Plenity product revenue increased 142%
year-over-year to $7.5 million in the quarter, driven by the debut
of the national media campaign in February 2022
Q1 2022 gross margin increased 277%
year-over-year
Company reiterates guidance of $58M in
projected product revenue for 2022
Gelesis (NYSE: GLS), the maker of Plenity for weight management,
today reported financial results for the first quarter of 2022.
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the full release here:
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Gelesis' net product revenue was $7.5
million for the first quarter 2022, a 142% increase over the first
quarter 2021, driven by the launch of the company’s first national
broad awareness media campaign for Plenity on January 31. (Graphic:
Business Wire)
“We saw all-time highs of people seeking and starting Plenity
prescriptions. It’s no surprise: we offer a proven,
nature-inspired, and FDA-cleared therapy that has the potential to
help over 150 million people in the United States whose needs are
largely unmet by existing therapies on the market. Based on the
results of the first quarter, we are encouraged that our message is
resonating with the right people,” said Yishai Zohar, Founder and
CEO of Gelesis. “We are committed to delivering an accessible and
affordable new option for weight loss. We were pleased with the
immediate reception from the first wave of our broad media
awareness campaign and we look forward to continuing to help many
more people achieve their weight loss goals.”
Gelesis CFO Elliot Maltz commented, “This quarter we focused on
beginning to build broad consumer awareness of Plenity. Our strong
performance across February and March, which accounted for more
than 80% of our revenue this quarter, demonstrates the
effectiveness of our marketing efforts and the tremendous potential
for this product. We were pleased by the improvement in our gross
margin this quarter that resulted from completing the first phase
of our commercial manufacturing scale-up last year. We believe this
is just the beginning and it could take 4-plus years to reach peak
market share in the United States. We are targeting a consumer
acquisition cost of less than $100 at the point when there is broad
awareness of Plenity. We intend to focus our business plan on
creating strong consumer awareness of our product.”
Key Business Metrics
For the Three Months Ended
March 31,
2022
2021
New members acquired
40,400
14,100
Units sold
114,570
48,761
Product revenue, net
$
7,514
$
3,101
Average selling price per unit, net
$
65.58
$
63.60
Gross profit
$
2,601
$
285
Gross margin
34.6
%
9.2
%
First Quarter 2022 Results
- Net product revenue was $7.5 million for the first quarter
2022, a 142% increase over the first quarter 2021, driven by the
launch of the company’s first national broad awareness media
campaign on January 31.
- Gross profit was $2.6 million for the first quarter 2022, with
gross margin for the first quarter 2022 increasing 276% over the
first quarter 2021, attributable to increased sales volume and
lower costs of goods sold.
- Net loss for the quarter was $(5.7) million and Adjusted EBITDA
was $(26.9) million.
- Following the broad awareness media campaign launch, a total of
40,400 members joined during first quarter 2022, a 187% increase
over first quarter 2021. In one quarter, with two months of broad
awareness media, the company more than doubled the number of new
members quarter over quarter.
A reconciliation of Adjusted EBITDA, a non-GAAP financial
measure, to net loss, its most comparable financial measure under
generally accepted accounting principles in the United States
(“U.S. GAAP”), is included in the tables accompanying this press
release. See “Non-GAAP Financial Measures” for additional important
information regarding Adjusted EBITDA.
Recent Business Highlights
Gelesis launched the first wave of its national broad awareness
media campaign for Plenity on January 31, which was subsequently
associated with its record high levels of web traffic and
prescription requests. Based on data from the first quarter 2022
and the first wave of the media campaign, the company shares the
following findings about these new members.
- More than 80% of new member acquisition and product revenue
occurred in February and March following the successful media
launch.
- Quarter over quarter, web traffic increased 140% and the number
of individuals seeking a new prescription increased 140%. This
conversion rate remained consistent with previous quarters, despite
the large influx of new potential members, suggesting that the
right message is reaching the appropriate target audience.
- 90% of new members typically complete a treatment request
within 24 hours of first visiting the website, indicating they are
coming with the intention of seeking a prescription and do not
require additional advertising investment.
