The world of Wnt heads to Nasdaq as Surrozen announces a $212M SPAC deal
Editor’s note: Interested in following biopharma’s fast-paced IPO market? You can bookmark our IPO Tracker here.
Another day, another SPAC merger in the world of biotech.
Less than 24 hours after Tango Therapeutics announced its own leap to Nasdaq through the blank check route, Surrozen has decided to take a similar step. The Wnt pathway-focused biotech is reverse-merging with Consonance Capital Management’s SPAC in a $212 million deal, which includes $92 million from the shell company and $120 million in PIPE financing.
The transaction is expected to close in the third quarter, with Surrozen taking on the ticker $SRZN when it officially hits the market.
Surrozen is working on a pipeline of experimental drugs that modulate the Wnt pathway, which plays a role in the maintenance and self-renewal of stem cells in a variety of tissues. Products that affect Wnt signaling, whose name combines Wingless and Int-1, can be difficult to manufacture because the process is highly unstable.
The goal, then, is to develop drugs that are flexible enough to address insufficient endogenous Wnt or insufficient receptors that have the potential to repair damaged tissue. So far, that’s taken the form of two lead programs, one for inflammatory bowel disease and another to treat severe alcoholic hepatitis.
Both programs are expected to enter the clinic thanks to Thursday’s raise, Surrozen said, with funds taking them through Phase Ib trials.
First, there’s SZN-1326, a bi-specific antibody targeting Fzd5/8 and Lrp6 for IBD. Preclinical data have shown the molecule can bind to Frizzled receptors — where Wnt proteins signal through — directly and should stimulate regeneration of intestinal epithelial cells.
Then there’s SZN-043, the severe alcoholic hepatitis candidate, which is a hepatocyte-targeted R-spondin mimetic. Rather than binding to the Frizzled receptors as the IBD program does, this candidate stabilizes them to stimulate liver cell proliferation and reduce fibrosis.
Surrozen is hoping to utilize the two Wnt modulating platforms that helped create these compounds to expand into other diseases, such as those in the eye, lung, kidney, cochlea, skin, pancreas and central nervous system.
SPACs have created a whirlwind on Wall Street, with the number of blank check companies pricing their IPOs in 2021 having already surpassed the total from the last two years combined, according to figures from SPACInsider. The flurry has also drawn the eyes of investigators, with the SEC saying last month they have started voluntarily requesting information from banks into how they’re policing the deals internally.
All the activity has also prompted concerns that there will soon be too many SPACs and not enough companies with which to merge. Surrozen marks the 6th life sciences company to announce its intent to merge in 2021, but there have been more than 30 that have priced this year, per an Endpoints News tally.
For biotech, though, the SPAC wave has meant a whole new stack of cash for the companies that do decide to eschew the traditional IPO route. Including Tango’s announcement for similar plans with Boxer Capital’s blank-check company just yesterday, the total SPAC raise for these six companies now equals about $2.9 billion.