Shares of Jounce Therapeutics JNCE were up 21.2% on Mar 27 after management announced that the company entered into an agreement with Concentra Biosciences (“Concentra”) wherein the former will acquire the former’s entire equity stake.

Per the terms of the agreement, shareholders of Jounce will receive $1.85 per share in cash, which is at a premium of 22.5% over Jounce’s closing price on Mar 24. The shareholders will also receive a contingent value right (“CVR”), which is a right to receive 80% of the net proceeds payable from any license or disposition of certain of Jounce’s legacy programs.

The deal, which is expected to be completed by second-quarter 2023, is based on the assumption that Jounce has at least $110 million in cash and cash equivalents. The deal has also been unanimously approved by Jounce’s board of directors.

Alongside this merger agreement, Jounce will also undertake a workforce reduction of nearly 84% employees. In turn, management will incur restructuring costs totaling around $6.5 million. This reduction is expected to be completed by the end of next month. The remaining employees will continue to work on completing the merger deal and the ongoing clinical studies sponsored by Jounce.

In the year so far, shares of Jounce have surged 64.9% against the industry’s 0.3% fall.

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By entering into the agreement with Concentra, Jounce rejected the deal for an all-share merger with Redx Pharma, which was previously unanimously approved by Jounce’s board of directors last month. The board has now withdrawn this approval and recommends that Concentra’s deal is in the best interest of all of Jounce’s shareholders.

Tang Capital Partners is a controlling shareholder in Concentra, while it owns around 10.2% stake in Jounce. Concentra, through one of its subsidiaries, will initiate a tender offer by Apr 7 to acquire the remaining outstanding shares of Jounce.

These buyout offers are being considered by Jounce as it lacks the resources needed to advance its pipeline development. Last month, Jounce announced that it would reduce its workforce by around 57% to advance the clinical development of its pipeline. These restructuring activities are being undertaken by management to curb cash burn.

Jounce Therapeutics, Inc. Price

 

Jounce Therapeutics, Inc. price | Jounce Therapeutics, Inc. Quote

 

Zacks Rank & Stocks to Consider

Jounce Therapeutics currently carries a Zacks Rank #2 (Buy).Some better-ranked stocks in the overall healthcare sector include Certara CERT, CRISPR Therapeutics CRSP and EQRx EQRX. While Certara sports a Zacks Rank #1 (Strong Buy), CRISPR Therapeutics and EQRx carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.