BOTHELL — Sonus Pharmaceuticals’ shareholders are set to vote today on a proposed merger with a Canadian firm, potentially ending a turbulent period for one of the region’s oldest biotechnology companies.
Shareholders are being asked to approve Sonus’ merger with OncoGenex Technologies Inc., a privately held firm based in Vancouver, B.C. If the deal goes through, the newly combined company will be based in Vancouver but plans to operate labs in Bothell.
In addition to the merger vote, shareholders are being asked to approve a reverse stock split, which aims to raise the company’s tiny share price. Shares of Sonus rose 3 cents, or about 12 percent, Monday to close just below 28 cents.
Founded in 1991, Sonus turned its focus to cancer drugs in 2000, after its drug application for an ultrasound contrast drug that got stuck in the last phase of the Food and Drug Administration’s approval process.
By last year, the company seemed on the verge of success, as it had advanced a cancer drug to late-stage human tests.
Then everything came to a crashing halt.
The company announced on Sept. 24 that its experimental chemotherapy treatment, Tocosol paclitaxel, showed inferior results when compared with one of the world’s most widely used chemotherapy drugs. Additionally, patients taking Sonus’ drug showed higher rates of serious side effects.
The news was devastating to Sonus, which had formed a lucrative drug development partnership with Bayer Schering for the drug. That fell apart and Sonus saw its stock price drop $3.65 — 84 percent — in one day.
Since then, the company’s work force has been cut back from more than 60 employees to less than two dozen.
The merger with OncoGenex, a deal valued at about $10 million, pairs Sonus with a company that has three potential cancer treatments going through clinical trials. The lead candidate, OGX-011, is in phase 2 trials. OncoGenex’s investors will hold about half of Sonus’ shares after the merger.
Under terms of the transaction, the newly named OncoGenex Pharmaceuticals will become a wholly owned subsidiary of Sonus. OncoGenex’s chief executive officer, Scott Cormack, will lead the company. Sonus’ CEO, Michael Martino, plans to leave once the merger is completed.
David Miller, president of Seattle-based Biotech Stock Research, said he’s troubled that Martino and his team won’t be leading the new company. Despite Sonus’ setback, Martino and his team have been well regarded.
“I personally would have rather have seen this management team take a big hit to fund their existing pipeline programs than to take this deal,” Miller said.
Because of today’s pending vote, executives with Sonus did not comment on the deal Monday.
Reporter Eric Fetters: 425-339-3453 or fetters@heraldnet.com.
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