REG - Redx Pharma plc Jounce Therapeutics - Recommended Business Combination

Redx PharmaAnnouncement

23/02/2023 07:15

For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20230223:nRSW8254Qa&default-theme=true

RNS Number : 8254Q  Redx Pharma plc  23 February 2023

Redx and Jounce Announce Recommended Business Combination

 

Combined group will have a strong clinical pipeline and proven expertise in
the discovery and development of highly selective therapeutics for the
treatment of cancer and fibrotic disease

 

RXC007, a next-generation selective ROCK2 inhibitor, to lead clinical
pipeline; portfolio to include discovery projects from both Redx and Jounce

 

Combined group to be called Redx Inc. listed on Nasdaq under the ticker REDX
and led by Redx CEO Lisa Anson with cash runway into H2 2025

 

Alderley Park, UK and Cambridge, Mass. USA 23 February 2023 Redx Pharma (AIM:
REDX) and Jounce Therapeutics, Inc. (Nasdaq: JNCE) today announce an
unanimously recommended Business Combination of the two companies via a
proposed all share merger transaction. Redx is a clinical-stage biotechnology
company focused on the discovery and development of novel, small molecule,
targeted therapeutics for the treatment of cancer and fibrotic diseases and
the emerging area of cancer-associated fibrosis. Jounce is a clinical-stage
immunotherapy company, dedicated to transforming the treatment of cancer by
developing therapies that enable the immune system to attack tumors and
provide long-lasting benefits to patients through a biomarker approach. The
Business Combination will create a transatlantic organization with proven
expertise in both small molecule drugs and biologics, and a clinical pipeline
with multiple value inflection points in the near and medium term.

 

The combined group's highest priority will be the development of RXC007, a
next-generation selective ROCK2 inhibitor, which is currently being assessed
in a Phase 2a study in idiopathic pulmonary fibrosis (IPF), with topline data
expected in Q1 2024. ROCK2 inhibition is now a commercially validated target
with potential in multiple disease areas, following the recent US FDA approval
and launch of the first drug with this mechanism of action. In addition to the
ongoing clinical development plan in IPF, Redx has also generated supportive
preclinical data that highlights the broad potential of next-generation ROCK2
inhibitors across a number of fibrotic indications where there remains a
significant unmet need, which supports potential development opportunities in
other interstitial lung diseases and cancer-associated fibrosis. Additionally,
RXC004 is being developed as a targeted treatment for Wnt-ligand dependent
cancers and is progressing through Phase 2 trials, and RXC008, a GI-targeted
ROCK inhibitor for fibrostenotic Crohn's disease, is expected to enter
clinical development in H1 2024.

 

Lisa Anson, Chief Executive Officer, Redx Pharma commented: "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, and we will now further
investigate opportunities for this asset in cancer-associated fibrosis and
other interstitial lung diseases. 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."

 

Richard Murray, Ph.D., Chief Executive Officer and President of Jounce
Therapeutics commented: "I am very proud of the work we have achieved at
Jounce and today's news is testament to the accomplishments of our team's
efforts. We are pleased that many of our employees will join the combined
group and continue to focus on bringing much-needed alternatives to patients.
Additionally, we are pleased that Redx will continue to advance certain of our
early discovery programs. With a focus on cancer and fibrosis, and a strong
scientific basis for discovery and development programs in those areas, we
believe that the new company will be well positioned to succeed."

 

At the time of the completion of the Business Combination, Jounce is expected
to have around $155m of cash and cash equivalents, which net of any tail and
closing costs results in at least $130m in cash and cash equivalents available
to the combined group. Together with Redx's expected cash at completion would
provide the combined group with cash runway into H2 2025. Based on Redx's
fully diluted market capitalization of £244m ($294m) as at the Last
Practicable Date and Jounce's expected cash and cash equivalents at the time
of completion, this implies a market value for the combined group of $425m,
before taking into account the value of Jounce's existing clinical and
non-clinical stage programs.

 

This announcement follows the earlier news(1) that Jounce plans to reduce its
workforce by approximately 57%. After completion of the transaction, around 47
Jounce employees will be retained by the combined group at a research and
development base in Massachusetts, USA and will bring complementary expertise
in biologics and immuno-oncology. Jounce's clinical programs will not be
pursued in-house beyond the currently ongoing studies.

