Kezar Life Sciences has become the latest biotech to decide that it could do better than a buyout offer from Concentra Biosciences.
Concentra’s parent company Tang Capital Partners has a track record of swooping in to try to acquire struggling biotechs. The company, along with Tang Capital Management and its CEO Kevin Tang, already own 9.9% of Kezar.
Tang’s recent bid was to buy up the remainder of Kezar’s shares for $1.10 apiece, along with a contingent value right for Kezar shareholders to receive 80% of the proceeds from the out-licensing or sale of any Kezar program. But this “substantially undervalues” the biotech, Kezar’s board concluded.
“The proposal would result in an implied equity value for Kezar stockholders that is materially below Kezar’s available liquidity and fails to provide adequate value to reflect the significant potential of zetomipzomib as a therapeutic candidate,” the company said in an Oct. 17 release.
To prevent Tang and his companies from securing a larger stake in Kezar, the biotech said it had introduced a “rights plan” that would incur a “significant penalty” for anyone trying to build a stake above 10% of Kezar’s remaining shares.
“The rights plan should reduce the likelihood that any person or group gains control of Kezar through open market accumulation without paying all stockholders an appropriate control premium or without providing the board sufficient time to make informed judgments and take actions that are in the best interests of all stockholders,” Graham Cooper, chairman of Kezar’s board, said in the release.
Tang’s offer of $1.10 per share exceeded Kezar’s current share price, which hasn’t traded above $1 since March. But Cooper insisted that there is a “significant and ongoing dislocation in the trading price of [Kezar's] common stock which does not reflect its fundamental value.”
Concentra has a mixed record when it comes to acquiring biotechs, having bought Jounce Therapeutics and Theseus Pharmaceuticals last year while having its advances rejected by Atea Pharmaceuticals, Rain Oncology and LianBio.
Kezar’s own plans were knocked off course in recent weeks when the company paused a phase 2 trial of its selective immunoproteasome inhibitor zetomipzomib in lupus nephritis in relation to the death of four patients. The FDA has since put the program on hold, and Kezar separately announced today that it has decided to discontinue the lupus nephritis program.
The biotech said it will focus its resources on evaluating zetomipzomib in a phase 2 autoimmune hepatitis (AIH) trial.
“A focused development effort in AIH extends our cash runway and provides flexibility as we work to bring zetomipzomib forward as a treatment for patients living with this life-threatening disease,” Kezar CEO Chris Kirk, Ph.D., said.