Elevation Oncology has agreed to be acquired by an investment firm focused on buying struggling biotechs and shutting them down.
The cancer drug developer on Monday accepted a bid from Concentra Biosciences, a vehicle controlled by hedge fund Tang Capital Partners. Through the deal, Concentra will pay $0.36 in cash for each Elevation share. The biotech’s stockholders could also receive a so-called contingent value right equal to 80% of the proceeds of a deal involving the company’s sole drug prospect, EO-1022, subject to certain time constraints, as well as all net cash at closing over $26.4 million.
The offer has the full support of Elevation’s board and is expected to close in July, pending shareholder approval.
Elevation’s deal is the latest example of a shift in the investment climate for public biotech companies, many of which have suffered setbacks that have rendered them worth less than their cash reserves. Historically, these types of companies tend to change course or merge with a privately held counterpart. However, investors have begun to more closely scrutinize these biotech “zombies” and press their boards, arguing their cash should be returned to shareholders instead.
In recent months, companies like Third Harmonic Bio and iTeos Therapeutics have announced plans to dissolve. Others, such as Acelyrin, Essa Pharma, Pliant Therapeutics and Keros Therapeutics have faced pressure from investors. And multiple investment funds are looking specifically to acquire floundering biotechs and liquidate them. Through Concentra, for instance, Tang Capital has already bought several struggling companies, including Allakos, Jounce Therapeutics and more recently, Kronos Bio.
Elevation is its latest target. The company went public in 2021 during a boom in initial public offerings. But its lead drug disappointed in clinical testing, ultimately leading the company to shelve the program, lay off a majority of its staff and begin a strategic review. Its shares have traded at less than $1 apiece for nearly a year. Investment firm and shareholder BML Capital Management in April called for the firm to liquidate and return all of its cash to stockholders, given the state of the equity markets and “abysmal performance” of many recent reverse mergers.
Elevation’s one remaining drug, dubbed EO-1022, is an antibody-drug conjugate in preclinical development for solid tumors. Prior to accepting Concentra’s bid, the company said it planned to ask regulators in 2026 to begin human testing.
