Merck pumps up pipeline

Will purchase NovaCardia for $350 million in stock

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WHITEHOUSE STATION, N.J.—Continuing its strategy of finding late-stage compounds to fill its drug pipeline, Merck & Co. announced in late July that it struck a deal to purchase cardiovascular specialist NovaCardia for $350 million in stock. With the acquisition, Merck gained access to NovaCardia's Phase III compound KW-3902 which has shown great promise as a treatment for acute congestive heart failure (CHF).

To date, Merck's cardiovascular strategy has focused on atherosclerosis and hypertension. "This acquisition continues to deliver on our strategy of targeted acquisitions in areas of unmet medical needs in therapeutic areas of strategic importance to Merck," says Richard Kender, VP of business development and corporate licensing for Merck.

The NovaCardia acquisition marked the second time in a month that Merck gained access to a late-stage compound. Earlier in July, the company forged a co-development deal with Ariad Pharamaceuticals (see story page 25) for its potential cancer compound, mTOR inhibitor AP23573.

For NovaCardia, the sale to Merck came, like so many recent deals in the industry, as the company was preparing to go public. "That was our goal, but we had also been talking to various potential partners earlier in year about KW-3902," says Randy Woods, president and CEO of NovaCardia. "Of course, what companies realized, once we announced our intention to go public, is that if we got to the offering they probably wouldn't get access to our promising candidate and it becomes much more expensive to strike a deal. So it ends up being easier, many times, to buy the company before it goes public."

San Diego-based NovaCardia was incorporated in 2001, but didn't start operations until it licensed rights to KW-3902 from Kyowa Hakko Kogyo Co. Ltd. in 2003.

According to company information, the drug is an adenosine A1 receptor antagonist which is believed to block adenosine-mediated constriction of blood flow to the kidneys and inhibit reabsorption of salt and water by the kidney, thereby increasing urine volume and maintaining renal function in patients with CHF. Typical treatments as renal functions deteriorate have been for higher doses of diuretics to reduce the fluid overload.

According to NovaCardia, no other vasodilator has demonstrated the selective renal vasodilation attribute of KW-3902 that helps preserve renal function.

According to Merck spokesman Ron Rogers, Merck also locked up the services of NovaCardia Chief Medical Officer Howard Dietrich and the bulk of the 11-person staff to help shepherd KW-3902 through Phase III clinical trials, expected to begin later this year.

"We certainly think it is a great benefit to Merck to have access to some of the people there and to have Howard Dietrich's expertise to help with the continuing trials," says Rogers.

But the fate of some of other staff members was still up in the air at press time. At the time the acquisition was announced, NovaCardia also disclosed that after the sale a new company would be spun off, this one focused on the continued development of the company's other clinical stage compound, K201, currently in Phase II studies as a treatment for atrial fibrillation.

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