Jounce Slashes 57% of Staff, Drops Assets in Stock Merger with Redx
One day after revealing a restructuring initiative, Jounce Therapeutics announced it plans to merge its business in an all-stock deal with clinical-stage biotech Redx Pharma.
The news comes after Jounce stated Wednesday it planned to cut staff by about 57% due to a lack of funds for its clinical assets, JTX-8064 and vopratelimab. As a result of the merger, those assets will be dropped.
Jounce’s shares rose 35% Thursday morning in response to the news.
The staff cuts are expected to be complete by March 31, after which time the remaining Jounce employees (approximately 47 in total) will work at an R&D base in Massachusetts.
The new company will keep Redx’s name and will target fibrotic diseases and cancer.
Its highest priority and lead asset will be next-generation selective Rho kinase 2 (ROCK2) inhibitor RXC007, which is currently being studied as a therapy for idiopathic pulmonary fibrosis in a Phase IIa trial. Topline data from the trial is expected in Q1 2024.
Lisa Anson, CEO of Redx Pharma, will become CEO of the new company. In the press release, Anson stated the new team will combine Redx’s track record in small molecule drug discovery with Jounce’s expertise in biologics and immunotherapy. She added that the company plan to look into opportunities to study RXC007 in cancer-associated fibrosis and other interstitial lung diseases.
Redx stockholders are expected to hold about 63% stake in the company, while Jounce stockholders will own about 37%. The new board will be comprised of members from each company, reflecting that ratio.
Redx shareholders will receive 0.2105 Jounce shares for each Redx share, pending approval from each company’s shareholders and regulatory bodies.