Biotech Values

[DewDiligence]

PARD–Allozyne Try to Make Eagle from Two Turkeys

[Allozyne’s lead drug candidate, a pegylated interferon-beta for MS, is not exactly a novel idea. Did anyone here listen to the CC?]

http://finance.yahoo.com/news/Poniard-Pharmaceuticals-and-iw-1445134698.html?x=0&.v=1

›Poniard Pharmaceuticals and ALLOZYNE Sign Definitive Merger Agreement
Combined Company to Focus on Advancing ALLOZYNE's Clinical Stage Product Pipeline and Next Generation Biologics Platform; Will Seek Partnership for Picoplatin

Conference Call Scheduled for Today, June 22, at 5:00 PM Eastern Time

Wednesday June 22, 2011, 4:26 pm EDT

SAN FRANCISCO, CA and SEATTLE, WA--(Marketwire - 06/22/11) - Poniard Pharmaceuticals, Inc. (NASDAQ:PARD), a biopharmaceutical company focused on innovative oncology therapies, today announced the signing of a definitive merger agreement with ALLOZYNE, Inc., a privately held biotechnology company focused on the development of bioconjugated protein therapeutics.

The merger transaction will bring together ALLOZYNE's autoimmune disease product pipeline and proprietary protein engineering platform and Poniard's oncology assets, including picoplatin, a Phase III-ready chemotherapeutic agent. The combined company is expected to focus its resources on advancing the ALLOZYNE products and platforms, and will seek a partnership for the continued development of picoplatin. [Will anyone want it?]

Under the terms of the merger agreement, Poniard will issue shares of its common stock to ALLOZYNE stockholders based on an exchange ratio to be determined prior to closing of the transaction. Under the exchange ratio formula in the merger agreement, the former ALLOZYNE stockholders are expected to own approximately 65 percent of the combined company, and the former Poniard shareholders are expected to own approximately 35 percent of the combined company, each on a fully diluted basis. The exchange ratio has been calculated using the 5-day average closing sales price of Poniard common stock prior to the merger announcement, or $0.2270 per share. The exchange ratio is subject to adjustment as described in the merger agreement. If the merger is consummated, the combined company will be renamed ALLOZYNE, Inc. and will be based in Seattle.

The merger transaction has been approved by the boards of directors of both companies and is currently anticipated to close during the second half of 2011, subject to filing of a registration statement and proxy statement with the Securities and Exchange Commission (SEC), approval by ALLOZYNE's and Poniard's respective stockholders, receipt of approval for listing of the combined company's common stock on The NASDAQ Capital Market, and other customary conditions of closing.

Following closing of the merger, Meenu Chhabra, President and CEO of ALLOZYNE, will become President, CEO and a director of the combined company. In addition to Ms. Chhabra, the board of directors of the combined company is expected to consist of two current Poniard directors (Ronald A. Martell and another individual to be selected by the Poniard board), three current ALLOZYNE directors (Steven Gillis, Ph.D., Michael Steinmetz, Ph.D. and Carl Weissman) and one new independent director selected by a majority of the combined company's board.

"We view this merger as a critical step in our goal of maximizing long-term value for our shareholders," said Ronald A. Martell, Chief Executive Officer of Poniard. "A merger with ALLOZYNE represents a new strategic direction for Poniard's shareholders, the risks of which, we believe, are mitigated and upside driven by a promising clinical asset, a pipeline of novel protein therapeutics, a proprietary biologic therapeutic platform offering significant partnership opportunities, and the potential of picoplatin."

Ms. Chhabra stated: "We believe that ALLOZYNE's proprietary platform may enable us to enhance virtually any biologic therapeutic, including therapeutic proteins and antibodies. Our lead product, AZ01, a clinical-stage, PEGylated interferon ß for multiple sclerosis, could replace existing weekly or twice-weekly interferon treatment with monthly dosing and has the potential to address a significant unmet need in this multi-billion dollar market [I doubt it]. By merging with Poniard, we believe we can access the public capital markets to accelerate our strategic plan. This plan includes the advancement of AZ01 into Phase II study, the advancement of AZ17, a bispecific antibody with broad potential in autoimmune and inflammatory diseases, into the clinic, and the further validation of our discovery platforms among potential partners."

Additional Information about the Proposed Transaction

The merger will take the form of a stock-for-stock merger intended to qualify as a tax-free reorganization. Under the terms of the agreement, all outstanding shares of ALLOZYNE common and preferred stock will be exchanged for shares of Poniard common stock and all outstanding ALLOZYNE options and warrants will be exchanged for options and warrants to acquire Poniard common stock.

In connection with the merger, Bay City Capital LLC (BCC), a principal shareholder of Poniard, has executed a binding commitment to loan Poniard $2.4 million, on a nonrecourse basis prior to closing of the merger to satisfy certain obligations under the merger agreement. The loan will accrue interest at a rate of 18 percent per annum and will be secured by a first priority security interest on all of Poniard's picoplatin assets. The principal amount of the loan, all accrued interest thereon and all other amounts due under the loan agreement must be repaid in full within one year after the date of the loan.

