Fractyl Health (Nasdaq: GUTS), a metabolic therapeutics company
focused on pioneering new approaches for the treatment of type 2
diabetes (T2D) and obesity, today reported its fourth quarter and
full year 2023 financial results and provided a business update.
“2024 is shaping up to be a transformational year
as we approach several key milestones across both our Rejuva and
Revita platforms, bringing us closer towards our goal of enabling
long-term control over type 2 diabetes and obesity without the
burden of chronic therapies. We are thrilled to announce today the
approval of our IDE for Revita’s Remain-1 study in patients with
obesity who wish to discontinue current GLP-1 treatment and look
forward to initiating the study in the second half of the year,”
said Harith Rajagopalan, M.D., Ph.D., co-founder and Chief
Executive Officer of Fractyl Health. “In addition, we expect to
complete enrollment of our pivotal Revitalize-1 study and are
excited to report topline data in the fourth quarter of 2024. In
parallel, we recently announced the first candidate in our Rejuva
GLP-1 pancreatic gene therapy platform, RJVA-001, and are on track
to complete IND-enabling studies in the second half of the year.
Following our recent initial public offering, we are now
well-capitalized and positioned to execute across multiple key
upcoming milestones for both our Revita and Rejuva platforms.”
Recent Highlights and Upcoming
Milestones
Revita
The Revita DMR system is an endoscopic outpatient
procedural therapy designed to durably modify duodenal dysfunction,
and improve metabolic health, blood glucose levels, and weight in
patients with inadequately controlled T2D.
- Today, the Company announced Investigational Drug Exemption
(IDE) approval from the U.S. Food and Drug Administration (FDA) to
initiate a two-part, parallel cohort Remain-1 study for weight
maintenance in patients with obesity who have lost at least 15%
total body weight on GLP-1RA therapy and wish to discontinue their
GLP-1RA without weight regain. Based on the FDA IDA approval,
Fractyl expects to initiate the Remain-1 randomized, double blind
pivotal study and begin reporting updates for the open-label
cohort, Reveal-1, in the second half of 2024.
- As of March 15, 2024, Fractyl treated 29 patients with DMR and
enrolled 24 patients in the registry with interim follow-up data
from 14 patients. At three months post-procedure, we observed a
change in median baseline HbA1c of -1.9% (9.2% to 7.3%) and a
median change in baseline weight of -17.6 pounds (244.7 pounds to
227.1 pounds). Of these 14 patients, two patients discontinued all
their previously prescribed ADAs. We believe these results suggest
a significant overall improvement in metabolic health.
- In December 2023, Fractyl announced new long-term weight
maintenance data. A pooled analysis of data collected on secondary
endpoints assessing weight in all of its controlled clinical
studies across the U.S. and Europe demonstrated a 3.4% mean
reduction in total body weight loss at four weeks in patients with
T2D on multiple ADAs after undergoing a single Revita DMR Procedure
and showed a sustained mean body weight loss of 4.0% at 48
weeks.
- The Revita system is approved in Europe as a medical device
under a CE Mark and received reimbursement authorization through
NUB in Germany in 2022 for the treatment of T2D. Fractyl has
initiated a limited commercial pilot in a single center in
Dusseldorf, Germany.
Upcoming Milestones:
- Fractyl is currently enrolling its pivotal Revitalize-1 study
in patients with inadequately controlled T2D despite being on up to
three ADAs and daily insulin. The Company expects to complete
enrollment in the first half of 2024 and report topline data in the
fourth quarter of 2024.
- Fractyl expects to initiate the Remain-1 randomized, double
blind pivotal study and begin reporting updates for the open-label
cohort, Reveal-1, in the second half of 2024.
- The Company plans to continue enrolling patients in its Germany
Real-World registry and provide updates on an ongoing basis.
Rejuva
Rejuva is a modular, physiologic gene therapy
platform with three key elements designed to enable successful
pancreatic gene therapy: (1) a proprietary delivery catheter
designed to enable local, low dose therapeutic delivery directly to
the pancreas via endoscopic access, (2) vectors with tropism for
the pancreatic islet to enable successful transduction and gene
delivery with limited biodistribution, and (3) transgenes with
tissue-restricted promoters and metabolically active peptides that
can durably impact glucose and weight control.
