Biotech Values

[DewDiligence]

TSRX Closes Flat After Slashing IPO Price

http://online.wsj.com/article/SB10001424052748703545604575407593721363852.html

›AUGUST 4, 2010
By LYNN COWAN

A company developing a drug for antibiotic-resistant bacteria ended its first day of trading unchanged, after cutting its offering price by more than half.

Trius Therapeutics Inc. closed at $5 a share on the Nasdaq Stock Market, flat with its initial public offering price. It sold 10 million shares, raising $50 million, below its original plans of selling six million shares at a range of $12 to $14.

Based in San Diego, Trius Therapeutics is a biopharmaceutical company focused on the developing its first drug, torezolid phosphate, for the treatment of serious infections that include methicillin-resistant Staphylococcus aureus, or MRSA. The company is starting Phase 3 clinical trials for the drug, which hasn't been approved yet for sale by regulators.

There is one other drug from the same family with Food and Drug Administration approval, linezolid, which is marketed by Pfizer Inc. as Zyvox. Zyvox is the leading branded antibiotic for serious gram-positive infections, and the only marketed antibiotic labeled for MRSA that is available in both intravenous and oral-dosage forms.

MRSA is the most prevalent drug-resistant bacterium classified as gram-positive found in hospital and community settings. Trius said in its prospectus that it believes its drug candidate offers some advantages over Zyvox, including greater potency, once-daily dosing, a shorter course of therapy, lower frequency of resistance, and an improved safety profile. The company plans to develop it to treat a number of illnesses, including several types of hospital-acquired infections.

Trius also is involved in two preclinical programs to develop antibiotics to treat other types of infections; those programs are funded by a $57.2 million contract with the National Institutes of Health and the Department of Defense.

Like many early stage biopharmaceutical companies, Trius has never posted a profit and isn't predicting when it will, or if ever. It also has no products approved for commercial sale, so there is a higher level of risk for its deal. Most unprofitable, early stage drug makers have difficulty attracting investors even when the IPO market is strong, so the current environment even is less inviting.

Trius was unable to price last week, and only succeeded this week after cutting its price.

"I think on IPO front, these are desperate times" for new pharmaceutical companies, said Steve Brozak, a biotech and medical-devices analyst who is president of WBB Securities LLC, which has no ties to Trius. "Here is a product that is definitely necessary, and the company has everything from government funding to publication of their clinical trials in journals, and they still barely got the deal done."

Citigroup Inc. managed the company's IPO.‹