On June 6, 2022 Yumanity Therapeutics, Inc. ("Yumanity") (Nasdaq: YMTX), a clinical-stage biopharmaceutical company focused on the discovery and development of innovative, disease-modifying therapies for neurodegenerative diseases, reported it has entered into definitive agreements for two strategic transactions (Press release, Yumanity Therapeutics, JUN 6, 2022, View Source [SID1234615707]).

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The first definitive agreement is an asset purchase agreement for the sale of Yumanity’s lead clinical-stage product candidate, YTX-7739, as well as Yumanity’s unpartnered discovery-stage neuroscience product candidates and targets to Janssen Pharmaceutica NV ("Janssen"), part of the Janssen Pharmaceutical Companies of Johnson & Johnson, for $26 million in cash. In connection with the closing of the proposed transaction, Yumanity plans to distribute any remaining available cash proceeds from the sale to Yumanity stockholders via a one-time dividend, net of any amounts retained for outstanding obligations and net cash requirements associated with the proposed merger between Yumanity and Kineta, Inc. ("Kineta"). The amount of such dividend will depend on many factors and will not be determined until closer to the closing date.

Under the second definitive agreement, Kineta will become a wholly-owned subsidiary of Yumanity in an all-stock transaction, resulting in a combined publicly traded company re-named Kineta, Inc., that will focus on immuno-oncology and continue Yumanity’s ongoing research collaboration with Merck & Co. in amyotrophic lateral sclerosis and frontotemporal lobar dementia. Upon completion of the proposed merger, on a pro forma basis and based upon the number of Yumanity shares to be issued in the proposed merger, current Kineta stockholders are expected to own approximately 85% of the combined company and current Yumanity stockholders are expected to own approximately 15% of the combined company. The actual allocation will be subject to adjustment based on each company’s outstanding equity ownership and Yumanity’s net cash balance at the time of the closing of the proposed merger. The combined company expects to raise a concurrent private investment in public equity (the "PIPE financing") led by Growth & Value Development Inc.

"After evaluating Yumanity’s strategic alternatives, management and our Board of Directors believes that the proposed transactions are in the best interest of Yumanity’s stockholders," said Richard Peters, President and CEO of Yumanity. "We are excited that our lead clinical-stage neurology asset and unpartnered assets will continue to be developed and we are very enthusiastic about Kineta’s innovative oncology pipeline."

Kineta’s IND-ready, lead asset is KVA12.1, a potential best-in-class VISTA blocking immunotherapy to address the problem of immunosuppression in the tumor microenvironment. It is a fully human engineered IgG1 monoclonal antibody that was designed to bind to VISTA through a unique epitope. KVA12.1 may be an effective immunotherapy for many types of cancer including NSCLC (lung), colorectal, renal cell carcinoma, head and neck, and ovarian. These initial target indications represent a significant unmet medical need with a large worldwide commercial opportunity for KVA12.1. Kineta is also developing fully human antibodies that target CD27 and CD24. These immunotherapies are engineered to address the problems of exhausted T cells and immunologically silent tumors.

"The proposed merger with Yumanity is a unique opportunity for Kineta to build a leading public immuno-oncology focused company with a diversified pipeline of new treatments for cancer patients," said Shawn Iadonato, Ph.D., CEO of Kineta. "Kineta has demonstrated expertise in developing novel immunotherapies that will enable us to advance our lead programs towards multiple milestones over the next 18 months."

The Yumanity Board of Directors has unanimously approved both definitive agreements. The Kineta Board of Directors has unanimously approved the definitive merger agreement with Yumanity. The two transactions are expected to close in the second half of 2022, subject to customary closing conditions, including approval of both transactions by the stockholders of Yumanity.