- The online visit takes about 15 minutes. On average, people
find out whether they have been approved for a prescription within
24 hours. The product is shipped directly to their home and arrives
within 2 days.
- The company demonstrated its operational ability to scale to
meet the significant increase in consumer demand. Manufacturing
Plenity is a proprietary process to Gelesis, and the company
completed a manufacturing scale up at the end of 2021 which helped
enable significant improvement in gross margin.
- Notable among growth with traditional healthcare provider
(“HCP”) interaction prescriptions, 40-50% of these prescriptions
were requested by the consumer (the company’s baseline before the
media campaign began was 25%).
- Of the prescriptions requests initiated by the patient, 40% of
the time the patient specifically made an appointment with their
HCP to seek out a prescription; 60% of the time they brought it up
during an already-scheduled visit.
- Plenity has the largest addressable market of any prescription
weight management approach and 150 million American adults could
qualify for treatment, including the tens of millions of Americans
with a BMI between 25 and 30 who generally do not qualify for other
prescription weight loss treatments. Unlike other available
prescription treatments for obesity, Plenity does not contain any
black box safety warnings.
- About 70% of Plenity members had never tried a prescription
weight management product before, indicating Plenity is bringing
new people into the category of prescription weight management
products.
- During its limited time on the market, Plenity members are
already ordering multiple units: three monthly kits on average
within the first year. The company expects this number to increase
over time as obesity and excess weight are chronic in nature, and
Gelesis intends to support members’ episodic and longer-term needs.
There is no limit to how long a person can take Plenity and the
company expects that those members who had success will seek
Plenity out the next time they are looking to manage their
weight.
- Gelesis presented results from the LIGHT-UP clinical trial at
the European Congress on Obesity 2022. The study looked at adults
with overweight or obesity who have prediabetes or type 2 diabetes
and were treated with either GS200 (one of the company’s clinical
stage hydrogels) or placebo. Approximately 6 out of 10 adults
treated with GS200 achieved clinically meaningful response to
treatment (achieving at least 5% body weight loss), losing on
average 11% of their body weight (~23 pounds) and an average
reduction of 5.5 inches off their waist circumference in only 24
weeks. Approximately 1 out of 3 GS200-treated adults were “super
responders,” losing at least 10% of their body weight and on
average losing 13% (~30 pounds), or 7 inches off their waist
circumference. The overall incidence of adverse events (AEs) in
adults treated with GS200 was similar to the incidence of AEs in
the placebo group.
- Gelesis completed its business combination with Capstar SPAC on
January 13, 2022, resulting in gross proceeds of $105 million.
Financial Outlook for Fiscal Year 2022
Based on current market conditions, results of the first quarter
of 2022, and expectations for the remainder of the year, Gelesis
estimates product revenue, net, of about $58 million in 2022. This
is contingent on the timing and amount of future anticipated
financing, in addition to the company’s current expectations
regarding the amount and timing of investments in broad awareness
media, which could be impacted by available liquidity and other
considerations as it monitors the rate of growth in new Plenity
members and units sold during upcoming quarters.
The guidance provided above constitutes forward-looking
statements which are subject to uncertainty. Actual results may
differ materially and we cannot anticipate the effect of changes in
marketing investment on our results from operations. Refer to the
"Forward-Looking Statements" safe harbor section below for
information on the factors that could cause our actual results to
differ materially from these forward-looking statements.
Q1 2022 Conference Call and Webcast Information
Gelesis management will host a conference call today at 4:30 pm
ET to discuss the first quarter 2021 results, followed by a
question-and-answer period. The conference call can be accessed by
dialing +1 (844) 200-6205 for U.S. participants and +1 (929)
526-1599 for all other participants. The conference ID is
726898.
A live webcast will also be available here, or on the company’s
investor relations website at https://ir.gelesis.com/. A replay of
the webcast will be available shortly afterwards.
