Earning the honor of first biotechnology company to conduct an IPO this year, Eyetech Pharmaceuticals Inc. raised $136.5 million and watched its stock skyrocket on Friday, trading up 54.3 percent from its opening price.
The New York-based company offered 6.5 million shares at $21 per share, above its expected price range of $18 to $20 per share. The stock, which was listed on the Nasdaq National Market under the ticker symbol "EYET," closed Friday at $32.40.
"This is the first biotech IPO in a long time with true blockbuster potential," stated a report by Greenwich, Conn.-based Renaissance Capital.
The company's sole product, Macugen, targets a market of 1.6 million Americans who have age-related macular degeneration (AMD). If approved, it could earn more than $1 billion in annual sales and would be the only approved product for all three sub-forms of wet AMD, Renaissance Capital said. The drug's main competitor would be Visudyne, made by Vancouver, British Columbia-based QLT Inc. Visudyne was approved in 2000 to treat the classic form of wet AMD.
Macugen (pegaptanib sodium), an antivascular endothelial growth factor aptamer, is being developed not only for the wet form of AMD, but also for the treatment of diabetic macular edema (DME), both of which can lead to severe vision loss and blindness. Macugen is a fast-track product for both indications. Eyetech plans to file an NDA for the 0.3-mg dose of Macugen to treat wet AMD in the third quarter.
The Eyetech IPO might be a huge jump-start for the biotech industry, which has hit financing roadblocks over the last three years. And IPOs such as Eyetech's spark investor interest for private companies as well.
Corey Lavinsky, CEO of Growthink Research in Venice, Calif., said the pick-up in IPOs late last year helped private companies gain momentum.
"This was very good for the venture capital industry," he told BioWorld Today, "in that when they want to make an investment in a company, one of their preferred methods of exiting is through an IPO."
There were no U.S. IPOs before September of last year, and only nine total.
"Typically, what happens for a biotech company is they'll either merge with a bigger company, get acquired or go public," Lavinsky said. "Over the past year going public hasn't been very much of an option."
With the pricing of its IPO, Eyetech granted the underwriters an overallotment option for 975,000 shares. Co-lead managers were New York-based Merrill Lynch & Co. and Morgan Stanley, but the underwriters also included Bear, Stearns & Co. Inc. and Credit Suisse First Boston, both also of New York.
Eyetech has nothing else in its pipeline and expects all near-term revenues to come from the successful commercialization of Macugen.
The company conducted two Phase II/III trials of Macugen, one in 578 wet AMD patients and another in 612 patients. The drug also is in a Phase II trial for DME. The primary efficacy endpoint in the AMD trials was the proportion of patients losing less than 15 letters, or three lines, of visual acuity from baseline after 54 weeks. The drug reached statistical significance in both trials. It also showed a consistent treatment effect in all three subtypes of wet AMD.
In December 2002, Eyetech signed a $750 million partnership for Macugen with New York-based Pfizer Inc. Pfizer and Eyetech would co-market Macugen in the U.S. and share in all profits and losses. Pfizer has exclusive rights to develop and commercialize Macugen outside of the U.S. (See BioWorld Today, Dec. 19, 2002.)
Macugen targets abnormal blood-vessel growth and blood-vessel leakage associated with elevated levels of the protein vascular endothelial growth factor (VEGF) in the eye. The company said Macugen binds to VEGF and prevents VEGF from binding to its natural receptor.
AMD cases include three subtypes, predominantly classic, minimally classic and occult. It is the leading cause of severe vision loss and blindness in patients over the age of 50. Eyetech expects the market to grow as the baby boom population ages and life expectancies increase.
DME is the leading cause of blindness in adults. About 500,000 people in the U.S. suffer from DME.
Eyetech licensed Macugen in 2000 from Gilead Sciences Inc., of Foster City, Calif., and its subsidiary NeXstar Pharmaceuticals Inc. in a deal valued at $32 million. (See BioWorld Today, April 7, 2000.)
Eyetech has not been profitable since inception. For the first nine months of 2003, it reported a net loss of $29.4 million and it has an accumulated deficit of $123.8 million.
"While it has all of the risks of an unseasoned biotech, Eyetech may be the first hot biotech in three years," the Renaissance Capital report said, "and the shares are being offered to investors at a bargain price."