Merck buys NovaCardia for USD 350m

US-headquartered Merck & Co have bought US-based NovoCardia in a USD 350m stock deal.

NovaCardia, a privately held biotech headquartered in San Diego, was targeted over its late-stage product for congestive heart failure, KW-3902. The treatment offers renal protection against diuretics, which prevent fluid build-up caused by the impaired ability of the heart in some cardiac patients to pump the blood around the body.

KW-3902 was the basis of the formation of NovaCardia which was acquired in 2003 by Japanese pharmaceutical company Kyowa Hakko, which has conducted over 200 preclinical studies on the drug.

Kyowa Hakko had been developing KW-3902 to offset the side effects of one of its chemotherapy drugs, which was eventually shown not to cause any and KW-3902 was shelved.

Researchers have identified the compound as potentially meeting a clinical need to treat kidney problems caused as a side effect of treatment for congestive heart failure, which is caused by weak or sclerotic heart muscle leading to a progressive deterioration in the heart's efficiency to pump blood effectively. An increasing ageing population means that there are more patients surviving the early stages of cardiovascular diseases.

NovaCardia history
Eckard Weber, a physician and former research scientist and partner at Domain Associates Venture Capital, licensed the rights to KW-3902 and formed NovoCardia around it.

The company raised USD 22m in financing, while eventual positive phase II trials led to another funding round of USD 66m. NovaCardia then floated an IPO in the hope of raising another USD 86m at approximately USD 18 per share. However, Merck, in its current round of acquisitions, offered NovoCardia USD 35m in its stock, in return for equity in NovaCardia.

According to reports, NovaCardia executives were about to launch the IPO, but were approached by a slew of pharmaceutical companies with their eyes on the treatment. It is anticipated that the deal will complete in the coming two months.

Merck has revealed it will keep NovoCardia's CSO, Howard C Dittrich, who is a co-founder of the company, as a consultant. The 11-strong team is also touted to follow the deal, with further compounds for arrhythmia and atrial fibrillation in the pipeline.

Strategic buy
Merck's reasons for buying NovoCardia are simple. The US giant is still on the rebound from the Vioxx (rofecoxib) court cases and loss of patent protection on its cholesterol lowering drug, Zocor (simvastatin). Profits for H1 FY07 were depressed as a result.

Merck has responded by making cost cuts and has recovered lost ground with the highly successful launch of cervical cancer vaccine, Gardasil. But an extra compound in the pipeline would not hurt future developments at the company.

Randall E Woods, who is NovaCardia's CEO, said of the deal: "We are excited to see our lead product become part of the superb scientific environment of Merck. This is what everyone dreams of."

Richard C Pasternak, vice president of clinical research at Merck Research Laboratories, added: "Our acquisition of NovaCardia enhances Merck's considerable internal research efforts committed to the development of new medicines to treat major cardiovascular diseases that are underserved by existing therapies.î