About Gelesis
Gelesis Holdings Inc. (NYSE: GLS) (“Gelesis”) is a
consumer-centered biotherapeutics company and the maker of
Plenity®, which is inspired by nature and FDA cleared to aid in
weight management. Our first-of-their-kind non-systemic
superabsorbent hydrogels are made entirely from naturally derived
building blocks. They are inspired by the composition and
mechanical properties of raw vegetables, taken by capsule, and act
locally in the digestive system, so people feel satisfied with
smaller portions. Our portfolio includes Plenity® and potential
therapies in development for patients with Type 2 Diabetes,
Non-alcoholic Fatty Liver Disease (NAFLD)/Non-alcoholic
Steatohepatitis (NASH), and Functional Constipation. For more
information, visit gelesis.com, or connect with us on Twitter
@GelesisInc.
Plenity® is indicated to aid weight management in adults with
excess weight or obesity, a Body Mass Index (BMI) of 25–40 kg/m²,
when used in conjunction with diet and exercise.
Important Safety Information about Plenity
- Patients who are pregnant or are allergic to cellulose, citric
acid, sodium stearyl fumarate, gelatin, or titanium dioxide should
not take Plenity.
- To avoid impact on the absorption of medications:
- For all medications that should be taken with food, take them
after starting a meal.
- For all medications that should be taken without food (on an
empty stomach), continue taking on an empty stomach or as
recommended by your physician.
- The overall incidence of side effects with Plenity was no
different than placebo. The most common side effects were diarrhea,
distended abdomen, infrequent bowel movements, and flatulence.
- Contact a doctor right away if problems occur. If you have a
severe allergic reaction, severe stomach pain, or severe diarrhea,
stop using Plenity until you can speak to your doctor.
Rx Only. For the safe and proper use of Plenity or more
information, talk to a healthcare professional, read the Patient
Instructions for Use, or call 1-844-PLENITY.
Forward-Looking Statements
Certain statements, estimates, targets and projections in this
press release may constitute “forward-looking statements” within
the meaning of the federal securities laws. The words “anticipate,”
“believe,” continue,” “could,” “estimate,” “expect,” “intend,”
“may,” “might,” “plan,” “possible,” “potential,” “predict,”
“project,” “should,” “strive,” “would” and similar expressions may
identify forward-looking statements, but the absence of these words
does not mean that statement is not forward looking.
Forward-looking statements are predictions, projections and other
statements about future events that are based on current
expectations and assumptions and, as a result, are subject to risks
and uncertainties. Forward-looking statements include, but are not
limited to, statements regarding our or our management team’s
expectations, hopes, beliefs, intentions or strategies regarding
the future, including those relating to Gelesis’ business
combination with Capstar Special Purpose Acquisition Corp.
(“Capstar”) and its expected benefits, Gelesis’ performance
following the business combination, the competitive environment in
which Gelesis operates, the expected future operating and financial
performance and market opportunities of Gelesis and statements
regarding Gelesis’ expectations, hopes, beliefs, intentions or
strategies regarding the future. In addition, any statements that
refer to projections, forecasts, or other characterizations of
future events or circumstances, including any underlying
assumptions, are forward-looking statements. Forward-looking
statements speak only as of the date they are made. Readers are
cautioned not to put undue reliance on forward-looking statements,
and Gelesis assumes no obligation and does not intend to update or
revise these forward-looking statements, whether as a result of new
information, future events, or otherwise. Gelesis gives no
assurance that any expectations set forth in this press release
will be achieved. Various risks and uncertainties (some of which
are beyond our control) or other factors could cause actual future
results, performance or events to differ materially from those
described herein. Some of the factors that may impact future
results and performance may include, without limitation: (i) the
size, demand and growth potential of the markets for Plenity® and
Gelesis’ other product candidates and Gelesis’ ability to serve
those markets; (ii) the degree of market acceptance and adoption of
Gelesis’ products; (iii) Gelesis’ ability to develop innovative
products and compete with other companies engaged in the weight
loss industry; (iv) Gelesis’ ability to finance and complete
successfully the commercial launch of Plenity® and its growth
plans, including new possible indications and the clinical data
from ongoing and future studies about liver and other diseases; (v)
