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Based in South San Francisco, CA, Hyperion Therapeutics (NASDAQ:HPTX) scheduled a $50 million IPO with a market capitalization of $174 million at a price range mid-point of $12, for the week of July 23, 2012.

Seven other IPOs are scheduled for the week of July 23. The full IPO calendar is available here.

HPTX filed a recent (S-1) July 13, 2012.

UNDERWRITERS
Manager, Joint Managers: Leerink Swann; Cowen
Co Managers: Needham

SUMMARY
HPTX is a biopharmaceutical company focused on the development and commercialization of novel therapeutics to treat disorders in the areas of orphan diseases and hepatology.

Ravicti was granted orphan drug designation for the maintenance treatment of UCD and for the intermittent or chronic treatment of patients with cirrhosis and any grade HE.

If HPTX is awarded orphan drug exclusivity for each indication, HPTX would receive seven years of orphan exclusivity from the date of the FDA approval for each indication,

Ravicti™ (glycerol phenylbutyrate), is designed to lower ammonia in the blood. Ammonia is produced in the intestine after a person eats protein and is normally detoxified in the liver by conversion to urea.

CONCLUSION
HPTX is worth watching from the sidelines, because HPTX does not yet have orphan drug exclusivity and HPTX is still pursing patent protection.

COMPARE

Valuation Ratios

IPO Mrkt

Price /

Price /

Price /

Cap (MM)

Sales

Earnings

BookValue

Hyperion Therapeutics (HPTX)

$174

none

-4

4.0

Durata Therapeutics (NASDAQ:DRTX)

$192

n/a

-6

2.0

Cempra (NASDAQ:CEMP)*

$175

n/a

-13

3.2

Rib-X Pharmaceuticals (RIBX)**

$130

n/a

-3

2.8

*CEMP IPO'd Feb 2, 2012 at $6. It recently traded at $8.32
**postponed

Glossary of financial terms
gaskinsco.com/glossary.htm

BUSINESS
HPTX is a biopharmaceutical company focused on the development and commercialization of novel therapeutics to treat disorders in the areas of orphan diseases and hepatology.

HPTX's product candidate, Ravicti™ (glycerol phenylbutyrate), is designed to lower ammonia in the blood. Ammonia is produced in the intestine after a person eats protein and is normally detoxified in the liver by conversion to urea. Elevated levels of ammonia are potentially toxic and can lead to severe medical complications which may include death.

HPTX is developing Ravicti to treat two different diseases in which blood ammonia is elevated: the most prevalent urea cycle disorders, or UCD, and hepatic encephalopathy, or HE.

UCD are inherited rare genetic diseases caused by a deficiency of one or more enzymes or protein transporters that constitute the urea cycle, which in a healthy individual removes ammonia through the conversion of ammonia to urea.

INTELLECTUAL PROPERTY
HPTX intends to seek patent protection in the United States and internationally for products and product candidates.

The anticipated market protection for Ravicti includes orphan drug exclusivity and issued patents.

Ravicti was granted orphan drug designation for the maintenance treatment of UCD and for the intermittent or chronic treatment of patients with cirrhosis and any grade HE.

If HPTX is awarded orphan drug exclusivity for each indication, HPTX would receive seven years of orphan exclusivity from the date of the FDA approval for each indication.

Whether Ravicti will receive orphan exclusivity for the UCD indication will depend on whether the FDA concludes that Ravicti is safer than BUPHENYL, which shares the same active substance as Ravicti, and comparable in terms of effectiveness.

Should the FDA determine that the safety of Ravicti in treating UCD is not sufficiently better, or that the product does not have comparable effectiveness, Ravicti may not be granted orphan exclusivity.

Licenses Rights
HPTX licensed the rights to the Ravicti composition of matter patents from Brusilow, which have been issued in the United States, Canada, and the primary countries of the European Union.

Upon the expiration of the Ravicti composition of matter patents, HPTX's license agreement with and license payment obligations to Brusilow will terminate and HPTX will have a fully paid, royalty-free, sublicensable license.

The United States composition of matter patent will expire in 2015, without taking into account the patent term restoration under the Drug Price Competition and Patent Term Restoration Act of 1984, known as the Hatch-Waxman Amendments.

Based on current projections, HPTX expects to receive an extension under the Hatch-Waxman Amendments, which would extend this patent coverage for approximately an additional three years to 2018.

HPTX also expects to receive three-year Hatch-Waxman exclusivity based on the submission of new and essential clinical trials conducted or sponsored by HPTX in support of the new product.

This exclusivity would prevent the FDA from giving final approval to any generic forms of Ravicti for a period of three years from the anniversary date of the approval of Ravicti.

It would also prohibit the agency from approving any 505(b)(2) NDAs that seek to reference the agency's approval of Ravicti for a period of three years. This three year period would run in parallel with any award of orphan drug exclusivity.

HPTX owns pending patent applications in the United States, Europe, Japan and Canada directed to methods of using, administering, and adjusting the dosage of drugs, including Ravicti and BUPHENYL, which operate via the active chemical entity PAA. Any patents issuing from these applications would expire in 2029.

COMPETITION
Currently, there is no cure for UCD. Management of UCD involves decreasing ammonia levels through reduction of protein in the diet, amino acid supplementation and the use of ammonia lowering agents, including sodium benzoate and BUPHENYL.

Liver transplantation is an option reserved for the most severely affected patients, typically those who present very early in life. If a curative treatment for UCD is developed, Ravicti and BUPHENYL may become obsolete for that indication.

BUPHENYL is the only branded therapy currently FDA-approved for the chronic management of patients with the most prevalent UCD.

HPTX is aware of one generic sodium phenylbutyrate tablet product manufactured by Ampolgen Pharmaceuticals, LLC, which received FDA approval in November 2011 under an abbreviated new drug application, or ANDA.

HPTX is aware that other companies, including Forte BV and Navinta LLC, are developing taste masking technologies for sodium phenylbutyrate.

Orphan Europe is conducting a clinical trial of carglumic acid to treat some of the UCD enzyme deficiencies for which we expect Ravicti to be approved. Carglumic acid is approved to treat HA crises resulting from a different rare disorder than UCD and is sold under the name Carbaglu.

If the results of this trial are successful and Orphan Europe is able to complete development and obtain approval of Carbaglu to treat additional UCD enzyme deficiencies, HPTX would face competition from this compound. AMMONUL is the only FDA-approved adjunctive therapy for HA crises in patients with the most prevalent UCD.

VENTURE CAPITAL
Pre-IPO
Entities affiliated with Bay City Capital, 18%
Entities affiliated with Highland Capital Partners, 19%
Panorama Capital, L.P., 12%
New Enterprise Associates 12, Limited Partnership, 21%
Sofinnova Venture Partners VII, L.P., 16%
Ucyclyd Pharma, Inc., 6%

EMPLOYEES
HPTX had 14 employees as of March 31, 2012

USE OF PROCEEDS
HPTX expects to net $44 million from its IPO. Proceeds are allocated as follows:

Completing the clinical development of Ravicti for UCD, including the long-term safety portion of our trial in UCD patients under 6 years of age, regulatory approval and post-marketing studies, currently estimated to be $8.0 million;

Commercial launch of Ravicti for UCD, including payroll and related costs, marketing and promotional costs, and manufacturing of commercial supplies, currently estimated at $29.0 million;

License payments under our license agreement with Brusilow of up to $0.5 million over the next 12 months; and

Remainder for working capital and general corporate purposes.

Source: IPO Preview: Hyperion Therapeutics