Q1 2025 Fractyl Health Inc Earnings Call and Business Update
Good afternoon and welcome to Fractyl Health's first quarter, 2025 Financial Results and Business Updates Call. As a reminder, this conference call is being recorded. At this time, all participants are in listen only mode.
There will be a question and successions following management prepared remarks.
Speaker Change: I'll now turn the call over to Brian Luque, head of investor relations and corporate development at Fractyl, Brian , you may now begin.
Speaker Change: Joining us on the call today are Dr. Harith Rajagopalan, Chief Executive Officer and Lisa Davidson, Chief Financial Officer.
Speaker Change: During this call, we make forward-looking statements which involve risks and uncertainties that may cause actual results to differ materially from our forward-looking statement.
Speaker Change: You provide a comprehensive list of risk factors in our SEC filing, including the quarterly report on form 10Q file today, which I encourage you to review.
Speaker Change: Any forward-looking statements on the call are subject to substantial risks and uncertainties. Speak only as of the call's original date, and we undertake no obligation to update or revise any of the statements, even if subsequent events cause the company's views to change.
Harith: It is now my pleasure to pass the call over to Farith.
Harith: Thank you, Brian . Good afternoon, everyone. Thank you for joining us today.
Harith: With multiple data readouts from Reveal One and Remain One, key commercial insights and weight maintenance, and a regulatory filing in Rajuva 001, expected over the course of the next two quarters, 2025 is poised to be a year of acceleration for Fractyl.
Harith: When we went public in early 2024, we did so with a bold ambition to redefine the treatment of obesity by offering patient-friendly solutions for durable improvements in weight and metabolic control.
Harith: But, real world evidence is beginning to show that there's still room for improvement to meet the needs of patients struggling with obesity today.
Harith: A recent study published by researchers at the Cleveland Clinic in JAMA suggests that GLP1's do not deliver nearly as much weight loss in the real world as they did in their clinical trials.
Harith: 377 Somagletide Treated Patients with Obesity lost only 5.9% of their body weight at one year, representing only about one third of the body weight loss seen in somagletide clinical trials, even when accounting for persistent medical coverage.
Harith: In addition to this efficacy gap, these drugs also have a durability gap. Today, most patients stop GILQ treatment in less than one year and only a minority resume GILP ones in the year after discontinuation.
Harith: So there's a clear need for non-drug options to drive greater efficacy in the real world and to offer an alternative when patients need to stop medical therapy.
Speaker Change: At Fractyl, we are focused on solving that problem. We are pioneering scalable outpatient solutions aimed at delivering durable metabolic resets for patients.
Speaker Change: Building a new category of care based on existing patient flow into GI endoscopy and initially targeting the critical need for weight maintenance after discontinuing GLP1 drugs.
Speaker Change: Regardless of short-term market dynamics, by nearly every operational measure we have made extraordinary advances, positioning Fractyl at the forefront of this emerging and substantial clinical and market opportunity.
Speaker Change: Today, we are excited to share significant progress on that front.
Speaker Change: I will start with a major milestone. We have completed full enrollment of the remain one pivotal cohort, which is evaluating Ravita for durable weight maintenance after GLP1 discontinuation.
Speaker Change: We filed with the FDA just in March of last year to initiate that study, received an IDE in April , obtained breakthrough device designation in July , initiated enrollment in August , and have now completed enrollment only nine months later and significantly ahead of schedule.
Speaker Change: Now that the study is fully enrolled and the last patients are initiating to Zepatite therapy
Speaker Change: Based on our observed time to achieve 15% total body weight loss, we anticipate completing randomization of these 315 participants.
Speaker Change: to Revita versus Sham in the first half of 2026 and anticipate reporting pivotal six-month primary endpoint data in the second half of 2026.
Speaker Change: Remember, we believe only a single pivotal study is required for approval for rubita in weight maintenance [inaudible]
Next.
The Remain One Midpoint Cohort, Completed Enrollment in Q4 2024 The Remain One Midpoint Cohort, The Remain One Midpoint Cohort
Speaker Change: and we are confident in our ability to deliver the first blinded control data from these 45 participants with three months of follow-up in Q3 2025. A major catalyst that we believe will help validate repeat as potential for these patients in need.
Speaker Change: Now, turning to the Reveal One cohort, in April we shared encouraging initial results.
Speaker Change: 15 participants who had lost weight on GLP1 drugs, discontinued their GLP1, underwent Reveda and entered structure, diet and lifestyle support.
Speaker Change: For the participants who had one month follow-up data at that time, average weight regain was just 1.2% compared to the approximately 3% typically seen after GLP1 cessation. Two participants with three month follow-up showed persistent weight loss through that follow-up period as well.
