Cadence Pharmaceuticals Inc. filed for its initial public offering, hoping to raise as much as $86 million to support clinical development of its two late-stage candidates targeting pain and infection in hospital settings.

The San Diego-based firm has not yet disclosed the number of shares or share price, and what the company would be able to pull in remains to be seen, as the current environment is downsizing IPOs. In fact, stem cell firm Osiris Therapeutics Inc. on Monday set its share amount and price range that cuts its IPO expectations by half.

Representatives of Cadence, which anticipates a Nasdaq listing ticker symbol of "CADX" upon completing the offering, were not able to comment due to quiet-period rules. In the company's prospectus, it said proceeds would be used to support clinical trials of omiganan pentahydrochloride 1 percent aqueous gel, in Phase III testing for intravascular catheter-related infections, and IV APAP, which is set to start a Phase III trial in postoperative pain during the fourth quarter.

Funds also could go toward working capital, general corporate purposes and the potential in-licensing of additional compounds for use in hospital settings.

Founded in May 2004 (as Strata Pharmaceuticals Inc.), Cadence focuses on acquiring rights to late-stage products with proven safety profiles to develop and market specifically for the hospital sector, which accounted for about 21 percent, or $54 billion, of total U.S. pharmaceutical sales in 2005, according to marketing research firm IMS Health Inc. The company anticipates building its own sales force to target U.S. hospitals and is considering partners to sell products outside the U.S.

Cadence has North American and European rights to omiganan, a topical antimicrobial agent licensed in 2004 from Vancouver, British Columbia-based Migenix Inc., in exchange for a $2 million up-front fee and up to $27 million in milestones, as well as royalties. (See BioWorld Today, Aug. 4, 2004.)

Cadence and Migenix began a Phase III trial in August 2005 under a special protocol assessment in local catheter site infection, a condition that includes infections at the catheter insertion site, catheter colonization and catheter-related bloodstream infections.

Results are expected in the second half of 2007, and Cadence hopes to file a new drug application in the first half of 2008.

Earlier this year, the company licensed U.S. and Canadian rights to I.V. AVAP, an injectable form of acetaminophen, from New York-based Bristol-Myers Squibb Co., which has marketed the product in Europe since 2002. Terms of that deal called for Cadence to pay a $25 million up-front fee, up to $50 million in milestones and a royalty on product sales.

It has been studied in nine trials, including six Phase III trials, and Cadence expects to start a Phase III study in the first half of 2008 for an NDA submission in the second half of that year.

Cadence completed a $25 million Series A round in October 2005, and added another $54 million in venture capital in February to help cover costs related to the I.V. AVAP license.

For the first quarter, the company had a net loss of $28.3 million. As of March 31, its cash and cash equivalents totaled $40.6 million.

Prior to the offering, Cadence has about 84.4 million shares outstanding. Its principal shareholders are funds affiliated with Domain Associates LLC, of Princeton, N.J., which owns 22.9 million shares, or 26 percent of the company; ProQuest Investments III LP, of Princeton, which has 12.3 million shares, or 14 percent; Frazier Healthcare V LP, of Seattle, which has 10.1 million shares, or 11.4 percent; Versant Ventures II LLC, of Menlo Park, Calif., which has 8.1 million shares, or 9.2 percent; Technology Partners, of Mill Valley, Calif., which has 8 million shares, or 9.1 percent; and BB Biotech Ventures II LP, of the Channel Islands, Calif., which holds 7 million shares, or 7.9 percent.

New York-based Merrill Lynch & Co. is acting as sole book-running manager for the offering, while Deutsche Bank Securities Inc., also of New York, is serving as co-lead manager. San Francisco-based Pacific Growth Equities LLC and New York-based JMP Securities LLC will act as co-managers.

Osiris Sets IPO Range

Two months after filing for its IPO, Osiris Therapeutics set a price range of $11 to $13 per share for 3.5 million shares.

At the high end, proceeds would amount to about $45 million - or $52.3 million if underwriters exercise the full 525,000-share overallotment option. In its original filing, the company had hoped to bring in as much as $80 million. (See BioWorld Today, May 15, 2006.)

In its prospectus, the company, which develops tissue regeneration products using human mesenchymal stem cells derived from donor bone marrow, said proceeds will be used to fund Phase III trials of Prochymal in steroid refractory graft-vs.-host disease. Prochymal previously received orphan and fast-track designations in that indication.

Osiris also is testing Prochymal in a Phase II trial as an add-on therapy to steroids in first-line treatment of GvHD, and in a Phase II trial in Crohn's disease.

Funds also are expected to fund a Phase III trial of Chondrogen, aimed at meniscus regeneration, as well as to support other research and development activities and allow the company to repay the $20.6 million principal, along with interest, on a promissory note that matures in November 2008.

Upon completion of the offering, Osiris would gain a listing on Nasdaq under the ticker "OSIR."