Tectonic Therapeutic, a biotech from renowned entrepreneur and researcher Tim Springer, completed its reverse merger with gene therapy company Avrobio on Thursday and will begin trading as $TECX on Friday.
The biotech hadn’t planned on a flip to the public markets anytime soon. The startup wasn’t seeking an initial public offering (most private life sciences companies have been cordoned off) nor was it searching for a public shell company to take over (as 14 other biotechs did last year), CEO Alise Reicin said in an interview with Endpoints News.
Rather, the Phase 1b-stage Tectonic, which is developing GPCR medicines, was “pretty close” to wrapping up a Series B raise that would have kept the startup running into the first half of 2026, Reicin said. The biotech was more than two years into its research paid for by an $80 million Series A.
A reverse merger would give the biotech even more runway, an appealing pro that has been echoed by other companies that have gone this route, including Lenz Therapeutics.
“What we realized is by going the reverse merger route, it really enabled us to get a runway into mid-2027 and we felt we were ready to go public as a company, and so it just made sense and was the right thing to do for the company,” Reicin said in a preview of Tectonic’s life as a public biotech.
Tectonic expects to have about $181 million in cash and equivalents, thanks in large part to a $130 million private placement from TAS Partners, 5AM Ventures, EcoR1 Capital, Polaris Partners and others.
The biotech was the only one to announce a reverse merger in the first quarter of this year, a decline from three or four every quarter of 2023. During the first three months of 2024, a few biotechs instead went public by the traditional IPO route.
While the pace slowed down, the “aftermarket trading for the asset class has been strong post-closing with a median close-to-current of 69% for reverse mergers announced and closed since 2023,” according to an April report from William Blair.
The pace of reverse mergers picked back up this quarter, though, with TuHURA Biosciences, OnKure and Oruka all disclosing plans to become public companies by way of the alternative financing vehicle. Others have also considered it: ADC drug developer Pyramid Biosciences was bought by Biohaven in the first quarter but the startup had also evaluated reverse mergers, according to the LinkedIn profile of CFO Biren Amin.
Joining AstraZeneca, Eli Lilly
Tectonic expects to start a Phase 2 study of its Fc-relaxin fusion protein, dubbed TX45, in the second half of this year, Reicin said.
The startup will have randomized data from that trial, in patients with group 2 pulmonary hypertension with heart failure with preserved ejection fraction, before its runway dries up, the CEO added.
AstraZeneca and Eli Lilly are also testing under-the-skin relaxin programs and are already in Phase 2 with AZD5462 and LY3540378, respectively. Novartis had also investigated a similar treatment, but missed the mark in a Phase 3 in 2017.
At the time of the merger announcement, Reicin said Novartis’ serelaxin was the “first major attempt at developing a recombinant form of the hormone” for cardiovascular treatment, adding that Tectonic has created a drug with a better half-life.
Tectonic will also bring a second asset into the clinic by the fourth quarter of 2025, Reicin said. The biotech will choose a development candidate later this year for treating hereditary hemorrhagic telangiectasia, a rare bleeding disorder that has no approved medicines. It also has an undisclosed fibrosis program and other projects further down in the pipeline, she said.
Reicin declined to disclose whether the company is still working on a drug for preeclampsia, a complication that can lead to premature birth and affect the health of pregnant individuals and newborns, sometimes leading to death.
At an Endpoints event last fall, Springer said the biotech had “started off with a lot of hope” for a biological for the condition, but investors didn’t see a path to profit. “There’s a real disconnect between incentives for drug development and what the US as a population as a whole needs for new medicines,” he added.
“It is an indication that’s near and dear to my heart,” Reicin said, but noted Tectonic hasn’t publicly talked about it.