S-4 1 tm2122708-1_s4.htm S-4 tm2122708-1_s4 - none - 92.125538s
As filed with the Securities and Exchange Commission on August 10, 2021
No. 333-     
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
CAPSTAR SPECIAL PURPOSE ACQUISITION CORP.
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of
incorporation or organization)
6770
(Primary Standard Industrial
Classification Code Number)
84-4730610
(I.R.S. Employer
Identification No.)
405 West 14th Street
Austin, TX 78701
(512) 340-7800
(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)
R. Steven Hicks
Chief Executive Officer
Capstar Special Purpose Acquisition Corp.
405 West 14th Street
Austin, TX 78701
(512) 340-7800
(Name, address, including zip code, and telephone number, including area code, of agent for service)
Copies of all communications, including communications sent to agent for service, should be sent to:
Christopher S. Auguste, Esq.
Ernest S. Wechsler, Esq.
Kramer Levin Naftalis & Frankel LLP
1177 Avenue of the Americas
New York, New York 10033
Tel: (212) 715-9100
Ettore A. Santucci, Esq.
James T. Barrett, Esq.
Goodwin Procter LLP
100 Northern Avenue
Boston, Massachusetts 02210
Tel: (617) 570-1000
Approximate date of commencement of proposed sale to the public:
As soon as practicable after this Registration Statement becomes effective.
If the securities being registered on this Form are being offered in connection with the formation of a holding company and there is compliance with General Instruction G, check the following box.   ☐
If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.   ☐
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.   ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.   ☐
Large accelerated filer Accelerated filer
Non-accelerated filer Smaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act.   ☐
If applicable, place an X in the box to designate the appropriate rule provision relied upon in conducting this transaction:
Exchange Act Rule 13e-4(i) (Cross-Border Issuer Tender Offer)   ☐
Exchange Act Rule 14d-l(d) (Cross-Border Third-Party Tender Offer)   ☐
CALCULATION OF REGISTRATION FEE
Title of Each Class of Securities
to be Registered
Amount to be
Registered(2)
Proposed Maximum
Aggregate
Offering Price(3)
Amount of
Registration Fee(4)
New Gelesis Common Stock(1)
108,950,726
$1,070,985,637
$116,844.54
Total
108,950,726
$1,070,985,637
$116,844.54
(1)
Based on the maximum number of shares of common stock, $0.0001 par value per share (the “New Gelesis Common Stock”), of New Gelesis (as defined below) issuable upon a business combination (the “Business Combination”) involving Capstar Special Purpose Acquisition Corp. (“CPSR”) and Gelesis, Inc. (“Gelesis”). This number is based on 108,950,726, the maximum number of shares of New Gelesis Common Stock that are expected to be issued pursuant to the Business Combination to the Gelesis Equityholders, which includes: (i) 83,188,403 shares of New Gelesis Common Stock to be issued to the holders of Gelesis Common Stock; (ii) 20,865,318, the maximum aggregate number of shares of New Gelesis Common Stock that may become issuable under certain Gelesis Options that are to be assumed by New Gelesis and become exercisable for shares of New Gelesis Common Stock upon consummation of the Business Combination; and (iii) 4,897,005, the maximum aggregate number of shares of New Gelesis Common Stock that may become issuable upon the settlement of certain Gelesis Warrants outstanding as of August 10, 2021, which Gelesis Warrants will be cancelled in exchange for warrants to purchase shares of New Gelesis Common Stock upon consummation of the Business Combination. “New Gelesis” refers to CPSR after giving effect to the consummation of the Business Combination.
(2)
Pursuant to Rule 416(a) of Securities Act of 1933, as amended (the “Securities Act”), there are also being registered an indeterminable number of additional securities as may be issued to prevent dilution resulting from stock splits, stock dividends or similar transactions.
(3)
Estimated solely for the purpose of calculating the registration fee, based on the average of the high and low prices of the Class A Common Stock of CPSR on the New York Stock Exchange on August 9, 2021 ($9.83 per share of Class A Common Stock). This calculation is in accordance with Rule 457(f)(1) of the Securities Act.
(4)
Calculated by multiplying the proposed maximum aggregate offering price of securities to be registered by 0.0001091.
The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date as the Commission acting pursuant to said Section 8(a), may determine.

The information in this preliminary proxy statement/prospectus is not complete and may be changed. The registrant may not sell the securities described in this preliminary proxy statement/prospectus until the registration statement filed with the Securities and Exchange Commission is declared effective. This preliminary proxy statement/prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted.
PRELIMINARY — SUBJECT TO COMPLETION, DATED AUGUST 10, 2021
PROXY STATEMENT FOR SPECIAL MEETING OF
CAPSTAR SPECIAL PURPOSE ACQUISITION CORP.
PROSPECTUS FOR
108,950,726 SHARES OF COMMON STOCK OF
CAPSTAR SPECIAL PURPOSE ACQUISITION CORP.
The board of directors of Capstar Special Purpose Acquisition Corp., a Delaware corporation (“CPSR”), has unanimously approved the transactions (collectively, the “Business Combination”) contemplated by that certain Business Combination Agreement, dated July 19, 2021 (as the same may be amended, supplemented or otherwise modified from time to time, the “Business Combination Agreement”), by and among CPSR, CPSR Gelesis Merger Sub, Inc., a Delaware corporation, and wholly-owned subsidiary of CPSR (“Merger Sub”), and Gelesis, Inc., a Delaware corporation (“Gelesis”), a copy of which is attached to this proxy statement/prospectus as Annex A. As described in this proxy statement/prospectus, CPSR’s stockholders are being asked to consider a vote upon the Business Combination, among other items. As used in this proxy statement/prospectus, “New Gelesis” refers to CPSR after giving effect to the consummation of the Business Combination.
On the date of closing of the Business Combination, Merger Sub will merge with and into Gelesis, with Gelesis as the surviving company in the Business Combination and, after giving effect to the Business Combination, Gelesis will be a wholly-owned subsidiary of CPSR (the time that the Business Combination becomes effective being referred to as the “Effective Time”).
In accordance with the terms and subject to the conditions of the Business Combination Agreement, at the Effective Time, based on an implied equity value of $900 million (i) each share of CPSR Class A Common Stock and CPSR Class B Common Stock issued and outstanding immediately prior to the Effective Time will become one share of New Gelesis Common Stock, (ii) each share of Gelesis outstanding as of immediately prior to the Effective Time will be automatically cancelled and extinguished and converted into a right to receive shares of New Gelesis Common Stock, (iii) each share of capital stock of Merger Sub issued and outstanding as of immediately prior to the Effective Time will be automatically cancelled and extinguished and converted into one share of New Gelesis Common Stock, (iv) all vested and unvested Gelesis Options will be assumed by New Gelesis and thereafter be settled or exercisable for shares of New Gelesis Common Stock and (v) each Gelesis Warrant will be assumed by New Gelesis and thereafter be a warrant to purchase shares of New Gelesis Common Stock. In addition, each holder of shares of Gelesis Common Stock, Gelesis Options and Gelesis Warrants will receive its pro rata portion of 15,000,000 restricted earn out shares of New Gelesis Common Stock, which will vest (in part) in equal thirds if the trading price of New Gelesis Common Stock is greater than or equal to $12.50, $15.00 and $17.50, respectively, for any 20 trading days within any 30-trading day period on or prior to the date that is five years following the Effective Time and will also vest in connection with any Change of Control Transaction (as defined in the Business Combination Agreement) with respect to New Gelesis if the applicable thresholds are met in such Change of Control Transaction during the same five-year deadline. The market value of the shares to be issued could vary significantly from the market value of the shares as of the date of this proxy statement/prospectus.
It is anticipated that, upon completion of the Business Combination, (i) the Gelesis stockholders, will own, collectively, approximately      % of the outstanding New Gelesis Common Stock, (ii) the stockholders participating in the concurrent private placement in public equity, will own, collectively,     % of the outstanding New Gelesis Common Stock and (iii) CPSR’s initial stockholders will own approximately     % of the outstanding New Gelesis Common Stock, in each case, assuming that none of CPSR’s outstanding Public Shares are redeemed in connection with the Business Combination, or approximately     %,     %, and     %, respectively, assuming that all of CPSR’s outstanding Public Shares are redeemed in connection with the Business Combination.
This proxy statement/prospectus covers up to 108,950,726 shares of New Gelesis Common Stock, which represents the maximum number of shares that may be issued to holders of shares of Gelesis Common Stock, Gelesis Options and Gelesis Warrants in connection with the Business Combination (as more fully described in this proxy statement/prospectus).
CPSR’s Units, Public Shares and Public Warrants are currently listed on the New York Stock Exchange (the “NYSE”) under the symbols “CPSR.U,” “CPSR” and “CPSR WS,” respectively. CPSR will apply for listing, to be effective at the time of the Business Combination, of New Gelesis Common Stock and the Public Warrants on the NYSE under the proposed symbols “GLS” and “GLS WS”, respectively. New Gelesis will not have Units traded following the Closing of the Business Combination. It is a condition of the consummation of the Business Combination that CPSR receive confirmation from the NYSE that New Gelesis has been conditionally approved for listing on the NYSE, but there can be no assurance such listing condition will be met or that CPSR will obtain such confirmation from the NYSE. If such listing condition is not met or if such confirmation is not obtained, the Business Combination will not be consummated unless the NYSE condition set forth in the Business Combination Agreement is waived by the applicable parties.
The accompanying proxy statement/prospectus provides stockholders of CPSR with detailed information about the Business Combination and other matters to be considered at the special meeting of CPSR. We encourage you to read the entire accompanying proxy statement/prospectus, including the Annexes and other documents referred to therein, carefully and in its entirety. You should also carefully consider the risk factors described in “Risk Factors” beginning on page 32 of the accompanying proxy statement/prospectus.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES REGULATORY AGENCY HAS APPROVED OR DISAPPROVED THE TRANSACTIONS DESCRIBED IN THE ACCOMPANYING PROXY STATEMENT/PROSPECTUS, PASSED UPON THE MERITS OR FAIRNESS OF THE BUSINESS COMBINATION OR RELATED TRANSACTIONS OR PASSED UPON THE ADEQUACY OR ACCURACY OF THE DISCLOSURE IN THE ACCOMPANYING PROXY STATEMENT/PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY CONSTITUTES A CRIMINAL OFFENSE.
The accompanying proxy statement/prospectus is dated            , 2021, and is first being mailed to CPSR’s stockholders on or about            , 2021.

