GLS - Earnings call transcript Q1 2022

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Operator

Good afternoon, everyone, and thank you for participating in today’s conference call to discuss Gelesis’ financial results for the fiscal quarter ended March 31, 2022.

Joining us today are Yishai Zohar, Founder and CEO of Gelesis; and Elliot Maltz, CFO of Gelesis. There’ll be discussion of fiscal 2022 first quarter and update in the company’s commercial product, Plenity. Plenity is indicated to aid weight management in adults with excess weight or obesity, body mass index of 25 kg to 40 kg square meter when used in conjunction with diet and exercise.

For important safety information about Plenity, please see our website at myplenity.com or call 1-844-PLENITY.

open to we’ll questions. remarks, their the your call Following

Private remind I this statements Before estimates Act of the prospects to today, EBITDA. business financial statements to XXXX, as Litigation everyone including of in its forward-looking we begin and Gelesis’ contain results, want including that relating sales Reform may conference defined outlook, future Securities or call projected

to XX-K will anticipates, continue, subject ended contribute subsequent differences discussed can include, reflected or written file on uncertainties, forward-looking current for and acting those All be are with likely in our Commission. cause amended are we projects, X-K attributable to Exchange statements identified the the believes, documents XXXX, in the and as December as in estimates, generally limited such and required predicts, by publicly by law. undertake in except statements and but discussed their expressly expects, statements forward-looking our cautionary similar statements other results are to the of included year persons Form Securities the in Forward-looking actual will expectations release such those not Gelesis XX, Gelesis’ are that could obligation to behalf these to this statements, and forward-looking words to, qualified be, or results We risks statements. will call. those or oral conference entirety no revise result forward-looking any that differ revision expressions. plans, cause from intends, and to materially by and These assumptions on Factors which could based

statements. contain cautioned uncertainties, listeners not such reliance place measures. discussion non-GAAP may Given following on the to these risks Also undue financial are and forward-looking

website, measures, our be will like also replay I a as that in see at discussion link starting available release these remind first the XXXX. two as www.gelesis.com. to provided today. reconciliation for company’s will call be please earnings replay available would for A quarter non-GAAP financial today’s weeks telephonic everyone and press of For the via via well webcast release the on this

to the Founder and Gelesis, please the would go CEO call turn over ahead. I Yishai, Zohar. Now, like Yishai of to

Yishai Zohar

good and everyone. you, Thank afternoon,

join We happy can you us today. are

listeners those walk will remarks first call and some who our are CFO, financial story, our For you our over make through to I results. turn new Elliot to then Maltz, quarter introductory to XXXX the

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truly Plenity Importantly, unique. is

of need to administration between from includes who the There advantages, BMI profile, unparalleled loss Plenity. behind prescription seen with prescription large and to management largest including approach This obesity. XX the market have addressable convenient population defined restriction as of a are significant the we other unmet weight a for encompasses entire XX As any weight of for of starting millions BMI XX with to label small a do up consumer not XX qualify those the the generally BMI treatments. We initial overweight of other slightly our from a believe we today. is tens people tolerability affordability. important market This have having of

performance. quarter first our to now Moving

This at Gelesis in wave the major for point, milestone for we media limited our two four-week well launch media ship by saw, home supply. awareness have channels, until national through when days as a people visiting we offer tool, provider. We to Up broad their price first with the a as of We February. launched vast we product and our free the February results been telehealth results about our ways more of occurred own Plenity, very an traditional the quarter are way, campaign. I two campaign a $XX that marked within March. or campaign the both a through this consultation today supply. it’s the was healthcare of their arrives the once since by affordable in were want to telehealth of majority to underway Either pleased you hearing emphasize

campaign, web saw our dramatic of traffic increase launch new the and seeking in we individuals of number the Following treatment. a a

when by first both the X.X metrics For these quarter compared of the quarter, XXXX. to times increased

We despite the consistent are increase previous also the with excited about dramatic quarters, in the conversion rate, which web remains traffic.

