As it prepares to file a new drug application for the antibiotic oritavancin in the first quarter of 2008, Targanta Therapeutics Corp. filed to raise $86.25 million in an initial public offering.

The Cambridge, Mass.-based company joins 15 other biotechnology firms waiting to price their IPOs. A third of those also have selected $86 million as their target offering price, although the 18 biotechs to price worldwide so far this year have brought in an average of $45.7 million, according to BioWorld Snapshots.

Targanta has not yet disclosed its price range or number of shares to be offered. The company applied to list on Nasdaq under the symbol "TARG." Credit Suisse Securities LLC is serving as the sole book-running manager for the offering, with Cowen and Co., Lazard Capital Markets and Leerink Swann and Co. also serving as underwriters.

Although Targanta executives declined to comment due to quiet-period restrictions, the company's preliminary prospectus said proceeds primarily would support oritavancin. The intravenous, semi-synthetic glycopeptide antibiotic for serious Gram-positive bacterial infections was developed by Eli Lilly and Co., licensed to InterMune Inc., and eventually acquired by Targanta. (See BioWorld Today, Dec. 28, 2005.)

Although Lilly and InterMune completed the Phase III trials for oritavancin, Targanta said it has added value to the program by negotiating a lower royalty rate with Lilly. That royalty rate was not disclosed, but Targanta has paid Lilly $1 million and may owe up to $35 million more in regulatory and sales milestones. As of April 15, Targanta had paid $4 million of the $9 million in cash and $17.5 million of the $25 million in convertible debt it owes InterMune.

Antibiotics to treat serious, antibiotic-resistant, Gram-positive bacterial infections in the U.S. brought in $945 million last year, according to IMS health. Vancomycin accounts for about 85 percent of those courses of therapy, with Zyvox (linezolid, Pfizer Inc.) and Cubicin (daptomycin for injection, Cubist Pharmaceuticals Inc.) comprising most of the remaining sales. New competition in the space may come from Theravance Inc.'s telavancin, which is under FDA review, and Arpida Ltd.'s iclaprim, which is in Phase III.

Oritavancin originally was developed as a replacement for vancomycin, but Targanta thinks the drug may offer advantages over the competition thanks to faster bactericidal activity, high potency, a lower incidence of certain adverse events, and other benefits seen in Phase III. Yet the two Phase III trials were both non-inferiority designs compared to vancomycin.

In its prospectus, Targanta cites multiple communications in which the FDA has confirmed that this design is appropriate for the company's chosen indication of complicated skin and skin structure infections (cSSSIs), and the agency has not requested any additional trials thus far. But last year the FDA began to move away from its previous reliance on non-inferiority for the approval of antibiotics, instead requesting superiority trials for Replidyne Inc.'s faropenem in several indications while an advisory panel made a similar request of Oscient Pharmaceuticals Corp.'s Factive (gemifloxacin) in acute bacterial sinusitis. (See BioWorld Today, Sept. 13, 2006, and Oct. 24, 2006.)

Whether or not cSSSI proves to be an exception to the superiority trend may be demonstrated by the FDA's decision on telavancin, expected later this year. Theravance's telavancin filing also relies on non-inferiority trials in cSSSI. (See BioWorld Today, Dec. 11, 2006.)

Regardless, Targanta will need to address the use of a 15 percent non-inferiority delta in its Phase III trials, while the FDA's accepted non-inferiority delta is 10 percent. The company said the agency has indicated that this analysis will be critical for approval. Targanta already resolved a regulatory issue InterMune had faced regarding injection-site phlebitis.

If oritavancin gets approved, Targanta plans to manage U.S. commercialization through its own hospital-directed sales force, and evaluate partnering or licensing opportunities for approval and launch in other countries. Targanta also intends to pursue approvals in other indications. Phase II studies are planned for late 2007 in cSSSI non-hospital use, and a Phase III study in bacteremia is slated for 2008 based on successful Phase II trials.

Oritavancin is Targanta's main focus, but the company also has a preclinical antibiotic for osteomyelitis. Targanta may license additional antibiotic programs, though it currently has no such agreements in process.

During 2006, Targanta reported a net loss of $29 million, bringing its total accumulated deficit to $61.6 million since its 1997 inception. The company had $12.5 million in cash, equivalents and short-term investments as of the end of last year, but in February it closed a $70 million Series C financing, resulting in gross proceeds of $58.4 million. (See BioWorld Today, Feb. 12, 2007.)

Prior to its Series C, Targanta - previously known as PhageTech Inc. - had raised about $40 million in financing. Primary shareholders include Brookside Capital, InterMune Inc., Skyline Ventures, VenGrowth Private Equity Partners, OrbiMed Advisors, T2C2 Capital, the Canadian Medical Discoveries Fund, Seaflower Ventures and Radius Ventures.

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