BioWorld Today Contributing Writer

Horizon Pharma Inc. had its eye fixed on raising $86 million in its initial public offering (IPO), but – like other biotechs this year – had to lower its horizons considerably. The Northbrook, Ill.-based company priced 5.5 million shares of common stock at $9 per share to raise $49.5 million – a 42 percent discount off the aggregate proceeds sought in the company's S-1 filing last year. (See BioWorld Today, Aug. 5, 2010.)

In its first day trading, Horizon's stock (NASDAQ:HZNP) saw a modest gain of 15 cents, closing at $9.15 Thursday.

Stifel Nicolaus Weisel, Cowen and Co. and JMP Securities LLC served as joint bookrunners for the offering.

Horizon granted the underwriters a 30-day option to purchase up to an additional 825,000 shares at the IPO price to cover any overallotments.

Horizon, whose lead product Duexis (ibuprofen/famotidine) was approved by the FDA in April, appears to have reacted to deteriorating market conditions to complete the deal – it's the first U.S. biotech IPO to price since April. In an amended S-1 filed on July 11, Horizon aimed to price shares between $10 and $12 each. The midpoint of that range would have grossed $60.5 million, although the company cited a target of $75.9 million for aggregate proceeds, calculated on the top price plus overallotments.

Although final pricing dropped below the expected range, Horizon's discount was smaller than other U.S. biotech IPOs this year. A BioWorld Today analysis conducted earlier this month revealed that four previous U.S. biotech IPOs in 2011 – Tranzyme Pharma Inc., AcelRx Pharmaceuticals Inc., Endocyte Inc. and Pacira Pharmaceuticals Inc. – priced at an average discount of 59.6 percent to their initial target price. In a bit of a silver lining, Horizon's discount was less than even the smallest of those previous discounts, at 53.3 percent for Pacira. (See BioWorld Today, July 12, 2011.)

To move the needle on its stock, Horizon plans to focus on a fourth-quarter U.S. commercial launch of Duexis (formerly HZT-501), which is designed to relieve symptoms associated with rheumatoid arthritis and osteoarthritis and to reduce the risk of developing upper gastrointestinal disorders. Results from a long-term safety study of the single-tablet formulation showed that the drug's safety was comparable to ibuprofen alone. Data also showed that Duexis was associated with a twofold reduction in the incidence of dyspepsia compared to ibuprofen alone.

In October 2010, Horizon also submitted a marketing authorization application for Duexis to the UK's Medicines and Healthcare Products Regulatory Agency. The company expects a decision on the MAA in the first half of 2012.

Horizon, which merged last year with Swiss pain specialist Nitec Pharma AG, also is preparing Nitec's compound Lodotra (NP01) – a single-pulse delayed-released low-dose prednisone tablet first launched in Germany in April 2009 for the reduction in morning stiffness associated with RA – for approval in the U.S. (See BioWorld Today, April 2, 2010.)

The company plans to submit a new drug application for NP01 to the FDA in the third quarter.

A European Phase III trial of Lodotra in RA was completed in 2006, and an MAA was submitted to 15 EU member states. Merck KGaA, of Darmstadt, Germany – which spun out Nitec in 2004 – holds marketing rights to Lodotra in Germany and Austria, and Mundipharma International Corp. Ltd., of Cambridge, UK, holds marketing rights in the rest of Europe and some Asian countries.

Nitec completed a Phase III trial for Lodotra in the U.S. for treatment of the signs and symptoms of RA. In the pivotal U.S. study (Circadian Administration of Prednisone in Rheumatoid Arthritis-2), patients treated with Lodotra experienced a statistically significant improvement in ACR-20 response compared with patients in the placebo group (48.5 percent vs. 28.6 percent; p = 0.0002). Also, patients taking Lodotra experienced a statistically significant improvement in ACR-50 response (22.7 percent vs. 9.2 percent; p = 0.0027). Patients in the Lodotra arm also experienced a statistically significant reduction in morning stiffness compared with patients in the placebo group (44 percent vs. 21 percent; p = 0.0008).

Earlier in its pipeline, Horizon is working on a naproxen combo drug, HZN-602, for mild to moderate pain and arthritis pain, and on TruNoc (tarenflurbil), developed at Nitec, as a potential treatment for pain-related diseases.

In its registration statement, the company indicated its intention to use approximately $37.3 million of net proceeds from the IPO to fund U.S. commercialization activities for Duexis and Lodotra and the remainder to fund regulatory approvals of the compounds, required postmarketing studies and development of Duexis and development of Lodotra for other indications.

Horizon reported $4.9 million in cash and equivalents as of July 1 and estimated that proceeds from the IPO would fund operations into the second quarter of 2012.