This Week's IPOs: Amicus Therapeutics, Jazz Pharmaceuticals, LDK Solar, Response Genetics

by: Abbi Adest

With the long holiday weekend, this is a light week for IPOs. There are only four on deck for this week: Amicus Therapeutics (NASDAQ:FOLD), a clinical stage biopharmaceutical company that focuses on treatments for genetic diseases; Jazz Pharmacueticals (NASDAQ:JAZZ), a pharmaceutical company focused on neurological and psychiatric treatments; LDK Solar (NYSE:LDK) a Chinese manufacturer of multicrystalline solar wafers for use in solar cells; and Response Genetics (NASDAQ:RGDX), a developer of pharmacogenomic cancer diagnostic tests.

All quotations are from the companies' most recent S-1 filings with links provided.


Business Overview (from prospectus)

We are a clinical-stage biopharmaceutical company focused on the discovery, development and commercialization of novel small molecule, orally-administered drugs, known as pharmacological chaperones, for the treatment of a range of human genetic diseases. Our lead products in development are Amigal for Fabry disease, Plicera for Gaucher disease and AT2220 for Pompe disease. Fabry, Gaucher and Pompe are relatively rare disorders but represent substantial commercial markets due to the severity of the symptoms and the chronic nature of the diseases. The worldwide net product sales for the five approved therapeutics to treat Fabry, Gaucher and Pompe disease totaled more than $1.5 billion in 2006, as publicly reported by companies that market these therapeutics. We hold worldwide commercialization rights to Amigal, Plicera and AT2220 and we intend to establish a commercial infrastructure and targeted sales force to market some or all of our products. Currently, none of our product candidates are approved for commercial sale or have generated any revenue from commercial sales.

Offering: 5.0 million shares at $14.00-$16.00 per share. Net proceeds of approximately $67.9 million will be used for the clinical development of the company's three main products: Amigal, Plicera and AT2220

Lead Underwriters: Morgan Stanley, Merrill Lynch

Financial Highlights:

Research and development expense was $33.6 million in 2006, an increase of $19.9 million, or 145%, from $13.7 million in 2005... Net loss attributable to common stockholders was $20.1 million in 2005 and $65.9 million in 2006.


Business Overview (from prospectus)

We are a specialty pharmaceutical company focused on identifying, developing and commercializing innovative products to meet unmet medical needs in neurology and psychiatry. Our goal is to build a broad portfolio of products through a combination of internal development and acquisition and in-licensing activities and to utilize our specialty sales force to promote our products in our target markets. We apply novel formulations and drug delivery technologies to known drug compounds, and compounds with the same mechanism of action or similar chemical structure as marketed products, to improve patient care by, among other things, improving efficacy, reducing adverse side effects or increasing patient compliance relative to existing therapies. By working with these drug compounds, we believe that we can substantially mitigate the risks and reduce the costs and time associated with product development and commercialization of new therapies with significant market opportunities. Through the application of novel formulations and drug delivery technologies available from third parties, we also explore potential new indications for known drug compounds. Since our inception in 2003, our experienced executive management team has built a commercial operation and assembled a portfolio of products and product candidates that currently includes two marketed products that generated net product sales of $41.9 million in 2006, one product candidate for which an approvable letter has been issued by the U.S. Food and Drug Administration, or FDA, and five product candidates in various stages of clinical development. We also have additional product candidates in earlier stages of development.

Offering: 6.0 million shares at $24.00-$26.00 per share. Net proceeds of approximately $137.2 million will be used for the launch and commercialization of Luvox CR, including $41.0 million for development and commercial milestone payments to Solvay in connection with the acquisition of our U.S. rights to Luvox CR; for activities related to the preparation for marketing, promotion and expansion of our specialty sales force; for production of initial commercial quantities of Luvox CR; to fund Phase III pivotal clinical trials of JZP-6 through the completion of the first Phase III clinical trial, after which, if the trial is successful, to complete development and commercial launch of JZP-6; to fund continued development of and feasibility activities for the company's portfolio of clinical and early-stage product candidates during the next 12 to 18 months, as well as for working capital, capital expenditures and other general corporate purposes.