Concurrent with execution of the merger agreement, holders of approximately 21 percent of Poniard's common stock entered into agreements to vote their Poniard shares in favor of the transaction and refrain from selling any Poniard shares they hold for six months following the closing of the transaction. In addition, stockholders holding approximately 63 percent of ALLOZYNE's capital stock have entered into similar agreements, whereby they have agreed to vote their ALLOZYNE shares in favor of the merger and refrain from selling any of the Poniard shares they receive in the merger for six months following the closing of the transaction.

Additional information regarding the merger terms are set forth in Poniard's current report on Form 8-K regarding the transaction that will be filed with the SEC and which should be reviewed carefully in conjunction with this press release.

Required Reverse Stock Split

As a condition to closing the merger, Poniard is required to obtain approval to list the common stock of the combined company on The NASDAQ Capital Market. Poniard will need to complete a reverse stock split, subject to shareholder approval, to comply with the NASDAQ listing requirements.

As previously announced, Poniard's 2011 Annual Meeting of Shareholders will be reconvened at 9:00 AM, Pacific Time, on July 8, 2011, to vote on a proposal to approve a reverse stock split at an exchange ratio of between 1-for-15 and 1-for-25, as determined by its board of directors. The reverse stock split proposal is described in detail in Poniard's definitive proxy statement filed with the SEC on April 27, 2011. A copy of the proxy statement can be found at www.sec.gov or is available from Poniard's proxy solicitor, D.F. King & Co., Inc., at [phone]. In addition, investors and security holders can obtain copies of the proxy statement without charge from Poniard Pharmaceuticals, Inc., 750 Battery Street, Suite 330, San Francisco, CA 94111, Attention: Investor Relations, [phone], or from www.poniard.com. All Poniard shareholders who have not yet voted "FOR" the reverse split are urged to contact D.F. King & Co. at [phone] for assistance in voting their shares on this important proposal.

Conference Call Information

ALLOZYNE and Poniard Pharmaceuticals will host a joint conference call today, June 22, at 5:00 PM Eastern Time, to discuss the proposed merger and a strategic overview of the combined company. The call can be accessed by dialing [phone] (U.S. and Canada) or [phone] (international), and entering passcode 57093910. In addition, the conference call webcast can be accessed on the "Events" page of the "News & Events" section of Poniard's website at www.poniard.com. A replay of the webcast will be available on Poniard's website for 10 days.

Financial Advisor

Leerink Swann LLC is acting as financial advisor to Poniard in this transaction.

About AZ01 and Multiple Sclerosis

ALLOZYNE's lead program, AZ01, is positioned as a long-acting interferon that offers potential advantages over existing therapies through enhanced dosing convenience and superior tolerability to existing agents. Multiple sclerosis (MS) is a chronic inflammatory and degenerative disease of the brain, which leads to severe nerve damage. Symptoms include fatigue, as well as cognitive and visual impairment. Approximately 2.5 million people worldwide suffer from MS. Global sales of therapeutics used to treat MS exceeded $9 billion in 2009, with sales of commercialized interferons (IFNs) approximating $6 billion. IFNs are currently the standard-of-care for first-line therapy in MS, with robust safety and efficacy data extending back to 1993, when the first short-acting IFN beta-1b was launched.

About Picoplatin

Picoplatin is a new and differentiated platinum-based chemotherapeutic agent that is in clinical development for multiple cancer indications, treatment combinations and by two routes of administration. It is designed to overcome platinum resistance associated with chemotherapy in solid tumors. Study data to date suggest that picoplatin has an improved safety profile relative to existing platinum-based cancer therapies and can be safely administered in combination with multiple approved oncology products. Approximately 1,100 patients have received picoplatin. Results obtained to date suggest that hematologic events are common but manageable. Kidney toxicity (nephrotoxicity) and nerve toxicity (neurotoxicity) are less frequent and less severe than is commonly observed with other platinum chemotherapy drugs. Picoplatin has demonstrated anti-tumor activity in a variety of solid tumors.

About ALLOZYNE

ALLOZYNE is a privately held, clinical stage biotechnology company based in Seattle, and was established in late 2005. Focusing specifically on autoimmune diseases, ALLOZYNE has created a pipeline of protein therapeutics with its proprietary platform which enables it to site-specifically modify protein sequences through substitution or addition of non-canonical amino acids, in E. Coli, yeast or mammalian systems. These amino acids possess unique chemical functions and thereby create the opportunity to introduce various site-specific conjugations into proteins that may elicit improved efficacy, safety and tolerability. ALLOZYNE believes that these unique amino acids may serve to unlock an advanced class of chemical reactions that potentially are superior to conventional methods available for protein modification.

ALLOZYNE has raised total capital of $43M since its formation and is supported by a top tier venture investor syndicate led by MPM Capital, Arch Venture Partners and OVP Venture Partners. This funding has been used to rapidly progress the platforms to practice and build a clinical stage pipeline with distinct product opportunities that reflect the breadth of the platform and maintain the company's focus on central nervous system and autoimmune diseases. For additional information, please visit www.ALLOZYNE.com.

About Poniard Pharmaceuticals

Poniard Pharmaceuticals, Inc. is a biopharmaceutical company focused on the development and commercialization of innovative oncology products. For additional information, please visit www.poniard.com.‹