Acquisition includes multiple
clinical stage, orphan pulmonary disease candidates,
including LTI-03, a Caveolin-1-related peptide in
development for the treatment of idiopathic pulmonary fibrosis
(IPF)
Financing proceeds of approximately
$18 million from a private placement
anticipated to fund completion of the ongoing Phase
1b clinical study of LTI-03 in IPF
and for general corporate purposes
Company to host conference call today at
1:30 p.m. EDT
WALTHAM,
Mass. and AUSTIN,
Texas, Oct. 31, 2023 /PRNewswire/ -- Aileron
Therapeutics, Inc. ("Aileron") (NASDAQ: ALRN) today announced it
has acquired Lung Therapeutics, Inc. ("Lung Tx"), a privately held
biopharmaceutical company focused on developing novel therapies for
the treatment of orphan pulmonary and fibrosis indications that
have no approved or limited effective treatments. Immediately
following the acquisition of Lung Tx, Aileron entered into a
definitive agreement for the sale of shares of Aileron's Series X
non-voting convertible preferred stock (the "Series X preferred
stock") and warrants to purchase shares of Aileron's common stock
in a private placement to a group of accredited investors led by
Bios Partners ("Bios"), and including Nantahala Capital, as well as
additional undisclosed investors. The private placement is expected
to result in gross proceeds to Aileron of approximately
$18 million before deducting
placement agent fees and other offering expenses. Aileron intends
to use the proceeds from the private placement primarily to
complete the ongoing Phase 1b
clinical study of LTI-03, a Caveolin-1-related peptide in
development for the treatment of IPF, and for general
corporate purposes.
"We are pleased to announce that after a thorough evaluation of
strategic alternatives, we have completed the acquisition of Lung
Therapeutics, which we believe represents a value-creation
opportunity for Aileron's stockholders. We are thankful and
appreciative of our board members, management team and employees,
both past and present, along with our investors for their support
and commitment," said Manuel Aivado, M.D., Ph.D, Chief
Executive Officer of Aileron. "Lung Therapeutics has built a
promising clinical-stage pipeline for life-threatening lung
conditions, and we believe in the ability of our combined companies
to deliver value to both patients and stockholders."
LTI-03 is a novel, Caveolin-1-related peptide with a dual
mechanism targeting both alveolar epithelial cell ("AEC") survival
as well as inhibition of profibrotic signaling, whereas approved
drugs for IPF such as nintedanib and treatments in clinical
development for IPF have only demonstrated a reduction of
profibrotic signaling. Studies conducted by Lung Tx and by
third parties have demonstrated that Caveolin-1 is a key protein in
the regulation of lung fibrosis and has a decreased expression in
IPF patients. Lung Tx's preclinical studies, including those
of biopsied tissue from IPF patients, have demonstrated a decrease
in numerous profibrotic signaling proteins, as well as the ability
to protect AECs. IPF is a chronic lung disease characterized by
progressive tissue scarring that prevents proper lung function. It
is a progressive, fatal, age-associated lung disease affecting
approximately 100,000 people in the
United States.i IPF typically presents in
adults 65 or older and is usually fatal within two to five years
after diagnosis. LTI-03 completed a Phase 1a clinical trial in
healthy volunteers and is currently in a randomized, double-blind,
placebo-controlled Phase 1b clinical
trial in IPF patients.
Management and Organization
Aileron will be led by its current management team consisting of
Manuel C. Aivado, M.D., Ph.D, Chief Executive Officer, and
Susan Drexler, M.B.A., C.P.A.,
Interim Chief Financial Officer, as well as Brian Windsor, Ph.D, former Chief Executive
Officer of Lung Tx, who was appointed as President and Chief
Operating Officer of Aileron. Dr. Windsor has 23 years of
experience in the formation and execution of life science
companies. He was the first employee of Lung Tx and led the company
from 2013 to 2023. While at Lung Tx, Dr. Windsor spun out
technology to form TFF Pharmaceuticals, which listed on Nasdaq in
2019. Prior to Lung Tx, he served as President of Enavail, a
specialty pharmaceutical company. Dr. Windsor received both his
B.S. and Ph.D. in molecular biology from the University of Texas at Austin.
"I am thrilled to join the management team of Aileron," said Dr.
