Fractyl Health (GUTS) priced its IPO at the $15.00 mid-point of its $14.00-to-$16.00 range – and kept the deal’s size at the 7.33 million shares in the prospectus – to raise $109.95 million on Thursday night, Feb. 1, 2024. The metabolic therapeutics company is targeting obesity and Type 2 diabetes.
The stock dropped below its $15.00 IPO price to open at $13.75 – down $1.25 – at 12:39 p.m. EST today – Friday, Feb. 2, 2024 – on the NASDAQ. Volume on that opening trade was slightly more than 467,800 shares.
BofA Securities, Morgan Stanley and Evercore ISI are the joint book-runners of Fractyl Health’s IPO.
Fractyl Health is conducting clinical trials to evaluate an outpatient endoscopic procedure, Revita, to durably modify duodenal malfunction through hydrothermal ablation of the duodenal mucosa. The malfunction is the result of a high sugar and high fat diet. By correcting the malfunction, the procedure “results in alterations to physiologic signaling that affect glucose control and satiety,” the prospectus says.
The company says its multiple clinical trials will treat patients with conditions ranging from pre-diabetes and obesity to advanced Type 2 diabetes patients on long-acting insulin.
The Lexington, Massachusetts-based company is also developing a pancreatic gene therapy, Rejuva, which is designed to enable long-term remission of Type 2 diabetes and obesity. The pancreatic gene therapy durably alters metabolic hormone function in the pancreatic islet cells of patients, according to the prospectus. The company is in the preclinical stage of its work, including animal studies, on the pancreatic gene therapy.
Founded in 2010, Fractyl Health was originally known as MedCatalyst.
Dr. Harith Rajagopalan, the CEO of Fractyl Health, wrote in the co-founder’s letter in the prospectus that “our bodies are simply not designed for the abundant food environment of the modern world. We are built for an ancient world, a world in which food was scarce, not particularly tasty, and often not available when it was needed. Our ancestors, whose genes allowed them to survive through difficult times, passed those very same genes down to us – genes that now significantly increase the risk of type 2 diabetes in the modern world. This disease of excess blood sugar has arisen as an unintended, yet inevitable, consequence of this mismatch between our ancient genes and our modern dietary environment.”
Fractyl Health, like most biotechs when they go public, is not profitable. The company reported a net loss of $68.81 million on revenue of $110,000 for the 12 months that ended Sept. 30, 2023.
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