Cardiome Pharma Shares Skyrocket on $700 Million Deal with Merck

Vancouver, B.C. based Cardiome Pharma shares skyrocket on a $700 million licensing agreement with Merck based out of Whitestation, New Jersey for Vernakalant, an investigational drug for treatment of atrial ibrillation. The agreement provides Merck with exclusive global rights to the oral formulation of vernakalant (vernakalant [oral]) for maintaining of normal heart rhythm in patients with atrial fibrillation, and provides a Merck affiliate, Merck Sharp & Dohme (Switzerland) GmbH, with exclusive rights outside of the United States, Canada and Mexico to the intravenous (IV) formulation of vernakalant (vernakalant [IV]) for rapid conversion of acute atrial ffibrillation to normal heart rhythm.

Cardiome to receive initial fee of US$60M and up to $300M in milestones.   Cardiome, a Canadian biotech which currently does not have any drugs approved for marketing, will get up to $200 million for achieving development and regulatory goals and another $100 million for approvals related to other heart conditions. And there’s $340 million available in sales milestones. Cardiome retains U.S. co-marketing rights in the deal and gets a $100 million credit facility from Merck that is available in 2010 in several tranches.

“Given Merck’s long-established leadership in the cardiovascular space, we believe there is no company better suited to advance Vernakalant,” said Bob Rieder, chairman and chief executive officer of Cardiome. “This collaboration places Cardiome in a strong financial position as we conclude our strategic review, and moves the Company closer to providing doctors with an important tool to address this critical unmet medical need.”

This deal also shows Merck continuing it direction of finding other external partners to help lead its drug pipeline for the future.

The effectiveness of the collaboration agreement is subject to the expiration or earlier termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act, if applicable, as well as other customary closing conditions. The agreement between Cardiome and Astellas Pharma U.S., Inc. for vernakalant (IV) in the United States, Canada and Mexico is unaffected by this agreement.

Written by Richard Wong, CMA     rwong@firstchoicecapital.ca