🔒Rallybio sells interest in drug program in deal worth up to $25M

Rallybio Corp., a New Haven-based biotechnology company developing therapies for rare diseases, said Tuesday it has agreed to sell one of those therapies to Utah-based Recursion Pharmaceuticals for up to $25 million. According to the agreement, Rallybio will sell its interest in REV102, a therapy in preclinical development to treat patients with hypophosphatasia (HPP), a rare bone disease, for up to $25 million, including an upfront equity payment of $7.5 million. The REV102 program originated from a joint venture between Rallybio and Recursion that was focused on developing novel, orally available small molecule inhibitors of ENPP1 to treat HPP. The lead candidate from the joint venture, REV102, entered into Investigational New Drug (IND)-enabling studies earlier this year. Under terms of the agreement, Rallybio is eligible to receive certain payments, including $7.5 million in upfront equity, a contingent equity payment of $12.5 million upon the initiation of additional preclinical studies, and a $5 million milestone payment following the initiation of dosing in a Phase 1 clinical study. Rallybio is also eligible to receive low single-digit royalties on all future net sales by Recursion. In addition, Rallybio may be eligible to receive certain payments in the event Recursion sells the REV102 program. With the upfront payment, Rallybio said it expects its cash runway to extend into mid-2027. Rallybio CEO Dr. Stephen Uden said divesting the REV102 program enables his company to sharpen its focus “on strategically advancing our pipeline in ways that leverage our drug development expertise.” Based in Salt Lake City, Utah, Recursion Pharmaceuticals is an artificial intelligence-based company that uses machine learning to assist with discovering new drug therapies. News of the agreement boosted Rallybio’s stock, which trades on the Nasdaq stock exchange under the symbol RLYB. The stock closed Monday at 33 cents per share but was trading at 58 cents per share, up more than 70%, Tuesday morning after the market opened. The bioscience company’s stock has been at risk of being delisted from Nasdaq since February, when the company informed federal regulators that it had received a letter from the Nasdaq listing qualifications department stating the closing bid price for Rallybio’s common stock was below the minimum $1 per share during the previous 30 consecutive business days required by the market’s rules. In April, Rallybio announced it had discontinued development of RLYB212, a therapy intended to prevent a rare immune disorder in fetuses and newborns. RallyBio also has significantly reduced its workforce over the past two years. According to its annual reports, the company had 43 full-time employees as of Dec. 31, 2023, which was reduced to 25 full-time employees by the end of last year. In May, it announced plans to cut another 40% of its workforce while reporting a first-quarter net loss of $9.46 million, or 21 cents per share, a significant improvement from a net loss of $19.12 million, or 47 cents per share, a year earlier.