Ophthotech, Foundation Medicine loot booming biotech IPO market for $273M

By John Carroll and Damian Garde

Any jitters about investors' appetite for new biotech IPOs were set aside--at least temporarily--after a trio of companies pushed their way confidently into the market yesterday, raising about $300 million. Two of those companies upsized their offerings and priced shares at well over their range. And the explosion of biotech IPOs this year has now generated close to $3 billion for the industry.

Ophthotech ($OPHT)--which originally set out to raise around $85 million--ended up generating a whopping $167 million on the sale of 7.6 million shares at $22 a pop. That's well over the initial range of $16 to $19 planned for a chunk of 5.6 million shares. Underwriters can add significantly to that sum with the purchase of about 1.2 million shares.

Investors were clearly sold on Ophthotech's story. The New York City-based biotech raised $175 million last spring, with Novo A/S leading a $50 million venture round and inking a $125 million royalty deal on the developer's Phase III-ready drug Fovista, which is designed to treat wet, age-related macular degeneration. The company is run by an experienced team of execs from Eyetech, which was acquired by OSI in 2005.

Foundation Medicine ($FMI)--a 2012 Fierce 15 company--raised $106 million, selling 5.9 million shares at $18. In the end, Cambridge, MA-based Foundation was able to upsize the offering and shoot higher than its $14 to $16 range. Underwriters have an option to buy 883,333 shares at the offering price. This is another example of a Third Rock Ventures portfolio company raising money successfully through an IPO, which can only further help swell its fortune after placing a wide variety of gambles on the biotech front. Agios and bluebird posted two of the most successful IPOs of the year.

After the stock started trading this morning, Foundation's shares rocketed up more than 80%, which will likely trigger fresh speculation that the IPO market for biotech has overheated.

Foundation is gambling on the success of its FoundationOne cancer diagnostic, which launched last year. The diagnostic test is a sequencing-based assay that combs 236 cancer-related genes to match patients with ideal treatments, and while the company hasn't secured CMS reimbursement for the diagnostic, it has grabbed the attention of some headline-worthy drug developers looking to partner up.

San Diego-based Evoke Pharma ($EVOK) pulled in about $25 million on the sale of 2.1 million shares. While the biotech wasn't able to exploit the current IPO frenzy like Foundation and Ophthotech did, it did hold on to the low end of the range, pricing its shares at $12 each.

Launched by longtime biotech entrepreneur Cam Garner and run on a tight budget since its launch in 2007, Evoke is a single-product company. EVK-001 has run up a little more than $20 million in red ink since Evoke first opened its doors 6 years ago. Questcor ($QCOR) sold the rights to the drug to the low-profile biotech for $448,000 and a schedule of milestones and royalties.

Fate Therapeutics remains on deck for an expected IPO this week, though the biotech was initially expected to jump last week. There's no word on what seems to be holding up the offering.

- here's the press release on Ophthotech
- see the release on Foundation Medicine (PDF)
- get the release on Evoke

Special Reports: Foundation Medicine – 2012 Fierce 15 | No end of biotech IPO frenzy in sight

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