Cardiome’s Biotech Bombshell

When people look back at the few bombshell deals in the Canadian biotech industry this decade, expect to hear a lot about Cardiome-Merck.

When people look back at the few bombshell deals in the Canadian biotech industry this decade, expect to hear a lot about Cardiome-Merck.

In April pharmaceutical giant Merck & Co. Inc. agreed to pay US$60 million upfront and offered a US$100-million line of credit for the right to develop the pill form of Vernakalant, a drug invented by Cardiome Pharma Corp. to treat a heart-rhythm disorder called atrial fibrillation. Cardiome gets more money if the drug passes clinical trials and meets sales targets: up to US$640 million, not counting royalties.

The deal is certainly good news for a Vancouver biotech that’s received little of it from regulators. The U.S. Food and Drug Administration (FDA) has repeatedly delayed approval of the intravenous version of Vernakalant, asking for more data to clear up lingering safety concerns. Cardiome CEO Bob Rieder describes how this deal came to be, despite the obstacles.

These are extremely difficult times. The FDA is under unrelenting pressure from Congress to get out of the “pocket” of the pharmaceutical industry. For us in the industry, that’s a huge joke; we’re experiencing nothing but adversity from the FDA. Our IV program should have been approved in October of 2007; their indecision and inaction probably put a bit of a shadow over the Vernakalant program.

But this deal with Merck is a giant endorsement. They understand the delays don’t tarnish the molecule at all. They were willing to put a lot of their money on the line to state that. This is a huge deal by any standards: the biggest deal ever done in the biotech sector in Canada and probably the second- or third-biggest in the global cardiovascular sector.

In the spring of 2008, at the end of our Phase-2 trials, we had to determine what to do with the project. Several years ago, we might have thought about taking this drug all the way through Phase-3 clinical trials on our own, which can cost hundreds of millions of dollars. But as financial markets deteriorated, we thought it made more sense to ask a partner to develop the drug, so we contacted all the large pharmaceutical companies.

Virtually all of them are hungry to build their pipelines with potential blockbusters. They’re losing patent protection on drugs that have been wonderfully profitable for them, and as soon as you lose patent protection, your sales disappear. One of our senior employees spent 10 years with Merck; he knows all the key people and could get our story in front of anyone we needed to. In my view, relationships are never made redundant by the technology. Those kinds of things are never out of fashion.

We expect this pill to ultimately be in broad use, so at least hundreds of thousands if not millions of patients will be taking this every day. Of course, that’s still a long way off. We think it will take about three to four years of clinical development and maybe a year of FDA scrutiny. It is an unforgiving process: with drugs you can have something that looks dynamite in the beginning and invest several hundred million dollars in it with no guarantees in the back end.