West Coast Editor

The industry's fourth initial public offering to price this year landed just below the range hoped for, as the implantable-drug firm Valera Pharmaceuticals Inc. sold 3.75 million shares at $9 each, raising $33.75 million.

Valera (NASDAQ:VLRX), which had targeted a price of $10 to $12, closed Thursday at $9.93, up 93 cents, or 10.3 percent. The company originally filed its S-1 in March 2005, seeking $74.75 million.

However, in the preliminary IPO prospectus filed Jan. 30, Cranbury, N.J.-based Valera estimated net proceeds of about $36.3 million, assuming the $11 midpoint of the sought range. About $5 million of the take was earmarked for research and development, including Phase III trials with VP002, the company's Histrelin CPP implant, for which Valera plans to submit a new drug application in the second quarter.

In September 2004, just after raising $11.5 million in its third round of financing, Valera (once known as Hydro Med Sciences Inc.) started enrollment of a pivotal Phase III trial of VP002, which is a one-year implant for hormonal treatment of central precocious puberty, an affliction characterized by the early onset of sexual development in pre-adolescents.

VP002 uses the company's Hydron drug delivery platform to provide the continuous administration of a controlled dose of histrelin, a synthetic non-peptide agonist of the naturally occurring gonadotropin-releasing hormone. (See BioWorld Today, Aug. 24, 2004.)

R&D spending of IPO funds also will finance clinical trials for VP006, a rapid dissolve peptide to treat nocturnal enuresis, for which Valera plans to submit an NDA in 2006, as well as Phase IIb trials for VP003, the firm's octreotide implant for acromegaly, and Phase I/II trials for VP004, the naltrexone implant for addiction disorders.

Taking aim at urological and endocrine conditions, the specialty pharma firm's first product, Vantas, was approved by the FDA in October 2004. Vantas is a 12-month implant for the palliative treatment of advanced prostate cancer. Vantas slows prostate tumor growth by delivering histrelin, which also is a luteinizing hormone-releasing hormone agonist, or LHRH agonist.

About $3 million of the IPO proceeds will be used to expand sales and marketing, about $5.5 million to expand manufacturing, and about $1.5 million to repay credit. The rest is going for general corporate purposes, including acquisitions.

Valera has granted the underwriters a 30-day option to buy up to 562,500 shares at the IPO price. UBS Securities LLC and Banc of America Securities LLC, both of New York, served as joint book-running managers of the offering. First Albany Capital Inc. and Fortis Securities LLC, also of New York, served as co-managers.

Earlier this week, San Diego-based SGX Pharmaceuticals Inc. priced a $24 million IPO, and Iomai Corp., of Gaithersburg, Md., priced one at $35 million.

Like Valera, both priced lower than first hoped ($80.5 million and $86.3 million, respectively), though last week's $105 million IPO by Cambridge, Mass.-based Altus Pharmaceuticals Inc. rang the bell. Altus sold 7 million shares at $15 each, after setting a range of $14 to $16. (See BioWorld Today, Jan. 27, 2006, and Feb. 2, 2006.)

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