Clinical Data, Inc. to Acquire Avalon Pharmaceuticals
October 28 2008 - 8:26AM
Business Wire
Clinical Data, Inc. (NASDAQ: CLDA) and Avalon Pharmaceuticals, Inc.
(NASDAQ: AVRX) today announced that they have entered into a
definitive merger agreement for Clinical Data to acquire Avalon in
an all-stock transaction valued at approximately $10 million. The
combined company 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. �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,� said Drew Fromkin, Clinical Data�s President and Chief
Executive Officer. �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.� The merger agreement was one of
four separate definitive agreements signed by the companies which
included: a) a private placement, b) a secured term loan agreement,
and c) an exclusive license to Avalon�s drug and biomarker
discovery platform. Merger Agreement Clinical Data entered into a
definitive merger agreement to acquire Avalon for approximately $10
million 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, October 27,
2008. 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 of certain milestone payments that Avalon may
receive under its collaboration agreements with Merck & Co.,
Inc. and Novartis Institute for Biomedical Research, Inc. prior to
June 30, 2010. Avalon�s board of directors has approved the merger
agreement and has recommended the approval of the transaction to
Avalon�s stockholders. The merger agreement is subject to various
closing conditions, including approval by Avalon stockholders.
Avalon stockholders will be asked to vote on the proposed
transaction at a special meeting to be announced. Private Placement
Clinical Data has completed a private placement of 3,390,547 shares
of Avalon�s common stock, equivalent to 19.9 percent of Avalon�s
issued and outstanding shares. The shares were priced at a 15
percent discount to the closing price of Avalon�s common stock on
October 27, 2008, or $0.07 per share, for a total purchase price of
approximately $240,000. In addition, Clinical Data was issued
warrants to purchase up to an additional 1,695,273 shares of
Avalon�s common stock at an exercise price of $0.86 per share
(equal to the book value per share). The warrants are not
exercisable for six months or to the extent that their exercise
would result in Clinical Data owning more than 19.9 percent of
Avalon�s outstanding common stock. Term Loan Clinical Data provided
a $3.0 million term loan to Avalon, secured by a first priority
lien on all of Avalon�s intellectual property. The loan bears
interest at seven percent and all principal and accrued interest
will be due to Clinical Data in full on March 31, 2009. Exclusive
License Agreement Clinical Data provided an upfront cash payment of
$1.0 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 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,� said Kenneth C. Carter, Ph.D., President and Chief
Executive Officer of Avalon Pharmaceuticals, Inc. �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.� Piper
Jaffray & Co. acted as financial advisor to Avalon
Pharmaceuticals, Inc. in this transaction. Important Additional
Information will be Filed with the SEC. Clinical Data intends to
file a registration statement on Form S-4 with the Securities and
Exchange Commission (SEC) in connection with the transaction.
Avalon intends to file with the SEC and mail to its stockholders a
proxy statement/prospectus in connection with the transaction.
Investors and security holders are urged to read the registration
statement on Form S-4 and the related proxy statement/prospectus
when they become available because they will contain important
information about the merger transaction. Investors and security
holders may obtain free copies of these documents (when they are
available) and other documents filed with the SEC at the SEC�s
website at www.sec.gov. In addition, investors and security holders
may obtain free copies of the documents filed with the SEC by
contacting Clinical Data Investor Relations at the email address:
tmcneely@clda.com or by phone at (617) 527-9933 x3373. In addition
to the registration statement and related proxy
statement/prospectus, Clinical Data files annual, quarterly and
special reports, proxy statements and other information with the
SEC. You may read and copy any reports, statements or other
information filed by Clinical Data, Inc. at the SEC public
reference room at 100 F Street, N.E., Washington, D.C. 20549.
Please call the SEC at 1-800-SEC-0330 for further information on
the public reference room. Clinical Data, Inc.�s filings with the
SEC are also available to the public from commercial
document-retrieval services and at SEC�s website at www.sec.gov,
and from Investor Relations at Clinical Data as described above.
This communication shall not constitute an offer to sell or the
solicitation of an offer to sell or the solicitation of an offer to
buy any securities, nor shall there be any sale of securities in
any jurisdiction in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the
securities laws of any such jurisdiction. No offering of securities
shall be made except by means of a prospectus meeting the
requirements of Section 10 of the Securities Act of 1933, as
amended. Clinical Data, Avalon and their respective directors and
executive officers may be deemed to be participants in the
solicitation of proxies from the stockholders of Avalon in
connection with the merger transaction. Information regarding the
special interests of these directors and executive officers in the
merger transaction will be included in the proxy
statement/prospectus of described above. Additional information
regarding the directors and executive officers of Clinical Data is
also included in Clinical Data�s proxy statement for its 2008
Annual Meeting of Stockholders which was filed with the SEC on July
29, 2008 and its Annual Report on Form 10-K for the year ended
March 31, 2008, which was filed with the SEC on June 16, 2008.
