Fractyl Health Reports Fourth Quarter and Full Year 2023 Financial Results and Provides Business Update
- Received IDE approval for Revita Remain-1 study for weight maintenance post GLP-1 drug discontinuation
- Completed enrollment in pivotal Revitalize-1 study for inadequately controlled T2D patients
- Announced RJVA-001 as first Rejuva GLP-1 gene therapy candidate
- Completed $110 million IPO for funding through 2025
- Net loss increased due to fair value of notes payable and warrants
- Operating expenses increased leading to higher net loss
- revenue from sales and leasing of Revita in 2023
- Decrease in SG&A expenses offset by increased debt issuance cost
Insights
The recent developments reported by Fractyl Health, particularly the IDE approval for the Revita Remain-1 study and the completion of the IPO, are significant for investors and stakeholders. The approval from the FDA indicates a green light for clinical advancements, which could potentially lead to marketable products and revenue streams. The successful IPO, raising $110 million, strengthens the company's financial position, ensuring sufficient capital to fund operations through 2025. This is a positive sign of investor confidence and provides a cushion for the company's research and development activities.
However, the reported insignificant revenue from the limited commercial pilot in Germany suggests that the company is still in the early stages of commercialization. Investors should note that the path to profitability is often long and uncertain in the biotech sector. The increase in net loss year-over-year, primarily due to fair value adjustments of notes payable and warrants, also highlights the risks associated with investing in early-stage biotech companies. The financial health of Fractyl will depend on the clinical success of its products and the ability to manage operating expenses efficiently.
The Investigational Drug Exemption (IDE) for Fractyl Health's Revita Remain-1 study is a pivotal step in the development of treatments for obesity post-GLP-1RA therapy. The ability to maintain weight without the need for chronic therapies could address a significant unmet need in obesity management. Additionally, the Revitalize-1 study for inadequately controlled T2D is expected to complete enrollment soon, with topline data anticipated in the fourth quarter of 2024. These milestones are critical as they will determine the efficacy and safety profile of the treatments, which are key factors for market adoption and regulatory approval.
Furthermore, the announcement of RJVA-001 as the first clinical candidate in the Rejuva GLP-1 gene therapy platform is a noteworthy advancement. The potential for a durable impact on glucose and weight control positions Fractyl Health at the forefront of innovative treatments for T2D. The preclinical data showing weight maintenance post-semaglutide treatment with GLP-1 PGTx is promising and could differentiate Fractyl's therapy from existing treatments. The success of these programs will be instrumental in shaping the company's future and the treatment landscape for T2D and obesity.
The metabolic therapeutics market is evolving rapidly, with a growing demand for treatments that offer long-term control over chronic conditions like type 2 diabetes and obesity. Fractyl Health's strategic focus on developing therapies that reduce the burden of chronic treatments aligns with current market trends towards minimally invasive and sustainable healthcare solutions. The Revita DMR system and the Rejuva gene therapy platform represent innovative approaches that could disrupt the traditional diabetes and obesity treatment paradigms if proven effective.
Fractyl's progress, including the CE Mark approval in Europe for the Revita system and the initiation of a commercial pilot in Germany, indicate potential for international market penetration. However, the true test will be the ability to translate clinical success into widespread adoption and reimbursement by healthcare systems. The company's current valuation and future stock performance will be closely tied to these clinical outcomes, regulatory approvals and the execution of commercial strategy.
Received IDE approval for the Revita® Remain-1 pivotal study for weight maintenance in patients with obesity after discontinuation of GLP-1 Based Drugs
Completion of enrollment in pivotal Revitalize-1 study in patients with inadequately controlled T2D expected in second quarter of 2024 and anticipated topline data in fourth quarter of 2024
Announced nomination of RJVA-001 as first clinical candidate in the Rejuva® GLP-1 gene therapy platform; completion of IND-enabling studies expected in second half of 2024
Completed initial public offering of common stock raising
BURLINGTON, Mass., April 01, 2024 (GLOBE NEWSWIRE) -- 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% to7.3% ) and a median change in baseline weight of -17.6pounds (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 of4.0% 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 to21% 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 regained19% 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
R&D Expenses: Research and development expense was
SG&A Expenses: Selling, general and administrative expense was
Net Loss: Net loss was
Cash Position: As of December 31, 2023, Fractyl had approximately
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
FAQ
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