Gelesis drops IPO, raises $31.5M for pivotal U.S. trial of hydrogel weight-loss capsule

Weight loss and glycemic control startup Gelesis had hoped to take advantage of the most recent med tech IPO window. Instead, it's opted to pull a proposed $52 million IPO and go back to the well with VCs. It's raised $31.5 million in a financing round led by new investor Cormorant Asset Management, bringing its total raised to in excess of $90 million.

Such a sizable pre-IPO investment will put plenty of pressure on the company to build its valuation. It hopes to do just that by getting its lead weight-loss product Gelesis100 through a U.S. pivotal trial. Gelesis expects to have top-line data from the trial in the first half of 2017. But early clinical results were mixed, showing little differentiation from placebo.

"We appreciate the support of Gelesis' new and existing investors as we aim to bring novel therapies to the market to address the obesity and diabetes epidemics," said Gelesis co-founder and CEO Yishai Zohar in a statement. "We look forward to completing our U.S. pivotal trial of Gelesis100 and, if approved, we believe it has the potential to address the significant unmet need for an orally dosed, safe and efficacious therapy to induce weight loss and improve glycemic control."

Hydrogel particles mixing with food in the stomach--Courtesy of Gelesis

Gelesis100 is a capsule filled with small hydrogel particles that's designed to induce weight loss. The pill is taken with water ahead of a meal; the particles are designed to expand in the stomach after absorbing the water to induce a feeling of fullness. The expectation is that this approach could offer substantial weight loss without the invasiveness of devices or surgery or the side effects associated with drugs.

In the placebo-controlled, proof-of-concept FLOW trial with data last year, 128 nondiabetic overweight and obese patients were in a three-arm trial with a placebo arm as well as a high (3.75 g) and low (2.25 g) "dose" arm. Patients had a mean BMI of 31.7 and a mean age of 44.

But there wasn't too much difference from placebo patients who reported an average weight loss of 4.1%, while high "dose" had 4.5% and low "dose" had 6.1%. It also found that subjects with elevated blood glucose levels before treatment had the best response, losing 8.2% on average.

In July, the Boston-based startup expanded its ongoing GLOW U.S. trial into a pivotal trial. The startup will continue to enroll patients in the 6-month trial next year. Given the proof-of-concept results, Gelesis will be looking for a way to widen that gap between treated and placebo groups.

In addition to backing Gelesis100, the financing will also support first-in-human testing of follow-on product Gelesis200 with a three-month proof-of-concept study that's slated to start in the second half of 2016. That product is based on the same tech as the first iteration, but the glycemic control properties targeting prediabetic and diabetic patients have been enhanced.

Existing investors Invesco Asset Management, PureTech and the Priztker/Vlock Family Office also participated in the latest financing.

- here are the financing and IPO withdrawal announcements