Reneo Pharmaceuticals Inc., which announced in December the failure of its drug to treat rare genetic diseases, said it will be acquired by OnKure Inc., a Boulder, Colo.-based privately held biopharmaceutical company.
Reneo, which has a market cap of $54 million, said it expects the deal to close this year. Terms of the acquisition were undisclosed.
The combined company will focus on advancing OnKure’s portfolio of precision cancer treatments, including its OKI-219 drug that’s currently in the first phase of a clinical trial with solid tumor and breast cancer patients. It will operate under the name OnKure Therapeutics Inc. and trade on the Nasdaq under the ticker symbol “OKUR,” according to a statement.
Reneo stockholders will own approximately 31% of the combined company while pre-merger OnKure stockholders will own 69% under the terms of the agreement.
“Following a thorough evaluation of strategic alternatives, the Reneo board of directors and management team believe that this anticipated transaction represents a compelling opportunity to deliver shareholder value as the OnKure team advances their PI3Kα inhibitors,” Reneo founder and Executive Chairman Mike Grey said in the statement.
The May 13 announcement signals the end of the existence of Reneo. It was formed in 2014 in San Diego before relocating to Irvine to be near the executive team living in Orange County and more available talent, Chief Executive Gregory Flesher told the Business Journal last year.
The company was testing a drug to treat rare genetic diseases, including primary mitochondrial myopathies, an illness that prevents people from metabolizing food in their bodies and causing their muscles and other organs to not fully develop. The disease affects about 66,000 people in the U.S. and another 82,000 in Europe.
“For the unfortunate people who are born with these rare diseases, a lot don’t make it out of childhood,” Flesher said. “Those who make it to adulthood have horrible lives.”
After Reneo announced on Dec. 14 the failure of its mavodelpar drug on mitochondrial myopathies in a Phase 2b trial, its shares fell 83% in one day to $1.34.
A spokesperson from Reneo declined to comment until the acquisition is compπleted “due to regulations.”
The new OnKure Therapeutics will be led by Nicholas Saccomano, CEO and president of OnKure.
IPO
Reneo went public in 2021, opening at $15 per share and raising $94 million.
This month, Reneo reported $82.8 million in cash, cash equivalents and short-term investments for the first quarter.
As part of the deal, Reneo signed a subscription agreement for $65 million in private investment in public equity financing known as PIPE. The participating group of institutional investors includes Acorn Bioventures, Cormorant Asset Management, Deep Track Capital, Perceptive Advisors, Samsara BioCapital, Surveyor Capital (a Citadel company) and Vestal Point Capital.
After the acquisition, OnKure should have $120 million in total cash, enough to fund several clinical milestones until the fourth quarter of 2026.
One of the conditions the transaction hinges on is that Reneo has at least $55 million in net cash at closing.
The company will be based in Boulder and its eight-member board of directors will have six appointed by OnKure and two from the legacy Reneo board.
After the deal was announced, Reneo’s shares dropped 12% to $1.59.
Merger
Reneo officials said they believe merging with OnKure will help drive shareholder value.
“OnKure has an experienced team of drug developers, and we are excited about the potential for OKI-219 to become a meaningful treatment option for patients suffering from breast cancer,” Reneo’s Grey said.
Saccomano said the merger also “comes at an important time” for OnKure.
OnKure in February began a Phase 1 trial of OKI-219 and expects early clinical data in the fourth quarter of this year, Saccomano said.
After the Reneo test results were announced, the company began cost-saving initiatives, including the suspension of its ongoing mavodelpar testing and a 90% reduction of its workforce. It had about eight employees as of May 7.
Results of its study called Stride showed that Reneo’s mavodelpar drug didn’t meet its efficacy benchmarks.
“Although the results of the Stride study were negative, the data generated are vitally important to the scientific community and we will make these data available once the final analyses are complete,” Flesher said in a December statement.
The May 13 statement about the combination didn’t once mention the mavodelpar drug nor whether OnKure would continue studying it.
