FDA-Approved Weight Loss Drug Plenity's Parent Announces SPAC Deal: What Investors Should Know

A SPAC deal announced Monday could help accelerate the manufacturing of a promising weight loss drug targeting over 150 million people. 

The SPAC Deal: Gelesis announced a SPAC merger with Capstar Special Purpose Acquisition Corp CPSR. The deal values the company at a pro forma market value of $1.3 billion.

Public CPSR shareholders will own 21% of the company after the merger. Shares will trade as GLS on the NYSE after the merger is approved.

About Gelesis: Biotherapeutics company Gelesis has a pipeline of drugs with targeting weight and metabolic disorders. The company’s first product Plenity is FDA approved to aid in weight management for overweight and obese adults.

Plenity helps with portion control and is targeting more than 150 million Americans. Plenity has a broad range of prescription weight management compared to others in the industry.

Plenity capsules act locally in the gastrointestinal tract of users rather than being absorbed. The capsule taken with water helps people get satisfaction from smaller meal sizes.

Growth Ahead: Going public will help the company expand its manufacturing to meet expected demand for Plenity, according to the company. Current plans call for 50% of Line 1 manufacturing in August and 100% in December. Additional manufacturing will ramp up in 2022.

Plenity saw six out of ten adults lose an average of 10% of their body weight during clinical trials with no additional side effects compared to the placebo.

Gelesis will use a direct-to-patient approach with several partnerships. Telehealth platform Ro and in-person healthcare provider visits will be used to recommend Plenity to potential customers.

Plenity will cost $98 a month for customers. The capsule is available in limited release now with more than 48,000 current members since the beta launch in October 2020.

With limited promotion and marketing, Plentity has surpassed all branded prescription weight management companies in their first month of testing.

Gelesis has a partnership with WW International Inc WW, the owner of the Weight Watchers brand. 

Gelesis sold commercial rights to Plenity in China for $35 million upfront and has the potential to earn $388 million in milestones along with royalties in the future.

Financials: Gelesis expects revenue to grow at a compounded annual growth rate of 50% over the next five years. The company estimates fiscal 2021 revenue of $26 million and fiscal 2022 revenue of $171 million. The company sees revenue of $442 million in fiscal 2023 with less than 0.5% market share.

Gelesis anticipates selling 69,000 units in fiscal 2021 scaling to 421,000 units sold in fiscal 2023.

CPSR Price Action: CPSR shares are up 0.51% to $9.84 on Monday.

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CORRECTION Aug. 2, 2021: The original article incorrectly stated Weight Watchers members getting a discount to Plenity. The correct information is that Plenity members will get a discount to Weight Watchers. Benzinga regrets the error.