 

Management and Organization

Named Redx Inc., the combined group will be solely listed on Nasdaq in the US
under the ticker symbol REDX. Led by current Redx CEO Lisa Anson, Dr Jane
Griffiths current Redx Chair will 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. The combined group
will be headquartered at Alderley Park, UK, with a drug discovery and clinical
development team in Massachusetts, USA.

 

About the transaction

Under the terms of the Business Combination, Redx Shareholders shall be
entitled to receive 0.2105 Jounce Shares in exchange for each Redx Share (the
"Exchange Ratio"). Jounce intends to conduct a reverse stock split of Jounce
Shares in conjunction with the Business Combination, with a ratio of one new
share for every five outstanding shares of Jounce. A reverse split is a share
exchange transaction, without any impact on the amount of the share capital:
only the number of outstanding shares is modified. If the Reverse Stock Split
is approved by Jounce Shareholders, the Exchange Ratio will be adjusted to
0.0421 Jounce Shares in exchange for each Redx Share.

 

Immediately following completion of the Business Combination, including
conversion of the Redx Convertible Loan Notes, Redx Shareholders are expected
to own approximately 63% and Jounce shareholders approximately 37% of the
share capital of the combined group.

 

The Business Combination is expected to be implemented by way of a Scheme of
Arrangement ("Scheme") of Redx under Part 26 of the UK Companies Act,
immediately preceded by a merger transaction between RM Special Holdings 3,
LLC, an entity controlled by Redmile, and Jounce and its affiliates (the
"Redmile Merger"), which together will result in Jounce owning the entire
issued and to be issued ordinary share capital of Redx. Further details of the
Redmile Merger and the ability for eligible Redx Shareholders to request that
their Redx Shares be transferred to Jounce via a similar merger structure are
set out in the Rule 2.7 announcement.

 

In connection with the Business Combination, a non-transferrable Contingent
Value Right ("CVR") is expected to be distributed to Jounce Shareholders that
held Jounce Shares prior to completion of the Business Combination and holders
of Jounce Share Awards immediately prior to completion of the Business
Combination comprising vested options, relating to certain existing Jounce
clinical and non-clinical stage programs. The CVRs shall entitle the relevant
Jounce Shareholders to receive, on a pro rata basis, subject to certain terms
and conditions, 80% of the net proceeds resulting from any sale, transfer,
disposition, spin-off, or license of certain assets relating to such programs
that is consummated within one year following the Business Combination,
subject to one six-month extension term in certain limited circumstances, as
set forth in the CVR Agreement.

 

The Boards of both Redx and Jounce have unanimously recommended that
shareholders vote in favor of the Business Combination. In connection with the
Business Combination, Jounce has received irrevocable undertakings from Redx
Shareholders who together own 76.6% of Redx's share capital as of 22 February
2023 (excluding the Redx shares held by RM3) and RM3 has entered into the
Redmile Merger Agreement conditional on the Court sanctioning the Scheme and
will receive the same Exchange Ratio. Both Redmile and Sofinnova have agreed
to convert all the Redx Convertible Loan Notes held by them respectively as
part of the transaction. Redx has also received voting and support agreements
in respect of Jounce shares, representing, in aggregate, approximately 21.3%
of the issued and outstanding share capital of Jounce. Full details of the
undertakings and voting and support agreements are contained in the Rule 2.7
announcement.

 

It is expected that the Business Combination will complete during the second
quarter of 2023, subject to satisfaction or waiver of the Conditions including
approval of the Scheme by Redx Shareholders, Jounce Shareholder approvals, and
customary regulatory approvals.

 

Defined terms have the meaning given to them in the Rule 2.7 announcement.
Additional details on the Business Combination are available in the Rule 2.7
announcement which is available at www.redxpharma.com/investor-centre/
(http://www.redxpharma.com/investor-centre/) and in the Investors and Media
section of Jounce's website at www.jouncetx.com (http://www.jouncetx.com) .

