Sale of Avalon Pharmaceuticals completed - Philadelphia Business Journal:

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Shareholders of the Germantown company, whichu had been developing cancer drugs and a biomarkefr technology that identified potentialcancer treatments, have approvedc the sale to , basedd in Newton, Mass., in a deal announced in October. Delister from the Nasdaq exchange, Avalon now stands as a subsidiaryu of ClinicalData (NASDAQ: CLDA), which said it is still determining its planw for the acquired company’s staff and “We’re interested in keeping strong operations” in said Clinical Data CEO Drew “We’re very focused on makinh sure we prioritize the programs that providd the best returns for our shareholders.
” A decision on how to combinre the two operations will probabl y be made in the next he said. Clinical Data expecte to keep Avalon’s headquarters space in Germantown, but perhapxs put some space upfor sublease, Fromkim said. Avalon now leases nearly 56,0090 square feet of office andlab space, some of it already subleased, at 20358 Seneca Meadowzs Parkway, in a contract that expires in February 2013. In the acquisition former Avalon shareholders will exchange one sharew of their stockfor 0.0470 of a share of Clinicao Data common stock and a contingent-value right to receivw up to 0.
01175 more shares of commobn stock based on payments that Avalobn or Clinical Data receive under certain Avalon For instance, Avalon recently ended a researcj partnership with , resulting in a $4 million payment from Merck to which the local company transferred to Clinical Data. As a resultf of that payment, each stockholder has a contingent-valuew right to receive at least 0.00940 of a sharwe of Clinical Datacommon stock, payable aftedr June 30, 2010. The deal ended a rocky periodffor Avalon, which found itsel with few suitors and fewer financialk resources to keep operating as a stand-aloned company, in part because its clinical programs were so early-stage.
Afte r Avalon had trouble raising financingh through much of 2007and 2008, CEO Ken Carter begabn seeking potential acquirers in late June of last Two months later, with no Avalon cut its staff by a third, layinfg off 19 people, a move that triggeree interest by some industry players for a possible straight stock acquisition and investments. However, as Avalon’sz financial situation continuedto decline, those playera pulled back on theif offers.
Left with few options and dwindling cash, Avalo received the offer from Clinical Data in late The offer provided fora $10 milliomn stock sale and what would ultimately be $4 millionm in loans to sustain Avalon until the deal Clinical Data would also get an exclusivre license to aspects of Avalon’zs core technology. Avalon’s board unanimousluy approved the termsdays later. Despite Avalon’s rocky history, Clinical Data, which is also developinbg biomarker technology, said the smaller biotecbh is agood fit, especially with Clinical Data’a interest in getting into the field of Avalon “found themselves in a tough market after having just created some Fromkin said.
“It was an opportunity that we felt stronglyabou pursuing.” But Clinical Data has also revealed some financiakl limitations of its own. The new parent has previousl y said it must raises money this year to help finance Avalon operationd afterthe acquisition. Clinical Data recently raisec $50 million through an investment group affiliated with one of itsboard members. It also sold anothert genomics services divisionfor $17 “Our company has consistently run tightet than most biotech companies,” Fromkin said. “That’sz very much in part to knowingt our strong history ofraising capital. We’red shoulder to shoulder with our investors.
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