IPO Report: Gelesis (GLSS)

Francis Gaskins |

Gelesis IPO, Gelesis IPO price, Gelesis IPO date, stocks to buy now, IPOs this week, small-cap stocksGelesis (GLSS) is a biotechnology company focused on the development of first-in-class products to induce weight loss and improve glycemic control in overweight and obese patients, including those with prediabetes and type 2 diabetes. It is based in Boston, MA.

Eleven other companies are scheduled for the week of May 4.  The full IPO calendar is available at IPO Premium.

SEC Documents

Manager, Joint-managers: Piper Jaffray, Stifel, and Guggenheim Securities

Co-managers:

End of lockup (180 days): Monday, November 2, 2015

End of 25-day quiet period: Monday, June 1, 2015

GLSS scheduled a $52 million IPO with a market capitalization of $179 million at a price range midpoint of $13 for Wednesday, May 6, 2015 on Nasdaq.

Gelesis IPO Summary

GLSS is a biotechnology company focused on the development of first-in-class products to induce weight loss and improve glycemic control in overweight and obese patients, including those with prediabetes and type 2 diabetes.

GLSS believes its product candidates, if approved, have the potential to address the obesity and diabetes epidemics by providing safe and effective treatments that can help large patient populations, including those not served by existing treatments.

Gelesis IPO Valuation

Glossary

Valuation Ratios

Mrkt Cap (mm)

Price /Sls

Price /Erngs

Price /BkVlue

Price /TanBV

% offered in IPO

Gelesis (GLSS)

$178

890.5

-9.9

2.7

2.8

29%

             

Gelesis IPO Conclusion

Products to induce weight loss and improve glycemic control

Neutral

Collaboration rev dropped to almost 0

Grant revenue dropped to 0

Price-to-book of 2.7, medium  range

P/E of -9.9 indicating moderate cash burn relative to market cap

Clinical trial results expected first half of '16

Gelesis Business

GLSS is a biotechnology company focused on the development of first-in-class products to induce weight loss and improve glycemic control in overweight and obese patients, including those with prediabetes and type 2 diabetes.

GLSS believes its product candidates, if approved, have the potential to address the obesity and diabetes epidemics by providing safe and effective treatments that can help large patient populations, including those not served by existing treatments.

Works Mechanically

GLSS’s product candidates are based on GLSS’s proprietary hydrogel technology that works mechanically, as opposed to via a chemical mode of action, and exclusively in the gastrointestinal, or GI, tract rather than systemically or through surgical intervention.

Lead Product

GLSS’s lead product candidate, Gelesis100, is an orally administered capsule that contains small hydrogel particles designed to employ multiple mechanisms of action along the GI tract to induce weight loss and improve glycemic control. For optimal safety and efficacy, these hydrogel particles are engineered to rapidly absorb and release water at specific locations in the GI tract.

Proof of Concept

GLSS has completed its 3 month proof of concept, or POC, FLOW study, a 128-patient, randomized, double-blind, placebo-controlled, parallel-group, clinical trial for Gelesis100 that demonstrated statistically significant weight loss and improvement of glycemic parameters in overweight and obese patients, including prediabetics.

Gelesis100 exhibited a safety profile that was similar to that of placebo with no serious adverse events observed.

Clinical Trial

In November 2014, GLSS initiated the GLOW study, a 168-patient, randomized, double-blind, placebo-controlled, parallel-group, 6 month clinical trial to study the ability of Gelesis100 to induce weight loss and improve glycemic control in overweight and obese patients, including those with prediabetes and mild type 2 diabetes.

GLSS expects to report data from this trial in the first half of 2016.

This study could, subject to the outcome of GLSS’s discussions with European notified bodies, serve as the pivotal study for obtaining a CE Mark for marketing approval for a weight loss indication in the European Economic Area and certain other jurisdictions.

It will also serve as a proof of concept study for weight loss and glycemic control in the United States.

Obesity and obesity-related metabolic diseases represent a global health challenge for which there are few safe and effective interventions.

These conditions are associated with comorbidities such as type 2 diabetes, hypertension, and heart disease.

Medical device

Although Gelesis100 is an orally administered capsule, GLSS anticipates it will be regulated as a medical device.

Gelesis Revenues

GLSS's limited revenues have been derived from a license and collaboration agreement and grants from government agencies. The license and collaboration agreement was executed in June 2012 and terminated effective November 2013.

Gelesis Market

In 2012, based on a report from the U.S. Centers for Disease Control and Prevention, or CDC, 35% of the U.S. adult population 20 years of age and older was obese and an additional 34% was overweight.

Of the overweight population, many of these individuals are expected to cross the threshold into obesity in the near future. The treatment of obesity, and its associated comorbidities, cost the U.S. healthcare system approximately $190 billion, or 21% of medical spending, in 2005.

