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billion acquisition of made a big and like a rock thrown intoa pond, the deal has sent ripplews out in all directions. In the drug giant won a bidding contest to acquireSan Francisco-based Sirna for $13 a share, about twicew the price of the stock beforwe the companies announced the deal. For Merck, which is aggressivelh building its pipeline following the withdrawal of its blockbuster pain medicationj Vioxx fromthe market, the deal representx an effort to harness an innovative drug development platform it hopess will serve as an engine to produce new Merck Research Laboratories president Peter Kim has said the company believee RNAi could change how it discovers and develops and could become a new way to treat patients with unme t medical needs.
The technology could be particularly attractive in cancef therapy because it promises to target the activity of genesx that control cancer cells and destroh them without damagingnormal cells. For Sirna, the deal was a remarkablre turnin fortunes. Just four years ago, the companyh was running out of money and had a market capitalization ofabougt $5 million. But by the time Merck begann talking to Sirna about a possible collaboration todevelolp RNAi-based cancer drugs, it had rivalsd for Sirna's attention.
Merck was just one of four companies vyinb for a collaboration in Other companies were interested in working with Sirna possiblyu in diabetes and metabolic disease aswell -- and in relationshipsz that went beyond collaboration. "Those deals became pretty rich dealse in termsof cash," former Sirna CEO Howard who now heads San Carlos-based , told the Businessw Times at the time of the "At some point, two of the companies given the importance of the technology and the power of the technologty and how much Sirna has accomplished in the field, it woulr be a great investmenft to just buy Sirna Therapeutics." That led to a biddinyg contest.
Merck's opening bid was topped by an unidentifiedx rival who said it would paybetween $10 and $12 a according to regulatory filings. Mercok countered with its $13 a share bid to win the The biggest winner inthe deal, may not be shareholders of either company, but San Francisclo itself, which lured Sirna from its home in Colo. to Mission Bay. The acquisitiob puts one of the world's largest pharmaceutica companies at the heart ofthe city'ss effort to transform former industriapl wasteland into a thrivinvg center for life sciences.
It also puts the pharmaceutical giant'sd power behind Sirna, ensuringt that its still unproven technology will have the opportunity to reacb itsfull potential. Sirna is developing a new clasz of drugs that uses RNA interferencw orRNAi technology. RNAi is a natural, selective procesas for turning off RNAi is triggeredby so-called short interfering RNA or Typically, drugs work by binding with proteins that are the underlyingf cause of a specific disease. Sirna's technology, by contrast, prevent s the production of thedeleterious protein. Mercj had already been working in the area of RNAi throug h its collaborationwith .
The deal placed it at the forefront of a breakthrough technology that has the potential for changingh the way a wide range of diseasesare treated. It complementw Merck's 2001 acquisition of , which gave it tools to analyzegene expression. At the time of the Sirna had been pursuing a strategy of collaborating to develo therapeutics with partners around specificvdisease areas. The company had already entered into a collaboratiohn with Allergen to develop siRNA therapeutica for the wet formof age-related macular a leading cause of blindness in the The company also has a collaboration with to develoo siRNA compounds for respiratory disease.
Sirna has several other programs coveringh a broad range oftherapeutic areas.
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