 
CAPSTAR SPECIAL PURPOSE ACQUISITION CORP.
405 West 14th Street
Austin, Texas 78701
Dear Capstar Special Purpose Acquisition Corp. Stockholders:
You are cordially invited to attend the Special Meeting of stockholders (the “Special Meeting”) of Capstar Special Purpose Acquisitions Corp., a Delaware corporation (“CPSR”), being held virtually on      2021, or at such other time, on such other date and at such other place to which the meeting may be adjourned.
At the Special Meeting, CPSR stockholders will be asked to consider and vote upon a proposal, which is referred to herein as the “Business Combination Proposal” to approve and adopt the Business Combination Agreement (and the transactions contemplated thereby), dated as of July 19, 2021 (as may be amended, supplemented or otherwise modified from time to time, the “Business Combination Agreement”), by and among CPSR, CPSR Gelesis Merger Sub, Inc., a Delaware corporation (“Merger Sub”) and a wholly-owned subsidiary of CPSR, and Gelesis, Inc., a Delaware corporation (“Gelesis”), a copy of which is attached to the accompanying proxy statement/prospectus as Annex A.
On the date of the closing of the Business Combination (the “Closing Date”), Merger Sub will merge with and into Gelesis (the “Business Combination”), with Gelesis as the surviving company in the Business Combination and, after giving effect to such Business Combination, Gelesis will be a wholly-owned subsidiary of CPSR. We refer to CPSR following the closing of the Business Combination as New Gelesis. In connection with the Business Combination, CPSR will be renamed “Gelesis Holdings, Inc.”, and Gelesis will retain its name “Gelesis, Inc.”
In connection with the foregoing and concurrently with the execution of the Business Combination Agreement, CPSR has entered into subscription agreements with certain investors (the “PIPE Investors”), pursuant to which the PIPE Investors have agreed to subscribe for and purchase, and CPSR has agreed to issue and sell to the PIPE Investors, an aggregate of 9,000,000 shares of CPSR Class A Common Stock at a price of $10.00 per share, for aggregate gross proceeds of $90 million (the “PIPE Financing”). The shares of CPSR Class A Common Stock to be issued pursuant to the Subscription Agreements have not been registered under the Securities Act of 1933, as amended (the “Securities Act”), in reliance upon the exemption provided in Section 4(a)(2) of the Securities Act. CPSR has granted the PIPE Investors certain registration rights in connection with the PIPE Financing. The PIPE Financing is contingent upon, among other things, the substantially concurrent closing of the Business Combination.
CPSR stockholders are being asked to vote on the following matters (the “Proposals”):
1.
to (a) adopt and approve the Business Combination Agreement, a copy of which is attached to the accompanying proxy statement/prospectus as Annex A, and (b) approve the Business Combination.
Subject to the terms and conditions set forth in the Business Combination Agreement, at the Effective Time, based on an implied equity value of $900 million:
(i)
each share of CPSR Class A Common Stock and CPSR Class B Common Stock issued and outstanding immediately prior to the Effective Time will become one share of New Gelesis Common Stock;
(ii)
each share of Gelesis outstanding as of immediately prior to the Effective Time will be automatically cancelled and extinguished and converted into a right to receive shares of New Gelesis Common Stock;
(iii)
each share of capital stock of Merger Sub issued and outstanding as of immediately prior to the Effective Time will be automatically cancelled and extinguished and converted into one share of New Gelesis Common Stock;
(iv)
all vested and unvested Gelesis Options will be assumed by New Gelesis and thereafter be settled or exercisable for shares of New Gelesis Common Stock;
 

 
(v)
each Gelesis Warrant will be assumed by New Gelesis and thereafter be a warrant to purchase shares of New Gelesis Common Stock; and
(vi)
each holder of shares of Gelesis Common Stock, Gelesis Options and Gelesis Warrants will receive its pro rata portion of 15,000,000 restricted earn out shares of New Gelesis Common Stock, which will vest (in part) in equal thirds if the trading price of New Gelesis Common Stock is greater than or equal to $12.50, $15.00 and $17.50, respectively, for any 20 trading days within any 30-trading day period on or prior to the date that is five years following the Effective Time and will also vest in connection with any Change of Control Transaction (as defined in the Business Combination Agreement) with respect to New Gelesis if the applicable thresholds are met in such Change of Control Transaction during the same five-year deadline.
We refer to this Proposal as the “Business Combination Proposal”;
2.
to approve, assuming the Business Combination Proposal is approved and adopted, a proposed amended and restated certificate of incorporation (the “Proposed Charter”), which will amend and restate CPSR’s current amended and restated certificate of incorporation (the “Current Charter”), and which Proposed Charter will be in effect when duly filed with the Secretary of the State of Delaware in connection with the Closing (the “Charter Amendment Proposal”);
3.
to approve, on a non-binding advisory basis, the following material differences between the Proposed Charter and the Current Charter, which are being presented in accordance with the requirements of the Securities and Exchange Commission as seven (7) separate sub-proposals (the “Advisory Charter Amendment Proposals”):
(a)
Advisory Charter Proposal A — to change the corporate name of New Gelesis to “Gelesis Holdings, Inc.”;
(b)
Advisory Charter Proposal B — to increase CPSR’s capitalization so that it will have 900,000,000 authorized shares of common stock and 250,000,000 authorized shares of preferred stock;
(c)
Advisory Charter Proposal C — to divide the New Gelesis board of directors into three classes with staggered three-year terms;
(d)
Advisory Charter Proposal D — to provide that the removal of any director be only for cause and only by the affirmative vote of holders of at least 6623% of New Gelesis’ then outstanding shares entitled to vote at an election of directors;
(e)
Advisory Charter Proposal E — to provide that certain amendments to provisions of the Proposed Charter will require the affirmative vote of holders of at least 6623% of New Gelesis’ then outstanding shares of capital stock entitled to vote thereon, and the affirmative vote of at least 6623% of New Gelesis’ then outstanding shares of each class entitled to vote thereon as a class;
(f)
Advisory Charter Proposal F — to make New Gelesis’ corporate existence perpetual as opposed to CPSR’s corporate existence, which is required to be dissolved and liquidated twenty-four (24) months following the closing of its initial public offering, and to remove from the Proposed Charter the various provisions applicable only to blank check companies; and
(g)
Advisory Charter Proposal G — to remove the provisions setting the Court of Chancery of the State of Delaware as the sole and exclusive forum for certain stockholder actions.
4.
to approve, assuming the Business Combination Proposal is approved and adopted, for purposes of complying with the applicable provisions of Section 312 of the NYSE Listed Company Manual, (a) the issuance of up to 108,950,726 newly issued shares of New Gelesis Common Stock in the Business Combination, which amount will be determined as described in more detail in the accompanying proxy statement/prospectus under the heading titled “Business Combination Proposal — Ownership of New Gelesis” and (b) the PIPE Financing (the “NYSE Stock Issuance Proposal”);
 

