ARYx Therapeutics Inc. priced its initial public offering of 5 million shares at $10 per share, becoming the first biotech to complete an IPO this month.

The deal priced below ARYx's previously projected range of $14 to $16 per share, demonstrating the continued selectivity of the IPO market. Most biotech IPOs since 2004 have priced below or at the low end of their ranges, including four of the five biotech IPOs last month: Targanta Therapeutics Corp., MAP Pharmaceuticals Inc., Pronova BioPharma and NovaBay Pharmaceuticals Inc.

The October IPO to buck the trend was that of Genoptix Inc., which priced above its range and then soared 56.4 percent in its first day of trading. But Genoptix is far from a traditional biotech, offering cancer diagnostic services that generate healthy revenues. (See BioWorld Today, Oct. 31, 2007.)

Shares of Fremont, Calif.-based ARYx (NASDAQ:ARYX) traded down $1.90, or 19 percent, to close at $8.10 on Wednesday.

The offering generated about $44.6 million in net proceeds for ARYx. If bookrunner and lead manager Morgan Stanley & Co. Inc. and co-managers CIBC World Markets Corp., Jefferies & Co. Inc. and Leerink Swann & Co. Inc. exercise their options to an additional 750,000 shares to cover overallotments, ARYx's take could increase to $51.5 million.

An estimated $18.7 million of the proceeds will fund external clinical trials, with $14.7 million earmarked for other research and development activities and $11.2 million set aside for general purposes.

ARYx uses its RetroMetabolic Drug Design technology to improve the safety of existing drugs by reengineering them so that they are metabolized through an esterase pathway rather than the cytochrome P450 system in the liver.

The company has three products in Phase II trials: ATI-7505, a variant of Propulsid (cisapride, Johnson & Johnson) for various gastrointestinal disorders; ATI-5923, an anticoagulant similar to warfarin; and ATI-2042, a reformulation of the anti-arrhythmic drug amiodarone for atrial fibrillation.

ATI-7505 was partnered last year with Procter & Gamble Pharmaceuticals Inc. in a deal worth up to $416 million. ARYx also has said it plans to partner its other two Phase II drugs and advance earlier-stage compounds. (See BioWorld Today, July 13, 2006.)

ARYx filed to go public in September. (See BioWorld Today, Sept. 4, 2007.)

In other financing news:

• Biopure Corp., of Cambridge, Mass., closed its previously announced public offering. The company sold 19.4 million new shares, including its overallotment, generating net proceeds of about $14.9 million. Each new share was sold for 85 cents and accompanied by a five-year warrant to purchase one additional share at an exercise price of $1.06. Proceeds will be used for general corporate and working capital purposes, including the advancement of the company's oxygen therapeutics.

• Formac Pharmaceuticals NV, of Leuven, Belgium, raised initial financing of €1.7 million (US$2.5 million) to develop oral formulations of small organic drugs. The newly formed drug delivery company spun out from the University of Leuven. Investors included Allegro Investment Fund, Hunza Ventures, Gemma Frisius Fonds K.U.Leuven II and Vinnof.

• SantoSolve AS, of Oslo, Norway, raised $7 million in a private financing round. Investors included DnB NOR, Gezina AS, Glastad Invest AS, Teknoinvest AS and InnovationsKapital. Proceeds will be used to initiate a Phase III trial with topical pain drug 2PX, which recently demonstrated a statistically significant reduction in pain compared to placebo in a Phase II trial for osteoarthritis pain.