Ikaria announces major acquisition

Seattle biotech Ikaria said Thursday it is acquiring INO Therapeutics in a merger that is valued at $670 million.

As part of the deal, the combined company, called Ikaria Holdings, secured an undisclosed amount of debt and raised $300 million in capital to pay for the acquisition.

At that level, the investment could be considered the largest round of financing in biotech history, outdoing the $273.7 million raised by Reliant Pharmaceuticals in 2003, according to VentureOne, a Dow Jones company.

However, VentureOne is still determining whether Ikaria's round will be categorized as a venture-capital investment, a category typically reserved for early-stage companies, or as a private-equity deal, which denotes a more mature company.

When the deal closes — expected about April — Ikaria Holdings will have 300 employees and be based in Clinton, N.J. The research and development facilities will remain in Seattle, where there are now about 20 employees.

Robert Nelsen, a partner at ARCH Venture Partners, which participated in the deal as an original investor in Ikaria, said that the company will be hiring aggressively here.

Other investors involved include New Mountain Capital, Venrock Associates, Altitude Life Science Ventures, Washington Research Foundation and Alexandria Equities.

Ikaria and INO have different backgrounds but are coming together based on using the same technology.

Both deliver drugs in the form of gas, rather than by pill or injection, said David Shaw, who was on Ikaria's board and will become the chairman and chief executive of the combined company.

Ikaria, founded in 2005 and spun out from the Fred Hutchinson Cancer Research Center, had raised $11 million in venture capital.

INO Therapeutics, which has $160 million in annual revenue and is profitable, was owned by The Linde Group, an engineering company that trades on the German stock exchange (Linde will continue to own 17 percent in Ikaria Holdings).

INO produces a gaseous drug to treat premature babies who have difficulty getting oxygen into their blood, often called the "blue baby" syndrome.

Ikaria is working on producing a drug that would allow critical-care patients to enter a suspended state until they are able to receive treatment.

Shaw said Ikaria will be able to gain from INO's experience in getting a gas-based drug through the U.S. government approval process; INO claims to have the only Federal and Drug Administration approved drug in the form of gas. At the same time, INO expects to gain from Ikaria's research expertise.

Nelsen said the two center on serving critical-care patients, a niche that doesn't get much attention by the medical-research community.

"We've been working on [the deal] for about a year, and we really think there's a real opportunity because there's been very little innovation in the critical-care space for the last 50 years," he said.

"Ikaria's technology could buy additional time when you are in acute situation, like a heart attack, stroke or when you are bleeding to death."

Tricia Duryee: 206-464-3283 or tduryee@seattletimes.com