Australian specialty dermatology company Peplin Ltd. raised A$20 million (US$16.9 million) in a private placement and established a U.S. subsidiary to facilitate an initial public offering on the Nasdaq Global Market.
The subsidiary, Peplin Inc., filed a registration statement with the SEC on Thursday seeking to raise up to $75 million through an initial public offering on Nasdaq. The Emeryville, Calif.-based company applied to list its shares under the ticker symbol "PLIN."
Merrill Lynch & Co. will serve as the lead manager of the offering, with Cowen & Co. LLC, Thomas Wiesel Partners LLC and Leerink Swann & Co. serving as co-managers. In Australia, the offering will be managed jointly by Merrill Lynch International (Australia) Ltd. and Wilson HTM.
As part of the preparation for the offering, Peplin Ltd. and Peplin Inc. will restructure so that Peplin Inc. becomes the parent company. Shareholders will receive one share of Peplin Inc. for every 20 of their Peplin Ltd. shares. Alternatively, the shareholders can elect to receive CHESS depository interests (CDIs), which will trade on the ASX, representing 1/20 of a share of Peplin Inc. Options in Peplin Ltd. will be cancelled, and option-holders will receive ASX-traded CDIs representing 1/20 of an option of Peplin Inc.
Contingent on the completion of the restructuring, Peplin intends to appoint Thomas Wiggans, former chairman and CEO of Connetics Corp. prior to its acquisition by Stiefel Laboratories Inc., as new chairman of the Peplin board. (See BioWorld Today, Oct. 24, 2006.)
To strengthen its balance sheet prior to seeking a U.S. listing, Peplin Ltd. raised A$20 million in a private placement of 22.2 million shares priced at A$0.90 each. The offering price is equivalent to the last price of Peplin's stock (ASX:PEP) on Aug. 8, when trading was halted. Wilson HTM served as lead manager for the placement.
Although the IPO, restructuring and private placement represent some significant changes for Peplin, the company plans to hold on to some of its Australian roots. In addition to listing its CDIs on the ASX, Peplin intends to keep its facility in Brisbane, Australia and alternate holding its annual stockholder meetings in Australia and in the U.S.
Peplin's board unanimously recommended that shareholders approve all of the transactions. The rationale provided by the board for transitioning the company's headquarters to the U.S. included enhancing access to the U.S. capital markets and investors, staff, key future consumer markets and business development opportunities.
Additionally, the board said the move would bring Peplin's financial reporting standards into line with its peers, allowing investors to more easily compare the company to others.
Proceeds from the initial public offering will be used to fund clinical development of lead candidate PEP005, a small molecule derived from the sap of Euphorbia peplus, commonly known as petty spurge or radium weed.
A topical formulation of PEP005 recently completed a Phase IIb trial for actinic keratosis, the most common pre-cancerous skin condition. Initial data from the trial indicated that the drug was well tolerated and, when administered at a concentration of 0.025 percent for three consecutive days, resulted in 56 percent of patients clearing three-quarters or more of their lesions (p=0.0002). When administered at a concentration of 0.05 percent for three consecutive days, PEP005 resulted in 75 percent of patients clearing three-quarters or more of their lesions (p<0.0001). Based on those data, Peplin intends to begin a Phase III trial in the first quarter of next year.
Peplin also conducted a Phase IIa trial with a topical formulation of PEP005 for superficial basal cell carcinoma. Initial data demonstrated that two applications of the gel on two consecutive days cleared 71 percent of tumors. The company now is conducting additional Phase II trials.
In 2002, Peplin licensed North and South American rights to PEP005 to Allergan Inc. in exchange for up to $23 million, but that collaboration was discontinued in 2004.
Additional proceeds from the offering will be used for working capital and general corporate purposes, including potential business development activities.
In other financing news:
• BioCryst Pharmaceuticals Inc., of Birmingham, Ala., completed its previously announced $65.3 million private placement of stock and warrants. The company sold 8.3 million shares of stock at $7.80 per share and warrants to purchase an additional 3.2 million shares exercisable at $10.25 per share. Investors agreed to pay an additional purchase price of 12.5 cents for each share underlying the warrants. Proceeds will be used to support clinical trials of lymphoma drug Fodosine, psoriasis drug BCX-4208 and other product candidates. (See BioWorld Today, Aug. 7, 2007.)