With the window for biotech initial public offerings newly cracked open, D-Pharm Ltd. went public on the Tel Aviv Stock Exchange, raising $7.6 million in an oversubscribed offering.
Until last week, the market for U.S. drug company IPOs had been nonexistent since Bioheart Inc.'s meager $5.8 million debut in February 2008. The international picture was similarly bleak: MolMed SpA joined the Milan exchange in March 2008, and PCI Biotech Holding ASA priced on the Oslo exchange a few months later - but then nothing.
Until last Tuesday, when specialty pharmaceutical player Cumberland Pharmaceuticals Inc. (Nasdaq:CPIX) tested the waters with an $85 million IPO. Medical billing provider Emdeon Inc. (NYSE:EM) quickly followed with a $367 million offering - but neither company provided much of a parallel to risky biotech business models. (See BioWorld Today, Aug. 12, 2009.)
Rehovot, Israel-based D-Pharm's IPO is another story. The clinical-stage company is poised to start a Phase III trial in ischemic stroke, and it doesn't get much riskier than that.
D-Pharm's offering raised NIS 28 million (US$7.6 million). The deal was priced at NIS133 per unit, which works out to roughly $4.50 per share - higher than D-Pharm's original minimum goal thanks to strong demand that led to the deal becoming oversubscribed. But that demand is easy to understand considering that the offering price was a bargain. D-Pharm's pre-money valuation was about $32 million.
The IPO was completed concurrently with an NIS57 million (US$15.4 million) rights offering at the same terms. D-Pharm CEO Alex Kozak said the deal was structured to tap into the company's "very supportive" existing investor base while also accessing a new group of investors. He added that the IPO is "in no way" an exit mechanism for D-Pharm's existing investors, but being public will better position the company to support the cost of late-stage clinical trials.
The offering was underwritten by CLAL Finance Underwriting Ltd., Rosario Underwriting Services (AS) Ltd. and Meitav Underwriting and Investment Ltd. D-Pharm's shares are set to start trading Tuesday on the TASE under the ticker symbol "DPRM."
Most of the proceeds from the two financings will go toward a planned Phase III trial with lead drug DP-b99 in moderate to severe ischemic stroke.
The only FDA-approved stroke drug is tissue-plasminogen activator (t-PA), marketed by Genentech Inc. as Activase (alteplase), and its use is severely limited by a delicate risk-benefit balance and tight three-hour time window for administration.
Dozens of companies have tried and failed to improve on t-PA, among them Renovis Inc. and AstraZeneca plc with NXY-059, Nuvelo Inc. with alfimeprase, and Neurobiological Technologies Inc. with Viprinex (ancrod). (See BioWorld Today, Oct. 27, 2006, March 19, 2008, and Dec. 18, 2008.)
Kozak believes DP-b99 will escape a similar fate because the drug hits multiple targets within the cell death cascade. He explained that stroke is a multifaceted disease, but previous drugs have targeted just one cell death mechanism. DP-b99, derived from D-Pharm's Membrane Activated Chelator platform, competitively binds with multiple metal ions, inhibiting metal-dependent enzymes that are overexpressed in stroke.
In a Phase IIb study, twice as many patients treated with DP-b99 compared to placebo achieved complete recovery within 90 days according to the Modified Rankin scale (p = 0.05).
The outcome was not statistically significant on the NIHSS scale, which Kozak explained is not sensitive enough for such a small trial. Yet DP-b99's benefit was statistically significant on NIHSS in a subgroup of patients with moderate to severe stroke at baseline.
Kozak also noted that DP-b99 is safe and can be administered up to nine hours after stroke.
A randomized, double-blind, placebo-controlled 770-patient Phase III protocol has been cleared by the FDA, and D-Pharm is working on securing a special protocol assessment.
The study is slated to begin enrolling around the end of the year, with interim data in 2011 and final data in 2012. While enrollment will be limited to patients with moderate to severe stroke because that is the easiest group in which to show benefit, Kozak said he envisions eventually expanding the label to include more moderate and more severe patients.
D-Pharma has a number of other programs in its pipeline, including trials of DP-b99 for traumatic brain injury and for neuroprotection during surgery, as well as the valproic acid prodrug DP-VPA for epilepsy, migraine and manic-depression and several preclinical candidates. But for now, the company is focusing its resources on its stroke trial.
The new fundraising should last one to two quarters beyond the interim analysis, Kozak told BioWorld Today.
In other financing news:
• BioSante Pharmaceuticals Inc., of Lincolnshire, Ill., closed its previously announced $12 million registered direct offering. The company sold 6 million units priced at $2, with each unit consisting of one share and one five-year warrant to buy an additional 0.4 shares exercisable at $2.50. Net proceeds of about $11.1 million will be used to advance the Phase III LibiGel program for female sexual dysfunction. Rodman & Renshaw LLC acted as exclusive placement agent.