Biodel Inc. is betting a lot on its lead product, an injectable insulin formulation, and it hopes investors will, too.

The Danbury, Conn.-based company filed a registration statement last week to raise up to $86.25 million in an initial public offering. Biodel applies its formulation technologies to existing peptide hormone drugs to develop products that may have improved safety, efficacy and convenience features.

The focus at Biodel, founded in 2003, is to develop treatments for endocrine disorders. It has two diabetes products in clinical trials, and preclinical candidates targeting osteoporosis.

The lead product, VIAject, is an injectable form of recombinant human insulin designed to be absorbed into the blood faster than currently marketed rapid-acting insulin analogues. It was created using the company's VIAdel technology to combine recombinant insulin with specific ingredients generally regarded as safe by the FDA.

In September, Biodel began two non-inferiority, pivotal Phase III trials of VIAject, in 400 patients with Type I diabetes and 400 patients with Type II diabetes.

The trials are expected to be completed in the fourth quarter, with a new drug filing to follow in 2008 if successful. Phase I and II trials showed faster delivery of insulin into the blood than currently marketed products, Biodel said.

The company's second product is VIAtab, a sublingual, fast-dissolving tablet formulation of insulin, which is being tested in a Phase I trial in diabetes. If successful, Phase II trials would begin in 2008.

The VIAdel technology at the heart of Biodel's product development consists of models designed to study the interaction between peptide hormones and small molecules. It is used to reformulate existing peptide drugs with small-molecule ingredients regarded as safe by the FDA. Its formulations are believed to mask the charge on peptides, resulting in less resistance from cell membranes and thus a faster and larger delivery to the blood. A goal is increased absorption and stability.

A Biodel preclinical candidate is VIAmass, a sublingual, rapid-acting formulation of PTH 1-34, for osteoporosis. PTH 1-34 is the active portion of the human parathyroid hormone. The injectable product is made by Eli Lilly and Co., of Indianapolis, and sold under the trade name Forteo. Another preclinical product is VIAcal, a sublingual, rapid-acting formulation of recombinant salmon calcitonin, also targeting osteoporosis. Salmon calcitonin currently is administered by injection and as a nasal spray, and is sold by various companies. Investigational new drug application filings are expected for both products in 2008.

Biodel also plans to use the VIAdel technology to develop additional peptide hormone product candidates that address large markets.

With its technology, Biodel said it would intend to use the Section 505(b)(2) route for filing for product approvals, which could provide quicker and less-costly product development than traditional new drug or biologics license applications. It would seek commercialization partners at the late stages of development due to the large market sizes being targeted, while retaining co-commercialization or co-promotion rights in the U.S.

Biodel, founded in December 2003, reported no revenues and about $11 million in losses from inception through Sept. 30. It had $17.5 million in cash and equivalents. It has raised $26.6 million since its formation, primarily through Series A and B financing rounds.

The $21.15 million Series B round last year was led by Great Point Partners, OrbiMed Advisors and Vivo Ventures. Great Point and OrbiMed each owns 17.4 percent of Biodel, while Vivo Ventures owns 15 percent.

The largest shareholder is Biodel Chairman, President and CEO Solomon Steiner, who owns 36.7 percent of the company pre-IPO. Steiner, along with Roderike Pohl, vice president of research, invented the VIAdel technology.

Banc of America Securities LLC and CIBC World Markets Corp. are lead underwriters for the proposed offering. Leerink Swann & Co. and Natexis Bleichroeder Inc. are co-managers. The proposed Nasdaq symbol is "BIOD."

In other financing news:

• Illumina Inc., of San Diego, said it intends to sell $325 million principal amount of convertible senior notes due 2014 to institutional investors, along with an option to purchase another $50 million in notes. Terms had not been determined. Illumina expects to use up to $200 million of the proceeds to buy back its stock. Illumina is developing tools for the large-scale analysis of genetic variation and function.

• Gentium SpA, of Villa Guardia, Italy, completed its previously announced $47.5 million private placement of 2.35 million American depository shares at $20.17 per ADS. Institutional investors in the U.S. and Italy participated in the financing. Separately, Gentium said data presented at the Keystone Symposia event in Sante Fe, N.M., showed that Defibrotide, being developed for veno-occlusive disease and known for its anti-inflammatory and endothelium-protecting function, also inhibits tumor blood vessel formation.

• Poniard Pharmaceuticals Inc., of South San Francisco, filed a shelf registration statement with the Securities and Exchange Commission to sell up to $75 million of stock and/or warrants. Poniard intends to use proceeds to advance its picoplatin programs and for other purposes. Picoplatin is an intravenous, new-generation platinum therapy being developed for cancer indications.