Dive Brief:

• Omega Therapeutics, a genetic medicines maker originally backed by Flagship Pioneering, plans to soon file for Chapter 11 bankruptcy as it enters a restructuring agreement with Flagship’s “Pioneering Medicines” initiative.
• In a securities filing Monday, the company outlined plans for Pioneering Medicines to offer a bridge loan of $1.4 million to help it continue operating, while negotiating what's known as a stalking horse bid, or an initial offer on Omega's assets, by Pioneering Medicines.
• Omega received a delisting notice from Nasdaq on Jan. 29, more than two months after it announced in November it was pausing the development of its lead program, OTX-2002, a drug for liver cancer and other solid tumors.

Dive Insight:

Omega raised $126 million when it went public in July 2021 with hopes of advancing what it described as “controllers” to regulate gene expression in cancer cells. With the proceeds, Omega launched a Phase 1 trial of OTX-2002 that read out in 2023.

Since halting development of OTX-2002, however, the company has turned its focus to preclinical programs for MASH, obesity and hyperlipidemia. Its platform is built around epigenetics, a field of medicine that studies changes in genetic expression.

Omega and Pioneering Medicines will negotiate a bid for Omega’s remaining assets in the coming weeks.

Omega had struck a deal with Novo Nordisk in January 2024 to make an experimental drug for obesity. After Omega ran into financial issues, fellow Flagship startup Mirai Bio made a bid in late December to acquire its agreement with Novo, in exchange for $8 million of Omega’s debt. Now, Pioneering Medicines is making a bid for that obesity program.

”If Flagship’s bid is selected as the highest and best bid and approved as part of Omega’s planned Chapter 11 bankruptcy proceedings, the company intends to support the continuation of the obesity program, including taking on employees working on the program,” a Flagship spokesperson said.

As part of its restructuring, Omega will lay off up to 17 employees. It’s also challenging a notice of default it received from Banc of California, saying it "believes it was not in default under the loan agreement, and that BOC did not have the right to accelerate the indebtedness or otherwise pursue remedies thereunder."

Several executives and directors have left the company in recent months, according to securities filings, including former CEO Mahesh Karande.

The company’s financial runway as of mid-2024 had put it in “active fundraising/partnering mode rather than in clinical development mode,” Raymond James equity analysts Ryan Deschner and Steven Seedhouse wrote in a November 2024 note to clients.

Omega had $30.4 million in cash and cash equivalents, as of Sept. 30.

At least a few other biotechs have filed for bankruptcy over the past year, including Gritstone Bio and Acorda Therapeutics.