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Merck (MRK - Analyst Report) and Cardiome Pharma Corp. (CRME - Snapshot Report) recently announced that Cardiome will regain global marketing and development rights for the intravenous (IV) as well as the oral formulations of vernakalant from Merck.

The Merck/Cardiome agreement dates back to April 2009, when the companies announced a collaboration and licensing deal related to the development and commercialization of vernakalant. While Merck Sharp and Dohme Corp. gained exclusive global rights to oral vernakalant, Merck Sharp & Dohme (Switzerland) GmbH (another Merck affiliate) acquired exclusive rights to the intravenous (IV) formulation of vernakalant outside the US, Canada and Mexico. Merck acquired North American rights as well to the IV formulation in 2011.

However, earlier this year in March, Cardiome announced Merck’s decision to discontinue the development of the oral formulation of vernakalant. Merck decided to stop developing oral vernakalant based on its assessment of the regulatory environment and the time involved in the development process.

Merck and Cardiome were studying the candidate as a maintenance therapy for the long term prevention of atrial fibrillation recurrence.

Meanwhile, the IV formulation is approved in the EU under the trade name Brinavess for the rapid conversion of recent onset atrial fibrillation to sinus rhythm in adults. However, Brinavess’ development path in the US has not been smooth with the US Food and Drug Administration (FDA) placing a clinical hold on the development program for the IV formulation. A phase III study, ACT V, which was suspended in 2010, was terminated later.

Merck’s decision to return vernakalant rights reflects the company’s efforts to streamline its pipeline and allocate funds across its entire portfolio. As far as Cardiome is concerned, the company will most likely need to seek a partner for the commercialization and further development of vernakalant. Moreover, the company has a weak pipeline consisting of a few early stage projects.

We currently have a Neutral recommendation on both Merck and Cardiome. While Merck carries a Zacks #3 Rank (short-term Hold rating), Cardiome carries a Zacks #4 Rank (short-term Sell rating).

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