This reaching So same reinforces our right people. new the the to that the scale is the right is message of up very as encouraging inquiries we are opinion proportion launch, members. converting and

are And typically visiting are of members? they they in seeking website what website, the that prescription. seeing request of are with XX new treatment have So complete We hours visiting the common? new indicating of intention these XX% the within who members do

acquisition do The online minutes and important additional visited it the be fact, In hours. within and means This because XX that people request efficient. they have average, out approved very is cost treatment XX for takes visit find from XX% is time our can new require about follow-up marketing. been prescription on whether first the not they website

weight about management Plenity prescription prescription of products. management weight is have tried bringing before, the Plenity of members into people XX% Importantly, category product new never indicating

category should provide of penetrate next the which users, over runway of long for for positioned are us a As consumer we uniquely awareness grows growth continue years. new Plenity, to several to this

to not an they from prescription, active made drive provider in the the scheduled out healthcare HCP, growth the healthcare by important of XX% from with healthcare the initiated increase is already XXX% provider uptake consumer, in provider, channel. highlights expect baseline were request patient began. our of XX% the a their requested visit. Notable prescription some of channel. before Now or the providers prescription, HCP the the patients, who our we because for campaign the the up brought prescription This preliminarily XX% specifically Of it during demand, traditional over doctor time, among [ph] media seek healthcare consumer appointment by

within first We are see members year. ordering limited Plenity’s market, very units that the are encouraged already three-month to in the time units, on average multiple from

are We time intend member’s to over needs. support long-term this There and we to both and even number as obesity weight excess increase and nature, expecting episodic are in more chronic is have no long success they seek a take lose can we will are person and next how looking those us Plenity, to time members limit to out weight. who expect that

to saw have pleased record telehealth both scale We to very our have through high. deliver delivery significant with channels online traditional demand. we demonstrated convenience a were rapidly two-day been this the provider we our large level promised a we member’s the quarter, Throughout demand increase reached experience February of members, of influx and March, Even continue we these and this same throughout operational able and home. orders, has healthcare in seamless meet our with to ability results to to to

to also have Manufacturing and is pace We this growing now Gelesis. we and to execute capacity a on are feedback products, key our demand that going is digital have loss We built to journey developed with we promise. it necessary from infrastructure infrastructure to begun our specifically proprietary recently weight as Plenity. have thousands the by we story keep was the of fully are and the thrilled operational with the to importantly, part forward. continue launch members of necessary product, new receiving to the expand will Most technology who

millions a confidence the have opportunity quarter’s more. performance our make This cements to in we lives that difference of the

turn like Maltz, walk would over the CFO, call I our our through to to Now, financial discussion. to Elliot

Elliot Maltz

Thank you, Yishai.

Corp. manufacturing the the I’ll of New debuting $XXX million. Plenity’s and Purpose limited product. we the out of financial company the Stock a while results infrastructure a symbol, launch a GLS. to traded publicly in commercial under the business results through reminder, walk on XXXX, fully Acquisition built York proceeds through XXXX, XX, January Exchange accomplishments as and needed the of quarter Gelesis now extended completed all day of ticker As combination gross in The combination the On following Special our Capstar beta XXXX. first launch business

kicked we Plenity, of inflection to campaign. February broad major began when media off in build awareness we point quarter, our This with occurring the national consumer

year for States. reach XXXX is costs million volume in per members, per For and it acquired share which could would with point, the that acquired ended lower the in threefold than cost product goods XX, XXX% the be a member. At quarter. to and of new acquisition peak year-over-year. just for representing when new we I XXXX, of March in $XXX XXXX, the prior our years broad less coming unit. reiterate, more prior XX,XXX $XXX,XXX of this United Plenity, year the we XXXX believe new XXX,XXX of drove to the XX,XXX to Units the the majority revenue four-plus than quarter, first like compared in awareness vast is versus was the to we the March onboard members year quarter the Gross March February consumer increased $X.X during in quarter the ending our beginning sales these the sold versus and increase to quarter, million estimate prior XX, and a of take increase attributable months product, market were three there’s first XX,XXX net in which the three could $X.X members profit months

Plenity commercial gross of and manufacturing margin. mentioned, completed year, process we scale our proprietary of helps end significant in phase of is last first Yishai the improvement As at for the enable which a Gelesis, our

million to the XXXX, capacity of quarter later our in we continue loss the three year this year. year the and ended improvement increased loss margin $XX.X for we in million as scaling a prior the from manufacturing this $X.X XX% X% gross quarter. anticipate to of compared was net of first XX, and first Net XXXX, Our next months in year March quarter further

quarter awareness broad $XX.X product year of at the the between comparative is Plenity a negative While adjusted period of EBITDA in change increased $XX.X due to XXXX compared activities million to drive negative prior full marketing the EBITDA this year. first consumer commercial sell was million adjusted the the The in to and for quarter. level

to Moving balance the on sheet.

