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Zafgen files for IPO as obesity drug gears for Phase 3 trial

A Cambridge obesity treatment developer has filed plans to go public and raise $86.2 million.

Zafgen Inc. is developing drugs to treat severely obese patients who aren’t helped by other treatments. The firm’s lead product candidate is a twice-a-week injection.

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The drug works by rebalancing the way the body produces and uses fat stored in adipose tissue, the company says. The imbalances in obese people make it more difficult for them to lose weight and keep it off, according to Zafgen.

Zafgen said it intends to use some of the proceeds from the stock sale to finance a Phase 3 clinical program for beloranib to begin this year. In January it reported that a Phase 2a study of the drug, in patients with a severe form of genetic obesity, Prader-Willi syndrome, reduced body fat content by 8.1 percent after four weeks of treatment.

According to the Obesity Action Coalition, severely obese persons can face a half-dozen or more related medical conditions, and 112,000 deaths a year in the United States are attributed to obesity.

Zafgen said the cost of treating patients with Prader-Willi syndrome can typically run $100,000 to $200,000 a year.

Along with Zafgen, US biotech firms targeting obesity include Boston-based Intarcia Therapeutics Inc., which is developing minipumps that are inserted under the skin to deliver a new drug for controlling type 2 diabetes and obesity. Meanwhile, Mountain View, Calif.-based Vivus Inc. received approval for anti-obesity drug Qsymia in mid-2012, but sales of the drug have been slow to date.

Zafgen has raised at least $114 million in equity funding since its launch in 2005. Top investors include Atlas Venture of Cambridge, which owns a 35.6 percent stake in Zafgen, and Third Rock Ventures of Boston, which owns 35.4 percent of the company’s shares.

The company intends to list on the Nasdaq Stock Market under the symbol ZFGN.

The company’s timing to go public may be tricky. While up-and-coming biotech firms have been streaming into the public markets for the past year, a sell-off earlier this month saw many publicly traded biotech firms lose share value. The benchmark Nasdaq Biotechnology Index dropped 11 percent between April 1 and April 14, though it has since recovered some.

One local biotech firm, Burlington-based Aldeyra Therapeutics, postponed its planned IPO earlier this month.

Another biotech, Cambridge-based Cerulean Pharma, sold shares as scheduled in mid-April but at a much lower price — $7 — compared with its target of $11 to $13.

Kyle Alspach can be reached at kyle.alspach@globe.com. Follow him on Twitter @KyleAlspach and on betaboston.com.
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