Graphite Bio has agreed to merge into LENZ Therapeutics, creating a combined company focused on advancing LENZ’s lead pipeline candidates, designed to address presbyopia—nearly a year after Graphite began exploring strategic alternatives after a safety issue forced it to halt development of its lead treatment.

The companies will carry out a reverse merger through an all-stock transaction, resulting in a combined public company that is expected to trade on Nasdaq under the ticker symbol “LENZ.”

The new LENZ is expected to continue building infrastructure through which it will work to commercialize the current privately-held LENZ’s lead product candidates through completion of ongoing Phase III trials to an NDA and subsequent FDA approval.

LENZ’s lead candidates include LENZ100 (aceclidine) and LENZ101 (aceclidine and brimonidine), both single-use, once-daily eye drops designed to correct the loss of near vision associated with presbyopia. Aceclidine is a small molecule acetylcholine receptor agonist designed to improve near vision by causing pupil miosis, creating a pinhole effect; and LENZ101,

“We believe that a once-daily pharmacological eye drop that can effectively and safely improve near vision throughout the full workday, without the need for reading glasses, will be a highly attractive commercial product,” Eef Schimmelpennink, LENZ’s president and CEO, said in a statement.

Schimmelpennink and LENZ have estimated that the U.S. market opportunity alone would exceed $3 billion for the presbyopia eye drops since the condition affects some 128 million Americans.

Schimmelpennink will lead the combined company, joined by other members of Lenz’s management team. The combined company will carry the name LENZ Therapeutics and be headquartered in San Diego, where the current LENZ is based. The board of the combined company will consist of seven members—five members of LENZ’s current board, plus two members to be selected by Graphite.

Phase III trials

The reverse merger comes as LENZ prepares to complete the three-trial Phase III CLARITY clinical program, which is expected to read out data in the second quarter of 2024.

LENZ expects the data to be positive enough to support a potential submission of an NDA for at least one of its product candidates in mid-2024.

The CLARITY trials include two six-week studies evaluating the safety and effectiveness of LNZ101 (NCT05656027 and NCT05728944), and a safety study evaluating the long-term safety of LNZ101 in presbyopic subjects (NCT05753189).

The efficacy trials, dubbed CLARITY-1 and CLARITY-2, are fully enrolled and over 95% enrolled, respectively, while the six-month safety trial, CLARITY-3, is fully enrolled, LENZ said.

The primary efficacy endpoint in CLARITY-1 and CLARITY-2 is the percentage of subjects who achieve three-lines or greater improvement in near vision, but at three hours post-treatment rather than one hour post-treatment, comparing to brimonidine and vehicle, respectively.

In China, development partner Shanghai-based Ji Xing Pharmaceuticals is carrying out a Phase III trial (NCT06045299) on the efficacy and safety of LNZ101 and LNZ100. Ji Xing signed an exclusive license agreement last year to co-develop the two presbyopia eye drop treatments, agreeing to pay LENZ $15 million upfront; up to $95 million in payments tied to achieving development, regulatory, and commercial milestones; and royalty payments based on future net sales.

LENZ demonstrated aceclidine’s mechanism of action in the Phase II INSIGHT trial (NCT05294328), where both LZN100 and LNZ101 achieved their primary endpoint of three-lines or greater near vision improvement without losing one or more lines in distance vision, with a responder rate of 71% and 56, respectively.

The combined company is expected to have approximately $225 million of cash or cash equivalents at close of the reverse merger. That includes $53.5 million to be raised through a concurrent private investment in public equity (PIPE) financing by a syndicate of healthcare investors led by LENZ’s existing investors, with participation from new investors.

The cash and cash equivalents is also expected to include $115 million that Graphite has agreed to contribute to the combined entity. Graphite will also pay its shareholders a dividend of approximately $60 million at the close of the reverse merger transaction.

“Find and replace”

Graphite was co-founded by academic pioneers in gene editing and gene therapy that included Matthew Porteus, MD, PhD, and Maria Grazia Roncarolo, MD, the director and co-director, respectively, Stanford Medicine’s Center for Definitive and Curative Medicine. They established the company in April 2020, just as the COVID-19 pandemic wreaked havoc on the world, to commercialize a precision gene editing approach designed to precisely “find and replace” any gene in the genome.

