Great for business: an anti-obesity pill that is not a drug

The company has developed an anti-obesity pill that is not a drug.

Following the publication of 2014 financial statements and the positive sentiment towards the biomedical sector, three Israeli biomedical companies today published prospectuses, after two quiet months for Israeli companies in the sector. One is Gelesis, which is seeking to raise $60 million in its IPO. Founded in 2006 by an Israeli team in the US through the PureTech Ventures fund, Gelesis has developed a pill that is actually a medical device, not a drug. The pill contains particles that expand in the stomach by absorbing water, making the patient feel satiated. The product is undergoing a multi-center clinical trial in the US. If the trial proves successful, the company expects to launch its product in Europe in 2018 and the US in 2019. The company’s first trial reported statistical differences in weight loss between the control group and the treatment group. These differences were significant; it is not certain, however, that they will meet the authorities’ requirements for weight reduction products. The company will therefore probably mark an improvement in diabetes indices as another possible target.

The company value for the offering has not yet been determined, and is very hard to estimate at this stage, because its product does not clearly fall into either the drug category of the medical device category. Pharmaceutical companies in this field are valued in the billions of dollars, but equipment companies have substantially lower values. The underwriters for the IPO are Piper Jaffray, Stifel, and Guggenheim. Gelesis has raised $64 million to date, and its main shareholders are PureTech of the US (28.59%), SDD2 (28%), Invesco Asset Management (12.4%), and Hercules Technology Ventures (6.9%).

Written by Gail Weinrub, 02/04/15