 

Conference Call and Webcast

Jounce and Redx will host a live conference call and webcast today at 08:00
ET/13:00 GMT. To access the conference call, please register here
(https://webcast.openbriefing.com/redx-jounce/) and please be advised to do so
at least 10 minutes prior to joining the call. The live webcast can be
accessed under "Events & Presentations" in the Investors and Media section
of Jounce's website at www.jouncetx.com (http://www.jouncetx.com) and on the
investor section of Redx's website at
www.redxpharma.com/investor-centre/presentations-analyst-reports-documents-and-videos/
(http://www.redxpharma.com/investor-centre/presentations-analyst-reports-documents-and-videos/)
. The webcast will be archived and made available for replay on Jounce and
Redx's websites approximately two hours after the call and will be available
throughout the offer period thereafter.

 

 

 For further information, please contact:

 Redx Pharma Plc                                         T: +44 (0)1625 469 918

 UK Headquarters
 Caitlin Pearson Head of Communications
 ir@redxpharma.com (mailto:ir@redxpharma.com)

 Lisa Anson, Chief Executive Officer

 US Office
 Peter Collum, Chief Financial Officer

 Centerview Partners UK LLP (Financial Adviser to Redx)  T: +44 (0) 20 7409 9700
 Richard Girling/ Hadleigh Beals/ Alex Elias

 SPARK Advisory Partners (Nominated Adviser)             T: +44 (0)203 368 3550
 Matt Davis/ Adam Dawes

 WG Partners LLP (Joint Broker)                          T: +44 (0)203 705 9330
 David Wilson/ Claes Spång

 Panmure Gordon (UK) Limited (Joint Broker)              T: +44 (0)207 886 2500
 Rupert Dearden/ Freddy Crossley/ Emma Earl

 FTI Consulting (Financial Communications Adviser)       T: +44 (0)203 727 1000
 Simon Conway/ Ciara Martin

 Jounce Therapeutics, Inc.
 Kim Drapkin/Eric Laub                                   T: +1-857-259-3840

 ir@jouncetx.com

 Cowen (Financial Adviser to Jounce)                     T: +1-646-562-1010
 Tanya Joseph / Erik Schuchard / Giles Roshier           T: +44 (0)203 011 0460

 Stern Investor Relations (Adviser to Jounce)            T: +1-212-362-1200

 Julie Seidel

 

About Redx Pharma Plc

Redx Pharma (AIM: REDX) is a clinical-stage biotechnology company focused on
the discovery and development of novel, small molecule, highly targeted
therapeutics for the treatment of cancer and fibrotic disease and the emerging
area of cancer-associated fibrosis, aiming initially to progress them to
clinical proof of concept before evaluating options for further development
and potential value creation. The company's lead fibrosis product candidate,
the selective ROCK2 inhibitor RXC007, is in development for interstitial lung
disease and commenced a Phase 2a trial for idiopathic pulmonary fibrosis (IPF)
in October 2022. Redx's lead oncology product candidate, the Porcupine
inhibitor RXC004, being developed as a targeted treatment for Wnt-ligand
dependent cancers, commenced a Phase 2 programme in November 2021. Redx's
third drug candidate, RXC008, a GI-targeted ROCK inhibitor for the treatment
of fibrostenotic Crohn's disease, is progressing towards a CTA/IND application
at the end of 2023.

 

The company has a strong track record of discovering new drug candidates
through its core strengths in medicinal chemistry and translational science,
enabling the company to discover and develop differentiated therapeutics
against biologically or clinically validated targets. The company's
accomplishments are evidenced not only by its two wholly-owned clinical-stage
product candidates and rapidly expanding pipeline, but also by its strategic
transactions, including the sale of pirtobrutinib (RXC005, LOXO-305), a
non-covalent (reversible) BTK inhibitor now approved by the US FDA for adult
patients with mantle cell lymphoma previously treated with a covalent BTK
inhibitor, and AZD5055/RXC006, a Porcupine inhibitor targeting fibrotic
diseases including IPF, which AstraZeneca is progressing in a Phase 1 clinical
study. In addition, Redx has forged collaborations with Jazz Pharmaceuticals,
which includes JZP815, a pan-RAF inhibitor developed by Redx which Jazz is now
progressing through Phase 1 clinical studies and an early stage oncology
research collaboration.

