Rallybio has swerved away from its Recursion Pharmaceuticals pact, accepting $7.5 million upfront for its share of a preclinical program to extend its cash runway to mid-2027.
Exscientia, now part of Recursion, partnered with Rallybio in 2019 to develop small-molecule treatments for rare diseases. The alliance spawned REV102, an ENPP1 inhibitor that is in preclinical development for the treatment of hypophosphatasia (HPP). The molecule could correct the mineralization problems that cause bones to soften in HPP patients, providing an oral alternative to AstraZeneca’s Strensiq.
Rallybio has decided to cash out of the program early. In return, the biotech has received the upfront fee and a chance to pocket $17.5 million in milestones. Rallybio could receive $12.5 million tied to the start of additional preclinical studies and a further $5 million when Recursion begins dosing in a phase 1 trial.
Recursion is making the payments in shares but the terms of the deal guarantee how much cash Rallybio will take home. If Rallybio sells the upfront equity for more or less than $7.5 million, it will either pay the excess to Recursion or receive the shortfall in cash from its partner. Similar terms apply to the $12.5 million milestone payment.
RallyBio estimates the deal will extend its cash runway into mid-2027, compared to the first half of 2027 before it sold its interest in REV102. The extension buys Rallybio time to rebuild in the aftermath of a phase 2 setback that sank its lead program and triggered another round of layoffs. Those cuts reduced the size of a team that RallyBio had already warned may struggle to cover in-house and partnered work.
Selling the stake in REV102 frees RallyBio up to focus on the C5 inhibitor RLYB116. The company is aiming to publish topline data from a confirmatory pharmacokinetic and pharmacodynamic study this year.
Recursion will take sole responsibility for pushing REV102 toward human testing. The biotech is running IND-enabling studies with a view to entering the clinic in the second half of next year. Several companies are developing oral ENPP1 inhibitors but most of them are focused on cancer. Alesta Therapeutics joins Recursion on a shorter list of biotechs that are seeking to challenge AstraZeneca for the HPP market.