GTx and Oncternal Therapeutics today disclosed plans for a reverse merger that would create a combined company specializing in clinical and preclinical oncology treatments.
Under the reverse merger, whose value was not disclosed, Oncternal shareholders will own the majority of shares in the combined company, also to be named Oncternal Therapeutics.
In entering into the merger, GTx’s board also agreed to eliminate seven employees, shrinking its workforce to 11 full-time staffers, GTx disclosed in a regulatory filing, As a result of that workforce reduction, plus a layoff of three employees earlier in the current quarter, GTx projected it will incur total severance-related charges of approximately $1 million in the first quarter, and up to an additional $0.5 million in the second quarter of this year.
The combined company’s lead product would be the current Oncternal’s Phase I/II candidate cirmtuzumab. The potential first-in-class anti-Receptor-tyrosine kinase-like Orphan Receptor 1 (ROR1) monoclonal antibody is now under study in a Phase Ib/II trial (NCT03088878) in combination with the marketed Pharmacyclics (AbbVie)/Janssen Biotech (Johnson & Johnson) drug Imbruvica® (ibrutinib) for chronic lymphocytic leukemia (CLL) and mantle cell lymphoma (MCL).
Cirmtuzumab is also being studied in combination with paclitaxel for women with metastatic breast cancer in an investigator-initiated Phase Ib trial (NCT02776917) being conducted at University of California, San Diego (UCSD). The first patient was dosed in that study in September 2018.
The combined company’s clinical pipeline would also feature the current Oncternal’s TK216, a potential first-in-class small molecule designed to inhibit the biological activity of ETS-family transcription factor oncoproteins.
TK216 is under study as monotherapy and in combination with vincristine in a Phase I trial (NCT02657005) in patients with relapsed or refractory Ewing sarcoma. Another Phase I trial of TK216 (NCT03752138) is being planned by sponsor MD Anderson Cancer Center with the NIH’s National Cancer Institute, but had yet to recruit patients as of the most recent ClinicalTrials.gov update on November 22, 2018.
Preclinical candidates for the combined company would include:
- The current Oncternal’s ROR-1 targeted chimeric antigen receptor T-cell (CAR-T) program, under development at UC San Diego for hematologic and solid tumors.
- GTx’s oral Selective Androgen Receptor Degrader (SARD) program, a potential first-in-class program designed to treat castration-resistant prostate cancer in men who are non-responsive to current androgen targeted therapies.
“The addition of GTx’s SARD technology strengthens our pipeline and augments our entire oncology franchise, which includes a range of therapeutic approaches for a variety of difficult to treat cancers,” James Breitmeyer, MD, PhD, Oncternal’s cofounder, president, and CEO, said in a statement. “In addition to clinical data expected from our cirmtuzumab and TK216 programs later this year and during the first half of 2020, we also plan to have preclinical results that get us ready for clinical testing of our ROR1 CAR-T program.”
GTx is publicly traded, while Oncternal is privately-held. The combined company would trade its shares on the Nasdaq Capital Market under the symbol ONCT upon closing of the transaction, which is expected in the second quarter.
Taking Oncternal public
“This merger introduces Oncternal and its promising oncology pipeline to the public market and provides additional capital resources to advance our programs to potential value inflection points,” Breitmeyer added.
Breitmeyer, a 30-year pharma industry veteran, would serve as president and CEO of the combined company. David Hale, Oncternal’s co-founder and a 35-year industry veteran, would be chairman of the board of the combined company—which would be headquartered in San Diego and be led by the management team of the current Oncternal.
No GTx employee is expected to remain an employee of the combined company, according to GTx and Oncternal. However, the companies’ merger agreement requires that the combined Board of Directors would consist of nine members—seven from Oncternal, plus two members of GTx’s current board, Michael G. Carter, MD, and GTx’s executive chairman Robert J. Wills, PhD.
“Following a thorough review of strategic alternatives, we have determined that a reverse merger with Oncternal will enable GTx investors to participate in Oncternal’s broader pipeline of oncology opportunities, including product candidates designed to address rare disease indications, and enable the continued development of our first-in-class SARD technology by a company whose leadership has deep experience in developing oncology medicines,” said Wills.
Cash, cash equivalents, and short-term investments for the combined company are expected to be approximately $26 million—enough capital, according to the companies, to advance Oncternal’s programs into the second quarter of 2020, including the Phase II cirmtuzumab-ibrutinib combination study, and the planned SARD preclinical studies to support a future IND application to the FDA.
The merger is structured as a stock-for-stock transaction whereby all of Oncternal’s outstanding shares of common stock and securities convertible into or exercisable for Oncternal’s common stock will be converted into GTx common stock and securities convertible into or exercisable for GTx common stock.
Stockholders of the current Oncternal will hold approximately 75% of the outstanding shares of the combined company. GTx shareholders would own the remaining 25%—and would receive non-transferable contingent value rights (CVR) entitling them to receive in the aggregate 50% of any net proceeds derived from the grant, sale, or transfer of rights to SARD or selective androgen receptor modulator (SARM) technology during the term of the CVR and, if applicable, to receive royalties on the sale of any SARD products by the combined company during the term of the CVR.
“This transaction with Oncternal reflects the continued commitment of our management team and Board of Directors to deliver value to stockholders and make a difference in patients’ lives,” Wills added.