Intercept Pharmaceuticals Inc. and Kythera Biopharmaceuticals Inc. each priced initial public offerings (IPO) at the top of their ranges Thursday, and both companies' stock surged, selling several dollars above even that top price.

Intercept (NASDAQ:ICPT) gained 30 percent, or $4.40, to close at $19.40, and Kythera (NASDAQ:KYTH) gained 23.7 percent, or $3.79, to close at $19.79.

The bullish response to the two biotech IPOs represents a major change from the IPOs of 2011 and early 2012, many of which were lucky to price at half their target range. Timed to apparent perfection, Intercept and Kythera will have raised $75 million and $70.4 million, respectively, before expenses, in their first public stock offerings.

Intercept, of New York, priced 5 million shares of common stock at $15 per share, with a 30-day option to underwriters to purchase up to 750,000 additional shares. It filed in September for 4.3 million shares between $13 and $15 per share, for an expected total value of $60 million to $75 million.

The company plans to use proceeds to support clinical and preclinical development of its products. About $17 million is earmarked for FDA and European filings for obeticholic acid (OCA) as a treatment for primary biliary cirrhosis.

Another $13 million will fund continuation of long-term safety extension studies for its POISE Phase II trial of OCA.

There is $5 million set aside for pre-commercialization activities for OCA, and $4 million for preclinical development of INT-767, plus, possibly, Phase I trials.

Finally, Intercept designated $5 million for a Phase II trial for another indication for OCA, such as portal hypertension, if studies warrant it.

Intercept estimated that remaining clinical development for OCA for PBC will take about $40 million, and that the current offering, plus $29.8 million from its recent Series C financing, plus its cash will be enough to put it over the top. (See BioWorld Today, Sept. 6, 2012.)

That clinical development includes completion of the POISE trial and initiation of its long-term safety extension, initiation of a Phase III outcomes trial, carcinogenicity studies in animals, a Phase I safety trial in healthy volunteers to study the effect of OCA on Qt interval, manufacturing of clinical supply, beginning a Phase II trial for another indication and other miscellaneous work.

PBC is caused by autoimmune destruction of the bile ducts that carry bile acids out of the liver. Toxic buildup of bile acids results in progressive liver damage in the form of inflammation and scarring.

Liver cells respond by releasing alkaline phosphatase (ALP), which is used as a marker for diagnosis of the disease and to monitor therapy response.

Ursodeoxycholic acid (ursodiol) is the only currently approved drug for PBC. According to Intercept, up to 50 percent of PBC patients fail to respond to ursodiol, and are at continuing risk of progressing to liver failure.

About 300,000 people have PBC in developed countries, and 60,000 are on ursodiol therapy. Intercept estimated that about 30,000 patients may be eligible for treatment with OCA.

Prior Phase II trials of OCA in combination with ursodiol and as a monotherapy have shown statistically significant reductions of more than 20 percent in ALP levels.

The POISE study is evaluating OCA in patients who have responded inadequately to ursodiol. Its primary endpoint is ALP less than 1.67 times the upper limit of normal and a 15 percent reduction in ALP from baseline, with normal bilirubin, compared to placebo.

BofA Merrill Lynch is the sole book-running manager for the offering, with BMO Capital markets as lead manager and Needham and Co. LLC, Wedbush PacGrow Life Sciences, and ThinkEquity LLC as co-managers.

Kythera Gears Up to Storm Aesthetics Market

Los Angeles-based Kythera's offering is for 4.4 million shares of common stock at $16 per share. As with Intercept, that was the top end of its target range of $14 to $16. The offering will raise $70.4 million, before expenses.

Underwriters are granted a 30-day option to purchase up to 660,000 additional shares to cover overallotments. Kythera expects net proceeds of about $62.8 million, or, if the underwriters exercise their overallotment in full, about $72.6 million.

It will use the proceeds to fund its Phase III trials of ATX-101 , an injectable facial treatment to reduce unwanted fat under the chin (submental fat).

Kythera's previous clinical studies showed a reduction in submental fat and an increase in patient satisfaction related to appearance of the chin. The company estimated that about 61 percent of patients currently receiving botulinum toxin or dermal fillers were likely to also try ATX-101. If approved, it could have sales as high as $500 million in the U.S.

The drug was well tolerated with its most notable side effects being injection site reactions.

For registration purposes, Kythera is carrying out four pivotal Phase III trials, two ongoing trials in the U.S. and Canada, and two recently completed trials in Europe.

Kythera is partnered with Bayer for development outside the U.S. and Canada. It received an up-front payment of $43.6 million in 2010, and a $15.8 million milestone payment in May 2012, triggered by Bayer's decision to continue development of the drug. It has also received $17.4 million from Bayer to fund further global development activities, and is eligible for up to $297 million in additional milestone payments.

J.P. Morgan Securities LLC and Goldman, Sachs and Co. are joint book-running managers for the offering, with Leerink Swann LLC as lead co-manager and Lazard Capital Markets LLC as co-manager.

In other financings news:

• AtheroNova Inc., of Irvine, Calif., closed a sale of 5.85 million stock units, raising net proceeds of $2 million. Each stock unit contained one share of common stock and a warrant to purchase 0.5 shares of common stock. The funds, in combination with a partnership with Maxwell Biotech Group's CardioNova subsidiary, will support the company through the end of Phase II trials of its primary compound in the area of atherosclerotic plaques, as well as development of its patent in lipid modulation.

• Theragenics Corp., of Buford, Ga., entered a second amended and restated $40 million unsecured credit agreement with Wells Fargo Bank, replacing a $30 million credit agreement with Wells Fargo set to expire on Oct. 31. It has refinanced loans of $22 million outstanding under the old credit agreement. The interest rate has been reduced from LIBOR plus 2.25 percent to LIBOR plus 1.75 percent. The credit line matures on Oct. 10, 2015, and provisions of the agreement require the company to maintain a minimum cash and investment balance of $10 million.