Faded star at Pfizer leads to discounted $68M IPO for Durata

The long and winding road followed by the antibiotic dalbavancin has taken yet another disappointing twist. Once touted by Pfizer ($PFE) as a top program, only to be thrown back four years ago by regulators who were unconvinced by the data offered for its support, it was sold off and became the big product at Durata Therapeutics. But the biotech was unable to spur much excitement about its prospects and was forced to price its IPO this week ($DRTX) at a significant discount to its proposed range.

Durata wanted to raise $82 million, proposing to sell 6.3 million shares at $11 to $13 a share. It settled for $68 million after agreeing to sell 7.5 million shares at $9. With only a few exceptions, that same experience has been shared by most of the biotechs which have gone public since 2007.

Pfizer picked up dalbavancin back in 2005, when it paid the princely sum of $1.9 billion for Vicuron Pharmaceuticals. At the time, the antibiotic was considered one of the crown jewels in the buyout, but within a few years, its value had been largely extinguished at a time Pfizer was being blasted for squandering cash while producing little successful work in R&D. Pfizer earned three CRLs for the program between 2005 and 2007.

Durata was set up in 2009 and acquired dalbavancin from Pfizer, buying Vicuron shares from Pfizer for only $10 million. Later, when it became apparent that Durata would need more than one new Phase III study to gain approvals, Pfizer agreed to fork over $6 million of that. And Durata will owe Pfizer a $25 million milestone--which can be delayed 5 years--if they get a green light and start selling it in Europe and the U.S.

Durata says now that successful results for its two studies will set the stage for new drug applications in the U.S. and Europe in 2013. Bank of America, Merrill Lynch and Credit Suisse acted as lead managers on the IPO.

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