Life Sciences Companies Continue IPO Streak

This article published with permission from The Burrill Report.

Nine life sciences companies have made their U.S. market debut in the past two weeks, ranging from digital health plays to biofuels makers, albeit with mixed results. This week’s initial public offerings included renewable fuels and chemical developer Gevo Inc., the tools company Fluidigm Corp., biotech drug developer AcelRx Pharmaceuticals Inc., medical device maker Kips Bay Medical Inc.

Gevo (NASDAQ: GEVO) of Englewood, Colo., was the first to complete its IPO, going public at the top of its target range. The company sold 7.15 million shares at $15 to raise $107 million. Its shares ended the week up 4.3%. In trading Monday, it closed at $17.20.

Next up, Fluidigm (NASDAQ: FLDM) of San Francisco priced at the bottom of its range, at $13.50, and raised $75 million. Its shares ended the week up almost 4%, and closed Monday at $14.40.

Kips Bay Medical (NYSE: KIPS), based in Minneapolis, Minn., also priced at the bottom of its target range, offering just 2.1 million shares to raise $17 million. Shares ended the day down less than 1%, but rebounded Monday to close up 5.5% at $8.37.

AcelRx (NASDAQ: ACRX), the only healthcare biotech in the bunch, had to slash its price to get its deal done. AcelRx had hoped to go public last week but poor market reception delayed its offering. The company had hoped to price between $12 and $14 a share but dropped its price to $5. It raised $40 million to debut on Friday. Its shares ended their first day of trading off 10%, and closed Monday at $4.38.

The Redwood City, Calif.-based company’s lead drug, a treatment for acute and breakthrough pain is currently in mid-stage development. Its poor reception and subsequent performance is indicative of a market that is just not excited by a company that is not a near-term revenue play.

Another biotech that had its debut last week, Pacira Pharmaceuticals Inc. (NADSAQ: PCRX), also had to slash its price in half to go public. The Parsippany, N.J., company also ended the week below its offering price, to close at $7 on Monday.

Endocyte Inc. (NASDAQ: ECYT), the only other biotech to go public in the U.S. so far this year, also struggled to IPO. It had hoped to offer its shares for $13 to $15, but ended up offering them for $6 apiece. However, investors may like its story better. The West Lafayette, Ind., company’s lead drug, an ovarian cancer treatment that is being paired with a companion diagnostic, is ready for late-stage testing. Shares of Endocyte ended the week up almost 19% and closed Monday at $7.23. Burrill & Co., publisher of The Burrill Report, is an investor in Endocyte.

The best performer of the nine, by far is Epocrates Inc. (NASDAQ: EPOC), a digital health company based in San Mateo, Calif., that allows doctors and healthcare professionals to access information about drugs, diseases, insurance, lab data, and patient data from their mobile devices at the point of care. The company offers several fee apps besides its premium products and makes most of its revenue from pharmaceutical companies that want to capture those eyeballs and conduct market research. It went public above its target price and ended its second week of trading 43.7% above its debut price, but closed Monday down a bit at $22.25.

In other market-moving news:

Mannkind Corp. (NASDAQ: MNKD) said it is eliminating 41% of its staff, or 179 employees, following notification from the U.S. Food and Drug Administration that it would not approve the company’s experimental inhaled insulin Afrezza without two additional clinical trials. In a call with analysts, the Valencia, Calif., company said it plans to focus on winning regulatory approval for Afrezza. After the layoffs, Mannkind will have 257 employees. Its shares closed Monday at $3.48.

Orexigen Therapeutics Inc. (NASDAQ: OREX) of San Diego, Calif., said that it has cut about 40% of its staff, or 23 employees, as part of a reorganization following its inability to win FDA approval for its experimental obesity drug Contrave. At the end of January, the FDA said it would not approve Contrave without an additional clinical trial to better establish its safety. “We continue to believe in the potential of Contrave and look forward to discussions with the FDA,” says Mike Narachi, CEO of Orexigen. “Unfortunately, given the near term uncertainty of Contrave approval, we felt it prudent to consolidate and focus our resources. We are deeply grateful for the dedication and tremendous effort provided by all of our colleagues who are impacted by this realignment.” The company said it expects to take a $2.6 million restructuring charge in the first quarter of 2011. It expects to save about $5 million a year because of the job cuts. At the close of trading Monday, its shares were at $3.42.

Pfizer Inc. (NYSE: PFE) will pay $330 million to settle claims relating to its menopause drug Premrpo, Bloomberg reported. The settlement will resolve more than 2,200 lawsuits, which alleged that Wyeth, which Pfizer acquired, had hidden the cancer risks associated with use of the drug. Bloomberg attributed its report to two people familiar with the agreement who were not authorized to speak to the press. A Pfizer spokesman told Bloomberg that the report was not accurate and that the firm does not comment on its litigation strategy. Shares of Pfizer, based in New York, closed Monday at $19.05.

A.P. Pharma said it is awaiting a decision from the Nasdaq Listing and Qualifications Panel on its eligibility for continued listing following a recent meeting with the exchange to discuss efforts to bring the company into compliance with listing requirements. In November, the company received a second letter from Nasdaq notifying it that its stock price was below $1.00, making it subject to delisting. The company said it is actively seeking debt or equity financing to fund its operations. It also said it will meet later this quarter with the FDA about how it could move forward on APF530, its experimental drug to prevent and control nausea and vomiting in patients undergoing cancer treatment. In March 2010, the FDA notified the company it would not approve its application to begin marketing the drug based on current information provided to the agency.

The World Health Organization called for additional research into a possible link between GlaxoSmithKline PLC's (NYSE: GSK) H1N1 flu vaccine Pandemrix and the sleeping disorder narcolepsy, Reuters reported. A WHO advisory panel issued a statement after a study from Finland suggested children given the vaccines were nine times more likely to suffer from narcolepsy, which causes a person to fall asleep suddenly without warning. WHO continues to keeps Pademrix on a list of prequalified vaccines and has made no change to its recommendations on it or other flu vaccines as a result of the study. U.K.-based Glaxo shares closed Monday at $38.19.

Copyright 2011 Burrill & Co. For more life-sciences news and information, visit www.burrillreport.com.