AVI BioPharma buys Ercole Bio for $9M

Oregon-based AVI BioPharma has signed a definitive merger agreement to acquire fellow US firm privately-held Ercole Biotech, a pioneer in developing drugs to directed alternative RNA splicing for around $9.0 million in stock and assumed debt liabilities. The two companies have collaborated since December 2006 to develop drug candidates including AVI-4658, which is in clinical testing in the UK for the treatment of Duchenne muscular dystrophy.

Under the terms of the deal, AVI will issue up to $7.5 million in AVI common stock valued at $1.3161 per share in exchange for all outstanding shares of Ercole not already owned. In addition, AVI will assume responsibility for up to $1.5 million in liabilities of Ercole, to be paid by a combination of cash and AVI stock. Liabilities in excess of $1.5 million will be deducted from the $7.5 million in common stock. The transaction was expected to close by March 21.

"The acquisition of Ercole is a major step toward AVI's goal of becoming the preeminent developer of drugs that modify RNA splicing," said Leslie Hudson, the latter's chief executive, adding: "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."