Biotech stocks are known to be highly sensitive to specific events such as patent action and FDA testing. However, a buyout offer can also have a significant impact, as demonstrated by Jounce Therapeutics (NASDAQ:JNCE). Following a buyout offer from Concentra Biosciences, Jounce’s stock price surged over 20% in Monday’s trading session.
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The acquisition deal proposed that Concentra would acquire Jounce for $1.85 per share, along with a non-tradeable contingent value right. The offer represented a premium of 75% against Jounce’s closing price on March 14, and even after the recent rise, it still represents a premium of about $0.03 per share since it closed at $1.82.
The buyout offer came at an interesting time for Jounce as the company’s board no longer recommended an earlier all-stock merger deal with Redx Pharma in the U.K. In addition, Jounce announced plans to lay off approximately 84% of its workforce in the next month, resulting in $6.5 million in restructuring costs. Although it is unclear who will pay these costs, a few employees will remain to complete the sale, and others will continue working on clinical trials, which will ultimately transfer to Concentra.
A review of the last five days of trading for Jounce Therapeutics reveals that its stock price was gradually falling during most of that period. However, the buyout offer from Concentra Biosciences caused a sudden rise in the stock price, nearly reaching the $1.85 ceiling proposed by the acquisition deal.
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