AVI BioPharma Announces Acquisition of Ercole Biotech
Research Triangle Park, N.C. and Portland, OR — AVI BioPharma, Inc. (Nasdaq: AVII) and privately held Ercole Biotech, Inc. today announced the execution of a definitive merger agreement pursuant to which AVI will acquire Ercole, a pioneer in developing drugs to directed alternative RNA splicing. AVI and Ercole have collaborated since December 2006 to develop drug candidates including AVI–4658, which is in clinical testing in the United Kingdom for treatment of Duchenne muscular dystrophy (DMD).
Under the terms of the agreement, 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 stock not already owned by AVI. 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 is 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, Ph.D., Chief Executive Officer 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.”
AVI refers to this novel therapeutic approach as ESPRIT (Exon Skipping Pre–RNA Interference Technology). AVI believes that its morpholino chemistry is particularly useful in modifying splicing of RNA because molecules based on this chemistry do not appear to degrade targeted RNA and do not appear to lead to down–regulation of the target gene. In addition, AVI has proprietary technology to direct delivery of drugs preferentially to specific organs in the body.
“We are excited about joining forces with AVI and combining the complementary strengths of the two companies to develop splice–directing drugs,” said Ryszard Kole, Ph.D., President and founder of Ercole Biotech. “Recent discoveries have shown how prevalent alternative splicing is in nature, providing a multitude of promising drug targets. We are committed to exploiting this mechanism for practical outcomes, which can be used to benefit patients with a variety of diseases.”
