Replidyne, Inc of Louisville, CO and Cardiovascular Systems, Inc. (CSI) of St. Paul, MN announced Tuesday that they have entered into a definitive merger agreement. Under the transaction which has been approved by both company’s boards of directors but still needs shareholder approval, Replidyne would issue new shares of common stock to CSI shareholders. Upon completion, CSI shareholders are expected to own about 83% of the company with Replidyne shareholders owning the remaining 17%.
Replidyne has been in the process of restructuring and looking for strategic alternatives since the FDA issued a warning letter in January 2008 for its lead product candidate, antibiotic faropenem, which left Replidyne with an uncertain clinical path. What Replidyne does have is a substantial pile of cash ($60.7M in cash and equivalents as of July 31 with only $10.2M of current liabilities) most of which came from a now-terminated agreement with Forrest Laboratories for the development of faropenem. CSI, which had initially considered an IPO early in 2008, was looking for an alternative way to access the capital markets for a cash infusion to expand sales efforts. CSI, a pure medical device player focusing on catheters, seems to essentially be buying Replidyne’s assets and not placing any value on their pipeline which would mark the end of Replidyne as an antibiotic company. If approved, the merger is expected to take effect in Q1 2009. The combined company would be headquartered in St. Paul. For more information see the company’s press release.
