Days After $22M Raise, Gelesis Files for IPO

Xconomy Boston — 

Gelesis may have raised $22 million just last week, but apparently it had more up its sleeve than just a private equity financing.

The Boston-based startup filed papers this afternoon to go public. It intends to use the proceeds from the offering to fund ongoing clinical trials for the anti-obesity pill it’s developing, known as Gelesis100. Gelesis hopes to trade on the Nasdaq under the ticker symbol “GLSS.”

Should Gelesis complete the offering, it would be the first company created by Boston-based PureTech to go public. PureTech, which formed Gelesis in 2006, remains its largest shareholder, with a 28.59 percent stake. Next are SSD2 (an entity managed by Michael Vlock and Elon Boms, 28.09 percent), Invesco Asset Management (12.40 percent), and Hercules Technology Ventures (6.91 percent). Gelesis has raised about $64 million since its inception.

Gelesis would use the IPO cash to help fund the trials it’s running for Gelesis100, a hydrogel pill made out of little particles that swell up in the stomach, tricking the body into feeling full. Though the company raised $22 million for that purpose last week, Gelesis’s IPO filing shows that it was running low on cash—it had $2.6 million on hand at the end of the year.

Gelesis100 is being developed as a medical device, not a drug, because it’s made of two ingredients that are “generally recognized as safe” by the FDA—the prospectus says those two ingredients are citric acid and a modified form of cellulose—and it passes through the body without getting absorbed. Gelesis100 packs sugar-grain-sized particles of a superabsorbent polymer into capsules taken with a glass or two of water. Those particles are released from the capsule in the stomach, sponge up the water, and balloon in size, making a person feel full. Enzymes in the large intestine then break down the particles, release the water, and enable the polymer to exit the body with stool.

Gelesis aims to market Gelesis100 as a safer alternative to weight loss pills; since it isn’t absorbed into the bloodstream like a drug, the idea is it shouldn’t produce the same type of side effects. To get the product to market, Gelesis is trying to first obtain a CE Mark in Europe, an approval path for a medical device. To prep for that filing, it’s running a six-month, randomized, placebo-controlled study including 168 overweight and obese patients, many of whom are either type 2 diabetic or prediabetic. Data are expected in 2016. If all goes well, Gelesis hopes to begin selling the product in 2018.

Still, Gelesis100 will have to perform better in this study than it did in an earlier three-month proof-of-concept trial to get to the finish line. In that trial, patients on a low (2.25g) 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 prospectus shows 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 people with higher blood sugar levels lost more weight in its three-month study. Its six-month trial will include more of those types of patients.

Piper Jaffray, Stifel, Nicolaus & Co., and Guggenheim Securities are underwriting the IPO.