Velaris Goes Public With $350M But Zero Clinical Data: Cardiopulmonary Bet Needs Proof

Paragon Spinout Velaris Therapeutics Completes Reverse Merger

Velaris Therapeutics, a spinout from biotechnology incubator Paragon Labs, has gone public through a reverse merger with Alaunos Therapeutics. This deal, announced on October 13, 2026, sees Velaris's drug programs, focused on diseases of the heart and lungs, taking center stage in the combined entity. Alongside the merger, Fairmount Funds, the founder of Paragon, led a private stock offering that raised approximately $350 million to support Velaris's research and operations into 2029. This marks the ninth spinout from Paragon, with eight now having gone public via reverse mergers.

• The transaction is structured as a reverse merger, where private company Velaris Therapeutics slots into public shell Alaunos Therapeutics, which had previously abandoned its cell therapy programs. The combined business will prioritize Velaris’s pipeline, and Fairmount Funds, Paragon's founder, will appoint four of the five board directors, effectively taking control of the new entity.
• A significant private stock offering, led by Fairmount Funds, concurrently raised around $350 million. This financing is crucial for advancing Velaris’s research pipeline and is expected to fund the new company's operations into 2029. Notable investors participating in the round included Venrock Healthcare Capital Partners, Wellington Management, Janus Henderson Investors, Perceptive Advisors, and T. Rowe Price Investment Management.
• This deal highlights a growing trend of reverse mergers in the biotech sector, with more than two dozen announced in 2026, matching the number of IPOs. Fairmount Labs has been instrumental in legitimizing these deals, offering promising private developers a fast track to public markets. Velaris is the eighth Paragon spinout to go public this way, demonstrating a successful alternative to traditional IPOs.

Addressing Unmet Needs in Heart and Lung Diseases

Precision medicine is reshaping the therapeutic landscape for both cardiac and pulmonary diseases, yet substantial unmet needs persist across multiple patient populations. Recent literature highlights gaps in managing refractory or progressive disease states, underserved phenotypes, and populations historically excluded from pivotal trials.

• Progressive and refractory fibrotic lung disease: Patients with idiopathic pulmonary fibrosis (IPF) or progressive pulmonary fibrosis (PPF) who experience disease progression despite antifibrotic therapy (pirfenidone or nintedanib) represent a critical unmet need. The PROGRESSION-IPF trial is directly addressing the undefined optimal strategy — continuation, switching, or combination — in this population. Nerandomilast, a selective PDE4B inhibitor approved in October 2025, offers a mechanistically distinct option; the phase 3 FIBRONEER-IPF and FIBRONEER-ILD trials demonstrated significant reductions in FVC decline versus placebo, with benefits observed both as monotherapy and alongside background antifibrotic therapy.

• Non-IPF progressive fibrosing ILD: Real-world data indicate that while antifibrotics improve FVC decline in both IPF and non-IPF progressive fibrosing ILD, overall survival benefit among non-IPF patients remains undemonstrated, with no significant difference in mortality between treated and untreated non-IPF groups. This population requires dedicated investigation to determine whether antifibrotics meaningfully alter prognosis beyond lung function metrics.

• Type 2-low, neutrophilic, and mixed granulocytic asthma phenotypes: Current approved biologics for severe asthma — targeting IgE, IL-5/IL-5Rα, IL-4Rα, and TSLP — only partially address non-type 2 endotypes and fail to adequately reverse airway remodeling or prevent persistent exacerbations in heterogeneous populations. Emerging strategies targeting upstream alarmins (TSLP, IL-33), dual/trispecific cytokine pathways, and IgE-producing B cells aim to overcome these limitations, with preclinical and early-phase data suggesting potential disease-modifying effects.

• Eosinophilic COPD and difficult-to-treat COPD phenotypes: Patients with eosinophilic COPD who remain symptomatic despite optimized triple inhaler therapy (ICS/LABA/LAMA) represent an emerging target population. Dupilumab and mepolizumab have demonstrated efficacy in reducing exacerbations in this phenotype, with a matching-adjusted indirect comparison showing no statistically significant difference between the two agents in reducing moderate/severe exacerbations. Ongoing trials are evaluating anti-TSLP (tezepelumab) and anti-IL-33 agents (itepekimab, tozorakimab, astegolimab) in COPD patients experiencing exacerbations, reflecting the broader shift toward precision, endotype-guided therapy.