failure to realize the anticipated benefits of the business
combination, including as a result of a delay or difficulty in
integrating the businesses of Capstar and Gelesis; (vi) the ability
of Gelesis to issue equity or equity-linked securities or obtain
debt financing in the future; (vii) the outcome of any legal
proceedings instituted against Capstar, Gelesis, or others in
connection with the business combination; (viii) the ability of
Gelesis to maintain its listing on the New York Stock Exchange;
(ix) the risk that the business combination disrupts current plans
and operations of Gelesis as a result of Gelesis being a publicly
listed issuer; (x) the regulatory pathway for Gelesis’ products and
responses from regulators, including the FDA and similar regulators
outside of the United States; (xi) the ability of Gelesis to grow
and manage growth profitably, maintain relationships with customers
and suppliers and retain Gelesis’ management and key employees;
(xii) costs related to the business combination, including costs
associated with the Gelesis being a publicly listed issuer; (xiii)
changes in applicable laws or regulations; (xiv) the possibility
that Gelesis may be adversely affected by other economic, business,
regulatory and/or competitive factors; (xv) Gelesis’ estimates of
expenses and profitability; (xvi) ongoing regulatory requirements,
(xvii) any competing products or technologies that may emerge,
(xviii) the volatility of the telehealth market in general, or
insufficient patient demand; (xix) the ability of Gelesis to defend
its intellectual property and satisfy regulatory requirements; (xx)
the impact of the COVID 19 pandemic on Gelesis’ business; (xxi) the
limited operating history of Gelesis; (xxii) the potential impact
of inflation on our operating expenses and costs of goods; and
(xxiii) other important factors discussed in the “Risk Factors”
section of Gelesis’ most recent Annual Report on Form 10-K, and in
other filings that Gelesis makes with the Securities and Exchange
Commission. These filings address other important risks and
uncertainties that could cause actual results and events to differ
materially from those contained in the forward-looking
statements.
Disclaimer
Gelesis assumes no obligation and does not intend to update or
revise the results provided in this press release. The results
provided in this press release represent past performance and are
not necessarily predictive of future results.
Key Business Metrics
We monitor the following key metrics to help us evaluate our
business, identify trends affecting our business, formulate
business plans and make strategic decisions. We believe the
following metrics are useful in evaluating our business:
New members acquired
We define new members acquired as the number of consumers in the
United States who have begun their weight loss journey with Plenity
during the financial period presented. This is the total number of
recurring and non-recurring consumers who have begun their weight
loss journey during the financial period presented. We do not
differentiate from recurring and non-recurring consumers as of this
date as (i) we strongly believe every member’s weight-loss journey
is chronic and long-term in nature, and (ii) we have not initiated
our long-term strategy and mechanisms to retain and/or win-back
members. We will continue to evaluate the utility of this business
metric in future periods.
Units sold
Units sold is defined as the number of 28-day supply units of
Plenity sold to consumers based on prescriptions, through our
strategic partnerships with online pharmacies and telehealth
providers as well as the units sold to our strategic partners
outside the United States. Note that the terms “units” and “monthly
kits”, as mentioned in Gelesis’ various public disclosures and
filings, are synonymous when used to describe the sales volume of
Plenity.
Product revenue, net
We recognize product revenue in accordance with Accounting
Standards Codification Topic 606, Revenue from Contracts with
Customers, when we transfer promised goods or services to customers
in an amount that reflects the consideration to which the entity
expects to be entitled in exchange for those goods or services.
Our product revenue is derived from product sales of Plenity,
net of estimates of variable consideration for which reserves are
established for expected product returns, shipping charges to
end-users, pharmacy dispensing and platform fees, merchant and
processing fees, and promotional discounts offered to
end-users.
Average selling price per unit, net
Average selling price per unit, net is the gross price per unit
sold during the period net of estimates of per unit variable
consideration for which reserves are established for expected
product returns, shipping charges to end-users, pharmacy dispensing
and platform fees, merchant and processing fees, and promotional
discounts offered to end-users.