Speaker Change: In June , we expect to present an incremental update with three months data from the Reveal One cohort, providing what we believe is critical early validation of Reveeda's potential.
Speaker Change: When patients stopters appetite, one would expect them to regain about 6% body weight by three months. So we will compare reveal one cohort result to that historical comparator.
Speaker Change: As you recall, for Rovita, we have built a hub and spoke network across the United States with referring clinics called Spokes sending patients to leading GI endoscopists at hub centers from Los Angeles to New Hampshire and Seattle to Miami.
Speaker Change: Looking ahead to potential approval and commercial launch, this broad and rapid enrollment in the remain one study.
Highlights the efficiency, scalability and throughput of our commercial model.
Speaker Change: We anticipate that these centers and others like them will form the foundation of our first commercial wave and we are energized by these early indicators of Revedas Market potential and the relationship that we've been building with physicians across the United States.
Speaker Change: As part of our commercial planning, we conducted in-depth market research with patients and other key stakeholders as well and the findings were clear. Patients are highly motivated to find an offer to GLP1 therapy.
Speaker Change: The patient living with obesity does not want to stay on chronic pharmacotherapy to manage their condition for the rest of their life. Patients uniformly expressed strong interest in Robita.
Speaker Change: So, what you can see is that we made a lot of progress in a short time with Reveeda and the Wake Maintenance.
Speaker Change: and seeing our acceleration into an exciting and important new area of medicine.
called Weight Maintenance, where we are breaking ground in a substantial therapeutic category that has emerged because of the success that GLP1 have with weight loss, but where they fall short with weight maintenance.
Speaker Change: Now turning to Rajuva, our pancreatic gene therapy platform that is designed to reprogram the pancreas itself to deliver durable metabolic control from within.
Speaker Change: We are building what we believe will be the best-in-class GLP1-based therapy for obesity and metabolic disease.
Speaker Change: Rajul has designed to deliver smart, nutrient-responsive, jealty-one expression in the pancreas, enabling natural metabolic regulation without the burden of chronic injections, adherence challenges, or escalating coughs.
Speaker Change: We believe Rajula sets a new standard for how to leverage the known therapeutic benefits of nutrient-stimulated hormones for long-term control of metabolic disease.
Speaker Change: It was only in January of last year that we nominated Rajuva 001 as our first clinical candidate and demonstrated that our one-time, pancreas-targeted, smart GLP1 gene therapy outperformed somatotide in pre-clinical models of diabetes and obesity.
Speaker Change: Importantly, Rajuva doesn't just drive more weight loss, it seems to deliver better quality weight loss compared to somagletide. Rajuva preserves the mass while reducing fat mass, addressing one of the major challenges seen with high dose GLP-1 therapy.
Speaker Change: By December , we demonstrated the precision of local pancreatic delivery in a large animal model achieving strong durable GLP1 expression with a single, low dose and no safety signals observed. We also completed Keegan-Divo CTA enabling studies for Rajuva 001 by the end of the year.
Speaker Change: Momentum continued into the first quarter of 2025 as we achieved regulatory alignment with European authorities on our planned first in-human study design.
Speaker Change: This positions us for an exciting series of milestones ahead. This weekend at ASGCT, we look forward to sharing new exciting data on Rajuva 001 safety, efficacy, and potential tolerability based on our pre-clinical CTA enabling studies.
Speaker Change: and then in June we plan to submit our first CTA module to regulators with additional filings following shortly thereafter.
Speaker Change: pending regulatory authorization. We expect to dose our first patients with Rajuva 001 and to report preliminary data in 2026.
Speaker Change: If successful, Rajuva could totally redefine the treatment paradigm for diabetes and obesity.
Delivering a first-in-class, programmable and durable therapy at scale.
Speaker Change: Working with the leading CDMO in AAD Manufacturing, we've developed a large-scale CGMP manufacturing process to support the size of the projected patient population that could be served by our Ridge of a platform.
Speaker Change: We have completed AAD production runs in 500 liter bio reactors, demonstrating a strong foundation for scalable manufacturing with the potential for significant expansion even from where we are now.
Speaker Change: What this means is that we see a pathway to drive COG several orders of magnitude lower than current systemic gene therapy products. We believe this could be a huge win for patients and enable a cost structure designed for the broadest possible access to our therapies.
Speaker Change: We believe that for AAD-based therapies to succeed, they must be safe, effective, and commercially viable, and this is precisely why we're so excited about the Rajuva platform.
