Troubled US biotechnology firm Replidyne’s battle to stay afloat has ended after the company agreed to be purchased by privately-held Cardiovascular Systems.

The all-stock deal will create a merged entity in which Cardiovascular Systems shareholders are expected to own an 83% stake. The deal gives the latter company a Nasdaq listing, though it will apply for a new symbol.

The new group will become a purely medical devices company focused on developing interventional treatment systems for vascular disease and will have $35-40 million in cash at its disposal. This seems an unusual fit given that until a few months ago, Replidyne was an antibiotics specialist.

The latter’s stockholders seem to doubt the logic behind the deal as Replidyne’s shares fell 11.6% to an all-time low of $0.99. The stock has been in decline pretty much since last year when the US Food and Drug Administration rejected the firm’s antibiotic drug faropenem medoxomil for all four uses for which Replidyne had sought the green light – acute bacterial sinusitis, community-acquired pneumonia, acute exacerbation of chronic bronchitis and uncomplicated skin and skin structure infections.

The FDA’s decision caused Forest Laboratories to end a partnership potentially worth $190 million with Replidyne, and the latter has not really recovered since, though it did receive a break-up fee of $55.6 million from Forest. In August, Replidyne reducing its headcount by 80% to just five employees and said it was looking for strategic alternatives, citing its strong cash position of $60.7 million (with liabilities of $10.2 million).

Cardiovascular Systems has stepped in and has now withdrawn a proposed initial public offering. According to chief executive David Martin, "the current equity market conditions have resulted in the IPO market coming to a standstill” and given the uncertainty regarding a recovery, the Replidyne deal “offers the best opportunity at this time for continued growth and for our company to gain access to the public capital markets”.