$X.X and supply cash As XX, of in XXXX, in inventory had of of $XX.X our March launch. receivables in pipeline we with million product million $XX million

equipment, Our property $XX.X and reflecting assets, was our million. manufacturing

full would I to outlook for about like talk year the Next, our XXXX.

approximately expect XXX% of XXXX. net million, continue a $XX product to We which revenues increase reflects over

While future and amount business, timing and are we are demand the for in Plenity confident increasingly financing. contingent our trajectory projections of the our on the of anticipated

Now I’ll closing Yishai? turn to remarks. provide Yishai to it back

Yishai Zohar

you, underscores success media that recently reach the we have The consumer. our campaign national Thank Elliot. of to our launched messaging targeted right

year focus we be will established on consumer build create in this to strong first our the continue that awareness to Our quarter. foundation and

that, largest any solution, the to on public executing the management up In biggest our an work our are with our satisfy today. weight FDA-cleared health thank for we open entirely with value approach shareholders. growth one you Plenity and would of new please to their loss to of plans and for the addressable look solution We the smaller team operator, weight on hard helps delivering crisis to has prescription call With questions. for like market portions. that market addressing forward dedication. closing, an I

Operator

Thank you, sir.

the and Ellie please be for Ellie, Yishai ahead. portion the Chief Q&A Merle Chief will [Operator Elliot, addition line UBS. question first Instructions] Our Pass, and David to Operating In from of of joining Officer Gelesis. Commercial Officer go from us comes

Ellie Merle

previous the digging as orders into traffic just the the taking you as little some rate; and bit quarters, a on more thinking media advertising guys. you’re congrats there or web versus advertising with perspective for terms conversion campaigns mentioned for any rate stayed of campaign, types on specific more progress. from types just led color web of of of And the placed a thinking campaign, campaign from learnings in plans specific that were the patient not. cost of the terms about to such higher you’re conversion rate that the little from Hey on recent terms Thanks then web bit of the advertising basis you were of maybe or that traffic us and in if that campaigns that my conversion a as of learnings types all any well advertising additionally, in how your Maybe per and more give higher question to consistent maybe visits. Thanks. learnings around a seeing it future could successful

Yishai Zohar

Thank you, the Ellie for questions.

answer Pass it. David to ask I’ll So

David Pass

Ellie. Hi, Thanks the for question.

So three questions.

conversion, pleased, site are were increased as and regard which what to opening were we the coming with think I in in comments that the First, to Yishai seeing tremendously. rate mentioned we people his

after going was, people In through consistent. online turned media for Plenity reach on prescription coming we we when terms visit the a the the and and February. what an then fact, in number broad to site of getting And even of then of saw the remain beginning online converting, visit in that

details Although was scale what up funnel, that kind saw we the that we’re consistently. not of went on providing

So a weren’t it and make looking that remained us metric we’re having the at the people people, sure to just constant, right conversion which come converting. to key to rate we the getting was site out to versus really

ultimately the right have message. site the We coming then are felt people we good to who became about members. So and the those

that So perspective our were marks we execution encouraging a about we scale that and as strategic perspective. making really a hitting as from from talk as well tactical sure was

terms of there lot the was media, a In learning. of

many. them, we out in was And audience. found we target So we thought terms reaching important educating really not and we as what all consumers used used about our but different vehicles of to

we driving So know, from XX. social this activation prior range to And linear. lower BMI the as reach that in. targeting saw used and to what we we you broad the we’re search really historically When we on an at campaign, is folks from XX perspective. And that’s found media, turned really

was very Specifically, as direct well linear as effective TV. response

not the we’ve media, that created, that channels. looks So can we of And immediately surprising, able as population in about target what that’s those you digitally the think coming and terms like. given platform And were two important assess evolution we’re who’s of response. that see to on, native

obviously, think, attractive. we’re all very we closely So investments. I linear TV was, monitoring was, of What also did the

