Update below Drug developer Zafgen priced its IPO at the upper end of its projected share price range ($16) on the evening before its public debut on the Nasdaq. It reflects confidence in the company’s unconventional injectible drug to treat severe obesity. It’s seeking to raise $96 million to push its drug alternative to costly bariatric surgery through Phase 2b clinical trials and eventually FDA submission.
Helmed by Novartis AG veteran Thomas Hughes, the biotechnology company will trade under the ticker symbol ZFGN.
Update At the close of trading on June 19, the stock had bounced more than 23 percent to end up at $19.75
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Instead of suppressing hunger, Zafgen’s obesity drug beloranib, inhibits the enzyme methionine aminopeptidase 2 and makes the body produce less fat and burn off the excess as fuel. Because the effects of the drug don’t appear to impact the brain in the way previous weight-loss drugs like fen-phen and Acomplia have, it may avoid the negative side effects that ultimately led to them being pulled from the market.
Given that 16 million Americans are considered to have severe obesity, it could produce blockbuster sized drug sales. Bariatric surgery runs from $22,000 to $38,000.
In addition to treating severe obesity in the general population, Zafgen is also developing its therapeutic to treat a rare genetic disorder called Prader-Willi Syndrome.
Atlas Venture was the founding investor going back to the company’s Series A round in 2006 when it raised $800,000, the first tranche in a $2 million round. In a statement, a company spokesman said Zafgen is a great example of its seed model. It incubated the company for 18 months. Peter Barrett was acting CEO and Bruce Booth served as acting COO. Barrett continues to serve as chairman of the board and Booth is also on the board. Zafgen raised $104 million in venture funding.
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[Photo Credit: Obesity Traffic Sign from Big Stock Photo]
