New record set for most Massachusetts biotech IPOs in a year


Not quite halfway through 2014 and the biotech industry in Massachusetts has already hit a milestone: a record number of young companies debuting on the big stage on Wall Street.

On Wednesday Zafgen Inc. became the 10th Massachusetts biotech to complete an initial public offering this year, surpassing the tally of nine for all of 2013, according to Renaissance Capital, a Connecticut investment firm that specializes in the IPO market.

Though largely a symbolic record, the large number of IPOs is a measure of the strength of Massachusetts’ local biotech industry, and shows the investment world is buying into the promise of up-and-coming drug makers, many of which are still in their tenuous early stages.

Bruce Booth, a partner at Atlas Venture in Cambridge and a member of the board at Zafgen, added that the investments from Wall Street will only further help expand and sustain the biotech sector.

“When you think about the long-term growth of the biotech sector, the ability to access capital markets like this is hugely important,” Booth said.

Founded in 2005, Cambridge-based Zafgen is still years from bringing a drug to market. With the $96 million raised in its IPO, Zafgen expects to begin Phase III clinical trials later this year on its lead product, a twice-a-week injection that tries to correct imbalances that make it difficult for some obese people to lose weight.

The company had previously raised $104 million in venture capital funding; its early backer was Atlas Venture, which remains its largest shareholder, followed by Third Rock Ventures of Boston.

Another local biotech–Syndax Pharmaceuticals Inc., a Waltham cancer drug firm–is also expected to hit Wall Street this week, according to Renaissance Capital. Nationwide six US biotech firms are expected to go public this week, which would bring the total for 2014 to 40 — again, surpassing the previous record of 37 for all of 2013. according to Renaissance Capital.

Meanwhile on Tuesday, Sage Therapeutics Inc. of Cambridge filed papers to go public, too. Sage is developing a treatment for life-threatening seizures, and aims to raise up to $69 million.

The year began at a torrid pace–with six biotechs from Massachusetts alone going public in the first three months of 2014. But then biotech stocks hit a period of tumult in April that led to a lull in IPOs for young drug developers that is just now ending.

Overall the US stock markets are pushing new records. The benchmark Nasdaq Biotechnology Index — which hit a record high in February, then plunged in April — is up 4.3 percent in the month of June. That’s compared to a 1.7 percent increase in the broader S&P 500 for the same period.

The earlier market volatility had led at least one biotech firm, Radius Health Inc. of Cambridge, to postpone its planned IPO in May. Radius Health ultimately completed its IPO earlier this month.

This article appears on page B7 of the Boston Globe on June 19, 2014, with the headline: Mass. biotech firms hit Wall St. running.

Illustration of a businessman popping champagne via Shutterstock.

Kyle Alspach has worked in journalism in Massachusetts since 2005 and was one of the original staff writers at BetaBoston.
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