Solazyme’s Strong Debut Augurs Well for Other Bioenergy Companies

Solazyme’s Strong Debut Augurs Well for Other Bioenergy Companies

Solazyme (NASDAQ:SZYM) went public in an upsized IPO, pricing 11 million shares at $18 per share to raise $198 million. The South San Francisco-based renewable oil developer’s offering was buoyed by the strong performance of several industrial biotech companies that have recently gone public. Both Amyris (NASDAQ:AMRS) and Gevo (NASDAQ:GEVO) are trading at about 50 percent above their initial offering price.

Originally planning to offer about 10 million shares, Solazyme increased its offer by 1 million shares. Morgan Stanley and Goldman Sachs were lead managers of the offering. Underwriters have an overallotment option for an additional 1.65 million shares. Investors in the offering are happy. Shares were up 14.5 percent on the first day of trading on the Nasdaq under the symbol SZYM.

Solazyme develops renewable oils from genetically engineered algae grown in closed tanks. Like many renewables companies that started with a biofuel strategy, it quickly refocused its plans to produce high value renewable chemicals and bioproducts. Solazyme’s oils are used in a range of products from cosmetics and soaps to food ingredients and aviation fuel. The company has agreements with partners ranging from the U.S. Navy and Dow Chemical to L’Oreal and Roquette Freres for its entire commercial production through 2015.

Solazyme’s strong debut could be a good sign for other bioenergy companies in the queue such as KiOR and Ceres. Oil prices are likely to remain high, and more and more corporations are looking to diversify their product mix with the addition of chemicals and fuels from renewable sources.

In Cambridge, Massachusetts, two biotech drug developers raised capital in conjunction with partnering agreements. Proteostasis Therapeutics received a $20 million equity investment from Elan (NYSE:ELN) that includes a drug discovery partnership to advance its platform for small molecule drugs and diagnostics for the treatment of neurodegenerative disorders. Besides the equity investment, Proteostasis could get an additional $30 million in collaboration funding over five years.

As part of the agreement, Elan will become an approximate 24 percent shareholder in Proteostasis and have a right of first negotiation to exclusively license compounds emerging from the partnership.

Radius Health closed a $66 million tranched series C financing and a $25 million loan facility along with two deals to advance its bone-building drug into late-stage trials for the treatment of osteoporosis. The equity financing came from five new investors including BB Biotech, Brookside Capital, Saints Capital, Nordic Bioscience, and Ipsen Pharma, which were joined by existing investors MPM Capital, BB Biotech Ventures, MPM Bio IV NVS Strategic Fund, The Wellcome Trust, HealthCare Ventures, and Scottish Widows Investment Partnership.

Nordic Bioscience, a Danish contract research organization that specializes in osteoporosis treatments, will manage the clinical trials in Europe. At the same time, Radius Health will collaborate with 3M Drug Delivery Systems, a subsidiary of 3M Corporation (NYSE:MMM), on the development of a transdermal delivery option as an alternative to subcutaneous injection for Radius’ experimental treatment, BA058, a proprietary parathyroid hormone-related protein analog. Financial terms of their agreement were not disclosed.