 

To subscribe to Email Alerts from Redx, please visit:
www.redxpharma.com/investor-centre/email-alerts/
(http://www.redxpharma.com/investor-centre/email-alerts/)

 

About Jounce Therapeutics

Jounce Therapeutics, Inc. is a clinical-stage immunotherapy company dedicated
to transforming the treatment of cancer by developing therapies that enable
the immune system to attack tumors and provide long-lasting benefits to
patients through a biomarker-driven approach. Jounce currently has multiple
development stage programs ongoing while simultaneously advancing additional
early-stage assets from its robust discovery engine based on its Translational
Science Platform. For more information, please visit www.jouncetx.com
(http://www.jouncetx.com) .

 

No Offer or Solicitation; Further Information

This announcement is for information purposes only and is not intended to and
does not constitute, or form part of, an offer, invitation or the solicitation
of an offer to purchase, otherwise acquire, subscribe for, sell or otherwise
dispose of any securities, or the solicitation of any vote or approval in any
jurisdiction, pursuant to the proposed transaction or otherwise, nor the
announcement of a forthcoming solicitation of any offer to acquire or dispose
of securities or of any vote or approval, nor shall there be any sale,
issuance or transfer of securities of Redx or Jounce in any jurisdiction. Any
securities issued as part of the Business Combination are anticipated to be
issued in reliance upon available exemptions from registration requirements of
the Securities Act of 1933, as amended. The information contained in this
announcement should not be construed to constitute any form of advice or
recommendation, including but not limited to investment, tax, legal or other
advice, and should not be relied upon as the basis for any decision or action.

 

The proposed transaction will be implemented solely pursuant to the terms of a
Scheme Document (the "Scheme Document") (together with a definitive proxy
statement), which will contain the full terms and conditions of the proposed
transaction, including details of how to vote in respect of the proposed
transaction. Any decision in respect of, or other response to, the proposed
transaction should be made only on the basis of the information in the Scheme
Document and such definitive proxy statement.

 

This announcement does not constitute a prospectus or a prospectus-equivalent
document.

 

Forward-Looking Statements

This press release contains forward-looking information within the meaning of
the Private Securities Litigation Reform Act of 1995, as amended, and other
securities laws. Forward-looking statements are statements that are not
historical facts. Words and phrases such as "aim," "believe," "expected,"
"forward," "opportunities," "plan," "proposed," "will" and similar expressions
are intended to identify forward-looking statements. These statements include,
but are not limited to, statements regarding future events such as: the
expected structure, anticipated synergies, terms, timing and closing of the
proposed transaction; areas of focus of the new company and development of
pipeline assets; the further clinical development of RXC007 and the
anticipated timing of data with respect to RXC007 and other clinical programs;
the composition of the board and management of the combined entity; any
potential CVR payments from potential proceeds generated as a result of
transactions on the Jounce clinical programs; expected cash and cash runway
amounts; the ability of the cash runway to fund the combined entity through
multiple inflection points; and the ability of the proposed transaction to
create shareholder value. All of such statements are subject to certain risks
and uncertainties, many of which are difficult to predict and generally beyond
Jounce's control, that could cause actual results to differ materially from
those expressed in, or implied or projected by, the forward-looking
information and statements. Such risks and uncertainties include, but are not
limited to: the risk that the transaction described above is not consummated
or that the benefits of the transaction are not realized; the risks inherent
in the early stages of drug development and in conducting clinical trials; the
outcome of the shareholder votes of Redx and of Jounce, the High Court and
other closing conditions; the risk that the CVR will not result in any
payments to Jounce shareholders, and factors in addition to the foregoing that
may impact Jounce's expectations that may cause Jounce's actual results and
outcomes to materially differ; and those risks and uncertainties identified in
the "Risk Factors" section of Jounce's Annual Report on Form 10-K for the year
ended December 31, 2021, filed with the Securities and Exchange Commission
(the "SEC") on March 2, 2022, and its other subsequent filings with the SEC.
Readers are cautioned not to place undue reliance on these forward-looking
statements. All forward-looking statements contained in this press release
speak only as of the date on which they were made. Except to the extent
required by law, Jounce undertakes no obligation to update such statements to
reflect events that occur or circumstances that exist after the date on which
they were made.

