Concentra Biosciences Acquires Struggling Kronos Bio in Latest M&A Move

Concentra Biosciences, a subsidiary of Tang Capital Partners known for its aggressive acquisition strategy, has struck again. The company has inked a definitive deal to acquire Kronos Bio, a small-molecule biotech firm that has been facing significant challenges in recent months. This latest move comes amid a flurry of M&A activity in the biotech sector, as larger companies seek to capitalize on the struggles of smaller, cash-strapped firms.

Deal Structure and Financial Details

The acquisition agreement values Kronos Bio at 57 cents per share, representing a 35% discount to the company's closing price of 89 cents on the day before the announcement. The deal also includes a contingent value right (CVR), allowing Kronos investors the potential for additional proceeds based on future performance of the company's assets.

Concentra's tender offer is set to begin by May 15, with the transaction expected to close by mid-2025. One key condition of the deal requires Kronos to maintain at least $40 million in cash at closing, underscoring the importance of the biotech's financial position in the acquisition.

Kronos Bio's Recent Struggles

The acquisition comes as a lifeline for Kronos Bio, which has been grappling with a series of setbacks. In recent weeks, the company was forced to close its California headquarters in a cost-saving measure. This closure followed a more drastic restructuring five months earlier, when Kronos laid off 83% of its workforce, including then-CEO Norbert Bischofberger, Ph.D.

These drastic measures were precipitated by the company's decision to shelve its last remaining clinical asset, a CDK9 inhibitor called istisociclib. The drug's development was halted after troubling safety signals emerged from a phase 1/2 trial in platinum-resistant high-grade serous ovarian cancer.

Concentra's M&A Strategy and Industry Trends

The Kronos Bio acquisition is just the latest in a series of moves by Concentra Biosciences. Last month, the company acquired Allakos for 33 cents per share, following that biotech's decision to drop its lead drug and lay off 75% of its workforce after a trial failure.

However, Concentra's aggressive approach has not been universally successful. Two other potential targets, including Acelyrin, recently enacted "poison pill" defenses to ward off Concentra's advances. Acelyrin ultimately opted to merge with another biotech rather than sell to Concentra.

These developments highlight the current state of flux in the biotech industry, where struggling smaller companies are increasingly becoming acquisition targets for larger, more stable firms looking to bolster their pipelines and research capabilities.