Switching Partners Provides a Big Shot in the Arm

Merck (NYSE: MRK  ) loves Cardiome Pharma (Nasdaq: CRME  ) more than Astellas does. And Cardiome's investors love the idea.

The biotech shot up nearly 30% yesterday, after Merck announced that it had bought North American rights to the IV version of Cardiome's vernakalant from Astellas. Merck isn't a new partner to Cardiome; the pharma giant markets the atrial fibrillation drug in Europe, where it's called Brinavess, and also has global rights to an oral version of vernakalant that's in development.

Bringing development and marketing of both versions under one roof is a benefit to Cardiome. Having the IV version in-house should help Merck compete with more-advanced atrial fibrillation drugs being developed by Boehringer Ingelheim, Pfizer (NYSE: PFE  ) and Bristol-Myers Squibb (NYSE: BMY  ) , and Bayer and Johnson & Johnson (NYSE: JNJ  ) . Merck will be able to promote the use of the IV version in the hospital, with the patients transferring to the oral version after they check out. That should benefit sales of the oral variety.

But investors were probably more excited by Merck's endorsement of the IV version, which has a checkered past with the Food and Drug Administration.

The FDA turned down vernakalant IV back in August 2008, requiring Astellas and Cardiome to run a new trial that was supposed to be completed in the first half of this year. But the FDA requested that the trial be suspended last October, when a patient experienced cardiogenic shock after taking the drug.

The drug's fate has sat in limbo since then, and now we know why. Cardiome tried to regain rights to the drug from Astellas, but Merck outbid its partner. Since it was clear that Astellas was going to find a buyer, the Japanese drugmaker hasn't talked to the FDA about a pathway to approval since the fourth quarter.

There's no guarantee that Merck can get the IV program back off the ground, but at least it's going to give it a shot, something Astellas hasn't done for the past six months.

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