- In January 2024, Fractyl announced RJVA-001 as the first GLP-1
pancreatic gene therapy (GLP-1 PGTx) candidate in its Rejuva
platform for the treatment of T2D. RJVA-001 is a locally
administered AAV9 viral vector that expresses full-length GLP-1
hormone from the insulin promoter designed to improve upon known
issues of treatment discontinuation and metabolic rebound typically
seen with existing GLP-1 based therapies. Fractyl also announced
that it has engaged with European regulators to align on an
Investigational New Drug (IND)-enabling path for RJVA-001 for the
treatment of T2D.
- In December 2023, Fractyl presented preclinical findings in an
oral presentation at the World Congress of Insulin Resistance
Diabetes and Cardiovascular Disease 2023 Annual Meeting. In the
head-to-head preclinical in vivo study in a diet-induced obesity
mouse model, a single administration of GLP-1 PGTx resulted in 27%
total body weight loss at day 28, compared to 21% loss for chronic
semaglutide. Animals that were subsequently withdrawn from
semaglutide and received a single-dose of GLP-1 PGTx maintained
initial body weight loss, while animals who did not crossover to
GLP-1 PGTx regained 19% body weight by day 57.
- In November 2023, the Company announced the expansion of an
academic-industry scientific partnership led by Professor Randy
Seeley, Ph.D., of Michigan Medicine, the academic medical center of
the University of Michigan, to explore mechanisms of metabolic
improvement for weight loss from an intrapancreatic gene therapy
leveraging GLP-1-based transgenes for long-duration treatment of
type 2 diabetes and obesity.
Upcoming Milestones:
- Fractyl expects to complete IND-enabling studies, or its
equivalent, for RJVA-001 in the second half of 2024. Pending
regulatory clearance, the Company intends to initiate its
first-in-human study in the first half of 2025.
- The Company plans to nominate its first GLP-1 PGTx candidate
for obesity in the second half of 2024.
Corporate Updates
- In the first quarter of 2024, the Company completed an initial
public offering (IPO), in which we issued and sold a total of
7,433,332 shares of common stock, inclusive of the partial exercise
of the underwriters’ option to purchase additional shares, at a
price to the public of $15.00 per share, resulting in aggregate net
proceeds of approximately $100.3 million, after deducting the
underwriting discounts and other offering expenses.
- In February 2024, Fractyl announced the appointment of Sam
Conaway to its Board of Directors. Mr. Conaway brings an extensive
background in the commercialization of medical technologies and
leadership in new product launches.
Fourth Quarter and Full Year 2023
Financial Results
Revenue: Fractyl initiated a
limited commercial pilot in Germany in the first half of 2023. Due
to the limited nature of the commercial pilot, revenue from sales
and leasing of Revita in 2023 was insignificant, totaling $0.1
million for the year ended December 31, 2023.
R&D Expenses: Research and
development expense was $10.2 million for the quarter ended
December 31, 2023, compared to $8.6 million for the same
period in 2022, and was $38.0 million for the year ended
December 31, 2023, compared to $34.4 million for the same
period in 2022. The increase was primarily due to increased
personnel-related expenses, including stock based compensation, as
well as clinical, medical and office lease expenditures, partially
offset by decreased engineering, manufacturing, and preclinical
study expenditures.
SG&A Expenses: Selling,
general and administrative expense was $2.8 million for both
quarters ended December 31, 2023 and December 31, 2022.
It was $12.8 million for the year ended December 31, 2023,
compared to $15.0 million for the same period in 2022. The decrease
was primarily due to less professional services spending related to
public relations, recruiting and marketing activities, offset by
increased debt issuance cost incurred in 2023. In addition, in 2022
the Company wrote off $2.7 million capitalized offering costs
related to its initial IPO plan that was delayed due to adverse
market conditions. IPO offering costs incurred associated with the
Company's IPO effort in 2023 were capitalized as deferred offering
costs on the balance sheet.
Net Loss: Net loss was $19.2
million, or $(11.18) per share, for the quarter ended
December 31, 2023, compared to a net loss of $10.9 million, or
$(7.39) per share, for the same period in 2022. The increase in net
loss was primarily related to $6.8 million increase in fair value
of the notes payable and warrants, as well as an increase of $1.6
million in operating expenses. Net loss was $77.1 million, or
$(45.29) per share, for the year ended December 31, 2023,
compared to a net loss of $46.5 million, or $(31.97) per share, for
the same period in 2022. The increase was primarily related to
$30.0 million increase in fair value of the notes payable and
warrants, as well as an increase of $1.5 million in operating
expenses.
Cash Position: As of
December 31, 2023, Fractyl had approximately $33.2 million in
cash and cash equivalents. Based on its current business plans,
Fractyl believes that its existing cash and cash equivalents,
together with the approximately $100.3 million of aggregate net
proceeds from the IPO, will be sufficient to fund its operating
expenses and capital expenditures requirements through 2025.
