Privately held Ocugen Inc. and publicly held Histogenics Corp. have entered a definitive merger agreement to create a publicly traded, clinical-stage biopharmaceutical company using Ocugen as its name, with a focus on eye diseases.

Stockholders will share in the proceeds to the sale of the assets of Histogenics' discontinued Neocart project, its sole clinical candidate, a knee cartilage repair candidate that stalled in late December after a phase III study missed statistical significance on the primary endpoint of response at one year. The FDA said the results would not support a BLA application and that another phase III study was needed. Since then, the company restructured itself and looked for a deal.

The newly created Ocugen, to be based in Malvern, Pa., will create a "clinical-stage company developing a diverse pipeline of novel small molecules, gene therapies and biologics for ocular diseases," Adam Gridley, Histogenics president and CEO said in a Monday morning call.

"When the deal is closed, we will trade under the Nasdaq symbol of OCGN," Kelly Beck, Ocugen's vice president of investor relations and administration, told BioWorld. "We plan to file a Form S-4 in May, which will provide an update on the company at that time."

The transaction, which has been unanimously approved by both boards, is expected to close in either the second or third quarter of 2019. Histogenics stock (NASDAQ:HSGX) closed up 56% for the day Monday at 17 cents per share. The stock's decline has been dramatic, though. On April 9, 2018, the stock closed at $2.73 per share. On Sept. 5, shares fell $2.77 to 76 cents each.

The merger is a stock-for-stock transaction. Once it closes, former Ocugen stockholders will hold about 90% of the outstanding shares of the combined company's common stock, and Histogenics stockholders will retain an ownership interest representing approximately 10% of the outstanding shares.

Broad pipeline

Ocugen is focused on its modifier gene therapy platform, designed to treat a variety of inherited retinal diseases with a single gene therapy replacement.

"We have developed a broad pipeline, which includes OCU-300, an orphan drug candidate for ocular graft-vs.-host disease, and OCU-310 for dry eye disease," said Ocugen CEO, chairman and co-founder Shankar Musunuri. He also listed the company's "modifier gene therapy platform and OCU-400, a gene augmentation therapy for patients with inherited retinal diseases caused by mutations in the NR2E3 gene, which recently received orphan drug designation (ODD) from the FDA. We've also made preclinical progress toward our retinal disease programs, which includes novel biologic therapies for wet-age-related macular degeneration, diabetic macular edema and diabetic retinopathy, as well as for retinitis pigmentosa."

The phase III OCU-300 study of brimonidine tartrate nanoemulsion eye drops is being conducted in patients with ocular graft-vs.-host disease (oGVHD). In August 2017, OCU-300 received orphan drug designation from the FDA. Currently, there are no FDA-approved products for the prevention or treatment of oGVHD.

The interventional, randomized, placebo-controlled trial began in September 2018 and is expected to conclude this January.

Ocular GVHD occurs in 40% to 60% of patients who have undergone allogenic bone marrow transplants. With inflammation, oGVHD may damage the ocular surface and tear-producing glands, which can eventually significantly diminish a patient's quality of life due to visual impairments such as blurry vision, foreign body sensation, burning sensation, severe light sensitivity, chronic conjunctivitis, dry eyes and eye pain.

The phase III OCU-310 study in dry eye disease (DED) began in December 2018. Ocugen said it has completed the trial and is waiting for a full dataset. The study, a randomized, placebo-controlled, double-masked, multicenter, safety and efficacy study of brimonidine tartrate 0.2% nanoemulsion eye, has recruited 240 participants at 25 centers. DED is an ocular disorder involving the aberrant product and instability of tear film, which results in damage to the ocular surface. Estimates put the number of Americans ages 50 and older with DED at nearly 5 million. Those patients are likely to experience anxiety and depression.

OCU-400 received ODD in February and consists of an adeno-associated virus serotype 5 capsid containing the gene NR2E3. It is Ocugen's first program based on its modifier gene therapy platform. Ocugen plans to initiate a phase I/IIa clinical study for OCU-400 this year.

OCU-410, currently in preclinical development, is a second in-line modifier gene therapy being developed for the treatment of dry age-related macular degeneration. It uses an AAV delivery platform for retinal delivery of the RAR-related orphan receptor A gene.

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