Gross profit and gross margin
Our gross profit represents product revenue, net, less our total
cost of goods sold, and our gross margin is our gross profit
expressed as a percentage of our product revenue, net. Our gross
profit and gross margin have been and will continue to be affected
by a number of factors, including the prices we charge for our
product, the costs we incur from our vendors for certain components
of our cost of goods sold, the mix of channel sales in a period,
and our ability to sell our inventory.
Non-GAAP Financial Measures
In addition to our financial results determined in accordance
with GAAP, we believe that Adjusted EBITDA, a non-GAAP measure, is
useful in evaluating our operating performance. We define “Adjusted
EBITDA” as net (loss) income before depreciation and amortization
expenses, provision for (benefit from) income taxes, interest
expense, net, stock-based compensation and (gains) and losses
related to changes in fair value of our warrant liability, our
convertible promissory note liability, our tranche rights liability
and the One S.r.l. call option. We use Adjusted EBITDA to evaluate
our ongoing operations and for internal planning and forecasting
purposes because it facilitates internal comparisons of our
historical operating performance. We believe that this non-GAAP
financial measure, when taken together with the corresponding GAAP
financial measure, net loss, provides meaningful supplemental
information regarding our performance by excluding certain items
that may not be indicative of our business, results of operations,
or outlook. We consider Adjusted EBITDA to be an important measure
because it helps illustrate underlying trends in our business and
our historical operating performance on a more consistent basis. We
believe that Adjusted EBITDA is helpful to our investors as it is a
metric used by management in assessing the health of our business
and our operating performance.
However, non-GAAP financial information is presented for
supplemental informational purposes only, has limitations as an
analytical tool and should not be considered in isolation or as a
substitute for financial information presented in accordance with
GAAP. In addition, other companies, including companies in our
industry, may calculate similarly-titled non-GAAP financial
measures differently or may use other measures to evaluate their
performance, all of which could reduce the usefulness of Adjusted
EBITDA as a tool for comparison. A reconciliation is provided below
for Adjusted EBITDA to the most directly comparable financial
measure stated in accordance with GAAP. Investors are encouraged to
review the related GAAP financial measure and the reconciliation of
this non-GAAP financial measure to its most directly comparable
GAAP financial measure, and not to rely on any single financial
measure to evaluate our business.
SELECTED UNAUDITED CONDENSED
CONSOLIDATED BALANCE SHEETS
(In thousands)
March 31,
December 31,
2022
2021
ASSETS
Cash and cash equivalents
$
33,985
$
28,397
Accounts receivable and grants
receivable
9,762
9,903
Inventories
16,276
13,503
Property and equipment, net
58,321
58,515
All other current and non-current
assets
34,535
35,983
Total assets
$
152,879
$
146,301
LIABILITIES, REDEEMABLE
CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY
(DEFICIT)
Accounts payable
$
13,241
$
10,066
Accrued expenses and other current
liabilities
10,124
13,660
Deferred income, current portion
25,533
32,370
Notes and convertible notes payable,
current portion
2,001
29,078
Warrant liabilities
3,730
15,821
Earnout liability
25,002
—
Deferred income, non-current portion
9,984
8,914
Notes payable, non-current portion
33,958
35,131
All other current and non-current
liabilities
7,565
7,648
Total liabilities
131,138
152,688
Noncontrolling interest
11,704
11,855
Redeemable convertible preferred stock
—
311,594
Total stockholders’ equity (deficit)
10,037
(329,836
)
Total liabilities, noncontrolling
interest, redeemable convertible preferred stock and stockholders’
equity (deficit)
$
152,879
$
146,301
UNAUDITED CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands)
Three Months Ended March
31,
2022
2021
Revenue:
Product revenue, net
$
7,514
$
3,101
Total revenue, net
7,514
3,101
Operating expenses:
Costs of goods sold
4,913
2,816
Selling, general and administrative
37,706
11,945
Research and development
7,410
4,376
Amortization of intangible assets
567
567
Total operating expenses
50,596
19,704
Loss from operations
(43,082
)
(16,603
)
Change in the fair value of earnout
liability
33,869
—
Change in the fair value of convertible
promissory notes
(156
)
—
Change in the fair value of warrants
3,484
(2,074
)
Interest expense, net
(135
)
(361
)
Other income, net
317
469
Loss before income taxes
(5,703
)
(18,569
)
Provision for income taxes
—
17
Net loss
(5,703
)
(18,586
)
Accretion of senior preferred stock to
redemption value
(37,934
)
(33,761
)
Accretion of noncontrolling interest put
option to redemption value
(88
)
(94
)
Net loss attributable to common
stockholders
$
(43,725
)
$
(52,441
)
Net loss per share attributable to common
stockholders—basic and diluted
$
(0.70
)
$
(9.38
)
Weighted average common shares
outstanding—basic and diluted
62,743,154
5,589,290
UNAUDITED CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
Three Months Ended March
31,
2022
2021
Cash flows from operating
activities:
Net loss
$
(5,703
)
$
(18,586
)
Adjustments to reconcile net loss to net
cash used in operating activities:
.
