Theseus Pharmaceuticals Enters into Agreement to Be Acquired by Concentra Biosciences for between $3.90 and $4.05 in Cash per Share Plus a Contingent Value Right
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Insights
The merger between Theseus Pharmaceuticals and Concentra Biosciences represents a significant transaction in the biopharmaceutical industry, particularly within the oncology sector. The valuation of Theseus at $3.90 to $4.05 per share, inclusive of a contingent value right (CVR), suggests a strategic premium for its targeted cancer therapies. The CVR component is particularly noteworthy as it ties future payouts to the success of Theseus' programs, which may indicate confidence in the potential for licensing deals or cost savings post-merger.
For shareholders, the immediate liquidity event at a premium to the market price before the announcement can be attractive, especially given the inherent risks of clinical-stage drug development. However, the CVR also presents a risk as its value is contingent on future events. The support of shareholders holding approximately 59% of Theseus common stock is a strong indicator of confidence in the deal's value proposition.
From a broader market perspective, this acquisition could signal consolidation within the sector, which may lead to increased competition for similar acquisition targets, potentially driving up valuations in the near term.
The definitive merger agreement between Theseus Pharmaceuticals and Concentra Biosciences is structured to include both a base cash price and an additional cash amount determined at closing, along with a CVR. Legally, the inclusion of a CVR is a mechanism to bridge valuation gaps and align interests by tying part of the consideration to future performance metrics. This structure requires careful drafting in the CVR Agreement to ensure clarity in the conditions that trigger the additional payments.
The tender offer process is a regulatory requirement that allows shareholders to sell their shares directly to the bidder, in this case, a subsidiary of Concentra. The condition that a majority of the shares must be tendered ensures that the acquirer obtains control. The legal advisors on both sides, Goodwin Procter LLP for Theseus and Gibson, Dunn & Crutcher LLP for Concentra, play critical roles in navigating the complexities of the transaction, ensuring regulatory compliance and protecting their clients' interests.
For the industry, this merger highlights the importance of thorough due diligence and the role of legal counsel in structuring deals that address both present and future value considerations.
The merger between Theseus Pharmaceuticals and Concentra Biosciences is poised to have a notable impact on the biopharmaceutical landscape. The transaction underscores the trend of consolidation in the industry, particularly for companies with promising oncology portfolios. Theseus' focus on targeted cancer therapies is aligned with the industry's move towards precision medicine, which is increasingly attracting investment and acquisition interest.
The financial terms of the deal, including the CVR, suggest that there is an expectation of significant value to be derived from Theseus' pipeline. The CVR indicates that the acquiring company, Concentra, sees potential in Theseus' ongoing programs and is willing to share future proceeds, which could incentivize the swift advancement of the pipeline post-acquisition.
It is important to monitor how this acquisition might influence competition, research and development focus and investment trends within the biopharmaceutical sector, particularly in oncology where the demand for innovative treatments is high.
Following a thorough review process conducted with the assistance of its legal and financial advisors, Theseus' Board of Directors has determined that the acquisition by Concentra – of which Tang Capital Partners, LP is the controlling shareholder – is in the best interests of all Theseus shareholders, and has unanimously approved the Merger Agreement.
Pursuant and subject to the terms of the Merger Agreement, a wholly owned subsidiary of Concentra will commence a tender offer (the "Offer") by January 9, 2024 to acquire all outstanding shares of Theseus common stock. Closing of the Offer is subject to certain conditions, including the tender of Theseus common stock representing at least a majority of the total number of outstanding shares; the availability of at least
Advisors
Leerink Partners is acting as exclusive financial advisor and Goodwin Procter LLP is acting as legal counsel to Theseus. Gibson, Dunn & Crutcher LLP is acting as legal counsel to Concentra.
About Theseus Pharmaceuticals, Inc.
