West Coast Editor

To wed biomarkers with molecular diagnostics, Icoria Inc. is being taken over by Clinical Data Inc. in an all-stock deal worth about $12.5 million, based on the former's closing price last Friday - and one that comes months after Clinical Data disclosed its plan to buy out Genaissance Pharmaceuticals Inc. (OTC BB:ICOR).

Icoria's shares closed Tuesday at 26 cents, up 8 cents, or 45 percent, and Newton, Mass.-based Clinical Data's stock (NASDAQ:CLDA) ended the day at $21.06, down $1.06.

Barry Buzogany, chief operating officer and general counsel for Icoria, noted that the firm had alerted investors months ago that "our cash position was in jeopardy," with only enough to last through the second quarter of 2006.

"As a management team and board of directors, we had to look at other options," he said, and those included possibly going private or getting acquired.

Under the terms, Icoria shareholders will get 0.0139 shares of Clinical Data stock for each share of Icoria they own. At the close of trading Friday, that represented a price of 32 cents per share of Icoria stock. Should the price of Clinical Data shares change before the transaction closes, the aggregate purchase price could fluctuate, but it won't go below $10 million or exceed $12.5 million.

Based on the current share price of Clinical Data and including the impact of the expected acquisition of New Haven, Conn.-based Genaissance - a $56 million all-stock deal announced in June - Icoria shareholders will own about 7.6 percent of the combined company upon the close of the Icoria transaction. (See BioWorld Today, June 22, 2005.)

The idea is to pair Research Triangle Park, N.C.-based Icoria's biomarker discovery platform with Clinical Data's molecular diagnostics business model, as well as Icoria's metabolomics and genomics capabilities with the growing pharmacogenomics expertise of Clinical Data. Whether Icoria will lose staff in the deal is uncertain, Buzogany said.

In the Genaissance/Clinical Data merger, approved by both boards and expected to close in the fourth quarter, Genaissance stockholders would get, at a fixed exchange ratio, 0.065 shares of Clinical Data for each share of Genaissance. Based on the two firms' closing prices just before the deal was made public, the amount represented a price of $1.33 per share of Genaissance's common stock.

Genaissance's preferred shareholders would exchange their shares for Clinical Data preferred shares, and owners of Genaissance would have about 40 percent of the combined company.

"[Clinical Data's] vision for the three companies is that they will become one of the leaders of personalized medicine in the clinical setting," Buzogany told BioWorld Today.

"If you look at the biomarker element, I think it's on the rebound, or winning more and more favor in terms of the science behind using them to diagnose this disease."

Icoria's board has unanimously approved the Clinical Data transaction and will recommend to Icoria's stockholders that they do the same.

"Certainly, it could come apart, as any of these deals can, since we need our shareholders to approve the deal," Buzogany said, citing "all the standard kinds of potential issues that could cause the deal to go down, but we're confident that's not going to happen."

New York-based Needham & Co. LLC served as financial adviser to Icoria.

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