Boulder-based Miragen Therapeutics to become publicly traded company

BOULDER — Local biopharmaceutical company Miragen Therapeutics Inc. announced this week that it plans to become a publicly traded company through a sort of reverse merger with California-based Signal Genetics Inc. (Nasdaq: SGNL).

The deal includes a $40 million concurrent financing from existing and new Miragen investors that will help the Boulder company advance clinical trials for a pair of drug candidates.

Signal is a molecular diagnostics company that sells a test for multiple myeloma.

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Under terms of the deal with Miragen, Signal plans to sell its technology. Signal will then, through the issuance of new shares of common stock, acquire Miragen in an all-stock transaction that results in Miragen shareholders becoming holders of 96 percent of Signal stock.

But the merged company will subsequently change its name to Miragen  Therapeutics Inc. and its ticker symbol on the Nasdaq exchange to MGEN. Signal directors and executives will resign from the merged company, which will move forward under Miragen’s current management team, with William Marshall serving as president and chief executive. All eight members of the board of directors will be appointed by Miragen, and the company will operate out of Miragen’s Boulder headquarters.

The deal, which has been approved by both companies’ boards, is expected to close during the first quarter of next year.

Such reverse mergers, or reverse IPOs, are seen as a simpler, less expensive way for private companies to go public than through a traditional initial public offering. The IPO market, particularly for bioscience companies, can be volatile, and timing IPOs around favorable market conditions isn’t easy.

Founded in 2007, Miragen is focused on the discovery and development of innovative microRNA-targeting therapies for various diseases, including cancer, fibrosis and heart disease. The company has raised $71 million in venture capital prior to the newest funding, including a $41 million Series C round last year. Marshall said in a phone interview Tuesday that Miragen had recently been exploring ways to finance its next level of operations, including an IPO, when the opportunity with Signal arose.

“The thing that was attractive to us was that they were a Nasdaq-listed operating company,” Marshall said. “It really allowed us to become a public company on a more precise timeline, a more predictable timeline.”

The new $40 million cash infusion will close moments before the merger with Signal is finalized. The investment will represent 27 percent of the merged company. Miragen stockholders’ current stake in the Boulder company will represent 69 percent of the merged entity, while current Signal shareholders will retain a 4 percent stake.

The new funds will come from an investor syndicate that includes Fidelity Management and Research Company, Brace Pharma Capital, Atlas Venture, Boulder Ventures, JAFCO Co. Ltd., MP Healthcare Venture Management, MRL Ventures, Remeditex Ventures, and others.

Signal shares have been trading at less than $1 since late last year, and Marshall said Tuesday that the company had been exploring its own strategic alternatives. The low share price drew a delisting warning from Nasdaq. The company will conduct a 1-for-15 reverse stock split this week to try and regain Nasdaq compliance — by maintaining a share price of at least $1 per share for 10 or more business days — ahead of the merger with Miragen.

“We have chosen to combine with Miragen following an extensive review of strategic alternatives and a thorough process because we believe the proposed merger provides Signal stockholders with an opportunity for value appreciation,” Signal CEO Samuel D. Riccitelli said in a news release.

Miragen employs just shy of 50 people, all at its Gunbarrel headquarters, 6200 Lookout Road. Marshall said the company will add some jobs over the coming year as clinical trials advance but said it’s premature to say how many.

MicroRNAs are short pieces of ribonucleic acid (RNA) native to all human cells that act as regulators of gene expression. In certain disease states, their over- or under-expression can drive characteristics of the disease.

Miragen’s research works to identify microRNAs that have the potential to be causative to disease state and normalize the microRNA levels by inhibiting their over-expression or boosting them in the case of under-expression.

The current Phase 1 clinical trial for Miragen drug candidate MRG-106 is looking at the treatment of a rare form of lymphoma, though the same drug is being looked at in the treatment of multiple other indications.

“We’re really going to be focusing a lot of efforts on moving that study forward and into the next phase of studies in that indication,” Marshall said.

Miragen’s other drug in a Phase 1 clinical trial is MRG-201, which targets several types of pathological fibrosis in which microRNA-29 is under-expressed.

While MRG-106 and MRG-201 will be Miragen’s first into clinical trials, the company has other similar drugs in development, as well as a collaboration and license agreement with French company Servier to look at microRNAs in heart failure.