These documents are available as described above. Additional
information regarding the directors and executive officers of
Avalon is also included in Avalon�s proxy statement for its 2008
Annual Meeting of Stockholders which was filed with the SEC on
April 29, 2008 and its Annual Report on Form 10-K for the year
ended December 31, 2007, which was filed with the SEC on March 31,
2008. These documents are available as described above. About
Clinical Data, Inc. Clinical Data is a global biotechnology company
unlocking the potential of molecular discovery, From Targeted
Science to Better Healthcare�. Its PGxHealth� division focuses on
proprietary biomarker and pharmacogenetic test development, as well
as targeted therapeutics to help predict drug safety and efficacy,
thereby reducing health care costs and improving clinical outcomes.
Its Cogenics� division provides genomics services to both research
and regulated environments. Through these divisions, Clinical Data
is leveraging advances in molecular discovery to provide tangible
benefits for patients, doctors, scientists and health plans
worldwide. Visit the company's website at www.clda.com for more
information. About Avalon Pharmaceuticals Avalon is a
biopharmaceutical company focused on the discovery, development and
commercialization of first-in-class cancer therapeutics. AvalonRx�
is the company's proprietary platform which is based on large-scale
biomarker identification and monitoring, used to discover and
develop therapeutics for pathways that have historically been
characterized as "undruggable." Avalon is headquartered in
Germantown, MD. SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES
LITIGATION REFORM ACT OF 1995 This press release contains certain
�forward-looking statements� within the meaning of the safe harbor
provisions of the United States Private Securities Litigation
Reform Act of 1995. Forward-looking statements are statements that
are not historical facts. Words such as "expect(s)", "feel(s)",
"believe(s)", "will", "may", "anticipate(s)", �intend(s)� and
similar expressions are intended to identify such forward-looking
statements. These statements include, but are not limited to,
statements about forecasts of market growth, future revenue,
benefits of the proposed merger, expectations that the merger will
be accretive to Clinical Data�s results, Clinical Data�s ability to
successfully integrate the operations, business, technology and
intellectual property obtained in the proposed acquisition of
Avalon; Clinical Data�s ability to obtain regulatory approval for,
and successfully introduce its and Avalon�s products; Clinical
Data�s ability to expand its long-term business opportunities;
financial projections and estimates and their underlying
assumptions; and statements regarding future performance. All of
such information and statements are subject to certain risks and
uncertainties, the effects of which are difficult to predict and
generally beyond the control of the Company, that could cause
actual results to differ materially from those expressed in, or
implied or projected by, the forward-looking information and
statements. These risks and uncertainties include, but are not
limited to: difficulties encountered in integrating merged
businesses; uncertainties as to the timing of the merger; approval
of the transaction by the stockholders of Avalon; the satisfaction
of closing conditions to the transaction, including the receipt of
regulatory approvals; whether certain market segments grow as
anticipated; whether any of merged business� therapeutic products
will advance further in the clinical trials process and whether and
when, if at all, any of their therapeutic products will receive
final approval from the U.S. Food and Drug Administration and
equivalent foreign regulatory agencies and for which indications;
whether merged business� therapeutic products will be successfully
marketed if approved; the extent to which genetic markers
(haplotypes) are predictive of clinical outcomes and drug efficacy
and safety; the strength of the merged business� intellectual
property rights; competition from pharmaceutical, biotechnology and
diagnostics companies; whether the merged business will be able to
develop or acquire additional products and attract new business and
strategic partners; changes in government regulations, and changing
relationships with customers, payers, suppliers and strategic
partners; and those risks identified and discussed by Clinical Data
and Avalon in their filings with the U.S. Securities and Exchange
Commission. Readers are cautioned not to place undue reliance on
these forward-looking statements that speak only as of the date
hereof. Neither Clinical Data nor Avalon undertakes any obligation
to republish revised forward-looking statements to reflect events
or circumstances after the date hereof or to reflect the occurrence
of unanticipated events. Readers are also urged to carefully review
and consider the various disclosures in Clinical Data's SEC
periodic and interim reports, including but not limited to its
Annual Report on Form 10-K for the fiscal year ended March 31,
2008, Quarterly Report on Form 10-Q for the fiscal quarter ended
June 30, 2008, Avalon's SEC periodic and interim reports, including
but not limited to its Annual Report on Form 10-K for the fiscal
year ended December 31, 2007, Quarterly Reports on Form 10-Q for
the fiscal quarters ended March 31 and June 30, 2008, and Current
Reports on Form 8-K filed from time to time by Clinical Data and
Avalon You are cautioned not to place undue reliance on these
forward-looking statements, which speak only as of the date of this
press release. All forward-looking statements are qualified in
their entirety by this cautionary statement.
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