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Aldagen Sold for More Than $40M

Aldagen sold to Md. company for more than $40M [The News & Observer, Raleigh, N.C.]

From News & Observer (Raleigh, NC) (February 9, 2012)

Feb. 09--Aldagen, a Durham biotechnology company whose attempts to go public didn't pan out, has been sold in a deal valued at more than $40 million.

The 14-person company is being acquired by Cytomedix, a small, publicly traded Maryland company that plans to continue development of Aldagen's most promising experimental drug -- a treatment for stroke. The deal was announced Wednesday after the markets closed.

Aldagen's search for a partner that could fund development of the stroke medication led it to Cytomedix, which decided it wanted to buy the company, said Richard Kent, Aldagen's chairman. Kent is a venture capitalist at Durham's Intersouth Partners, one of two Triangle venture capital firms -- the other was Aurora Funds -- that invested in the business.

Aldagen will retain its presence in Durham as a wholly owned subsidiary of Cytomedix. Cytomedix also will retain all of Aldagen's employees with the exception of CEO Lyle Hohnke, who will join the Cytomedix board of directors.

"So everybody will stay associated (with the business) one way or another," said Kent, also joining the Cytomedix board.

Founded as StemCo Biomedical in 2000, Aldagen twice filed plans to go public. But it ended up withdrawing its plans in 2008 and 2011 because of unfavorable market conditions. The second time it tried to go public, Aldagen hoped to raised $80.5 million from investors.

Aldagen has developed experimental drugs using stem cells, and Cytomedix also is focused on "regenerative medicine."

"We see it as a really, really good fit," Kent said.

The purchase price includes an up-front payment of preferred shares of Cytomedix valued at $16 million. When these shares are converted to common stock, Aldagen's shareholders -- investors and employees -- will own about 17 percent of Cytomedix's outstanding shares.

Aldagen shareholders also are scheduled to receive up to 20.3 million shares of Cytomedix, valued at $28.4 million based on Wednesday's closing price, contingent on favorable clinical results from the ongoing Phase 2 trials of Aldagen's stroke treatment.

The amount of venture capital funding Aldagen previously raised wasn't immediately available.

"If the contingent milestone payments are made based on a successful stroke trial, then investors will do very well," Kent said.

As part of the transaction, certain unspecified Aldagen investors bought $5 million worth of Cytomedix stock via a private placement.

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Posted: February 2012