The biotech industry's Arctic ice-cube salesman Cristoph Westphal managed to raise $86 million Wednesday night in an initial public offering to develop a treatment for leg cramps made from food ingredients commonly found in your spice drawer and refrigerator.
If the biotech bull market hasn't reached 11 on the absurdity meter quite yet, the Flex Pharma (FLKS) IPO gets us darn close.
Flex's "proprietary" treatment for leg cramps -- prescription and over-the-counter retail versions to be developed -- is made from extracts of ginger, cinnamon and capsicum, otherwise known as bell peppers, according to its registration statement.
Wednesday night's offering sold 5.4 million shares of Flex at $16 per share, higher than the expected $12-14 pricing range. If the offering's over-allotment is also sold, Flex will raise $99 million.
Westphal, Flex's co-founder and CEO, seemingly has a knack for convincing unsuspecting investors and pharma companies to buy his food-as-medicine concoctions. Among his past dealings, Westphal founded and then sold Sirtris Pharmaceuticals, which was developing resveratrol (a component of red wine) as an age-defying miracle drug, to GlaxoSmithKline (GSK) - Get GlaxoSmithKline Plc Report for $700 million. Glaxo later wrote off its Sirtris investment after the resveratrol compound turned out to be a dud.
More recently, Westphal co-founded and served as first CEO of Verastem (VSTM) - Get Verastem, Inc. Report , a developer of drugs based on cancer stem cells, which went public in January 2012 at $10 per share. None of Verastem's pipeline drugs have worked out so far and the stock closed Wednesday at $7.53. In the same time frame, the Nasdaq Biotechnology Index has gained 186%.
Westphal was also involved with Alnara Pharmaceuticals, which bought an abandoned pancreatic enzyme replacement therapy on the cheap and flipped it to Eli Lilly (LLY) - Get Eli Lilly and Company Report for $180 million. The FDA later rejected Lilly's attempt to get the drug approved.
Westphal and his pals founded Flex only last February. They raised a $40 million round of private financing in September before filing IPO papers in December. The company is even taking shortcuts with drug development. Since the Flex "drug" is essentially food, the company is sidestepping safety and preclinical testing requirements usually necessary to conduct human clinical studies, at least initially.
It feels like Westphal is moving fast to help his early Flex backers -- the owners of the New England Patriots and the Boston Celtics, among others -- cash out for fear the over-hyped biotech IPO window closes before someone else realizes they were sold two spices and a vegetable for $16 per share.
The Flex IPO was co-managed by Jefferies, which makes perfect sense following the embarrassing allegations that the investment bank's former lead healthcare banker Sage Kelly used sex, booze and drugs to win client business.
Being drunk or stoned explains a lot about the Flex IPO.
Adam Feuerstein writes regularly for TheStreet. In keeping with company editorial policy, he doesn't own or short individual stocks, although he owns stock in TheStreet. He also doesn't invest in hedge funds or other private investment partnerships. Feuerstein appreciates your feedback;
to send him an email.