Weight loss pill maker Epitomee’s stock sinks 70% after Nestlé cancels agreement
Weight loss pill maker Epitomee’s stock sinks 70% after Nestlé cancels agreement
The Swiss conglomerate notified Epitomee that it has decided not to market its product as the clinical trial results measuring the disparity in the weight loss rate between patients who took the pill and the control group did not reach the previously agreed upon success level
Israeli company Epitomee Medical, which develops a weight loss capsule, reported to the Tel Aviv Stock Exchange that the Swiss conglomerate Nestlé has communicated its decision to terminate its license agreement with the company and will not market its products.
Epitomee revealed that Nestlé sent it an email on Friday in which it stated that it concluded that the trial results, sent to Nestlé on November 6th, did not meet the minimum conditions outlined in the license agreement. “Following extensive internal deliberations at Nestlé, the decision was made not to proceed with the commercialization of Epitomee's product,” the Israeli company said.
Epitomee partnered with Nestlé Health Science in the study, with the latter having the exclusive rights to commercialize the capsule globally.
Epitomee’s shares reacted to the news with a drop of over 70% last Wednesday, leaving it with a market cap of around $35 million.
In August 2020, Epitomee entered into a commercialization agreement with Nestlé, wherein it was slated to receive a sum ranging from $10 million to $25 million, contingent upon the success level of the clinical trial.
As per the terms of the agreement, the primary criterion for determining the payment amount was the disparity in the weight loss rate between patients who took the pill and the control group (placebo recipients). The specific weight loss rate needed to fulfill the agreement with Nestlé was not disclosed.
Last Wednesday, Epitomee reported that, in an informal communication with a Nestlé representative, it was conveyed that "after the Nestlé examination team scrutinized the results of the clinical trial conducted by the company, their stance is that, at this stage, the results do not fully satisfy the minimum conditions established between the parties, which would entitle the company to a payment from Nestlé in the amount of $10 million."
In the same report, Epitomee stated that Nestlé, at its sole discretion, could either continue with the commercialization agreement, notwithstanding Epitomee not meeting the milestones, or terminate the agreement. Subsequently, Epitomee's report on Sunday confirms that Nestlé has opted to cancel the agreement.
Despite Nestlé’s decision, Epitomee underscored its belief that the experimental results do meet the minimum conditions agreed upon with Nestlé and said that it is currently exploring alternative avenues for the commercialization of its product.
This capsule, classified as a medical device, is essentially a swallowable pill that expands in the stomach, creating a sensation of satiety.
Epitomee reported success in a pivotal study of its weight loss capsule in September which resulted in the company's stock surging by over 70% and reaching an all-time high market cap of over $100 million.
It's worth noting that this stock jump occurred despite the fact that the company had not yet published the full results of the experiment and that its report lacked crucial details, such as the average weight loss observed in the experimental group compared to the control group.
Epitomee's weight management product is a shapeshifting polymeric scaffold composed of swellable biopolymers that imitates solid food to achieve a sensation of satiety. Once it reaches the stomach, it expands into a flexible triangle, interacting with the stomach wall and activating key pathways that regulate satiety and food intake. It is then cleared out through normal bowel movements and is not absorbed by the body. The capsule is already CE cleared.
Epitomee completed its IPO on the Tel Aviv Stock Exchange in December 2021. The company raised $51 million from institutional investors, including leading insurance companies. The offering was made at a pre money valuation of $200 million.
