Ebb & Flow

A profitable, private biotech company seems almost an oxymoron, but that’s what Ikaria and its investors are creating with last week’s acquisition ofINO Therapeutics for $500 million to be paid in cash to INO’s parent company, The Linde Group (FSE:LIN).

A therapeutic gas company, INO isn’t core to LIN’s industrial gas and engineering business. "It’s the only pharmaceutical product within a whole empire that’s worth $15 billion in sales," noted David Shaw, chairman and CEO-designate of the combined Ikaria entity. "That suggested they might be willing to let go of it."

INO has a revenue stream of $160 million and is sufficiently profitable to sustain the newco’s R&D and still remain in the black, according to Alok Singh, managing director of New Mountain Capital, a private equity firm that is the lead investor on the deal.

INO’s INOmax nitric oxide treatment for inhalation is marketed for the non-invasive treatment of hypoxemic respiratory failure associated with persistent pulmonary hypertension in infants. INOmax is also in Phase III testing to treat or prevent chronic lung disease and stroke in premature infants.

The deal transforms Ikaria into a commercial story. Its IK-1001 is in preclinical development for ischemic perfusion injury and hemorrhagic shock. The compound uses the company’s hydrogen sulfide technology for inducing reversible metabolic hibernation. By temporarily slowing metabolism, the technology may be able to lengthen the treatment window for trauma, stroke, cardiac arrest, organ transplant or surgery (see BioCentury, May 2, 2005).

The combination is attractive for investors, said Brian Roberts of Venrock Associates. The newco will be "fully

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