NitroMed Takes Buyout Offer from Deerfield, Dumps Archemix at the Altar

1/27/09

NitroMed (NASDAQ:NTMD), the Lexington, MA-based drug developer that struggled to market a heart failure drug for African-Americans, says it has agreed to be acquired for 80 cents per share in cash by investment firm Deerfield Management. This means NitroMed bailed out of previous agreements to sell BiDil to specialty drugmaker JHP Pharmaceuticals and to merge with Cambridge, MA-based biotech firm Archemix.

Archemix issued a separate statement confirming the terminated deal with NitroMed, and the associated fallout. Now that it’s planning to be independent again, Archemix said CEO Errol De Souza, who negotiated the deal with NitroMed, is resigning from the top job and will remain on the board of directors. Duncan Higgons, who was previously executive vice president of business operations, is replacing him as interim president and CEO of Archemix. De Souza had planned to step down after the merger with NitroMed.

Deerfield’s buyout offer, which is subject to NitroMed shareholder approval and other conditions, came last month after NitroMed announced the previous month that it agreed to an all-stock merger with privately held Archemix. The offer represents a 25 percent premium above NitroMed’s closing stock price yesterday of 64 cents. The Deerfield bid puts NitroMed’s value at about $36.8 million.

In October, before Deerfield made its bid, NitroMed said it would sell all assets related to BiDil (isosorbide dinitrate/hydralazine hydrochloride), its heart failure drug approved by the FDA for self-identified African Americans in 2005, for about $26 million. Now Deerfield’s acquisition of NitroMed is expected to close in April.

Archemix’s and JHP’s breakup fees with NitroMed provide some degree of a silver lining. As part of the firms’ agreements with NitroMed, Archemix is due to get a $1.5 million termination fee from NitroMed and JHP is expected to receive $900,000.

Archemix continues to land lucrative deals related to its drugs called aptamers, which use short pieces of DNA or RNA to bind with disease-related proteins. Last month Archemix received $27.5 million in upfront money in a deal to develop aptamer treatments for London-based drug giant GlaxoSmithKline. Two months before landing the GSK deal, former Archemix CEO De Souza told me that his firm had enough cash to support operations through the middle of 2010.

Also, Archemix says that it has just started mid-stage clinical trials of its lead aptamer drug for treating a rare blood disorder known as thrombotic microangiopathiesement.

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