Ebb & Flow

Undaunted by the uncertainty following the market sell-off on Feb. 27, IPO hopefuls continue to make their way toward the market. Last week, Jazzannounced plans to raise up to $172.5 million. A handful of smaller European companies also edged forward on the IPO front.

Jazz had a high-profile $250 million B round in March 2004, the largest ever for a biotech venture funding. At that time, Chairman Bruce Cozadd told BioCentury that a $1 billion valuation for an IPO wouldn't be inconceivable. To support that valuation, he said Jazz probably would need at least $100 million in revenue (see BioCentury, March 29, 2004).

Jazz posted about $45 million in revenue for FY06, mostly from three marketed products gained in its June 2005 purchase of Orphan Medical for almost $123 million.

Xyrem, approved to treat cataplexy and excessive daytime sleepiness in patients with narcolepsy, accounted for $29 million. Another $12.5 million came from Antizol for ethylene glycol and methanol poisoning. Only $1.4 million came from Cystadane, a treatment for homocystinuria that Jazz sold off earlier this month for $9 million in cash.

Jazz also has two late-stage products. Luvox CR, a treatment for obsessive-compulsive disorder and social anxiety disorder, was acquired in January from Solvay (Euronext:SOLB) for an undisclosed amount. The selective serotonin reuptake inhibitor (SSRI) got an approvable letter from the FDA in February and is expected to be on the market in 1Q08.

JZP-6, a liquid dosage form of sodium oxybate, is in Phase III trials to treat fibromyalgia syndrome. Preliminary data are expected in 2H08. In addition, Jazz has three Phase I candidates and one preclinical candidate.

Xyrem and JZP-6 are partnered with UCB (Euronext:UCB).

Jazz had an operating loss of $78 million last year and held $79 million in cash at Dec. 31, 2006.

The company has raised a total of $265 million in venture financing and an additional $80 million via a debt financing. Principal stockholders include Kohlberg Kravis Roberts (47.6% prior to the IPO); Thoma Cressey Bravo (10.7%); Beecken Petty O'Keefe (7.2%); Prospect Venture Partners (6.7%); Versant Ventures (6.7%); Golden Gate Capital (5.4%); and Lehman Brothers (5.1%). Jazz is KKR's only investment in biotech to date.

It may be difficult to attract investor interest on such a large scale right now. "We're definitely going to take a look; it's

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