 

Centerview Partners UK LLP ("Centerview"), which is authorised and regulated
in the United Kingdom by the FCA, is acting exclusively as financial adviser
to Redx and no one else in connection with the Business Combination and will
not be responsible to anyone other than Redx for providing the protections
afforded to its clients or for providing advice in relation to the Business
Combination, the contents of this Announcement or any other matters referred
to in this Announcement. Neither Centerview nor any of its affiliates, nor any
of Centerview's and such affiliates' respective members, directors, officers,
controlling persons or employees owes or accepts any duty, liability or
responsibility whatsoever (whether direct or indirect, consequential, whether
in contract, in tort, in delict, under statute or otherwise) to any person who
is not a client of Centerview in connection with this Announcement, any
statement contained herein, the Business Combination or otherwise.

 

SPARK Advisory Partners Limited ("SPARK"), which is authorised and regulated
in the United Kingdom by the FCA is acting as nominated adviser to Redx and
for no one else in connection with the Business Combination and other matters
referred to in this Announcement and will not be responsible to anyone other
than Redx for providing the protections afforded to its clients or for
providing advice in relation to the Business Combination, the contents of this
Announcement or any other matters referred to in this Announcement. Neither
SPARK nor any of its affiliates, directors or employees owes or accepts any
duty, liability or responsibility whatsoever (whether direct or indirect,
consequential, whether in contract, in tort, in delict, under statute or
otherwise) to any person who is not a client of SPARK in connection with this
Announcement, any statement contained herein, the Business Combination or
otherwise.

 

WG Partners LLP ("WG Partners"), which is authorised and regulated in the
United Kingdom by the FCA is acting as Corporate Broker to Redx and for no one
else in connection with the Business Combination and other matters referred to
in this Announcement and will not be responsible to anyone other than Redx for
providing the protections afforded to its clients or for providing advice in
relation to the Business Combination, the contents of this Announcement or any
other matters referred to in this Announcement. Neither WG Partners nor any of
its affiliates, members, directors or employees owes or accepts any duty,
liability or responsibility whatsoever (whether direct or indirect,
consequential, whether in contract, in tort, in delict, under statute or
otherwise) to any person who is not a client of WG Partners in connection with
this Announcement, any statement contained herein, the Business Combination or
otherwise.

 

Panmure Gordon (UK) Ltd ("Panmure Gordon"), which is authorised and regulated
in the United Kingdom by the FCA, is acting exclusively as joint broker to
Redx and no one else in connection with the Business Combination and will not
be responsible to anyone other than Redx for providing the protections
afforded to its clients nor for providing advice in relation to the Business
Combination, the contents of this Announcement or any other matters referred
to in this Announcement. Neither Panmure Gordon nor any of its affiliates, nor
any of Panmure Gordon's and such affiliates' respective members, directors,
officers, controlling persons or employees owes or accepts any duty, liability
or responsibility whatsoever (whether direct or indirect, consequential,
whether in contract, in tort, in delict, under statute or otherwise) to any
person who is not a client of Panmure Gordon in connection with this
Announcement, any statement contained herein, the Business Combination or
otherwise.

 

Cowen Execution Services Limited ("Cowen"), which is authorised and regulated
in the United Kingdom by the FCA, is acting exclusively as financial adviser
to Jounce and no one else in connection with the Business Combination and will
not be responsible to anyone other than Jounce for providing the protections
afforded to clients of Cowen nor for providing advice in relation to the
Business Combination, the contents of this Announcement or any other matters
referred to in this Announcement. Neither Cowen nor any of its affiliates, nor
any of Cowen's and such affiliates' respective members, directors, officers,
controlling persons or employees owes or accepts any duty, liability or
responsibility whatsoever (whether direct or indirect, consequential, whether
in contract, in tort, under statute or otherwise) to any person who is not a
client of Cowen in connection with the Business Combination, this
Announcement, any statement contained herein or otherwise.

 

1.
https://ir.jouncetx.com/news-releases/news-release-details/jounce-therapeutics-announces-restructuring
(https://ir.jouncetx.com/news-releases/news-release-details/jounce-therapeutics-announces-restructuring)

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
 or visit
www.rns.com (http://www.rns.com/)
.

RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
.   END  MSCPPUMGPUPWUQW