As the first biotech initial public offering to price this year, Altus Pharmaceuticals Inc. raised $105 million to fund clinical work, including an upcoming Phase III study of its lead product, ALTU-135, for exocrine pancreatic insufficiency.
The 7 million shares were priced at $15 each, falling in line with the $14 to $16 range set earlier this month, and bucking the recent trend of lower-than-expected IPOs. The company also granted underwriters a 30-day overallotment option of about 1.1 million shares, which could bring in an additional $15.75 million. If the overallotment is exercised in full, Altus could reap net proceeds of $110 million.
That figure beats all but two of the 33 IPOs that priced during 2005, according to data from BioWorld Snapshots. Coley Pharmaceutical Group, of Wellesley, Mass., brought in $110.4 million from the sale of 6.9 million shares at $16 in August, and San Diego-based MediciNova Inc., which went public in Japan in February, sold 31.6 million shares at $3.88 apiece to raise $122.5 million. (See BioWorld Today, Feb. 10, 2005, and Aug. 11, 2005.)
News for Altus got even better on its first day of trading. The company's shares (NASDAQ:ALTU) had momentum on Thursday and closed at $16.82, up 12 percent.
The Cambridge, Mass.-based company could not comment due to quiet-period rules, but said in its prospectus that about $37 million of the proceeds would be used for development of ALTU-135, an orphan and fast-track drug designed as an oral enzyme-replacement therapy for the treatment of malabsorption due to exocrine pancreatic insufficiency. A Phase III trial in 150 cystic fibrosis patients is expected to begin during the second half of the year, with testing expected to be completed in the first half of 2007.
Existing therapies for exocrine pancreatic insufficiency, a condition that can result from several diseases, such as CF, chronic pancreatitis and pancreatic cancer, usually require patients to take several pills per meal, have low stability in the gastrointestinal tract and have a short shelf life. Those therapies, derived from pig pancreas, have been on the market since before the federal Food, Drug and Cosmetic Act was enacted in 1938, but a 2004 FDA directive is requiring makers of those products - which include New Brunswick, N.J.-based Johnson & Johnson, and generic drug-maker Impax Laboratories Inc., of Hayward, Calif. - to obtain an approved new drug application by April 2008.
ALTU-135, however, was designed using Altus' protein crystallization technology, which allows a formulation with higher concentration to cut down on the number of pills. The company said patients would have to take an average of one capsule per meal. ALTU-135 also has demonstrated greater stability in the gastrointestinal tract and has a longer shelf life.
The product is being developed through a strategic alliance with Cystic Fibrosis Foundation Therapeutics Inc., of Bethesda, Md., which agreed to provide Altus with up to $25 million in milestones. As of Sept. 30, Altus had received a total of $15.9 million from the collaboration. In addition to its capsule formulation of ALTU-135, the company is developing a liquid formulation aimed at children and adults who have difficulties swallowing pills.
Altus also has a Phase II-stage growth hormone drug, ALTU-238, designed as a weekly injection to treat growth hormone deficiency and hGH-related disorders. In a Phase I trial completed in June, the drug demonstrated that it could release hGH into a patient's bloodstream over a period of time without altering the hGH molecule. A recently initiated Phase II study is evaluating ALTU-238 in adults with growth hormone deficiency. Results are expected in the first half of this year.
In preclinical development, the company has ALTU-237 - an oral, crystalline formulation of an oxalate-degrading enzyme to treat primary hyperoxaluria and enteric hyperoxaluria. The company anticipates filing an investigational new drug application in early 2007.
Altus, which was formed as a wholly owned subsidiary of Cambridge, Mass.-based Vertex Pharmaceuticals Inc. in 1992, was reorganized as an independent company in 1999. Since then, the company has recorded cumulative net losses of $112.1 million. For the first nine months of 2005, Altus posted a net loss of $19.1 million, with a cash position of $32 million.
Prior to the public offering, Altus' largest shareholders were Warburg Pincus Private Equity VIII LP, of New York, which held 4.3 million shares, or 29.3 percent of the company; entities associated with U.S. Venture Partners, of Menlo Park, Calif., which had 3.4 million shares, or 23.5 percent; Vertex Pharmaceuticals, which had 2.8 million shares, or 17.4 percent; and entities associated with Nomura International plc, of London, which had 2 million shares, or 13.8 percent.
After the offering, the company will have about 21 million shares outstanding.