Assistant Managing Editor

Ironwood Pharmaceuticals Inc. filed for an initial public offering, joining five other private U.S. biotechs that have filed for a public listing, as industry experts debate whether the IPO window is really opening up for drug development firms.

So far, three companies have successfully priced IPOs this year. Nashville, Tenn.-based Cumberland Pharmaceuticals Inc. raised $85 million in its August IPO, ending an 18-month dry spell for biotechs in the U.S. capital market. But Cumberland, like Research Triangle Park, N.C.-based Talecris Biotherapeutics Holdings Corp., which pulled in a whopping $950 million in its IPO a few weeks later, isn't a traditional biotech firm. (See BioWorld Today, Aug. 12, 2009, and Oct. 2, 2009.)

Neither is Omeros Corp., of Seattle, which priced a $68.2 million IPO last month. Omeros develops generic combination drugs for surgical indications. (See BioWorld Today, Oct. 9, 2009.)

But those triumphs - albeit lukewarm in the case of Omeros, which has traded below the $10 asking price since its debut - were enough to prompt ophthalmology firm Alimera Sciences Inc., of Atlanta, and stem cell company Aldagen Inc., of Durham, N.C., to try second attempts at the IPO market. Both originally had filed to go public last year but later withdrew their S-1s citing unfavorable market conditions.

San Diego-based Trius Therapeutics Inc. and Hayward, Calif.-based Anthera Pharmaceuticals Inc. also have filed for this year. And diagnostics firm Prometheus Laboratories Inc., of San Diego, has had an S-1 on file since late 2007.

Adding its name to the list, Ironwood is hoping to raise $172.5 million in an IPO, though the number of shares and share price have not yet been determined.

Not that Cambridge, Mass.-based biotech is hurting for money. The company has raised more than $280 million in several financing rounds since its founding in 1998 (as Microbia), including investments from shareholders Ridgeback Capital Investments LP, Venrock Capital, Polaris Venture Partners and Morgan Stanley.

As of Sept. 30, it had nearly $100 million in cash and could bank even more in the near term, thanks to a series of partnerships for Phase III-stage bowel drug linaclotide.

In May, Ironwood got $40 million up front in a potential $95 million European deal with Barcelona, Spain-based Laboratorios Almirall SA, and partnered Japanese rights to the drug with Tokyo-based Astellas Pharma Inc. in exchange for $75 million in up-front and precommercial milestones. (See BioWorld Today, May 5, 2009, and Nov. 11, 2009.)

The company already had set up a 50-50 co-development and co-promotion arrangement with New York-based Forest Laboratories Inc. in the U.S.

To date, Ironwood has received more than $250 million from its partners. It stands to bank another $190 million in precommercial payments for linaclotide, and those funds, along with the cash on hand and proceeds from the planned IPO, should cover the company's share of costs associated with U.S. launch of linaclotide, pending success in an ongoing Phase III trial in irritable bowel syndrome with constipation, as well as fund R&D efforts for at least the next five years.

Linaclotide already has met expectations in chronic constipation. Ironwood reported positive Phase III data early this month, showing that patients receiving the drug achieved a complete spontaneous bowel movement, with an overall response rate of 16 percent in the lower-dose group and 21.3 percent in the higher-dose group. (See BioWorld Today, Nov. 4, 2009.)

But it's the much less crowded IBS-C market that Ironwood has its eye on. Bethesda, Md.-based Sucampo Pharmaceuticals Inc.'s Amitiza (lubiprostone) finally won approval last year, filling the gap left after Zelnorm, a 5-HT4 receptor partial agonist from Novartis AG, was pulled from the market in 2007 due to cardiovascular risks. (See BioWorld Today, May 1, 2008.)

Linaclotide, which is designed as an agonist to the guanylate cyclase Type C receptor found on the lining of the intestine, is in two ongoing pivotal trials in IBS-C, with results expected in the second half of 2010.

Elsewhere in its pipeline, Ironwood has a Phase I-stage pain product and multiple preclinical programs in gastrointestinal and cardiovascular diseases, pain and inflammation.

Upon successful pricing of its IPO, Ironwood would trade on Nasdaq under the ticker "IRWD."

J.P. Morgan Securities Inc., Morgan Stanley & Co. Inc. and Credit Suisse Securities LLC will serve as joint book-running managers, with BofA Merrill Lynch and Wedbush PacGrow Life Sciences set to act as co-managers.

In other financings news:

• Oncolytics Biotech Inc., of Calgary, Alberta, closed its $12.75 million offering of 4.25 million units - each comprising one common share and 0.4 common share purchase warrants - priced at $3 each. Underwriters have the option to purchase additional common shares and/or warrants in an amount up to 15 percent of the number of shares and warrants underlying the units sold pursuant to the offering at the same price. Proceeds will fund a Phase III combination Reolysin and paclitaxel/carboplatin trial with platinum-failed head and neck cancers, as well as other clinical and R&D activities and general corporate purposes.

• Poniard Pharmaceuticals Inc., of San Francisco, sold about 3.5 million shares to Azimuth Opportunity Ltd. for gross proceeds of about $7.4 million under its existing committed equity financing deal. Shares were sold for about $2.15 each, following an added pricing flexibility to the CEFF. The deal with Azimuth previously called for a $3-per-share minimum, but Poniard's stock sank last week on disappointing Phase III results of its platinum-based chemotherapy drug picoplatin in small-cell lung cancer. The company expects to use the net proceeds of about $7.3 million to focus on regulatory and partnering activities for picoplatin, clinical development, other general corporate purposes and working capital. Funds from the offering, plus its cash reserves, are expected to provide sufficient resources to mid-2010. Shares of Poniard (NASDAQ:PARD) fell 20 cents Monday to close at $2.33. (See BioWorld Today, Nov. 17, 2009.)

• Salix Pharmaceuticals Ltd., of Raleigh, N.C., closed its offering of 5.5 million shares priced at $21 apiece, with underwriter Jefferies & Co. Inc. exercising in full its overallotment option for an additional 825,000 shares, for net proceeds of about $128.2 million. Those funds will be used for business development activities and other general corporate purposes.

Published  November 24, 2009