Windsor, President and Chief Operating Officer of Aileron. "I look
forward to working with Dr. Aivado and his team to continue the
development of our programs at Aileron. I want to thank the board
and entire team of Lung Therapeutics for all their hard work with
this transaction."
Following the transaction, Aileron's board members will include
former members of the board of directors of Lung Tx, William C. Fairey and Alan A. Musso, and current Aileron board members
Josef H. von Rickenbach, who will
serve as Chairman of the Board of Directors, Manuel C. Aivado, M.D., Ph.D., Chief Executive
Officer, Reinhard J. Ambros, Ph.D.,
and Nolan Sigal, M.D., Ph.D.
About the Acquisition and Private Placement
The acquisition of Lung Tx was structured as a stock-for-stock
transaction whereby all of Lung Tx's outstanding equity interests
were exchanged in a merger for a combination of shares of Aileron
common stock and shares of Aileron Series X preferred stock.
Following the acquisition, Lung Tx became a wholly owned subsidiary
of Aileron. Immediately after the acquisition of Lung Tx, Aileron
entered into a definitive agreement for a private placement with
existing Lung Tx investors and new investors to raise approximately
$18 million, including the conversion
of certain convertible promissory notes in the aggregate principal
amount of approximately $1.6 million
issued by Lung Tx to Bios prior to the acquisition. In the private
placement, investors have agreed to purchase (i) an aggregate of
4,707 shares of Series X preferred stock and (ii) warrants to
purchase up to an aggregate of 2,353,500 shares of Aileron common
stock. The warrants will be exercisable any time after the later of
May 2, 2024 and the date stockholder
approval for the conversion rights of the Series X preferred stock
is obtained and on or prior to May 2,
2027, at an exercise price of $4.89. The private placement is expected to close
on November 2, 2023, subject to the
satisfaction of customary closing conditions. Subject to
stockholder approval of the conversion of the Series X preferred
stock into Aileron common stock, each share of Series X preferred
stock will convert into 1,000 shares of Aileron common stock,
subject to certain beneficial ownership limitations initially set
at, and not to exceed, 19.99%.
On a pro forma basis, based upon the number of shares of Aileron
common stock and Series X preferred stock issued in the acquisition
and the private placement and assuming the conversion of all such
Series X preferred stock to Aileron common stock, but excluding any
potential exercise of warrants issued in the private placement,
Aileron equity holders immediately prior to the acquisition will
own approximately 14% of Aileron on an as-converted-to-common basis
immediately after these transactions. The acquisition was approved
by the board of directors of Aileron and the board of directors and
stockholders of Lung Tx. The closing of the transactions was not
subject to the approval of Aileron stockholders.
Ladenburg Thalmann & Co. Inc. is serving as exclusive
financial advisor to Aileron and Wilmer
Cutler Pickering Hale and Dorr LLP is serving as legal
counsel to Aileron. Cozen O'Connor P.C. is serving as legal counsel
to Lung Tx. Clear Street LLC is serving as financial advisor to
Lung Tx and is acting as lead placement agent for the private
placement. Brookline LLC is acting as co-placement agent. Winston
& Strawn LLP is serving as legal counsel to the placement
agents.
As of September 30, 2023, on a pro
forma basis to give effect to the receipt of gross proceeds of the
private placement, Aileron and Lung Tx's combined cash and cash
equivalents was approximately $29
million. Based on Aileron's current operating plan, Aileron
estimates that these cash resources will enable Aileron to fund its
operating expenses and capital expenditure requirements as
currently planned into the fourth quarter of 2024.
An updated corporate presentation can be found at
www.aileronrx.com in the Events & Presentations section.
Conference Call Details
Aileron will host a conference call on October 31, 2023, at 1:30
p.m. EDT to discuss the acquisition. To access the call,
please dial 877-317-6789 (toll-free) or 412-317-6789
(international) and ask to be joined into the Aileron Therapeutics
call. A live webcast of the conference call can be accessed at
https://investors.aileronrx.com/events-presentations/investor-events.
For more information on the acquisition, please visit the
investor section of Aileron's website at
investors.aileronrx.com.
