PE-backed Zealand Pharma Plans $140 Million IPO

Private equity backed Danish biotech firm Zealand Pharma aims to raise up to $140 million in an initial public offering, Reuters reported. The company will offer nearly 9 million new shares priced between 86 and 120 crowns ($16.2-22.6) each. The company expects its shares to begin trading on the Copenhagen bourse by November 19. Danish private equity firm Sunstone Capital is Zealand Pharma’s largest shareholder.

(Reuters) – Danish biopharma firm Zealand Pharma announced on Wednesday plans for an initial public share offer to raise up to around $140 million under an indicative price range of 86 to 120 crowns ($16.2-22.6) per share.

Zealand Pharma A/S, which said it would offer up to 8.98 million new shares, expects its shares to begin trading on the Copenhagen bourse no later than Nov. 19 after the public offering to retail and institutional investors in Denmark and a private placement to institutions abroad.

“The company intends to use the net proceeds from the offering in the further development of its drug candidates,” said Zealand, which is working on drugs for metabolic, gastrointestinal and cardiovascular diseases.

The biotech firm’s IPO follows share offerings on the Copenhagen market from Danish jewellery maker Pandora and food ingredients firm Chr. Hansen , marking a revival of the IPO market after years of stagnation.

The Nov. 9-18 offering comprises up to 7.81 million new shares plus an overallotment option of 1.17 million new shares, Zealand Pharma said in a statement.

The company said the number of shares to be issued would be set with the aim of reaching gross proceeds of 671.3 million Danish crowns, excluding any overallotment.

But a spokeswoman added that total proceeds with the overallotment were seen at up to roughly 100 million euros ($140.3 million).

If the price is set in the middle of the indicated range, then the company would issue about 6.52 million shares, excluding the potential overallotment, to reach the target proceeds, the propectus said.

Zealand Pharma’s current owners — of which Danish private equity investment firm Sunstone Capital is the biggest — are keeping their stock and would still hold 69.9 percent of the company’s shares if the maximum amount is sold at the low end of the price range, the company said.

Zealand Pharma, which was started in 1998, has up to now financed its operations itself through private placements of shares for 754.6 million crowns, as well as from milestone and up-front licence payments for drugs under development, it said.

Danske Markets and Jefferies International are joint global coordinators and bookrunners while Bryan, Garnier & Co. and SEB Enskilda are the co-lead managers, in line with a Reuters report on Oct. 21 about the sale plans [ID:nLDE69K0QU.

“We believe that public ownership will provide us with financial flexibility to grow the company further, advance the (drug development) pipeline towards commercialisation and take advantage of strategic goals using a more visible public profile,” Chief Executive David Solomon said in the statement.

ON THE MARKET IN 2013

Zealand Pharma’s most advanced candidate drug is lixisenatide, which it is developing with Sanofi-Aventis for type-2 diabetes. The drug is in late Phase III clinical trials as both a monotherapy and in combination with Sanofi’s Lantus.

Lixisenatide belongs to the GLP-1 class of drugs that stimulate insulin release when glucose levels become too high. If it wins marketing approval it will compete with Novo Nordisk’s Victoza, and Amylin Pharmaceuticals and Eli Lilly’s Byetta.

“It’s expected that our first product, lixisenatide, will be registered in 2011 in Europe and 2012 in the United States,” Solomon told Reuters.

“It is impossible to predict when regulators will complete (the process) but conservatively saying it is likely to be on the market in the latter half of 2013,” Solomon said. ($1=.7126 euros) ($1=5.313 Danish crowns)

By John Acher and Shida Chayesteh
(Editing by Greg Mahlich)