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San Diego Biotech Pfenex Inc. (PFNX) Prices IPO At $6 Per Share, Below Downwardly Revised $8 Expectation


7/24/2014 8:06:21 AM

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San Diego Biotech Pfenex Prices IPO At $6 Per Share, Below Downwardly Revised $8 Expectation
July 24, 2014
By Renee Morad, BioSpace.com Breaking News Staff

Pfenex Inc., a clinical stage biotechnology company focused on the development of difficult to manufacture and high-value proteins including biosimilars, today announced its initial public offering of 8.33 million shares of its common stock at $6.00 per share.

The shares are expected to begin trading on the NYSE on July 24, 2014, under the symbol PFNX.

Pfenex has also granted the underwriters a 30-day option to purchase up to 1.25 million additional shares of common stock at the initial public offering price.

Pfenex, a spinoff of Dow Chemical (DOW), plans to raise $59 million in its initial public offering. The San Diego-based company plans to spend up to $40 million of that capital on PF582, a biosimilar version of Roche’s Lucentis, which is the current standard of care for the eye disease wet macular degeneration, a cause of blindness.

Pfenex’s copy of Lucentis is currently in midstage study with results expected in the fourth quarter of 2014. Phase III is slated to begin in mid-2015 with data expected in 2017, according to Pfenex.
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The company plans to spend an additional $5 million on the development of PF530, a biosimilar candidate to Bayer’s Betaseron, which is used in the treatment of multiple sclerosis. Pfenex expects to begin phase I for the Betaseron copy this year.

The remaining funds from the initial public offering will likely go toward pipeline work and general expenditures. The company is also eyeing the development of a version of Roche’s hepatitis C drug Pegasys, planned for 2015.

William Blair & Company, L.L.C. and JMP Securities LLC are acting as joint book-running managers for the deal and Mizuho Securities USA Inc. is acting as a co-manager.

A registration statement relating to these securities has been filed with, and declared effective by, the Securities and Exchange Commission.

Pfenex was previously eyeing a $75 million initial public offering in June 2014. The company filed to offer 5 million shares at a price of $12 to $14 and then revised its terms to 8.1 million shares at $8 in mid-July.

At $6 per share, Pfenex now has a fully diluted market cap of $118 million, 43 percent below its initial proposed market cap of $207 million, according to Renaissance Capital.

Pfenex believes that biosimilars are positioned to thrive in the near future, estimating that $45 billion of 2010’s aggregate biologics sales will be exposed to biosimilars by 2020, as 47 drugs will have come off patent.

“We expect the biologics market to shift toward biosimilars over the coming years, much like generic small-molecule drugs which now account for an estimated 80 percent of the dispensed prescription small-molecule drug market in the United States,” the company said in a regulatory filing.

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