Chinook Therapeutics, a Vancouver-based developer of precision medicines for kidney disease, has agreed to merge with Aduro Biotech. The new company will assume Chinook’s name and gain a NASDAQ listing. The deal will include a US$25 million investment by Chinook’s existing investors, which include Versant Ventures, Apple Tree Partners and Samsara BioCapital.
BERKELEY, Calif., VANCOUVER, British Columbia and SEATTLE, Wash., June 02, 2020 (GLOBE NEWSWIRE) — Aduro Biotech, Inc. (“Aduro”) (NASDAQ: ADRO) and Chinook Therapeutics, Inc. (“Chinook”), a privately held clinical-stage biotechnology company focused on the discovery, development and commercialization of precision medicines for kidney diseases, today announced that the companies have entered into a definitive merger agreement pursuant to which Aduro will acquire all of the outstanding capital stock of Chinook in exchange for shares of Aduro common stock representing approximately 50 percent of Aduro’s outstanding common stock immediately following completion of the transaction. The combined company is expected to have approximately $200 million in cash, cash equivalents and marketable securities at closing, including $25 million in additional financing committed by Chinook’s existing investors. Following closing, which is expected to occur in the second half of 2020, Aduro will be renamed Chinook Therapeutics, Inc., and is expected to trade on the Nasdaq Global Market under the ticker symbol “KDNY”.
The combined company’s pipeline will include:
Atrasentan, an investigational selective endothelin receptor antagonist, in clinical development for the treatment of IgA nephropathy and other primary glomerular diseases;
BION-1301, an investigational humanized IgG4 monoclonal antibody that blocks APRIL binding to both the BCMA and TACI receptors, in clinical development for the treatment of IgA nephropathy;
CHK-336, an investigational small molecule, in preclinical development for treatment of an ultra-rare orphan kidney disease; and
Additional research and discovery programs focused on the treatment of rare, severe chronic kidney diseases.
The combined company plans to advance its pipeline through multiple clinical trials, including the following milestones anticipated over the next 12-18 months:
Report results from the ongoing Phase 1 trial of BION-1301 in patients with IgA nephropathy;
Initiation of a randomized Phase 3 trial of atrasentan for IgA nephropathy;
Initiation of a Phase 2 basket trial of atrasentan in primary glomerular diseases; and
Initiation of a Phase 1 trial of CHK-336 in an ultra-rare orphan kidney disease.
Aduro is currently exploring strategic alternatives for its legacy programs outside of kidney disease, including the STING agonist program in collaboration with Novartis, cGAS-STING inhibitor program in collaboration with Lilly, and anti-CD27 program out-licensed to Merck, as well as deprioritized programs such as the anti-SIRPα and anti-CTLA-4 antibodies. Immediately prior to the closing of the proposed merger, Aduro stockholders will be issued contingent value rights representing the right to receive certain cash payments from proceeds received by Aduro, if any, related to its non-renal assets for a period of ten years following closing.
“After an extensive and thorough review of strategic and potentially transformative options for Aduro, we are very pleased to announce a proposed merger with Chinook,” said Stephen T. Isaacs, chairman, president and chief executive officer of Aduro. “We believe the combined company’s strong pipeline, near-term milestones, seasoned leadership team and focus on kidney diseases offer an excellent opportunity to benefit patients and provide value to our stockholders.”
“The proposed merger with Aduro is a unique opportunity for Chinook to build a leading company in the kidney disease space, particularly by pursuing complementary approaches to treating IgA nephropathy with both atrasentan and BION-1301,” said Eric Dobmeier, president and chief executive officer of Chinook Therapeutics. “The combined company will have the demonstrated expertise and strong balance sheet to advance its three lead programs towards multiple anticipated milestones over the next 12 to 18 months. I’m grateful to our existing investors, Versant, Apple Tree and Samsara, for their ongoing support and the additional capital they’ve committed to help build Chinook and advance our pipeline of novel product candidates for rare, severe chronic kidney diseases.”
About the Proposed Merger
Pursuant to the merger agreement, Aduro will acquire all of the outstanding capital stock of Chinook in exchange for the issuance of newly issued shares of Aduro common stock upon closing, subject to the satisfaction or waiver of customary closing conditions, including the receipt of the required approval of the Aduro stockholders and Chinook stockholders. Upon completion of the merger, Aduro’s then-current equity holders and the former Chinook equity holders will each own approximately 50 percent of Aduro’s common stock, calculated on a fully diluted basis, based upon an expected Aduro net cash balance of $145 million and expected Chinook cash and cash equivalents of $10 million at closing, but subject to adjustment for each company’s actual balances at closing. Chinook’s existing investors have also committed to invest an additional $25 million in convertible notes prior to closing, which will convert into Aduro common stock following the merger.