• Advanced chronic kidney disease patients with cardiovascular risk: Patients with severely impaired kidney function (eGFR ≤25 ml/min/1.73m²), those on hemo- or peritoneal dialysis, and kidney transplant recipients have been systematically excluded from prior SGLT2 inhibitor trials. The Renal Lifecycle trial (NCT05374291) is enrolling approximately 1,500 such patients randomized 1:1 to dapagliflozin 10 mg or placebo, with a composite primary endpoint of heart failure hospitalization, all-cause mortality, or kidney failure, targeting a 25% relative risk reduction.

• Heart failure with preserved ejection fraction (HFpEF): HFpEF remains a syndrome with high morbidity and mortality and limited targeted therapeutic options. Empagliflozin has demonstrated cardioprotective effects in preclinical HFpEF models via AMPK/mTORC1/autophagy pathway modulation, reducing cardiac hypertrophy, fibrosis, and diastolic dysfunction. Inter-atrial shunt device therapy (LA-CS shunting) is being explored in patients with higher natriuretic peptide levels — a marker of more advanced disease — with the ALT-FLOW study demonstrating significant improvements in KCCQ-OSS and NYHA functional class even in the high NP subgroup, alongside preservation of cardiac index and right ventricular function through one year.

• Pulmonary arterial hypertension (PAH) beyond vasodilation: Established PAH therapies primarily correct vasoactive imbalances without reversing pulmonary vascular remodeling. Sotatercept, the first biologic approved for PAH (USA, 2024), targets the activin receptor type IIA signalling pathway to restore the balance between pro-proliferative and anti-proliferative signalling, with multiple clinical trials demonstrating reductions in pulmonary vascular resistance and pulmonary artery pressure — though long-term safety data remain under evaluation.

Velaris's Pipeline: Exploring Novel Cardiopulmonary Targets

Recent research has identified a range of novel molecular targets across pulmonary fibrosis, pulmonary arterial hypertension, and cardiac disease, reflecting a shift toward mechanism-driven therapeutic strategies. Investigations span endothelial biology, extracellular matrix remodeling, transcription factor regulation, and intracellular signaling, with several candidates demonstrating preclinical proof-of-concept.

• MMP19 and the SDF1/CXCR4 and ET1 axes in pulmonary fibrosis: MMP19 expression is significantly increased in lung endothelial cells of IPF patients and bleomycin-induced mice. MMP19 promotes endothelial-to-mesenchymal transition (E(nd)MT), stimulates monocyte infiltration into lung tissues via the SDF1/CXCR4 axis, and interacts physically with Endothelin-1 (ET1). Blocking these interactions with AMD3100 and bosentan alleviated MMP19-driven fibrosis in the bleomycin mouse model, positioning vascular integrity regulated by MMP19 as a promising therapeutic target.

• FoxP1 as a protective transcription factor in IPF and COPD: More than 100 variants in the FoxP1 gene are associated with lung function. Knockdown of FoxP1 in lung epithelial cells increased mRNA levels of matrix metalloproteinases 1, 2, and 3, as well as pro-inflammatory cytokines IL-6 and IL-8, and reduced cell viability after cigarette smoke exposure — processes implicated in the pathogenesis of both COPD and IPF. FoxP1 is proposed as a novel therapeutic target for these lung disorders.

• WNT/RYK signaling as an anti-inflammatory modulator in lung mesenchyme: The WNT co-receptor RYK, acting in mesenchymal tissues, functions as a cell survival and anti-inflammatory modulator. Mesenchymal deletion of Ryk leads to lung inflammation and alveolar simplification, and RYK expression is down-regulated in stromal cells of pneumonitis patient lungs. RYK signaling through β-catenin and NF-κB is identified as part of a safeguard mechanism against excessive inflammatory cytokine production and inflammatory cell recruitment.

• ECM remodeling and mechanotransduction in pulmonary arterial hypertension (PAH): ECM remodeling and pulmonary vascular stiffness occur early in PAH, before increases in intimal and medial thickness and pulmonary artery pressure, suggesting the ECM is a cause rather than a consequence of distal vascular remodeling. Mechanoactivation of signaling pathways including YAP/TAZ, TGF-β, transient receptor potential channels, Toll-like receptor, and NF-κB drives proliferation of pulmonary vascular cells. Inhibition of ECM remodeling and mechanotransduction has been shown to prevent and reverse experimental pulmonary hypertension.

