Sonus Pharmaceuticals has found good use for its stash of cash — and perhaps a better shot at survival — by merging with British...

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Sonus Pharmaceuticals has found good use for its stash of cash — and perhaps a better shot at survival — by merging with British Columbia biotech firm OncoGenex Technologies.

The merger proposal unveiled Wednesday will leave OncoGenex management in charge and its shareholders with at least 50 percent of the combined company’s stock.

It marks the culmination of Sonus’ quest to salvage the Bothell company from last fall’s failure of clinical trials for its lead breast-cancer drug, Tocosol. After its stock plummeted, the company halted most of its research and laid off a big portion of its work force.

But as of March, it still had nearly $30 million in the bank. By combining with OncoGenex — into what will be called OncoGenex Pharmaceuticals — the firm will acquire three new potential therapies, one of which is in midstage clinical trials.

“What this combination really does is give the combined company a much broader and deeper clinical pipeline,” said Sonus Chief Executive Michael Martino, who will hand over the reins to OncoGenex’s CEO Scott Cormack once the deal is completed, expected in the third quarter of 2008.

Sonus Chief Financial Officer Alan Fuhrman will also depart. Shareholders for both firms must grant their approval.

The combined company’s operations will be split between Vancouver, where Cormack resides, and the Seattle area, where OncoGenex Technologies already has a presence.

It may end up having “more of a U.S. presence, because it speaks to a larger investor base,” but it’s too early to tell, Cormack said. “Ultimately you’ll end up with 15 people in Vancouver and 35 based in Seattle,” he estimated.

Sonus has 27 employees in its Bothell headquarters. OncoGenex has 23 employees between Vancouver and Seattle. Some jobs overlap, especially in the area of finance and administration, said Fuhrman, but no decisions have been made yet on which positions will be eliminated. Sonus employs about 10 people in those areas.

Although OncoGenex Technologies shareholders will initially own half the company, their stake may grow to 62.5 percent if certain research and business milestones are met. The companies’ combined cash could fund research for about two years, executives said.

Sonus’ cash — and its access to U.S. equity markets as a listed public company — might help fund OncoGenex’s pipeline of oncology therapies. But the company must make sure it stays listed.

Earlier this month, Sonus was warned by Nasdaq that it could be delisted if its shares don’t float back above $1 within six months. Fuhrman said the company will present its new business plan to the listing panel, and propose a reverse stock split “of some magnitude” to increase the shares’ nominal value.

Sonus shares fell 11 percent to 29 cents in trading Wednesday after the merger announcement.

Ángel González: 206-515-5644