Separately, Clinical Data paid $1 million in cash for Avalon’s drug and biomarker discovery platform.

Clinical Data will purchase Avalon Pharmaceuticals in an all-stock transaction valued at approximately $10 million. The combined company will have an expanded oncology business, which includes biomarkers and drug candidates, and a biomarker discovery platform.

Additionally, Avalon stockholders could receive up to $2.5 million in Clinical Data shares upon achievement of milestones before June 30, 2010, under collaborations with Merck & Co. and Novartis.

Separately, Avalon also received $1 million in cash to give Clinical Data royalty-free, exclusive, worldwide rights to Avalon’s drug and biomarker discovery platform, AvalonRx®.

Besides the merger agreement and the license deal, Clinical Data carried out a private placement worth about $240,000 and gave Avalon a $3 million secured term loan agreement. The loan has a 7% interest rate and is due in full on March 31, 2009.

The private placement includes 3,390,547 shares of Avalon’s common stock, equivalent to 19.9% of Avalon’s issued and outstanding shares. The shares were priced at a 15% discount to yesterday’s closing price of $0.07.

Clinical Data also received warrants to purchase up to an additional 1,695,273 shares at an exercise price of $0.86 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% of Avalon’s outstanding common stock.

 “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.”

Previous articleApplied Bio’s New Grant Program Will Offer Winners Access to the SOLiD 3 System
Next articleKainos to Provide up to $25M to Advance Parion’s Dry Mouth Treatment