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Mumbai:
Merck & Co. will acquire San Diego-based biotech firm NovaCardia Inc. in a
$350 million all-stock deal, thereby adding a promising cardiovascular drug to
Merck''s pipeline. Venture capital-backed NovaCardia''s owners opted to
accept Merck shares rather than taking NovaCardia public in an uncertain market.
Eckard Weber founded NovaCardia around the drug KW-3902 which he bought
from the Japanese firm Kyowa Hakko Kogyo Co. Ltd. NovaCardia developed it as a
treatment for kidney dysfunction associated with congestive heart failure.
The lead product candidate, KW-3902, is in Phase 3 clinical trials. It aims
to treat the effects of congestive heart failure, but it does not address the
cause of the disease, which is a weakened heart muscle that doesn''t pump enough
blood. NovaCardia expects to take the drug to market, perhaps by late
2009, and build a small sales force to target acute care and hospital settings.
The company also plans to spin off a new unit for clinical development
of its second compound, K201 (JTV-519), for atrial fibrillation, or arrhythmia.
NovaCardis''s largest shareholder is Domain Associates LLC of Princeton
, N.J. which owns 25 per cent in the company. NovaCardia raised a total of $80
million in venture funding. Other investors include Forward Ventures
of San Diego (15.6 per cent); Skyline Ventures of Palo Alto, Calif. (15.3 per
cent); and Versant Venture Management LLC (13.6 per cent), Montreux Equity Partners
(12.5 per cent) and InterWest Partners (10.4 per cent), all based in Menlo Park,
California. Although profit figures were not immediately available, NovaCardia
has issued warrants that allow investors to purchase shares cheap since 2005.
Domain had bought 256,000 shares in the company for $288,000 in March. Earlier
this year, the firm had registered to go public, but as of May it had not set
any terms. NovaCardis was also getting ready for a pre-IPO road show when Merck
made its buyout offer. Merck, meanwhile, is also under tremendous pressure
to bolster its pipeline as generics threaten profits and R&D costs spiral.
Under the all-stock deal, Merck''s stock price now becomes a variable
part. The number of shares NovaCardia receives will be based on the average closing
price for the five days
leading to the deal''s close, which is expected within 45 days. Merck shares closed
$1.66 or 3.2 per cent higher at $53.38 on July 25. align="left">Merck
reported second quarter 2007 sales of $6.1 billion, a 6 per cent increase over
the year-ago period and a 12 per cent jump in income, to $1.67 billion, from $1.5
billion a year ago.
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