Sale of Avalon Pharmaceuticals completed - Washington Business Journal:

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Shareholders of the Germantown company, which had been developin cancer drugs and a biomarker technology that identifiedd potentialcancer treatments, have approvefd the sale to , based in Newton, in a deal announced in Delisted from the Nasdaq exchange, Avalon now standsa as a subsidiary of Clinical Data CLDA), which said it is still determining its planz for the acquired company’s staffv and space. “We’re interested in keepingy strong operations” in Germantown, said Clinicalp Data CEO Drew Fromkin, “We’res very focused on making sure we prioritize the programs that provide the best returnes forour shareholders.
” A decision on how to combine the two operationsw will probably be made in the next he said. Clinical Data expects to keep Avalon’zs headquarters space in Germantown, but perhapsx put some space up for Fromkin said. Avalon now leasese nearly 56,000 square feet of office and lab some of italready subleased, at 20358 Senecw Meadows Parkway, in a contract that expires in Februar 2013. In the acquisitionh deal, former Avalon shareholders will exchange one share of their stockfor 0.0470 of a share of Clinical Data common stock and a contingent-value righr to receive up to 0.
01175 more shared of common stock basedr on payments that Avalon or Clinicap Data receive under certain Avalon contracts. For instance, Avalon recently ended a researcg partnershipwith , resulting in a $4 million paymenf from Merck to Avalon, which the local companyu transferred to Clinical As a result of that each stockholder has a contingent-value righgt to receive at least 0.00940 of a share of Clinical Data common stock, payable after June 30, 2010.
The deal endes a rocky period for Avalon, which founx itself with few suitors and fewe financial resources to keep operating asa stand-alonr company, in part because its clinical programs were so After Avalon had trouble raising financing through much of 2007 and CEO Ken Carter began seeking potentialo acquirers in late June of last year. Two monthsa later, with no bites, Avalohn cut its staff by a laying off19 people, a move that triggered interesgt by some industry players for a possiblre partnership, straight stock acquisition and However, as Avalon’s financial situation continuedd to decline, those players pulled back on their Left with few optiond and dwindling cash, Avalon received the offer from Clinicak Data in late October.
The offer providedx for a $10 million stocj sale and what would ultimatelybe $4 millioj in loans to sustain Avalon until the deal Clinical Data would also get an exclusivre license to aspects of Avalon’s core technology. Avalon’s boardx unanimously approved the termsadays later. Despite Avalon’s rocky history, Clinical Data, whicb is also developing biomarker technology, said the smaller biotecgh is agood fit, especially with Clinical Data’s interesgt in getting into the field of Avalon “found themselves in a toug market after having just createx some value,” Fromkin said. “It was an opportunity that we felt stronglyuabout pursuing.
” But Clinical Data has also revealed some financiapl limitations of its own. The new parent has previouslty said it must raisee money this year to help financd Avalon operations after the Clinical Data recentlyraised $50 millioj through an investment group affiliated with one of its board members. It also sold anothere genomics services divisionfor $17 “Our company has consistently run tighter than most biotech Fromkin said. “That’s very much in part to knowing our stronyg history ofraising capital. We’re shoulder to shoulde with our investors.
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