Zafgen Inc. is merging with privately held biotech Chondrial Therapeutics Inc, with the combined company to be renamed Larimar Therapeutics Inc.

Chondrial will become a wholly owned subsidiary of Zafgen while holding about 60% of the combined company's shares. The deal is expected to clear in the first half of 2020. Shareholders of Chondrial will receive newly issued Zafgen common shares via a private placement as part of the transaction.

The acquisition will further the clinical development of Chondrial's treatment CTI-1601, which is designed to target Friedreich's ataxia, Chondrial said in a Dec. 18 press release. The rare genetic disease affects patients' ability to walk and talk and causes a loss of sensation in the arms and legs.

CTI-1601 has previously received the U.S. Food and Drug Administration's rare pediatric disease designation and fast-track tag.

After the merger closes, Larimar Therapeutics will be headquartered in Pennsylvania, with Chondrial CEO Carole Ben-Maimon serving as president and CEO.

The transaction has been approved by the board members of both companies, however, shareholders have yet to vote on the merger.

Zafgen is receiving financial advice from MTS Health Partners LP and legal counsel from Goodwin Procter LLP, while McCarter & English LLP is the legal counsel to Chondrial for the agreement.