The industry increased its number of publicly traded companies Thursday as Pharmion Corp. and NitroMed Inc. priced their initial public offerings.
The former raised $84 million after selling 6 million shares at $14 apiece; the latter raised $66 million through the sale of the same amount of shares at $11 each. However, their first trading day differed.
Boulder, Colo.-based Pharmion (NASDAQ:PHRM) closed unchanged in its first day of trading, while shares of Bedford, Mass.-based NitroMed (NASDAQ:NTMD) lost 15.5 percent of their value, or $1.71, to close at $9.29. Both companies priced at the low end of their forecasted range.
But private company analyst Corey Lavinsky, president of Venice, Calif.-based Growthink Research, said the companies seem to exhibit the hallmarks of a positive investment going forward.
"Both Pharmion and NitroMed are backed by leading venture capital firms and have strong product candidates, management teams, and boards of directors," he told BioWorld Today. "They both appear to have all the elements necessary to be successful."
Upon first filing, Pharmion anticipated raising $86.3 million and NitroMed projected it would raise $100 million. They both sold the expected amount of shares scheduled for offering. (See BioWorld Today, Aug. 22, 2003.)
They priced a week after three other industry IPOs, while a number of other companies have registered as well and remain in the queue.
Pharmion said it would use the proceeds to further develop and commercialize its existing product portfolio, which includes four in-licensed products. The company also plans to use the funding to expand its sales and marketing organization and to acquire additional late-stage or approved products.
Among its U.S. offerings, Pharmion sells a low-molecular-weight heparin for deep-vein thrombosis called Innohep (tinzaparin). The rights were acquired from LEO Pharma A/S, of Ballerup, Denmark, which markets the drug in Europe and several other countries.
Beyond the U.S. market, Pharmion has rights to Thalidomide Pharmion 50 mg (thalidomide), for relapsed and refractory multiple myeloma, in all countries outside of North America and certain Asian markets. The company gained the license from Celgene Corp., of Warren, N.J., and Penn T Ltd. (See BioWorld Today, Nov. 20, 2001.)
Pharmion sells Refludan (lepirudin), an antithrombin agent for heparin-induced thrombocytopenia, in all countries outside of the U.S. and Canada. The company obtained the rights from Schering AG, of Berlin.
Pharmion also features a late-stage developmental product, Vidaza (azacitidine), for myelodysplastic syndromes (MDS). The company is beginning a confirmatory study of the drug, which was obtained from a unit of New York-based Pfizer Inc., with eventual plans to file for marketing approval in the U.S., Europe and Australia.
Concurrent with its offering, Pharmion extended a 900,000-share overallotment option to its syndicate of underwriters, a group led by book-runner Morgan Stanley, of New York. Others in the underwriting team include JP Morgan Securities Inc., also of New York and the offering's co-lead manager, as well as co-managers Pacific Growth Equities Inc., of San Francisco, and U.S. Bancorp Piper Jaffray, of Minneapolis.
NitroMed said it would use its funds for commercialization activities related to its lead product, BiDil, as well as for research and development, working capital and other general corporate purposes.
BiDil, an orally administered nitric oxide-enhancing medicine to treat African-Americans diagnosed with heart failure, remains in a pivotal trial. The company said it expects results early next year.
Other pipeline programs include a pair of collaborative efforts. NitroMed is developing nitric oxide-enhancing COX-2 inhibitors in partnership with Merck & Co. Inc., of Whitehouse Station, N.J., and is developing nitric oxide stents with Boston Scientific Corp., of Natick, Mass.
The company also granted a 900,000-share overallotment option to its underwriting group, which included joint book-running managers Deutsche Bank Securities Inc., of New York, and JP Morgan, along with co-manager Pacific Growth.
Lavinsky added that the recent up-tick in IPOs would bode well for other young biotech companies not yet poised for public offerings.
"The increased activity in the IPO market is very exciting to both venture capitalists and private companies seeking to raise funding," he said. "The slowdown of the market over the past few years has, for practical purposes, given investors one less way to cash in on their investments. It has also been one more reason not to invest in a promising company. With an IPO exit strategy now intact, we should see an increase in venture capital activity."
He argued that the opening of the IPO market has contributed to increased private investments, as evidenced by $1.3 billion in venture capital raised by privately held health care companies during the third quarter, a $210 million increase from the preceding quarter.
Among companies still waiting to go public are Dynavax Technologies Corp., of Berkeley, Calif.; Renovis Inc., of South San Francisco; GTx Inc., of Memphis, Tenn.; Xcyte Therapies Inc., of Seattle; Acorda Therapeutics Inc., of Hawthorne, N.Y.; Marshall Edwards Inc., the oncology subsidiary of Sydney, Australia-based Novogen Ltd.; Eyetech Pharmaceuticals Inc., of New York; Tercica Inc., of South San Francisco; and TolerRx Inc., of Cambridge, Mass.
Including Pharmion and NitroMed, eight biotech IPOs have priced in the past six weeks. Last week, Carlsbad, Calif.-based CancerVax Corp. raised $72 million, Denver-based Myogen Inc. raised $70 million, and Redwood City, Calif.-based Genitope Corp. raised $33.3 million. (See BioWorld Today, Oct. 31, 2003.)
One company, Hopkinton, Mass.-based Aderis Pharmaceuticals Inc., postponed its initial public offering due to market conditions. (See BioWorld Today, Oct. 30, 2003.)