What happens: Chinook Therapeutics announces merger deal with American firm
Why it matters: Vancouver company recently raised $65m from investors in pursuit of treating kidney disease through precision medicine
International borders may be closed, but that’s not stopping a merger between bio-tech firms based in Vancouver and the U.S., respectively.
Privately held Chinook Therapeutics Inc. has reached an agreement with Silicon Valley’s Aduro Biotech Inc. (Nasdaq:ADRO) in which the latter will acquire all of the Vancouver company’s outstanding stock.
In exchange, Chinook will receive 50% of Aduro’s common stock once the merger deal is complete.
The new company will be renamed Chinook Therapeutics Inc. upon close and is expected trade under the Nasdaq symbol “KDNY.”
Chinook is best known for developing treatments for kidney disease, drawing $65 million from investors in August 2019.
Researchers at the company are tapping into advances in precision medicine – tailored treatments based on genetic profiles – and identifying specific subsets of patients that have either a genetic predisposition or a key chemical pathway that’s driving the kidney disease.
Patients with end-stage renal disease — the last stage of chronic kidney disease — make up 1% of Medicare patients in the U.S. but account for 7% of costs, according to University of California San Francisco research.
The research pegged those costs to the American Medicare program at US$35 billion in 2016.
“Despite that fact, very few drugs exist to slow the progression of kidney disease once you’re diagnosed,” Chinook chief business officer Tom Frolich told Business in Vancouver last year.
“We see a real opportunity to go after progressive kidney diseases.”
Historically, big pharmaceutical companies have tried developing treatments for broad groups of people — generally those whose kidney disease was caused by high blood pressure or diabetes.
“There’s different causes of kidney disease in those patient types,” Frohlich said, “so going after them with one mechanism didn’t really do very much.”
The combined company is expected to hold US$200 million in cash and marketable securities, including US$25 million in additional financing from Chinook’s existing investors.
The merger deal, which has been approved by the board of directors at both companies, is expected to close in the second half of 2020.
Current Chinook CEO Eric Dobmeier will lead the newly combined company from headquarters out of existing offices in Vancouver and Seattle.