Tocagen Merger: Strategic Pivot Toward Dermatology Innovation with FB-401 Lead Program

In a significant strategic realignment, Tocagen has agreed to combine with Forte Biosciences through an all-stock transaction that positions the merged entity to focus on advancing late-stage clinical programs in inflammatory skin conditions. The combined organization will operate as Forte Biosciences under the ticker FBRX on the Nasdaq Capital Market, marking a deliberate shift in the merged company’s clinical development strategy.

Clinical Foundation and Unmet Medical Need

At the heart of this combination lies FB-401, Forte’s proprietary live biotherapeutic candidate designed as a topical treatment for inflammatory skin diseases, particularly atopic dermatitis. The therapeutic has already completed Phase 1/2a testing in both adult and pediatric populations (ages 3 and older), demonstrating encouraging efficacy alongside a favorable safety profile. Full trial data is slated for peer-reviewed journal submission during the first half of 2020.

The pediatric atopic dermatitis market represents a substantial unmet medical need, with existing therapeutic options remaining limited. Forte’s differentiated approach through live biotherapeutic technology aims to address this treatment gap, positioning FB-401 as a potentially first-in-class option in this indication.

Financing Structure and Development Timeline

An investor consortium including Alger, BVF Partners LP, and OrbiMed has committed to a $14 million capital injection prior to transaction closing. This financing will fuel further development of the combined entity’s clinical pipeline, with the newly merged company projected to maintain approximately $25 million in total cash following the completion of both the merger and financing.

The clinical roadmap includes initiation of a randomized Phase 2 trial by mid-2020, with data readouts anticipated for mid-2021. This timeline positions Forte’s development program for potential regulatory advancement in the near to medium term.

Transaction Economics and Ownership Structure

Under the definitive agreement, all outstanding Forte shares and related securities will be exchanged for Tocagen equity on a pro forma basis. On a fully-diluted treasury stock method calculation, Tocagen shareholders will retain approximately 25.5% ownership of the combined organization, while Forte shareholders (including incoming investors) will hold approximately 74.5%. The ownership allocation remains subject to adjustment based on Tocagen’s net cash position and the final financing amount at closing.

Leadership and Strategic Direction

Paul Wagner, Ph.D., will serve as president and chief executive officer of the combined entity, headquartered in Torrance, California. The board structure will comprise eight directors, with Forte designating six members and Tocagen designating two, reflecting the ownership composition and Forte’s clinical leadership role in the merged organization.

Regulatory Path and Closing Expectations

The transaction requires stockholder approval at a special meeting and satisfaction of customary closing conditions, including a minimum cash threshold for Tocagen. Closing is anticipated for the second quarter of 2020. Following completion, the organization will pursue regulatory pathways to advance FB-401 toward commercial potential, with particular focus on delivering treatment alternatives for pediatric populations where therapeutic options remain constrained.