Redx joins with Jounce to create cancer, fibrosis biotech

UK biotech Redx Pharma and US-based Jounce Therapeutics have agreed to merge, pooling their resources to create a new company dedicated to the development of small-molecule and antibody drugs for cancer and fibrotic diseases.

The all-share merger deal 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, said the two firms in an announcement this morning.

The new Redx will be led by the UK biotech’s current chief executive, Lisa Anson, and have its headquarters in Alderley Park in the UK, with an R&D team located at Jounce’s site in Massachusetts.

Its pipeline will be led by RXC007, a selective ROCK2 inhibitor currently in a phase 2a trial in idiopathic pulmonary fibrosis (IPF), a drug in the same class as Kadmon Pharmaceuticals’ Rezurock (belumosidil), which was approved by the FDA for graft-versus-host disease (GvHD) in 2021 shortly before Kadmon was acquired by Sanofi.

The deal has been announced the day after Jounce said it was slashing its headcount by 57% after concluding that it did not have the financial resources to take its lead clinical programmes, JTX-8064 and vopratelimab, forward.

Prospects for ICOS agonist vopratelimab were already looking speculative after it generated mixed results alongside other cancer immunotherapies in solid tumour trials. ILT4 inhibitor JTX-8064 had reached phase 1, but isn’t mentioned in the merger statement, and Jounce has said it wants to license out both programmes.

After RXC007, the new Redx pipeline features RXC004 for Wnt-ligand dependent cancers, which is in phase 2, and RXC008, a GI-targeted ROCK inhibitor for fibrostenotic Crohn’s disease due to start human testing next year.

Once the deal goes through, the combined company will start operations with around $130 million in cash or equivalents, which should be enough to fund operations into the first half of 2025 - well after an anticipated readout for the IPF study in the first quarter of next year.

The kitty has been swelled by Jounce’s revised licensing deal with Gilead Sciences for CCR8-targeting cancer immunotherapy GS-1811, which saw a $67 million payment from Gilead to take full ownership of the programme in December.

Anson said combining Redx’s proven track record in small molecule drug discovery and development with Jounce’s expertise in biologics and immunotherapy “will establish a world-class biotech company with a robust pipeline”.

The deal is expected to be completed in the second quarter, pending the usual approvals from both companies’ shareholders, as well as regulatory authorities.

The merger is further evidence of an uptick in M&A in the biotech sector after a lacklustre 2022, coming after Chiesi’s acquisition of Amryt Pharma, Ipsen’s play for Albireo, and AstraZeneca’s agreement to buy CinCor Pharma in the first few weeks of the year.