Candid Therapeutics, part of a wave of companies expanding immunotherapy approaches from cancer to potential new applications in autoimmune disease, will continue development of its pipeline as a public company by combining with Nasdaq-listed biotech Rallybio.
Alongside the reverse merger announced Monday, Candid reached a deal to raise $505 million in private financing to fund operations through the end of the decade. Ken Song, Candid’s current president and CEO, will be chief executive of the combined company, which will operate under the Candid name. The deal is expected to close in mid-2026, which is about the same time Candid’s lead autoimmune program is expected to begin Phase 2 testing.
San Diego-based Candid specializes in therapies called T cell engagers (TCEs). A TCE is a type of bispecific antibody designed to bind to a target on T cell and a target on a disease-driving cell, directing the immune cell to kill the pathogenic cell. Candid launched in 2024 with two TCEs licensed from biotech companies in China.
The most advanced Candid program is cizutamig, a TCE designed to target CD3 on T cells and BCMA on B cells that drive autoimmune disorders. In Phase 1 testing, Candid said this drug has shown favorable tolerability and low rates of mild cytokine release syndrome, an immune response that is a complication risk of immunotherapies. The company plans to advance cizutamig to global Phase 2 testing in myasthenia gravis and interstitial lung disease.
The next Candid program is CND261, a TCE designed to target CD19 on B cells. In an investor presentation, the company said initial clinical data for this program are expected in the first half of this year. The Candid pipeline also includes two preclinical TCEs. CND319 hits two B cell targets, CD19 and CD20; it’s on track to begin Phase 1 testing in mid-2026. Meanwhile, CND460 is designed to hit BCMA and CD19 on B cells. This program is expected to enter the clinic in the first half of next year.
By depleting autoimmune disease-driving B cells, the goal is to reset the immune system — the cells that replace the disease-driving ones do not target healthy tissue. This approach offers the potential for long disease remission that could make such therapies one-time treatments.
Other companies are also developing TCEs for autoimmune conditions. In the second quarter of this year, Cullinan Therapeutics’ CLN-978 is expected to yield preliminary Phase 1 data in rheumatoid arthritis and systemic lupus erythematosus; initial data in Sjogren’s disease are expected by the end of the year. Startup Ouro Medicines is in early clinical development with a TCE licensed from a Chinese company. GSK and Merck have each struck deals for bispecific antibodies with potential applications in autoimmune disease. One way Candid could stand apart from the field is by pursuing immune reset with partial depletion of B cells, what the company calls “immune dimming.”
“With immune dimming, we would expect intermittent TCE dosing that provides superior efficacy over standard of care with a strong safety profile,” Song said in a Monday morning conference call. “The immune reset and immune dimming approach we believe is unique to TCEs and both can be pursued in parallel as they are not mutually exclusive.”
Candid’s approach looks attractive to investors. Disclosed participants in the new financing include Venrock Healthcare Capital Partners, RA Capital Management, Janus Henderson Investors, accounts advised by T. Rowe Price Associates, venBio Partners, Viking Global Investors, Cormorant Asset Management, Foresite Capital, Soleus Capital, TCGX, Vivo Capital.
The financing will close immediately prior to the close of the merger, which still needs the approval of shareholders from both companies. When the reverse merger is complete, 96.35% of the combined company will be owned by shareholders of Candid, including the investors participating in the new financing. Rallybio stockholders will own about 3.65% of the combined company. After the deal close, Candid projects the combined company will have about $700 million in cash. Its shares are expected to trade on the Nasdaq under the stock symbol “CDRX.”
New Haven, Connecticut-based RallyBio went public in 2021 with then lead program RLYB211 in early clinical development for fetal and neonatal alloimmune thrombocytopenia (FNAIT), a blood disorder in which pregnant women develop antibodies against the platelets of a fetus. Last April, RallyBio discontinued this program after Phase 2 data showed the drug did not achieve the minimum target concentrations in the body required for efficacy.
Rallybio laid off 40% of its staff and turned its focus turned to RLYB116, an inhibitor of the complement protein C5. Last month, RallyBio reported that Phase 1 data support progression of this program to Phase 2 testing in immune platelet transfusion refractoriness and refractory antiphospholipid syndrome. RLYB116 will likely need to continue its development elsewhere. Under the merger agreement, the company will look to sell the legacy Rallybio assets. The agreement includes contingent value rights in which Rallybio shareholders will be paid a portion of cash proceeds from the previously announced sale of the preclinical program REV102 and the potential sale of other legacy assets.
Photo by Flickr user Oregon DOT via a Creative Commons license
