In a merger valued at $670 million, Seattle-based biotech Ikaria Inc. is joining forces with Clinton, N.J.-based INO Therapeutics Inc., the specialty pharmaceutical division of The Linde Group. The new company, Ikaria Holdings, will focus on gas-based critical care therapeutics.
A whopping $300 million of new equity capital will be contributed to the merged company by an investor group including New Mountain Capital, ARCH Venture Partners, Venrock Associates, Altitude Life Science Ventures, Washington Research Foundation and Alexandria Equities. Of the new funding, more than $200 million will come from New Mountain Capital.
Existing investors in Ikaria Inc., which was privately-held, will continue to be investors in the merged company. INO will be acquired from Linde, which will retain an equity position in the merged company.
INO's most visible contribution to the merger is a steady revenue stream. Ikaria Holdings will generate approximately $160 million annually through the sale of INOmax (nitric oxide). INOmax, a vasodilator for the treatment of hypoxic respiratory failure with evidence of pulmonary hypertension in newborns, is the only brand of nitric oxide approved for human use in the U.S. It also is approved in Europe, Canada and parts of Latin America. Additional component products and services include the INOvent system to deliver the nitric oxide, INOcal calibration mixtures to be used with the delivery system and technical support.
Yet INO provides far more than just cash flow, explained David Shaw, who will serve as chairman and chief executive officer of Ikaria Holdings. He cited INO's expertise in inhalation systems and established capabilities in regulatory, manufacturing, marketing, sales, customer service and distribution to hospitals.
INO also brings a pipeline to the table. The company is conducting Phase III trials with nitric oxide in chronic lung disease in premature newborns and in adult cardiac surgery, where there is often a need to reduce pulmonary hypertension without lowering blood pressure in the rest of the body. Phase I and II programs are also under way with both nitric oxide and carbon monoxide in myocardial infarction, organ transplantation, ischemic stroke and other disease indications. A Phase II trial of carbon monoxide in renal transplantation is slated to begin in "a few months," according to INO's Chief Scientific Officer Richard Straube.
Ikaria Inc. also is developing a platform in gas-based therapeutics for critical care, specifically with hydrogen sulfide. The company's preclinical programs involve inducing "reversible hibernation," a state in which metabolic, heart and breathing rates are depressed by about 90 percent to 95 percent and body temperature is lowered. Such a technology could be useful in organ transplantation, cardiac arrest, stroke, heart attack and trauma or surgery involving major blood loss. (See BioWorld Today, May 2, 2005.)
Ikaria plans to enter Phase I this year in ischemic reprofusion injury.
Shaw said Ikaria Inc. approached INO about the merger because gas-based therapeutics are "an unusual space" and INO had "the only approved therapeutic gas in the U.S." While the merged company will now have a strong position in the gas-based therapeutic arena, Shaw said he intends to look at licensing opportunities both relating to noncritical care uses of gasses and non-gas approaches within critical care.
Ikaria Holdings will establish its corporate headquarters at INO's facilities in Clinton, N.J., and will have operations in several other locations, including a research facility at Ikaria Inc.'s Seattle location. The company will have about 300 employees.