Gelesis to take its stomach-filling weight loss capsule public in $1.3B SPAC merger

Gelesis’ flagship technology may be designed to help people slim down, but the device maker itself is doing anything but, as the company makes plans to significantly bulk up its market standing and valuation through a proposed reverse merger with special purpose acquisition company Capstar.

SPAC transactions have quickly become the new method of choice for medtech companies looking to go public: In the last week alone, cardiac-mapping artificial intelligence developer HeartFlow laid the groundwork for its own $2.4 billion reverse merger and molecular diagnostics maker Prenetics was reported to be eyeing a $1.3 billion SPAC deal of its own.

But for Gelesis, the SPAC route may be the chance for a second bite at the apple: the company previously aimed to go public through a $52 million IPO in 2015, but ultimately withdrew its plans, instead opting for $31.5 million in private financing to continue the development of its Plenity edible weight-loss capsule. 

Since then, the company—an alumnus of the Fierce 15 class of 2010—has raised about $100 million to support those R&D efforts and signed high-value deals with the telehealth provider Ro and pharmaceutical company China Medical System to help roll out Plenity. Now through its deal with Capstar, which filed its own $240 million IPO last summer, Gelesis is slated to become a publicly traded company on the New York Stock Exchange with the ticker symbol “GLS.”

The SPAC combination is expected to reel in an equity value of about $1.3 billion, bestowing Gelesis with gross proceeds totaling about $376 million, including $100 million from new and existing investors such as co-founder PureTech Health, Capstar-backer PIMCO, Kennedy Lewis Investment Management and more.

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Those funds—as well as Gelesis’ newly public standing—will help the Boston-based company fast-track the commercialization plans for Plenity, a hydrogel-filled capsule for managing weight gain.

Modeled after the cellular properties of raw vegetables, Plenity capsules are taken with a glass of water before a meal. Upon entering the gastrointestinal tract, they break into solid gel pieces that glom onto ingested foods, helping them take up more space in the stomach and leaving users feeling fuller faster.

Clinical studies of the capsules have demonstrated that, when taken regularly, about 60% of users experienced “meaningful” weight loss, which translates to an average reduction of about 10% of their body weight over the course of six months. As a result, in 2019, Plenity was cleared by the FDA for use by those with a body mass index of 25 to 40, prescribed alongside a regimen of diet and exercise.

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The SPAC merger—expected to be finalized in the fourth quarter of this year—will allow Gelesis to begin the full commercial launch of Plenity before the end of 2021, building on the limited rollout that began last October. And to prep for the increase in demand it expects from the wider debut, Gelesis is currently expanding its manufacturing facilities.

Becoming a publicly traded company will also help Gelesis accelerate development of the other products in its pipeline, including edible hydrogels for Type 2 diabetes, non-alcoholic steatohepatitis, constipation and other conditions of the GI tract.