Arcturus Therapeutics is set to gain a Nasdaq listing through a reverse merger with Alcobra. The deal will give Arcturus a route to public investors at a time when interest in RNA therapies is flying high on the back of Alnylam’s phase 3 success.

San Diego, California-based Arcturus, a graduate from Johnson & Johnson’s JLABS incubator, will arrive on Nasdaq with the thing Alcobra lacks: a pipeline as yet unsullied by clinical failure. 

Arcturus’ pipeline is built upon a delivery platform and oligomer technology it thinks address two of the challenges of RNA therapeutics, namely how to enable systemic delivery to target tissues and maximize stability and potency while minimizing toxicity. Arbutus Biopharma and Arrowhead Pharmaceuticals are using the oligomer technology on some of their pipeline prospects. And Ultragenyx is working with Arcturus to develop mRNA medicines against rare diseases that make use of both the delivery and oligomer technology. Arcturus also has a relationship with Takeda and has worked with J&J in the past.

What Arcturus lacks is money. The combined Arcturus-Alcobra biotech will have about $40 million in cash. Alcobra is expected to have $35 million at the time of closing, showing Arcturus is bringing a relative pittance to the party.

That difference in the cash contributions of the two parties means Alcobra shareholders will own 40% of the combined company, despite the Israeli biotech contributing nothing from a pipeline perspective. Alcobra’s Nasdaq listing and cash are its main contributions to the merger.

Arcturus plans to use those resources to advance its in-house pipeline. The RNA specialist lists treatments for OTC deficiency and an undisclosed rare liver disease target as the most advanced assets in its in-house pipeline. Boosted by the merger, Arcturus expects to move at least one drug into the clinic in the next two years. 

For Alcobra and its shareholders, the merger provides a way out after a torrid time on Nasdaq. The biotech suffered the gamut of setbacks, from clinical holds through to repeated failures in the clinic. Those blows left the biotech with a below-cash market cap of $30 million.