Speaker Change: With Ravita and Rajuva both advancing rapidly we're entering a catalyst-rich period of acceleration and key proof points in the months ahead for Fractyl and we look forward to delivering transformative data within the next several months to you [inaudible]
Lisa: With that, I'll turn the call over to Lisa for a financial update.
Thank you, Harith.
Lisa: In the first quarter of 2025, we continue to invest strategically in the clinical and operational home progress. You just heard about it.
Lisa: So, in general, an administrative expense was $5.3 million compared to $7.1 million in the same period last year. Primarily due to a reduction in stock-based compensation expenses, partially offset by increased costs associated with operating as a public company.
Lisa: We reported a net loss of 23.7 million compared to a net loss of 3.3 million in Q1 2024. This was largely due to the fluctuation in the non-cash change in fair value of notes and partially driven by increase in operating expenses.
Lisa: As of March 31, 2025, Fractyl had approximately 42.1 million in cash in cash equivalent.
Lisa: Based on the projected cost of our clinical development plans and current enrollment trends, we believe our existing cash and cash equivalents will be sufficient to fund our operations into the fourth quarter of 2025.
Lisa: This update primarily reflects the accelerated pace of enrollment in our Remain One Pivotal Study.
Lisa: Combined with additional investments in Rajuva 001 manufacturing scalability. Investments, we believe, are critical to advancing both the repeat and Rajuva platforms toward key value-creating milestones.
Speaker Change: Before I turn it back to Harith, I want to briefly address a topic that's come up in recent Investor Conversations, the potential impact of terror.
Speaker Change: As a development stage company focused on R&D and clinical studies and regulatory planning, we don't believe current terror policies could material affect our business for the foreseeable future.
Speaker Change: While some of our lab supplies and device components are sourced internationally, any related cross exposure is currently minimal and does not impact our near-term financial guidance.
Speaker Change: We are monitoring policy developments closely and will reassess as we move closer to commercial launch.
With that, I'll turn the call back over to her
Harith: Thank you Lisa. 2025 is shaping up to be a defining year for Fractyl. One were execution, breakthrough data, and regulatory progress come together to drive meaningful momentum.
Harith: In the months ahead, we expect to deliver three major catalysts, incremental three-month data from the reveal one cohort in June , the first CTA module submission for Rijuva 001 in June , and midpoint randomized data from the remain one midpoint cohort into third quarter.
Harith: For the Reveal 1 cohort, success means demonstrating stable weight maintenance without GLP1 therapy.
Harith: For the Remain One Midpoint cohort, success means showing clear separation between Ravita and Sham.
Harith: and for Rijuva 001, success means earning authorization to initiate first in human studies. Each of these would represent a major validation of our platforms and our leadership position in metabolic care.
Harith: We are so deeply grateful to the patients, physicians, employees and investors who are supporting our mission to transform the future of metabolic disease treatment. We look forward to updating you as we execute on our upcoming key milestones.
Harith: and I'd like to take a moment to recognize Dr. Tim Kiefer, our Chief Scientific Officer for his leadership in advancing Rijuva 001 on its path to the clinic.
Harith: As we transition, Rajuva into its next chapter of clinical development, Tim will continue to support Fractyl as a scientific consultant, and we are grateful for his continued contributions in that regard. Operator, we're now ready to open the call for questions.
Speaker Change: Thank you. At this time, we'll conduct a question and sit session. As a reminder, just ask a question, you'll need to press star 111 on your telephone and wait for your name to be announced. To withdraw your question, two press star 111 again. Please stand by where we compile the Q&A roster.
Speaker Change: Now first question comes online of Jason Gerberi of Bank of America Securities in line is not open.
Unknown.
Chi: Hey, this is Tee on Purchasing. Thanks for taking our questions. Just a couple from me.
Chi: Regarding the midpoint analysis of Remain 1, I understand you guys have reaffirmed the time on 3Q.
Chi: But just curious if you have already randomized all the 45 patients, meaning that they already achieved the minimal 15% weight.
Chi: I'll be lost with the clip one such that I just want to get a sense of when we might get the medical analysis and pre-cure.
Speaker Change: And the second question is, thanks for the color on what you see as a far-off success for the Remain One Midpoint Analysis, which you've framed as a clear separation of Sam versus Ravita. I'm curious, you know, at the 12-week analysis, is there any sort of effect-sized delta that you expect to see between the Shem and the Ravita from the Remain One Midpoint Analysis?
Thanks so much.
Speaker Change: Thanks. She looked forward to seeing you in Las Vegas at your conference in a couple of days. Let me reaffirm on the midpoint. Well over 45 patients have hit 15% total body weight loss and so we feel like we are confident in our
Anticipation of that data that's coming in Q3.