 
5.
to approve, assuming the Business Combination Proposal is approved and adopted, the appointment of nine directors who, upon consummation of the Business Combination, will become directors of New Gelesis (the “Director Election Proposal”);
6.
to approve, assuming the Business Combination Proposal is approved and adopted, the Gelesis Holdings, Inc. 2021 Stock Option and Incentive Plan, a copy of which is appended to the accompanying proxy statement/prospectus as Exhibit H to the Business Combination Agreement, a copy of which is attached to the accompanying proxy statement/prospectus as Annex A, which will become effective the day prior to the Closing (the “Equity Incentive Plan Proposal”); and
7.
to approve a proposal to adjourn the Special Meeting to a later date or dates, if necessary, to permit further solicitation and vote of proxies if, based upon the tabulated vote at the time of the Special Meeting, there are not sufficient votes to approve the Business Combination Proposal, the Charter Amendment Proposal, the NYSE Stock Issuance Proposal, the Director Election Proposal, or the Equity Incentive Plan Proposal, or we determine that one or more of the closing conditions under the Business Combination Agreement is not satisfied or waived (the “Adjournment Proposal”).
CPSR is providing the accompanying proxy statement/prospectus and accompanying proxy card to CPSR’s stockholders in connection with the solicitation of proxies to be voted at the Special Meeting and at any adjournments of the Special Meeting. Information about the Special Meeting, the Business Combination and other related business to be considered by CPSR’s stockholders at the Special Meeting is included in the accompanying proxy statement/prospectus. Whether or not you plan to attend the Special Meeting, all of CPSR’s stockholders are urged to read the accompanying proxy statement/prospectus, including the Annexes and other documents referred to therein, carefully and in its entirety. You should also carefully consider the risk factors described inRisk Factorsbeginning on page 32 of the accompanying proxy statement/prospectus.
After careful consideration, the board of directors of CPSR has unanimously approved the Business Combination Agreement and the transactions contemplated thereby, including the Business Combination, and unanimously recommends that stockholders vote “FOR” the adoption of the Business Combination Agreement and approval of the transactions contemplated thereby, including the Business Combination, and “FOR” all other Proposals presented to CPSR’s stockholders in the accompanying proxy statement/prospectus. When you consider the recommendation of these Proposals by the board of directors of CPSR, you should keep in mind that CPSR’s directors and officers have interests in the Business Combination that may conflict with your interests as a stockholder. See the section entitled “Business Combination Proposal — Interests of CPSR’s Directors and Executive Officers in the Business Combination” in the accompanying proxy statement/prospectus for a further discussion of these considerations.
Pursuant to CPSR’s current bylaws, a majority of the shares entitled to vote, represented at the Special Meeting or by proxy, will constitute a quorum for the transaction of business at the Special Meeting. Under the DGCL, shares that are voted “abstain” or “withheld” and broker “non-votes” are counted as present for purposes of determining whether a quorum is present at the Special Meeting.
The approval of the Business Combination Proposal, the Advisory Charter Amendment Proposals, the NYSE Stock Issuance Proposal, the Equity Incentive Plan Proposal and the Adjournment Proposal each require the affirmative vote of the holders of a majority of the shares of CPSR Common Stock cast by the stockholders represented in person (which would include presence at a virtual meeting) or by proxy and entitled to vote thereon at the Special Meeting, voting together as a single class.
The approval of the Charter Amendment Proposal requires the affirmative vote of a majority of the issued and outstanding shares of CPSR Common Stock, voting together as a single class.
The approval of the Director Election Proposal requires a plurality vote of the CPSR Common Stock present (which would include presence at a virtual meeting) or represented by proxy and entitled to vote at the Special Meeting. “Plurality” means that the individuals who receive the largest number of votes cast “FOR” are elected as directors. Consequently, any shares not voted “FOR” a particular nominee (whether as a result of an abstention, a direction to withhold authority or a broker non-vote) will not be counted in the nominee’s favor.
 

 
If the Business Combination Proposal is not approved, the NYSE Stock Issuance Proposal, the Charter Amendment Proposal, the Advisory Charter Amendment Proposals, the Director Election Proposal and the Equity Incentive Plan Proposal will not be presented to the CPSR stockholders for a vote. The approval of the Business Combination Proposal, the NYSE Stock Issuance Proposal, the Charter Amendment Proposal and the Equity Incentive Plan Proposal are preconditions to the Closing.
Your vote is very important. Whether or not you plan to attend the Special Meeting, please vote as soon as possible by following the instructions in the accompanying proxy statement/prospectus to make sure that your shares are represented at the Special Meeting. If you hold your shares in “street name” through a bank, broker or other nominee, you will need to follow the instructions provided to you by your bank, broker or other nominee to ensure that your shares are represented and voted at the Special Meeting.
If you sign, date and return your proxy card without indicating how you wish to vote, your proxy will be voted “FOR” each of the proposals presented at the Special Meeting. If you fail to return your proxy card or fail to instruct your bank, broker or other nominee how to vote, and do not attend the Special Meeting in person, the effect will be, among other things, that your shares will not be counted for purposes of determining whether a quorum is present at the Special Meeting. If you are a stockholder of record and you attend the Special Meeting and wish to vote in person, you may withdraw your proxy and vote in person.
TO EXERCISE YOUR REDEMPTION RIGHTS, YOU MUST DEMAND IN WRITING THAT YOUR PUBLIC SHARES ARE REDEEMED FOR A PRO RATA PORTION OF THE FUNDS HELD IN THE TRUST ACCOUNT AND TENDER YOUR SHARES TO CPSR’S TRANSFER AGENT AT LEAST TWO BUSINESS DAYS PRIOR TO THE VOTE AT THE SPECIAL MEETING. IN ORDER TO EXERCISE YOUR REDEMPTION RIGHT, YOU NEED TO IDENTIFY YOURSELF AS A BENEFICIAL HOLDER AND PROVIDE YOUR LEGAL NAME, PHONE NUMBER AND ADDRESS IN YOUR WRITTEN DEMAND. YOU MAY TENDER YOUR SHARES BY EITHER DELIVERING YOUR SHARE CERTIFICATE TO THE TRANSFER AGENT OR BY DELIVERING YOUR SHARES ELECTRONICALLY USING THE DEPOSITORY TRUST COMPANY’S DWAC (DEPOSIT WITHDRAWAL AT CUSTODIAN) SYSTEM. IF THE BUSINESS COMBINATION IS NOT COMPLETED, THEN THESE SHARES WILL BE RETURNED TO YOU OR YOUR ACCOUNT. IF YOU HOLD THE SHARES IN STREET NAME, YOU WILL NEED TO INSTRUCT THE ACCOUNT EXECUTIVE AT YOUR BANK OR BROKER TO WITHDRAW THE SHARES FROM YOUR ACCOUNT IN ORDER TO EXERCISE YOUR REDEMPTION RIGHTS.
HOLDERS OF UNITS MUST ELECT TO SEPARATE THE UNDERLYING PUBLIC SHARES AND PUBLIC WARRANTS PRIOR TO EXERCISING REDEMPTION RIGHTS WITH RESPECT TO THE PUBLIC SHARES. IF HOLDERS HOLD THEIR UNITS IN AN ACCOUNT AT A BROKERAGE FIRM OR BANK, HOLDERS MUST NOTIFY THEIR BROKER OR BANK THAT THEY ELECT TO SEPARATE THE UNITS INTO THE UNDERLYING PUBLIC SHARES AND PUBLIC WARRANTS, OR IF A HOLDER HOLDS UNITS REGISTERED IN ITS OWN NAME, THE HOLDER MUST CONTACT THE TRANSFER AGENT, DIRECTLY AND INSTRUCT IT TO DO SO.
On behalf of CPSR’s board of directors, I would like to thank you for your support and look forward to the successful completion of the Business Combination.
Sincerely,
/s/ R. Steven Hicks
R. Steven Hicks
Chief Executive Officer and Chairman of the Board of Directors
 

 
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES REGULATORY AGENCY HAS APPROVED OR DISAPPROVED THE TRANSACTIONS DESCRIBED IN THE ACCOMPANYING PROXY STATEMENT/PROSPECTUS, PASSED UPON THE MERITS OR FAIRNESS OF THE BUSINESS COMBINATION OR RELATED TRANSACTIONS OR PASSED UPON THE ADEQUACY OR ACCURACY OF THE DISCLOSURE IN THE ACCOMPANYING PROXY STATEMENT/PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY CONSTITUTES A CRIMINAL OFFENSE.
The accompanying proxy statement/prospectus is dated                 , 2021 and is first being mailed to CPSR stockholders on or about                 , 2021.
 

 
CAPSTAR SPECIAL PURPOSE ACQUISITION CORP.
405 West 14th Street
Austin, Texas 78701
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON                 , 2021
TO THE STOCKHOLDERS OF CAPSTAR SPECIAL PURPOSE ACQUISITION CORP.: NOTICE IS HEREBY GIVEN that the Special Meeting will be held on      , 2021, at      Eastern time, via live webcast at the following address                  . You will need the 12-digit meeting control number that is printed on your proxy card to enter the Special Meeting. CPSR recommends that you log in at least 15 minutes before the Special Meeting to ensure you are logged in when the Special Meeting starts. Please note that you will not be able to attend the Special Meeting in person. You are cordially invited to attend the Special Meeting for the following purposes:
CPSR stockholders are being asked to vote on the following proposals (the “Proposals”):
1.   to (a) adopt and approve the Business Combination Agreement, dated as of July 19, 2021 (as may be amended, supplemented or otherwise modified from time to time, the “Business Combination Agreement”), among CPSR, CPSR Gelesis Merger Sub, Inc., and Gelesis, pursuant to which Merger Sub will merge with and into Gelesis, Inc., a Delaware corporation (“Gelesis”), with Gelesis surviving the merger as a wholly-owned subsidiary of CPSR (the “Business Combination”) and (b) approve such merger and the other transactions contemplated by the Business Combination Agreement. In connection with the Business Combination, CPSR will be renamed “Gelesis Holdings, Inc.”, and Gelesis will retain its name “Gelesis, Inc.” We refer to CPSR following the closing of the Business Combination as New Gelesis.
Subject to the terms and conditions set forth in the Business Combination Agreement, at the Effective Time, based on an implied equity value of $900 million:
(i)   each share of CPSR Class A Common Stock and CPSR Class B Common Stock issued and outstanding immediately prior to the Effective Time will become one share of New Gelesis Common Stock;
(ii)   each share of Gelesis outstanding as of immediately prior to the Effective Time will be automatically cancelled and extinguished and converted into a right to receive shares of New Gelesis Common Stock;
(iii)   each share of capital stock of Merger Sub issued and outstanding as of immediately prior to the Effective Time will be automatically cancelled and extinguished and converted into one share of New Gelesis Common Stock;
(iv)   all vested and unvested Gelesis Options will be assumed by New Gelesis and thereafter be settled or exercisable for shares of New Gelesis Common Stock;
(v)   each Gelesis Warrant will be assumed by New Gelesis and thereafter be a warrant to purchase shares of New Gelesis Common Stock; and
(vi)   each holder of shares of Gelesis Common Stock, Gelesis Options and Gelesis Warrants will receive its pro rata portion of 15,000,000 restricted earn out shares of New Gelesis Common Stock, which will vest (in part) in equal thirds if the trading price of New Gelesis Common Stock is greater than or equal to $12.50, $15.00 and $17.50, respectively, for any 20 trading days within any 30-trading day period on or prior to the date that is five years following the Effective Time and will also vest in connection with any Change of Control Transaction (as defined in the Business Combination Agreement) with respect to New Gelesis if the applicable thresholds are met in such Change of Control Transaction during the same five-year deadline.
We refer to this Proposal as the Business Combination Proposal. A copy of the Business Combination Agreement is attached to the accompanying proxy statement/prospectus as Annex A;
 

