Reneo Pharmaceuticals, Inc. (NASDAQ:RPHM) shares initially traded higher Monday before turning negative after the company announced a proposed merger with OnKure, Inc.
The Details: Reneo and Onkure announced Monday that they have entered into a definitive merger agreement to combine the two companies in an all-stock transaction.
The resulting company, expected to operate as OnKure Therapeutics, will focus on advancing OnKure's products targeting oncogenic mutations in phosphoinositide 3-kinase alpha. This includes OnKure's lead program OKI-219.
"OnKure has an experienced team of drug developers, and we are excited about the potential for OKI-219 to become a meaningful treatment option for patients suffering from breast cancer," said Mike Grey, executive chairman of Reneo Pharmaceuticals.
In connection with the agreement, Reneo Pharmaceutics has entered into a subscription agreement for $65 million in private investment in public equity (PIPE) with a group of institutional investors, including Acorn Bioventures, Cormorant Asset Management, Deep Track Capital, Perceptive Advisors, Samsara BioCapital, Surveyor Capital and Vestal Point Capital.
Including PIPE proceeds, the combined company is expected to hold about $120 million of cash, cash equivalents and short terms investments at closing.
Pre-merger Reneo stockholders are anticipated to hold about 31% of the combined company's shares, while pre-merger OnKure stockholders are expected to own approximately 69%.
The merger and PIPE agreement are subject to approval by stockholders of both companies, the effectiveness of a registration statement to be filed with the U.S. Securities and Exchange Commission and the condition that Reneo Pharmaceuticals has at least $55 million in net cash excluding the PIPE agreement. The transactions are expected to close later this year.
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RPHM Price Action: Reneo Pharmaceuticals shares were down 10.8% at $1.61 at the time of writing, according to Benzinga Pro.
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