About Fractyl Health
Fractyl Health is a metabolic therapeutics company
focused on pioneering new approaches to the treatment of metabolic
diseases, including T2D and obesity. Despite advances in treatment
over the last 50 years, T2D and obesity continue to be rapidly
growing drivers of morbidity and mortality in the 21st century.
Fractyl Health’s goal is to transform metabolic disease treatment
from chronic symptomatic management to durable disease-modifying
therapies that target the organ-level root causes of disease.
Fractyl Health is based in Burlington, MA. For more information,
visit www.fractyl.com or www.twitter.com/FractylHealth.
About Revita
Fractyl Health’s lead product candidate, Revita,
is based on the company’s insights surrounding the potential role
of the gut in obesity and T2D. Revita is designed to remodel the
duodenal lining via hydrothermal ablation (i.e., duodenal mucosal
resurfacing) to edit abnormal intestinal nutrient sensing and
signaling mechanisms that are a potential root cause of metabolic
disease. Revita has received a CE mark in Europe and, in January
2022, received reimbursement authorization through NUB in Germany
for the treatment of T2D. In the United States, Revita is for
investigational use only under US law. A pivotal study of Revita in
patients with inadequately controlled T2D despite multiple
medicines and insulin, called Revitalize-1, is currently enrolling
in the United States and Europe.
About Rejuva
Fractyl Health’s Rejuva platform focuses on
developing next-generation adeno-associated virus (AAV)-based,
locally delivered gene therapies for the treatment of T2D and
obesity. The Rejuva platform is in preclinical development and has
not yet been evaluated by regulatory agencies for investigational
or commercial use. Rejuva leverages advanced delivery systems and
proprietary screening methods to identify and develop metabolically
active gene therapy candidates targeting the pancreas. The program
aims to transform the management of metabolic diseases by offering
novel, disease-modifying therapies that address the underlying root
causes of disease.
Forward Looking Statements
This press release contains forward-looking
statements within the meaning of the Private Securities Litigation
Reform Act of 1995. All statements contained in this press release
that do not relate to matters of historical fact should be
considered forward-looking statements, including without limitation
statements regarding the promise and potential impact of our
preclinical or clinical trial data, including without limitation
the design, initiation, timing and results of clinical enrollment
and any clinical trials or readouts, the content, information used
for, timing or results of any IDE or IND-enabling studies or IND
applications, the potential launch or commercialization of any of
product candidates or products, the sufficiency of our cash, cash
equivalents and investments to fund our operating activities for
any specific period of time, and our strategic and product
development objectives and goals, including with respect to
enabling long-term control over type 2 diabetes and obesity without
the burden of chronic therapies. These statements are neither
promises nor guarantees, but involve known and unknown risks,
uncertainties and other important factors that may cause the
Company’s actual results, performance or achievements to be
materially different from any future results, performance or
achievements expressed or implied by the forward-looking
statements, including, but not limited to, the following: the
Company’s limited operating history; the incurrence of significant
net losses and the fact that the Company expects to continue to
incur significant net losses for the foreseeable future; the
Company’s need for substantial additional financing; the Company’s
ability to continue as a going concern; the restrictive and
financial covenants in the Company’s credit agreement; the lengthy
and unpredictable regulatory approval process for the Company’s
product candidates; uncertainty regarding its clinical studies; the
fact that the Company’s product candidates may cause serious
adverse events or undesirable side effects or have other properties
that may cause it to suspend or discontinue clinical studies, delay
or prevent regulatory development, prevent their regulatory
approval, limit the commercial profile, or result in significant
negative consequences; the Company’s reliance on third parties to
conduct certain aspects of the Company’s preclinical studies and
clinical studies; the regulatory approval process of the FDA,
comparable foreign regulatory authorities and notified bodies, are
lengthy, time-consuming and inherently unpredictable, and even if
we complete the necessary clinical studies, we cannot predict when,
or if, we will obtain regulatory approval or certification for any
of our product candidates, and any such regulatory approval or
certification may be for a more narrow indication than we seek; and
the potential launch or commercialization of any of product
candidates or products and our strategic and product development
objectives and goals, and the other factors discussed under the
caption “Risk Factors” in our Annual Report on Form 10-K filed with
the Securities and Exchange Commission (the “SEC”) on April 1,
2024, and in our other filings with the SEC. These forward-looking
statements are based on management's current estimates and
expectations. While the Company may elect to update such
forward-looking statements at some point in the future, the Company
disclaims any obligation to do so, even if subsequent events cause
its views to change.
