Hyperion takes standard biotech haircut on $50M IPO

South San Francisco-based Hyperion Therapeutics has joined the roster of biotechs which pushed ahead on an IPO only to fall short of its projected range. The orphan drug developer priced 5 million shares at $10 this morning, taking a haircut on the $11 to $13 range while raising $50 million.

Hyperion filed plans to sell shares in the company back in April, months after the FDA accepted its NDA for Ravicti, a new treatment designed to lower the level of ammonia in the blood to treat urea cycle disorders (UCD) and hepatic encephalopathy. Ravicti has already won orphan drug status in its quest for recognition in the UCD field, a condition that afflicts one in every 10,000 newborns. Hyperion has an October 23rd PDUFA date with the FDA and says it will start marketing the treatment in the first half of 2013--if the approval comes through. 

An approval for that condition will clear the path for its clinical development of the treatment for hepatic encephalopathy (HE). A month ago Hyperion announced that its Phase II study of glycerol phenylbutyrate for HE met its primary endpoint: "the proportion of patients experiencing at least one HE event was significantly lower on glycerol phenylbutyrate versus placebo." 

That kind of resume though rarely wins tremendous enthusiasm these days from gun-shy investors who have developed a bad habit for steering clear of high-risk companies with a long tradition of losing money--the classic biotech profile. That's why biotech IPOs--particularly successful ones--are a rare sight on Wall Street.  

Bucking the trend this year has been Tesaro ($TSRO), a cancer drug company run by a crew of experienced professionals, and Christoph Westphal's Verastem ($VSTM). Both stocks are trading over their initial price this morning.

According to Renaissance Capital, company "insiders" were prepared to buy up almost half of the offering--another regular feature of the biotech IPO. Venture backers include Sofinnova, NEA and Highland Capital Partner.

- here's the press release
- get the story from the San Jose Business Journal