CAR-T cell therapy developer Cargo Therapeutics has agreed to be acquired by Concentra Biosciences for approximately $202 million upfront, marking the end of a company that once raised nearly half a billion dollars but was forced to halt its lead program due to disappointing clinical results.
The acquisition, announced Tuesday, comes after Cargo made the difficult decision in January to discontinue development of its lead candidate firicabtagene autoleucel (firi-cel), an autologous CD22 CAR-T cell therapy for patients with aggressive large B cell lymphoma (LBCL). The decision followed Phase II trial results that showed concerning durability issues despite initial promising response rates.
Clinical Trial Results Drive Strategic Pivot
Firi-cel demonstrated a 77% response rate and 43% complete response rate in the Phase II trial, results that initially appeared encouraging. However, the therapy's durability proved problematic, with only 18% of patients maintaining responses at three months, indicating rapid relapse rates. These results represented a decline from the therapy's performance in earlier Phase I studies, ultimately leading Cargo's leadership to conclude that the benefit-risk profile did not support continued development.
The clinical setback triggered immediate cost-cutting measures, with Cargo initially laying off half its workforce following the trial halt. Two months later, the company eliminated an additional 90% of its remaining employees as it became clear that a pivot strategy would not be viable.
Concentra's Distressed Biotech Strategy
Concentra Biosciences, backed by Tang Capital Partners, has emerged as a prolific acquirer of struggling biotechnology companies. The firm targets "zombie" biotechs that trade below the value of their cash holdings, typically following negative clinical trial results or other major setbacks.
Under the deal terms, Cargo shareholders will receive $4.379 in cash per share, with additional value provided through a contingent value right structure. Shareholders will receive 100% of any net cash above $217.5 million at closing, plus 80% of proceeds from any asset sales within two years.
Cargo's board of directors unanimously approved the merger, which is expected to close in August. The company's leadership and certain investors, who collectively own approximately 17% of Cargo stock, have agreed to tender their shares to support the transaction.
Financial Context and Market Dynamics
The acquisition highlights the challenging environment facing biotech companies following clinical failures. Cargo had raised $200 million in an oversubscribed Series A financing in March 2023, demonstrating the significant investor interest that once surrounded its CAR-T cell therapy platform. The company also completed an initial public offering, bringing its total fundraising to nearly half a billion dollars.
At the end of 2024, Cargo maintained $368 million in cash, cash equivalents, and marketable securities. However, its stock price had fallen from around $13 per share to less than $4 following the January clinical update, before rising 5% on Tuesday morning following news of the Concentra agreement.
Broader Acquisition Pattern
The Cargo acquisition represents Concentra's latest move in an aggressive buying spree throughout 2024. The company has completed five acquisitions this year, including Elevation Oncology in June, Kronos Bio in May, and IGM Biosciences just last week. This activity has made Concentra the most prolific biotech buyer of the first half of 2024.
The deal structure reflects Concentra's established approach of acquiring companies at a premium to their depressed stock prices while retaining a portion of their cash holdings and returning the remainder to shareholders. This strategy has proven effective in an environment where investors increasingly demand that struggling biotechs wind down operations rather than pursue expensive pivot strategies.
The transaction is contingent on Cargo maintaining $217.5 million in cash on hand at closing, ensuring sufficient liquidity to execute the deal structure and provide the promised returns to shareholders.
