Merger: Carisma Therapeutics and Sesen Bio Announce Merger Agreement 

Main highlights: 

• The agreement announcement of Carisma therapeutics and sesen bio.
• Details about the proposed merger.

Sesen Bio and Carisma Therapeutics, a privately held company, are merging with the goal of creating “well-funded” biotech that will operate under the Carisma moniker and develop the use of modified macrophages for the treatment of cancer

According to a Sept. 21 statement, the merger is anticipated to be completed in the following three to four months, at which point the biotech would begin trading on the Nasdaq under the symbol “CARM.”

The Philadelphia-based Carisma has raised $30 million in a funding round timed to the merger proposal from a number of investors, including Big Pharma companies AbbVie and Merck & Co. The transaction and financing are anticipated to close together.

The combined biotech will have around $180 million in cash, equivalents, and marketable securities after accounting for the expected cash from both businesses and the additional $30 million. This sum of money is intended to sustain the business through the year 2024.

Following discussions with the FDA, Sesen, which focuses on tailored fusion protein treatments to treat cancer, has put the brakes on its phase 3 bladder cancer programme. Vicineum, a cutting-edge medicine from the Cambridge, Massachusetts-based biotech, has had its U.S. clinical development halted in order to conserve money.

“This transaction represents the outcome of a thoughtful and careful review of strategic alternatives over the past four months,” said Thomas Cannell, president and chief executive of Sesen. “Carisma’s clinical programmes, management team, and corporate strategy stood out among the 42 bids reviewed.”

In order to treat cancer, the merged business will advance Carisma’s cell therapy platform, which uses modified macrophages and monocytes. Using the company’s chimeric antigen receptor macrophage (CAR-M) platform, individual immune cell targets can be fine-tuned, potentially enabling therapeutic uses outside of oncology.

The CT-0508 CAR-M cell therapy from Carisma is the company’s leading candidate. It is presently being tested in phase 1 clinical trials on patients with advanced HER2+ solid tumours. With the help of a recent agreement with Moderna, in which the biotech received $45 million in funding for the discovery, development, and commercialization of in vivo CAR-M treatments, Carisma is also trying to increase the scope of its cancer pipeline.

According to Steven Kelly, president and CEO of Carisma, the Sesen merger will give Carisma the financial stability it needs to continue developing CT-0508 and cultivating other potent strategic alliances. Once the transaction is complete, Kelly will be the company’s leader. 

Kelly said, “This transaction will give us the financial strength to not only continue the development of our lead candidate, CT-0508 but also to accelerate the growth of our platform and pipeline both inside and outside of the oncology space, as well as to develop additional strong strategic partnerships beyond those we already have with Moderna and Novartis,”

Over the next 18 months, Carisma anticipates a number of catalysts and developmental milestones throughout its clinical initiatives, including:

Additional Phase 1 data readout for CT-0508 with a single-day dose on safety, manufacturing viability, and mechanism of action

Finalization of the technology transfer to Novartis for the anticipated clinical manufacture of the CT-0508 intraperitoneal trial drug for HER2+ peritoneal cancer patients

Patients with HER2+ solid tumours receiving CT-0508 and pembrolizumab in combination: Phase 1 data readout

An IND application was submitted for a novel HER2 CAR-engineered monocyte cell product.

Carisma has well-established strategic partners to support the development of its pipeline in addition to its exclusively licenced proprietary technologies that were created by eminent researchers at the University of Pennsylvania (Penn), including Saar Gill, MD, PhD, an associate professor of medicine at Penn’s Perelman School of Medicine, a fellow co-founder and Carisma’s Chief Scientific Officer, Dr Michael Klichinsky, PharmD, PhD. Moderna and Carisma recently formed strategic cooperation for the research and marketing of in vivo CAR-M treatments for up to 12 cancer target indications.

Carisma got a $45 million upfront cash payment from Moderna as well as an investment from the latter in the form of a $35 million convertible note, which will be converted into shares of the combined company’s common stock in connection with the merger. Carisma will be given complete research funding as part of the collaboration, and it will also be able to collect development, regulatory, and commercial milestone payments as well as a royalty on the net sales of any commercially successful products. Additionally, Carisma has teamed up with Novartis, a company with substantial expertise in the production of cell therapies, to serve as its contract manufacturing organisation for the delivery of its primary clinical programme, CT-0508.

Source: Google Images

The proposed merger’s details: 

Before taking into account the concurrent financing mentioned above and the conversion of the outstanding Moderna convertible note, Sesen Bio stockholders are anticipated to control roughly 41.7% and pre-merger Carisma stockholders are anticipated to own roughly 58.3% of the merged firm. Stockholders of Carisma will receive freshly issued shares of Sesen Bio common stock in accordance with the provisions of the merger agreement, which includes an exchange ratio calculation. The amount of Sesen Bio’s net cash on hand at the time of closing will also affect how much of the merged business Sesen Bio investors would possess when the merger is complete.

For each outstanding share of Sesen Bio common stock held by such Sesen Bio stockholder as of such date, immediately prior to the proposed merger’s closing, such Sesen Bio stockholder will be issued a contingent value right (CVR). This CVR represents the right to receive specific cash payments from Sesen Bio’s proceeds related to the Roche Asset Purchase Agreement, if any, subject to customary deductions, including for expenses and taxes.

After the merger is completed, the combined business will have its main office in Philadelphia, Pennsylvania, and Steven Kelly, president and CEO of Carisma, will serve as its executive chairman.

Mr. Kelly just received the Ernst & Young Entrepreneur of the Year 2022 Greater Philadelphia award, which honours the most ambitious business owners and executives from throughout the world. The combined company’s board of directors is anticipated to consist of seven members, including one chosen by Sesen Bio and six chosen by Carisma.

The boards of directors of both firms have unanimously approved the merger agreement. In the following three to four months, the combination and associated financing are anticipated to conclude, pending shareholder approval and other usual closing requirements.