Fractyl Health shares plunged nearly 50% in Friday's trading despite the company reporting positive six-month clinical results for its Revita weight-loss treatment. Benzinga Pro data showed Fractyl shares down 47.60% at $2.18 at publication on Friday. The selloff comes amid an investor class action over earlier trial disclosures and concerns about the treatment's effectiveness.
Fractyl released topline six-month findings from the Pivotal Cohort of the ongoing REMAIN-1 clinical trial of the Revita DMR System. The 308-participant study achieved its pre-specified six-month co-primary endpoint. Patients receiving a single Revita treatment showed a statistically significant reduction in weight regain compared with sham participants, with p=0.0023. In the modified intention-to-treat group, Revita recipients maintained approximately 80% of their initial GLP-1-driven weight loss six months after a single procedure. Sham participants maintained 67% of their initial GLP-1-driven weight loss. Least-squares mean weight regain was 5.1% for Revita recipients, compared with 8.2% for sham participants. Among Revita patients, 32% maintained stable weight or achieved further reductions, compared with 18% in the control cohort.
The trial also demonstrated a dose-dependent relationship. Patients receiving 12 to 18 centimeters of duodenal ablation experienced 43% less weight regain than sham participants. Patients receiving 20 centimeters or more experienced 53% less weight regain than sham participants. Fractyl released post-hoc data from the REMAIN-1 Midpoint Cohort in March. Those findings concerned participants with above-median GLP-1-induced weight loss who received greater than 14 centimeters of duodenal ablation. Revita participants in that group retained 88% of GLP-1-induced weight loss at six months, compared with 60% for sham participants.
Revita remained well-tolerated through the September 24 cutoff, with zero deaths, device-related serious adverse events or unanticipated device effects. Management expects the findings to support a De Novo marketing application to the U.S. Food and Drug Administration in late fourth quarter of 2026. A Category III CPT code takes effect on January 1, 2027. One-year Pivotal Cohort data are scheduled for the first quarter of 2027. Fractyl anticipates potential regulatory authorization in late 2027. Fractyl anticipates a commercial rollout in early 2028.
Fractyl faces a securities class action alleging that the company misled investors about Revita's effectiveness and the prospects of the REMAIN-1 study. The lawsuit alleges that Fractyl overstated Revita's effectiveness and failed to disclose clinical site issues that affected study results. The Portnoy Law Firm announced the lead-plaintiff deadline on Wednesday, October 14. Investors who purchased Fractyl securities between January 13, 2025, and January 29, 2026, have until October 20 to seek appointment as lead plaintiff, the firm said.
Fractyl reported on January 29 that Revita-treated patients regained 4.5% of their weight over six months, compared with 7.5% in the control group. The results fell short of investor expectations. Morgan Stanley subsequently downgraded Fractyl from Overweight to Equal-weight. Morgan Stanley cut its price forecast from $8 to $2. Morgan Stanley reduced its estimated probability of success for Revita from 50% to 35%. Morgan Stanley lowered its projected peak risk-adjusted global sales for 2035 from $700 million to approximately $490 million. The complaint states that Fractyl shares plunged more than 68% following the clinical results. The complaint states that Fractyl shares declined more than 21% further after analysts raised concerns about the treatment's prospects.
Fractyl Health Shares Drop 47.6% Amid Clinical Results and Legal Action
BenzingaShare
Summary
Fractyl Health (NASDAQ:GUTS) shares plunged 47.6% to $2.18 amid legal action and mixed clinical updates. The drop came after a securities lawsuit accused the company of misleading investors on Revita’s performance and trial data. Liquidity and crypto markets remained unaffected by the plunge. Earlier, shares had tumbled over 68% after underwhelming results, with Morgan Stanley slashing its price target from $8 to $2. The firm also cited CFT concerns in regulatory filings.
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