Shares of Biodel Inc. shot up 19 percent on the first day of trading, as the company priced its initial public offering of 5 million shares at $15 apiece for gross proceeds of $75 million.

Underwriters have an overallotment option that could bring proceeds up to as much as $86.25 million, the total Biodel had hoped to raise when it filed to go public in February and raise money to support its pipeline of peptide hormone formulations.

That successful outcome - especially at a time when the majority of industry IPOs are pricing lower than expected - was sweetened by Wall Street's reception. In its debut Friday, Biodel's stock (NASDAQ:BIOD) jumped $2.86 to close at $17.86. (See BioWorld Today, Feb. 13, 2007.)

Founded in 2003, the specialty pharma firm focuses on developing improved products for endocrine disorders using its VIAdel technology, which is used to study the interaction between peptide hormones and small molecules and reformulate existing peptide drugs to increase absorption and stability. In its prospectus, Biodel said net proceeds of $68 million - or $78.5 million if the overallotment option is exercised - will fund clinical development, preclinical testing, research and development, working capital and other general corporate purposes.

The bulk of the funds, or about $40 million, is earmarked for clinical development of the lead product, VIAject, which began two pivotal Phase III studies in September in diabetes. An injectable formulation of recombinant human insulin, VIAject is designed to be absorbed into the blood faster than existing rapid-acting analogues, such as Humulin, a bioengineered version of human insulin sold by Indianapolis-based Eli Lilly and Co. In earlier Phase I and Phase II trials, data showed that VIAject delivered insulin into the blood faster than existing products. The Phase III studies are designed as non-inferiority studies against Humulin, with one trial involving 400 Type I diabetics and the other trial enrolling 400 patients with Type II diabetes.

Pending positive results, Biodel plans to submit a new drug application in 2008 under a 505(b)(2) filing, which could offer a faster development track than traditional new drug applications.

For now, the Danbury, Conn.-based company expects to retain all rights to the product through all, or most, of the clinical development process, with plans to seek a commercialization partner while maintaining co-promotion rights in the U.S.

Beyond VIAject, Biodel's pipeline includes VIAtab, a sublingual tablet formulation of insulin designed to provide rapid absorption into the blood without having to go through the stomach or liver. VIAtab is in testing as a potential treatment for Type II diabetics with early stage disease, and pending the success of an ongoing Phase I trial, the product would enter later-stage trials in 2008. Biodel also has programs in preclinical development aimed at osteoporosis: VIAmass, a sublingual formulation of parathyroid hormone 1-34, and VIAcal, a sublingual formulation of salmon calcitonin. The company anticipates submitting investigational new drug applications for both products in 2008.

Since inception, the company has reported no revenue and has supported its operations with about $26.6 million in private funding. For the fourth quarter of 2006, Biodel had a net loss of $3.7 million. As of Dec. 31, it had cash and cash equivalents totaling $14.6 million.

The company's largest stockholder is Solomon Steiner, co-founder, chairman, president and CEO, who holds about 4.3 million shares, or about 22.2 percent of the company after the offering. Other principal shareholders include New York-based OrbiMed Advisors LLC, which holds nearly 2 million shares, or 9.7 percent after the IPO; Greenwich, Conn.-based Great Point Partners I LP, which also holds about 2 million shares; and Vivo Ventures, of Palo Alto, Calif., which holds 1.7 million shares, or 8.3 percent.

Biodel had about 19.4 million shares outstanding after the offering.

Morgan Stanley & Co. Inc. is acting as the sole bookrunner and lead manager of the IPO, while Banc of America Securities LLC is serving as co-lead manager. Leerink Swann & Co. Inc. and Natexis Bleichroeder Inc. are acting as co-managers.

In other financing news:

• Javelin Pharmaceuticals Inc., of Cambridge, Mass., agreed to sell 7.1 million shares of its common stock priced at $6 each in a public offering. The company also granted underwriters a 30-day option to purchase an additional 1.1 million shares to cover any overallotments. Net proceeds of about $39.3 million are expected to support clinical research and development programs, the commercialization and manufacturing of its product candidates, and for other general corporate purposes. J.P. Morgan Securities Inc. is the book-running manager, while Pacific Growth Equities LLC, Leerink Swann & Co., Allen & Co. LLC, Fortis Securities LLC and Punk, Ziegel & Co. are serving as co-managers. The offering is expected to close Wednesday. Shares of Javelin (AMEX:JAV) slipped 20 cents Friday to close at $5.86.

• Spectrum Pharmaceuticals Inc., of Irvine, Calif., completed its previously announced sale of 5.1 million shares of common stock priced at $6.25 each, for gross proceeds of about $31.9 million and net proceeds of about $30 million. That money, in addition to about $20 million the company expects to receive in milestones relating to satraplatin development, will allow Spectrum to move forward with its ongoing Phase III program for EOquin for non-invasive bladder cancer. Proceeds also will be used to support ongoing work in ozarelix, which is in Phase IIb trials for benign prostatic hypertrophy and is expected to move into Phase III in the second half of this year. Oppenheimer & Co. acted as lead placement agent and Lazard Capital Markets LLC as co-lead agent on the offering, with Rodman & Renshaw LLC and ThinkEquity Partners LLC acting as co-placement agents. (See BioWorld Today, May 8, 2007.)

• Unigene Laboratories Inc., of Fairfield, N.J., said it repaid $1 million in stockholder debt and restructured the remaining $15.7 million debt balance as eight-year term notes with a fixed simple interest rate of 9 percent per annum. The new notes replace short-term debt, a portion of which was in default. Payments under the new notes are not required for the first three years. As of March 31, the company had a cash position of $4.6 million. Shares of Unigene (OTC BB:UGNE) closed at $2.50 Friday, up 8 cents.