NewLink Genetics and Lumos Pharma to Form Biopharma Company

NewLink Genetics (NASDAQ:NLNK) is partnering with Lumos Pharma to establish a new company to develop treatments for rare diseases, the company said in a statement in after-hours trading.

Under the terms of the merger agreement, announced on Monday (September 30), Lumos Pharma shareholders will receive common stock in NewLink Genetics in exchange for their Lumos shares. Lumos Pharma shareholders will ultimately own 50 percent of NewLink Genetics.

Once the deal has closed, Lumos Pharma will become a wholly owned subsidiary of NewLink Genetics, which will then change its name to Lumos Pharma and its ticker to LUMO on the NASDAQ. The companies expect the transaction to be completed sometime before the end of Q1 2020, subject to approval from NewLink Genetics shareholders and other regulatory requirements.

“We believe this combined entity offers us a new, strategic position in the market and has the potential to create significant value to patients and our stockholders alike,” Eugene Kennedy, MD, chief medical officer at NewLink, said in a release.

The merger will create the financial stability needed to advance Lumos Pharma’s LUM-201 treatment for pediatric growth hormone deficiency (PGHD), which is a condition that results in children being unable to produce enough growth hormones to grow naturally.

According to the US National Library of Medicine, the presence of PGHD in children is 1:4,000 to 1:10,000. The Boston Children’s Hospital explains that causes of growth hormone deficiency include brain tumors in the hypothalamus or pituitary, trauma to the head and autoimmune conditions.

Symptoms range from a young appearance to a larger body build and prominent forehead.

The companies plan to begin a Phase 2b clinical trial of LUM-201 in children with PGHD by mid-2020. The trial will compare results for LUM-201 to the current treatment method of recombinant human growth hormone injections.

Rick Hawkins, CEO of Lumos Pharma, said in the release that, as the companies work to move LUM-201 through clinical development, with regulatory approval the candidate could become the first oral therapeutic for treating PGHD.

“Other target indications for LUM-201 have potential for development, supporting expanded market opportunity for this drug candidate,” Hawkins said. “With exciting prospects for the clinic, we are optimistic about what this combined company will achieve.”

To date, LUM-201 has been studied in roughly 150 pediatric patients and in 1,200 patients total. Results show that the drug was well tolerated and acted as a safe alternative to daily growth hormone injections.

LUM-201 has orphan drug designation from the US Food and Drug Administration, as well as European Medicines Agency approval to treat growth hormone deficiency. LUM-201 also has a US patent that doesn’t expire until 2036 in addition to pending patent applications in other countries.

While shares of NewLink Genetics were down 3.64 percent during Monday’s trading session to close at US$1.59, the after-hours announcement bumped its share price up 10.06 percent to reach US$1.75 as of 6:41 p.m. EDT.

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Securities Disclosure: I, Jocelyn Aspa, hold no direct investment interest in any company mentioned in this article.