Weight loss biotech Gelesis (US:GLS) led US equity markets on Tuesday, rising 87% higher and closing with a 52 cent share price on news of a new joint activist campaign from holders SSD2 LLC (BomsMaster LLC) and KLP Enterprises LLC.
In their previous filing dated Jan. 21, 2022, they reported 13,405,732 shares and 18.22% of the company, an increase in shares of 0.21% and a decrease in total ownership of 0.17% (calculated as current – previous percent ownership).
Despite the strong rally to begin the 2023 year, the stock remains down around 95% from its $10 SPAC merger price established when listing in January of 2022. GLS started with an initial equity valuation of $675 million and currently has a market cap of only $38 million.
The 13D filing, submitted by Elon Boms and Andrew Wingate, stated that the parties had engaged Gelesis’ management with plans for further engagement to discuss the firm’s business and financial condition.
The joint activists stated in the filing that discussions would include potential corporate transactions in the form of; a possible merger, a take-private transaction, sales, acquisitions, changes to capitalization and dividend policy.
They also intend to discuss potential changes to the business’s corporate structure, including management changes or the Board composition.
During the company’s most recent financial update in November, Gelesis reported positive third quarter results that showed year-over-year growth. Unfortunately, the growth was insufficient to please the market, with shares continuing to slip.
For the third quarter, Gelesis management told investors that unit sales doubled to 92,070 from 45,825 in 2021. 23,500 new members aided the unit sales growth acquired, bringing the total for the year to 107,700.
Product revenue grew from $3.0 million in 2021 to $6.4 million in 2022, with gross margins expanding from 8% to 44% in the same period.
Net losses improved from -$30.7 million to -$14.1 million, aided by a reduction in operating and SG&A expenses.
For the full year, GLS management expects the company to generate product revenue of $27 to $30 million with gross profits between $11 to $13 million. Adjusted EBITDA losses have been guided to come in between -$75 to -$80 million.
Gelesis’ Founder and CEO, Yishai Zohar during the result announced that the company is preparing to submit its Plentiy drug for ‘over the counter (OTC)’ status, which would make it available without the need for a prescription and further reduce costs of customer acquisition.
Zohar stated, “If approved, Plenity would become only one of two FDA regulated oral treatments for weight management available without a prescription.”
The latest activist campaign and OTC FDA submission will be two catalysts on watch for investors over 2023.
Gelesis is a consumer-centered biotherapeutics company advancing a novel category of treatments for weight management and gut related chronic diseases. Its non-systemic superabsorbent hydrogels are the first and only made entirely from naturally derived building blocks. They are inspired by raw vegetables’ composition (i.e., water & cellulose) and mechanical properties (e.g., elasticity or firmness). They are conveniently administered in capsules to create a much larger volume of small, non-aggregating hydrogel pieces that become an integrated part of the meals and act locally in the digestive system. Its portfolio includes Plenity®, an FDA-cleared product to aid in weight management, and potential therapies in development for patients with Type 2 Diabetes, Nonalcoholic Fatty Liver Disease (NAFLD)/Non-alcoholic Steatohepatitis (NASH), and Functional Constipation.
What are other large shareholders doing?
Allianz Asset Management GmbH holds 3,165,411 shares representing 4.33% ownership of the company. In its prior filing, the firm reported owning 5,657,607 shares, representing a decrease of 78.73%. The firm decreased its portfolio allocation in GLS by 59.49% over the last quarter.
Vitruvian Partners LLP holds 1,876,106 shares representing 2.57% ownership of the company.
Neuberger Berman Group LLC holds 1,107,985 shares representing 1.52% ownership. No change in the last quarter.
Cormorant Asset Management, LP holds 626,107 shares representing 0.86% ownership. In its prior filing, the firm reported owning 626,108 shares, representing a decrease of 0.00%. The firm decreased its portfolio allocation in GLS by 35.58% over the last quarter.
Northeast Financial Consultants Inc holds 395,035 shares representing 0.54% ownership. In its prior filing, the firm reported owning 25,000 shares, representing an increase of 93.67%. The firm increased its portfolio allocation in GLS by 1,049.99% over the last quarter.
What is the overall Fund Sentiment?
There are 98 funds or institutions reporting positions in Gelesis Holdings, Inc. Common Stock. This is an increase of 15 owner(s) or 18.07%.
Average portfolio weight of all funds dedicated to Gelesis Holdings, Inc. Common Stock is 0.0065%, an increase of 170.6065%. Total shares owned by institutions increased in the last three months by 25.35% to 12,383,024 shares.
Fintel’s Fund Sentiment Score is a quantitative model that ranks companies from zero to 100 based on Fund Sentiment. Fund Sentiment is important because it tells you if funds are buying or selling – particularly, how the company ranks compared to other companies in the investing universe.
This article originally appeared on Fintel
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