Gelesis gobbled up some cash from private investors just a few months ago. But it looks like public investors don’t have the same type of appetite for the Boston startup’s hydrogel weight-loss pills.
According to research firm Renaissance Capital, Gelesis has postponed its planned initial public offering. Gelesis had been hoping to sell 4 million shares at $12 to $14 apiece. Renaissance recently noted that company insiders planned to cover up to 34 percent of the deal.
While it’s unclear what the next move is for Gelesis, the startup was to be the first company formed by Boston-based PureTech to go public. According to an e-mail statement to Xconomy from CEO Yishai Zohar, the company’s April IPO filing was “opportunistic” and Gelesis “may consider pricing [an IPO] as market conditions evolve.”
“While Gelesis had the ability to price the IPO last week, we have been considering the ideal timing for this,” Zohar wrote. “The U.S. biotech IPO market has been turbulent in the last few weeks with mixed aftermarket performance of most stocks that listed. Given our strong cash position and clinical studies underway, our board has been weighing the relative benefits of being a public company at this time.”
Zohar declined to comment beyond the statement.
PureTech, which formed Gelesis nine years ago, has given rise to startups in various areas of life sciences and technology, among them depression treatments (Tal Medical), therapeutic video games (Akili Interactive), and recently, music-as-therapy (The Sync Project). The most recent SEC filings show that PureTech held a 28.85 percent stake in Gelesis, making it the company’s largest shareholder. Other shareholders include SSD2 (an entity managed by Michael Vlock and Elon Boms, 28.29 percent), Invesco Asset Management (12.40 percent)—a unit of Invesco Perpetual, which just led an investment round in PureTech last year— and Hercules Technology Ventures (6.99 percent).
Gelesis raised $22 million from private backers at the end of March—it had been running low on cash last year, with $2.6 million on hand at the end of December, SEC filings show—and filed to go public less than a week later. The plan was to use the IPO cash to run trials for Gelesis100, a hydrogel pill made out of little particles that swell up in the stomach, tricking the body into feeling full.
Obesity drugs are a competitive field, and the drugs that have been approved over the past several years to shed pounds (like Arena Pharmaceuticals’ lorcaserin (Belviq) and Vivus’s phentermine/topiramate (Qsymia) have been a commercial disappointment. Gelesis aims to show that Gelesis100 is a safer alternative to these treatments, however, because Gelesis100 isn’t absorbed into the bloodstream like a drug. Instead, it contains two ingredients that are “generally recognized as safe” by the FDA—citric acid and a modified form of cellulose—and pass through the body.
Gelesis is developing the pill as a medical device, and is trying to get a CE Mark in Europe (an approval path for a medical device) to bring it to market. The big test of its hypothesis is already underway: Gelesis is running a six-month, randomized, placebo-controlled study including 168 overweight and obese patients, many of whom are either type 2 diabetic or prediabetic, with data expected next year.
But Gelesis100 will have to perform better than it has in previous tests to succeed. In an earlier three-month study, patients on a low (2.25 g) dose of Gelesis100 lost 2 percent more weight, on average (and 6.1 percent overall), than those on placebo, and those on a higher dose didn’t fare as well. The IPO prospectus showed that the FDA has required that “at minimum” Gelesis100 would have to do 3 percent better than placebo in this next study, and that at least 35 percent of patients on the drug have to lose at least 5 percent of their body weight. European regulators have indicated initially that they may require the drug to produce 5 percent more weight loss than placebo, on average, to win a CE Mark.
Gelesis has said, however, that patients with higher blood sugar levels in its earlier study fared better; its current trial has more of those types of patients.