(Adds Cardiovascular CEO comments, updates share movement)
By Vidya L Nathan
BANGALORE Nov 4 Biopharmaceutical company
Replidyne Inc RDYN.O, which was exploring strategic
alternatives, said it agreed to be acquired by privately held
Cardiovascular Systems Inc for about $40 million in an
all-stock deal, sending its shares to a lifetime low.
"This is not a good deal for Replidyne. The deal values
Replidyne on a net asset basis and Cardiovascular Systems does
not value the company pipeline," Argus Research Co analyst
Maggie Liu told Reuters.
Liu also said the deal lacked synergy as Cardiovascular
Systems is a medical-device company, while Replidyne develops
However, Cardiovascular Systems' Chief Executive David
Martin said the combined entity would be a pure-play device
"The prospects for Replidyne were closed and any notion of
an antibiotic company is gone," Martin said by phone.
Small biotechnology companies with cash but failed or
floundering products are in hot demand as partners for
companies that are unable to raise money in the capital
Replidyne, which stopped trials of its key antibiotic
faropenem after it received a warning letter from U.S. health
regulators, has been trying to lure potential suitors with its
strong cash position.
As of July 31, the company had $60.7 million in cash and
cash equivalents, and current liabilities of $10.2 million.
"I think the process of finding a partner to merge into was
a consequence of not finding a partner to develop their
product," Pacific Growth Equities analyst Gregory Wade said by
Under the terms of the deal, Cardiovascular Systems'
shareholders will own 83 percent of the combined entity, while
Replidyne shareholders will own the rest.
The combined company will apply for listing on Nasdaq under
the symbol "CSII."
The deal is expected to close in the first calendar quarter
of 2009, following which Replidyne's name would change to
Cardiovascular Systems Inc.
Replidyne was advised by Morgan Stanley on the deal.
Replidyne's shares, which have lost more than 60 percent of
their value so far this year before Tuesday's losses, closed
down 12 percent at 99 cents on Nasdaq.
(Editing by Amitha Rajan, Vinu Pilakkott)