• MMP-10 from M1 macrophages in PAH vascular remodeling: MMP-1 and MMP-10 levels are increased in the medial layer of vessel walls, serum, and M1-polarized macrophages from PAH patients and in rodent PAH models. MMP-10 promotes pulmonary artery smooth muscle cell proliferation and migration via upregulation of cyclin D1 and proliferating cell nuclear antigen, and STAT1 inhibition suppresses hypoxia-induced MMP-10 expression. Circulating MMP-10 is proposed as a potential targeted therapy for PAH.

• Protein kinase targets in heart failure: Chronic activation of kinases including protein kinase A, protein kinase C, calcium/calmodulin-dependent kinase II, mitogen-activated protein kinases, protein kinase B, and Rho-associated protein kinase contributes to progressive cardiac dysfunction. Preclinical studies demonstrate that selective inhibition of these kinases can reverse maladaptive remodeling, improve contractile performance, and attenuate neurohormonal activation.

• Runx1 transcription factor in post-myocardial infarction cardiac remodeling: Runx1 expression is increased in adult cardiomyocytes after myocardial infarction (MI). Cardiomyocyte-specific Runx1-deficient mice were protected against adverse cardiac remodeling after MI, maintaining ventricular wall thickness and contractile function through increased phosphorylation of phospholamban by protein kinase A, relief of sarco/endoplasmic reticulum Ca-ATPase inhibition, and preserved sarcoplasmic reticulum calcium handling. Runx1 is identified as a novel therapeutic target with translational potential.

• Mitophagy flux modulation in cardiac pathology: Inadequate mitophagic flux leads to accumulation of reactive oxygen species, disruption of calcium homeostasis, and uncontrolled inflammation, driving pathological hypertrophy, heart failure, cardiac aging, and obesity-associated cardiomyopathy. Appropriate activation of mitophagy can lessen structural injury and restore pump performance during ischemia reperfusion, pressure overload, and metabolic stress, making careful modulation of mitophagic flux a target for cardioprotective therapy.

• Naltrexone as a repositioned antifibrotic agent targeting ECM remodeling: In a bleomycin-induced pulmonary fibrosis rat model, naltrexone (NTX) significantly reduced alveolar wall thickening, collagen deposition, pro-inflammatory cytokines (TNF-α, IL-6, TGF-β), oxidative stress markers, and key fibrotic markers including α-SMA. NTX inhibited collagen type I and III, TIMP-1, TIMP-2, MMP-2, and MMP-9 production in BLM-stimulated fibroblasts, and modulated Wnt/β-catenin and NF-κB signaling pathways. At 20 mg/kg, antifibrotic efficacy was comparable to that of pirfenidone.

Navigating Current Treatment Challenges in Cardiopulmonary Care

Cardiopulmonary diseases present a complex therapeutic landscape where single-pathway interventions frequently fall short of halting disease progression, and patient heterogeneity continues to confound treatment standardization. Across heart failure, idiopathic pulmonary fibrosis (IPF), and obstructive lung diseases, current approaches face overlapping limitations in efficacy, patient selection, and long-term outcomes.

• Inadequate guidance for bronchodilator use in IPF: Existing guidelines recommend inhaled bronchodilators in IPF only when FEV1/FVC < 0.7; however, the median FEV1/FVC in IPF patients is 0.86, meaning most patients with coexisting small airway dysfunction (SAD) or emphysema are not captured by this threshold. CT-confirmed emphysema was present in 34.92% of patients in one cohort, yet bronchodilator treatment produced no changes in lung function or symptom scores in this subgroup. IOS parameters may better identify patients likely to benefit, but this approach is not yet embedded in standard practice.

• Exclusion of advanced IPF patients from randomized trials: Patients with advanced IPF — defined by FVC < 50% and/or DLCO < 30% of predicted — have not been included in randomized trials of antifibrotic therapy. In a real-world Nordic registry of 502 patients, 66 (13%) had advanced IPF at treatment initiation; these patients had substantially higher mortality (hazard ratio 2.39 [95% CI 1.66, 3.43] for transplant-free survival) compared to those with mild-moderate IPF, despite not showing greater lung function decline over time.

