Medicines Co. to Acquire Targanta

Updated from 9:27 a.m. EST

Medicines Co.(MDCO Quote) said Tuesday that it would acquire antibiotic maker Targanta Therapeutics(TARG Quote) for a minimum price tag of $42 million.

The acquisition values Targanta at $2 a share, or a 72% premium to the company's closing stock price Monday of $1.16. Targanta shareholders are eligible to receive more cash from Medicines if certain regulatory and commercial milestones are met in the future, the company said.

Targanta's lead product is oritavancin, an antibiotic designed to treat serious hospital-based infections such as Methicillin-resistant Staphylococcus aureus, or MRSA. Targanta ran two phase III studies of oritavancin and sought the drug's approval from the Food and Drug Administration, but the FDA rejected the drug in December, asking Targanta to conduct another phase III study.

Medicines said it will consult with the FDA about the design of that study after the acquisition of Targanta is completed.

Oritavancin was originally developed by Eli Lilly (LLY Quote) and was acquired by InterMune (ITMN Quote) in 2001. Targanta gained rights to the drug in 2005.

A competing drug from Theravance(THRX Quote) called telavancin is currently under review by the FDA.

Medicines' primary product is Angiomax, a blood thinner used by doctors during angioplasty and cardiac stenting procedures. U.S. sales of the product grew 35% to $246 million in the first nine months of 2008. However, Angiomax faces generic competition in 2010. Efforts by the company to delay the entry of a cheaper, generic version of the drug have so far been unsuccessful.

Medicines also recently began selling Cleviprex, a hospital-based drug used to control high blood pressure.

Medicines shares were down 5.9% to $13.88 at midday Tuesday, $14.75, and Targanta shares were up 94.8% to $2.26.