Ikaria takes a $1.6B buyout but spins out some early-stage programs

Rumored takeover target Ikaria has signed a deal to sell the majority of its business to a private equity outfit for about $1.6 billion, spinning out a new company to work on some in-development candidates.

Under the deal, Madison Dearborn Partners will snap up the commercial arm of the critical care-focused Ikaria, which includes Inomax, the only FDA-approved treatment for hypoxic respiratory failure associated with pulmonary hypertension. Ikaria's investors--New Mountain Capital, Arch Venture Partners, Venrock and 5AM Ventures--are cashing out for $1.6 billion after buying the company and merging it with INO Therapeutics in 2007.

With the proceeds, that investor group plans to spend about $80 million for a 45% stake in an Ikaria spinout that will develop early-stage treatments for pulmonary arterial hypertension, chronic obstructive pulmonary disease, and congestive heart failure.

"We are looking forward to working with Madison Dearborn as we embark on the next stage of Ikaria's development," CEO Daniel Tassé said in a statement. "I am also confident that the existing Ikaria investors will provide strong support to the newly independent research company in its clinical trials for three groundbreaking research programs."

Rumors of Ikaria's sale popped up in October when Reuters reported that the company had recruited some bankers to help it pull down a $2 billion exit, with Inomax leading the way alongside two Phase II hypertension treatments and a Phase III kidney failure drug.

The company, a 2005 Fierce 15 member, made a go at a $200 million IPO in 2010 but pulled the offer after running into less-than-favorable market conditions.

The deal is expected to close in the first quarter of 2014.

- read the statement