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Boston’s Flex Pharma raises $86.4 million in IPO

Flex Pharma chairman and CEO Christoph Westphal has launched five other Cambridge startups.Pat Greenhouse/Globe Staff File

Shares of biotechnology startup Flex Pharma Inc. lost 6.5 percent in their first day of trading Thursday after the company raised $86.4 million in an initial public offering.

The performance, on a day of strong gains in the broader financial markets, marked an underwhelming debut for the first Massachusetts biotech to go public in 2015.

Flex Pharma, based in Boston, is developing a prescription medicine and an over-the-counter treatment for the muscle cramps that affect everyone from sports stars to weekend athletes. Its chief executive, the serial entrepreneur and investor Christoph Westphal, has helped launch and taken public five Cambridge biotech startups during the past decade.

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Less than a year old, Flex Pharma, which has attracted a roster of high-profile investors, sold 5.4 million shares of common stock at a price of $16 a share Wednesday. It opened on the Nasdaq Stock Market Thursday under the ticker symbol FLKS and traded as high as $19.50 a share in mid-morning before closing at $14.95, down $1.05.

A record 63 biotech startups went public last year, breaking the 1999 record of 52 offerings. The strength of the IPO market this year will depend partly on the general economy and partly on how individual companies structure their businesses and drug pipelines, said industry consultant Jonathan Gertler, senior partner at Back Bay Life Science Advisors in Boston. He said he did not want to comment specifically on the Flex Pharma offering.

“Obviously we’re still subject to macroeconomic factors,” Gertler said. “If the broad financial markets pull back, you might see a pullback in the biotech IPOs. But there will still be sustained interest in the sector. If you look at the IPO class over the last year and a half, the ones that have come up with substantial offerings with platforms and alliances have fared better.”

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Flex Pharma granted its underwriters a 30-day option to buy an additional 810,000 shares at the offering price minus underwriting discounts and commissions, the company said in a statement. The IPO was co-managed by Jefferies LLC and Piper Jaffray & Co.

The company is hoping its combination of ginger extract, cinnamon extract, and bell peppers, developed by scientific co-founders Rod MacKinnon and Bruce Bean, can be designated a dietary supplement, allowing it to reach a consumer market before the Food and Drug Administration approves a separate prescription medicine for nocturnal leg cramps.

Chief executive Westphal is the co-founder of Longwood Fund, a Boston venture capital firm that bankrolled Flex Pharma along with Bessemer Venture Partners of Menlo Park, Calif. Among the outside investors are several owners of professional sports teams, including Wyc Grousbeck and Steve Pagliuca of the Boston Celtics, and the Kraft Group of the New England Patriots.

Westphal was not available to discuss the offering Thursday, said a company spokeswoman, who cited a “quiet period” imposed by US securities regulators. Westphal previously helped launch Cambridge biotechs Alnylam Pharmaceuticals Inc., Momenta Pharmaceuticals Inc., Sirtris Pharmaceuticals Inc., Acceleron Pharma Inc., and Verastem Inc.


Robert Weisman can be reached at robert.weisman@globe.com. Follow him on Twitter @GlobeRobW.