West Coast Editor

Altus Pharmaceuticals Inc. is shooting for as much as $115 million in an initial public offering, though the number of shares and price per share were not disclosed in the company's SEC filing.

The Cambridge, Mass.-based company plans to use the IPO proceeds to develop the lead product ALTU-135, including a Phase III trial for the solid form of the drug for cystic fibrosis patients who suffer malabsorption due to exocrine pancreatic insufficiency, a Phase II trial for the liquid form of the compound and related toxicology studies, along with manufacturing and materials costs.

In its prospectus, Altus noted that existing pancreatic enzyme-replacement products have been marketed since before the [federal Food, Drug and Cosmetic Act] was enacted in 1938 and are not marketed under new drug applications approved by the FDA.

"In April 2004, the FDA issued a notice that manufacturers of existing pancreatic enzyme-replacement products will be subject to regulatory action if they do not obtain approved NDAs for those products by April 28, 2008," Altus pointed out. "We believe that some of the manufacturers of these products may not be able to satisfy the FDA's requirements for NDAs for these products by that deadline."

Pig-derived products are marketed by companies including Axcan Pharma Inc., of Mt. Saint-Hilaire, Quebec; Johnson & Johnson, of New Brunswick, N.J.; and Solvay Pharmaceuticals Inc., of Marietta, Ga.; as well as generic drug manufacturers such as KV Pharmaceutical Inc., of St. Louis, and Impax Laboratories Inc., of Hayward, Calif.

Others working to develop new pancreatic enzyme replacements include Biovitrum AB, of Stockholm, Sweden, which acquired a recombinant bile salt stimulated lipase for that use in its August takeover of Arexis AB, of Gothenburg, Sweden. The compound has reached Phase IIb development.

Altus' IPO proceeds also would fund work with the growth hormone ALTU-238, including a Phase III trial in adults and a Phase II/III trial in children, as well as preclinical research and development activities for ALTU-237 for hyperoxaluria (overproduction of oxalic acid, which can lead to kidney stones), ALTU-236 for phenylketonuria, and other compounds.

In September, Altus disclosed positive results from its Phase I trial with ALTU-238, a long-acting crystalline formulation of recombinant human growth hormone that, like others in the pipeline, uses the firm's proprietary protein crystallization and formulation technology.

Specifically, the drug showed no burse release and significantly extended the time to reach maximum serum growth hormone concentration. Increases in serum IGF-1 levels with a single injection of ALTU-238 were comparable to those achieved in subjects receiving the same amount of growth hormone with seven daily injections of Nutropin AQ (somatropin), from South San Francisco-based Genentech Inc. A Phase II trial is under way.

Merrill Lynch & Co., Morgan Stanley and SG Cowen & Co., all of New York, are underwriting the IPO. As of June 30, Altus had about $40.7 million in cash and cash equivalents, and short-term investments, with a net loss for the period of about $14.9 million.