Quince Therapeutics is trying to make itself a less appetizing bite for potential buyers to fend off an unsolicited buyout bid from Echo Lake Capital. The “poison pill” is intended to deter investors from accumulating stock on the open market and will kick in once they buy a set percentage of the shares.
Last month, Echo Lake offered $1.60 a share in cash to buy Quince. The stock was trading at 84 cents before the buyout bid, reflecting the fact that Quince, formerly known as Cortexyme, has struggled to regain ground after its Alzheimer’s disease plans unraveled early in 2022. Management responded by buying Novosteo and changing its name, only to later seek to outlicense the recently acquired assets.
Quince wants to rebuild by using the $94 million it had at the end of last year to pick up new clinical-stage assets. Echo Lake has another plan, arguing that the uncertainty created by Quince’s lack of a pipeline is causing investors to undervalue its cash, Novosteo asset and federal net operating loss carryforwards.
After receiving the Echo Lake offer, Quince said it would “carefully review and evaluate the proposal to determine the course of action it believes is in the best interests of the company and its stockholders.” Now, Quince is erecting barriers to a deal.
The biotech, which takes its name from a hard, tart and astringent fruit that is rarely eaten raw, has put a stockholder rights plan in place for one year. While the plan is active, the acquisition of 10% or more of Quince’s stock, or 15% under certain circumstances, will trigger certain changes that could put a buyer off hoovering up shares on the open market.
Quince adopted the plan days after another investor, Tang Capital Partners, said it had built up a 9.98% stake in the company. Tang, a life science-focused investment group, has a history of taking positions in struggling biotechs, with recent financial disclosures revealing stakes in Jounce Therapeutics, Elevation Oncology and Tcr2 Therapeutics.
A day after announcing the corporate defense mechanism, Quince said it had hired MTS Health Partners to review and explore strategic alternatives. The priority, Quince says, will be to focus on in-licensing and acquisition opportunities, in addition to "alternative options and proposals."
Editor's note: This story was updated after Quince announced it had hired MTS Health Partners to help review strategic alternatives.