 
2.   to approve, assuming the Business Combination Proposal is approved and adopted, a proposed amended and restated certificate of incorporation (the “Proposed Charter”), which will amend and restate CPSR’s current amended and restated certificate of incorporation (the “Current Charter”), and which Proposed Charter will be in effect when duly filed with the Secretary of the State of the State of Delaware in connection with the Closing (the “Charter Amendment Proposal”);
3.   to approve, on a non-binding advisory basis, the following material differences between the Proposed Charter and the Current Charter, which are being presented in accordance with the requirements of the Securities and Exchange Commission as seven (7) separate sub-proposals:
(a)   Advisory Charter Proposal A — to change the corporate name of New Gelesis to “Gelesis Holdings, Inc.”;
(b)   Advisory Charter Proposal B — to increase CPSR’s capitalization so that it will have 900,000,000 authorized shares of common stock and 250,000,000 authorized shares of preferred stock;
(c)   Advisory Charter Proposal C — to divide the New Gelesis board of directors into three classes with staggered three-year terms;
(d)   Advisory Charter Proposal D — to provide that the removal of any director be only for cause and only by the affirmative vote of holders of at least 6623% of New Gelesis’ then outstanding shares entitled to vote at an election of directors;
(e)   Advisory Charter Proposal E — to provide that certain amendments to provisions of the Proposed Charter will require the affirmative vote of holders of at least 6623% of New Gelesis’ then outstanding shares of capital stock entitled to vote thereon, and the affirmative vote of at least 6623% of New Gelesis’ then outstanding shares of each class entitled to vote thereon as a class;
(f)   Advisory Charter Proposal F — to make New Gelesis’ corporate existence perpetual as opposed to CPSR’s corporate existence, which is required to be dissolved and liquidated twenty-four (24) months following the closing of its initial public offering, and to remove from the Proposed Charter the various provisions applicable only to blank check companies; and
(g)   Advisory Charter Proposal G — to remove the provisions setting the Court of Chancery of the State of Delaware as the sole and exclusive forum for certain stockholder actions.
4.   to approve, assuming the Business Combination Proposal is approved and adopted, for purposes of complying with the applicable provisions of Section 312 of the NYSE Listed Company Manual, (a) the issuance of up to 108,950,726 newly issued shares of New Gelesis Common Stock in the Business Combination, which amount will be determined as described in more detail in the accompanying proxy statement/prospectus under the heading titled “Business Combination Proposal — Ownership of New Gelesis” and (b) the issuance and sale of 9,000,000 newly issued shares of CPSR Class A Common Stock in connection with the PIPE Financing concurrent with the Business Combination (the “NYSE Stock Issuance Proposal”);
5.   to approve, assuming the Business Combination Proposal is approved and adopted, the appointment of nine directors who, upon consummation of the Business Combination, will become directors of New Gelesis (the “Director Election Proposal”);
6.   to approve, assuming the Business Combination Proposal is approved and adopted, the Gelesis Holdings, Inc. 2021 Stock Option and Incentive Plan, a copy of which is appended to the accompanying proxy statement/prospectus as Exhibit H to the Business Combination Agreement, a copy of which is attached to the accompanying proxy statement/prospectus as Annex A, which will become effective the day prior to the Closing (the “Equity Incentive Plan Proposal”); and
7.   to approve a proposal to adjourn the Special Meeting to a later date or dates, if necessary, to permit further solicitation and vote of proxies if, based upon the tabulated vote at the time of the Special Meeting, there are not sufficient votes to approve the Business Combination Proposal, the Charter Amendment Proposal, the NYSE Stock Issuance Proposal, the Director Election Proposal, or the Equity
 

 
Incentive Plan Proposal, or we determine that one or more of the closing conditions under the Business Combination Agreement is not satisfied or waived (the “Adjournment Proposal”).
Only holders of record of CPSR Common Stock at the close of business on           , 2021 (the “Record Date”) are entitled to notice of the Special Meeting and to vote at the Special Meeting and any adjournments or postponements of the Special Meeting. A complete list of CPSR stockholders of record entitled to vote at the Special Meeting will be available for ten days before the Special Meeting at the principal executive offices of CPSR for inspection by stockholders during ordinary business hours for any purpose germane to the Special Meeting.
Pursuant to the Current Charter, CPSR is providing its public stockholders with the opportunity to redeem, upon the closing of the Business Combination, the shares of CPSR Class A Common Stock issued in the Initial Public Offering (and such shares, the “Public Shares”) then held by them for cash equal to their pro rata share of the aggregate amount on deposit (as of two business days prior to the closing) in the trust account that holds the proceeds (including interest but less franchise and income taxes payable) of the Initial Public Offering (the “Trust Account”). For illustrative purposes, based on funds in the Trust Account of approximately $     on the Record Date, the estimated per share redemption price would have been approximately $      . Holders of Units must elect to separate the underlying Public Shares and Public Warrants prior to exercising redemption rights with respect to the Public Shares. If holders hold their Units in an account at a brokerage firm or bank, holders must notify their broker or bank that they elect to separate the Units into the underlying Public Shares and Public Warrants, or if a holder holds Units registered in its own name, the holder must contact the transfer agent, directly and instruct it to do so. Holders of Public Shares may elect to redeem Public Shares even if they vote for the Business Combination Proposal. A holder of Public Shares, together with any of his, her or its affiliates or any other person with whom it is acting in concert or as a “group” ​(as defined under Section 13 of the Securities Exchange Act of 1934, as amended), will be restricted from redeeming in the aggregate his, her or its shares or, if part of such a group, the group’s shares, with respect to fifteen percent (15%) or more of the shares of CPSR Class A Common Stock issued in the Initial Public Offering.
CPSR’s Sponsor and CPSR’s other initial stockholders (excluding the PIMCO Private Funds) have agreed to waive their redemption rights with respect to any shares of CPSR Common Stock they may hold in connection with the closing of the Business Combination, and such shares will be excluded from the pro rata calculation used to determine the per-share redemption price. The Sponsor, R. Steven Hicks, Rodrigo de la Torre, Jamie Weinstein, Kathryn Cavanaugh, John Ghiselli, James Whittenburg and the PIMCO Private Funds, the other holders of the Founders Shares, have agreed to vote any shares of CPSR Common Stock owned by them in favor of the Business Combination Proposal, which represent approximately     % of the voting power of CPSR as of the Record Date.
Pursuant to CPSR’s current bylaws, a majority of the shares entitled to vote, represented at the Special Meeting or by proxy, will constitute a quorum for the transaction of business at the Special Meeting. Under the DGCL, shares that are voted “abstain” or “withheld” and broker “non-votes” are counted as present for purposes of determining whether a quorum is present at the Special Meeting.
The approval of the Business Combination Proposal, Advisory Charter Amendment Proposals, NYSE Stock Issuance Proposal, Equity Incentive Plan Proposal and the Adjournment Proposal each require the affirmative vote of the holders of a majority of the shares of CPSR Common Stock cast by the stockholders represented in person (which would include presence at a virtual meeting) or by proxy and entitled to vote thereon at the Special Meeting, voting together as a single class.
The approval of the Charter Amendment Proposal requires the affirmative vote of a majority of the issued and outstanding shares of CPSR Common Stock, voting together as a single class.
The approval of the Director Election Proposal requires a plurality vote of the CPSR Common Stock present (which would include presence at a virtual meeting) or represented by proxy and entitled to vote at the Special Meeting. “Plurality” means that the individuals who receive the largest number of votes cast “FOR” are elected as directors. Consequently, any shares not voted “FOR” a particular nominee (whether as a result of an abstention, a direction to withhold authority or a broker non-vote) will not be counted in the nominee’s favor.
 

