Vital Therapies banks $54M in a downsized IPO retry

After pulling the plug on an $86 million float in biotech's halcyon 2013, Vital Therapies ($VTL) has made its way to Wall Street with a scaled-down $54 million offering, cash it will use to advance its drug-device combo for liver failure.

The biotech flipped 4.5 million shares at $12 apiece, below its already-reduced range of $13 to $15. With the cash, Vital Therapies will fund three Phase III studies of Elad, a biologic cellular therapy system for failing livers. Elad works by running patients' blood through a bedside unit that uses human liver-derived cancer cells to filter toxins out of the plasma, which is then pumped back into the patient to help restore liver function.

The company expects to report out late-stage results for the system in alcohol-induced liver decompensation in 2015, with Phase III trials on acute alcoholic hepatitis and fulminant hepatic failure wrapping up in 2016 and 2017. The company is also in the midst of preclinical work to see whether Elad can be of use in liver transplants and liver cancer resections.

But despite the promise of its lead candidate, the San Diego biotech's timing is less than ideal. Vital Therapies' first IPO pitch came in October, right in the middle of a brief biotech swoon in a year otherwise marked by the best market for drug developer debuts since 2000. After postponing its go-public effort, the company this year revealed plans to try again during the hyperbole-defying first-quarter run that saw 29 biotechs pull off IPOs, only to price in the weeks-long hangover that has hammered the Nasdaq biotech index ($IBB).

The industry's sudden bear turn is largely tied to drug pricing concerns related to large-cap companies like Gilead Sciences ($GILD) and Amgen ($AMGN) that have trickled down to smaller drugmakers and thus dampened IPO optimism. After Q1's remarkable pace and performance, this quarter's class of life sciences debutantes has largely limped to the market, with many pricing below their ranges and others scrapping IPO plans entirely.

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