Biotechs Onconova and Trawsfynydd Merge to Create Traws Pharma

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In a deal uniting two biotech companies from opposite coasts, Onconova Therapeutics and Trawsfynydd Therapeutics announced they are combining forces through an all-stock merger. The newly created entity, dubbed Traws Pharma, will have a deep pipeline spanning virology and oncology when it begins trading on the Nasdaq as “TRAW” this Wednesday.

Traws is being launched with an approximately $28 million cash balance after a $14 million private placement investment led by elite life sciences funds OrbiMed and Torrey Pines. The cash provides ample runway as Traws prepares for multiple clinical catalysts in 2024 across its three lead programs.

The combined company will be led by an executive team blending leadership from the previous organizations. Incoming CEO Werner Cautreels, Ph.D., previously headed Trawsfynydd, while Onconova’s Steven Fruchtman, M.D., will serve as President and Chief Scientific Officer of Oncology for Traws.

On the virology side, Traws inherits Trawsfynydd’s advancing pipeline of antiviral candidates for influenza and COVID-19. Viroksavir, a novel cap-dependent endonuclease inhibitor, has completed Phase 1 testing for influenza and is slated to begin Phase 2 trials in the second half of this year. Early data could read out by the first half of 2025.

Travaltrelvir is Trawsfynydd’s oral protease inhibitor targeting COVID-19. A first-in-human Phase 1 study initiated screening in the first quarter, with topline data expected in the second half of 2024. If positive, Traws plans to rapidly advance travaltrelvir into a Phase 2 trial in the second half of 2024 enrolling moderate to severe COVID-19 patients.

From Onconova, Traws gains narazaciclib, a next-generation CDK4/6 inhibitor being evaluated in a Phase 1/2 trial for low-grade endometrioid endometrial cancer (LGEEC). Preclinical data suggests narazaciclib could offer an improved therapeutic window over approved CDK4/6 drugs like palbociclib with potentially fewer bone marrow and GI toxicities.

The merger deal terms entail Trawsfynydd shareholders receiving 75.7% ownership in the combined Traws entity, with Onconova shareholders getting 13.7% and the OrbiMed/Torrey Pines investors getting 10.6%. A key piece allows current Onconova investors to retain a contingent value right (CVR) entitling them to potential future proceeds from narazaciclib.

Traws’ board will blend representation as well, co-led by Executive Chairman Iain Dukes, DPhil from OrbiMed and Nikolay Savchuk, Ph.D. of Torrey Pines, along with continuing Onconova directors.

While delivering upside potential from a fresh pipeline spanning anti-infectives and cancer, the Traws merger does come with a degree of complexity and deal risk. The share issuances require a shareholder vote, which could potentially disrupt the closing if there are any hiccups.

But if the transaction goes through as anticipated, Traws Pharma will emerge as a unique hybrid biotech play. Bolstered by crossover financing, it will seek to advance multiple clinical candidates toward key data inflections that could help unlock their full therapeutic and commercial potential across areas of significant unmet medical need.

Take a moment to take a look at more biotech companies by taking a look at Noble Capital Market’s Senior Research Analyst Robert Leboyer’s coverage list.

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