UPDATE 1-Merck expands FoxHollow deal, to buy 11 pct stake
Wed Sep 27, 2006 10:27am ET163
NEW YORK, Sept 27 (Reuters) - Merck & Co. (MRK.N: Quote, Profile, Research) on Wednesday said it would expand its research collaboration with FoxHollow Technologies Inc. (FOXH.O: Quote, Profile, Research), which analyzes artery plaque to find "biomarkers" for cardiovascular disease, and would pay $95 million for an 11 percent stake in the company.
Shares of FoxHollow, a far smaller company which is based in Redwood City, California, surged 21 percent in morning trading.
Under the expanded partnership, Merck said it would pay FoxHollow $40 million over four years in return for the smaller company collaborating exclusively with Merck in specified disease areas.
Merck said it would also pay FoxHollow at least $60 million over the first three years of the four-year expanded deal for research under Merck's direction, including removal of atherosclerotic plaque from patient arteries for analysis, and for performing clinical trials of potential drugs.
"FoxHollow will receive milestone payments on successful development of drug products or diagnostic tests utilizing results from the collaboration, as well as royalties," the companies said in a joint press release.
Merck, which is based in Whitehouse Station, New Jersey, said it will buy FoxHollow's stock at $29.63 per share. That represents an 8.7 percent premium to FoxHollow's closing share price on Tuesday of $27.25.
FoxHollow was up $5.75 to $33 on the Nasdaq, after reaching $35.72 earlier in the day. Merck was up 22 cents to $41.98 on the New York Stock Exchange.
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