About Aileron Therapeutics
Following the acquisition of Lung Tx, Aileron is shifting its
disease focus to advancing a pipeline of first-in-class medicines
to address significant unmet medical needs in orphan pulmonary and
fibrosis indications. Aileron's lead product candidate, LTI-03, is
in a Phase 1b clinical trial for the
treatment of idiopathic pulmonary fibrosis. LTI-03 is a novel,
synthetic peptide with a dual mechanism targeting alveolar
epithelial cell survival as well as inhibition of profibrotic
signaling. Aileron's second product candidate, LTI-01, is a
proenzyme that has completed Phase 1b
and Phase 2a clinical trials for the treatment of loculated pleural
effusions. LTI-01 has received Orphan Drug Designation in the US
and EU and Fast Track Designation in the US.
Forward-Looking Statements
This press release contains forward-looking statements of
Aileron within the meaning of the Private Securities Litigation
Reform Act of 1995, including statements with respect to: future
expectations, plans and prospects for Aileron following the
consummation of the merger transaction (the "Merger") between
Aileron and Lung Tx; the expected closing of the concurrent private
placement; the use of proceeds from the private placement and the
sufficiency of Aileron's cash resources; stockholder approval of
the conversion of the Series X preferred stock; the initial market
capitalization of Aileron following the Merger and the benefits of
the Merger; and the milestones of Aileron; the projected cash
runway of Aileron; the status and plans for clinical trials,
including the timing of data; future product development; and the
potential commercial opportunity of LTI-03 and LTI-01. We use words
such as "anticipate," "believe," "estimate," "expect," "hope,"
"intend," "may," "plan," "predict," "project," "target,"
"potential," "would," "can," "could," "should," "continue," and
other words and terms of similar meaning to help identify
forward-looking statements, although not all forward-looking
statements contain these identifying words. Actual results may
differ materially from those indicated by such forward-looking
statements as a result of various important factors, including
risks and uncertainties related to the ability to recognize the
anticipated benefits of the Merger, the outcome of any legal
proceedings that may be instituted against Aileron following the
Merger and related transactions, the ability to obtain or maintain
the listing of the common stock of Aileron on The Nasdaq Stock
Market following the Merger, costs related to the Merger, changes
in applicable laws or regulations, the possibility that Aileron may
be adversely affected by other economic, business, and/or
competitive factors, including risks inherent in pharmaceutical
research and development, such as: adverse results in Aileron's
drug discovery, preclinical and clinical development activities,
the risk that the results of preclinical studies and early clinical
trials may not be replicated in later clinical trials, Aileron's
ability to enroll patients in its clinical trials, and the risk
that any of its clinical trials may not commence, continue or be
completed on time, or at all; decisions made by the U.S. FDA and
other regulatory authorities, investigational review boards at
clinical trial sites and publication review bodies with respect to
our development candidates; our ability to obtain, maintain and
enforce intellectual property rights for our platform and
development candidates; our potential dependence on collaboration
partners; competition; uncertainties as to the sufficiency of
Aileron's cash resources to fund its planned activities for the
periods anticipated and Aileron's ability to manage unplanned cash
requirements; and general economic and market conditions; as well
as the risks and uncertainties discussed in the "Risk Factors"
section of Aileron's Annual Report on Form 10-K for the year ended
December 31, 2022, which is on file
with the Securities and Exchange Commission, and in subsequent
filings that Aileron files with the Securities and Exchange
Commission. These forward-looking statements should not be relied
upon as representing Aileron's view as of any date subsequent to
the date of this press release, and we expressly disclaim any
obligation to update any forward-looking statements, whether as a
result of new information, future events or otherwise, except as
required by law.
Investor Relations & Media Contact:
Argot Partners
lungtx@argotpartners.com
212-600-1902
i Pergolizzi, Jr., J., LeQuang, J., Varrassi, M.,
Breve, F., Magnusson, P., Varrassi, G.,(2023). What Do We Need to
Know About Rising Rates of Idiopathic Pulmonary Fibrosis? A
Narrative Review and Update. Springer Nature, Published online 2023
Jan 24. doi: 10.1007/s12325-022-02395-9.
View original content to download
multimedia:https://www.prnewswire.com/news-releases/aileron-therapeutics-announces-acquisition-of-lung-therapeutics-301973050.html
SOURCE Aileron Therapeutics, Inc.
