BioWorld International Correspondent

FRANKFURT, Germany - Initial public offerings for German biotechnology companies got off to a quick start in 2005 this week, with Paion AG, of Aachen, announcing its intention to tap the capital markets, just three weeks into the year.

The company plans to list on the Frankfurt exchange, raising up to €70 million (US$90.7 million) in its IPO, with a greenshoe option that could raise up to €10.5 million.

Paion's lead product, desmoteplase, is a stroke treatment derived from a protein found in the saliva of vampire bats. The protein prevents the formation of blood clots, and the drug is designed to help restore blood flow to the brain in patients afflicted with ischemic stroke.

Treatment for stroke must begin within three hours to have an effect. Paion says that desmoteplase is effective when given to patients up to nine hours after a stroke. That is important because strokes, unlike heart attacks, are not as immediately apparent to a patient. At present, the time window for effective treatment might have closed before a patient arrives at a hospital and a proper diagnosis is made.

Desmoteplase originally was in-licensed from Schering AG, and Paion has reached an agreement with Forest Laboratories Inc. that will cover much of the remaining development in stroke.

In October, Paion completed a Phase II trial for desmoteplase, and the results will be presented in the first week of February to the American Stroke Association. "We showed good results up to nine hours after the start of a stroke," said Wolfgang Soehngen, CEO of Paion. He declined to give more specific details from the study, citing the upcoming presentation.

The meeting will come in the middle of Paion's book-building period for its IPO, which runs from Jan. 25-Feb. 7. The company plans to sell up to 5 million shares, with a list price between €11 and €14. The first day of trading would be Feb. 10. Soehngen said that waiting to begin the IPO until after the results were presented would have meant a three- or four-month delay.

A Phase III trial in stroke will begin this quarter, and Paion hopes to be able to file a new drug application for the compound in 2007. It has been awarded fast-track status from the FDA.

"One of desmoteplase's advantages is that it is not neurotoxic, unlike many other compounds being investigated for their effectiveness against stroke," said Mariola Soehngen, Paion's chief medical officer.

Desmoteplase also is in Phase II trials for use against pulmonary embolism. The license to Forest includes that indication, as well, and Paion said that it could be approved as early as 2008.

"The cooperation with Forest can bring in up to $69.5 million in milestone payments, of which [Paion] received $22 million in 2004," said Bernhard Hofer, Paion's chief financial officer.

Hofer and Soehngen declined to be specific about when Paion would reach the break-even point, but said it was expected after introduction of the product. They also pointed to analyst reports that suggested peak annual sales of the drug could be in the range of $200 million to $400 million a year.

Money raised in the IPO would be used primarily to develop other compounds in the company's pipeline, including enecadin, a neuroprotective substance also used in treating acute ischemic stroke. The natrium- and calcium-channel blocker was in-licensed from Nippon Shinyaku. Paion expects to begin a Phase II study in the second half of 2005. The company also sees potential for combination therapy with desmoteplase.

Solulin, an anti-thrombotic compound, is expected to enter Phase I trials in the second half of the year.

Paion also is negotiating with Schering for complete ownership of the intellectual property associated with desmoteplase.

"Currently, we have just a license, but we would prefer complete ownership," Soehngen said. "There have been positive signals from Schering, but we can't estimate the costs this would entail right now."

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