LONDON, UK: The boards of Redx Pharma plc and Jounce Therapeutics Inc. have reached agreement on the terms of an all share merger to combine the Redx Group and Jounce Group to form the “enlarged group”.

It is intended that the business combination will be implemented immediately preceded by a merger transaction between RM Special Holdings 3 LLC, an entity controlled by Redmile (which manages entities holding in aggregate approximately 73% of the issued ordinary share capital of Redx) (“RM3”) and Jounce and its affiliates, which together will result in Jounce owning the entire issued and to be issued ordinary share capital of Redx.

The combination will create a transatlantic organisation specialised in developing both small molecule targeted therapeutics and antibody drug discovery for the treatment of cancer and fibrotic diseases, that will leverage the proven capabilities of both companies, and which has a clinical pipeline with multiple value inflection points in the near and medium term.

Following completion of the merger, Redx Pharma shareholders will own approximately 63 per cent and Jounce Group shareholders will own approximately 37 per cent of the share capital of the enlarged group.

Under the terms, Redx Shareholders shall be entitled to receive 0.2105 Jounce shares in exchange for each Redx share.

Jounce Group intends to conduct a reverse stock split of Jounce Shares in conjunction with the Business Combination, with a ratio of one new share for every five outstanding shares of Jounce (the “Reverse Stock Split”).

A reverse stock split is a share exchange transaction, without any impact on the amount of the share capital: only the number of outstanding shares is modified. If the Reverse Stock Split is approved by Jounce shareholders, the Exchange Ratio will be adjusted to 0.0421 Jounce Shares in exchange for each Redx share.

Redx’s Non Executive Chair, Jane Griffiths, said: “I am delighted to announce this recommended all share merger with Jounce, which will allow us to broaden our asset base and capabilities to discover and develop new drug candidates for cancer and fibrotic disease. It will also strengthen our cash position so we can progress meaningfully past our current key milestones with our clinical assets. As a Board we believe that having a sole stock- listing on Nasdaq is a critical step, creating improved access to capital markets and specialist long-term investors as we grow the Company.”

Jounce’s Chairman, Jigar Raythatha said: “We believe the proposed merger is value-enhancing for our shareholders and are excited about the newly combined business. The transaction will result in a strengthened organisation with an expanded pipeline of differentiated assets targeting significant unmet needs in cancer and fibrosis. We look forward to working closely with the Redx team to finalise the transaction and assist in assimilation of the combined assets and people”.