2020-10-05| M&A

Chinook Therapeutics Completes Merger with Aduro BioTech Inc.

by Eduardo Longoria
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By Eduardo Longoria

Aduro BioTech, Inc., (ADRO), a clinical-stage biopharmaceutical company, focuses on treating diseases through the discovery, development, and commercialization of therapies that harness the body’s natural immune system. On October 1st, its stockholders approved a merger with Chinook therapeutics, a biopharma that develops precision medicines for kidney diseases with particular emphasis on rare and severe disorders.

Currently, Chinook has assets such as atrasentan, an investigational phase 3-ready endothelin receptor antagonist in development for the treatment of IgA nephropathy, and CHK-336, a preclinical development candidate for undisclosed ultra-orphan kidney disease. Through this merger, it will add BION-1301, an investigational anti-APRIL monoclonal antibody currently in Phase 1b trial for IgA nephropathy, to its pipeline.


Completion of Merger

Today, it announced the closing of its merger with Aduro Biotech, Inc. and $115 million private placement financing. The combined company, known as Chinook Therapeutics, will start trading under the ticker “KDNY” from October 6th. Chinook, which operates from in Vancouver, British Columbia, and Seattle, Washington, is backed by existing investors such as Versant Ventures, Apple Tree Partners, and Samsara BioCapital, who purchased $25 million in Chinook common stock on the same terms as the new investors.

The $115 million private placement financing includes participation from new investors EcoR1 Capital, OrbiMed Advisors, funds managed by Rock Springs Capital, Fidelity Management and Research Company LLC, Avidity Partners, Surveyor Capital (a Citadel company), Ally Bridge Group, Monashee Investment Management LLC, Northleaf Capital Partners, Janus Henderson Investors, Sphera Biotech and other top-tier healthcare investors. All in all, Chinook now has over $275 million in operating capital to advance its kidney disease programs. Aduro’s board of directors effected a 1:5 reverse split of its common stock (a canceling of outstanding shares in exchange for 1/5 as many shares worth 5x more) on the Nasdaq Global Select Market. The announcement of this action on October 1st was probably responsible for the rise in its stock price from $12.20 to $14.50 by the closing bell on October 2nd. On Friday end, the approximate price was maintained at $14.01.

Reverse stock splits are not only responsible for price increases but also can be used to increase earnings per share and meet the minimum requirement to be registered on an exchange. Aduro’s price per share was $2.86 at the close of business on October 1st and was lesser than the minimum $4.00 per share requirement to be listed on Nasdaq. The reverse split resulted in a value exceeding that minimum upwards of $10.00. Aduro can now take full advantage of the market expectations created by this merger and will trade at a premium. Aduro’s stock growth is despite the somewhat disconcerting fact that its CEO, Stephen T. Isaacs, sold 32,481 shares of the firm’s stock in a transaction on September 15th at an average price of $2.39, for a total transaction of $77,629.59. Following this transaction, he now directly owns 279,166 shares of the company’s stock, valued at approximately $667,206.74. The sale was disclosed in a document filed with the SEC. Following the CEO’s example, insider Blaine Templeman sold 12,369 shares for a total transaction of $29,561.91 and now directly owns 121,916 shares valued at $291,379.24. In the last three months, insiders sold 47,246 shares of the company stock worth $112,918. Insiders own 5.90% of the company’s stock.

Chinook CEO Eric Dobmeier describes the merger as “a unique opportunity for Chinook to build a leading company in the kidney disease space”. In exchange for 50% of its stock, Aduro has acquired 100% of Chinook. With its new headquarters in Seattle, the newly expanded Chinook therapeutics will be able to launch itself forward into the kidney disease space.

Editor: Rajaneesh K. Gopinath, Ph.D.

Related Article: Nestlé to Acquire Aimmune Therapeutics in a $2.6 Billion Merger Agreement



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