Aquinox Pharmaceuticals & Neoleukin Therapeutics Announce Merger Agreement

Aquinox Pharmaceuticals, Inc. and Neoleukin Therapeutics, Inc. recently announced the two companies entered into a definitive merger agreement under which Aquinox agreed to the acquisition of Neoleukin, which is expected to close on or about August 8, 2019. Pursuant to the merger agreement, Aquinox will acquire all of the outstanding capital stock of Neoleukin in exchange for a combination of common and preferred shares.  In connection with the merger, Aquinox will be renamed as Neoleukin Therapeutics, Inc., and is expected to trade on the Nasdaq Global Market under the new ticker symbol NLTX, concurrent with closing.

The combined company will focus on the development and commercialization of computationally-designed protein therapeutics to address significant unmet medical needs in immuno-oncology, inflammation, and autoimmunity. Neoleukin’s lead product candidate, NL-201, is a de novo protein designed to mimic the therapeutic activity of the cytokines interleukin-2 and interleukin-15 for the treatment of various types of cancer by activating both T-cells and NK-cells to fight cancer, while limiting toxicity with minimal loss of activity.

“Neoleukin Therapeutics is a new company based on sophisticated computational technology licensed from the Institute for Protein Design and the University of Washington that enables us to design and create de novo proteins as therapeutic candidates,” said Jonathan G. Drachman, MD, CEO of Neoleukin Therapeutics. “In January, our scientific founders published their seminal findings in the journal, Nature. Since then, we have been advancing our lead program, NL-201, toward IND-enabling studies. The merger with Aquinox is transformational for our company, providing additional capital to prepare an IND submission, generate clinical data, develop additional preclinical programs, and advance our computational technology. We believe that cytokine mimetics, or Neoleukins, have the potential to offer enhanced therapeutic effects with fewer toxic side effects.”

“Since announcing our plans to seek and consider strategic alternatives for Aquinox, our priority has been to identify a merger candidate we believe has the potential to continue our mission to help patients and provide meaningful value to our stockholders,” said David J. Main, President & CEO of Aquinox.  “Following an extensive evaluation and diligence process, the Aquinox Board of Directors concluded that a merger with Neoleukin, with a strong platform technology, seasoned leadership team, and compelling clinical development plan, offered an excellent opportunity to create such value.  We believe Neoleukin represents an attractive merger partner for Aquinox, offering a novel approach to creating de novo proteins for patients with unmet medical need.”

About the Transaction
Pursuant to the merger agreement, Aquinox will acquire all of the outstanding capital stock of Neoleukin in exchange for the issuance of 4,589,787 newly issued shares of Aquinox common stock, which represented approximately 19.5% of the voting power of Aquinox as of immediately prior to the issuance of such shares, and shares of Aquinox convertible preferred stock convertible into a total of 10,194,838 shares of Aquinox common stock upon receipt of the required approval of the Aquinox stockholders under Nasdaq rules.  Following completion of the merger and on an as-converted basis, the former Aquinox stockholders will own approximately 61.42% of the combined company’s capital stock and the former Neoleukin stockholders will own 38.58% of the combined company’s capital stock.  The shares of convertible preferred stock are not tradeable by the holders of the shares.

In connection with the merger, Aquinox will be renamed as Neoleukin Therapeutics, Inc. and is expected to trade on the Nasdaq under the new ticker symbol NLTX at the time of closing, on or about August 8, 2019, subject to customary legal and regulatory clearances and procedures. The corporate headquarters for the combined company will be located in Seattle, Washington at Neoleukin’s existing facility.

SVB Leerink is acting as exclusive financial advisor and Cooley LLP is serving as legal counsel to Aquinox.  MTS Health Partners is acting as exclusive financial advisor and Fenwick & West LLP is serving as legal counsel to Neoleukin.

Effective as of the closing of the transaction, Jonathan G. Drachman, M.D. will be the President and Chief Executive Officer of the combined company with Kamran Alam continuing as the interim Chief Financial Officer.  Senior leadership of the combined company will also include Daniel Silva, PhD as VP, Head of Research; Umut Ulge, MD, PhD as VP, Translational Medicine; and Carl Walkey, PhD as VP, Corporate Development. In connection with the merger, David J. Main, President and Chief Executive Officer of Aquinox, will be stepping down.

Additionally, effective as of the closing of the transaction, Gary Bridger, PhD, Daniel Levitt, MD, PhD, Richard S. Levy, MD, David J. Main, Kevin Neu, MD, and Robert E. Pelzer will resign from the Aquinox’s board of directors and the board of directors of the combined company will be comprised of six directors:  Todd Simpson and Sean Nolan will be continuing Board members and will be joined by Cantey Boyd, Managing Director at Baker Brothers Advisors; Jonathan G. Drachman, CEO, Neoleukin Therapeutics; Sarah B. Noonberg, former Chief Medical Officer at Nohla Therapeutics; and Lewis “Rusty” Williams, former CEO of FivePrime Therapeutics.

About Aquinox Pharmaceuticals, Inc.
Aquinox Pharmaceuticals, Inc. (NASDAQ:AQXP) is a pharmaceutical company discovering and developing novel therapeutics for conditions marked by inflammation, inflammatory pain, and blood cancers.

About Neoleukin Therapeutics, Inc.
Neoleukin is a privately-held biopharmaceutical company creating next generation immunotherapies using de novo protein design technology.  Neoleukin uses sophisticated computational methods to design proteins that demonstrate specific pharmaceutical properties that provide potentially superior therapeutic benefit over native proteins.  Neoleukin’s lead product candidate, NL-201, is a combined IL-2 and IL-15 agonist designed to eliminate alpha receptor binding. For more information, please visit the Neoleukin website: www.neoleukin.com.