 
If the Business Combination Proposal is not approved, the NYSE Stock Issuance Proposal, the Charter Amendment Proposal, the Advisory Charter Amendment Proposals, the Director Election Proposal and the Equity Incentive Plan Proposal will not be presented to the CPSR stockholders for a vote. The approval of the Business Combination Proposal, the NYSE Stock Issuance Proposal, the Charter Amendment Proposal, the Director Election Proposal and the Equity Incentive Plan Proposal are preconditions to the closing of the Business Combination.
As of the Record Date, there was approximately $     in the Trust Account. Each redemption of Public Shares by the holders of Public Shares will decrease the amount in the Trust Account. CPSR will not redeem Public Shares in an amount that would cause it to have net tangible assets of less than $5,000,001.
Your attention is directed to the proxy statement/prospectus accompanying this notice (including the Annexes thereto) for a more complete description of the proposed Business Combination and related transactions and each of the Proposals. We encourage you to read this proxy statement/prospectus carefully. If you have any questions or need assistance voting your shares, please call us at (512) 340-7800.
, 2021
By Order of the Board of Directors
/s/ R. Steven Hicks
R. Steven Hicks
Chief Executive Officer and Chairman of the Board of Directors
 

 
TABLE OF CONTENTS
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F-1
 
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ADDITIONAL INFORMATION
This document, which forms part of a Registration Statement on Form S-4 filed with the Securities and Exchange Commission (the “SEC”) by CPSR (File No. 333-      ) (the “Registration Statement”), constitutes a prospectus of CPSR under Section 5 of the Securities Act, with respect to the shares of New Gelesis Common Stock to be issued to Gelesis Equityholders if the Business Combination described below is consummated. This document also constitutes a notice of meeting and a proxy statement under Section 14(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), with respect to the Special Meeting, at which CPSR stockholders will be asked to consider and vote upon a proposal to approve the Business Combination by the approval and adoption of the Business Combination Agreement, among other matters.
You should rely only on the information contained or incorporated by reference into this proxy statement/prospectus. No one has been authorized to provide you with information that is different from that contained in, or incorporated by reference into, this proxy statement/prospectus. This proxy statement/prospectus is dated as of the date set forth on the cover hereof. You should not assume that the information contained in this proxy statement/prospectus is accurate as of any date other than that date. You should not assume that the information incorporated by reference into this proxy statement/prospectus is accurate as of any date other than the date of such incorporated document. Neither the mailing of this proxy statement/prospectus to CPSR stockholders nor the issuance of New Gelesis Common Stock in connection with the Business Combination will create any implication to the contrary.
Information contained in this proxy statement/prospectus regarding CPSR has been provided by CPSR and information contained in this proxy statement/prospectus regarding Gelesis has been provided by Gelesis.
This proxy statement/prospectus does not constitute an offer to sell or a solicitation of an offer to buy any securities, or the solicitation of a proxy, in any jurisdiction to or from any person to whom it is unlawful to make any such offer or solicitation in such jurisdiction.
CPSR files reports, proxy statements/prospectuses and other information with the SEC as required by the Exchange Act. You can read CPSR’s SEC filings, including this proxy statement/prospectus, over the Internet at the SEC’s website at http://www.sec.gov.
If you would like additional copies of this proxy statement/prospectus or if you have questions about the Business Combination or the proposals to be presented at the Special Meeting, you should contact us by telephone or in writing:
CAPSTAR SPECIAL PURPOSE ACQUISITION CORP.
405 West 14th Street
Austin, TX 78701
Attn: Chief Financial Officer
Tel: (512) 340-7800
You may also obtain these documents by requesting them in writing or by telephone from our proxy solicitor at:
MacKenzie Partners, Inc.
1407 Broadway, 27th Floor
New York, NY 10018
Phone: (800) 322-2885
Email: proxy@mackenziepartners.com
If you are a stockholder of CPSR and would like to request documents, please do so by           , 2021 to receive them before the Special Meeting. If you request any documents from us, we will mail them to you by first class mail, or another equally prompt means.
 
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MARKET AND INDUSTRY DATA
Certain information contained in this document relates to or is based on studies, publications, surveys and other data obtained from third-party sources and CPSR’s and Gelesis’ own internal estimates and research. While we believe these third-party sources to be reliable as of the date of this proxy statement/prospectus, we have not independently verified the market and industry data contained in this proxy statement/prospectus or the underlying assumptions relied on therein. Finally, while we believe our own internal research is reliable, such research has not been verified by any independent source.
TRADEMARKS
This document contains references to trademarks, trade names and service marks belonging to other entities. Solely for convenience, trademarks, trade names and service marks referred to in this proxy statement/prospectus may appear without the ® or TM symbols, but such references are not intended to indicate, in any way, that the applicable licensor will not assert, to the fullest extent under applicable law, its rights to these trademarks and trade names. We do not intend our use or display of other companies’ trade names, trademarks or service marks to imply a relationship with, or endorsement or sponsorship of us by, any other companies.
 
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SELECTED DEFINITIONS
Unless otherwise stated in this proxy statement/prospectus or the context otherwise requires, references to:
“Affiliate” means, with respect to any person, any other person who directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with, such person. The term “control” means the possession, directly or indirectly, of the power to direct or cause the direction of the management and policies of a person, whether through the ownership of voting securities, by contract or otherwise, and the terms “controlled” and “controlling” have meanings correlative thereto.
“Board” means the CPSR’s board of directors, unless the context otherwise requires.
“Business Combination” means the transactions contemplated by the Business Combination Agreement.
“Business Combination Agreement” means the Business Combination Agreement, dated as of July 19, 2021, by and among CPSR, Merger Sub and Gelesis, as amended from time to time.
“Capstar Sale Price” means the price per share for one (1) share of New Gelesis Common Stock in a Change of Control Transaction, inclusive of any escrows, holdbacks or fixed deferred purchase price, but exclusive of any contingent deferred purchase price, earn outs or the like. If and to the extent the price is payable in whole or in part with consideration other than cash, the price for such non-cash consideration shall be determined as follows: (i) with respect to any securities: (A) the average of the closing prices of the sales of the securities on all securities exchanges on which the securities may at the time be listed, or, if there have been no sales on any such exchange on any day, the average of the highest bid and lowest asked prices on all such exchanges at the end of such day, or, if on any day such securities are not listed on any securities exchange, the average of the highest bid and lowest asked prices on such day in the domestic over-the-counter market as reported by the OTC Markets Group, or any similar successor organization, in each such case averaged over a period of 21 days consisting of the day as of which such value is being determined and the 20 consecutive business days prior to such day or (B) if at any time the securities are not listed on any securities exchange or quoted on the NYSE or the over-the-counter market, the value of each such security shall be equal to the fair value thereof as of the date of valuation as determined by an independent, nationally recognized investment banking firm on the basis of an orderly sale to a willing, unaffiliated buyer in an arm’s-length transaction, taking into account all factors determinative of value as the investment banking firm determines relevant (and giving effect to any transfer taxes payable in connection with such sale) and (ii) with respect to any other non-cash assets, the fair value thereof as of the date of valuation as determined by an independent, nationally recognized investment banking firm on the basis of an orderly sale to a willing, unaffiliated buyer in an arm’s-length transaction, taking into account all factors determinative of value as the investment banking firm determines relevant (and giving effect to any transfer taxes payable in connection with such sale).
“Change of Control Transaction” means any transaction or series of related transactions (a) under which any person(s), directly or indirectly, acquires or otherwise purchases (i) another person or any of its Affiliates or (ii) all or a material portion of assets, businesses or equity securities of another person, including by way of an equity or similar investment in such person, (b) that results, directly or indirectly, in the stockholders of a person as of immediately prior to such transaction holding, in the aggregate, less than fifty percent (50%) of the voting shares of such person (or any successor or parent company of such person) immediately after the consummation thereof (in the case of each of clause (a) and (b), whether by merger, consolidation, tender offer, recapitalization, purchase or issuance of equity securities, tender offer or otherwise).
“Class A Common Stock” means the Class A common stock of CPSR, par value $0.0001 per share.
“Class B Common Stock” means the Class B common stock of CPSR, par value $0.0001 per share, which is convertible into shares of Class A Common Stock on a one-for-one basis.
“Closing” means the closing of the Business Combination.
“Code” means the United States Internal Revenue Code of 1986, as amended.
 
