Cardiome Pharma Corp. and Merck & Co. will work together to develop a drug candidate to treat atrial fibrillation, the companies said Thursday, announcing a deal in which Merck could pay Cardiome more than $600 million.

Merck will pay Cardiome $60 million upfront for the worldwide rights to an oral version of vernakalant, a drug candidate intended to help patients maintain a steady heartbeat. Merck's Swiss subsidiary Merck Sharpe & Dohme now has rights to an intravenous version of the drug in all countries except the U.S., Canada and Mexico.

The drug is intended to stop atrial fibrillation, a condition in which the upper chambers of the heart contract rapidly and erratically, instead of forming a coordinated beat with the two lower chambers. It can cause blood to pool and form clots, which can lead to strokes.

Cardiome is a development stage company with no products on the market, and it reported $1.3 million in revenue in 2008. The Vancouver-based company is also trying to get an injectable form of vernakalant drug approved. The FDA delayed approval last August, requesting more information from Cardiome and its partner, Astellas Pharma Inc. of Japan.

Merck, of Whitehouse Station, N.J., will also pay up to $200 million if the drug meets development and regulatory goals, including $35 million when late stage testing begins, and $100 million if the oral and IV forms of vernakalant are tested and approved to treat other heart ailments.

Cardiome will also receive royalty payments on sales, and milestone payments of up to $340 million. Merck also agreed to grant Cardiome a credit facility of up to $100 million that the company can access over several years starting in 2010. It will also have the option to co-promote drug in U.S. with Merck through a hospital-based sales force.

In premarket trading, shares of Cardiome jumped $1.32, or 41.5 percent, to $4.50. The stock finished at $3.18 Wednesday, and has traded between $2.57 and $12.77 over the last 12 months.

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