The LIPO IPO: Neothetics files to raise $63 million to fight fat with an asthma drug

Neothetics, a biotech targeting fat reduction with an injectable formulation of an approved asthma drug, filed on Friday with the SEC to raise up to $63 million in an initial public offering.

Business
The company has completed Phase 2 trials for LIPO-202, its lead candidate that is intended to reduce "subcutaneous fat in the central abdomen that is often characterized by people as love-handles, a pot-belly, a pouch or stomach rolls." The drug has been well tolerated in about 800 people and the company plans to conduct two Phase 3 trials with top-line data expected by the end of 2015 for a 2H16 launch. LIPO-202, which is injected into the abdomen as an elective procedure (not reimbursed), is a formulation of salmeterol xinafoate, the approved drug in GlaxoSmithKline's Advair inhaler for asthma. As such, Neothetics plans to use the 505(b)(2) pathway for approval.

Shareholders
Primary shareholders include Domain Partners, Alta Partners, RMI Partners and CEO George Mahaffey.

Aesthetic biotechs
2014 peer biotech Revance Therapeutics jumped 68% on its IPO in February and subsequently traded 100% above its IPO price, but has since fallen to just a 9% gain. Similarly, fat-reduction biotech Kythera Biopharmaceuticals (KYTH) ran up about 50% earlier in the year but now has a year-to-date return of -12%. Aesthetic device maker Lumenis (LMNS) has lost 24% since its February IPO, while device maker Ulthera (ULTH) was on file for an IPO before being acquired by Merz in July for $600 million.

The San Diego, CA-based company, which was founded in 2007, plans to list on the NASDAQ under the symbol NEOT. Neothetics initially filed confidentially on September 12, 2014. Piper Jaffray, Guggenheim Securities and Needham are the joint bookrunners on the deal. No pricing terms were disclosed.