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“Continental” means Continental Stock Transfer & Trust Company, transfer agent for CPSR.
“CPSR” means Capstar Special Purpose Acquisition Corp., a Delaware corporation.
“CPSR Common Stock” means the Class A Common Stock and Class B Common Stock of CPSR.
“Current Bylaws” means CPSR’s Bylaws, as the same may be amended or restated from time to time.
“Current Charter” means CPSR’s amended and restated certificate of incorporation, as the same may be amended or restated from time to time
“DGCL” means the Delaware General Corporation Law, as amended.
“Dollars” or “$” means U.S. dollars, except where otherwise noted.
“Earn Out Period” means the five (5) year period immediately following the Closing.
“Earn Out Shares” means the fifteen million (15,000,000) restricted shares of New Gelesis Common Stock to be issued to Gelesis stockholders, holders of Gelesis Warrants and holders of Gelesis Options, pro rata with the portion of the Transaction Share Consideration allocated to each Gelesis stockholder, holder of Gelesis Options and holder of Gelesis Warrants, subject to certain vesting conditions as set forth in the Business Combination Agreement.
“Effective Time” means the effective time of the Business Combination.
“Equity Incentive Plan” means the Gelesis Holdings, Inc. 2021 Stock Option and Incentive Plan, approved by the Board, effective as of the date immediately preceding, and contingent on the consummation of, the Business Combination.
“Exchange Act” means the Securities Exchange Act of 1934, as amended.
“FDA” means the United States Food and Drug Administration.
“FTC” means the United States Federal Trade Commission.
“Founders Shares” mean the shares of Class B Common Stock initially purchased by the Sponsor, and the shares of Class A Common Stock issuable upon conversion thereof.
“Gelesis” means Gelesis, Inc., a Delaware corporation.
“Gelesis Board” means the board of directors of Gelesis.
“Gelesis Common Stock” or “Gelesis Stock” means the common stock, par value $0.0001 per share, of Gelesis.
“Gelesis Equityholders” means the holders of Gelesis Common Stock, Gelesis Options and Gelesis Warrants.
“Gelesis Equity Plan” means the Gelesis, Inc. 2016 Stock Option and Grant Plan and the Gelesis 2006 Stock Incentive Plan.
“Gelesis Options” means options to purchase Gelesis Common Stock, whether vested or unvested.
“Gelesis Warrants” means warrants to purchase Gelesis Common Stock.
“Governing Documents” mean the legal document(s) by which any Person (other than an individual) establishes its legal existence or which govern its internal affairs. For example, the “Governing Documents” of a U.S. corporation are its certificate or articles of incorporation and bylaws, the “Governing Documents” of a U.S. limited partnership are its limited partnership agreement and certificate of limited partnership, the “Governing Documents” of a U.S. limited liability company are its operating or limited liability company agreement and certificate of formation.
“HSR Act” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended.
 
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“Initial Public Offering” means the initial public offering of CPSR, which closed on July 7, 2020.
“JOBS Act” means the Jumpstart Our Business Startups Act of 2012, as amended.
“Merger” means the merger of Merger Sub with and into Gelesis, with Gelesis as the surviving corporation in the Merger and, after giving effect to the Merger, Gelesis being a wholly-owned subsidiary of CPSR.
“Merger Sub” means CPSR Gelesis Merger Sub, Inc., a Delaware corporation and wholly-owned subsidiary of CPSR.
“New Gelesis” refers to CPSR following the consummation of the Business Combination.
“New Gelesis Common Stock” means the common stock, par value $0.0001 per share, of New Gelesis.
“New Gelesis Preferred Stock” means the preferred stock, par value $0.0001 per share, of New Gelesis.
“NYSE” means The New York Stock Exchange.
“PIMCO” means, collectively, Pacific Investment Management Company LLC and its Affiliates.
“PIMCO Private Funds” means GCCU VI LLC, a Delaware limited liability company and TOCU XXIX LLC, a Delaware limited liability company, which are members of the Sponsor.
“PIPE Financing” means the private placement of an aggregate of 9,000,000 shares of Class A Common Stock to the PIPE Investors pursuant to Section 4(a)(2) of the Securities Act and Regulation D promulgated thereunder, for a purchase price of $10.00 per share, resulting in an aggregate amount of $90 million to CPSR, pursuant to Subscription Agreements with the PIPE Investors, including the PIMCO Private Funds.
“PIPE Investors” means those investors participating in the PIPE Financing.
“Private Placement Warrants” means the 7,520,000 warrants issued to our Sponsor concurrently with our Initial Public Offering, each of which is exercisable for one share of CPSR Class A Common Stock.
“Proposals” means the proposals to be voted on by CPSR’s stockholders at the Special Meeting.
“Proposed Bylaws” means the proposed amended and restated bylaws of New Gelesis to be effective following consummation of the Business Combination.
“Public Stockholders” means holders of Class A Common Stock issued in the Initial Public Offering.
“Public Warrants” means the warrants included in the Units issued in the Initial Public Offering, each of which is exercisable for one share of CPSR Class A Common Stock, in accordance with its terms.
“Rollover Option” means each vested and unvested Gelesis Option which, at the Effective Time, by virtue of the Merger and without any action of any party or any other person, but subject to the terms of the Business Combination Agreement, will cease to represent the right to purchase shares of Gelesis Common Stock and will be canceled in exchange for an option to purchase shares of New Gelesis Common Stock. Each Rollover Option will be subject to the same terms and conditions (including applicable vesting, expiration and forfeiture provisions) that applied to the corresponding Gelesis Option immediately prior to the Effective Time, except for (i) terms (A) rendered inoperative by reason of the transactions contemplated by the Business Combination Agreement (including any anti-dilution or other similar provisions that adjust the number of underlying shares that could become exercisable subject to the options) or (B) to the extent they conflict with the Gelesis Equity Plan and (ii) such other immaterial administrative or ministerial changes as the CPSR Board (or the compensation committee of the CPSR Board) may determine in good faith are appropriate to effectuate the administration of the Rollover Options.
“Rollover Warrant” means each Gelesis Warrant which, at the Effective Time, by virtue of the Merger and without any action of any party or any other person, will cease to represent the right to purchase shares of Gelesis Common Stock and will be canceled in exchange for a warrant to purchase shares of New Gelesis Common Stock. Each Rollover Warrant will be subject to the same terms and conditions that applied
 
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to the corresponding Gelesis Warrant immediately prior to the Effective Time, except for (i) terms rendered inoperative by reason of the transactions contemplated by the Business Combination Agreement (including any anti-dilution or other similar provisions that adjust the number of underlying shares that could become exercisable subject to the warrants) and (ii) such other immaterial administrative or ministerial changes as the CPSR Board (or the compensation committee of the CPSR Board) may determine in good faith are appropriate to effectuate the administration of the Rollover Warrants.
“Sarbanes-Oxley Act” means the Sarbanes-Oxley Act of 2002.
“Securities Act” means the Securities Act of 1933, as amended.
“Special Meeting” means the special meeting of stockholders of CPSR, scheduled to be held on           , 2021.
“Sponsor” means Capstar Sponsor Group, LLC, a Delaware limited liability company.
“Transaction Share Consideration” means an aggregate number of shares of New Gelesis Common Stock equal to (a)(1) $900,000,000, divided by (2) $10.00, minus (b) the number of shares of New Gelesis Common Stock to which the holders of vested Company Options and Company Warrants would be entitled at the Effective Time in respect of such vested Company Options and Company Warrants if such vested Company Options and Company Warrants were exercised in full (and not on a net-exercise basis) in exchange for shares of Gelesis Common Stock immediately prior to the Closing.
“Trust Account” means the trust account maintained by Continental, acting as trustee, that holds the proceeds from CPSR’s Initial Public Offering and the private placement of the Private Placement Warrants and established for the benefit of holders of Class A Common Stock in connection with the Initial Public Offering.
“Units” means the units of CPSR, each consisting of one (1) share of CPSR Class A Common Stock and one-half (1/2) of one Public Warrant of CPSR.
 
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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
Certain statements in this proxy statement/prospectus may constitute “forward-looking statements” for purposes of the federal securities laws. Our forward-looking statements include, but are not limited to, statements regarding our or our management team’s expectations, hopes, beliefs, intentions or strategies regarding the future, including those relating to the Business Combination. The information included in this proxy statement/prospectus in relation to Gelesis has been provided by Gelesis and its management, and forward-looking statements include statements relating to the expectations, hopes, beliefs, intentions or strategies regarding the future of Gelesis and its management team, including those relating to the Business Combination. In addition, any statements that refer to projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. The words “anticipate,” “believe,” “contemplate,” “continue,” “could,” “estimate,” “expect,” “intends,” “may,” “might,” “plan,” “possible,” “potential,” “predict,” “project,” “should,” “will,” “would” and similar expressions may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking. Forward-looking statements in this proxy statement/prospectus may include, for example, statements about:

our ability to complete the Business Combination with Gelesis or, if we do not consummate such Business Combination, any other initial business combination;

satisfaction or waiver of the conditions to the Business Combination including, among others: (i) the approval by our stockholders of the Proposals necessary to consummate the Business Combination being obtained; (ii) the applicable waiting period under the HSR Act relating to the Business Combination Agreement having expired or been terminated; and (iii) CPSR having at least $5,000,001 of net tangible assets (as determined in accordance with Rule 3a51-1(g)(1) of the Exchange Act) after giving effect to the transactions contemplated by the Business Combination Agreement and the PIPE Financing;

the occurrence of any event, change or other circumstances, including the outcome of any legal proceedings that may be instituted against CPSR and Gelesis following the announcement of the Business Combination Agreement and the transactions contemplated therein, that could give rise to the termination of the Business Combination Agreement;

the financial and business performance of New Gelesis following the Business Combination, including projected financial information and business metrics;

the ability to obtain and/or maintain the listing of New Gelesis Common Stock and the New Gelesis Warrants on the NYSE, and the potential liquidity and trading of such securities;

the amount of redemptions made by public stockholders;

the risk that the proposed Business Combination disrupts current plans and operations of Gelesis as a result of the announcement and consummation of the proposed Business Combination;

the risk that the proposed Business Combination may not be completed in a timely manner or at all, which may adversely affect the price of CPSR’s securities;

the ability to recognize the anticipated benefits of the proposed Business Combination, which may be affected by, among other things, competition, the ability of New Gelesis to grow and manage growth profitably and retain its key employees;

costs related to the proposed Business Combination;

our ability to raise financing in the future, if and when needed;

our success in retaining or recruiting, or changes required in, our officers, key employees or directors following the completion of the Business Combination;

our officers and directors allocating their time to other businesses and potentially having conflicts of interest with our business or in approving the Business Combination;

the ability of Gelesis to achieve and maintain widespread market acceptance of Plenity, including building brand recognition and loyalty, increasing sales, and achieving commercial success;
 
