Tuesday, December 11, 2012

Merck Agrees To 60 Percent Haircut On Cardiome's Debt Obligation, Post Vernakalant

Back in September 2012, due to other responsibilities, I failed to cover the fact that Merck terminated the license for an I.V. formulations of Cardiome's Vernakalant. This morning, the two companies agreed to restructure (deeply discount) the debt obligations between them. Clearly immaterial to Merck, this is really more about righting the ship at Cardiome -- and giving it a chance at a life after the Merck agreement ended. Per the NASDAQ market wires, then:
. . . .Cardiome agreed to pay Merck $20 million on or before March 31 to settle its outstanding debt of $50 million owed to Merck. The payment will be made from the Canadian biopharmaceutical company's existing cash balance, which totaled $53.6 million at the end of September. The agreement also will terminate a $100 million credit facility Merck had made available to Cardiome. "Complete resolution of our $50 million debt obligation to Merck removes a significant financial and operational overhang for Cardiome," said William Hunter, Cardiome's interim chief executive. In September, Merck agreed to return the global marketing and development rights for both the intravenous and oral formulations of vernakalant. . . .
In March of 2012, Merck passed the the oral formulation (graphic at right). So it goes.

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