SOUTH SAN FRANCISCO, Calif., May 28 /PRNewswire-FirstCall/ -- VaxGen, Inc. (OTC Bulletin Board: VXGN), a biopharmaceutical company, and diaDexus, Inc., a privately held diagnostics company focused on the development and commercialization of patent-protected in vitro diagnostic products addressing unmet needs in cardiovascular disease, announced today that they have entered into a definitive agreement under which VaxGen will acquire diaDexus in a stock-for-stock merger.
In connection with the transaction, VaxGen will issue, as merger consideration, common stock equal to approximately 38% of the outstanding shares of the combined company immediately following the merger and VaxGen stockholders will continue to own approximately 62% of the combined company immediately following the merger. As previously announced earlier in May, diaDexus voluntarily suspended the commercialization of its automated PLAC® TIA product. Due to the impact of this suspension, the parties renegotiated the relative ownership of the combined company, as well as certain other terms, from those set forth in the Summary of Terms announced in April 2010.
If the merger is consummated, upon the closing of the transaction, diaDexus will become a wholly-owned subsidiary of VaxGen, and diaDexus stockholders receiving merger consideration will become stockholders of VaxGen. The officers of the combined company will be the current officers of diaDexus, and the combined company will be renamed diaDexus."The VaxGen board of directors and I are very pleased to announce the execution of this merger agreement," said James P. Panek, VaxGen President. "We believe that this transaction provides VaxGen stockholders a significant ownership position in a revenue generating company which we believe has the potential for significant revenue growth in 2011." "We believe the merger provides the opportunity to further increase the awareness and clinical adoption of the PLAC Test," said Patrick Plewman, President and Chief Executive Officer of diaDexus. "The PLAC ELISA Test for Lp-PLA2 is the only blood test cleared by the FDA to assess risk for coronary heart disease and ischemic stroke, the #1 and #3 cause of death, respectively, in the U.S." VaxGen has also agreed to provide a loan to diaDexus in an amount not to exceed $6 million. If the amount of the loan advanced exceeds $4 million, the ownership percentage of diaDexus will be reduced. Certain significant stockholders of diaDexus have also agreed to provide a loan to diaDexus in the amount of $1.5 million. Both loans are secured by the assets of diaDexus, including intellectual property. The merger is subject to customary closing conditions, including approval of the merger by diaDexus' stockholders. The merger does not require approval of VaxGen stockholders. The companies anticipate that the merger will close in the 3rd quarter of 2010. Upon the closing of the merger, the board of directors of the combined company would consist of five members, with two members being nominated by VaxGen and three members being nominated by diaDexus.