West Coast Editor

With its oral antibiotic Orapem accepted for review by the FDA in February, Replidyne Inc. filed for an initial public offering that would raise up to $100 million - though the company did not specify the targeted number of shares or price per share, and noted that the amount was specified solely to calculate the IPO's registration fee.

Replidyne, of Louisville, Colo., partnered Orapem with Forest Laboratories Inc., of New York, in February. Under the terms, Replidyne got an up-front payment of $50 million in February plus then-undisclosed milestone payments tied to development and commercial achievements, as well as royalties. (See BioWorld Today, Jan. 10, 2006.)

In the IPO prospectus, Replidyne disclosed that Forest paid the $50 million in February, and a $10 million milestone payment in March. Another $190 million more is possible in development and commercial milestones for both adult and pediatric indications, which would be reduced by $25 million if the firm exercises its option in the Forest deal to directly market and promote Orapem to pediatricians on an exclusive basis, as Replidyne plans to do, according to the prospectus.

"These milestone payments are largely dependent on the acceptance of additional NDA filings, FDA approvals and achieving certain sales levels of adult and pediatric formulations of Orapem," the prospectus noted.

Replidyne and Forest are seeking approval of Orapem (faropenem medoxomil) for use against acute bacterial sinusitis, community-acquired pneumonia, acute exacerbations of chronic bronchitis and uncomplicated skin infections.

"Although the efficacy data for acute exacerbation of chronic bronchitis and uncomplicated skin and skin structure infections may be adequate for FDA approval," according to the prospectus, "we expect that the FDA will likely require additional clinical trials, including a placebo-controlled trial in the case of acute exacerbation of chronic bronchitis, before it will approve these indications."

Orapem is a member of the penem family within the beta-lactam class of antibiotics, often recommended as first-line therapy in many respiratory and skin infections, and Orapem would be the first orally available penem in the U.S., if approved. Replidyne's NDA is based on 11 Phase III studies, with safety data for more than 5,000 patients.

The company also expects to file an investigational new drug application for its second product candidate, REP8839, this year. Targeting skin and wound infections topically, the drug also goes after Staphylococcus aureus in hospital settings and prevention of methicillin-resistant S. aureus in hospital settings.

IMS Health estimated the annual worldwide market for antibiotics was $25 billion in 2005, including $8.5 billion of U.S. sales for oral antibiotics, which consists of $7 billion in the adult market and $1.5 billion in the pediatric market. IMS Health pegged beta-lactams at 42.7 percent of the oral antibiotic market last year.

Proceeds from the IPO will go toward preparing for Orapem's launch, paying milestones to licensors, funding clinical research and for general corporate purposes.

As of the end of last year, Replidyne had about $59.4 million in cash, cash equivalents and short-term investments.

Merrill Lynch & Co. and Morgan Stanley, both of New York, are acting as joint book-running managers for the offering, and Cowen & Co. LLC, also of New York, and Pacific Growth Equities LLC, of San Francisco, are serving as co-managers.