Mysterious biotech makes last-minute bid to snatch Jounce out of Redx's hands

Just last month, Jounce Therapeutics jumped at the chance for a reverse merger into Redx Pharma after conceding its cancer meds were unlikely to advance any further into clinic. Now, the surprise arrival of another offer leaves Jounce in the unexpected position of fighting off prospective suitors.

The new player on the scene is Concentra Biosciences, whose CEO Kevin Tang has offered to buy up all of Jounce’s shares for $1.80 apiece. 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.

“Concentra has funds immediately available to execute this transaction through an arrangement with Tang Capital Partners, its controlling shareholder,” Tang told Jounce’s board of directors in a letter (PDF) sent yesterday. “Furthermore, the management of Concentra has the expertise and resources to both maximize the value of the CVR for the benefit of legacy Jounce stockholders and responsibly wind down clinical study activities for the benefit of patients.”

The last-minute offer from Concentra may come as a surprise at Jounce, which announced on February 23 the combination with Redx via a reverse merger. Under the agreement, Jounce shareholders would exchange 0.2105 shares of their common stock for each share of the British biotech. As of this morning, Redx’s shares were trading on the London Stock Exchange for around 34 pence (41 cents).

Announcing the offer from Concentra, Jounce reminded shareholders about the existing offer from Redx and advised them that “no action is necessary at this time.”

“The board is committed to acting in the best interests of all shareholders, consistent with its fiduciary duties,” the company stated. “A further announcement will be made in due course.”

In a response to the news, Redx simply noted the details of Concentra’s offer and reiterated that the merger with Jounce was due to complete during the second quarter of the year, subject to shareholder approval. “Further updates will be made as and when appropriate,” the company added.

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.

Jounce has been rocked by clinical setbacks in recent years, leading the company to seek business development opportunities for its two lead clinical programs, JTX-8064 and vopratelimab, in the belief the biotech lacks the resources to show their value.

While Jounce announced 57% layoffs on the same day as the agreement with Redx, 47 of Jounce’s staff at a site in Massachusetts were due to be retained, giving Redx expertise in biologics and immuno-oncology, as well as adding some discovery projects to the preclinical pipeline. Work on Jounce’s clinical candidates will stop.

Assuming it isn’t derailed by Concentra’s play, the merger with Redx will see a new, Nasdaq-listed company, carrying Redx’s name and focused on its lead candidate. Jounce was expected to contribute at least $130 million to the combined group, which may explain why Concentra said yesterday that its own offer is subject to “the availability of at least $130 million of cash and cash equivalents at closing.”

Concentra’s surprise move certainly excited Jounce’s investors, who sent the biotech’s stocks jolting 37% in early hours trading to $1.46 per share from a Tuesday closing price of $1.06.