Merger to create a Nasdaq-listed genetic
medicines company focused on advancing Korro Bio’s wholly owned
portfolio of RNA editing programs
Lead program is a disease modifying therapy for
patients with alpha-1 antitrypsin deficiency (AATD), with
preclinical data showing an increase of normal A1AT protein to 85%
of total protein in circulation
Combined company is expected to have cash
balance of approximately $170 million at close, which is expected
to provide cash runway through several value-creating milestones
and into 2026
Companies to host conference call today at 8:30
a.m. ET
Korro Bio, Inc., a leading RNA editing company focused on the
discovery and development of novel genetic medicines, and Frequency
Therapeutics, Inc. (Nasdaq: FREQ) today announced that they have
entered into a definitive merger agreement to combine the companies
in an all-stock transaction. The combined company will focus on the
advancement of Korro Bio’s portfolio of RNA editing programs, is
expected to operate under Korro Bio, Inc. and will apply to trade
on Nasdaq under the ticker symbol “KRRO”.
Korro Bio has secured commitments from a syndicate of leading
life sciences investors for a planned concurrent $117 million
financing, co-led by Surveyor Capital (a Citadel company) and
Cormorant Asset Management and participation from Atlas Venture,
NEA, Platanus, Qiming Venture Partners USA, MP Healthcare Venture
Management, Eventide Asset Management, Fidelity Management &
Research Company LLC, Invus, Point72, Verition Fund Management,
Monashee Investment Management, Sixty Degree Capital and additional
investors. The financing is expected to close immediately prior to
the completion of the merger. The combined company is expected to
have approximately $170 million in cash, cash equivalents and
marketable securities at close after estimated transaction
expenses. The pro-forma cash balance is expected to provide cash
runway through several value-creating milestones and into 2026. The
merger and related financing are expected to close in the fourth
quarter of 2023, subject to approval by Frequency Therapeutics’
stockholders and other customary closing conditions.
“RNA editing, specifically utilizing our OPERA™ platform, holds
significant promise to transform the therapeutic landscape for rare
and common diseases. The ability to make a single base change on
RNA using a simple drug product provides an opportunity to modify
disease in an unprecedented manner,” said Ram Aiyar, PhD, Chief
Executive Officer of Korro Bio. “The power of our OPERA platform is
exemplified by our lead program in AATD, where we have demonstrated
an increase of normal A1AT protein to 85% of total protein in
circulation, which has the potential of disease-modifying effects.
We are committed to creating value for Korro Bio’s and Frequency
Therapeutics’ stockholders as we work to develop a novel class of
innovative medicines that have the potential to improve the lives
of patients.”
Korro Bio is rapidly advancing its lead program for AATD to a
clinical trial and intends to submit a regulatory filing in the
second half of 2024. AATD is an inherited disease that results from
a single genetic defect that manifests itself as a broad spectrum
of clinical pathologies. A majority of the patients are diagnosed
later in life, having multiple clinical effects including liver
disease and lung disease, eventually leading to organ transplant in
some cases. Studies suggest that clinical unawareness of AATD
results in a significant number of patients that go undiagnosed or
misdiagnosed with approximately 100,000 patients in the U.S.
currently identified with AATD. Korro Bio’s lead program is focused
on precisely and transiently editing the genetic mutation in RNA
rather than permanently altering DNA. Korro Bio has also
demonstrated the ability to edit within the coding region of the
SERPINA1 gene showing translation from the PiZ mouse model to
non-human primates.
“Following comprehensive review and consideration of our
strategic options, management and our Board of Directors believe
the merger with Korro Bio provides the best opportunity for the
company and its stockholders,” said David. L. Lucchino, Chief
Executive Officer of Frequency Therapeutics. “Korro Bio’s RNA
editing technology leverages genetics transiently, expanding the
target space to intervene in biology in a unique manner. We are
confident in their ability to bring forward important genetic
medicines with the potential to transform the lives of
patients.”
