Concentra Biosciences Acquires Struggling Allakos for $0.33 per Share

In a strategic move that underscores the volatile nature of the biotech industry, Concentra Biosciences has successfully acquired Allakos Inc. for $0.33 per share. This acquisition comes as a lifeline for Allakos, which has been grappling with significant setbacks and dwindling resources in recent months.

Allakos' Downfall and Concentra's Opportunity

Allakos, once a promising player in the gastrointestinal and dermatological drug development space, has faced a series of setbacks that left the company on the brink of closure. The biotech's troubles began with the failure of its lead asset, lirentelimab, in eczema trials last year, resulting in a 50% reduction in workforce. The final blow came in January when Allakos abandoned development of AK006, its last remaining asset, after disappointing phase 1 results in hives treatment.

With only 15 employees remaining and a rapidly depleting cash reserve, Allakos' board unanimously approved the Concentra buyout as the best option for shareholders. The merger is expected to close in May, marking the end of Allakos' independent operations.

Concentra's Acquisition Strategy and Industry Response

Concentra Biosciences, owned by Tang Capital Partners, has made a name for itself by pursuing takeovers of struggling biotech firms. However, this strategy has not always been met with open arms. Earlier this year, both Pliant Therapeutics and Acelyrin implemented "poison pill" defenses to ward off Concentra's advances. These defensive measures make it difficult for a single entity to acquire more than 10% ownership, effectively blocking Concentra's attempted buyouts.

Despite these setbacks, Concentra has persevered in its acquisition efforts. The company has previously faced rejections from Atea Pharmaceuticals, Rain Oncology, LianBio, and Kezar Life Sciences. However, Concentra did successfully acquire Jounce Therapeutics and Theseus Pharmaceuticals in 2023, demonstrating its commitment to growth through strategic purchases.

Implications for the Biotech Landscape

The Allakos acquisition highlights the challenges faced by biotech companies in maintaining financial stability and advancing drug development programs. It also underscores the opportunistic nature of firms like Concentra, which are poised to capitalize on the misfortunes of struggling biotechs.

As the industry continues to evolve, the interplay between innovative but financially vulnerable companies and well-funded acquirers is likely to shape the future of drug development and biotech consolidation. The Concentra-Allakos deal serves as a stark reminder of the high-stakes nature of the pharmaceutical industry, where scientific setbacks can quickly lead to corporate restructuring and acquisitions.