TOCA stock has more than doubled today after it was announced that cancer biotech Tocagen Inc (NASDAQ:TOCA) was planning an all-stock merger with privately-held Forte Biosciences.
The reverse all-stock acquisition by Forte comes after Tocagen was forced to slash its workforce by 65% last October following a failed late-stage study of its Toca 511 gene study. The new company will assume the Forte name and be led by its CEO Paul Wagner, Ph.D., with a focus on developing Forte’s clinical-stage skin disease pipeline, including a late-phase program in atopic dermatitis, or eczema. TOCA stock, which had traded for over $15 in 2018, dropped to below the 50 cent mark after the failed trial.
“Following an extensive review of strategic alternatives, we believe that this merger with Forte is in the best interest of Tocagen’s stockholders and has the potential to deliver immediate and long-term value to the stockholders,” said Tocagen CEO Marty Duvall. “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.” TOCA stock is trading for $1.95.
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Tocagen investors will own around 25% of the combined entity, which will trade on the NASDAQ under a new ticker. An investor syndicate, made up of OrbiMed, BVF Partners LP, and Alger, has agreed to invest US$14 million in the new company, which will help fund the further development of clinical programs. These will include Tocagen’s lead asset, FB-401, which is expected to close immediately prior to the completion of the merger. The new company is expected to have about US$25 million in cash upon completion of the merger, which is expected in Q2.
TOCA stock is up over 115% on Friday following the announcement, despite no mention of the future of Tocagen’s gene therapy. However, the statement did indicate that the company could choose to license or sell off “Potentially Transferable Assets,” including the “tangible and intangible assets used in or related to Toca 511, Toca FC.”
With TOCA investors doubling their money today, you might want to check out our pick of three more small-cap biotech stocks that could be the next big winner.
Featured image: DepositPhotos © nikesidoroff
