Tempest’s third makeover

Tempest Therapeutics, which has been in limbo since April owing to lack of cash, has found a suitor of sorts in the private biotech Factor Bioscience. However, though Wednesday’s all-stock transaction looks like Factor and its senior management reversing into the listed shell of Tempest, it isn’t that simple.

In fact the curious deal involves Tempest issuing shares in return for just four of Factor’s bispecific Car-T therapies, reviving Tempest's existing lead project, amezalpat, and Factor continuing as a private company. One reason why a full-blown reversal wasn’t undertaken might be Factor’s lawsuit against Cellectis and AstraZeneca; asking current Tempest holders to buy this would have been a step too far.

That legal action stems from Factor’s underlying technology, which uses Talens (transcription activator-like effector nucleases), delivered via synthetic mRNA, for gene editing. In September Factor issued a complaint in Delaware District Court, alleging that Cellectis and Astra were infringing three of its Talen patents.

Cellectis is a cell therapy company whose allogeneic Car-T therapies are all based on Talen technology; many of its projects were licensed, via Pfizer, to Allogene, while a separate discovery deal gave Astra rights to the Talen technology in 2023. When the suit was launched Factor called this a “David versus Goliath story”.

Outside Tempest’s scope

The aim now appears to be for the legal action to remain the concern of the private Factor business, and not Tempest’s current shareholders.

Wednesday’s transaction with Tempest “includes a limited exclusive licence to Factor’s mRNA Talens technology”, Tempest told ApexOnco. But it added: “Based on the company’s current understanding, the deal is outside the scope of the legal action brought against Cellectis and AstraZeneca.”

This could account for its unusual structure, where Tempest is issuing 8.2 million shares – there were only about 4.4 million outstanding at the end of October – in return for just 65% of Factor’s equity. The enlarged Tempest, while still retaining the Tempest name, will be headed by Factor’s chief executive, Matt Angel, with the previous incumbent, Stephen Brady, becoming chairman.

Tempest shares fell nearly 50% on the deal’s announcement, presumably because of the massive dilution, plus the expectation of further equity raises to bring in cash to fund R&D. At the current share price the deal is worth $39m (there are additional warrants too), and the entire Factor business is being valued at around $60m.

It’s clear that more funding will be required; Tempest had just $7.5m in the bank at the end of September, and though Factor has committed to invest an undisclosed amount in the enlarged entity the resulting funds will last only to mid-2027.

The biggest initial drain on R&D will be a phase 3 study of Tempest’s PPAR⍺ antagonist amezalpat. This 700-patient trial was listed on clinicaltrials.gov a year ago, but Tempest failed to raise the necessary funds, finally moving to “explore strategic alternatives” in April. The most advanced asset being acquired from Factor is an anti-CD19 x BCMA Car-T, TPST-2003, but Tempest isn’t planning to take this into the clinic until 2027.

Third time lucky?

Tempest gained a Nasdaq listing through the 2021 reverse merger with a company called Millendo. Amazingly, Millendo itself was the result of the reverse merger of a private business, into the publicly traded fertility company OvaScience; that deal took place in 2018.

OvaScience went public by a traditional IPO, back in 2012. Since then the various entities have burned through $229m of invested capital, according to Tempest’s latest quarterly SEC filing. Factor gives the business a new lifeline, but the markets will need some convincing.

The Tempest/Factor tie-up

Source: OncologyPipeline.