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In public debut, weight-loss firm Gelesis gets less backing than planned

The Boston biotech raised $105 million in a SPAC deal after expecting $376 million

Gelesis’s commercial manufacturing facility is now producing the company's weight-loss capsules at large scale. (Photo: Business Wire)

Boston biotech Gelesis completed its plan to go public by merging with a special purpose acquisition company, though the deal brought in considerably less proceeds than hoped.

The company collected $105 million by merging with Capstar Special Purpose Acquisition Corp. to fund the rollout of its new weight-loss assistance treatment. But that was just a fraction of the $376 million Gelesis said it could garner when the deal was announced in July.

The problem was that almost all of the shareholders of the Capstar SPAC decided to get their money back instead of investing in Gelesis.

Blank-check companies like Capstar raise money from investors with the goal of finding a promising company to merge with and take public. But since the merger partner isn’t known in advance, SPACs have to allow those original investors the opportunity to back out once a deal is announced.

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In the Gelesis deal, Capstar had to return more than $270 million to shareholders. Other private investors who had agreed to back the deal in July still put in more than $100 million.

The original SPAC investors, who paid $10 a share to Capstar in 2020, got back about the same amount when they decided to bail this month. Gelesis closed at $7.36 on Friday, its first day on the public market after the merger closed.

Investors appear to have learned a hard lesson from the SPAC boom, which many startups used over the past few years as a quicker way to go public than by conducting a traditional initial public offering. Ten Boston-area companies went public by merging with a SPAC last year — and those stocks currently trade at a 42 percent loss on average.

Gelesis chief executive Yishai Zohar said he was still glad to have completed the deal.

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“The SPAC market has been going through some volatility, but at this point we are a company that will be executing on our goals and further building a shareholder base around our unique offering,” Zohar said. “The initial excitement about SPACs as a vehicle has shifted.”

Gelesis will use the proceeds to expand manufacturing and marketing of Plenity, the company’s $98-per-month treatment to help overweight people suppress food cravings, Zohar said. More than 70,000 people have already signed on and 70 percent had never previously tried a weight-loss approach with a device or drug requiring a prescription, he said.

“For 2020 and most of 2021, we did not have enough supply to meet demand — we were selling as much as we could make,” Zohar said. “In the past few months, we have increased capacity and are excited to meet the demand we create with our broad scale launch. That is a major focus for the funds from this transaction.”

In 2019, the FDA approved the treatment, which it classifies as a medical device, for adults with a body mass index of 25 to 40. After being swallowed, the company’s capsules create tiny pouches of water in the stomach, making patients feel full so they eat less food.

Gelesis is an affiliate of PureTech Health in Boston, which also founded Boston-based Karuna Therapeutics and Cambridge’s Vor Biopharma, both publicly traded companies.


Aaron Pressman can be reached at aaron.pressman@globe.com. Follow him on Twitter @ampressman.