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Why Is TCR2 Therapeutics (TCRR) Stock Up 30% Today?

  • TCR2 Therapeutics (TCRR) and Adaptimmune (ADAP) will be merging in an all-stock transaction.
  • Both companies target solid cancer tumors, although Adaptimmune is closer to having a therapy approved.
  • Investors can expect more small biotech companies to merge in the future in order to survive.
An image of a tablet with 'therapeutics' on the screen, a stethoscope and face mask around it
Source: ra2 studio/Shutterstock

TCR2 Therapeutics (NASDAQ:TCRR) stock is jumping more than 30% in early trading on March 6 after the company agreed to merge with Adaptimmune (NASDAQ:ADAP). Meanwhile, Adaptimmune is falling more than 15%.

This all-stock transaction will give TCR2 shareholders 25% ownership of the combined company. Last week, on March 3, Adaptimmune closed with a market capitalization of $288 million while TCR2 closed with a market cap of $47 million. Today’s early gains have now given TCR2 a market cap of about $60 million. Adaptimmune’s market cap has fallen to around $240 million as of this writing.

The TCR2-Adaptimmune deal was announced in conjunction with Adaptimmune’s latest earnings report. Both companies in the combination are working on cell therapies targeting solid cancer tumors.

TCRR Stock, Adaptimmune and Solid Tumor Therapies

Both TCR2 and Adaptimmune are considered “pre-revenue” companies. They are burning money as they seek to get new cancer treatments approved.

Adaptimmune, however, says that it’s now on track to have its afami-cel treatment for late-stage synovial sarcoma approved this year. Synovial sarcoma is a rare cancer sometimes found in muscles or ligaments.

Meanwhile, TCR2 is in pre-clinical studies with gavo-cel, which targets various tumors that express the protein mesothelin. Metothelin is often overexpressed in tumor cells.

During 2022, Adaptimmune lost $165.5 million and had revenue of $27 million. Likewise, TCR2 lost about $90 million for the first three quarters of 2022 without reporting revenue.

Biotech stocks have been in a bear market for months as the cost of debt rises and hope becomes less valuable. Shares in small biotech firms plummeted last year, while those of bigger companies held firm.

With debt carrying a high price tag and equity values falling, many small biotechs have turned to mergers to survive. Layoffs have also increased at both large and small biotech companies.

What Happens Next?

Looking forward, TCR2 has won a lifeline. But for Adaptimmune, this may be a case of 1 + 1 = 1. The company is approaching revenue for its solid tumor drug while also taking on a pipeline that will cost money to develop.

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On the date of publication, Dana Blankenhorn did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the Publishing Guidelines.

Dana Blankenhorn has been a financial and technology journalist since 1978. He is the author of Technology’s Big Bang: Yesterday, Today and Tomorrow with Moore’s Law, available at the Amazon Kindle store. Tweet him at @danablankenhorn, connect with him on Mastodon or subscribe to his Substack.

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