Concentra Biosciences Continues Biotech Acquisition Spree with Elevation Oncology Deal

Concentra Biosciences, a vehicle controlled by hedge fund Tang Capital Partners, has agreed to acquire Elevation Oncology for $0.36 per share in cash. The deal, which has received full support from Elevation's board, marks the latest in a series of acquisitions by Concentra targeting struggling biotech companies.

Elevation Oncology's Path to Acquisition

Elevation Oncology, a cancer drug developer that went public in 2021, has faced significant challenges in recent months. The company's lead drug disappointed in clinical testing, leading to the shelving of its primary program and layoffs affecting a majority of its staff. Elevation's shares have traded below $1 for nearly a year, prompting activist investor BML Capital Management to call for the company's liquidation in April.

The acquisition offer includes a contingent value right for Elevation's stockholders, equal to 80% of the proceeds from any potential deal involving the company's sole remaining drug prospect, EO-1022. Shareholders may also receive additional compensation based on net cash exceeding $26.4 million at closing.

Broader Implications for the Biotech Industry

This acquisition reflects a growing trend in the biotech sector, where investors are increasingly scrutinizing so-called "zombie" companies – those worth less than their cash reserves. Several other biotechs, including Third Harmonic Bio and iTeos Therapeutics, have recently announced plans to dissolve, while others like Acelyrin, Essa Pharma, and Pliant Therapeutics have faced pressure from investors.

Concentra's strategy of acquiring and liquidating struggling biotechs has gained traction, with previous acquisitions including Allakos, Jounce Therapeutics, and Kronos Bio. However, not all of Concentra's efforts have been successful, with some companies like Acelyrin enacting "poison pill" defenses to resist takeover attempts.

The Future of EO-1022 and Industry Outlook

Elevation's remaining asset, EO-1022, is an antibody-drug conjugate in preclinical development for solid tumors. Prior to the acquisition, Elevation had planned to seek regulatory approval to begin human testing in 2026. The fate of this promising compound remains uncertain under Concentra's ownership.

As the biotech industry continues to face challenges in the current investment climate, more companies may find themselves considering similar strategic options. The trend of consolidation and liquidation is likely to persist, reshaping the landscape of publicly traded biotech firms in the coming months.