Cardiome Pharma Corp. (TSX:COM) lost more than half its stock value in a single day with the announcement that Merck is pulling out of an agreement to take Vernakalant, an oral version of the company's heart drug, through clinical trials.
"The decision was based on Merck's assessment of the regulatory environment and projected development timeline," Cardiome stated in a press release.
There are intravenous and oral versions of Vernakalant. The Vernakalant IV is already approved for sale in Europe, Iceland and Norway, under the trade name Brinavess.
Merck and Cardiome had a partnership agreement to bring oral Vernakalant through clinical trials for approval as a maintenance therapy drug for abnormal heart rhythm. Those trials are now suspended.
News of Merck's withdrawal from clinical trials triggered a stock slide March 19. Cardiome's share prices had already dropped from a 52-week high of $5.70 on May 20, 2011 to $1.92 on March 16. It then slid to $0.88 March 19 on the Merck announcement.
The market's reaction reflects just how serious it considers Merck's withdrawal, according to Byron Capital Markets analyst Douglas Loe.
But he added the decision to withdraw seems based mostly on the huge costs and regulatory obstacles in front of it, not on Vernakalant's efficacy.
"We've seen a lot of churn in Merck's R&D pipeline priorities recently," Loe said. "Vernakalant can still emerge as a best-in-class oral therapy." •
