Versartis Inc. (NASDAQ: VSAR) sold 6 million shares in a Friday morning initial public offering (IPO) at a price of $21 a share, nicely higher than the estimated range of $16 to $19 a share. The number of shares on offer also rose, from a planned 4.6 million.
The lead underwriters for the offering were Morgan Stanley and Citigroup. The underwriters have an option on an additional 900,000 shares at the IPO price.
The biopharmaceutical firm is working on developing a long-acting recombinant form of human growth hormone for use as a treatment for growth hormone deficiency. Current treatments involve daily injections over multiple years, according to the company. Versartis believes that the market for its product will reach $4 billion by 2018. The company’s first target is pediatric growth hormone disease, a market it says is currently worth about $1.8 billion.
Versartis says it will use about $65 million of the proceeds to fund ongoing and planned development of its treatment of pediatric growth hormone deficiency. Remaining proceeds will be used for working capital, capital expenditures and general corporate purposes and may also include acquisition or licensing of other products, businesses or technologies.
Without naming names, the company says competitors may include several large pharmaceutical and biotech firms that currently sell therapies to the company’s target population. Versartis also noted in its filing, “Many of these competitors are attempting to develop therapeutics for our target population.”
Shares were up nearly 64% in the noon hour to $34.35, after hitting an earlier high of $35.48.
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