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IPO Hopeful Nycomed Signs Drug Deal with Merck

LONDON (Reuters) – Privately owned Swiss drugmaker Nycomed, which is aiming for an eventual IPO, has signed up Merck & Co (MRK.N) to help sell its key lung drug Daxas in Europe and Canada, boosting its commercial prospects.

Monday’s deal with one of the world’s biggest pharmaceutical manufacturers is an important validation for the once-daily tablet.

It comes after a green light from European regulators on Friday recommending Daxas for approval as a maintenance treatment for severe chronic obstructive pulmonary disease (COPD), despite a rebuff in the United States. 

A person familiar with the matter said Nycomed’s “base case” was for a 2011 initial public offering (IPO), after Daxas had been launched and its sales had had some time to take off. No banks have yet been picked to help prepare a share sale, this person said.

Nycomed will receive an undisclosed upfront fee from U.S. drugmaker Merck and is eligible for certain payments based on defined regulatory and commercialisation milestones for Daxas.

Once the drug wins final regulatory clearance, Merck and Nycomed will co-promote Daxas in France, Germany, Italy, Spain, Portugal and Canada. Nycomed will make and distribute the finished product under the agreement.

In Britain, Merck will have exclusive commercialisation rights but Nycomed has retained a co-promotion option.

The positive recommendation for Daxas from the European Medicines Agency, whose experts see it as a useful add-on therapy to inhaled bronchodilator drugs, contrasts with a rejection from a U.S. Food and Drug Administration panel earlier this month.

The U.S. panel voted 10 to five not to recommend Daxas, dealing a blow to Nycomed and its existing partner Forest Laboratories (FRX.N), which has U.S. marketing rights to the drug.

Daxas is vying for a niche in the multibillion-dollar worldwide COPD market, alongside rivals such as GlaxoSmithKline’s (GSK.L) Advair and Spiriva, marketed by Pfizer (PFE.N) and Boehringer Ingelheim.

MAJOR IPO…WHEN IT COMES

The fate of Daxas is pivotal to Nycomed, which has said in the past it wants to launch an IPO but has never given an exact timetable for listing its shares in Switzerland.

Company spokeswoman Beatrix Benz confirmed on Monday that an IPO for Nycomed — which would be one of the biggest in the pharmaceuticals sector in years — was still planned “sooner or later”.

Nycomed also received a second piece of good news late on Friday when a U.S. jury ruled that the patent on its Protonix acid reflux drug was valid and had been infringed by Teva Pharmaceutical Industries (TEVA.TA), which has been selling a generic version of the drug since 2007.

Pfizer holds marketing rights to Protonix, known chemically as pantoprazole.

The Protonix decision should boost Nycomed’s earnings, although Benz said it was too early to speculate on the impact as legal issues remain to be decided by the presiding judge in the U.S. case.

Nycomed, which had sales of 3.2 billion euros ($4.30 billion) in 2009 and reported adjusted earnings before interest, tax, depreciation and amortisation of 1.1 billion euros, is majority-owned by four private equity firms, led by Nordic Capital with a 42.7 percent stake.

The other three are Credit Suisse’s DLJ Merchant Banking, Coller International Partners and Avista.

By Ben Hirschler and Quentin Webb
(editing by David Holmes and Sharon Lindores) ($1=.7439 Euro)