Biotech IPO: Elixir Pharmaceuticals

Elixer Pharmaceuticals (ELXR) is planning to float an initial public offering of its stock this week. The company is developing treatments for metabolic diseases such as diabetes and obesity.

ELIXER PHARMACEUTICALS (ELXR)
Business Overview (from prospectus)

We are a pharmaceutical company focused on the discovery, development and commercialization of pharmaceuticals for the treatment of metabolic diseases such as diabetes and obesity. Our scientific founders identified that interactions between specific genes and enzymes can slow the aging process, and we are developing compounds that stimulate these interactions and will be used to treat a range of diseases of aging, including metabolic disease. Our product pipeline includes a number of programs which we believe will have significant advantages over existing products and will address unmet medical needs of the large metabolic disease markets. These include our phase III product candidates, Glinsuna (also known by its chemical name, mitiglinide) and Metgluna (metformin, an approved product, plus mitiglinide) for the treatment of type 2 diabetes, and our ghrelin antagonist, a compound which blocks the receptor for the hormone ghrelin, which represents a potential next-generation treatment for a number of metabolic diseases. In addition, we have built upon our knowledge of ghrelin to advance a ghrelin agonist, a compound which stimulates the receptor for ghrelin, and our sirtuin program (sirtuins are a set of seven human enzymes) is an example of how we continue to use our understanding of the pathways which slow the aging process to identify interesting targets for the development of drugs to treat metabolic disease. Recently, we entered into a strategic relationship with Novartis International Pharmaceuticals, or Novartis, in which it made a $10 million equity investment in Elixir through an investment fund managed by MPM Capital, our largest stockholder, and under which we granted Novartis the right to negotiate to obtain rights to develop and commercialize either our ghrelin agonist product candidate or one of our sirtuin product candidates.

Offering: 5.0 million share at $14.00 - $16.00 per share. Net proceeds of approximately $67.1 million will be used to to fund the continued clinical development of Glinsuna and Metgluna, including completion of the pivotal phase III clinical trial initiated in August 2007, to fund the continued development of the company's ghrelin antagonist, including the initiation of a phase I trial in the fourth quarter of 2008, to fund the continued development of the company's ghrelin agonist product candidate and our sirtuin initiatives, including the initiation of a phase I ghrelin agonist trial in 2008, to make scheduled monthly payments through 2009 of interest and principal outstanding under the company's Loan Agreement and for general corporate purposes.

Lead Underwriters: Credit Suisse, Pacific Growth Equities

Financial Highlights:

For the nine months ended September 30, 2007, revenue totaled $35,000 compared with no revenue recorded in the nine months ended September 30, 2006... Research and development expense for the nine months ended September 30, 2007 was $12.1 million compared to $12.6 million for the nine months ended September 30, 2006, a decrease of $0.5 million or 3.9%... General and administrative expense for the nine months ended September 30, 2007 totaled $4.1 million compared to $2.5 million for the nine months ended September 30, 2006, an increase of $1.6 million, or 63.1%.

Competition

Novo Nordisk (NVO) launched Prandin in 1998 in the U.S. Novo Nordisk recently announced a strategic decision to focus on biologics and we believe this, in part, led them to de-emphasize promotion of Prandin to physicians. Until November 2007, we believed there had been no active sales force promotion or marketing of the product, with the exception of limited direct mail sampling. However, in November 2007, Sciele Pharma (SCRX) announced that it had licensed the rights from Novo Nordisk to promote Prandin in the U.S. Novartis (NVS) launched Starlix in 2000 in the U.S. We believe Novartis has ceased all active promotion of Starlix due to its small revenue contribution relative to its other, larger products. Even with these very limited promotion efforts, the glinide class has grown despite other new agents coming to market. We estimate that Prandin and Starlix generated revenues of $306 million in the U.S. during 2006.

We expect Sciele Pharma’s promotion of Prandin will increase this product’s share of the glinide market. We believe that this promotion will accelerate growth of the glinide market over the near-term and ultimately increase competition amongst the members of the class

Additional Resources:

• The Boston Globe: 'One of biotech's brightest players is now a free agent'
• Xconomy: 'Sir2 Roads Diverged: Elixir Co-founder Joins Rival Sirtris'
• Press Release: 'Elixir Pharmaceuticals Names Paul M. Martha, MD as Chief Medical Officer'