Amortization of intangible assets
567
567
Reduction in carrying amount of
right-of-use assets
132
41
Depreciation
1,019
174
Stock-based compensation
13,989
1,455
Unrealized loss on foreign currency
transactions
65
143
Noncash interest expense
40
19
Accretion on marketable securities
—
(1
)
Change in the fair value of earnout
liability
(33,869
)
—
Change in the fair value of warrants
(3,484
)
2,074
Change in the fair value of convertible
promissory notes
156
—
Change in fair value of One S.r.l. call
option
258
48
Changes in operating assets and
liabilities:
Account receivables
(1,177
)
(169
)
Grants receivable
(198
)
(1,273
)
Prepaid expenses and other current
assets
(2,010
)
318
Inventories
(2,888
)
846
Other assets
—
(1,222
)
Accounts payable
3,502
(1,192
)
Accrued expenses and other current
liabilities
528
200
Operating lease liabilities
(134
)
(37
)
Deferred income
(5,550
)
8,459
Other long-term liabilities
(426
)
(158
)
Net cash used in operating activities
(35,183
)
(8,294
)
Cash flows from investing
activities:
Purchases of property and equipment
(1,963
)
(6,354
)
Maturities of marketable securities
—
24,000
Net cash (used in) provided by investing
activities
(1,963
)
17,646
Cash flows from financing
activities:
Proceeds from Business Combination, net of
transaction costs
70,478
—
Principal repayment of notes payable
(418
)
(186
)
Repayment of convertible promissory notes
due to related party, held at fair value
(27,284
)
—
Proceeds from issuance of promissory notes
(net of issuance costs of $0 and $30, respectively)
—
3,506
Proceeds from the exercise of warrants
4
10
Proceeds from exercise of share-based
awards
—
4
Net cash provided by financing
activities
42,780
3,334
Effect of exchange rates on cash
(46
)
(973
)
Net increase in cash
5,588
11,713
Cash and cash equivalents at beginning of
year
28,397
48,144
Cash and cash equivalents at end of
period
$
33,985
$
59,857
Noncash investing and financing
activities:
Purchases of property and equipment
included in accounts payable and accrued expense
$
1,721
$
889
Recognition of earnout liability
$
58,871
—
Recognition of private placement warrant
liability
$
8,140
—
Supplemental cash flow
information:
Interest paid on notes payable
$
95
$
43
NET LOSS TO ADJUSTED EBITDA
RECONCILIATION
(In thousands,
Unaudited)
For the Three Months Ended
March 31,
2022
2021
Adjusted EBITDA
Net loss
$
(5,703
)
$
(18,586
)
Provision for income taxes
—
17
Depreciation and amortization
1,586
741
Stock based compensation expense
13,989
1,455
Change in fair value of earnout
liability
(33,869
)
—
Change in fair value of warrants
(3,484
)
2,074
Change in fair value of convertible
promissory notes
156
—
Change in fair value of One S.r.l. call
option
258
48
Interest expense, net
135
361
Adjusted EBITDA
$
(26,932
)
$
(13,890
)
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220512005826/en/
Media & Investor
Relations Katie Sullivan ksullivan@gelesis.com
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