Managing Editor

Undaunted by a rush of development activity in the DPP-4 inhibitor space in Type II diabetes, Phenomix Corp. has filed for an $86 million initial public offering to push through its lead candidate.

The San Diego-based firm has not yet set the share price and is seeking a listing on Nasdaq under the ticker "PHMX."

Phenomix is attempting stake a claim to the $21 billion global Type II diabetes market with its lead candidate PHX1149, a dipeptidyl peptidase-4, or DPP-4, inhibitor being developed as an oral, once-daily treatment for Type II diabetes. The company recently completed enrollment of a 445-patient Phase IIb clinical trial designed to measure the reduction in hemoglobin A1c.

Its results thus far are encouraging. In a Phase IIa trial completed last March, patients treated with PHX1149 experienced increased levels of glucagon-like peptide-1, or GLP-1, and reduced post-meal glucose levels, similar to other DPP-4 inhibitors.

PHX1149 also has demonstrated low cross-reactivity with other cellular targets closely related to DPP-4, which the company said will reduce the potential for off-target effects from PHX1149 relative to less selective DPP-4 inhibitors.

In that Phase IIa study, the orally administered compound met its primary endpoint of improving postprandial glucose in 174 Type II diabetics, and it also met secondary endpoints related to HbA1c and GLP-1 levels.

The market leader in the DPP-4 field is sitagliptin, marketed by Merck & Co. Inc., of Whitehouse Station, N.J., as Januvia and Janumet, which is the first DPP-4 inhibitor approved by the FDA and the European Agency for the Evaluation of Medicinal Products for the treatment of Type II diabetes.

It its Securities and Exchange Commission filings, Phenomix noted that sitagliptin carries with it common side effects, including upper respiratory tract infections, nasal congestion and headache, as well as rare adverse events such as serious allergic and hypersensitivity reactions. It and other DPP-4 inhibitors in development have exhibited similar efficacy profiles as measured by reductions in HbA, and the favorable tolerability findings for PHX1149 could give the company a leg up.

The company began its Phase IIb trial in September. The double-blind, randomized, placebo-controlled, study will evaluate the effect of 200 mg PHX1149, 400 mg PHX1149 or placebo on hemoglobin A1c levels in patients already receiving metformin, glitazone or a combination thereof. Secondary endpoints include post-meal glucose and fasting blood glucose. The 12-week trial will be followed by a two-year, open-label, follow-on study.

The company's second product candidate, PHX1766, is a protease inhibitor currently in preclinical development for the treatment of hepatitis C virus. Phenomix expects to begin Phase I clinical trials in the second half of 2008.

Phenomix bolstered its coffers last March with a Series C financing that brought in $55 million. The company, founded in 2001, said at that time that the round should last it through the Phase IIb testing. To date it has raised about $120 million. (See BioWorld Today, March 8, 2007.)

All shares of the common stock to be sold in the offering will be offered by Phenomix, and Morgan Stanley & Co. Inc. and Credit Suisse (USA) LLC will serve as joint book-running managers for the offering, for which Oppenheimer & Co. and Pacific Growth Equities, LLC are acting as co-managers.