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Proteon Cuts Price, Boosts Shares to Bag $61M in IPO

Xconomy Boston — 

Proteon Therapeutics is about to successfully pivot from a potential portfolio company of Novartis to a publicly traded entity—just not with the valuation it was hoping for.

Waltham, MA-based Proteon priced its IPO late Tuesday at $10 per share. The company sold 6,110,000 shares of stock to investors, raising $61.1 million before discounts due to its underwriters, and will make its debut on the Nasdaq Wednesday morning under the ticker symbol “PRTO.” While Proteon was able to hit the $61 million number it aimed for when it projected a range for its IPO a few weeks ago, it had to sell more shares (6.11 million instead of 4.7 million) at a lower price ($10 instead of $12 to $14) to get there.

Proteon’s underwriters, Stifel, JMP Securities, Baird, and Oppenheimer & Co. have a 30-day option to buy up to 916,500 more shares at the IPO price.

Proteon is using the IPO cash primarily to finance the development of PRT-201, a drug that’s supposed to boost the success rates of a surgical procedure called arteriovenous fistula, which is often used to prepare kidney failure patients for dialysis. In AVF surgery, a connection is created between an artery and a vein in a person’s arm, which boosts the blood flow through the area and thickens the blood vessel wall, making it stand up better to being pricked constantly by the big needles used in dialysis. AVFs often fail in the first year, however, largely because while the blood vessel is healing, a bunch of cells head to the area and stay there, clogging up the vessel and cutting blood flow. PRT-201, an engineered form of a human enzyme called elastase, is designed to prevent that from happening.

Proteon started the first of two Phase 3 trials of PRT-201 in the third quarter of 2014, and will begin the second of those trials early next year. Proteon expects to report data from the first trial in 2017.

As I’ve written previously, the IPO represents a strategic pivot for Proteon, after an option-to-buy deal with Novartis fell apart in 2013. Novartis had the option to either buy Proteon outright or license PRT-201 after a Phase 2 trial for up to $550 milllion in upfront and deferred payments. The two companies couldn’t come to terms on a deal, however, and the transaction collapsed. Proteon then announced a $45 million round and positioned itself to go public.

TVM Capital held the biggest piece of Proteon’s equity, a 19.4 percent stake, prior to the IPO. Other major shareholders include Abingworth Bioventures VI (19.1 percent), Prism Venture Partners (15.6 percent), Skyline Venture Partners (15.3 percent), Deerfield (10.5 percent), and Intersouth Partners (10.4 percent). The company has raised around $120 million in private financing since its inception in 2006.