New biotech Avere plots listing via NextCure merger

New biotech Avere Therapeutics has taken a fast-track to becoming a publicly listed company by merging with NextCure, with a related private placement adding $320 million in funding for its lead psoriasis drug.

The merger will see the two companies combine and emerge under the Avere name with a pipeline headed by once-weekly oral IL-23 antagonist AVR-001, which has been licensed from Chinese biotech Hansoh. Hansoh has completed a phase 1b trial in moderate-to-severe plaque psoriasis in China and has now started a phase 2b study.

Avere has licensed ex-Greater China rights to AVR-001 in return for upfront payments to Hansoh of $120 million, plus up to $2.18 billion in development and sales milestones.

NextCure listed on the Nasdaq in 2019, when it was focused on the development of a pair of cancer immunotherapies targeting Siglec-15 and LAIR-F2 and had a sizeable drug discovery partnership in place with Eli Lilly aimed at finding new oncology targets.

Its fortunes turned soon thereafter, however, as Lilly exited the pact in January 2020, and both in-house programmes suffered setbacks in clinical trials and were discontinued, along with various other additions to its pipeline. That left it with a pair of early-stage antibody-drug conjugates for cancer, and it ended the first quarter of this year with cash reserves of less than $30 million.

The merger gives Avere a simple route to a Nasdaq listing and a swift opportunity to raise the cash it needs to accelerate the development of AVR-001 outside China.

The planned private placement should fund a phase 2b trial of the drug in psoriasis, due to start in the first quarter of next year and read out in the first half of 2028, as well as a phase 3 programme in psoriasis and a phase 2b study in follow-up indication ulcerative colitis.

IL-23 is a well-established target in immunological and inflammatory (I&I) diseases, with a string of approved, injectable antibody-based therapies for psoriasis and inflammatory bowel disease (IBD), and one once-daily oral therapy, namely Bristol Myers Squibb's Sotyktu (deucravacitinib). Avere thinks AVR-001's oral, weekly dosing could give it an edge in the market.

Once the merger completes – expected before the end of this year – Avere will trade on the Nasdaq under the AVRX symbol, and NextCure's NXTC symbol will be discontinued. Shares in the latter company shot up almost 180% today on news of the Avere deal.

The combined company will be led by Avere's chief executive, Andrew Cheng, who led the executive team behind Akero Therapeutics, which was bought by Novo Nordisk for $4.7 billion last year.

"We have a clear line of sight to potentially value-generating clinical data and the resources to execute our plans," said Cheng in a statement.