Financing led by ADAR1 Capital Management and Janus Henderson Investors
$30 million up front with the potential to receive an additional $20 million at clinical study initiation
Phase 1 clinical study initiation planned mid-2026; data anticipated approximately 6 months thereafter
Equillium, Inc. (“Equillium” or the “Company”) (Nasdaq: EQ), a biotechnology innovator developing novel therapies to treat severe autoimmune and inflammatory disorders, today announced it has entered into a definitive securities purchase agreement with leading healthcare investors that will provide up to $50 million in gross proceeds to Equillium. The private placement is comprised of (i) an initial upfront financing of approximately $30 million in gross proceeds in exchange for approximately 52.6 million shares of common stock (or, for certain investors, pre-funded warrants in lieu of common stock), representing a purchase price of $0.57 for each share of common stock sold at the initial closing (or $0.5699 for each pre-funded warrant sold in lieu of common stock at the initial closing), and (ii) the potential for up to an additional $20 million in gross proceeds in exchange for up to approximately 35.1 million shares of common stock (or, for certain investors, pre-funded warrants in lieu of common stock), subject to achieving specified milestones related to clinical study initiation and share price.
The financing is being led by new investors ADAR1 Capital Management and Janus Henderson Investors, and includes participation from additional new investors Adage Capital Partners LP, Coastlands Capital, and Woodline Partners LP.
“We’re delighted to have the support of such a strong syndicate of top-tier biotech investors who share our vision for advancing transformative therapies for patients,” said Bruce Steel, Chief Executive Officer of Equillium. “This funding marks a significant milestone for Equillium, enabling us to accelerate the clinical development of EQ504 into a Phase 1 proof-of-mechanism study in mid-2026, with data expected to follow approximately six months thereafter.”
The aryl hydrocarbon receptor (AhR) is critical to barrier organ physiology and immunology. Modulating AhR induces IL-10 and IL-22, two cytokines that mitigate excessive inflammation, restore barrier function and promote regeneration of tissues. Modulation of AhR has been clinically validated in the treatment of both skin and gastrointestinal (GI) diseases through tapinarof (VTAMA®) and indigo naturalis, a botanical treatment rich in natural AhR modulators. AhR binds a diverse array of heterocyclic or aromatic compounds, including several approved drugs. Recently, Abivax SA reported Phase 3 data in the treatment of ulcerative colitis with obefazimod. The structure of obefazimod has similarities to other AhR modulators and in pre-clinical models of colitis obefazimod was seen to induce both IL-10 and IL-22, both hallmarks of AhR modulation.
“IL-10 and IL-22 are both powerful cytokines that are the basis of many drug development programs,” said Dr. Stephen Connelly, Chief Scientific Officer of Equillium. “In combination, we believe that their induction through AhR modulation affords a differentiated, multi-modal and non-immunosuppressive approach to treating tissue inflammation. We intend to develop EQ504 as a novel oral, colon-targeted treatment that we believe has the potential to make a meaningful impact in the treatment for ulcerative colitis and pouchitis, and we’re excited to advance this program into the clinic.”
Equillium intends to use the proceeds from this financing to fund the further development of EQ504, working capital and general corporate purposes. The Company has not initiated its recently announced cryptocurrency treasury reserve strategy and is prioritizing development of EQ504. Equillium expects net proceeds from the initial closing of the financing will extend its cash runway through 2027.
Leerink Partners is acting as lead placement agent in connection with the financing, and LifeSci Capital is acting as co-placement agent.
The offer and sale of the foregoing securities are being made in a transaction not involving a public offering and have not been registered under the Securities Act of 1933, as amended (the “Securities Act”), or any applicable state securities laws. Accordingly, the securities may not be reoffered or resold in the United States except pursuant to an effective registration statement or an applicable exemption from the registration requirements of the Securities Act and such applicable state securities laws. The investors have been granted customary resale Form S-3 registration rights for the shares of common stock issued to them in the financing. This press release shall not constitute an offer to sell or a solicitation of an offer to buy these securities, nor shall there be any sale of these securities in any state or other jurisdiction in which such offer, solicitation or sale would be unlawful prior to the registration or qualification under the securities laws of any such state or other jurisdiction.
