Investors were swooning over the opportunity to participate in a Series B financing round for rare disease-focused Ultragenyx Pharmaceutical Inc., of Novato, Calif. The round, expected to be disclosed Thursday morning, completed at $75 million, one of the largest private placements of the year for a biotech company.

Ultragenyx's chief financial officer, Shalini Sharp, called the round a "plain vanilla equity transaction."

The funds will support three compounds through pivotal trials in 2015. "Our eventual goal is to go public in the first half of 2014," Sharp told BioWorld Today.

Ultragenyx's lead compound, UX001, is an extended-release formulation developed as a replacement therapy for hereditary inclusion body myopathy (HIBM).

HIBM is a severe, progressive myopathy, with onset between ages 18 and 20, caused by a defect in the sialic acid biosynthetic pathway. Patients with the disease are typically wheelchair-bound within 10 years to 20 years of diagnosis, and no approved therapies exist.

A preclinical study in mice showed that animals who received treatment with sialic acid lacked the inclusion body pathology in their muscle cells that characterizes the disease. Instead, those deposits were absent after treatment.

There also were improvements in survival, treadmill performance and other measures of efficacy.

UX001 is being investigated in a randomized, placebo-controlled, Phase II trial with endpoints of improvements in pharmacodynamic parameters, muscle strength and clinical evaluations.

Another enzyme replacement therapy, UX003, is in development for mucopolysaccharidosis Type VII (MPS VII), and will begin a Phase I/II study in seven patients in 2013.

MPS VII is "extremely rare," according to Sharp, with only about 200 patients worldwide. "But the mechanism of action is quite simple, and there's a vast amount of clinical data that gives us confidence it will work," Sharp said.

There is one other clinical-stage compound in Ultragenyx's pipeline. The nature of the compound and its indication have not been disclosed, but Sharp told BioWorld Today that it is a compound recently licensed from an academic institution, in development for a disease with a population of about 6,000 in the U.S.

Clinical data are expected for that compound in 2013, as well.

"We felt we had strong use of proceeds for this transaction, and we're able to fund pivotal trials for all of them," Sharp said.

The financing round was led by Adage Capital Partners LP, with new investors Jennison Associates LLC, T. Rowe Price Associates, BlackRock Inc., Sanofi-Genzyme BioVentures, Shire plc and other blue-chip market funds.

Existing investors TPG Biotech, Fidelity Biosciences, HealthCap and Pappas Ventures also participated.

The deal was heavily oversubscribed, according to Ultragenyx, signaling quite a bit of interest from investors.

Sharp attributed that interest to a combination of the appeal of the orphan disease space and the experience of the management team.

"The orphan space remains very solid," Sharp said. "The biotech sector has had its ups and downs this year, but the orphan space has been very strong."

Sharp also pointed out that the fundamentals of Ultragenyx's business were solid, including the relative cost of developing the compounds and the time to market. As well, regulators have shown greater flexibility in rare and ultra-rare indications, because of the high unmet need. "On the back end, when you are approved, a small company can afford to commercialize orphan products. They don't require a large primary care sales force."

The prospect of multiple product approvals in a short period of time played a role, as well.

In addition to development of its three lead compounds, Sharp said Ultragenyx will be looking at additional in-licensing opportunities. "We probably do have room for an additional compound or two," Sharp said.

Ultragenyx's $75 million paycheck is exceeded by few private placements in the biotech field in 2012.

One example is a deal closed by Genmab A/S, of Copenhagen, Denmark, in October. The company executed a private placement of 5.4 million new shares at DKK88 (US$15.40) each to Johnson & Johnson Development Corp., raising gross proceeds of DKK475 million. That placement was connected to a global license and development agreement for daratumumab between Genmab and Janssen Biotech Inc., a unit of J&J. (See BioWorld Today, Aug. 31, 2012.)

Ultragenyx brought in $45 million in its last financing round, in 2011, which, again, was one of the largest financings of its kind of the year. (See BioWorld Today, June 21, 2011.)

If orphan diseases continue to be popular with investors, Ultragenyx's initial public offering in 2014 will be one to watch.