BOTHELL, Wash.—SonusPharmaceuticals Inc. and OncoGeneXTechnologies Inc., based in Vancouver, B.C.,today jointly announced the signing of a definitive agreement to merge the twocompanies. The combined company will operate as OncoGenex Pharmaceuticals, Inc.Scott Cormack, OncoGenex' current president and CEO will continue in the sameroles with the merged company.
The merger comes in the wake of Sonus announcing last Septemberthat it was halting its development of its most advanced drug candidate forbreast cancer, Tocosol Paclitaxel, which fell short in Phase III in efficacyover Taxol, the therapeutic it intended to improve upon. Based on thisdecision, Bayer Schering pulled out of its collaboration on the potential drugwith Sonus, which in turn sent Sonus share prices tumbling.
"In October 2007, Sonus outlined its strategy to rebuildshareholder value,'' says Michael Martino, president and CEO of Sonus. "Ourgoal was to identify quality assets to enhance, complement and leverage thestrengths of our existing clinical pipeline, capabilities, infrastructure, cashand public listing. We believe that this transaction represents an outstandingvalue creation opportunity for shareholders.'"
As a result of the merger, the combined company will have astrong oncology pipeline addressing distinct unmet needs in the treatment ofcancer, including three candidates in various stages of clinical development.Its lead candidate, OGX-011, is being evaluated in five Phase 2 clinicaltrials, each of which has completed patient enrollment. Interim study resultshave previously been presented for each of the five clinical trials.
"We were attracted by the immediate value and the potentialfuture value this transaction creates for Sonus and OncoGenex shareholders,''said Mr. Cormack. ``Our companies are built around very similar approaches todeveloping oncology products that provide better therapeutic alternatives forcancer patients. This transaction provides an exciting opportunity for thestockholders of both companies to realize the full value of each company'sassets.''
Under the terms of the proposed merger, OncoGenex' stock anddebenture holders will receive approximately 37 million shares of Sonus commonstock and OncoGenex will become a wholly owned subsidiary of SonusPharmaceuticals, Inc. Following the close of the proposed transaction,OncoGenex stockholders will hold 50% of Sonus' outstanding shares of commonstock. An additional 25 million shares will be held in escrow and released toOncoGenex' shareholders upon achievement of specific milestones that areintended to demonstrate continued development of OncoGenex' assets andexecution of the combined company's business plan. The proposed transactionreceived unanimous approval from the Boards of Directors of Sonus andOncoGenex, and is expected to be completed in the third quarter of 2008,subject to regulatory approval, and the approval of Sonus' and OncoGenex'shareholders.