Concentra Biosciences, having weathered a failed acquisition of Atea Pharmaceuticals earlier this year, has now turned its attention to Rain Oncology, extending a lifeline to the beleaguered biotech.
Rain Oncology has encountered significant challenges, marked by a severe workforce reduction of 65% in May, following the disappointment of its lead candidate, milademetan, in a phase 3 trial for liposarcoma. Faced with this setback, Rain announced the discontinuation of other trials involving the MDM2 inhibitor and expressed intentions to explore options for bolstering its pipeline through precision oncology acquisitions.
Meanwhile, Concentra Biosciences, a subsidiary of Tang Capital, had its own share of difficulties when its proposal to acquire Atea Pharmaceuticals, focused on COVID-19 therapeutics, was rejected. Now, Tang Capital, described as a life sciences-focused investment company, has set its sights on Rain, a biotech in which it already holds a 14.6% stake. The offer presented by Tang Capital values each outstanding share of Rain at $1.25, slightly exceeding the 99 cents at which Rain’s shares closed on Friday.
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Notably, Rain’s shares had enjoyed a much higher valuation, trading between $7 and $10 per share during the initial four months of the year. However, the setback in the milademetan trial had a significant impact on the company’s stock value.
Tang Capital’s proposal also includes a contingent value right (CVR) that allows Rain’s shareholders to receive 80% of the net proceeds from any licensing or sale of Rain’s oncology programs. Concentra’s CEO, Kevin Tang, expressed the company’s commitment to maximizing the value of the CVR for the benefit of Rain Oncology’s existing shareholders, while ensuring the responsible closure of clinical studies for the benefit of patients.
Tang stated that Concentra possesses the necessary financial resources to finalize the deal. The expectation is that an agreement can be reached this month, with the transaction completed by year-end. A key condition of the deal is that Rain maintains at least $55 million in cash and equivalents at the time of closing.
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Tang Capital is hoping for a more favorable response to its offer compared to the rejection by Atea in May. Notably, Tang Capital succeeded in a last-minute offer to acquire Jounce Therapeutics earlier in the year, rescuing the biotech from Redx Pharma. Like Rain and Atea, Jounce had faced its own clinical challenges, including the partial clinical hold placed on its ROCK2 inhibitor, RXC007.
Concentra Biosciences’ interest in Rain Oncology marks a strategic move to potentially revive and reshape the biotech’s trajectory, aligning with Tang Capital’s commitment to the life sciences sector.
