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Thursday, October 19, 2006 - Page updated at 12:00 AM

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Local biotech's IPO beats odds

Seattle Times business reporter

Trubion Pharmaceuticals


Founded: 2002

Located: Seattle, Belltown

Ticker: TRBN

Market Capitalization: $220 million

Employees: 72

CEO: Peter Thompson

What it does: Is developing targeted drugs for autoimmune diseases and cancer.

Trubion's top shareholders after the IPO: Arch Venture Partners (13.9 percent), Frazier Healthcare Ventures (13.2 percent), Oxford Bioscience Partners (13 percent), Prospect Venture Partners (11 percent), and Venrock Associates (11 percent).

Underwriters: Morgan Stanley, Banc of America Securities, Pacific Growth Equities and Lazard Capital Markets.

— Source: Company reports, Securities and Exchange Commission

Trubion Pharmaceuticals beat the odds in its initial public offering Wednesday on a couple of counts.

In a market that has lost much of its appetite for new biotech companies, it was able to complete the IPO without slashing its price, and then maintain a steady valuation in its first day on the Nasdaq.

Shares in the Seattle biotech closed at $13.09, up from its initial price of $13. The company, which trades under the ticker TRBN, corralled investors at the low end of the $13 to $15 range it had predicted. It now has a market capitalization of $220 million.

Trubion sold 4 million shares to new investors, and 800,000 more shares to its drug-development partner, Wyeth. The offering raised $62 million to advance its drug trials against autoimmune diseases and cancer.

Trubion is just the second Northwest life-sciences company to go public this year, after Northstar Neuroscience in May. Last week, Snoqualmie-based Light Sciences Oncology indefinitely postponed its IPO, as did Tucson, Ariz.-based ImaRx Therapeutics. Trubion is the 15th biotech IPO out of 180 total this year, according to Bloomberg data.

Like most biotechs, Trubion does not yet have a marketable drug or a convincing body of evidence that its drugs work. What sets it apart is a well-known pharmaceutical partner in Wyeth, and managers who successfully developed Enbrel at Seattle-based Immunex.

It's still a big gamble, because just one of 10 drugs that enters clinical testing reaches the market.

This year, investors have not been eager to take that sort of risk. So far in 2006, eight biotech IPOs have traded up, and seven are down from their initial price.

Trubion's chief financial officer, Michelle Burris, said the company is just the fourth biotech in the last 18 to 24 months that went public without being forced to cut the price below its pre-set range.

"This is a team that has executed successfully in the past, and has a likelihood that there's an ability to execute in the future," Burris said.

Cynthia Robbins-Roth, founding partner of BioVenture Consultants in San Mateo, Calif., said the average biotech IPO this year has raised $57.5 million. Nearly all have been companies with marketed products, or experimental products in late stages of development — not basic lab research.

She said public investors are no longer willing to bankroll biotech companies that inhale cash for years and then flame out.

"If there's a person around that hasn't figured out by now that biotechs in development are years away from producing a product, ... they are living many miles away from reality," Robbins-Roth said. "This is a risky business."

Trubion plans to use its new cash to grow from 72 employees to about 85, according to filings with the Securities and Exchange Commission. It is currently testing TRU-015 against rheumatoid arthritis in a 280-patient, placebo-controlled clinical trial, and expects results in the second half of 2007. It also plans to test other drugs at earlier stages of development against cancer.

The company was founded in 2002 by a trio of scientists with experience at successful biotech companies Chiron, Immunex and Genetic Systems.

Trubion is developing what it calls "small, modular immunopharmaceuticals" that have the ability to hone in on diseased cells like other biotech drugs but in a smaller package it believes may be better at penetrating bulky tissues.

Luke Timmerman: 206-515-5644 or ltimmerman@seattletimes.com

Copyright © 2006 The Seattle Times Company

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