Inmagene Bio charts backdoor to U.S. listing with offshore acquisition

The biotech company’s merger with Ikena Oncology will bring in $175 million in fresh funds, including $75 million from an oversubscribed private placement

Key Takeaways:

• Inmagene Bio plans to merge with Ikena Oncology, after which it will continue its clinical trials for IMG-007, a monoclonal antibody co-developed with Hutchmed
• The unusual path to a U.S. listing owes partly to the background of company founder and Chairman Jonathan Wang, who has extensive experience in capital management

By Molly Wen

Intense competition in China’s domestic market is leading a growing number of homegrown innovative drugmakers to seek relief overseas. Part of such movement often includes licensing products from overseas peers, as well as raising funds from offshore capital markets in the U.S. and Hong Kong.

While direct IPOs are the most common way to enter foreign capital markets, innovative drug maker Inmagene Biopharmaceuticals is taking a slightly different route after announcing a merger with U.S. pharmaceutical company Ikena Oncology (IKNA.US) last week. Inmagene will take over Ikena’s U.S. listing as part of the deal, presenting a new model for Chinese Biotech companies in their movement overseas.

Ikena said the merger would bring in about $175 million in new financing, including $75 million through an oversubscribed private placement. This financing features an A-list of institutional investors, including international funds like Deep Track Capital, Foresite Capital and RTW Investments, as well as early Inmagene shareholders BVF Partners, Blue Owl Healthcare, Omega Funds and OrbiMed.

Both companies’ boards have approved the deal, which is expected to close in mid-2025. Ikena and Inmagene shareholders will hold 34.8% and 43.5% of the combined company, respectively, with 21.7% going to the new investor group. The combined company will begin a new journey under the ImageneBio name and trade on the Nasdaq under the ticker IMA.

The $175 million in new funds will be used to support IMG-007, a monoclonal antibody (mAb) Inmagene is co-developing with Hutchmed (0013.HK; HCM.US; HCM.L) that targets the OX40 receptor to treat immunological diseases like atopic dermatitis. OX40 is primarily present on activated T-cells, and can regulate immunological reactions by facilitating the production and growth of T-cells and inhibiting activities of regulatory T-cells (Tregs). 

Anti-OX40 mAbs have the potential to play important roles in the treatment of cancer and immunological diseases such as atopic dermatitis. Multinationals such as Amgen (AMGN.US) and Sanofi (SAN.PA) are also developing anti-OX40 mAbs.

IMG-007 was developed by Hutchmed, and in February last year Inmagene exercised an option related to licensing of the mAb laid out in a strategic cooperation agreement between the two companies dating back to 2021. Under the partnership, Hutchmed could receive development milestone payments of $92.5 million, and additional future payments of up to $135 million based on sales milestones, on top of a percentage of sales revenue.

In May 2024, Inmagene announced positive interim results from an IMG-007 phase-2a clinical study on patients with atopic dermatitis. Results from a global phase-2a clinical study of IMG-007 for patients with alopecia areata are expected to come out soon.

Rapid listing

China’s pharmaceutical industry went through a cold winter in 2024 in terms of new financing. Only two pharma companies went public in the domestic A-share market, and the number of companies newly listed in Hong Kong was also in the single-digits. Those figures are well below the boom year of 2021 when as many as 20 biotech companies, nearly all unprofitable, went public in Hong Kong.

At the same time, geopolitical factors such as China-U.S. tensions caused values for U.S.-listed Chinese stocks to plunge to new lows. As a result, few Chinese pharmaceutical companies have launched IPOs on Wall Street in recent years.

Inmagene’s last financing round came in June 2021, raising $100 million. The round was led by Highlight Capital and Panacea Venture, with other well-known funds such as VMS, Triwise and Kunlun Capital also participating. Though Inmagene never disclosed its planned use of the funds, such rounds usually either raise fresh money for business operation or to help existing investors cash out their holdings.

Since a traditional IPO seems somewhat out-of-reach in the current frosty climate, Inmagene has opted for an innovative alternative through merging with a foreign company. Such creativity owes largely to the wide-ranging skills of Jonathan Wang, the company’s founder, chairman and CEO.

Wang obtained a PhD in neurobiology from Columbia University, and served as a global partner for renowned medical investor OrbiMed Capital, as well as the founding partner of OrbiMed Asia, giving him extensive experience in fundraising and capital management. In September 2023, David Topper, who has 40 years of financial investment experience and engineered the listing of New Amsterdam Pharma through a SPAC merger, became the company’s CFO.

Their target, Ikena Oncology, was listed in the U.S. in 2021, focusing on gene and biomarker driven precision tumor therapy, with two pipelines in development under an agreement with Bristol-Myers Squibb. But that tie-up ended in February 2024, sending Ikena’s business into a downward spiral. Last May, Ikena continued to cut its pipelines and laid off more than half of its remaining employees, as it sought to salvage the company by putting itself up as an acquisition target.

“We believe IMG-007 has the potential to be extremely impactful for patients with inflammatory diseases, while also building value for our shareholders,” said Ikena CEO Mark Manfredi, commenting on the merger.

While that remains to be seen, the deal has certainly been impactful for Inmagene, giving it a path to a Nasdaq listing, while also securing vital new funds. Ikena and its shareholders have also made out well, as the company gets a second lease on life. In addition to providing a win-win outcome for both companies, the transaction could also provide a potential new way forward for Chinese biotechs struggling to secure new financing.

To subscribe to Bamboo Works weekly free newsletter, click here