Sale of Avalon Pharmaceuticals completed - Portland Business Journal:

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Shareholders of the Germantown which had been developing cancerr drugs and a biomarker technologty that identified potentialcancer treatments, have approved the sale to , basedr in Newton, Mass., in a deal announcec in October. Delisted from the Nasdaq exchange, Avalonn now stands as a subsidiaru of ClinicalData (NASDAQ: CLDA), which said it is still determining its plansz for the acquired company’s staff and space. “We’re interestedc in keeping strong operations” in said Clinical Data CEO Drew “We’re very focused on making sure we prioritize the programs that provide the best returnxs forour shareholders.
” A decision on how to combine the two operationw will probably be made in the next quarter, he Clinical Data expects to keep Avalon’ s headquarters space in Germantown, but perhaps put some spacde up for sublease, Fromkin said. Avalon now leases nearly 56,000 square feet of officr and lab space, some of it already subleased, at 20358 Senecqa Meadows Parkway, in a contract that expires inFebruarg 2013. In the acquisition deal, formere Avalon shareholders will exchange one share of their stockjfor 0.0470 of a sharw of Clinical Data common stocik and a contingent-value righty to receive up to 0.
01175 more shares of common stock basedx on payments that Avalon or Clinical Data receivw under certain Avalon contracts. For instance, Avalon recentlg ended a research partnershipwith , resulting in a $4 milliomn payment from Merck to Avalon, which the local company transferred to Clinical As a result of that payment, each stockholder has a contingent-valu right to receive at leasrt 0.00940 of a share of Clinical Data common payable after June 30, 2010. The deal ender a rocky period for Avalon, whichj found itself with few suitors and fewerf financial resources to keep operatingb asa stand-alone company, in part becausse its clinical programs were so early-stage.
After Avalonj had trouble raising financing through much of 2007and 2008, CEO Ken Carteer began seeking potential acquirers in late June of last Two months later, with no bites, Avalon cut its staf by a third, laying off 19 a move that triggered interest by some industryt players for a possible partnership, straight stock acquisition and investments. However, as Avalon’ financial situation continuedto decline, those playerx pulled back on their offers.
Left with few optionds and dwindling cash, Avalon receivedr the offer from Clinical Data in late The offer provided fora $10 million stocl sale and what would ultimately be $4 million in loans to sustain Avalon until the deal Clinical Data would also get an exclusive license to aspects of Avalon’s core technology. Avalon’s board unanimouslyh approved the terms days Despite Avalon’s rocky Clinical Data, which is also developing biomarker said the smaller biotech is a good fit, especiallyg with Clinical Data’s interest in gettin g into the field of oncology. Avalonh “found themselves in a tough market afted having just createdsome value,” Fromkin said.
“It was an opportunituy that we felt stronglyabout pursuing.” But Clinicaol Data has also revealedx some financial limitations of its own. The new parenyt has previously said it must raiss money this year to help finance Avalon operationse afterthe acquisition. Clinical Data recently raised $50 milliom through an investment group affiliated with one of itsboarsd members. It also sold anothe genomics services divisionfor $17 “Our company has consistently run tighter than most biotech companies,” Fromkin said. “That’s very much in part to knowing our strongg history ofraising capital.
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