Acelyrin Adopts Poison Pill Strategy to Fend Off Tang Capital's Takeover Attempt

Acelyrin, a Los Angeles-based biotech company, has implemented a "poison pill" defense strategy to protect itself from an unwanted takeover bid by Tang Capital, a San Diego-based venture capital firm. This move comes as Tang Capital has been steadily increasing its stake in Acelyrin, threatening to disrupt the company's planned merger with Alumis.

Poison Pill Defense and Tang Capital's Growing Stake

Acelyrin's board of directors has approved a limited-duration stockholder rights plan, commonly known as a poison pill. This strategy grants current stockholders the option to purchase additional shares at a significant discount if any investor acquires 10% or more of the company's outstanding shares. The plan is designed to dilute the voting power of the unwelcome investor, who is excluded from the discounted share purchase option.

Tang Capital has been aggressively accumulating Acelyrin shares in recent weeks:

• Mid-February: 5.3% stake
• One week later: 7.3% stake
• March 10th: 8.8% stake

These increasing stakes, as reported in SEC filings, have pushed Tang Capital closer to the 10% threshold that would trigger the poison pill defense.

Merger Plans and Takeover Bid

The defensive action by Acelyrin is aimed at protecting its planned merger with Alumis, announced earlier this year. The merger, expected to close in the second quarter of 2025, would combine approximately $700 million in resources from both companies. The resulting entity would operate under the Alumis name and focus on developing an antibody currently in Phase II trials for thyroid eye disease.

In early February, Concentra Biosciences, owned by Tang Capital, made an unsolicited offer to acquire Acelyrin, attempting to preempt the Alumis merger. Acelyrin's board rejected this offer on March 4th, setting the stage for the current standoff.

Tang Capital's Track Record and Industry Impact

Tang Capital and its subsidiary Concentra Biosciences have a history of targeting small, struggling biotech companies for acquisition. Recent examples include:

1. Singular Genomics: Received an unsolicited offer but was ultimately acquired by Deerfield Management.
2. LianBio: Rejected Tang Capital's offer and subsequently shut down operations.

This aggressive acquisition strategy has raised concerns within the biotech industry about the potential impact on innovation and drug development pipelines, particularly for smaller companies facing financial challenges.

As the situation continues to evolve, industry observers are closely watching to see how Acelyrin's poison pill strategy will affect Tang Capital's takeover attempt and the broader implications for mergers and acquisitions in the pharmaceutical sector.