Each of Versant Ventures, Apple Tree Partners, Samsara BioCapital, Abbvie, Inc., Morningside Venture (VI) Investments Limited, Morningside Foundation and Ultimate Keen Limited, as well as the directors and certain officers of both companies, representing a total of approximately 85% of the outstanding stock of Chinook and approximately 22% of the outstanding stock of Aduro, have signed support agreements committing to vote in favor of the transaction and lock-up agreements restricting transfers of the combined company’s stock for 180 days post-closing.
The transaction has been unanimously approved by the board of directors of both companies. The combined company will be headquartered out of Chinook’s existing facilities in Vancouver, BC and Seattle, Washington.
SVB Leerink is acting as exclusive financial advisor and Latham & Watkins LLP is serving as legal counsel to Aduro. MTS Health Partners is acting as exclusive financial advisor and Fenwick & West LLP is serving as legal counsel to Chinook.
Management and Organization
Effective as of the closing of the transaction, Eric Dobmeier will be the president and chief executive officer of the combined company. Senior leadership of the combined company will also include Tom Frohlich as chief business officer, Alan Glicklich, M.D., as chief medical officer, Andrew King, D.V.M., Ph.D., as head of renal discovery and translational medicine and Renata Oballa, Ph.D., as vice president of chemistry. In connection with the merger, Stephen T. Isaacs, chairman, president and chief executive officer of Aduro, will be stepping down.
Additionally, effective as of the closing of the merger, the board of directors of the combined company will be comprised of seven directors: Eric Dobmeier, president and chief executive officer of Chinook Therapeutics; Jerel Davis, Ph.D., managing director at Versant Ventures; Srini Akkaraju, M.D., Ph.D., managing general partner at Samsara BioCapital; William M. Greenman, president and chief executive officer of Cerus Corporation; and Ross Haghighat, founder, chairman and managing partner of Triton Systems, Inc.; and two additional independent directors.
Conference Call Details
Chinook and Aduro will host a live conference call and webcast on Tuesday, June 2, 2020, at 8:30 am EDT to discuss the proposed transaction. To access the call, please dial (833) 979-2734 (toll-free) or (778) 560-2727 (international) and provide the conference ID 5387085.
Additionally, Chinook management will present an overview of the company and its pipeline at the Jefferies Virtual Healthcare Conference on Wednesday, June 3, 2020, at 3:30 pm EDT.
To access the live webcasts and subsequent archived recordings of these and other company presentations, please visit the investor section of Aduro’s website at www.aduro.com or Chinook’s website at www.chinooktx.com. The archived webcasts will remain available for replay on Aduro’s and Chinook’s websites for 90 days.
Aduro Biotech, Inc. is a clinical-stage biopharmaceutical company focused on the discovery, development and commercialization of therapies that are designed to harness the body’s natural immune system for the treatment of patients with challenging diseases. Aduro’s product candidates in the Stimulator of Interferon Genes (STING) and A Proliferation Inducing Ligand (APRIL) pathways are being investigated in cancer, autoimmune and inflammatory diseases. ADU-S100 (MIW815), which potentially activates the intracellular STING receptor for a potent tumor-specific immune response, is being evaluated in combination with KEYTRUDA® (pembrolizumab), an approved anti-PD-1 monoclonal antibody, as a potential first-line treatment for patients with recurrent or metastatic squamous cell carcinoma of the head and neck (SCCHN). BION-1301, an investigational humanized IgG4 monoclonal antibody that blocks APRIL binding to both the BCMA and TACI receptors, is being evaluated in IgA nephropathy. Aduro is collaborating with a number of leading global pharmaceutical companies to help expand and drive its product pipeline. For more information, please visit www.aduro.com.
About Chinook Therapeutics
Chinook Therapeutics, Inc. is a clinical-stage biotechnology company developing precision medicines for kidney diseases. The company’s pipeline is focused on rare, severe chronic kidney disorders with opportunities for well-defined and streamlined clinical pathways. Chinook’s lead program is atrasentan, an investigational endothelin receptor antagonist in development for the treatment of IgA nephropathy and other primary glomerular diseases. The company is also advancing a preclinical development candidate for an undisclosed ultra orphan kidney disease and research programs for other rare, severe chronic kidney diseases, including polycystic kidney disease. Chinook seeks to build its pipeline by leveraging insights in kidney single cell RNA sequencing, human-derived organoids and new translational models, to discover and develop therapeutics with mechanisms of action against key kidney disease pathways. Chinook is backed by leading healthcare investors, Versant Ventures, Apple Tree Partners, and Samsara BioCapital, and is based in Vancouver, British Columbia and Seattle, Washington. For more information visit www.chinooktx.com.