Ex-Retrophin BD chief flips his rare disease startup onto Nasdaq via reverse merger with Proteon
Proteon Therapeutics’ lead and only drug for kidney and vascular diseases may not be worth much in investors’ eyes, but its Nasdaq listing is proving valuable to ArTara Therapeutics as the shell for a reverse merger.
An unnamed syndicate is injecting $42.5 million into the combined company, in which ArTara will dominate in both name and share structure. Current Proteon stockholders are collectively assigned around 10% of the new entity $TARA.
Waltham, MA-based Proteon began looking for strategic alternatives in March when its recombinant human elastase, vonapanitase, failed definitively in a Phase III trial for chronic kidney disease. That was the second attempt at a late-stage win, following another disastrous implosion in 2016. In both trials, the drug was unable to help CKD patients maintain an open fistula to allow adequate blood flow needed for hemodialysis.
CEO Timothy Noyes gave the usual spiel about the transaction delivering significant and near-term value for investors, who would have been badly battered. Proteon debuted on the Nasdaq in 2014 at an IPO price of $10 and soared to $20 at one point. Even accounting for a pre-market surge, the stock is now trading at $0.44.
He will turn over control to ArTara CEO Jesse Shefferman, who also sits on a board of seven, one of whom will be designated by Proteon. The company headquarters will remain in ArTara’s New York home.
Shefferman, a former investment banker who led business development at Vertex and Retrophin, co-founded the biotech. Randall Marshall, a fellow Retrophin alum, was briefly on board as CMO but later retreated to a scientific advisor role.
With an explicit focus on rare and specialty diseases, ArTara has obtained orphan drug status for its lead compound, TARA-002, in lymphatic malformations. Chugai had secured a Japan approval for a similar treatment dubbed OK-432, or Picibanil, but discontinued its program late last year. ArTara says its drug, now ready for Phase III, is a follow-on biologic to the inactivated Group A streptococcus bacterial preparation.
Its second asset, IV choline chloride, is also an orphan drug. Designed as a phospholipid substrate replacement therapy for choline-deficient patients, it’s being tested in Phase II for intestinal failure associated with liver disease.