Rallybio Pivots Strategy, Sells Stake in Rare Disease Program to Extend Cash Runway

Rallybio, a biotech company focused on developing therapies for rare diseases, has made a strategic shift by divesting its interest in a preclinical program to Recursion Pharmaceuticals. This move is designed to extend the company's financial runway and allow it to concentrate on its remaining pipeline assets.

Deal Structure and Financial Impact

Rallybio has accepted $7.5 million upfront from Recursion for its share of REV102, an ENPP1 inhibitor in preclinical development for hypophosphatasia (HPP). The agreement includes potential milestone payments totaling $17.5 million, with $12.5 million tied to additional preclinical studies and $5 million linked to the initiation of a phase 1 trial.

The transaction, conducted primarily through share-based payments, comes with provisions to ensure Rallybio receives the agreed-upon cash value. This deal extends Rallybio's cash runway into mid-2027, providing an additional cushion beyond the previously projected first half of 2027.

Strategic Refocus Following Setbacks

This divestment follows a series of challenges for Rallybio, including a significant setback in its lead program that resulted in workforce reductions. The company had previously warned of potential difficulties in managing both in-house and partnered projects with its reduced team size.

By selling its stake in REV102, Rallybio aims to streamline its operations and focus on RLYB116, a C5 inhibitor currently under development. The company plans to publish topline data from a confirmatory pharmacokinetic and pharmacodynamic study of RLYB116 later this year.

Recursion's Plans for REV102

With the acquisition of full rights to REV102, Recursion Pharmaceuticals is now solely responsible for advancing the program. The company is currently conducting IND-enabling studies and aims to initiate clinical trials in the second half of 2026.

REV102 represents a potential oral alternative to AstraZeneca's Strensiq for the treatment of HPP, a rare genetic disorder that affects bone mineralization. While several companies are developing ENPP1 inhibitors, most are focused on oncology applications. Recursion joins a select group, including Alesta Therapeutics, in targeting the HPP market specifically.