“We’ve also thought about not just the technology, the platform, and the cell engineering, but how we can get these genetic therapies to be more than a headline, more than an exciting publication, more than a handful of patients treated to really impact large numbers of people in need,” Graphite’s then CEO Josh Lehrer, MD, MPhil, told GEN Edge last year.

“We realized that the conditioning treatment—how a patient’s bone marrow is treated to make room for the gene-edited stem cell therapies—is as critical as the editing technology. We have used our experience in stem cell biology and immunology to begin research on a new approach to conditioning,” Lehrer explained. “We are now developing what we hope will become a best-in-class, non-toxic antibody targeting approach, ultimately enabling a one-time cure that wouldn’t require a hospital stay or have chemotherapeutic conditioning risk—a very different paradigm than what we can currently offer patients.

Graphite went public in 2021, through an upsized initial public offering (IPO) that raised approximately $251.4 million in net proceeds shortly before the markets soured on biotech IPOs. Graphite sold 14 million shares of common stock at $17 per share, while underwriters exercised in full their option to purchase another 2.1 million shares at the IPO price.

Last year, Graphite dosed its first patient with nulabeglogene autogedtemcel (nula-cel, formerly GPH-101), a gene-editing autologous hematopoietic stem cell (HSC) therapy designed to directly correct the genetic mutation that causes sickle cell disease (SCD). Nula-cel used Graphite’s UltraHDR™ gene editing platform, designed to take CRISPR beyond cutting by harnessing the power of high-efficiency precision DNA repair.

In addition to SCD, Graphite pursued research programs to treat beta-thalassemia, and alpha-1 antitrypsin (AAT) deficiency,

A pause, then a halt

Five months after first patient dosing in January 2023, Graphite Bio announced a voluntary pause in its Phase I/II CEDAR trial (NCT04819841) of nula-cel after that patient showed prolonged low blood cell counts (pancytopenia) requiring ongoing transfusion and growth factor support. The event did not meet the requirements to halt the study, but Graphite Bio decided to pause CEDAR voluntarily and reported the event to the FDA, citing evolving clinical data.

The following month, Graphite halted development of nula-cel and began exploring strategic alternatives. Graphite eliminated 71% of its workforce—about 85 jobs, based on the 120 full-time employees it employed as of December 31, 2022, according to its Form 10-K Annual Report for 2022. The staffers who remained continued research associated with its preclinical non-genotoxic conditioning program, with the goal of advancing toward one or more potential development candidates.

Graphite transferred that preclinical non-genotoxic conditioning program, including technology and intellectual property, to an unnamed third-party in August, while it continued to explore strategic alternatives.

Also in August, Graphite entered into a license and option agreement granting another unnamed third party an option to acquire technology and intellectual property related to nula-cel and preclinical platform assets, according to its latest Form 10-Q quarterly report, covering the third quarter and filed November 13.

Lehrer “separated from his employment” in August, Graphite disclosed, succeeded by current president and CEO Kimberlee C. Drapkin.

Graphite Bio stockholders are expected to own approximately 35% of the combined company while pre-merger LENZ shareholders will hold the remaining approximately 65% of the combined company upon the closing of the merger, prior to the additional PIPE financing transaction. The percentage of the combined company that each company’s former stockholders are expected to own may be adjusted based on Graphite Bio’s net cash at closing.

The reverse merger transaction has been unanimously approved by the boards of both companies and is expected to close in the first quarter of 2024, subject to customary closing conditions, including approvals by shareholders of each company.

Holders of approximately 70% of LENZ’s shares have agreed to vote all of their shares in favor of the merger agreement, as have holders of approximately 52% of Graphite’s outstanding shares. Should the reverse merger not go through, either Graphite or LENZ may be required to pay the other a $7.5 million termination fee depending on the circumstances, according to a regulatory filing.

“Graphite Bio ran a thorough and strategic process and we believe that this transaction represents the company’s commitment to delivering value to the Graphite stockholders,” Drapkin stated. “LENZ Therapeutics is strongly positioned with Phase III lead program, addressing a very large target market with near-term, high potential, value-inflecting milestones and a well-credentialed management team to lead the combined company.”

Alex Philippidis is Senior Business Editor of GEN.

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