West Coast Editor

With its compound clevudine for hepatitis B virus slated to enter pivotal Phase III trials in the fourth quarter, Pharmasset Inc. filed for an initial public offering that would raise up to $75 million.

In a prospectus filed with the SEC, the Princeton, N.J.-based firm has not yet specified the number of shares or price per share, and said the proceeds would be used for "clinical development programs, primarily clevudine and Racivir, for research and development related to our preclinical programs and for general corporate purposes."

Clevudine is an oral, once-daily pyrimidine nucleoside analogue. Racivir is an oral, once-daily cytidine nucleoside analogue for HIV, currently in Phase II trials.

Near the end of last month, Pharmasset and partner Bukwang Pharm. Co. Ltd., of Seoul, South Korea (from which Pharmasset licensed clevudine), said one-year treatment with clevudine demonstrated in a Korean Phase III trial significant viral suppression and biochemical improvement. At 48 weeks, the percentage of patients with undetectable virus and the percentage of those with normal ALT levels compared favorably to existing HBV therapies, Pharmasset said.

The company, which hopes to trade on Nasdaq under the symbol "VRUS," has further back in its pipeline R-4048, a pro-drug of PSI-6130, another oral cytidine nucleoside analogue, for hepatitis C virus. Clinical work is expected to start with that compound in the first quarter.

At the end of 2005, Pharmasset had about $40 million in cash, cash equivalents and short-term investments.

Underwriters of the proposed IPO are Banc of America Securities LLC and UBS Investment Bank, both of New York, acting as joint book-running managers, and JMP Securities, also of New York serving as co-manager.

Montreal-based Caprion Pharmaceuticals Inc. also has filed a preliminary IPO prospectus with the securities regulatory authorities in each of the provinces of Canada. The company did not say how much money it intends to raise, but sources have estimated the take to be as high as C$35 million (US$31.8 million). Eighty percent of proceeds would go for clinical programs, with the remainder divided equally between preclinical programs and general corporate purposes.

Caprion's lead program is Shigamabs, a dual antibody product being developed for the treatment of Shigatoxin-producing bacterial infections, aimed for a pivotal Phase II/III trial by the first quarter.

If approved, Shigamabs could go up against TMA-15, a single antibody against the Shiga toxin Stx2, in development by Teijin Pharma Ltd., of Tokyo. Caprion pointed out in its prospectus, though, that Teijin's drug targets only Stx2, while Stx1 is "known to be present in greater than 65 percent of all infections in North America. Furthermore, since current diagnostics do not distinguish between Stx1 and Stx2, it is preferable to have a treatment for both."

Animal evidence suggests higher efficacy for Caprion's Stx2 antibody, too, the company said. Another single antibody to Stx2, in development by Tufts University and partnered with Cumberland, R.I.-based Collegium Pharmaceuticals Inc., has yet to enter clinical trials.

The underwriting syndicate for Caprion's IPO is being led by GMP Securities LP and Orion Securities Inc., both of Toronto, and includes Canaccord Capital Corp., of Vancouver, British Columbia; TD Securities Inc., of Toronto; and Versant Partners Inc., with offices in Toronto and Montreal.