terms of can different to very successful. media, other rate down in as dial different higher we’re the we not but attractive, think day, morning to want. to as the able programmatic, evening the consumer different that So well able networks, we spots invest of is, go about being to websites, response a go necessarily And the the having times in in we terms thing we’re ones. as to start as proved type of individual you of And very

excited. particularly are We

slot. the response visits in invested have one saw a rate highest in time finale, of and The we website is in highest that the of We in is Bachelor of live ever rated which audience terms during finale advertising. fact, terms And to

there’s our audiences. to ample think opportunity we target an So regard with

or to other the So out be media, at an and the ones with things we going that different sense, types the but And we makes also to working what as then of starting to go that had. pulsing, media of traditional whether that that is, types that I’d different regard future, only integrator think we’re about mix media radio well I as the with. with, described we look perspective many what other as the out to say it learning vehicles finally, are but from different And not print. more get specifically, audiences

up, what is, all dialing back we’re exploring dialing investment. as we and that response So we’re see the we’re those

Ellie Merle

the And Bachelor helpful. appreciate I The Got it. That’s color finale. on incredibly

David Pass

was exciting. very It

Ellie Merle

in committed of far, what something three sensitivity supply trends of member around more release year. price commented just of sort think of the from the duration and of months Thanks. the sort to that maybe potential in color in so trends that of of you’re I terms seeing know average and of terms in any you have like continue you and of term sort the first patient an guess guess of the you’re long And around number just you’re of, in someone’s or then the that experience terms the members I learned terms terms in I tenor terms refills guess, seeing to think, every how about similar pricing, you maybe I as the of members, sort like I of, in in of thinking average refill increases? of month, or within of use compliance. Maybe patient the they the sort future price that

David Pass

No Sure. problem.

increase of release, monthly market, time on this to mentioned you XX units, and for during we’re more months. terms time. three ordering based getting into those that the we and we’re are frame. three Plenity a getting are And the members in numbers opportunity time period as the over in And units in where just average that compliance, monthly we So expect put on limited obviously, upon having

So unfortunately, chronic any and they after exercise several people or reasons. for is weight gain stop a likely Excess we’re back regimen their number this activity. weight, diet encouraged condition. stop the with will Many

people we multiple maintenance needs. products, as either importance long therapy really well intend the our the that members important need cycles majority will episodic where So is is to and of as term of support what’s

So we’re for important there that them. it’s

along finally, unique That therapy, to us strong makes continue in diet way. the and of that we the opportunity and and then of safety tolerability is foundational In addition is grow backs return exercise, terms access. why garner to what profile. terms us really business to in be believe there really is win And significant allows

we have our in industry X%. think on gives directly to call, spoken I of average opportunity. previous members with somewhere often The around us. who to the really a we’ve XX% XX% past And that the communicate earnings us unique as So X% is

we a in obviously, connect allows us good to exercise. the course of importance with create expectations being appropriate loss of on of persistence, time able ultimately, support that given their can diet and them portion terms them So journey. to with members, it our and And weight of

can well multiple hopefully are episodic number which support chronically, that will – ultimately as things improve that The we them. there as more. even So to do

right at multiple in with pricing of testing In priced now, terms so business, are And for of including second sensitivity, aspects doing pricing we’re supply. a in of terms A/B currently below-the-line we question your of our terms four-week testing sensitivity. $XX

So we’re level the well of a our that’s very as overall for consumers currently significant evaluating that. about Obviously, we with as think hot business model. inflation, point

So is what evaluate elasticity from testing impact and perspective. and to what points we are the sense price different makes an

Ellie Merle

much Great. congrats the progress. the Thanks on color so for and all

David Pass

Thanks a lot.

Operator

[Operator There this further time. are Instructions] no questions at

call So would for like Mr. I over this back remarks. our concludes the to to session. question-and-answer turn Zohar now closing

Yishai Zohar

look we quarter us. Thank Thank for you, results our speaking to joining today’s in second report again everyone listening you with to I’d call, thank you like Lauren. August. for to forward when and we

Operator

teleconference. gentlemen, this conclude does and Ladies today’s

disconnect your this at lines participation. You may for time. Thank you your

Gelesis (GLSHQ) 14 May 222022 Q1 Earnings call transcript