Lead Underwriters: Morgan Stanley, Lehman Brothers

Financial Highlights:

The increase in product sales, net in 2006 [$43,299,000] compared to 2005 [$18,796,000] was primarily due to the inclusion of only approximately six months of product sales in 2005, subsequent to our acquisition of Orphan Medical in June 2005, compared to a full year in 2006...The increase in royalties, net in 2006 [$594,000] compared to 2005 [$146,000] was principally due to an increase in royalties on sales of Xyrem by UCB from $9,000 in 2005 to $305,000 in 2006...Higher research and development expenses in 2006 [$54,956,000] as compared to 2005 [45,783,000] resulted primarily from higher spending in 2006 on early phase development and preclinical studies, along with higher salaries and benefits expenses related to a growth in research and development headcount during 2006.

Business Overview (from prospectus)

We manufacture multicrystalline solar wafers, which are thin sheets of crystalline silicon material primarily made by slicing multicrystalline ingots or monocrystalline boules. Solar wafers are the principal raw material used to produce solar cells, which are devices capable of converting sunlight into electricity. We sell multicrystalline wafers globally to manufacturers of photovoltaic products, including solar cells and solar modules. We produce and sell multicrystalline solar wafers between 180 and 240 microns in thickness. In addition, we provide wafer processing services to monocrystalline and multicrystalline solar cell and module manufacturers.

Offering: 17.4 million shares at $25.00-$27.00 per share. Net proceeds of approximately $323.6 million will be used to to expand production capacity (including the purchase of manufacturing equipment and the construction of additional production and ancillary facilities); to purchase or prepay for polysilicon feedstock; and to invest in research and development efforts.

Lead Underwriters: Morgan Stanley, UBS Investment Bank

Financial Highlights:

For the year ended December 31, 2006, we had net sales of $105.5 million, gross profit of $41.5 million, net income of $30.2 million and net income available to ordinary shareholders of $25.9 million. Our gross margin for the year ended December 31, 2006 was 39.3%; our operating margin for the year was 35.2%; and our net margin for the year was 28.6%.


Business Overview (from prospectus)

We are engaged in the research and development of our own pharmacogenomic cancer diagnostic tests based on our proprietary technologies. We currently generate revenues primarily from sales of our proprietary analytical pharmacogenomic testing services of clinical trial specimens to the pharmaceutical industry.

Pharmacogenomics is the science of how an individual’s genetic makeup relates to drug response. Tests based on pharmacogenomics facilitate the prediction of an individual’s response to drug therapy and chance of survival following a surgery. Using our patented and proprietary technologies, we extract nucleic acids such as RNA and DNA from tumor specimens preserved in paraffin, a wax-like substance, in order to perform phamacogenomic analysis.

We use our technologies to extract and analyze genetic information from genes derived from tumor specimens stored as formalin-fixed and paraffin embedded, or FFPE specimens. We believe this is a significant development because preserving tumor tissue as FFPE specimens is a standard procedure used worldwide, and although other methods exist to extract DNA from FFPE specimens, we are not aware of any other existing technologies that enable reliable and consistent extraction of RNA from FFPE specimens suitable for genome-wide gene expression research.

Offering: 3.0 million shares at $7.00-$8.00 per share. Net proceeds of approximately $18,750,000 will be used for research and development, business expansion and for general corporate purposes.

Lead Underwriters: Maxim Group LLC, Caris & Company

Financial Highlights:

Revenues were $6,017,025 for the twelve months ended December 31, 2006, as compared to $6,956,800 for the comparable period in 2005, a decrease of $939,775, or 13.5%...Cost of revenues for the year ended December 31, 2006 were $2,456,071 as compared to $1,787,897 for the year ended December 31, 2005, an increase of $668,174 or 37.4%...Research and development expenses were $1,261,981 for the year ended December 31, 2006, as compared to $1,018,179 for the year ended December 31, 2005, an increase of $243,802 or 23.9%.