Obsidian Therapeutics and Galera Therapeutics have announced a merger agreement aimed at advancing the clinical development of a next-generation cell therapy for melanoma, which may provide advantages over the currently available cell therapy for advanced cases of this cancer. Once the transaction is finalized, the combined entity will operate under the name Obsidian, led by the existing management team of the former Obsidian. The newly public company will also secure a $350 million investment from a syndicate of investors betting on Obsidian’s potential to deliver cell therapy for solid tumors. In the merger announcement on April 14, the companies indicated they would seek a Nasdaq listing under the proposed ticker symbol “OBX.”
Legacy Obsidian, a private biotechnology firm based in Cambridge, Massachusetts, focuses on a different type of immune cell known as tumor-infiltrating lymphocytes (TILs), which have already breached a tumor and can recognize a patient’s cancer. This approach diverges from earlier cell therapies that used patients‘ T cells. TIL therapy involves isolating these lymphocytes from a tumor sample, expanding them in the lab, and reinfusing them back into the patient to combat cancer. Currently, there is an FDA-approved TIL therapy for melanoma, namely Iovance Biotherapeutics‘ Amtagvi, which was approved in 2024 as the first cell therapy for solid tumors. However, Amtagvi requires concurrent dosing with an IL-2 therapy to activate the TIL’s antitumor activity, which results in toxic side effects.
Obsidian’s manufacturing process for OBX-115 includes an additional step that designs TILs to produce IL-15, a signaling protein that stimulates an immune response. Importantly, IL-15 is anchored to the membrane of the therapeutic cell rather than secreted. The company asserts that this membrane-bound IL-15 eliminates the need for high doses of IL-2, reducing toxicity and expanding the treatment’s applicability to more patients.
In an investor presentation, Obsidian highlighted that OBX-115 requires less lymphodepletion, the preconditioning drug regimen necessary before a patient can undergo cell therapy. This reduced lymphodepletion further decreases toxicity and could facilitate the administration of TIL treatment on an outpatient basis.
„At Obsidian, we strive to offer a best-in-class TIL cell therapy developed using our proprietary protein regulation technology,” said Madan Jagasia, CEO of Obsidian, in a prepared statement. “We believe OBX-115 presents an opportunity to deliver an enhanced TIL product and patient experience.“ Last year, at the annual meeting of the American Society of Clinical Oncology, Obsidian reported that OBX-115 achieved an overall response rate of 67% for the recommended phase 2 dose without any dose-limiting toxicities or treatment-related fatalities. OBX-115 is currently in phase 2 trials for advanced melanoma and phase 1 for non-small cell lung cancer, with data from both studies expected next year.
To support the development of its pipeline, Obsidian and Galera have raised $350 million, which will be finalized just before the merger transaction is completed. The private placement participants include new investors like Balyasny Asset Management, Caligan Partners LP, Eventide Asset Management, Nantahala Capital, Octagon Capital, Redmile, Spruce Street Capital, and Trails Edge Capital Partners, as well as existing investors from Obsidian such as Atlas Venture and RA Capital Management. This capital injection is anticipated to fund the operations of the merged company until the second half of 2028.
Galera, a publicly traded company that also focuses on cancer treatments, has faced setbacks. Its lead therapeutic candidate, avasopasem, was developed to mitigate oral mucositis, a common side effect of radiotherapy. In 2023, the FDA rejected Galera’s submission for this treatment, requiring further clinical trials. Galera has since restructured, eliminating most of its workforce and selling avasopasem, along with another drug, rusosopasem, to the Canadian private firm Biossil. The company still has a cancer drug candidate, a pan-nitric oxide synthase inhibitor acquired through the 2024 purchase of Nova Pharmaceuticals, which is currently in phase 1/2 trials for advanced breast cancer.
Once the merger between Obsidian and Galera is completed, the pre-merger shareholders of Obsidian are expected to hold about 53.2% of the newly formed company, while investors from the private placement will own approximately 45%. Shareholders of Galera prior to the merger will retain around 1.8% of the combined entity, along with a conditional value right for 95% of future milestones over a maximum period of ten years stemming from the Biossil acquisition agreement last October. The boards of both Obsidian and Galera have approved the merger, which is anticipated to close by the third quarter of this year.
