Stock-for-stock purchase will enhance AVI’s position in directed, alternative RNA splicing treatments.

AVI BioPharma plans to buy Ercole Biotech in a stock-for-stock transaction. AVI will issue up to $7.5 million in its common stock valued at $1.3161 per share in exchange for all Ercole’s outstanding shares that AVI doesn’t already own.

AVI will also bear responsibility for up to $1.5 million in Ercole’s liabilities, which will be paid in cash and stock. Liabilities over this amount will be deducted from the $7.5M purchase price.

AVI will thus gain drugs in directed alternative RNA splicing. The firms have partnered since December 2006 a number of targets such as Duchenne muscular dystrophy (DMD) and thalassemia. This program includes AVI-4658, which is reportedly in clinical testing in the U.K. for DMD.

“The acquisition of Ercole is a major step toward AVI’s goal of becoming the preeminent developer of drugs that modify RNA splicing,” remarks Leslie Hudson, Ph.D., CEO of AVI. “This therapeutic approach takes advantage of a fundamentally important mechanism—alternative RNA splicing—for therapeutic intervention. We believe this intervention can correct genetic mutations in situ or produce clinically desirable variants of relevant therapeutic proteins in vivo. Our acquisition of Ercole brings us significant scientific expertise and fundamental patents to help us reach this goal.”

The transaction is expected to close by March 21.

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