Merck to buy Sirna for $1.1 billion in cash

PHILADELPHIA – Merck & Co. Inc. on Monday said it agreed to acquire biotechnology firm Sirna Therapeutics Inc. for $1.1 billion in cash to bolster the drugmaker’s research and development efforts in areas such as cancer treatments.

Merck agreed to pay $13 per share for Sirna — more than double Sirna’s Nasdaq closing stock price of $6.45 on Monday.

After the stock market closed, shares of Sirna nearly doubled in extended trading to $12.42. The shares traded only briefly before Nasdaq halted trading in the stock for “news dissemination” shortly after the news was released.

Sirna has been working to create a new class of medicines based on RNA interference (RNAi) technology and has shown “great promise” in the area of cancer research, Merck said. RNA, or ribonucleic acid, is the molecule that transmits the genetic information encoded in DNA. Certain types of RNA can silence genes — turning them off and altering a cell’s functions.

Earlier this month, Americans Andrew Fire and Craig Mello won the Nobel Prize in Medicine for their discovery of RNAi, which has become one of the hottest new areas of biotechnology research.

Focusing on RNAi technology has given Sirna a novel approach to discovering drugs with the potential to produce highly specific, potent, and long-lasting effects, Merck said.

Sirna’s lead clinical development candidate, Sirna-027, is moving into Phase II, or mid-stage, development for the treatment of the wet-form of age-related macular degeneration — the leading cause of blindness in the elderly — as part of a pact with Allergan Inc. (NYSE:AGN – news) in the area of ophthalmic diseases.

Sirna also has a strategic alliance with GlaxoSmithKline (GSK.L) for the development of compounds for the treatment of respiratory diseases.

In addition, Sirna has programs in areas such as infectious diseases, metabolism, and dermatology, Merck said.

The deal is expected to close in the first quarter of 2007.