NEW YORK (Reuters) – Talecris Biotherapeutics Holdings Corp (TLCR.O) shares rose 13.3 percent in their trading debut following the Cerberus-backed company’s initial public offering, the largest by a biopharmaceuticals company in three years.
Talecris, which produces plasma-based protein therapies, raised $950 million in its IPO on Wednesday. The shares stood at $21.52 in midday Nasdaq trading on Thursday, up from an IPO price of $19.
It is a significant profit for private equity firm Cerberus Capital Management LP [CBS.UL], which made about 23 times its original investment, a source familiar with the situation said.
Talecris was formed in 2005 when German drug and chemicals group Bayer AG (BAYGn.DE) sold its blood products unit to Cerberus and Ampersand for $590 million.
Cerberus and Ampersand will still jointly own about 56 percent of Talecris’ outstanding shares following the IPO.
Talecris increased the expected size of the share issue by 11.8 percent in the largest IPO by a biopharmaceuticals firm since 2006, buoyed by strong demand.
Unlike most IPOs in the sector, Talecris has products on the market in addition to those in development, allowing it to attract more interest.
“Because we are well established, with good revenues and leading products, we found good receptivity,” Chief Executive Larry Stern told Reuters in an interview.
Talecris generated net income of $66 million on revenue of $1.4 billion in 2008, according to a regulatory filing.
Its products are used to treat a number of diseases, including immune deficiencies, bleeding disorders, infections and severe trauma.
Talecris said it had a 24 percent share of the North American market for plasma-derived proteins in 2007, based on product sales and contract manufacturing combined, and a 12 percent global share based on product sales.
The fact that Talecris also has patents on its manufacturing processes, in addition to its products, distinguishes it from most biotech or pharma companies, which have not launched many IPOs in the past three years, one analyst said.
“Unlike a regular biotech company where you reach a patent cliff, they (Talecris) have a second line of defense with their manufacturing IP,” said Matt Therian, an analyst with Connecticut-based investment firm Renaissance Capital.
Stern said Talecris would use $515 million from the IPO to pay down debt and said the company was investing $750 million in a new manufacturing facility.
Talecris’ products include a treatment for genetic emphysema and it is in Phase I clinical trials to develop a treatment to block blood clots.
The Talecris IPO is the second-largest in the United States this year, after a $1.04 billion offering last week by Chinese video game company Shanda Games Ltd (GAME.O).
By Phil Wahba
(Additional reporting by Megan Davies; editing by John Wallace and Gerald E. McCormick)