Intercept Pharma, Kythera Bio jump out of the IPO gate

In a rare day for biotech IPOs, Kythera Biopharmaceuticals ($KYTH) and Intercept Pharmaceuticals ($ICPT) hit the public markets Thursday with prices at the high end of anticipated ranges and big jumps in value. It's up for debate what the huge day for the two biotech IPOs means for other drug developers angling to go public, and in some ways Kythera and Intercept appear to be unique cases in the biopharma industry.

Kythera, whose shares shot up 24% yesterday, has an injectable drug known as ATX-101 in late-stage trials for cosmetic medical treatment of submental fat that resides in a double chin. While not designed to combat a deadly disease, the candidate could provide patients with a new alternative to surgery and other medical procedures in the fast-growing market for aesthetic treatments. Late-stage data from U.S. and Canadian trials are expected in mid-2013, according to the Calabasas, CA-based outfit. Bayer is partnered on the program.

Intercept is a different story in some ways. The company, which rallied up 29% on its first day of trading, features a lead program for a rare disease, which falls into a hot field that both pharma and regulators recognize as an area of critical need for patients. The New York-based biotech has a liver-protecting candidate called obeticholic acid in Phase III for second-line treatment of biliary cirrhosis. Japanese drugmaker Dainippon Sumitomo Pharma is developing the drug in Japan and China. And Servier, which is France's largest private pharma group, is partnered with Intercept on earlier stage programs.

Thursday was a turnaround for biotech IPO activity after recent events. As The Wall Street Journal reports, Regulus Therapeutics ($RGLS), a developer of microRNA drugs, slashed the price of its shares and its offering size in its public debut last week. GlobeImmune and Rib-X Pharmaceuticals have delayed their IPOs this year. And privately owned biotechs have generally struggled to notch successful maiden public offerings for several years, much to the chagrin of the private equity investors that count on IPOs as one of two main options along with M&As to cash out on their stakes in drug developers.  

This makes the successful kickoffs on the market for Kythera and Intercept seem special.

"For two biotechs to be so strong, you have to chalk that up more to the way those deals were positioned," said Paul Bard, director of research at Renaissance Capital, as quoted by the WSJ. "Most biotech IPOs sell based on the company-specific story."

- check out the WSJ article

Special Report: The 10 biotech IPOs of 2011

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