Tranzyme IPO targeted for April 4; offering re-priced at $4 per share

North Carolina’s next initial public offering will be Tranzyme Pharma, which expects to begin trading […]

North Carolina’s next initial public offering will be Tranzyme Pharma, which expects to begin trading April 4.

The company announced the date for the offering late today after earlier revising the terms of the IPO, lowering the target stock price to $4 per share. The Durham, North Carolina drug development company had initially planned to raise up to $65 million by selling 5 million shares in a price range of $11 to $13 per share. At a midpoint of $12 per share, Tranzyme expected net proceeds of about $53.8 million.

Under the revised terms, Tranzyme will sell more shares for a lower price. The company plans to sell 23.7 million shares for $4 per share. At that price, Tranzyme expects net proceeds of $48.2 million, close to the initial $53 million target.

The company likely had to lower its price to attract more buyers for stock in a company with no approved products and expensive late-stage clinical trials ahead. But Tranzyme sees a market opportunity and an unmet medical need for its lead drug candidate. Tranzyme plans to use money raised from the public stock offering to finance two phase 3 clinical trials on ulimorelin, which is being developed as a treatment for postoperative ileus or POI, a condition in which the gastrointestinal tract stops functioning normally following intestinal surgery. Patients with the condition are unable to eat solid food or have normal bowel movements.

Besides the obvious patient discomfort of POI, the condition results in longer hospital stays — POI can last anywhere from a few days to two weeks.  The company says ulimorelin could reduce healthcare costs associated with POI by shortening the duration of hospital stays.

The company also plans to finance continued development of TZP-102 for the treatment of diabetic gastroparesis, an upper gastrointestinal disorder. That compound is planned for a phase 2b clinical trial.

Tranzyme disclosed its IPO plans in a November securities filing. Tranzyme’s IPO could happen today. Renaissance Capital had said it expects Tranzyme’s offering this week and IPOscoop.com said it expects the company’s stock to trade today. Tranzyme has applied to trade on the NASDAQ under the symbol “TZYM.”

Venture capital backed-Tranzyme has raised more than $60 million in equity financing from investors, including  H.I.G. Ventures, Quaker BioVentures and Thomas McNerney & Partners.

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