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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.