Concentra's Buy Offer May Jeopardize Jounce's Merger with Redx

Pictured: Two professionals shaking hands/Courtesy Getty Images

Tuesday, Jounce Therapeutics announced it had received an unsolicited and non-binding acquisition proposal from Concentra Biosciences, looking to buy 100% of Jounce's equity at a per-share price of $1.80 in cash.

Concentra also offered a contingent value right, representing the ability to receive 80% of net proceeds payable from specific Jounce legacy programs. The acquisition proposal is subject to confirmatory due diligence and contingent on the availability of at least $130 million in cash and cash equivalents at the deal's close, net of any tail, closing and other such costs.

Jounce's shares surged 38% in premarket trading Wednesday in response to the news. 

Concentra's offer comes three weeks after Jounce signed an all-stock merger deal with U.K.-based Redx Pharma, which the companies expect to complete by the second quarter of 2023. The resulting combined entity will retain Redx's name and therapeutic focuses: fibrotic diseases and cancer.

A day before the Redx merger, Jounce also kicked off a strategic restructuring initiative which included a 57% workforce reduction due to a lack of funds to support the development of its clinical-stage assets JTX-8064 and vopratelimab.

These assets will be dropped as part of the merger.

In a form 8-K filed with the SEC after Concentra's offer, Jounce said it would convene a shareholder meeting to discuss the merger with Redx "in connection with the proposed transaction."

In the meantime, shareholders are advised that no action is necessary at this time, according to Jounce.

Jounce declined to comment for this article.

Who is Making the Offer?

Kevin Tang CEO, Concentra, formally offered to acquire Jounce in a Mar. 14 letter addressed to Richard Murray, CEO, Jounce.

In the letter, Tang noted that the offer price of $1.80 per share "represents an 80% premium to yesterday's closing price."

"Concentra has funds immediately available to execute this transaction," Tang wrote, citing an arrangement with Tang Capital Partners, L.P., which is Concentra's controlling shareholder.

The capital management firm also owns 10.2% of Jounce's shares.

Concentra expects it to complete due diligence, negotiate a definitive agreement by Mar. 31 and close the deal through a cash tender by May 2023. Jounce has until the end of the day on March 17 to respond, at which point Concentra's offer will expire.