Fractyl sets out $99M IPO ambitions after busy week of biotechs going public

With last week seeing back-to-back oversized biotech IPOs to kick off the new year, it’s no surprise that Fractyl Health is now kicking its own offering plans up a gear.

The Lexington, Mass.-based biotech announced in December 2023 that a potential IPO could be near, with the proceeds earmarked to complete a 1,000-person study of an endoscopic procedure, called Revita, to back up a planned U.S. approval application. Funds would also go towards continued preclinical development of a GLP-1-based pancreatic gene therapy Rejuva.

The company didn’t share expectations for the offering last month but revealed in an SEC filing this morning that it’s hoping to sell 7.3 million shares for between $14 and $16 apiece. If the final price falls in the middle of that range, the biotech could bring in $99 million—rising to $114.3 million if underwriters seize the 30-day option to buy an additional 1.09 million shares at the same price.

That haul would place Fractyl below GC Oncology and ArriVent, which brought in a combined $555 million from their back-to-back IPOs toward the end of last week. Still, Fractyl’s leadership will no doubt be heartened by the markets’ initial reception to both those debuts, with CG's stock almost doubling in value on the first day of trading, while ArriVent saw a more modest 11% rise on Friday.

Fractyl’s leadership may also be hoping that the gold rush in obesity meds will ensure the same warm reaction from investors. Rejuva is a GLP-1-based pancreatic gene therapy candidate designed to “provide long-term metabolic benefits” from a single dose. Fractyl has been reading out data from preclinical studies in mice in recent months that appear to show the therapy can outperform semaglutide—marketed by Novo Nordisk as Wegovy to treat obesity.

In October, the company presented data showing that a single dose of Rejuva reduced body fat by about 25% in a mouse model of type 2 diabetes, compared to roughly 18% in animals that were given daily doses of semaglutide.

Rejuva uses an inactive adeno-associated virus to deliver a gene that stimulates GLP-1 expression in pancreas cells, leading to insulin release. While semaglutide is given through subcutaneous injections, Rejuva is designed to go directly to the pancreas via an infusion, though the mice in the October 2023 study received intraperitoneal injections. The mode of delivery and the design of the gene therapy restrict it to the pancreas, reducing the potential for off-target effects, according to Fractyl.

The biotech is currently working on lead optimization and investigational new drug-enabling toxicology studies and is targeting 2024 for initial human studies.