Ikaria, Developer of the Hutch’s Hibernation-on-Demand Concept, Seeks $200M IPO

5/13/10Follow @xconomy

Ikaria, the developer of a drug to induce hibernation on demand like something from a science fiction novel, is attempting to raise $200 million through an initial public offering to help it achieve its goal.

Ikaria is headquartered in Clinton, NJ, but its R&D base is in Seattle, close to the lab of Mark Roth at the Fred Hutchinson Cancer Research Center, where pioneering work on the hibernation-on-demand concept was done. One of the company’s directors is Bob Nelsen of the Seattle office of Arch Venture Partners, which has a 10.1 percent ownership in the company, according to its IPO prospectus filed with the Securities and Exchange Commission.

The offering is sure to generate a lot of attention if Ikaria goes through with the plan. Ikaria’s underwriters are Goldman Sachs, Morgan Stanley, Credit Suisse, Lazard Capital Markets, Wedbush PacGrow Life Sciences, and Cowen & Co. Unlike most biotech companies that spend years in the product development stage burning cash, Ikaria generated $274 million in revenue and turned a $13 million profit last year. The company makes almost all its money today on what it calls INOtherapy, particularly a nitric oxide drug called Inomax. The treatment is the only FDA-approved therapy FDA for hypoxic respiratory failure in infants, which is a potentially deadly condition sometimes called “blue baby” syndrome.

While the existing drugs provide a stable financial base, you can be sure investors will start hearing a lot about what Ikaria has in the pipeline, namely a drug called IK-1001. This is a sodium sulfide compound that Ikaria has been testing in clinical trials to build on Roth’s concept of inducing hibernation-on-demand. As we described in a September 2008 feature, this is the big idea that if you can slow down breathing, heartbeat, and other metabolic functions without going too far and suffocating people, you might buy time for a surgeon trying to save someone before he or she bleeds to death.

Mark Roth

Mark Roth

Nelsen, in that story, went so far as to say that Ikaria “will probably be the biggest biotech IPO ever when it decides to go public.” A year later, former Merck executive Ben Shapiro and Arch’s Steven Gillis said at an Xconomy event that they both think Ikaria is the local company with the greatest potential to produce another blockbuster drug like Immunex’s etanercept (Enbrel) from the 1990s.

The company obtained an exclusive worldwide license to the hibernation technology from the Hutch in April 2005, a deal that requires the biotech to achieve certain milestones to show it’s diligently trying to develop the drug. If Ikaria hits all the goals, it will owe the Hutch $6.7 million in payments, and a “single digit percentage” royalty on sales if it can develop a marketable product, according to the filing. The company leases 8,000 square feet of office space for its R&D operations in Seattle, according to the filing.

Ikaria has got some deep pockets lined up behind it with a lot to gain in the IPO. New Mountain Investments and related entities control a majority 51 percent stake in the company, Linde has 17 percent, Arch has 10 percent, and Venrock Associates is the last major holder with another 10 percent, according to the filing. In what looks like an IPO-prep move, Ikaria enlisted a new director … Next Page »

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