Affymax Inc. netted $83.1 million in its initial public offering, selling 3.7 million common shares at $25 apiece in the deal for gross proceeds of $92.5 million
The company, of Palo Alto, Calif., plans to direct the bulk of its proceeds toward the further development of Hematide, a synthetic peptide-based erythropoiesis-stimulating agent (ESA) designed to stimulate red blood cell production to treat anemia associated with chronic kidney disease and cancer. In fact, according to the company's prospectus, $50 million is tabbed for funding Phase III trials and long-term carcinogenicity studies, $5 million will be devoted to manufacturing scale-up, and another $5 million is dedicated for the product's launch and commercial development plans.
Hematide is designed to act longer than recombinant erythropoietin-based products, which are the only currently marketed ESAs. So Hematide could offer both better patient care and reduced cost and complexity for health care providers in a global market currently estimated at $13 billion. That landscape already includes three large drug firms: Thousand Oaks, Calif.-based Amgen Inc., with Epogen (epoetin alfa) and Aranesp (darbepoetin alfa); New Brunswick, N.J.-based Johnson & Johnson's Procrit (epoetin alfa); and Basel, Switzerland-based F. Hoffmann-La Roche Ltd.'s CERA (continuous erythropoietin receptor activator).
Hematide is in Phase II trials in dialysis patients suffering from end-stage renal disease, as well as in earlier-stage, predialysis, chronic kidney disease patients. Should those studies prove positive, Affymax would expect to begin separate Phase III trials in both dialysis and predialysis patients next year. In oncology supportive care, a Phase II trial also is under way to evaluate Hematide in cancer patients who suffer from anemia due to chemotherapy.
The product is partnered with Takeda Pharmaceutical Co. Ltd., of Osaka, Japan, in a $535 million global deal in which both firms would co-develop and co-commercialize it in the U.S. Elsewhere, Takeda has exclusive rights. Hematide employs Advanced PEGylation Technology from Nektar Therapeutics Inc., of San Carlos, Calif. (See BioWorld Today, June 28, 2006.)
In addition to Affymax's Hematide-related spending plans, the company intends to use another $5 million on research and development related to other product candidates, a number of peptide-based drugs, and the remainder on working capital, capital expenditures and other general corporate purposes. Its broader portfolio includes Adeptide, a non-injectable ESA, as well as a family of drugs that show early positive results in tissue protection in preclinical models of stroke, myocardial infarct and renal failure, and it also has a preclinical anti-angiogenesis product called Angiotide that's partnered with EntreMed Inc., of Rockville, Md.
Affymax registered to go public this summer, setting $115 million as its IPO goal. Eventually, the company set a per-share range between $22 and $24 apiece, estimating $96.6 million at top end of a deal for 4.025 million shares. (See BioWorld Today, Aug. 1, 2006.)
There will be about 14.3 million shares outstanding after the offering.
Prior to the IPO, its largest stockholders included Apar Excelsior VI LP, which had 12.1 million shares that previously totaled 29.3 percent; MPM BioVentures II-QP LP, with 6.7 million shares, or 16.4 percent; Sprout Capital IX LP, with 6.3 million shares, or 15.3 percent; Bear Stearns Health Innoventures Management LLC, with 4.6 million shares, or 11.4 percent; Jafco Life Science No. 1 Investment Enterprise Partnership, with 4 million shares, or 9.8 percent; Glaxo, with 3.4 million shares, or 8.3 percent; and Takeda, with 2.1 million shares, or 5.2 percent.
Morgan Stanley & Co. Inc., of New York, is the sole bookrunner and co-lead manager, while Cowen and Co. LLC, also of New York, and Thomas Weisel Partners LLC, of San Francisco, are co-lead managers. New York-based RBC Capital Markets is acting as co-manager. The IPO would net $96 million if the underwriters fully exercise their 555,000-share overallotment option.