Korro Bio’s proprietary RNA editing platform enables a breadth
of indications with an initial focus on six potential programs that
are all wholly owned, including AATD.
“This transformative transaction enables us to take our lead
program in AATD into the clinic and progress our pipeline,” said
Vineet Agarwal, Chief Financial Officer of Korro Bio. “In addition,
we will be able to fund our company through several value-creating
milestones into 2026.”
Management and Organization
Following the consummation of the merger, the combined company
will be headquartered in Cambridge, Massachusetts. The combined
company will be led by current members of the Korro Bio management
team, including:
- Ram Aiyar, PhD, President and Chief Executive Officer
- Steve Colletti, PhD, Chief Scientific Officer
- Vineet Agarwal, Chief Financial Officer
- Todd Chappell, Senior Vice President, Strategy and Portfolio
Planning
- Shelby Walker, Senior Vice President, General Counsel
- Venkat Krishnamurthy, PhD, Senior Vice President, Head of
Platform
- Stephanie Engels, Senior Vice President, HR, People and
Culture
The Board of Directors of the combined company is expected to be
comprised of seven members, consisting of four members designated
by Korro Bio, one member designated by Frequency Therapeutics,
which will be Frequency’s Chief Executive Officer, David L.
Lucchino, and two independent directors. In connection with this
transaction, Alex Silverstein from Point72 and Jordan Baumhardt,
PhD from Eventide Asset Management will resign from their director
roles from the Korro Bio Board of Directors with immediate
effect.
About the Proposed Merger
Pre-merger Frequency Therapeutics stockholders are expected to
own approximately 8% of the combined company and pre-merger Korro
Bio stockholders (including those purchasing Korro Bio shares in
the private financing discussed above) are expected to own
approximately 92% of the combined company. Under the terms of the
merger agreement, stockholders of Korro Bio will receive newly
issued shares of Frequency Therapeutics common stock pursuant to a
formula set forth in the merger agreement. The percentage of the
combined company that Frequency Therapeutics stockholders will own
upon the closing of the merger is further subject to adjustment
based on the amount of Frequency Therapeutics’ net cash at the time
of closing.
Frequency Therapeutics has discontinued development of its
remyelination program for Multiple Sclerosis as it explores
strategic alternatives for the program. If Frequency Therapeutics
has not otherwise monetized its remyelination program for Multiple
Sclerosis prior to the closing of the proposed merger, Frequency
Therapeutics stockholders of record will be issued a contingent
value right (CVR) for each outstanding share of Frequency
Therapeutics common stock held by such Frequency Therapeutics
stockholder prior to the closing of the proposed merger. The CVR
would represent the right to receive certain cash payments from
proceeds received by Frequency Therapeutics related to its
remyelination program for Multiple Sclerosis that is in preclinical
development.
The merger agreement has been unanimously approved by the boards
of directors of both companies. Additional information about the
transaction will be provided in a Current Report on Form 8-K that
will be filed by Frequency Therapeutics with the Securities and
Exchange Commission (SEC) and will be available at www.sec.gov.
Conference Call Information
Korro Bio and Frequency Therapeutics will host a conference call
today, July 14, 2023, at 8:30 a.m. ET, to discuss the proposed
merger.
A live webcast of the conference call can be accessed at the
“Events and Presentations” page on the Frequency Therapeutics
website at
https://investors.frequencytx.com/events-and-presentations. A
replay will be available on the Frequency Therapeutics website at
the same link shortly after conclusion of the event.
Advisors
J.P. Morgan Securities LLC is serving as exclusive financial
advisor to Korro Bio and lead placement agent on Korro Bio’s
planned concurrent financing. Goodwin Procter LLP is serving as
legal counsel. BofA Securities, Piper Sandler and RBC Capital
Markets are also serving as placement agents for Korro Bio’s
planned concurrent financing and Davis Polk & Wardwell LLP is
serving as the placement agents’ legal counsel. TD Cowen is acting
as exclusive financial advisor to Frequency Therapeutics and Latham
& Watkins LLP is serving as Frequency Therapeutics’ legal
counsel.
