Zealand Pharma tests chilly IPO waters

A Danish newspaper is reporting that Zealand Pharma--the biotech responsible for initially developing the late-stage diabetes drug lixisenatide and then licensing it to Sanofi--is poised to launch an IPO that would value the company up to $591 million.

Sanofi is pursuing Phase III studies on the drug both as a monotherapy and in combination with Lantus, its blockbuster Type 2 diabetes drug. The Big Pharma company announced positive top-line results of the Phase III GETGOAL-L-ASIA trial of lixisenatide in combination with Lantus at the end of September.

The bulk of the company's value is wrapped around the fate of the lixisenatide program, one of the new GLP-1 class that spurs the release of insulin when needed. The drug could go on to compete with the recently approved Victoza as well as Byetta. But as Eli Lilly, Amylin and Alkermes learned this week with the fresh delay of Bydureon, there are no guarantees of success in this field.

Quoting analysts, the business daily Borsen reported that "in our model, the combination product lixisenatide/Lantus accounts for 56 percent of the value of Zealand Pharma," Two big banks are testing the reactions of some big investors as they decide whether Zealand Pharma should go ahead and brave a very difficult IPO market.

- here's the story from Reuters

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