Following a big setback, Avalanche ties the knot with gene therapy player Annapurna

Avalanche CEO Paul Cleveland

After getting whacked by a major clinical failure for its lead gene therapy last year, Avalanche Biotechnologies is looking to get back on track by acquiring Annapurna, a small, Paris-based outfit that recently in-licensed several new gene therapy programs from a pioneering scientist in the field.

Menlo Park, CA-based Avalanche CEO Paul Cleveland struck a deal to acquire Annapurna for 17.6 million newly issued shares, giving Annapurna's investors 37.5% of the combined company. Avalanche's stock ended last week at $6, far removed from its 2015 high of more than $44.

Amber Salzman, the CEO at Annapurna, will become president of the combined company after the tie-up is complete.

Avalanche ($AAVL) ran head first into a wall of skepticism last summer when it tried to dress up messy efficacy data for its lead drug for wet, age-related macular degeneration and present it as a significant success. (In better days, the biotech had partnered with Regeneron in a $640 million deal.) The market wasn't having it, though, and the stock price collapsed. Then CEO Thomas Chalberg was out the door soon after and the company scrapped plans for a follow-up mid-stage study and then regrouped under the new CEO, Paul Cleveland.

At the time that Salzman spoke with FierceBiotech a few weeks ago, the company--which was switching its name from AAVLife to Annapurna--had just in-licensed a trio of preclinical programs from Weill Cornell Medicine's Ron Crystal, who's had considerable experience using adenovirus vectors to deliver gene therapies. The new work included a fresh focus on alpha1-antitrypsin (A1AT) deficiency, a genetic condition that destroys lung tissue as well as hereditary angioedema, with some intriguing animal data setting the stage for an attempt at a new program for a one-time cure for severe allergies.

Salzman, a GlaxoSmithKline ($GSK) veteran, said a month ago that the game plan was to go out and hunt up a Series B to follow up on their $12 million A round, which was led by Versant Ventures. But events evidently pushed the biotech in a new direction.

Cleveland, who had $258 million in cash at Avalanche the end of December, isn't done.

"(W)e are seeking to expand our pipeline further through additional licenses and acquisitions that complement our expertise in vector development and optimization platforms, process development and manufacturing," he said in a statement.

Cleveland had helmed Celladon ($CLDN) briefly after the company crashed on a devastating trial failure. He had also worked earlier at Aragon, which experienced a much happier ending with a big buyout.

- here's the release