Valera starts IPO price talk at $10-$12 per share for 3.75 million shares

By Ted A. Knutson

Washington, Jan. 17 - Valera Pharmaceuticals, Inc. started the price talk for its pending initial public offering at $10 to $12 per share for 3.75 million shares in an amendment to its S-1 registration with the Securities and Exchange Commission.

There is a greenshoe for up to 562,500 shares.

UBS Investment Bank is bookrunner for the offering and Banc of America Securities LLC is joint leader manager. Co-managers are First Albany Capital and Fortis Securities LLC.

The Cranbury, N.J.-based firm is a specialty pharmaceutical company concentrating on the development, acquisition and commercialization of products for the treatment of urological and endocrine conditions, diseases and disorders.

Valera's first product, Vantas, approved for sale by the Food and Drug Administration in October 2004, is a 12-month implant indicated for the palliative treatment of advanced prostate cancer.

Vantas slows prostate tumor growth by delivering histrelin, a luteinizing hormone-releasing hormone agonist, or LHRH agonist. Vantas is the only product indicated for the palliative treatment of advanced prostate cancer that delivers histrelin, the most potent LHRH agonist available on the market.

Total U.S. sales of LHRH agonist products for advanced prostate cancer were about $973 million in 2004 based on IMS Health market data, though Valera believes that amount declined by about 10% in 2005, primarily as a result of lower prices due to changes in Medicare reimbursement.

Valera promotes Vantas as a more comfortable and convenient alternative to competing products because it eliminates the requirement of multiple physician visits and repeated injections and is smaller, softer and more flexible than other implants.

In addition to Vantas, the company is developing a pipeline of product candidates for indications that include central precocious puberty, acromegaly, opioid addiction, interstitial cystitis, nocturnal enuresis and bladder cancer.

At the midpoint of price guidance, gross proceeds would be $41.25 million, increasing to $47.44 million if the over-allotment option is exercised in full. Net IPO proceeds would be $36.3 million and would increase to $42.1 million if the over-allotment option is exercised in full.

Proceeds are targeted for general corporate purposes.

Valera had a net income of $150,609 on revenues of $21.6 million for the first nine months of 2005 versus a net loss of $15 million on revenues of $127,984 for the same period in 2004.

As of Sept. 30, the company had $2.57 million in cash and cash equivalents.

Sanders Morris Harris, Inc. is the largest shareholder with 5.4 million shares for 49.4% of the pre-IPO total. MXL Industries, Inc. is second with 2.1 million shares for 19.9% of the total.

Valera has applied to have its common stock approved for quotation on the Nasdaq National Market under the symbol "VLRX."

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