Boston's Flex Pharma Upsizes IPO to $86 Million

January 29, 2015
By Riley McDermid, BioSpace.com Breaking News Sr. Editor

Boston biotech darling Flex Pharma has upped its highly anticipated initial public offering size, saying Thursday it will boost the amount it wants to raise by 40 percent, from $60 million to $86 million, as it attempts to take advantage of a booming market for biotech IPOs.

The revised filing with the U.S. Securities and Exchange Commission said Flex will price its shares at $16, a major hike from the $12 to $14 listed in its original filing, and will offer 5.4 million shares instead of 4.6 million.

It has said it will use the money to begin clinical trials for its neuromuscular dietary supplements, an approach to anti-cramping therapy that has athletes sitting up and taking notice. Flex Pharma was launched less than a year ago but has become a favorite with investors from the sports world’s inner circle, including Kraft Group, which owns the New England Patriots, and the owners of the Boston Celtics Wyc Grousbeck and Steve Pagliuca.

Flex Pharma is based in Back Bay, Mass. and has already seen a $41 million funding injection from well-known venture capitalists including Bessemer Venture Partners, Bindley Capital Partners, CD-Venture, Alexandria Equities, Lightstone Ventures, Jennison Associates and EcoR1 Capital.

The company said it plans to list on the NASDAQ under the symbol FLKS and initially filed confidentially on Oct. 29 but is joining a parade of winter biotech IPOS including Carbylan and Tracon trying to cash in on what may be a quickly waning biotech bull market. Jefferies and Piper Jaffray are the joint bookrunners on the deal.

So far Flex Pharma has focused on research and dietary supplements that attempt to target the excessive firing of neurons in the spinal cord that control muscle contraction. It has a timeline for market introduction of its products in 2016.

“There are a number of well-known sports drinks and other consumer products used to prevent [exercise-associated muscle cramps],” Flex Pharma said in its filing. “However, we do not believe any of these products have been proven to be clinically effective in preventing [the problem]”.

Public filings have shown Flex Pharma lost more than $4 million in the 10 months since it was founded, a not uncommon financial situation for young startups with massive overhead and very little existing infrastructure. If it can convince large biopharma companies that it’s a smart bet with a proprietary pipeline, however, those costs can easily be defrayed by a splashy IPO or lucrative exit.

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