Nuvelo, Inc and ARCA Biopharma Inc, a privately-held biopharmaceutical company developing genetically-targeted therapies for heart failure and other cardiovascular diseases Inc have entered into a definitive merger agreement, expected to create a biotechnology company with a near-term commercial opportunity Gencaro (bucindolol hydrochloride), as well as a mid-stage pipeline asset, novel short-acting anticoagulant NU172, to drive long-term growth.

"We believe this combination brings both immediate and longer-term value to our stockholders," said Dr Ted W Love, chairman and chief executive officer of Nuvelo. "After thorough review of numerous options, we chose to merge with ARCA because it enables us to transform ourselves into a late-stage company with multiple significant milestones and a near-term commercialization opportunity, backed by a promising cardiovascular pipeline."

"This unique transaction offers us the financial resources, people, and pipeline as we continue to build our company," said Richard B Brewer, president and chief executive officer of ARCA. "We believe this merger brings together known industry leaders with significant cardiovascular drug development and commercialization expertise, forming an ideal team to lead the development of the first personalized heart failure medicine, Gencaro, and short-acting anticoagulant NU172, which is being tested as a potential new therapy in indications where heparin and protamine are the current standard of care."

Under the terms of the definitive merger agreement between Nuvelo, ARCA and Dawn Acquisition Sub, Inc, a wholly-owned subsidiary of Nuvelo, Dawn Acquisition Sub will be merged with and into ARCA and ARCA will become a wholly owned subsidiary of Nuvelo.

Under the agreement, Nuvelo will issue new shares of its common stock to ARCA common and preferred stockholders and assume outstanding options and warrants to acquire capital stock of ARCA such that these stockholders, option holders and warrant holders are expected to own or have the right to acquire approximately 67 percent of the common stock of the combined company on a fully-diluted basis, using the treasury stock method. Current Nuvelo stockholders are expected to own approximately 33 percent of the common stock of the combined company on a fully-diluted basis, using the treasury stock method.

The boards of directors of both Nuvelo and ARCA have approved the definitive merger agreement. The transaction is structured as a tax-free reorganization for federal income tax purposes.