Lenz Therapeutics is absorbing sickle-cell-focused Graphite Bio in a reverse merger that will see the combined company reemerge with a focus on vision loss and $225 million in cash on hand at close.

The merger marks an end for Graphite Bio, which launched in 2020 touting new technology for gene editing. In January, the biotech’s sickle cell “cure” hit a major roadblock when the first patient dosed with the sickle cell treatment nulabeglogene autogedtemcel (nula-cel) experienced a serious adverse event. The therapy was eventually scrapped, and Graphite sought strategic alternatives.

That’s where Lenz comes in. The ophthalmic pharmaceutical company is developing the eye drops LNZ100 and LNZ101 for presbyopia, or near vision loss. The drops contain aceclidine and aceclidine plus brimonidine, respectively.

“Graphite Bio ran a thorough and strategic process and we believe that this transaction represents the company’s commitment to delivering value to the Graphite stockholders,” Kim Drapkin, CEO of Graphite Bio, said in a Wednesday release. “LENZ Therapeutics is strongly positioned with a phase 3 lead program, addressing a very large target market with near-term, high potential, value-inflecting milestones and a well-credentialed management team to lead the combined company.”

Graphite also entered into a subscription agreement for a PIPE financing of $53.5 million that is expected to close along with the merger. The funding included a syndicate of Lenz’s existing investors and new investors. Investors in the combined entity will include Versant Ventures, RA Capital Management, Alpha Wave Global, Point72, Samsara BioCapital, Sectoral Asset Management and RTW Investments.

Graphite will bring $115 million to the combined entity and will pay a dividend to its shareholders of about $60 million upon deal close. The biotech’s shareholders will own 35% of the new company while pre-merger Lenz stockholders will own 65% upon closure of the merger and before the PIPE financing.

The deal will bring Lenz public, trading under the same name. The merger is subject to approval of stockholders but has already been cleared by each company’s board. Net proceeds from the deal are expected to allow the newly combined company to continue to build infrastructure and commercialize the two lead candidates. The drops are currently in phase 3 testing.

“This pivotal change comes at an important time for the company as we gear up for the readout of the Phase 3 CLARITY trials in the second quarter of 2024,” said Eef Schimmelpennink, Lenz CEO.

The deal is expected to close in the first quarter of 2024. Schimmelpennink will lead the newly combined company along with her existing management team.

About PackGene

PackGene is a CRO & CDMO technology company that specializes in packaging recombinant adeno-associated virus (rAAV) vectors. Since its establishment in 2014, PackGene has been a leader in the AAV vector CRO service field, providing tens of thousands of custom batches of AAV samples to customers in over 20 countries. PackGene offers a one-stop CMC solution for the early development, pre-clinical development, clinical trials, and drug approval of rAAV vector drugs for cell and gene therapy (CGT) companies that is fast, cost-effective, high-quality, and scalable. Additionally, the company provides compliant services for the GMP-scale production of AAVs and plasmids for pharmaceutical companies, utilizing five technology platforms, including the π-Alpha 293 cell AAV high-yield platform and the π-Omega plasmid high-yield platform. PackGene's mission is to make gene therapy affordable and accelerate the launch of innovative gene drugs. The company aims to simplify the challenging aspects of gene therapy development and industrialization processes and provide stable, efficient, and economical rAAV Fast Services to accelerate gene and cell therapy development efforts from discovery phase to commercialization.

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