Cash-flush Versartis swings for an $80M IPO to advance its orphan drug

On the same day it announced a $55 million E round, California biotech Versartis filed to go public in an $80 million IPO, planning to use its fast-growing bank account to get a promising orphan therapy through late-stage trials.

With the combined $135 million, Versartis figures it can pull off a Phase III study for VRS-317, a long-acting recombinant human growth hormone designed to treat HGH deficiency. The current standard of care amounts to inconvenient daily injections, Versartis said, and the company figures it can grab a major share of the roughly $3 billion market for HGH deficiency treatments with VRS-317, which has demonstrated a half-life at least 30 times longer than traditional shots.

The company is starting off with pediatric patients, working through a Phase IIa study to test VRS-317's effect on height velocity at 6 months and expecting a data readout by June. From there, Versartis plans to embark on a Phase III study, make its case to the FDA and, if everything works out, market the drug on its own.

And if public investors are as faithful as the biotech's private syndicate, Versartis should have no trouble paying for all that. Versartis has raised more than $132 million since its incorporation in 2008, securing $95 million of that total in the last 13 months alone. The company's backers include Sofinnova Ventures, Index Ventures Aisling Capital, New Leaf Venture Partners, Advent Venture Partners and 5 undisclosed "leading life science investment firms."

Meanwhile, the rest of the biotech world is still reveling in the best market for drug developer IPOs in nearly 15 years. A first-quarter push has seen 18 life sciences companies pull off successful market debuts, and despite early-year concerns of a burst-ready bubble, the returns have been largely positive. Class leaders Dicerna ($DRNA) and Ultragenyx ($RARE) have each more than doubled their share values since hitting Wall Street in January, while contemporaries Auspex ($ASPX) and Revance Therapeutics ($RVNC) have soared on February offerings.

The shoulder-to-shoulder schedule of biotech IPOs has largely eased after two weeks of near-daily debuts, but Versartis joins a next wave of hopefuls including Cambridge, MA's Akebia Therapeutics and Israeli medical device outfit Lumenis.

- read the filing

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