Speaker Change: and then with respect to the 12-week analysis on effect size, our goal is to demonstrate that we are at least 50% better than what you would expect to see from transuppotide withdrawal, and we are sort of reaffirming that expectation.
Foundation, um.
Speaker Change: As we sit here today, we're excited by what the reveal one open label data just next month will show at three months as an early open label view towards that and then just a short while later the rant first randomized data for a weight maintenance therapeutic strategy. Thanks for your question.
Grace, look for seeing it tomorrow.
Thank you, one moment for our next question.
Speaker Change: Our next question comes from the line of Michael Ulz, Morgan Stanley , the line is now open.
Speaker Change: Hey, good afternoon. It's Bobby Novich on from Mike. Thank you for taking our questions. I'm congrats on all the progress.
Speaker Change: So I guess starting with the upcoming reveal, one update in June , will the three month data be from all seven subjects who we had data for previously and is there a possibility that we could see data, you know, I guess perhaps earlier data from additional patients have been enrolled in study, so that's one and then...
Speaker Change: I guess on the remain one midpoint analysis, could you remind us what mechanisms you have in place to limit up the bill effect? Thanks.
Speaker Change: Sure. Great. So on question number one, the reveal one update.
Speaker Change: We had reported that there were 15 patients who had enrolled as of the beginning of April , and we made our last announcement. We expect that the majority of them will have hit their three-month follow-up by that time, and we will have incremental one-month data to share as well.
and we look forward to sharing that in June .
Speaker Change: with respect to limiting variability and sham effect. This is a super important question particularly in device based procedural therapy studies.
Speaker Change: We keep a very close eye on all of the different variables that could be impacting the likelihood of sham effect.
Speaker Change: The biggest among those are patient behavior and adherence to the diet and lifestyle program in the post procedure period.
Speaker Change: and one of the things that really helps us in that regard is having the ability to observe patients through their 15% weight loss journey on transepity during that open label run in phase.
Speaker Change: in order to confirm patient adherence and ability to follow procedures leading into the study.
Speaker Change: The second big thing that I would focus on in bear in mind, this is the first...
Speaker Change: Significant Pivotal Study for Weight Maintenance after GLP1 Discontinuation. So I think we're leading the field here and defining how these things can be done.
Speaker Change: But one thing that differentiates revealed from remain is the relative homogeneity of the remain one patient population going into the randomization.
Speaker Change: and so, as you know, we are selecting patients and remain who are obese, non-diabetic, G.L.P.1 Dr. Naive.
Speaker Change: for Protocol and then once they hit 15% body weight loss, then we are randomizing them as close to that weight loss as possible. So we expect a tighter window of weight loss achieved at the time of randomization.
Speaker Change: As we know from the GLP1 category, that gender can affect GLP1's and glycemic status can affect the effect of GLP1. So we'll be looking at all of those things and controlling all of those things in our randomization, but those are the two big ones that I would focus on that we are clued into and monitored very closely.
Wilson
Great. Thank you for taking our questions. Thanks.
Thank you, William, for our next question.
Michael DeFiore: In our next question, come to the front line of Michael DiFiore, Michael DiFiore, your life is not open.
Michael DeFiore: Hey guys, thanks so much for taking my question and congrats on all the continued progress. A few for me. Just given all of the shake up at the FDA.
Michael DeFiore: in Seaburr and possibly on the device side. Are there any concerns or potential red flags
You know, undermine or slow down your regulatory submission process.
Speaker Change: and in terms of Rajuva, it sounds like the boxes are still being checked on the EU regulatory front. Are there any more gating factors in the US for the CTA? And if so, what are they? And I have one follow-up.
Speaker Change: Sure, so with respect to the FDA's shake up, we are not seeing anything on Rebita that could impact our regulatory interactions.
Speaker Change: We've had ongoing dialogues with the FDA on small matters, and everything is proceeding normally.
Speaker Change: With respect to your Juva, as you may recall, we took in full US first in human strategy. We're planning to file in Europe and in Australia to do the first in human study in those geographies. And so we don't feel like we are affected by near term changes at all.
with respect to your second question, Rajuva 001.
Speaker Change: Well, there's really nothing other than preparing all of the documentation necessary in order to file for both the device and for the drug and for the DNC lot release.
Speaker Change: and we're checking boxes on all of those fronts and submitting in a systematic way. We'll keep you updated on that and our next updates for force, but we are on track for our submission coming up in the next several weeks here.
