(Alliance News) - Redx Pharma PLC and Jounce Therapeutics Inc on Thursday said they have agreed to an all-share merger that will create a USD425 million company focused on the treatment of cancer and fibrotic diseases.
Macclesfield, England-based Redx Pharma and Cambridge, Massachusetts-based Jounce Therapeutics said the proposal will leave Redx shareholders owning 63% of the combined company and Jounce Therapeutics holders 37%. However, the company, to be called Redx Inc, will be listed on Nasdaq, on which Jounce currently trades.
Redx Pharma shareholders will receive 0.2105 of a Jounce share for each Redx share. Jounce shares closed at USD0.99 in New York on Wednesday, but were up 29% to USD1.28 in the pre-market Thursday. Redx Pharma shares were up 3.0% to 51.50 pence in London.
"While the majority of the combined group's operations, and its headquarters, will be at Alderley Park in the UK, we believe that listing solely on Nasdaq is the most efficient way to enable us to access a deep pool of risk capital and engage with specialist global investors to support our future growth," said Redx Pharma Chief Executive Officer Lisa Anson, who will lead the combined entity.
Current Redx Chair Jane Griffiths will be the non-executive chair of the combined company.
"The business combination will create a transatlantic organisation specialised in developing both small molecule targeted therapeutics and antibody drug discovery for the treatment of cancer and fibrotic diseases, that will leverage the proven capabilities of both companies," the two companies said.
The combination of the cash resources of the two companies will provide a cash runway into the second half of 2025, the companies said. Jounce is expected to have USD155 million in cash and cash equities, with at least USD130 million of this available to the combined company after costs.
"By combining Redx's proven track record in small molecule drug discovery and development with Jounce's expertise in biologics and immunotherapy, we will establish a world-class biotech company with a robust pipeline, aimed at developing therapeutics for cancer and fibrotic disease. RXC007, our next-generation ROCK2 inhibitor, will lead the clinical pipeline," Anson said, "and we will now further investigate opportunities for this asset in cancer-associated fibrosis and other interstitial lung diseases."
The merger, by way of a scheme of arrangement, is expected to be completed in the second quarter of the year. It needs to be approved by 75% of Redx shareholders at a general meeting to be held in the second quarter.
By Tom Waite, Alliance News editor
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