Fractyl Health, Inc.
Selected Condensed Consolidated Balance Sheet Data
(in thousands) (Unaudited)
|
|
December 31, 2023 |
|
|
December 31, 2022 |
|
Cash and cash equivalents |
|
$ |
33,209 |
|
|
$ |
49,269 |
|
Restricted
cash |
|
|
4,570 |
|
|
|
4,255 |
|
Working
capital (1) |
|
|
24,460 |
|
|
|
44,318 |
|
Total
assets |
|
|
76,212 |
|
|
|
60,956 |
|
Notes
payable, long-term |
|
|
55,152 |
|
|
|
17,760 |
|
Total
liabilities |
|
|
113,944 |
|
|
|
25,945 |
|
Convertible
preferred stock |
|
|
287,330 |
|
|
|
287,330 |
|
Total
stockholders’ deficit |
|
|
(325,062 |
) |
|
|
(252,319 |
) |
|
|
|
|
|
|
|
|
|
(1) Working capital is defined as total current
assets less total current liabilities.
Fractyl Health, Inc.
Consolidated Statements of Operations and Comprehensive
Loss (in thousands, except for share and per share
information) (Unaudited)
|
Three Months Ended
December 31, |
|
|
Twelve Months Ended
December 31, |
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
Revenue |
$ |
7 |
|
|
$ |
— |
|
|
$ |
120 |
|
|
$ |
— |
|
Cost of
goods sold |
|
2 |
|
|
|
— |
|
|
|
77 |
|
|
|
— |
|
Gross profit |
|
5 |
|
|
|
— |
|
|
|
43 |
|
|
|
— |
|
Operating
expenses: |
|
|
|
|
|
|
|
|
|
|
|
Research and development |
|
10,166 |
|
|
|
8,617 |
|
|
|
38,038 |
|
|
|
34,354 |
|
Selling, general and administrative |
|
2,820 |
|
|
|
2,796 |
|
|
|
12,841 |
|
|
|
15,031 |
|
Total operating expenses |
|
12,986 |
|
|
|
11,413 |
|
|
|
50,879 |
|
|
|
49,385 |
|
Loss from
operations |
|
(12,981 |
) |
|
|
(11,413 |
) |
|
|
(50,836 |
) |
|
|
(49,385 |
) |
Other income
(expense), net: |
|
|
|
|
|
|
|
|
|
|
|
Interest income, net |
|
463 |
|
|
|
411 |
|
|
|
1,260 |
|
|
|
797 |
|
Loss from debt extinguishment |
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
(313 |
) |
Change in fair value of notes payable |
|
(1,021 |
) |
|
|
130 |
|
|
|
(20,697 |
) |
|
|
2,315 |
|
Change in fair value of warrant liabilities |
|
(5,633 |
) |
|
|
15 |
|
|
|
(6,794 |
) |
|
|
137 |
|
Other expense, net |
|
(8 |
) |
|
|
(1 |
) |
|
|
(24 |
) |
|
|
(4 |
) |
Total other income (expense), net |
|
(6,199 |
) |
|
|
555 |
|
|
|
(26,255 |
) |
|
|
2,932 |
|
Net loss and
comprehensive loss |
|
(19,180 |
) |
|
|
(10,858 |
) |
|
|
(77,091 |
) |
|
|
(46,453 |
) |
Accretion of
dividends on convertible preferred stock |
|
(4,330 |
) |
|
|
(4,330 |
) |
|
|
(17,180 |
) |
|
|
(17,180 |
) |
Net loss
attributable to common stockholders |
$ |
(23,510 |
) |
|
$ |
(15,188 |
) |
|
$ |
(94,271 |
) |
|
$ |
(63,633 |
) |
Net loss per
share attributable to common stockholders, basic and diluted |
$ |
(11.18 |
) |
|
$ |
(7.39 |
) |
|
$ |
(45.29 |
) |
|
$ |
(31.97 |
) |
Weighted-average number of common shares outstanding, basic and
diluted |
|
2,102,410 |
|
|
|
2,055,399 |
|
|
|
2,081,328 |
|
|
|
1,990,419 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contacts
Corporate Contact Lisa Davidson, Chief Financial
Officer ir@fractyl.com, 781.902.8800
Media Contact Beth Brett, Corporate Communications
bbrett@fractyl.com, 720.656.6544
Investor Contact Stephen Jasper Gilmartin Group
stephen@gilmartinir.com, 619.949.3681
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