Assistant Managing Editor

NitroMed Inc. agreed to divest its low-selling heart failure drug, BiDil, to specialty pharmaceutical firm JHP Pharmaceuticals LLC for $26.3 million, leaving the Lexington, Mass.-based firm with a modest chunk of cash and a nitric oxide technology platform.

Kenneth M. Bate, president, CEO and interim chief financial officer for NitroMed called the deal "the best opportunity for the company," which underwent a drastic restructuring process in January, cutting 70 of 90 jobs and halting active promotional efforts for BiDil, a one-pill combination of isosorbide dinitrate and hydralazine hydrocholoride approved in 2005 as a heart failure drug targeted specifically to African-American patients. (See BioWorld Today, Jan. 17, 2008.)

Despite the fanfare surrounding its approval as a drug aimed at a patient population that tends to be disproportionately affected by heart failure - the Centers for Disease Control and Prevention reported that African-Americans between the ages of 45 and 64 are 2.5 times likely to die prematurely from heart failure than comparable aged non-blacks - BiDil failed to live up to its marketing potential. NitroMed had projected $20 million for its first full year of sales - analyst estimates were even higher, expecting as much as $44 million in 2006 revenue - but the drug ended up pulling in a paltry $12 million.

Its lack of commercial success was attributed partly to the fact that the FDA approved only a one-year shelf life for the drug. But NitroMed's biggest struggle has been trying to convince doctors to prescribe costly BiDil instead of just writing prescriptions for the two separate generic components of the drug.

NitroMed reported third-quarter revenue from BiDil sales of $4 million, and Bate told investors on a conference call that prescriptions of the drug have held steady over the past year, even without the promotional efforts.

The company will continue marketing the drug, without promotion, through the completion of the sale to JHP, expected in early 2009.

Under the terms of the sale, Parsippany, N.J.-based JHP agreed to pay NitroMed about $24.5 million in cash, plus up to an additional $1.8 million for closing date inventory of the drug. In exchange, JHP gets most of the assets related to BiDil, including an extended-release version of the drug in development.

As of Sept. 30, NitroMed had about $17.8 million in cash and about 46 million shares outstanding. Besides its cash, the remaining company assets include its nitric oxide intellectual property.

Bate said the firm, which has retained the help of Cowen and Co., will continue to seek strategic alternatives, though he declined to go into details.

About 28 percent of the company is owned by funds affiliated with HealthCare Ventures LLC, Rho Ventures and Invus Public Equities LP.

Shares of NitroMed (NASDAQ:NTMD) gained 9 cents, or 36 percent, Thursday to close at 34 cents.