UK-based Redx Pharma PLC (AIM:REDX) and Jounce Therapeutics (NASDAQ:JNCE) of the US have agreed an all-share merger to form a new company, Redx Inc, that will focus on the development of targeted treatments for cancer and fibrosis.
The new company, which has a combined value of US$425mln, will be listed on Nasdaq with the symbol REDX.
It will be headed by Redx chief executive Lisa Anson and headquartered at Alderley Park in Cheshire, with a research and development team in Massachusetts.
Jounce currently has around US$155mln in cash and cash equivalents, which will result in at least US$130mln being available to the new company.
This, along with Redx's expected cash at completion, will provide the new company with a funding runway into the second half of 2025.
The deal is expected to be completed in the second quarter, subject to approval from both companies' shareholders and regulatory authorities.
Following the merger, Redx shareholders are expected to own 63% of the share capital of the new business, while Jounce investors are expected to own 37%.
The new company will focus on developing RXC007, a next-generation selective ROCK2 inhibitor, which is being tested in a phase IIa study for idiopathic pulmonary fibrosis (IPF), scarring of the lung that makes breathing difficult.
The drug's potential has also been highlighted for interstitial lung diseases and cancer-associated fibrosis.
Redx's RXC004 and RXC008 are also expected to be included in the new company's clinical pipeline.
Anson stated that "by combining Redx's proven track record in small molecule drug discovery and development with Jounce's expertise in biologics and immunotherapy, we will establish a world-class biotech company with a robust pipeline".
Jounce's CEO, Richard Murray, said that the new company "will be well-positioned to succeed".