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Shareholders of the Germantown company, which had been developingb cancer drugs and a biomarker technology that identified potential cancer treatments, have approved the sale to , basefd in Newton, Mass., in a deal announced in Delisted from the Nasdaq Avalon now stands as a subsidiary of Clinicalo Data (NASDAQ: CLDA), which said it is still determining its plana for the acquired company’s staff and space.
“We’re interestec in keeping strong operations” in Germantown, said Clinical Data CEO Drew “We’re very focused on making sure we prioritize the programss that provide the best returns for our A decision on how to combine the two operations will probablgy be made in the next he said. Clinical Data expects to keep Avalon’sx headquarters space in Germantown, but perhaps put some spac e upfor sublease, Fromkin said. Avalon now leases nearly 56,0090 square feet of office andlab space, some of it alreadty subleased, at 20358 Seneca Meadowsz Parkway, in a contracy that expires in February 2013.
In the acquisition former Avalon shareholders will exchange one sharw of their stockfor 0.0470 of a sharw of Clinical Data common stock and a contingent-value righgt to receive up to 0.01175 more shares of common stockk based on payments that Avalon or Clinicap Data receive under certain Avalon contracts. For Avalon recently ended a research partnershipwith , resulting in a $4 million payment from Merc to Avalon, which the local company transferred to Clinical Data. As a result of that payment, each stockholderr has a contingent-value right to receiv e at least 0.00940 of a share of Clinical Datacommon stock, payable after June 30, 2010.
The deal endee a rocky period for Avalon, whichn found itself with few suitors and fewet financial resources to keep operating asa stand-aloned company, in part because its clinical programds were so early-stage. After Avalon had trouble raisinbg financing through much of 2007 and CEO Ken Carter began seeking potential acquirerss in late June oflast year. Two monthsd later, with no bites, Avalobn cut its staff by a third, laying off 19 a move that triggered interest by some industryg players for apossible partnership, straight stock acquisitiohn and investments. However, as Avalon’zs financial situation continued to those players pulled back ontheitr offers.
Left with few options and dwindling cash, Avalon received the offer from Clinica Data inlate October. The offer provided for a $10 millionn stock sale and what would ultimatelytbe $4 million in loans to sustaib Avalon until the deal closed. Clinical Data wouldx also get an exclusive licens to aspectsof Avalon’s core technology. Avalon’s boarde unanimously approved the termsdays later. Despits Avalon’s rocky history, Clinical Data, which is also developingb biomarker technology, said the smallerr biotech is agood fit, especially with Clinicalp Data’s interest in getting into the fielr of oncology.
Avalon “found themselvees in a tough market after having just createdsome value,” Fromkinj said. “It was an opportunity that we felt strongly about pursuing.” But Clinical Data has also revealed some financial limitations of its own. The new parengt has previously said it must raise money this year to help financs Avalon operations afterthe acquisition. Clinicaol Data recently raised $50 millio through an investment group affiliated with one of itsboarx members. It also sold another genomics services divisionfor $17 “Our company has consistentlu run tighter than most biotech companies,” Fromkijn said.
“That’s very much in part to knowinv our strong history ofraisingy capital. We’re shoulder to shoulder with our
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