Speaker Change: Excellent. And just my final question is simply, are there any developments for Rajudu's obesity construct that they're worth mentioning?
Exciting stuff, but nothing worth mentioning publicly yet.
Speaker Change: Got it, thanks again. Thank you, Mike. Thank you, Volumet for our next question.
Again, I was a runner.
I mean press star one one, that's the question.
Sir.
Speaker Change: In our next question, consult line up, Whitney Isum of Cancord January , the line is not open.
Whitney Isham: Hey guys, congrats on all the progress. A few from me, so on Remain One, can you quantify or help us understand it gets how far ahead enrollment was relative to expectations and was that driven by like more sites getting open than you thought more demand at the individual sites, any color you can give us on that.
Whitney Isham: Sure, happy to. Roughly three months ahead of schedule, we saw that enrollment was proceeding more rapidly than we expected over the last couple of months. We had guided to in full enrollment by summer.
and in fact, we...
Whitney Isham: Within the last several weeks, we had to cap our first sites because the demand to participate at those individual sites.
Unknown Executive, Lisa Davidson
Whitney Isham: Access Demand at a site level relative to our expectations. We actually ended up enrolling a smaller number of sites in the study than we had originally thought that we needed.
Speaker Change: God, that's helpful. Okay. And then can you remind us in what the sham procedure looks like? What's involved there? And then I guess there's a follow-up question on the kind of controlling placebo response.
Speaker Change: Question. Are you stratifying based on some of the things that you said you're monitoring? Are you stratifying patients based on kind of adherence during the 15% weight loss period or percent weight loss at the time of the room or any other metrics in that regard?
Speaker Change: So with respect to the sham procedure, everyone gets an upper endoscopy and everyone gets
The catheter introduced into their intestine.
Speaker Change: and then randomization occurs, and either there is a dwell time of that catheter within the duodenum in lieu of performing the procedure or the procedure is performed, and then there is a script that physicians and the teens in the room have to follow.
Speaker Change: after the procedure is complete in order to not unblind the patients, then the physicians who manage those.
Patience.
Speaker Change: are not the ones who were in the room and so the whole study team that is blinded does not know what happened within that room and there's a Chinese wall set up that separates those two.
Speaker Change: So that's the way in which the sham is protected. We feel like it's about as rigorous as you could possibly imagine the sham being and we're proud of the rigor of that scientific evidence. And then the question that you asked me about
Randomization. You know, we do have certain...
Speaker Change: Factors that are that we are stratifying on for randomization. It's only 45 subjects in the
Speaker Change: Wait, regain, and so those are the ones that we focused on and how we thought about stratifying randomization.
Got it. Okay. And then just one on Rijuva.
Speaker Change: Assuming I'll go well with the CTA, can you, how should we think about kind of timelines to get the study up and running in patients' dose thereafter, and thinking in particular I guess about the training process for the administration procedure, and how much is that, I guess, how long will that take?
Speaker Change: Well, we've guided to dosing the first patients and preliminary data in 2026 and we continue to feel very confident in that guidance, um, there's
Speaker Change: Nothing to, nothing more to be said about that right now, but of course over the next several quarters we will continue to give you more specifics on that. I'm excited that you asked me a question about the training process.
Speaker Change: The Rajuva procedure, we just came out of the DDW meeting which is a GI meeting that's conducted annually in San Diego, we had a clinical advisory board meeting there with several GI and oscopy experts.
Speaker Change: They love the Rajuva catheter that we have designed and they believe that the procedure that we are asking them to conduct is right down the middle of the fairway of things that they already know how to do.
Speaker Change: That we will be super rigorous about how we train them like we are with Ravita, but we anticipate that this will be a very straightforward, although a very momentous.
Speaker Change: First, human case. When we deliver a gene therapy to the pancreas for the first time, the complexity will not be in delivering the needle into the pancreas. That is something they do all of the time and are super comfortable with. [inaudible]
Transcription by CastingWords
Perfect, that's really helpful. Thanks much. Thanks.
Speaker Change: Thank you, and I turn the call back to Dr. Rajagopalan for close remarks.
Dr. Rajagopalan: Well, thank you very much, everyone. Thanks for joining us. As always, we appreciate your continued interest and support of Fractyl.
Dr. Rajagopalan: We'll just end with how we started. There's an efficacy gap and a durability gap in obesity care today. And we are laser focused on trying to close those gaps. And we look forward to sharing our updates on our progress with Ravita and Rajuva. Thanks so much.
Speaker Change: This concludes today's conference call. Thank you for participating. You may now disconnect.
Unknown Executive, Lisa Davidson