Reuters is reporting that Jazz Pharmaceuticals, maker of the controversial drug Xyrem, priced its six million IPO shares at $18 apiece — roughly 30% below its earlier, most optimistic hopes. Just this morning, Jazz lowered its expected range to $20 to $21, down from an earlier projection of $24 to $26.

That leaves the specialty-pharma company, which had raised $265 million in venture funding and private equity, gross proceeds of $108 million — or up to $124.2 million if its underwriters purchase a 900,000 share overallotment. Jazz had earlier hoped to raise almost $180 million in the offering. Based on its projection of 24.5 million shares outstanding following the offering, the company is now valued at $441 million. That’s still a mighty high valuation for a company that had 2006 revenues of less than $50 million.

My previous coverage of the Jazz IPO, here and here, laid out the case that the company — a “specialty pharmaceutical” outfit whose business consists of buying cast-off drugs from other companies — was woefully overhyped, with an initial offering that represented the peak of an investment bubble in specialty pharmas. Backed by the New York private-equity firm Kohlberg Kravis Roberts and several prominent Silicon Valley VCs, including Versant Ventures and Prospect Venture Partners, however, Jazz maintained an aura of inevitability despite the weakness of its fundamental business.

Then the NYT weighed in this morning with a story pointing out that the company’s lead drug Xyrem — an approved treatment for narcolepsy — is basically GHB, a controlled substance known as a club and date-rape drug. Although Jazz had disclosed the “negative publicity” associated with Xyrem in its filings, no one — myself included — had previously made much of this fact. (Of course, it didn’t help that Jazz obscured the connection between Xyrem and GHB by describing its drug’s active ingredient as a “derivative” of GHB, rather than GHB itself.) Although it’s impossible to know whether the NYT story was responsible, Jazz almost immediately knocked down its offering price, and then failed even to clear that lowered bar later in the day.

Who’s looking forward to seeing how Jazz trades tomorrow?

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