About Korro Bio
Korro Bio is an RNA editing company focused on the discovery and
development of a new class of precision genetic medicines for both
rare and highly prevalent diseases. RNA editing is a natural
physiological process that occurs in cells, including a mechanism
mediated by an enzyme called Adenosine Deaminase Acting on RNA
(ADAR). Korro Bio’s RNA editing approach involves co-opting this
endogenous editing system via a proprietary engineered
oligonucleotide to introduce precise edits to RNA. This unique
technology enables the development of therapeutic candidates that
deliver the functional benefits of gene therapy with a transient,
titratable and specific treatment regimen, offering the potential
to advance genetic medicines beyond rare genetic diseases into
larger patient populations with common diseases. Korro Bio is based
in Cambridge, Mass. For more information, visit korrobio.com.
About OPERA
Korro Bio’s proprietary platform, OPERA™ (Oligonucleotide Promoted Editing of RNA),
builds on a deep understanding of ADAR biology, and combines oligo
discovery, chemistry and data-driven design with clinically
validated delivery vehicles, to achieve highly selective RNA
editing product candidates. OPERA is designed to enable the precise
repair and modulation of disease-causing mutations and protein
function to provide new possibilities for treating diseases in
which progress with existing technologies has been slow to
materialize.
About Korro Bio’s lead program in AATD
AATD is an inherited genetic disorder that can cause severe
progressive lung and liver disease due to a lack of normal alpha-1
antitrypsin protein (A1AT). Korro Bio’s AATD product candidate is a
proprietary oligonucleotide that uses an established lipid
nanoparticle (LNP) based delivery system administered intravenously
to restore production of normal functional A1AT to liver
hepatocytes. The oligonucleotide drug product co-opts the naturally
occurring ADAR pathway, repairing disease-related mutations and
restoring production of normal A1AT. Korro Bio believes this will
provide clinically differentiated benefit for both liver and lung
function in affected individuals. Proof of concept has been shown
in preclinical models, and studies in mice and non-human primates
demonstrated high editing efficiency and expression of functional
A1AT protein to support potential modification of disease
progression. Korro Bio intends to submit a regulatory filing in the
second half of 2024.
About Korro Bio’s portfolio of programs
Korro Bio has demonstrated that single RNA changes can disrupt
protein-protein interactions, prevent protein aggregation,
selectively modulate ion channels, and activate kinases. These
modulation approaches have the potential to unlock validated target
classes that have historically been difficult to drug, enabling
Korro Bio to pursue a broad range of diseases, including those with
high prevalence and large market opportunities. Korro Bio’s wholly
owned, early-stage pipeline targets several diseases such as
Parkinson’s disease, severe alcoholic hepatitis, amyotrophic
lateral sclerosis, subsets of pain, and cardiometabolic
disease.
About Frequency Therapeutics
Headquartered in Lexington, Mass., Frequency Therapeutics is
pioneering a new category in regenerative medicine that aims to
restore human function by developing therapeutics that activate a
person’s innate regenerative potential within the body through the
activation of progenitor cells. Frequency Therapeutics’ lead
preclinical program is designed to activate oligodendrocyte
precursor cells with the goal of driving remyelination and
potential functional recovery for individuals living with multiple
sclerosis. For more information, visit www.frequencytx.com and
follow Frequency on Twitter @Frequencytx.
