Clinical Data acquires Avalon

Clinical Data Inc. and Avalon Pharmaceuticals Inc. announced in late October that the companies entered into a definitive merger agreement for Clinical Data to acquire Avalon in a stock transaction valued at approximately $10 million.

Jeffrey Bouley
NEWTON, Mass.—Clinical Data Inc. and Avalon Pharmaceuticals Inc. announced in late October that the companies entered into a definitive merger agreement for Clinical Data to acquire Avalon in a stock transaction valued at approximately $10 million.

The combined company reportedly will have a significantly expanded oncology business with a pipeline of promising oncology biomarkers and compounds, and a biomarker discovery platform to identify additional therapeutic and diagnostic candidates. The merger agreement was part of a series of transactions entered into by the companies.

Those other transactions that comprised the total package—along with the merger agreement itself—were a private placement, a secured $3 million term loan agreement, and an upfront cash payment of $1 million to Avalon in exchange for a royalty-free, exclusive worldwide license to Avalon's proprietary drug and biomarker discovery platform, AvalonRx, with carve-outs for existing Avalon compounds and programs.

"The acquisition of Avalon is aligned with our core strategy of identifying proprietary biomarkers that correlate with safety and efficacy in the development of targeted therapeutics and genetic tests used to diagnose disease and guide treatment decisions," says Drew Fromkin, Clinical Data's president and CEO. "Avalon's comprehensive biomarker discovery platform, validated by partnerships with leading pharmaceutical companies, extensive library of biomarkers and compounds and oncology expertise, add to our growing estate of proprietary oncology biomarkers and in-depth knowledge of biomarker and pharmacogenetic test development."

That Avalon was ripe for the picking in an acquisition deal comes as little surprise. Dr. Kenneth Carter, CEO of Germantown, Md.-based Avalon, publicly announced in the summer that his company was "running on fumes" and by his own admission, people were speculating that an event of this magnitude was inevitable for Avalon's survival—either a large partnership deal or sale of the company. Avalon had already announced in August it would lay off a third of its staff, bringing the total down to 35 employees and, to reduce its burn rate, that company halted work on its cancer therapy AVN994 and decided to focus on AVN316 instead, which CEO Kenneth Carter says was "better understood by Big Pharma companies."

Under the acquisition deal, approximately $10 million will be paid in Clinical Data's common stock, payable to current Avalon stockholders based upon the 15-day volume weighted average price of $12.49 for Clinical Data's common stock through Monday, Oct. 27.

Additionally, as part of the merger, Clinical Data will issue contingent value rights to Avalon stockholders, payable for up to $2.5 million of additional shares of Clinical Data's common stock, upon the receipt, prior to June 30, 2010, of certain milestone payments that Avalon may receive under its collaboration agreements with Merck & Co. Inc. and Novartis Institute for Biomedical Research Inc.

"The merger with Clinical Data represents an opportunity to continue using our biomarker-based drug discovery platform to build a pipeline and first-in-class cancer therapeutics," says Carter. "With Clinical Data's oncology biomarker development programs and abilities, we can pursue drugs and diagnostics that offer the greatest potential value for patients, providers, payers and our stockholders."

Under the current plans, Avalon and its 35-member staff will remain in Germantown. DDN

Jeffrey Bouley

Published In:


Subscribe to Newsletter
Subscribe to our eNewsletters

Stay connected with all of the latest from Drug Discovery News.

February 2023 Front Cover

Latest Issue  

• Volume 19 • Issue 2 • February 2023

February 2023

February 2023 Issue