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the impact of current and future applicable laws and regulations, whether in the United States or foreign countries, and our ability to comply with such laws and regulations;

the ability of Gelesis to produce adequate supply of Plenity, including its ability to continue to invest in manufacturing capacity and to build additional manufacturing sites;

risks related to the development of the telehealth market and regulations related to remote healthcare;

global economic, political and social conditions and uncertainties in the markets that Gelesis serves, including risks and uncertainties caused by the COVID-19 pandemic or other natural or man-made disasters;

the ability of Gelesis to enter into additional strategic collaborations with third parties, to acquire businesses or products or form strategic alliances in the future and to realize the benefits of such collaborations, acquisitions and alliances;

ability of Gelesis to adequately protect its proprietary technology or maintain issued patents that are sufficient to protect Plenity and its ability to prevent third parties from infringing on its proprietary technology;

the risk that a third-party’s activities, including with respect to third parties that Gelesis has granted outlicenses to or granted limited exclusive or non-exclusive commercial rights, may overlap or interfere with the commercialization of Plenity or that Gelesis becomes dependent on such arrangements;

the ability of Gelesis to successfully develop and expand its operations and manufacturing and to effectively manage such growth;

risks related to our suppliers and distributors, including the loss of such suppliers or distributors, or their inability to provide adequate supply of materials or distribution;

the ability of Gelesis to retain its senior executive officers and to attract and keep senior management and key scientific and commercial personnel;

the ability of Gelesis to identify and discover additional product candidates and to obtain and maintain regulatory approval for such candidates;

risks related to potential product liability exposure for Plenity or other future product candidates;

risks related to adverse publicity in the weight management industry, changes in the perception of the Gelesis brands, and the impact of negative information or inaccurate information about Gelesis on social media;

the ability of Gelesis to generate product sales and to reduce operating losses going forward;

the ability of Gelesis to accurately forecast revenue and appropriately monitor its expenses in the future;

the ability of Gelesis to compete against other weight management and wellness industry participants or other more effective or more favorably perceived weight management methods, including pharmaceuticals, devices and surgical procedures;

foreign currency fluctuations;

failure to maintain adequate operational and financial resources or raise additional capital or generate sufficient cash flows;

our ability to successfully protect against security breaches and other disruptions to our information technology structure;

the effect of COVID-19 on the foregoing, including our ability to consummate the Business Combination due to the uncertainty resulting from the recent COVID-19 pandemic; and

other factors detailed under the section entitled “Risk Factors.”
The forward-looking statements contained in this proxy statement/prospectus are based on current expectations and beliefs concerning future developments and their potential effects on us and/or Gelesis.
 
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There can be no assurance that future developments affecting us and/or Gelesis will be those that we and/or Gelesis have anticipated. These forward-looking statements involve a number of risks, uncertainties (some of which are beyond our control or the control of Gelesis) or other assumptions that may cause actual results or performance to be materially different from those expressed or implied by these forward-looking statements. These risks and uncertainties include, but are not limited to, those factors described under the heading “Risk Factors.” Should one or more of these risks or uncertainties materialize, or should any of our assumptions prove incorrect, actual results may vary in material respects from those projected in these forward-looking statements. Some of these risks and uncertainties may in the future be amplified by the COVID-19 outbreak and there may be additional risks that we consider immaterial or which are unknown. It is not possible to predict or identify all such risks. Neither we nor Gelesis undertake any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.
Before any stockholder grants its proxy or instructs how its vote should be cast or vote on the proposals to be put to the Special Meeting, such stockholder should be aware that the occurrence of the events described in the “Risk Factors” section and elsewhere in this proxy statement/prospectus may adversely affect us.
 
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QUESTIONS AND ANSWERS FOR STOCKHOLDERS OF CPSR
The questions and answers below highlight only selected information from this document and only briefly address some commonly asked questions about the proposals to be presented at the Special Meeting, including with respect to the proposed Business Combination. The following questions and answers do not include all the information that is important to CPSR’s stockholders. We urge stockholders to read this proxy statement/prospectus, including the Annexes and the other documents referred to herein, carefully and in its entirety to fully understand the proposed Business Combination and the voting procedures for the Special Meeting, which will be held on           , 2021 at                 .
Q.
Why am I receiving this proxy statement/prospectus?
A.
CPSR stockholders are being asked to consider and vote upon a Proposal to approve and adopt the Business Combination Agreement, and other Proposals described in this proxy statement/prospectus. CPSR has entered into the Business Combination Agreement as a result of which Merger Sub, a wholly-owned subsidiary of CPSR, will merge with and into Gelesis with Gelesis surviving such merger, and as a result of which Gelesis will become a wholly-owned subsidiary of CPSR. We refer to this merger as the “Business Combination.” CPSR urges its stockholders to read the Business Combination Agreement in its entirety, which is attached to this proxy statement/prospectus as Annex A and a copy of the preliminary proxy card is attached to this proxy statement/prospectus as Annex B.
YOUR VOTE IS IMPORTANT. YOU ARE ENCOURAGED TO SUBMIT YOUR PROXY AS SOON AS POSSIBLE AFTER CAREFULLY REVIEWING THIS PROXY STATEMENT/PROSPECTUS AND ITS ANNEXES AND CAREFULLY CONSIDERING EACH OF THE PROPOSALS BEING PRESENTED AT THE MEETING.
Q:
Why is CPSR proposing the Business Combination?
A:
CPSR was formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses.
Based on its due diligence investigations of Gelesis and the industries in which it operates, including the financial and other information provided by Gelesis in the course of CPSR’s due diligence investigations, the Board believes that the Business Combination with Gelesis is in the best interests of CPSR and its stockholders.
See “Business Combination Proposal — The Board’s Reasons for the Business Combination” for a discussion of the factors considered by the Board in making its decision.
Q:
What matters will be considered at the Special Meeting?
A:
The following is a list of the Proposals upon which CPSR stockholders will be asked to vote at the Special Meeting:
1.
The Business Combination Proposal — to adopt and approve the Business Combination Agreement and approve the Business Combination.
2.
The Charter Amendment Proposal — to approve, assuming the Business Combination Proposal is approved and adopted, the Proposed Charter, which will amend and restate the Current Charter, and which Proposed Charter will be in effect when duly filed with the Secretary of State of the State of Delaware in connection with the Closing.
3.
The Advisory Charter Amendment Proposals — to approve, on a non-binding advisory basis, the following material differences between the Proposed Charter and the Current Charter, which are being presented in accordance with the requirements of the SEC as seven (7) separate sub-proposals:
(a)
Advisory Charter Proposal A — to change the corporate name of New Gelesis to “Gelesis Holdings, Inc.”;
(b)
Advisory Charter Proposal B — to increase CPSR’s capitalization so that it will have 900,000,000 authorized shares of common stock and 250,000,000 authorized shares of preferred stock;
 
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(c)
Advisory Charter Proposal C — to divide the New Gelesis board of directors into three classes with staggered three-year terms;
(d)
Advisory Charter Proposal D — to provide that the removal of any director be only for cause and only by the affirmative vote of holders of at least 6623% of New Gelesis’ then outstanding shares entitled to vote at an election of directors;
(e)
Advisory Charter Proposal E — to provide that certain amendments to provisions of the Proposed Charter will require the affirmative vote of holders of at least 6623% of New Gelesis’ then outstanding shares of capital stock entitled to vote thereon, and the affirmative vote of at least 6623% of New Gelesis’ then outstanding shares of each class entitled to vote thereon as a class;
(f)
Advisory Charter Proposal F — to make New Gelesis’ corporate existence perpetual as opposed to CPSR’s corporate existence, which is required to be dissolved and liquidated twenty-four (24) months following the closing of its initial public offering, and to remove from the Proposed Charter the various provisions applicable only to blank check companies; and
(g)
Advisory Charter Proposal G — to remove the provisions setting the Court of Chancery of the State of Delaware as the sole and exclusive forum for certain stockholder actions.
4.
The NYSE Stock Issuance Proposal — to approve, assuming the Business Combination Proposal is approved and adopted, for purposes of complying with the applicable provisions of Section 312 of the NYSE Listing Company Manual, (a) the issuance of up to 108,950,726 newly issued shares of New Gelesis Common Stock in the Business Combination, which amount will be determined as described in more detail in the accompanying proxy statement/prospectus under the heading titled “Business Combination Proposal — Ownership of New Gelesis” and (b) the issuance and sale of 9,000,000 newly issued shares of CPSR Class A Common Stock in connection with the PIPE Financing.
5.
The Director Election Proposal — to approve, assuming the Business Combination Proposal is approved and adopted, the appointment of nine (9) directors who, upon consummation of the Business Combination, will become directors of New Gelesis.
6.
The Equity Incentive Plan Proposal — to approve, assuming the Business Combination Proposal is approved and adopted, the Equity Incentive Plan, a copy of which is appended to this proxy statement/prospectus as Exhibit H to the Business Combination Agreement, a copy of which is attached to the accompanying proxy statement/prospectus as Annex A, which will become effective as of the date immediately preceding the date of the Closing.
7.
The Adjournment Proposal — to approve a proposal to adjourn the Special Meeting to a later date or dates, if necessary, to permit further solicitation and vote of proxies if, based upon the tabulated vote at the time of the Special Meeting, there are not sufficient votes to approve the Business Combination Proposal, the Charter Amendment Proposal, the NYSE Stock Issuance Proposal, the Director Election Proposal, or the Equity Incentive Plan Proposal, or we determine that one or more of the Closing conditions under the Business Combination Agreement is not satisfied or waived.
Q:
When and where will the Special Meeting take place?
A:
The CPSR Special Meeting will be held on      , 2021, via live webcast, at the following address:                  , or such other date, time and place to which such meeting may be adjourned or postponed, to consider and vote upon the Proposals.
Q:
Is my vote important?
A:
Yes. The Business Combination cannot be completed unless the Business Combination Agreement is adopted by the CPSR stockholders holding a majority of the votes cast on such proposal and the other condition precedent Proposals to the Business Combination achieve the necessary vote outlined below. Only CPSR stockholders as of the close of business on the Record Date are entitled to vote at
 