Cautionary Note on Forward-Looking Statements
Certain statements contained in this press release may be
considered forward-looking statements within the meaning of the
U.S. Private Securities Litigation Reform Act of 1995, including
statements regarding the concurrent financing, the combined
company’s expected cash, cash equivalents and marketable securities
and their sufficiency to achieve value-creating milestones and fund
operations into 2026, the listing of the combined company on
Nasdaq, the proposed transaction involving Frequency Therapeutics
and Korro Bio the including the conditions to, and timing of,
closing of the proposed transaction, the location and management of
the combined company, the percentage ownership of the combined
company, the CVR, and the parties’ ability to consummate the
proposed transaction, the potential of RNA editing, the development
and treatment potential of Korro Bio’s approach and its OPERA
platform, AATD program, and timing development and regulatory
matters therefor, among others. Forward-looking statements
generally include statements that are predictive in nature and
depend upon or refer to future events or conditions, and include
words such as “may,” “will,” “should,” “would,” “expect,”
“anticipate,” “plan,” “likely,” “believe,” “estimate,” “project,”
“intend,” and other similar expressions among others. Statements
that are not historical facts are forward-looking statements.
Forward-looking statements are based on current beliefs and
assumptions that are subject to risks and uncertainties and are not
guarantees of future performance. Actual results could differ
materially from those contained in any forward-looking statement as
a result of various factors, including, without limitation: (i) the
risk that the conditions to the closing of the proposed transaction
are not satisfied, including the failure to timely or at all obtain
stockholder approval for the proposed transaction or the failure to
timely or at all obtain any required regulatory clearances; (ii)
uncertainties as to the timing of the consummation of the proposed
transaction and the ability of each of Frequency Therapeutics and
Korro Bio to consummate the proposed transaction; (iii) the ability
of Frequency Therapeutics and Korro Bio to integrate their
businesses successfully and to achieve anticipated synergies; (iv)
the possibility that other anticipated benefits of the proposed
transaction will not be realized, including without limitation,
anticipated revenues, expenses, earnings and other financial
results, and growth and expansion of the combined company’s
operations, and the anticipated tax treatment of the combination;
(v) potential litigation relating to the proposed transaction that
could be instituted against Frequency Therapeutics, Korro Bio or
their respective directors; (vi) possible disruptions from the
proposed transaction that could harm Frequency Therapeutics’ and/or
Korro Bio’s respective businesses; (vii) the ability of Frequency
Therapeutics and Korro Bio to retain, attract and hire key
personnel; (viii) potential adverse reactions or changes to
relationships with customers, employees, suppliers or other parties
resulting from the announcement or completion of the proposed
transaction; (ix) potential business uncertainty, including changes
to existing business relationships, during the pendency of the
proposed transaction that could affect Frequency Therapeutics’ or
Korro Bio’s financial performance; (x) certain restrictions during
the pendency of the proposed transaction that may impact Frequency
Therapeutics’ or Korro Bio’s ability to pursue certain business
opportunities or strategic transactions; (xi) legislative,
regulatory and economic developments; (xii) unpredictability and
severity of catastrophic events, including, but not limited to,
acts of terrorism or outbreak of war or hostilities, as well as
management’s response to any of the aforementioned factors; and
(xiv) such other factors as are set forth in Frequency
Therapeutics’ periodic public filings with the SEC, including but
not limited to those described under the heading “Risk Factors” in
Frequency Therapeutics’ Form 10-Q for the fiscal year ended March
31, 2023. Frequency Therapeutics and Korro Bio can give no
assurance that the conditions to the proposed transaction will be
satisfied. Except as required by applicable law, Frequency
Therapeutics and Korro Bio undertake no obligation to revise or
update any forward-looking statement, or to make any other
forward-looking statements, whether as a result of new information,
future events or otherwise.