Globally, there were more than 1.9 billion adults 18 years of age and older that were overweight or obese in 2014, according to the World Health Organization, or WHO. One of the most prevalent comorbidities of overweight and obesity is type 2 diabetes.

In 2012, according to the CDC, approximately 26 million Americans had type 2 diabetes and 85% of these individuals were overweight or obese.

Furthermore, there were an additional 86 million American adults 20 years of age and older that were considered prediabetic, with approximately 1.7 million new cases of type 2 diabetes diagnosed that year.

Gelesis Intellectual Property

GLSS owns five families of patents and patent applications, both issued and pending, covering composition of matter, methods of use and methods of production for its product candidates, including Gelesis100 and Gelesis200.

Patents covering use of GLSS’s technology for treating obesity and reducing calorie consumption have been granted or allowed in the United States, Europe, and several other territories providing protection until at least 2027 and potentially longer based on regulatory extensions, if applicable, or GLSS’s pending patent applications, should they be granted. In addition, GLSS also relies on know-how, trade secrets, and continuing technological innovation to develop and maintain its proprietary position.

Gelesis Competition

Orally Administered Drugs

Four drugs that are FDA approved and currently marketed for the treatment of obesity are phentermine/topiramate, lorcaserin, naltrexone/bupropion, and orlistat.

 Each treatment is indicated for obese patients and overweight patients with at least one comorbidity.

In September 2012, Vivus, Inc. commercially launched its combination product, Qsymia (phentermine/topiramate) in the United States.

In June 2013, Arena Pharmaceuticals, Inc. launched Belviq (lorcaserin), in the United States.

In October 2014, Takeda Pharmaceutical Company Limited commercially launched its combination product, Contrave (naltrexone/bupropion), in the United States and in December 2014 Orexigen received a positive recommendation for approval of Mysimba (naltrexone/bupropion), in Europe.

Orlistat is marketed in the United States by Roche Group under the brand name Xenical and over-the-counter in the United States at half the dose of Orlistat by GlaxoSmithKline under the brand name alli. In addition to competing with one another, these drugs also compete against generic forms of phentermine, topiramate, naltrexone, and bupropion.

Injectable Drugs

Several pharmaceutical companies, are developing injectable drugs for obesity. Zafgen has completed a 3 month Phase 2 study with beloranib, an injectable drug candidate with a mechanism of action through methionine aminopeptidase 2, or MetAP2, inhibition.

Saxenda, a formulation of Novo Nordisk’s liraglutide, was approved by the FDA in December 2014 for the treatment of obesity. Liraglutide is currently also marketed by Novo Nordisk for the treatment of type 2 diabetes under the brand name Victoza in the United States.

Medical Devices and Surgery

Bariatric surgery, including gastric bypass and gastric banding procedures, is typically employed for obese patients with a BMI exceeding 40 or those with a BMI greater than 35 who are experiencing obesity-related complications such as diabetes.

However, in February 2011, the FDA approved Apollo Endosurgery’s LAP-BAND system for obese patients with a BMI greater than 30 who are experiencing obesity related comorbidities or patients with a BMI greater than 35 with or without obesity related comorbidities.

The gastric bands available in the United States include LAP-BAND, as well as the Realize gastric band from Johnson & Johnson.

ReShape Duo, a dual-intragastric balloon from ReShape Medical, is approved in Europe. ReShape Medical recently submitted a PMA application to the FDA.

In addition, there are gastric balloon concepts in early development by Allurion Technologies and Obalon. EndoBarrier, a duodenal-jejunal bypass liner from GI Dynamics, is approved in Europe and is currently in a U.S. study.

On March 5, 2015, GI Dynamics announced that the FDA has placed a hold on enrollment in its ongoing clinical trial of EndoBarrier. EnteroMedics received FDA approval for VBLOC (vagal blocking) therapy in January 2015.

VBLOC therapy is also approved in Europe. The TransPyloric Shuttle from BAROnova is an endoscopically-delivered device for which an early stage six month clinical study has been conducted.

Gelesis 5% Shareholders Pre-IPO

PureTech Ventures, LLC and affiliated entities     28.85%

SSD2, LLC and affiliated entities            28.29%

Hercules Technology Ventures and affiliated entities       6.99%

Invesco Asset Management Limited       12.40%

Yishai Zohar    5.24%

John LaMattina, Ph.D.  30.53%

Elon Boms        29.74%

Gelesis Dividends

No dividends are planned.

Gelesis IPO Use of Proceeds

GLSS expects to receive $46 million from its IPO and use it for the following:

$20 million to complete the GLOW study and FDA pivotal study, as well as additional clinical development of its lead product candidate, Gelesis100;

$4 million to fund preclinical and clinical development of its other product candidates, including a 3 month POC trial of Gelesis200;

$20 million to fund engineering and construction of a commercial-scale manufacturing line to completion; and

the remaining proceeds, if any, to fund working capital and other general corporate purposes.

 

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer

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