PharmAthene Backs Out of Theraclone Sciences Merger

Theraclone Sciences tried to merge with PharmAthene for a couple of months, but the deal is off.

Annapolis, MD-based PharmAthene (NYSE MKT: PIP) chose to pull the plug on a pending merger with Seattle-based Theraclone on the day before a special meeting of shareholders, and Theraclone said today it has agreed. PharmAthene will now pay Theraclone a $1 million breakup fee, and both companies will go back to operating independently. Neither company explained in their respective statements why the deal collapsed.

The two companies announced in August that they planned to an all-stock “merger of equals,” with the combined operation named PharmAthene, but with a headquarters in Seattle led by Theraclone CEO Cliff Stocks. The idea was to merge PharmAthene’s government contracting business for anthrax-related product candidates with Theraclone’s antibody drug discovery platform. Theraclone has a couple of drug candidates in clinical trials—one for flu, and another for cytomegalovirus. But Theraclone suffered a setback last week when it said it was unable to secure funding from the Biomedical Advanced Research and Development Authority (BARDA) to help advance its pandemic flu program.

The failed merger marks the second time that a graduate of the Seattle-based Accelerator has been unable to complete a pending merger. Allozyne tried, unsuccessfully, to close a merger with Poniard Pharmaceuticals in 2011 which was aimed to get the company traded on a public exchange, at least partly so the initial venture investors could see some liquid returns on their investment. The company was founded in 2005 at Accelerator, and has raised more than $50 million since its start. Theraclone’s most recent financing was a $14 million equity-and-debt deal in March.

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