Allozyne, Poniard Scrap Plan to Merge Amid Investor Apathy

12/22/11Follow @xconomy

Seattle-based Allozyne spent the last six months trying to go public by merging into the shell of what used to be an active, publicly traded biotech company.

But in the end, the deal fell apart.

Allozyne and San Francisco-based Poniard Pharmaceuticals (NASDAQ: PARD) said today in a statement they have “mutually agreed to terminate” the merger deal they reached in June, after realizing that shares of the combined company wouldn’t meet standards for listing on the NASDAQ exchange. Poniard said in a statement that its board is now “actively exploring alternatives” for what to do with its remaining assets.

Allozyne, the privately held developer of a long-lasting protein drug for multiple sclerosis, said in June it hoped to find its way to the public markets through acquiring Poniard, a cancer drug developer that crashed and burned two years ago, but still had an active NASDAQ listing. A couple of proxy advisory services recommended the deal, but shareholders were so apathetic about merging the companies that it took months of management hounding before enough votes were turned in to approve it. Poniard shareholders eventually agreed to the merger in November, along with a painful reverse stock split in which investors agreed to trade in 40 of their shares for just one in return, in order to prop up the stock price above $1.

But by late in the year, the Poniard shareholder base still hadn’t gotten excited about the newly merged company. After news of the termination, shares of Poniard fell 5 percent to $2.79 at 10:28 am Eastern time.

Allozyne CEO Meenu Chhabra, who would have been the CEO of the combined company, didn’t immediately respond to a request for comment.

Allozyne was founded in 2005 at the Seattle-based Accelerator. Its backers include MPM Capital, OVP Venture Partners, Arch Venture Partners, and Amgen Ventures. The company said in a recent merger document that it had about $1.1 million in cash in the bank, and that it had an accumulated deficit of $49.6 million as of June 30.

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