After burning up $349M, CymaBay aims for Nasdaq as IPOs get shaky

Three years ago, Sanofi ($SNY) walked away from a $375 million diabetes partnership with Metabolex, which had just salved the wound with a new pact with Johnson & Johnson ($JNJ). Now, operating under a new name--CymaBay--and armed with a fresh $38 million raise from late last year, the small biotech is floating plans for a $30 million IPO, looking to cash in on the lingering biotech boom.

According to its S-1, CymaBay has burned through $349 million since its founding. And it has made gout the prime focus in a lead program for a mid-stage drug headed into a Phase IIb study.

The lead drug, dubbed arhalofenate, is an anti-inflammatory uricosuric therapy designed to reduce the risk of painful gout flareups. The biotech also has MBX-2982 in mid-stage development for Type 2 diabetes, targeting the G protein-coupled receptor 119. And CymaBay got the rights to its third pipeline drug, MBX-8025, which targets deficits in lipid storage, handling and utilization that trigger metabolic disorders, from J&J back in 2006. The biotech forged a $228 million development deal with J&J on diabetes that has yet to pay off on any milestones, according to the S-1. And now it's considering 8025's potential for rare diseases, including homozygous familial hypercholestorolemia.

Just last December, CymaBay--which has a full-time staff of 15 in the San Francisco Bay area augmented with the help of some consultants--said it had raised $33 million through the sale of stock along with $5 million in venture debt from Oxford Finance and Silicon Valley Bank. The other investors weren't named in the release. The refinancing and renaming of the biotech was completed as the company moved to Newark, CA, south of Oakland. 

The company has been helmed by longtime CEO Harold Van Wart, a Roche ($RHHBY) veteran and former academic. Alta BioPharma owns an 11% stake in the company, the same amount held by Versant Ventures.

CymaBay's arrival with a small IPO may test investors' appetite for new biotech offerings at an unsettling moment. Biotech stocks have suffered a serious correction in recent weeks, and there are signs that the larger IPO window may be starting to close on Wall Street. A fund mounted by Renaissance Capital to track the performance of new offerings is down 2% for the year, reflecting a major drop.

"The sound of that drop is the sound of the I.P.O. window starting to close," Kathleen Smith, a principal of Renaissance Capital, told The New York Times. "It's not going to close all the way, but it's going to get more selective."

- here's the S-1
- here's the New York Times story on the IPO market