Prometheus Inc., the Sorrento Valley-based drug and diagnostics development company, reported its 10th profitable year in a row, according to a news release.

The privately held 16-year-old company, with its feet planted firmly in the gastrointestinal medicine niche, reported an increase in revenues, reaching $519 million for 2010. Prometheus reported $341.5 million in revenues for the year ending Dec. 31, 2009, good enough for the No. 3 ranking on the San Diego Business Journals latest list of Largest Private Companies, which is based on 2009 revenue.

Prometheus officials declined to comment on or discuss the companys revenues, pointing to an application for an initial public stock offering that has been on file with the U.S. Securities and Exchange Commission since November 2007. The application carries a requirement of a “quiet period” on business matters discussed in the documents, which have been amended 18 times since the initial filing.

The current amended S-1 form (filed Feb. 25) paints a picture of a company that derived more than 60 percent of its income from the sales of a drug called Entocort, which Prometheus licensed from pharma giant AstraZeneca LP in 2005.

Entocort is used to treat mild to moderate active Crohns disease and to maintain clinical remission once its achieved for up to 3 months, according to the company.

The unfulfilled IPO filing doesnt surprise John McCamant, an analyst who publishes the Berkeley-based Medical Technology Stock Letter.

Fewer IPOs

“We see fewer and fewer IPOs in the biotech sector,” McCamant said. “These companies are being acquired or merged rather than stand for public offerings, particularly since they rarely raise the capital theyd hoped to.”

Prometheus is what McCamant terms a specialty pharma business.

“They focus on a niche and serve it better than the large pharmaceutical companies can,” he said. “That signals smarter drug development – everything doesnt have to be a billion-dollar drug to be profitable.”

“They license an existing asset and build value – put dedicated sales to work and develop a market while providing needed therapies,” he said.

The company also markets Lotronex, which it licensed from GlaxoSmithKline in January 2008. Lotronex is a last-ditch drug for women with severe irritable bowel syndrome. Prometheus has developed diagnostic tests to help doctors identify the causes and effective treatments for the syndrome in individual patients.

The company hit a few bumps this year. It relinquished its April 2009 U.S. license of Rosetta Genomics micro RNA diagnostic tools for cancer, which Rosetta then began selling. And, according to SEC filings, the patent on Prometheus top seller, Entocort, is set to expire in May. AstraZeneca has negotiated a deal with Israeli generic producer Teva-Barr that will allow the company to start making an authorized generic in December, which will reduce the profitability of the nongeneric drug.

But Prometheus has also developed diagnostic tools and a sales team that works with the 12,000 American gastroenterologists to help identify which drugs will be most effective at treating patients with irritable bowel syndrome. The company reports that 83 percent of those doctors either prescribed Entocort or Lotronex, or ordered Prometheus diagnostics in 2010.

A Winning Combination

“We believe our business model of offering pharmaceuticals combined with diagnostic testing services provides our sales force greater access to physicians and differentiates us from other pharmaceutical, specialty pharmaceutical and diagnostic companies. Leveraging this model, we believe we have established ourselves as a leader in the gastroenterology market, where our sales force, including approximately 125 sales representatives, sales managers and regional field trainers, has significant experience and technical knowledge of the market,” the SEC filing states.

That sales model, the combination of working directly with doctors to promote and provide testing and treatments, should serve the company well in the oncology world, where Prometheus gained a foothold with the acquisition of the license for Proleukin.

Marty Graham is a freelance writer for the San Diego Business Journal.