Friday, September 26, 2008

Deals of the Week: Slowly, Unsurely

Any day now.

The subheading to today's press release announcing that the intrepid Fluidigm was withdrawing its S-1 says "the company will wait for markets to stabilize." After the week that was, to us that statement is akin to saying that it'd be nice to walk from New York to Lisbon, but we "will wait for plate tectonics."

Who else remains stranded on opposite sides of a slow moving divide? Everyone's favorite biopharma pen-pals Carl Icahn and Jim Cornelius continue to entertain ("absurd!"), though we may have to wait until next week to find out the identity of Imclone's mystery $70 bidder. Alpharma has once again rebuffed King's takeover offer ("inadequate!"). UCB said it was withdrawing its application for European approval of lacosamide in neuropathic pain, citing an advisory committee's view that further clinical study would be necessary to fully demonstrate the drug's efficacy. A deal was reached to settle the details on the bailout of US banks until it wasn't but then it was but no, in fact, it wasn't. We're still not sure whether Barack Obama will be debating an empty lectern down in Mississippi tonight (and that isn't a political statement).

And don't even get us started about the tightening of the NL East race and its potentially waterlogged climax.

In these uncertain and precarious times, however, you can still rely on the movers and shakers that strike ...

Ligand/Pharmacopeia: If alliance encumbrances can sometimes hinder a deal (we're looking at you, Biogen Idec) they can also it seems add up to the primary rationale for a takeout. Royalty/discovery play Ligand said it was buying Pharmacopeia on Wednesday, noting that the $55 million deal was driven first and foremost by Pharmacopeia's array of future royalty streams from deals with Schering-Plough, BMS, and others. The all stock deal puts a value of $1.81/share (a 52% premium on Pharmacopeia's previous closing price, though still much cheaper than the shares' $5 highs earlier this year) on PCOP and provides a potential $15 million earn-out should Ligand enter a deal around the anti-hypertensive DARA, Pharmacopeia's most advanced unpartnered project, before the end of 2011. Our Pink Sheet Daily coverage of the deal is here. Recall that Ligand back in 2006, after a failed attempt to sell the company, new managers ditched its commercial assets via deals with Eisai and King and others, under pressure from activist shareholders. It now remains committed to the kind of discovery-and-license strategy that the acquisition of Pharmacopeia augments, if only slightly.

Medtronic/Cryocath: The arms race for ablative systems to treat atrial fibrillation waged on with Medtronic’s bid to pay $380 million (C$400 million) for device maker CryoCath Technologies Inc. The acquisition would pit Medtronic against fellow defibrillator makers Boston Scientific and St. Jude Medical in another front against atrial fibrillation—tissue ablation. The trio still is struggling to restore physician and patient confidence in their defibrillators. St. Jude has been the most aggressive, snapping up companies including EP MedSystems Inc. Last year, Boston Scientific put a small, but significant bet on another ablation company CryoCor, acquiring for $17.6 million. Medtronic’s paid considerably more for CryoCath’s technology, but it got a great deal in return. The company sells its catheter-based Arctic Front system worldwide, generating more than $40 million in annual sales. It still awaits FDA approval, which the company hopes to obtain in 2009, with a market launch in 2010. Once again, Medtronic and Boston Scientific will be competitors in the a-fib space. However, they’ll have to share, at least for the short term. CryoCath also announced the settlement of a lawsuit between CryoCath and CryCor, news of which was release just before the potential deal was announced. According to a release, CryoCath has agreed to “payment of future royalties on certain future products for a limited time.” The companies also will let appeals at the US Patent and Trademark office work their way through the system, although they’ve agreed not to sue each other however the appeal is resolved.--Tom Salemi

Getinge/Datascope: It might be largely a function of the depreciating US dollar, but it’s been a record year for international acquisitions of US companies. Budweiser beer--that staple of American baseball games--may soon belong to a Belgian company if it succeeds in its bid for Anheuser-Busch. That trend now extends to health care. Sweden’s Getinge announced that it would acquire New Jersey’s Datascope for $865 million in cash. Of course, the timing of the merger doesn’t only have to do with the dollar’s devaluation. In September 2008, Datascope is quite a different company than it was six months ago. It had shed its patient monitoring business to China’s leading medical device company MindRay Medical in March 2008 as well as its slow-growing vascular closure business to St. Jude Medical in August 2008. Meanwhile, it beefed up its vascular offerings by the acquisition, in June 2008, of the peripheral vascular business of the Sorin Group, whose products Datascope had been distributing in Europe. On the other side of the Atlantic, Getinge has long been executing on its strategy of diversifying beyond non-clinical areas like disinfection products and beds for hospitals. In particular, Getinge has been building out its cardiovascular and critical care divisions. To that end, Getinge acquired the cardiac and vascular surgery businesses jettisoned by Boston Scientific at the end of 2007 for $750 million Now Datascope has complementary products; it operates in two cardiovascular segments; cardiac surgery, with cardiac assist counterpulsation pulsation devices, and vascular surgery, which includes synthetic grafts and peripheral stents. After the merger, Getinge plans to realize growth from cross-selling opportunities from a wider range of products and geographic regions. The deal makes sense on a strategic level, and it’s been long coming. Still, while the medtech industry has been waiting for clinically-focused mid-sized acquirers to take over for the absent large company purchasers, Datascope’ s European and Chinese acquirors suggest that the new acquirors may come from abroad.--Mary Stuart

Nuvelo/ARCA: This reverse merger sees ARCA Biopharma's private investors holding two-thirds of the combined company, which will focus on cardiovascular disease. Reverse mergers haven't exactly set the world on fire though, and even pre-global financial meltdown those companies that had reverse merged since 2005 were down an average of 40% since their deals (performing even worse than newly IPOd firms) according to research published in this month's START-UP. Nuvelo had essentially been a shell in search of a partner since its alfimeprase anti-clotting candidate failed back in March, and despite the difficulties faced by newly public firms, no doubt ARCA is attracted by the public company's $76 million cash pile. The companies' lead project will be the registration stage drug/pharmacogenomic test that is the beta blocker Gencaro, which has a PDUFA date of May 31. The Pink Sheet Daily's coverage of the deal is here.

image via Wikimedia commons.

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