Jounce elopes with Concentra, leaving Redx at the altar

A $425 million proposed marriage between Redx Pharma of the UK and Jounce Therapeutics is on the rocks, just over a month after it was first announced.

Jounce has instead thrown its lot in with Concentra Biosciences, another US company that emerged to woo Jounce with an unsolicited offer earlier this month. That has now been upgraded to a definitive agreement to combine the two businesses, leaving Redx out in the cold.

The UK firm confirmed the news in a stock exchange filing earlier today, stating that Jounce had withdrawn its offer to merge and was no longer recommending the deal to shareholders.

Redx board chair Dr Jane Griffiths had little to say about the failed agreement, other than to express her disappointment that it had fallen through, and her confidence in the company’s prospects.

“We strongly believe in the potential of our clinical stage assets and pipeline of development candidates,” she added, pointing to lead drug RXC007, a selective ROCK2 inhibitor currently in a phase 2a trial in idiopathic pulmonary fibrosis (IPF).

Under the terms of the original proposal, the combined company would have been headquartered at Alderley Park in the UK, with a drug discovery and clinical development team located in Massachusetts in the US.

Jounce, meanwhile, said it had agreed to be acquired by Concentra for $1.85 in cash per share, valuing the company at around $96 million, along with an 80% contingent value right (CVR) payment tied to the proceeds of potential divestment deals for Jounce’s 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.

Jounce said that it was also cutting 84% of its workforce - way more than the 57% reduction that would have occurred with the Redx deal - which will cost the company around $6.5 million to finalise.

The Concentra deal is subject to Jounce having at least $110 million in net cash reserves, according to documents filed with the Securities & Exchange Commission (SEC) - less than the $130 million cash in its original offer.

Concentra, which is owned by San Diego-based life sciences investment fund Tang Capital Partners, had previously offered $1.80 per share for the business.