Essa Pharma, which had been resisting pressure from activist investors to wind down operations, has now agreed a deal to be bought out by XenoTherapeutics.
The biotech ran into difficulties late last year, when prostate cancer data drove Essa’s management to stop a phase 2 study and start considering strategic alternatives. By April 2025, the company was coming under pressure from investor Soleus Capital Management to close down and hand the resulting cash back to the company’s shareholders.
In a Monday morning release, Essa said that being acquired by Xeno would deliver “more certain value to shareholders” than simply liquidating. Xeno is a Massachusetts-based non-profit research foundation focused on developing regenerative medicines using genetically engineered pigs.
The deal will see Essa’s stockholders receive a cash payment per share that will be based on the company’s remaining cash once expenses and fees have been deducted. Each shareholder will also receive a non-transferable contingent value right (CVR) that entitles them to a slice of a $2.95 million pie within 18 months of the deal’s close.
Excluding the CVR, it looks like each Essa stockholder could receive around $1.91 per share—slightly above the $1.71 price that the company’s shares closed at on Friday.
The deal is set to complete in the second half of the year, assuming it gets buy-in from two-thirds of Essa’s shareholders. Xoma Royalty, a biotech royalty aggregator, is helping Xeno to bankroll the acquisition.
Up until a year ago, Essa's management were still promising a “stream of significant milestones throughout the next nine to 12 months.” But with the failure of the biotech's androgen receptor inhibitor masofaniten to best Pfizer and Astellas' blockbuster cancer drug Xtandi in a phase 2 trial—and the biotech's AR N-terminal domain inhibitors yet to reach the clinic—the company's management has been looking for an off-ramp for a while.
“After conducting a comprehensive review of the opportunities available to Essa and considering the communications received from our shareholders, the Essa board of directors has unanimously concluded that entering into this agreement with Xeno and Xoma Royalty is in the best interest of the company and maximizes value for our shareholders as the company proceeds with its plans to discontinue operations and wind-down its business,” Essa CEO David Parkinson, M.D., said in the Monday morning release.
“This transaction delivers cash value to shareholders in an expedited timeframe, with less complexity and value risk when compared to a liquidation, and thus delivers more certain value to shareholders,” Parkinson added.