Theseus is a clinical-stage biopharmaceutical company focused on improving the lives of cancer patients through the discovery, development, and commercialization of transformative targeted therapies. Theseus has focused on the development of THE-349, a fourth-generation, selective epidermal growth factor receptor inhibitor for C797X-mediated resistance to first- or later-line osimertinib treatment in patients with non-small cell lung cancer, a pan-variant BCR-ABL inhibitor for the treatment of relapsed/refractory chronic myeloid leukemia and newly diagnosed
Cautionary Statement Regarding Forward Looking Statements
This release contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, including, but not limited to, statements regarding Theseus' beliefs and expectations and statements about the proposed Offer, merger and related transactions contemplated by the Merger Agreement (the "Transactions"), including the timing of and closing conditions to the Transactions; the potential effects of the proposed Transactions on Theseus; and the potential payment of proceeds to the Theseus stockholders, if any, pursuant to the CVR Agreement. These statements may be identified by their use of forward-looking terminology including, but not limited to, "anticipate," "believe," "continue," "could," "estimate," "expect," "goal," "intend," "may," "might," "plan," "potential," "predict," "project," "should," "target," "will," and "would," and similar words expressions are intended to identify forward-looking statements. Forward-looking statements are neither historical facts nor assurances of future performance and involve risks and uncertainties that could cause actual results to differ materially from those projected, expressed or implied by such forward-looking statements. These risks and uncertainties include, but are not limited to: the possibility that various closing conditions set forth in the Merger Agreement may not be satisfied or waived, including uncertainties as to the percentage of Theseus' stockholders tendering their shares in the Offer; the possibility that competing offers will be made; Theseus' ability to retain key personnel; the risk that the Transactions may not be completed in a timely manner, or at all, which may adversely affect Theseus' business and the price of its common stock; significant costs associated with the proposed Transactions; the risk that any stockholder litigation in connection with the Transactions may result in significant costs of defense, indemnification and liability; the risk that activities related to the CVR Agreement may not result in any value to the Theseus stockholders; and other risks and uncertainties discussed in Theseus' most recent annual and quarterly reports filed with the Securities and Exchange Commission (the "SEC") as well as in Theseus' subsequent filings with the SEC. As a result of such risks and uncertainties, Theseus' actual results may differ materially from any future results, performance or achievements discussed in or implied by the forward-looking statements contained herein. There can be no assurance that the proposed Transactions will in fact be consummated. Theseus cautions investors not to unduly rely on any forward-looking statements.
The forward-looking statements contained in this release are made as of the date hereof, and Theseus undertakes no obligation to update any forward-looking statements, whether as a result of future events, new information or otherwise, except as expressly required by law. All forward-looking statements in this document are qualified in their entirety by this cautionary statement.
Additional Information and Where to Find It
The Offer described in this release has not yet commenced, and this release is neither a recommendation, nor an offer to purchase nor a solicitation of an offer to sell any shares of the common stock of Theseus or any other securities. On the commencement date of the Offer, a tender offer statement on Schedule TO, including an offer to purchase, a letter of transmittal and related documents, will be filed with the SEC by Concentra and its acquisition subsidiary, and a Solicitation/Recommendation Statement on Schedule 14D-9 will be filed with the SEC by Theseus. The Offer to purchase the outstanding shares of the common stock of Theseus will only be made pursuant to the offer to purchase, the letter of transmittal and related documents filed as a part of the Schedule TO. INVESTORS AND SECURITY HOLDERS ARE URGED TO READ THE TENDER OFFER MATERIALS (INCLUDING THE OFFER TO PURCHASE, A LETTER OF TRANSMITTAL AND RELATED DOCUMENTS) AND THE SOLICITATION/RECOMMENDATION STATEMENT ON SCHEDULE 14D-9 REGARDING THE OFFER, AS THEY MAY BE AMENDED OR SUPPLEMENTED FROM TIME TO TIME, WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION THAT INVESTORS AND SECURITY HOLDERS SHOULD CONSIDER BEFORE MAKING ANY DECISION REGARDING TENDERING THEIR SHARES, INCLUDING THE TERMS AND CONDITIONS OF THE OFFER. Investors and security holders may obtain a free copy of these statements (when available) and other documents filed with the SEC at the website maintained by the SEC at www.sec.gov or by directing such requests to the information agent for the Offer, which will be named in the tender offer statement. Investors and security holders may also obtain, at no charge, the documents filed or furnished to the SEC by Theseus under the "Investors & Media" section of Theseus' website at www.theseusrx.com.
For further information, please contact:
Theseus Pharmaceuticals, Inc.
IR@theseusrx.com
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