In one of the most successful initial public offerings so far this year, Orexigen Therapeutics Inc. priced 7 million shares at $12 apiece, raising $84 million to support ongoing development of its lead programs in obesity.

The price fell right in between the $11 to $13 range set by the company earlier this month, though Orexigen opted to sell 1 million more shares than originally planned. Underwriters will have the chance to buy up to an additional 1.05 million shares, which would total $12.6 million, to cover any overallotments.

On its first day of trading, Orexigen (NASDAQ:OREX) gained $1 to close at $14.

At a time when most biotech IPOs are falling short of expectations, Orexigen managed to nearly hit the estimated $86.5 million it listed in its December filing - with the overallotment, gross proceeds would total about $96 million. That puts it behind Chinese firm 3SBio Inc.'s $115.2 million offering in February, which priced 7.2 million American depositary shares at $16 each, and ahead of a $70 million IPO, also priced in February, by Cambridge, Mass.-based Molecular Insight Pharmaceuticals Inc. (See BioWorld Today, Feb. 21, 2006.)

Overall, IPO activity for the first few months of 2007 seems to mirror the trend observed over the past couple of years, with most companies pricing their offerings much lower than expected. According to figures from BioWorld Snapshots, a total of 15 IPOs have priced so far this year, including Orexigen, for an average of about $42.6 million per offering.

Part of Orexigen's attraction for investors might be its development strategy, which involves combining existing generic drugs approved for other indications to create new product candidates for central nervous system disorders.

The company's two lead programs both target obesity. The first is Contrave, a fixed-dose combination of naltrexone SR, which is approved for opioid addiction and alcohol addiction, and bupropion SR, approved for depression and smoking cessation. That product has started the first of several Phase III studies to evaluate its efficacy, in conjunction with intensive behavioral modification protocol, with a primary endpoint measuring the percent change in body weight one year after the start of treatment. About 800 patients will be enrolled.

Its second product, Empatic, a fixed-dose combination of bupropion SR and zonisamide SR, a drug approved in treating epilepsy, is in a Phase IIb trial designed to determine the product's optimal dose ratio for further development.

In its prospectus, San Diego-based Orexigen said the majority of its proceeds - about $55 million - will fund those trials, with the remaining proceeds allotted for working capital, general corporate purposes and potential in-licensing, partnering or acquisition opportunities. Funds from the offering, plus existing cash and access to cash, should allow the company to begin all Phase III trials of Contrave and to complete the first Phase IIb study of Empatic. Orexigen, which reported a net loss of $27.5 million for 2006, ended the year with about $34.4 million in cash. Earlier this year, the company entered an agreement with Merrill Lynch Capital to borrow up to $17 million, as needed, to support operations.

Prior to the IPO, Orexigen relied primarily on net proceeds of about $75.8 million in private placements since it was founded in 2002. Its last financing round was a $30 million Series C closed in November. (See BioWorld Today, Nov. 27, 2006.)

At this time, the company holds all rights to its drug candidates, though it might consider signing a partner with a large sales force to get the products to primary care physicians.

Orexigen's principal stockholders, which held about 84 percent of the company prior to the offering, retain 61.6 percent following the IPO. Those include: Princeton, N.J.-based Domain Associates LLC, which holds 4 million shares, or 15.6 percent of the company following the IPO; KPCB Holdings Inc., of Menlo Park, Calif., with 3.8 million shares, or 14.6 percent; Sofinnova Venture Partners VI LP, of San Francisco, with 2.8 million shares, or 10.9 percent; Scale Venture Partners II LP, of Foster City, Calif., with 2.8 million shares, or 10.8 percent; Montreaux Equity Partners, also of Menlo Park, with 1.4 million shares, or 5.4 percent; and Morgenthaler Partners VII LP, of Menlo Park, with 1.2 million shares, or 4.3 percent.

After the offering, Orexigen had about 25.9 million shares outstanding.

Merrill Lynch & Co. acted as sole book-running manager, J.P. Morgan Securities Inc. acted as co-lead manager and JMP Securities LLC and Leerink Swann Co. Inc. served as co-managers.