Redx Pharma merger collapses after proposed partner agrees US takeover deal
The proposed $425m merger of Cheshire drug discovery business Redx Pharma with American drug research business Jounce Therapeutics is off.
Alderley Park-based Redx announced the recommended proposed deal last month, but almost a fortnight ago the merger was thrown into doubt after an unsolicited offer from US-based Concentra Biosciences LLC was lodged for Jounce.
Today, Jounce confirmed it has entered into a definitive merger agreement to be acquired by Concentra, quashing any likelihood of a merger with Alderley Park-based Redx.
In a stock exchange announcement this afternoon (March 27), Redx said it noted the announcement by the proposed partner, adding: “The board of directors of Jounce has, therefore, withdrawn its recommendation for the proposed all-share merger transaction with Redx announced on 23 February 2023 and has notified Redx of the termination of the co-operation agreement between Redx and Jounce in respect of the business combination.”
Dr Jane Griffiths, chair of the board of Redx said: “The board remains fully confident in the future of Redx despite being disappointed that the board of Jounce has now decided to recommend a cash offer for their company at this late stage.
“We strongly believe in the potential of our clinical stage assets and pipeline of development candidates.
“Whilst the offer for Redx has not formally lapsed under the UK Takeover Code, the board will consider all options available to it in line with our strategy.”
Under the terms of the original proposal, the combined Redx-Jounce group was proposed to be headquartered at Alderley Park, with a drug discovery and clinical development team in Massachusetts, USA.
When the deal was announced on February 23, based on Redx’s fully diluted market capitalisation of £244m ($294m) and Jounce’s expected cash and cash equivalents at the time of completion, it implied a market value for the combined group of $425m, before taking into account the value of Jounce’s existing clinical and non-clinical stage programmes.
Jounce is developing cancer treatments and the merger with Redx would have created a transatlantic research business focused on developing small molecule drugs and biologics, and a clinical pipeline with multiple value inflection points in the near and medium term.
Shares in the merged business would have been solely listed on the Nasdaq exchange in the US and led by current Redx chief executive Lisa Anson. Dr Jane Griffiths would have become the non-executive chair of the combined group, with the board, including representatives from both Redx and Jounce, in line with the relative shareholding percentages.