Struggling Austin biotech company Mirna Therapeutics has found a buyer.
Cambridge, Mass.-based Synlogic has agreed to take over Mirna Therapeutics in a reverse merger deal. That means Synlogic will receive all of Mirna’s publicly-traded shares and become a public company.
No money is exchanging hands, and Synlogic will receive all of Mirna’s remaining cash and assets.
It’s a way for Synlogic to go public without going through a conventional IPO process. Synlogic also announced it had raised $42 million in a Series C stock financing round.
Mirna had about $57.5 million in cash at the end of its most recent quarter. The combined company will have about $82 million in cash, according to a Synlogic spokesperson.
Synlogic shareholders will own 83 percent of the combined company, and Mirna shareholders will own 17 percent.
Synlogic will focus on its own drug development pipeline, which involves genetically modifying bacteria to treat rare metabolic diseases. The company has not started clinical trials yet.
Mirna investors were not happy about the deal. The stock, which closed on Monday at around $2.00 a share, plummeted over 25 percent on Tuesday morning.
Mirna had started clinical trials on its lead drug but had to shut it down last year after patients in a Phase 1 study had severe side effects. The company then decided to halt all research and development activities.
The once-promising Austin-based biotech company had specialized in developing synthetic drugs that mimic microRNA, which play a crucial regulatory role in cells.
Mirna employed about 7 people in Austin as of last week.
Jose Carlos Gutiérrez-Ramos, the current CEO of Synlogic, will be in charge of the combined company.
Courtney Heath, a spokeswoman for Synlogic, confirmed that none of Mirna’s executives or employees would transition over to the new company.
She said two board members from Mirna will be sitting on the Synlogic board.
Biotechnology startups are notoriously risky investments. Drug development is expensive, and it takes a long time to obtain all the necessary regulatory approvals and bring a drug to market.
Only 3 percent of pre-clinical trial drugs ever made it to market, according to a 2012 study by research firm KMR Group.
-Reuters contributed to this report.
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