Important Additional Information
In connection with the proposed transaction, Frequency
Therapeutics intends to file with the SEC a registration statement
on Form S-4 that will include a proxy statement of Frequency and
that will constitute a prospectus with respect to shares of
Frequency Therapeutics’ common stock to be issued in the proposed
transaction (Proxy Statement/Prospectus). Frequency Therapeutics
may also file other documents with the SEC regarding the proposed
transaction. This document is not a substitute for the Proxy
Statement/Prospectus or any other document which Frequency
Therapeutics may file with the SEC. INVESTORS, KORRO BIO
STOCKHOLDERS AND FREQUENCY THERAPEUTICS STOCKHOLDERS ARE URGED TO
READ THE PROXY STATEMENT/PROSPECTUS AND ANY OTHER RELEVANT
DOCUMENTS THAT ARE OR WILL BE FILED BY FREQUENCY WITH THE SEC, AS
WELL AS ANY AMENDMENTS OR SUPPLEMENTS TO THESE DOCUMENTS, CAREFULLY
AND IN THEIR ENTIRETY BECAUSE THEY CONTAIN OR WILL CONTAIN
IMPORTANT INFORMATION ABOUT THE PROPOSED TRANSACTION AND RELATED
MATTERS. Investors, Korro Bio stockholders and Frequency
Therapeutics stockholders will also be able to obtain free copies
of the Proxy Statement/Prospectus (when available) and other
documents containing important information about Frequency
Therapeutics, Korro Bio and the proposed transaction that are or
will be filed with the SEC by Frequency Therapeutics through the
website maintained by the SEC at www.sec.gov. Copies of the
documents filed with the SEC by Frequency Therapeutics will also be
available free of charge on Frequency Therapeutics’ website at
https://frequencytx.gcs-web.com/sec-filings or by contacting
Frequency Therapeutics’ investor relations department by email at
investorrelations@frequencytx.com or by directing a written request
to Frequency Therapeutics, Inc., 75 Hayden Avenue, Suite 300
Lexington, MA 02421.
No Offer or Solicitation
This communication is not intended to and shall not constitute
an offer to sell or the solicitation of an offer to buy or sell any
securities or a solicitation of any vote or approval, nor shall
there be any sale of securities in any jurisdiction in which such
offer, solicitation or sale would be unlawful prior to registration
or qualification under the securities laws of any such
jurisdiction. No offer of securities shall be made except by means
of a prospectus meeting the requirements of Section 10 of the
Securities Act of 1933, as amended.
Participants in the Solicitation
Frequency Therapeutics and certain of its directors and
executive officers may be deemed under SEC rules to be participants
in the solicitation of proxies of Frequency Therapeutics'
stockholders in connection with the proposed transaction.
Information regarding the persons who may, under SEC rules, be
deemed participants in the solicitation of proxies to Frequency
Therapeutics’ stockholders in connection with the proposed
transaction will be set forth in the Proxy Statement/Prospectus on
Form S-4 for the proposed transaction, which is expected to be
filed with the SEC by Frequency. Investors and security holders of
Korro Bio and Frequency Therapeutics are urged to read the Proxy
Statement/Prospectus and other relevant documents that will be
filed with the SEC by Frequency Therapeutics carefully and in their
entirety when they become available because they will contain
important information about the proposed transaction. Frequency
Therapeutics’ stockholders will be able to obtain free copies of
the Proxy Statement/Prospectus (when available) and other documents
containing important information about Frequency Therapeutics,
Korro Bio and the proposed transaction that are or will be filed
with the SEC by Frequency through the website maintained by the SEC
at www.sec.gov. Copies of the documents filed with the SEC by
Frequency Therapeutics will also be available free of charge on
Frequency Therapeutics’ website at
https://frequencytx.gcs-web.com/sec-filings or by contacting
Frequency Therapeutics’ investor relations department by email at
investorrelations@frequencytx.com or by directing a written request
to Frequency Therapeutics, Inc., 75 Hayden Avenue, Suite 300
Lexington, MA 02421.
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Korro Bio Information
Investors IR@korrobio.com
Media Glenn Silver FINN Partners
Glenn.silver@finnpartners.com
Frequency Therapeutics Information
Investor and Media Contact Frequency Therapeutics Email:
investors@frequencytx.com
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