Hyperion Thera Goes Public as Investors Warm Up to Biotech

July 27, 2012 - Dow Jones VentureWire

Hyperion Therapeutics Inc . became the latest in a string of venture-backed biotechnology companies to list on Nasdaq recently, going public on Thursday at $10 and closing up 1.1% at $10.11.

Hyperion, which is developing a drug called Ravicti to treat urea-cycle disorders and hepatic encephalopathy, sold five million shares. Like several other biotechs going public this year, Hyperion lowered its initial offering price and went public at $10, less than its previously announced $11 to $13 range.

Last week venture-backed antibiotics company Durata Therapeutics Inc . went public, while Tesaro Inc., a venture-funded cancer-drug developer, got out in late June. Tesaro went public at $13.50, within the range it sought, and closed at $13.61 Thursday. Durata went public at $9, below its previous $11 to $13 range, and now trades at $8.70.

That these companies have been able to list suggests to some that the biotech IPO market is recovering after a few lean years.

Nineteen U.S. biotechs went public in 2007, according to VentureSource, which is owned by Dow Jones & Co ., publisher of VentureWire.

Last year, eight went public, down from 13 in 2010, the data show. Hyperion's offering is the eighth venture-backed biotech IPO this year. A few other companies are in registration, including Kythera Biopharmaceuticals Inc . and Rib-X Pharmaceuticals Inc .

That's not to say that all biotechs are finding the climate to their liking. Some have pulled back from plans to go public, including Argos Therapeutics Inc., which withdrew its registration in March and then raised $25 million from insiders in April.

But with the U.S. regulatory climate improving, significant need for new therapies and good margins on existing products, the fundamentals of the biotech industry are generally strong, said Jim Healy , general partner of Sofinnova Ventures , which has backed Hyperion, Durata and Tesaro.

When taking a biotech public, it helps if it's poised to reach an important milestone within the next several months, Dr. Healy said.

For example, Hyperion filed for U.S. approval of Ravicti for the chronic management of urea-cycle disorders in patients aged 6 and above in December, according to a regulatory filing. It expects the Food and Drug Administration to make a decision by Oct. 23, and it expects to launch Ravicti in the first half of 2013, it said in the filing.

Hyperion's top venture backers include Sofinnova and New Enterprise Associates , which each held 21.4% of the company before the IPO, according to a regulatory filing. Highland Capital Partners held 18.5% before the IPO, Bay City Capital17.6% and Panorama Capital 11.7%.