Immune drugmakers Alumis and Acelyrin to merge

Dive Brief:

• Alumis and Acelyrin are merging, the biotechnology companies said Thursday afternoon, in an all-stock deal that leaves the combined company with a bigger cash balance and three drugs in clinical testing. 
• Per deal terms, Acelryin stockholders will receive 0.4274 shares of Alumis stock for each share they own, leaving them with about 45% of the combined company and Alumis equity holders with 55%. The new company, which will keep the Alumis name and be run by its executive team, would have $737 million in cash, enough to keep operating into 2027.  
• The merged entity will continue to develop Alumis’ two so-called TYK2 inhibitors, one of which is being developed for plaque psoriasis and lupus while the other is targeting neuroinflammatory conditions like multiple sclerosis. Acelyrin’s top prospect, a thyroid eye disease drug called lonigutamab, is part of the deal, too, but the program will be re-evaluated to “confirm its differentiation in a capital efficient manner,” the companies said.

Dive Insight:

Prior to the merger, Acelyrin and Alumis were struggling with depressed share prices. The two biotechs went public in 2023 and 2024, respectively, in large initial public offerings — Acelyrin netted $540 million, while Alumis raised $250 million — but both have since lost most of their market value. 

Acelryin has already changed up its strategy. The company went public to support development of a drug, izokibep, being tested in multiple autoimmune conditions. But izokibep failed a late-stage study in September 2023 and, a year later, was shelved in a restructuring that saw Acelyrin focus resources around lonigutamab. The company has been discussing plans to bring lonigutamab into late-stage testing, but earlier results haven’t been convincing enough to lift its share price, which closed Thursday at less than $2.

Alumis, meanwhile, has seen its stock sink about two thirds from its IPO price. Though the company has a TYK2 inhibitor — a type of oral autoimmune medicine — in late-stage testing, it trails other, similar drugs. Its development has also advanced during a crowding of competition for oral autoimmune therapies and while the only approved TYK2 blocker, Bristol Myers Squibb’s Sotyktu, hasn’t yet met expectations commercially. 

Still, Alumis has claimed its top TYK2 drug, ESK-001, could be superior to Sotyktu, and that a second candidate, A-005, has the potential to treat inflammation in the central nervous system. For ESK-001, data are expected next year from a Phase 3 trial in psoriasis and a mid-stage study in lupus. A-005 should have results from a Phase 2 test in multiple sclerosis as well.  

The merger, then, is a “creative and capital efficient transaction” that gives Alumis a “significant influx of cash” to get to those readouts while “relieving any potential financing overhang,” wrote Leerink Partners analyst Thomas Smith.

The deal also enables Acelyrin shareholders to bet on those results, while handing Alumis a program in lonigutamab it could advance in parallel.

“We believe that scale and diversity of the portfolio is extremely important, and sufficient capital is critical,” Alumis CEO Martin Babler said on a Thursday afternoon call with analysts. 

The drug’s fate, though, is unclear. While Acelyrin has pitched it as more convenient alternative to Amgen’s thyroid eye disease drug Tepezza, Wall Street analysts have been skeptical of its ability to stand out from Tepezza and a competing program from Viridian Therapeutics.

Leerink analyst Smith, who connected with management following the conference call, said executives reiterated they are “pausing” Acelyrin’s previously stated plans to move lonigutamab directly into Phase 3 testing. A decision will only be made after fully assessing early study results and finding a study path that can show “clear clinical differentiation,” he wrote. 

“We do not expect significant investment in lonigutamab in the near term,” Smith added. 

The companies anticipate that the deal will close in the second quarter. 

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