Kevin Tang's Con­cen­tra swoops in on an­oth­er strug­gling biotech, of­fer­ing to buy Kezar

Con­cen­tra Bio­sciences, a shell com­pa­ny from Tang Cap­i­tal, wants to buy an­oth­er biotech that has found it­self in a bind.

Kevin Tang’s shop told Kezar Life Sci­ences’ board on Tues­day that it is will­ing to pay $1.10 per share to buy out the Bay Area biotech. The move comes just days af­ter Kezar stopped its Phase 2b clin­i­cal tri­al in lu­pus nephri­tis af­ter four pa­tients died. The tri­al was then put on of­fi­cial hold by the FDA this week.

Kezar’s share price $KZR spiked 22% to 91 cents apiece in post-mar­ket trad­ing af­ter Con­cen­tra’s pro­pos­al be­came pub­lic. Kezar had closed Tues­day at 74 cents per share. The biotech de­buted as a pub­lic com­pa­ny at $15 per share in June 2018.

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Tang Cap­i­tal owns 9.9% of Kezar’s out­stand­ing shares. The in­vestor has bought more than six mil­lion shares in Kezar since Sept. 30, ac­cord­ing to an SEC fil­ing.

Con­cen­tra’s non-bind­ing pro­pos­al al­so comes with the po­ten­tial for fur­ther pay­ments. If the deal goes through and Con­cen­tra is able to out-li­cense or sell Kezar’s ex­per­i­men­tal drugs and in­tel­lec­tu­al prop­er­ty, then share­hold­ers could get 80% of those net pro­ceeds.

In his let­ter to the board, Tang said Con­cen­tra “has funds im­me­di­ate­ly avail­able to ex­e­cute this trans­ac­tion.”

“Con­cen­tra has the ex­per­tise and re­sources to max­i­mize the val­ue of the CVR for the ben­e­fit of Kezar share­hold­ers,” Tang wrote. “This may in­clude, if ap­pro­pri­ate, com­plet­ing POR­TO­LA, an on­go­ing Phase 2a study of ze­tomip­zomib in pa­tients with au­toim­mune he­pati­tis.”

Con­cen­tra has had a mixed bag of suc­cess. Atea Phar­ma­ceu­ti­cals and Lian­Bio re­ject­ed the shell com­pa­ny’s un­so­licit­ed bids last year. The­seus Phar­ma­ceu­ti­cals and Jounce Ther­a­peu­tics, mean­while, both went with the takeover bids. DNA se­quenc­ing com­pa­ny Sin­gu­lar Ge­nomics was al­so tar­get­ed by Con­cen­tra last month.

Tang wants to hear back from Kezar by the close of busi­ness on Oct. 18. Oth­er­wise, the of­fer will ex­pire, he wrote in the let­ter.

A Kezar spokesper­son didn’t im­me­di­ate­ly re­spond to an End­points News in­quiry.

The 2015 Am­gen spin­out has had a string of set­backs in the past 12 months. In Au­gust, Kezar stopped en­rolling pa­tients in a Phase 1 sol­id tu­mor tri­al. Last Oc­to­ber, it laid off 41% of its staff, swapped CEOs and end­ed pre­clin­i­cal R&D to keep the lights on.

At the end of June, the com­pa­ny had $164 mil­lion in cash, equiv­a­lents and mar­ketable se­cu­ri­ties.