Anacor Pharma IPO: A Play on Skin Care

Dec. 3.10 | About: Anacor Pharmaceuticals, (ANAC)

Anacor Pharmaceuticals (NASDAQ:ANAC), a developer of novel small-molecule therapeutics, priced its IPO on 23 November, 2010, at $5 per share, with a first day return of 1.8%.

Business Overview (from prospectus)

We are a biopharmaceutical company focused on discovering, developing and commercializing novel small-molecule therapeutics derived from our boron chemistry platform. In our first eight years of operations, we have demonstrated that our organization, utilizing our boron chemistry platform, is highly productive and efficient at creating novel clinical product candidates. During this period, we have discovered, synthesized and developed five molecules that are currently in clinical development, while utilizing equity capital of only $88.3 million. We believe that our organization and boron chemistry platform has the potential to continue to yield clinical candidates at a similar pace and efficiency in the future. While drug development is often uncertain and occasionally uneven, our current portfolio of product candidates and our ability to efficiently fill our own pipeline provides us with a unique opportunity to create a valuable and sustainable biopharmaceutical company.

Offering: 12 million shares at $5 per share. Net proceeds of approximately $46.7 million will be used to fund Phase 3 clinical trials of AN2690 for onychomycosis and preclinical and clinical activities and approximately $9.0 million for debt repayment.

Lead Underwriters: Citi (NYSE:C), Deutsche Bank Securities (NYSE:DB)

Financial Highlights:

Contract revenue and Contract revenue-related party for nine months ended September 30, 2010 was $24.2 million as compared to $11.8 million for nine months ended September 30, 2009...Research and development expenses for nine months ended September 30, 2010 was $20.1 million as compared to $25.3 million for nine months ended September 30, 2009...General and development expenses for nine months ended September 30, 2010 was $5.5 million as compared to $5.3 million for nine months ended September 30, 2009...

Competitors

If approved for the treatment of onychomycosis, we anticipate AN2690 and AN2718 would compete with other approved onychomycosis therapeutics including Lamisil, also known by its generic name, terbinafine, is marketed by Novartis (NYSE:NVS). Terbinafine is available from several generic manufacturers. Sporanox, also known by its generic name, itraconazole, is marketed by Johnson & Johnson (NYSE:JNJ) and is available as a generic as well. Penlac, also known by its generic name, ciclopirox, is marketed by sanofi-aventis (NYSE:SNY). Several versions of ciclopirox are available as generics.

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