Chinook raises $106M in private placement as it prepares to close merger with Aduro
As Versant-backed Chinook prepares to hit Nasdaq after a merger with Aduro, the Vancouver-based biotech has secured alternative funding to an IPO.
Chinook raised $106 million in private placement financing, the company said Tuesday, which is expected to close immediately before the merger is completed. Once that’s finished, likely sometime before the end of the year, Aduro will take on the Chinook name and trade under the ticker $KDNY.
CEO Eric Dobmeier said the company, which focuses primarily on kidney disease research, had originally been planning a Series B, but that changed when the opportunity to merge with Aduro came about.
“We did that deal with Aduro because it got us another pipeline program,” Dobmeier told Endpoints News. “It got us a lot of capital as well as a lot of strong staff to help us execute our plans. And after the merger was announced, we continued discussions with [potential Series B] investors…they liked Chinook before the merger, but they liked it even more after we had another asset.”
New funding was led by EcoR1 Capital, OrbiMed, Rock Springs Capital, and Avidity Partners. Chinook’s existing investors, Versant, Apple Tree and Samsara, also purchased $25 million in common stock.
Tuesday’s announcement comes almost a year to the day after Chinook came out of stealth from a Versant discovery engine with a $65 million Series A. From Versant’s point of view, the focus on kidney disease is a bet that Chinook can get in front early among other new startups in the field.
The new financing will go toward several Chinook and old Aduro programs. Chinook’s lead candidate atrasentan, which was in-licensed from AbbVie toward the end of 2019, is currently in Phase II and Phase III trials for the treatment of IgA nephropathy and other primary glomerular diseases.
There is also an ongoing Phase Ib study for BION-1301, Aduro’s IgG4 monoclonal antibody that blocks APRIL binding to both the BCMA and TACI receptors. This candidate was the primary reason Chinook went down the merger route, Dobmeier said.
“There are companies that will do reverse mergers into a shell company in order to go public like a SPAC,” Dobmeier said. “This is different in the sense that there are real assets, there’s a program, there’s people and there’s quite a bit more capital than you would normally see.”
Chinook’s side of the pipeline deals largely with kidney disease research, with its CHK-336 candidate for ultra rare orphan kidney disease having reached the IND-enabling stage. Some of Tuesday’s capital will help launch a Phase I trial in that area as well as advancing research in Chinook’s other preclinical kidney disease candidates.
Aduro’s decision to merge with Chinook comes after a long string of setbacks over the years. Its two proposed cancer vaccines, GVAX and CRS-207, both busted a few years ago. That prompted J&J to back out of a $1.2 billion deal in late 2018, forcing the company to axe about a third of its staff at the beginning of 2019.
Later that year, Novartis dumped Aduro’s STING drug after clinical data showed little to no benefit. The beleaguered biotech, which by that point was trading in the penny stock territory after hitting $40 per share in 2015, was forced into another round of layoffs this past January.
Other new investors included Surveyor Capital, Ally Bridge Group, Monashee Investment Management, Northleaf Capital Partners, Janus Henderson and Sphera Biotech.