Ikaria receives three final private equity bids

Ikaria is set to pick one of those three bidders for exclusive negotiations imminently, the sources said.

Two other private equity firms that also participated in the auction, BC Partners Ltd and Onex Corp, have stopped pursuing Ikaria, the sources said. 

The sources asked not to be identified because the sale process is private. A spokeswoman for private equity and venture capital-backed Ikaria declined to comment. American Securities, GTCR and BC Partners also declined to comment, while Madison Dearborn and Onex did not respond to requests for comment.

Hampton, New Jersey-based Ikaria’s main drug INOMAX delivers nitric oxide gas to treat newborns with serious trouble breathing, allowing for more oxygenated blood to circulate in their bodies. It also has a pipeline of what it calls “critical care” products for patients with life-threatening injuries or disease.

Ikaria, whose owners include New Mountain Capital LLC, ARCH Venture Partners LP and Venrock Associates LP, is working with Morgan Stanley and Credit Suisse Group AG on the auction, people familiar with the matter told Reuters in October. 

The company was created in 2007 when investors led by New Mountain merged a biotechnology company also called Ikaria with German industrial gas producer Linde AG’s INO Therapeutics in a $670 million cash-and-stock deal.

The deal left Linde as minority investor in Ikaria, creating a company with more than $160 million in revenue. Six years later, Ikaria had about $361 million in 12-month revenue as of the end of March 2013, according to Moody’s Investors Service Inc.

With several of its key patents expiring this year and next, Ikaria is more vulnerable to competition, although its patents on heart failure products expire in 2029 and others expire in 2031, according to Moody’s.

Ikaria filed for an initial public offering in 2010 but withdrew the filing that same year citing market conditions. Its owners have taken several dividends from the company, including a $475 million distribution last summer that Ikaria paid for by borrowing.

Greg Roumeliotis, Soyoung Kim and Jessica Toonkel are reporters for Reutes News in New York