UPDATE: May 30, 2023: Atea’s board of directors said May 30 that they have rejected the unsolicited bid from Tang Capital Partners, arguing it “fundamentally undervalues” the company.
- The investment firm behind privately held Concentra Biosciences is attempting to buy a second struggling biotechnology company in a matter of months, disclosing in a regulatory filing an unsolicited bid for COVID-19 drug developer Atea Pharmaceuticals.
- The offer from Concentra’s owners, Tang Capital Partners, would pay Atea’s stockholders $5.75 for each share they own, a 55% premium to the company’s closing price last Friday. Equity holders would also get 80% of the proceeds if Concentra licenses or sells any of Atea’s drug programs.
- If successful, Concentra would add another biotech to its portfolio. In May, the company successfully bid for cancer drug developer Jounce Therapeutics, a deal that also involved a potential payout for shareholders if Concentra sells its assets.
Three years ago, Boston-based Atea raised $300 million in an initial public offering, riding investor enthusiasm for a COVID-19 pill that, in the early days of the pandemic, was a leading program in clinical development.
But Atea has had a tough run since. A Phase 2 trial failed in 2021, and partner Roche quickly pulled out of a lucrative collaboration between the two companies. Other COVID-19 pills from Pfizer and Merck & Co. reached market first.
In the meantime, Atea changed its development plans, and its market value sank. The company’s shares have traded below $4 apiece for most of the year, well below Atea’s $24 IPO price and far off its highs of more than $80 in 2021.
As with Jounce, which suffered a number of clinical setbacks, Atea’s depressed valuation has made it a buyout target for a life sciences investor, Tang Capital, looking to maximize the value of what’s left.
In Jounce’s case, Tang Capital turned a roughly 10% stake into a takeover proposal. Through Concentra, it successfully bid $1.85 per share in cash, plus rights to receive 80% of the proceeds of any sale or licensing deal.
Its offer for Atea, of which the firm owns a 3.6% stake, is structured similarly. In a letter to Atea’s board of directors, Tang Capital CEO Kevin Tang wrote that Concentra “has significant clinical development and business development experience” and “the expertise and resources to maximize the value” of Atea’s remaining assets.
Atea has continued working on its COVID-19 treatment. Enrollment in a large Phase 3 trial is ongoing, and the company has also initiated a Phase 2 study for the same antiviral drug in hepatitis C.
“We think acquisition of Atea could make sense as a possible move to reposition the company and deploy its [...] cash for other means, given Atea’s prior setbacks,” SVB Securities analyst Roanna Ruiz wrote in a note Monday.
In a statement Tuesday, Atea said it will "carefully review and evaluate" Tang Capital's offer.
Atea had $620 million in cash and cash equivalents as of March 31, according to regulatory filings. Its shares surged about 40% Monday after Concentra’s offer, to above $5 apiece, before falling back 2.5% Tuesday. The company is still worth less than the cash it has on hand.