• Self-sustaining fibrotic progression that resists current antifibrotic strategies: Current antifibrotic drugs slow but rarely reverse disease progression in IPF. A proposed mechanistic framework describes pulmonary fibrosis as a self-sustaining pathological tissue-repair state driven by failed alveolar epithelial regeneration, persistent cellular senescence, fibroblast survival, myofibroblast persistence, and progressive matrix stiffening — a feedback loop that single-pathway therapies are unlikely to disrupt effectively.

• Challenges in optimizing disease-modifier drug therapy in advanced heart failure: In advanced heart failure (AdvHF), maintaining optimal medical therapy is complicated by hospitalization, hypotension, renal dysfunction, electrolyte abnormalities, medical inertia, and patient adherence. Newer drug classes shown to modify the natural history of heart failure with reduced ejection fraction remain insufficiently adopted, limiting the real-world impact of evidence-based regimens.

• Prognostic uncertainty and barriers to palliative care integration in heart failure: Approximately 30% to 50% of patients with heart failure die suddenly, and 50% of patients with advanced heart failure die within 1 year of diagnosis. The unpredictable disease trajectory creates barriers to timely palliative care referral, compounded by misconceptions among patients, families, and clinical staff, organizational constraints, and the absence of universally agreed performance indicators for symptom assessment and quality-of-life measurement in end-stage disease.

• Pharmacokinetic drug-drug interactions in complex heart failure regimens: Patients with chronic heart failure frequently require combinations of narrow therapeutic window drugs — including statins, anticoagulants, antiplatelet agents, and cardiac glycosides — alongside treatments for comorbid conditions. The most common pharmacokinetic mechanisms driving interactions involve CYP3A4, CYP2C9, and P-glycoprotein, and the frequency and complexity of these interactions is high, requiring specialized modeling tools such as PBPK software to identify and manage risks that would otherwise be difficult to assess.

• Limited efficacy of low-dose theophylline in mild-to-moderate COPD: In a randomized, double-blind, placebo-controlled trial across ten centres in China (734 subjects randomized; 615 completing the study), low-dose theophylline sustained-release tablets (100 mg twice daily) for 12 months did not reduce annual exacerbation rates (0.46 ± 0.03 vs. 0.43 ± 0.04 per patient-year; RR 1.07 [95% CI 0.84 to 1.36]; p = 0.607) and produced only a modest improvement in pre-bronchodilator FEV1 of 30 ml [95% CI, 3 to 57 ml] (p = 0.031), highlighting the limited therapeutic gains achievable with anti-inflammatory bronchodilator strategies in this population.

Velaris's Bold Leap into Cardiopulmonary Innovation

The emergence of Velaris Therapeutics onto the public market, backed by a substantial $350 million capital raise, signals a pivotal moment for innovation in the challenging fields of heart and lung diseases. This strategic move, facilitated by a reverse merger, underscores a growing industry appetite for tackling conditions like cystic fibrosis (CF), pulmonary arterial hypertension (PAH), and various forms of heart failure, where significant unmet needs persist. Current therapeutic paradigms often manage symptoms, but the literature points to a clear shift towards developing disease-modifying treatments that address underlying pathologies. Velaris's focus aligns with this trend, potentially exploring advanced modalities such as gene therapy for genetic defects in CF, cell-based therapies for lung regeneration, or anti-remodeling agents for cardiac and pulmonary vasculopathies.

The substantial funding provides a critical lifeline, offering the necessary runway to navigate the often lengthy and capital-intensive research and development cycles inherent in these complex areas. This financial backing is particularly vital given the translational hurdles that many promising preclinical discoveries face when moving into human clinical trials. For instance, while gene therapy for CF holds immense promise, demonstrating safety, efficacy, and durability in human lungs remains a significant challenge. Similarly, the multifactorial nature of conditions like heart failure, involving intricate processes of inflammation, fibrosis, and mitochondrial dysfunction, means that single-target approaches may yield limited long-term benefits. Velaris will need to carefully consider these complexities and the rapidly evolving competitive landscape, where new therapies, such as BMP/TGF-β modulators in PAH, are already reshaping treatment paradigms. Success will hinge on demonstrating clear clinical advantages and navigating the intricate biological and regulatory pathways to bring truly transformative therapies to patients.