Following Restructure, Tocagen Enters into Reverse Merger with Forte
After slashing 65% of its workforce and initiating a corporate restructuring in the fall of 2019, Tocagen, Inc. announced it was merging with privately-held Forte Biosciences, Inc. The reverse merger is an all-stock transaction, the company said in its announcement.
The new company will use Forte’s name and begin to trade on the Nasdaq under the ticker symbol FDBR. Shares of San Diego-based Tocagen fell slightly late Thursday following the announcement. The merged company will focus on advancing Forte's clinical program in inflammatory skin diseases, including atopic dermatitis.
Marty Duvall, chief executive officer of Tocagen, said following an extensive review of options for his company, the merger with Forte is in the best interest of company stakeholders. Last year, Tocagen was crushed when its Phase III brain cancer treatment failed. The treatment did not stand up to the current standard-of-care in patients with recurrent high-grade glioma undergoing resection.
“The strength and dedication of the Forte leadership team, combined with their highly differentiated technology platform and enthusiastic support from leading clinicians, provides a compelling foundation for future success for all stakeholders, and they have our full support,” Duvall said in a statement.
Forte's lead asset, FB-401, is a potentially first-in-class, live biotherapeutic being developed as a topical therapy for the treatment of inflammatory skin diseases, including atopic dermatitis. In a Phase I/IIa trial in adult and pediatric patients, FB-401 demonstrated significant efficacy and a favorable safety and tolerability profile. The full trial results will be submitted for publication in a peer-reviewed journal in the first half of 2020. A randomized Phase II trial is expected to begin later this year in adults and pediatrics with atopic dermatitis. Forte anticipated an expected data readout from this trial in mid-2021.
In addition to the news of the reverse merger, the companies said an investor syndicate including Alger, BVF Partners LP and OrbiMed, have agreed to invest $14 million into the company. The funds will be used to further development of the combined company's clinical programs, including lead asset FB-401. The total cash balance of the combined company following the closing of the merger and financing is expected to be approximately $25 million.
Paul Wagner, president and CEO of Forte Biosciences, said the merger positions the combined companies to become a “global leader in inflammatory skin diseases.” The $14 million infusion of cash, Wagner said, will help the new company advance its pipeline towards regulatory approval and potential commercial launch.
“Our team and advisors are committed to providing new treatment options, particularly for pediatrics with atopic dermatitis, for which few treatment options exist, and we look forward to delivering on this as we advance through development,” Wagner said in a statement.
When the companies fully merge, Wagner will helm the new company, which will be located in Torrance, Calif. The board of directors is expected to be composed of eight members, with six members designated by Forte, including current Forte board members Lawrence F. Eichenfield and Wagner, and two members designated by Tocagen.
Under terms of the merger agreement, shareholders of Tocagen will own approximately 25.5% of the combined company and Forte’s stakeholders will own the remaining 74.5%.