Jounce jilts Redx for Concentra's surprise merger offer, plans to lay off 84% of workforce

Only two weeks after crashing Redx Pharma’s planned reverse merger into Jounce Therapeutics, Concentra Biosciences’ unsubtle tactics appear to have paid off as it walks home with Jounce.

Until a few weeks ago, it looked like Redx’s plans to merge with Jounce were signed, sealed and delivered, with a new, Nasdaq-listed company carrying Redx’s name and focused on its lead candidate set to be created. Instead, Concentra’s CEO Kevin Tang wrote to Jounce’s board of directors on March 14 offering to buy up all of Jounce’s shares for $1.80 apiece.

Jounce announced today that it has accepted a slightly increased offer from Concentra of $1.85 per share, which represents a 75% premium to Jounce’s March 14 share price. The tender offer is due to commence on April 7. Jounce’s shareholders will also receive a contingent value right (CVR) to receive 80% of the proceeds from licensing or selling off any of Jounce’s legacy programs—mirroring a similar clause in the planned deal with Redx.

The acquisition, which is due to close in the second quarter of 2023, also relies on Jounce having $110 million in cash and equivalents at hand. Jounce was expected to contribute at least $130 million to its planned combination with Redx.

Unfortunately for Redx, Jounce’s board has decided that Concentra’s bid “is in the best interests of all Jounce shareholders, and has unanimously approved the merger agreement,” it said in a release this morning. As a result, the board has withdrawn its recommendation for shareholders to accept the Redx offer.

But good news for Jounce’s shareholders isn’t as welcome for the biotech’s employees, 84% of which will be laid off as part of the merger—a rise on the 57% layoffs expected under the Redx combination. The skeleton crew remaining will work to complete the sale and oversee Jounce’s remaining clinical programs: vopratelimab, JTX-8064 and pimivalimab.

Little is known about Concentra, with no details on the company’s website. However, the SEC filing revealed that Concentra’s parent company Tang Capital—which is described on LinkedIn as a life sciences-focused investment company—already owns around 10% of Jounce.

For its part, Redx said today that it “remains fully confident” in the future of the company “despite being disappointed” by Jounce’s decision. “Whilst the offer for Redx has not formally lapsed under the U.K. Takeover Code, the board will consider all options available to it in line with our strategy.”  

Jounce has been rocked by clinical setbacks in recent years, leading the company to seek business development opportunities for its two lead clinical programs in the belief the biotech lacks the resources to show their value.