Merck & Co. will pay an initial fee of $60 million to Cardiome Pharma for rights to vernakalant, a drug candidate for atrial fibrillation (AF). Cardiome has already received a $100 million credit facility and could earn an additional $640 million through success-based fees.
The agreement gives Merck an exclusive global license to the oral formulation of vernakalant for the maintenance of normal heart rhythm in patients with atrial fibrillation. Cardiome successfully completed a Phase IIb study evaluating this indication in July 2008.
The deal also provides Merck’s Switzerland affiliate with exclusive rights outside North America to the intravenous formulation for rapid conversion of acute atrial fibrillation to normal heart rhythm. The drug has completed Phase III development in the U.S., and is under FDA review.
“For a Phase III asset with a filed NDA, the price of the deal is not too surprising, but the market for AF has been elusive,” notes Seamus Fernandez, equity researcher at Leerink Swann's major pharmaceuticals division.
Cardiome has the right to access in tranches beginning in 2010, the secured, interest-bearing credit facility. The firm could also obtain $200 million based on the achievement of development and approval goals, including $35 million for initiation of a Phase III program for vernakalant oral and submission for regulatory approval in Europe of vernakalant IV. Approvals in other indications with either formulations will trigger up to $100 million in milestones. Finally, besides tiered royalty payments, Cardiome could receive up to $340 million in milestone fees if certain sales thresholds are met.
Cardiome has retained an option to co-promote vernakalant oral with Merck through a hospital-based sales force in the U.S. Merck will be responsible for all future development, manufacturing, and commercialization costs. "In this kind of financial climate, the alternative of developing the oral asset is really not available to us," says CEO Bob Rieder. "This partnership with Merck gives this drug the highest rate of success."
As to how the company will invest the money it receives, Rieder says that at a time when milestone achievements no longer necessarily drive the value of the company, they intend to take a cautionary stand on developing pipeline assets as they look for financial stability.
Vernakalant works by selectively blocking multiple ion channels in the heart that are known to be active during episodes of atrial fibrillation. In August 2008, FDA told Cardiome and its North American partner, Astellas Pharma, that the agency needed to establish a better risk-benefit profile before granting final approval.
FDA thus requested the firms to submit data on the risk of previously identified events experienced by a subset of patients during the clinical trials. FDA also asked for a safety update from ongoing or completed studies of vernakalant, regardless of indication, dosage form, or dose level.
“To us, it appears that Merck is taking a broad approach to new mechanisms in cardiovascular (CV) disease,” Fernandez remarks. “Merck now has several new mechanisms for treatment of various CV diseases, including rolofylline for acute heart failure, vernakalant for arrhythmia, TRA for platelet inhibition, and CETP and niacin for atherosclerosis.
“We are intrigued by the risk/reward of this strategy. The only remaining major medium-stage asset that remains to be added would be an anticoagulant. We're most positive on prospects for Factor Xa inhibitors.”
Past Merck & Co. Deals
MMV Takes Over Merck & Co.’s Early-Stage Antimalarial (Mar. 18, 2009)
Merck & Co. to Pony Up $41.4B for Schering-Plough (Mar. 9, 2009)
Merck & Co. to Pay $130M for Insmed’s FOBs and Production Plants (Feb. 12, 2009)
Merck & Co. Pays Galapagos Roughly $2M to Kick Off Diabetes and Obesity Alliance (Jan. 9, 2009)
Merck & Co.’s Exit from Alliance Sends Dynavax Crashing (Dec. 19, 2008)