Concentra gatecrashes Jounce and Redx’ merger party

merger three way
Philip Neumann

Three weeks after Redx Pharma and Jounce Therapeutics announced a merger, their plans have been disrupted by an unsolicited offer for Jounce from little-known Concentra Biosciences.

Little is known about Concentra – its website consists of nothing but a contact form – but news of the bid sparked a 40% spike in Jounce’s shares to $1.49. Redx dipped fractionally on the news, but then shot up almost 25% after it issued a statement saying it still expected the all-stock merger to complete as planned in the second quarter.

Concentra is reported to be majority owned by San Diego-based life sciences investment fund Tang Capital Partners, and has offered Jounce investors $1.80 in cash per share for the company. Also sweetening the deal is a contingent value right (CVR) that would allow them to receive 80% of the net proceeds if Jounce is able to sell or license out its legacy drug programmes.

That includes two clinical-stage drugs, ILT4 inhibitor JTX-8064 and ICOS agonist vopratelimab, which Jounce has indicated would cost too much for it to take forward independently.

Redx and Jounce announced their merger agreement as the latter gave up on developing its pipeline itself, laying off 57% of its headcount. It has pledged to contribute its sizeable $150 million-plus cash reserves to the development of Redx’ cancer and fibrotic disease drug candidates, headed by RXC007, a selective ROCK2 inhibitor currently in a phase 2a trial in idiopathic pulmonary fibrosis (IPF).

Tang Capital – which is led by Ardea Biosciences founder Kevin Tang, who is also CEO of Odonate Therapeutics, as well as Concentra, and was on the board of TetraPhase – has said its offer is contingent on the availability of at least $130 million of cash and cash equivalents at closing. It currently holds around 10% of Jounce’s shares.

A Securities & Exchange Commission (SEC) filing reveals a letter from Tang to Jounce stating that it has the funds available to complete the deal, and that Concentra “has the expertise and resources to both maximise the value of the CVR for the benefit of legacy Jounce stockholders and responsibly wind down clinical study activities for the benefit of patients.”

Jounce’s statement on the unsolicited offer was neutral, saying that, while it anticipated the Redx deal to go through, it “is committed to acting in the best interests of all shareholders, consistent with its fiduciary duties.” It added that “a further announcement will be made in due course.”

If the Redx merger goes through as planned, it will create a new company to be called Redx Inc, with a paper value of around $425 million, that will be listed on the Nasdaq under the REDX ticker.

Image by Philip Neumann from Pixabay