Sontra and Echo hook up for transdermal techs

By Staff Reporter

- Last updated on GMT

Related tags Pharmacology

Sontra Medical has announced its intention to merge with Echo
Therapeutics in a bid to create a company with a powerful
transdermal drug delivery offering, and steadying Sontra's rickety
financial position.

According to the terms of the merger announced by the two firms yesterday, the new company will operate under the name Echo Therapeutics, operating out of corporate offices in Philadelphia with R&D facilities in Massachusetts and North Carolina. Through the transaction, Sontra has acquired all of the outstanding shares of Echo common stock in exchange for an aggregate of 6,250,000 shares of Sontra common stock. Former Echo stockholders now hold approximately 35 per cent of the combined company's common stock, with the remainder held by Sontra stockholders. Combining the two companies' expertise in transdermal drug delivery technologies is thought to be a strategic move to help progress the firms' plans for long term growth. The deal should be music to Sontra's ears, as a company which less than a year ago had essentially given up the ghost and announced plans to cease operations. The merger is the latest event in what has been an rollercoaster nine months or so for Sontra, after being thrown a lifeline at the eleventh hour following the decision to shut up shop in December. Just after Christmas 2006, the company announced that efforts to try and stabilise its financial position through sourcing additional funding or a merger had been unsuccessful, forcing the decision to terminate all employees and implement an orderly wind down of operations. However, by the beginning of January a saviour had appeared in the form of Sherbrooke Partners, who agreed to plough a $600,000 equity investment into the company and buy up two thirds of the company. Operations were restarted and the company breathed a sigh of relief. By July the company had raised another $1,815,000 from a variety of individuals, including $105,000 contributed by a member of the company's board and an executive officer. This latest news announcing the merger with Echo is touted by the company as validating and supporting the firm's strategy over the last nine months, which has been primarily focused on stabilizing its financial position, capitalizing the company for future growth and continuing development and commercialization plans. The new combined company will focus on platform-enabled transdermal therapeutics and diagnostics, formulating speciality pharmaceuticals and "new applications of next generation transdermal diagnostics". ​ It will benefit from two transdermal drug penetration technologies, focusing on improved formulations of established and approved products, and a varied late stage pipeline comprising one FDA-approved product, another with a pending new drug application, and seven candidate programs in development covering a total of eight different indications. The new company will also continue Echo's existing relationship with contract research organization Cato Research, to help maximise the output of the firm's two core technologies, whilst also helping reduce clinical development and regulatory risks.

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