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With an ultrasound imaging agent in Phase III, Acusphere Inc. became the first kernel of corn to pop in the IPO pan, raising $52.5 million by pricing its 3.75 million shares at $14 - the mid-point of its targeted $13 to $15 range.

Given the parade of biotechnology firms lately to file for IPOs, market watchers might be wondering if they'll end up with an entire bowl. Jason Zhang, analyst with the Independent Research Group, a division of www.TheStreet.com, doubts that.

Zhang, who does not cover Watertown, Mass.-based Acusphere, called the firm's IPO "pretty brave, but diagnostic imaging is a different business. The buy side is not all that enthusiastic about IPOs" of the more traditional kind yet, he said.

Acusphere began trading Wednesday on Nasdaq under the symbol "ACUS," closing at $14.03.

Although Acusphere is in a quiet period mandated by the SEC, John Thero, chief financial officer, was able to say that "a number of investors went out of their way to say how pleased they were to say the life sciences IPOs are back."

He noted Acusphere's lead product, AI-700, is "regulated as a drug by the FDA and injected into the body like a drug." What's more, it is not the company's only candidate.

"We were very happy with the level of attention we received in the road-show process," Thero told BioWorld Today.

Acusphere disclosed in its prospectus that proceeds from the offering - which gives the firm about 14.3 million shares outstanding - will finance efforts that include ongoing Phase III work with AI-700, an ultrasound contrast agent for myocardial perfusion imaging.

Myocardial perfusion, or blood flow to the heart, is a marker for coronary artery disease. No ultrasound agent is available now, and the standard evaluator for myocardial perfusion is the costly, time-consuming nuclear stress test, which entails radiation.

AI-700, made of hollow microparticles containing gas that reflects ultrasound, is aimed at a potential $1.9 billion market in myocardial perfusion and might be used to trace abnormal blood flow in conditions such as coronary artery disease, cancer and disorders of renal artery disease and the peripheral vascular system, the prospectus said.

Incorporated in July 1993 as Polymers for Medicine Inc., the company - which develops new drugs and new formulations of existing drugs using porous microparticles - changed its name in March 1994. It has a cumulative net loss of $103.2 million from inception through June 30 of this year, including $64.6 million spent on research and development during the period.

Phase III trials with AI-700 began earlier this year, and in April the company raised $20 million in its eighth round of financing. (See BioWorld Today, April 22, 2003.)

Farther back in the pipeline are AI-850 and AI-128. The first, a formulation of the cancer drug paclitaxel, was devised using Acusphere's porous microparticle hydrophobic drug delivery system, which converts drugs with poor water solubility into tiny drug microparticles embedded in a water-soluble, sponge-like matrix. The idea is to enhance tolerability. A Phase I dose-escalation study with AI-850 is expected to finish next year.

AI-128 is an inhaled, sustained-release asthma formulation developed in a joint venture with Dublin, Ireland-based Elan Corp. plc. However, that venture was terminated in October in a cash-free transaction triggered by Elan's restructuring. Acusphere got all the intellectual property and development rights to product candidates in the joint venture's pipeline, including AI-128, for which it agreed to pay Elan royalties if revenues are realized. The Phase I study with AI-128 was completed in 2002.

Acusphere said in the prospectus it expects development costs for AI-850 and AI-128 to drop "until we are prepared to commence further preclinical and clinical testing using our own resources or through strategic collaborations."

Meanwhile, Zhang told BioWorld Today, don't expect an avalanche of IPO pricings.

"Will it be like what happened in 2000? No," he said. "Investors are selective today. A few will do well, but a lot will have to go back to venture capital [funds] for more money."

Even in Acusphere's case, he said, "the stock's been trading higher, but if you compare it to the open, it's down," although Zhang conceded that "might have something to do with the overall market today." Acusphere's stock rose as high $16.25 Wednesday.

"Very few companies [waiting to price an IPO] can compare to the already-listed stocks, where you can still find some good bargains," Zhang said.

Acusphere filed for the IPO July 1, having withdrawn an earlier bid at the end of 2001.

In the priced IPO, Acusphere has granted underwriters an option for another 562,500 shares of common stock to cover overallotments. The lead manager of the offering is SG Cowen Securities Corp., of New York. Co-managers are Thomas Weisel Partners LLC, of San Francisco; U.S. Bancorp Piper Jaffray Inc., of New York; and Friedman, Billings, Ramsey & Co., of Arlington, Va.

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