Avalanche Biotechnologies Inc (“Avalanche”) (NASDAQ:AAVL) and Annapurna Therapeutics SAS (“Annapurna”), a privately held biopharmaceutical company, announced that they have entered into a definitive agreement providing for the acquisition of all outstanding shares of Annapurna by Avalanche in exchange for approximately 17.6 million newly issued shares of Avalanche common stock. Upon completion of the proposed acquisition, existing Avalanche shareholders will own 62.5% of the combined company and Annapurna shareholders will own 37.5% of the combined company (calculated on a treasury method basis). The combined company’s common stock will continue to trade on NASDAQ Global Market under the symbol “AAVL.”
Upon completion of the proposed acquisition, the combined company’s pipeline will consist of Avalanche’s existing ophthalmic programs and four new gene therapy based programs, which are focused on Alpha1-antitrypsin (A1AT) deficiency, cardiomyopathy associated with Friedreich’s ataxia, hereditary angioedema and severe allergies. The combined company will be headquartered in Menlo Park, California. Avalanche had approximately $258 million in cash as of December 31, 2015, which is expected to be sufficient to fund the combined company’s programs for at least the next 36 months.
Paul B. Cleveland, president and chief executive officer of Avalanche, will serve as the chief executive officer of the combined company, and Amber Salzman, Ph.D., president and chief executive officer of Annapurna, will become president and chief operating officer of the combined company. Both will serve on the combined company’s board of directors.
“This transaction creates the opportunity to build a leading gene therapy company with an extensive pipeline and significant scientific, financial and human resources,” said Mr. Cleveland. “I have tremendous respect for Annapurna’s commitment to high level research and development and we are looking forward to working together to drive our combined current programs forward. At the same time, we are seeking to expand our pipeline further through additional licenses and acquisitions that complement our expertise in vector development and optimization platforms, process development and manufacturing.”
“Our businesses are highly complementary, and this transaction enables us to combine the best assets of both companies as we drive toward the development of new gene therapies in multiple disease areas, including rare diseases,” said Dr. Salzman. “This transaction provides the capabilities required to bring promising treatments to clinical practice.”
Following the closing of the proposed transaction, the following organizational appointments will take place:
- Carlo Russo, M.D., chief medical officer and head of development at Annapurna, will serve as executive vice president and chief medical officer of the combined company, and Mehdi Gasmi, Ph.D., interim chief scientific officer of Avalanche, will be appointed chief technology officer.
- Ronald Crystal, M.D., Chairman of Genetic Medicine, the Bruce Webster Professor of Internal Medicine and a Professor of Genetic Medicine and of Medicine at Weill Cornell Medicine, and a co-founder of Annapurna, will serve as a scientific adviser.
- Mitchell H. Finer, Ph.D., managing director of MPM Capital, co-founder and distinguished research fellow at Avalanche and a pioneer in the field of gene therapy, will join the board of directors.
- Dr. Mark Blumenkranz, current chairman of Avalanche’s board of directors, co-founder of Avalanche and H. J. Smead Professor of Ophthalmology at Stanford University, will continue to serve as chairman of the board.
- The board will be expanded to nine members, comprising five current directors of Avalanche, Dr. Blumenkranz, Mr. Cleveland, John McLaughlin, Dr. Steven Schwartz and Paul Wachter, and four new directors, Dr. Salzman, Dr. Finer, Bong Koh, M.D., a partner at Venrock, and Thomas Woiwode, Ph.D., Managing Director at Versant Ventures.
The proposed transaction has been approved unanimously by the boards of directors of both companies and is expected to close in the second quarter of 2016, subject to approval by Avalanche stockholders of the issuance of Avalanche common stock and other customary closing conditions.
Cowen and Company acted as exclusive financial advisor to Avalanche, and Munger, Tolles & Olson LLP, Fieldfisher France LLP and Cooley LLP acted as legal counsel to Avalanche. Skadden, Arps, Slate, Meagher & Flom LLP and Gide Loyrette Nouel acted as legal counsel to Annapurna. (Original Source)
Shares of Avalanche Biotechnologies Inc closed last Friday at $6 . AAVL has a 1-year high of $45.18 and a 1-year low of $5.41. The stock’s 50-day moving average is $7.72 and its 200-day moving average is $9.82.
On the ratings front, Piper Jaffray analyst Joshua Schimmer reiterated a Buy rating on AAVL, with a price target of $15, in a report issued on January 7. The current price target implies an upside of 150.0% from current levels.
According to TipRanks.com, Schimmer has a total average return of -20.3%, a 19.0% success rate, and is ranked #3617 out of 3622 analysts.
Avalanche Biotechnologies Inc is a clinical-stage biotechnology company focused on discovering and developing novel gene therapies to transform the lives of patients with sight-threatening ophthalmic diseases.