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the Special Meeting. The Board unanimously recommends that such CPSR stockholders vote “FOR” the approval of the Business Combination Proposal, “FOR” the approval of the Charter Amendment Proposal, “FOR” the approval, on an advisory basis, of each of the Advisory Charter Amendment Proposals, “FOR” the approval of the NYSE Stock Issuance Proposal, “FOR” the approval of the Director Election Proposal, “FOR” the approval of the Equity Incentive Plan Proposal, and “FOR” the approval of the Adjournment Proposal, if presented.
Q:
If my shares are held in “street name,” will my broker, bank or nominee automatically vote my shares for me?
A:
No. Under the rules of various national and regional securities exchanges, your broker, bank or nominee cannot vote your shares with respect to non-discretionary matters unless you provide instructions on how to vote in accordance with the information and procedures provided to you by your broker, bank or nominee. CPSR believes the Proposals presented to the stockholders will be considered non-discretionary and therefore your broker, bank or nominee cannot vote your shares without your instruction. Your bank, broker or other nominee can vote your shares only if you provide instructions on how to vote. You should instruct your bank, broker or other nominee to vote your shares in accordance with directions you provide.
Q:
What vote is required to approve the Proposals presented at the Special Meeting?
A:
The approval of the Business Combination Proposal, the Advisory Charter Amendment Proposals, the NYSE Stock Issuance Proposal, the Equity Incentive Plan Proposal, and the Adjournment Proposal each require the affirmative vote of the holders of a majority of the shares of CPSR Common Stock cast by the stockholders represented in person (which would include presence at a virtual meeting) or by proxy and entitled to vote thereon at the Special Meeting, voting together as a single class.
The approval of the Charter Amendment Proposal requires the affirmative vote of a majority of the issued and outstanding shares of CPSR Common Stock, voting together as a single class. Accordingly, a CPSR’s stockholder’s failure to vote by proxy or to vote in person (which would include presence at a virtual meeting) at the Special Meeting or an abstention will have the same effect as a vote “AGAINST” the Charter Amendment Proposal.
The approval of the Director Election Proposal requires a plurality vote of the CPSR Common Stock present (which would include presence at a virtual meeting) or represented by proxy and entitled to vote at the Special Meeting. “Plurality” means that the individuals who receive the largest number of votes cast “FOR” are elected as directors. Consequently, any shares not voted “FOR” a particular nominee (whether as a result of an abstention, a direction to withhold authority or a broker non-vote) will not be counted in the nominee’s favor.
A CPSR stockholder’s failure to vote by proxy or to vote in person (which would include presence at a virtual meeting) at the Special Meeting will not be counted towards the number of shares of CPSR Common Stock required to validly establish a quorum, and if a valid quorum is otherwise established, it will have no effect on the outcome of the vote on the Business Combination Proposal, the Advisory Charter Amendment Proposals, the NYSE Stock Issuance Proposal, the Director Election Proposal, the Equity Incentive Plan Proposal, or the Adjournment Proposal.
Q:
Are the Proposals conditioned on one another?
A:
Unless the Business Combination Proposal is approved, the Charter Amendment Proposal, the Advisory Charter Amendment Proposals, the NYSE Stock Issuance Proposal, the Director Election Proposal, and the Equity Incentive Plan Proposal will not be presented to the stockholders of CPSR at the Special Meeting. The approval of the Business Combination Proposal, the Charter Amendment Proposal, the NYSE Stock Issuance Proposal, the Director Election Proposal, and the Equity Incentive Plan Proposal are preconditions to the Closing. The Adjournment Proposal is not conditioned on the approval of any other Proposal set forth in this proxy statement/prospectus. It is important for you to note that in the event that the Business Combination Proposal does not receive the requisite vote for approval, then we will not consummate the Business Combination. If CPSR does not consummate the Business Combination and fails to complete an initial business combination by July 7, 2022, CPSR
 
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will be required to dissolve and liquidate its Trust Account by returning the then remaining funds in such account to its Public Stockholders.
Q:
What conditions must be satisfied to complete the Business Combination?
A:
There are a number of Closing conditions in the Business Combination Agreement, including the approval by the stockholders of CPSR of the Business Combination Proposal, the Charter Amendment Proposal, the NYSE Stock Issuance Proposal, the Director Election Proposal, and the Equity Incentive Plan Proposal. The Charter Amendment Proposal, the NYSE Stock Issuance Proposal, the Director Election Proposal, and the Equity Incentive Plan Proposal (collectively, the “Condition Precedent Proposals”) are subject to and conditioned on the approval of the Business Combination Proposal. The Business Combination Proposal is subject to and conditioned on the approval of the Condition Precedent Proposals. Subject to needing to satisfy those Closing conditions that are required by applicable law (such as the applicable waiting periods under the HSR Act having expired, or there being no order or law issued by any court of competent jurisdiction or other governmental entity or other legal restraint or prohibition preventing the consummation of the transactions), the other Closing conditions that are required for CPSR to close can be waived by CPSR and the other Closing conditions that are required for Gelesis to close can be waived by Gelesis, but neither party is required to waive any Closing conditions. For a summary of the conditions that must be satisfied or waived prior to the Closing of the Business Combination, see the section titled “Business Combination Proposal — The Business Combination Agreement.”
If CPSR were to waive certain other Closing conditions that are not required to be satisfied by applicable law (such as waiving the requirement that New Gelesis’ listing application be accepted by the NYSE, waiving the requirement that the representations and warranties of Gelesis must be true and correct as of the Closing or waiving the requirement that since the date of the Business Combination Agreement, no Gelesis Material Adverse Event has occurred that is continuing), and following such waiver did not elect to re-solicit stockholder approval, such decision may have a material adverse effect on the CPSR stockholders. For a summary of the potential material adverse effects on the CPSR stockholders, see the section titled “Risk Factors — Risks Related to CPSR and the Business Combination — CPSR or Gelesis may waive one or more of the Closing conditions without re-soliciting stockholder approval.”
Q:
What will happen in the Business Combination?
A:
At the closing of the Business Combination, Merger Sub will merge with and into Gelesis, with Gelesis surviving such merger as the surviving entity. Upon the Closing, Gelesis will become a wholly-owned subsidiary of CPSR. In connection with the Business Combination, the cash held in the Trust Account after giving effect to any redemption of shares by the Public Stockholders and the proceeds from the PIPE Financing will be used to pay (i) CPSR stockholders who properly exercise their redemption rights, (ii) the underwriters their deferred underwriting commissions from the Initial Public Offering, (iii) certain other fees, costs and expenses (including regulatory fees, legal fees, accounting fees, printer fees and other professional fees) that were incurred by CPSR or Gelesis in connection with the transactions contemplated by the Business Combination and pursuant to the terms of the Business Combination Agreement, (iv) unpaid franchise and income taxes of CPSR, and (v) for general corporate purposes including, but not limited to, working capital for operations, capital expenditures and future potential acquisitions.
Q:
What equity stake will current stockholders of CPSR and Gelesis Equityholders hold in New Gelesis after the Closing?
A:
It is anticipated that, upon completion of the Business Combination and based on ownership as of the Record Date, the Public Stockholders (other than the PIPE Investors) will retain an ownership interest of approximately     % in New Gelesis, the PIPE Investors will own approximately     % of New Gelesis (such that Public Stockholders, including PIPE Financing investors, will own approximately     % in New Gelesis) and the Gelesis Equityholders will own approximately     % in New Gelesis. The ownership percentage with respect to New Gelesis following the Business Combination does not take into account (i) the redemption of any shares by the Public Stockholders, (ii) Public Warrants and
 
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Private Placement Warrants that will remain outstanding immediately following the Business Combination, (iii) the issuance of any shares upon the Closing under the Equity Incentive Plan or (iv) the potential forfeiture of any Earn Out Shares issued to Gelesis Equityholders and/or certain Founders Shares held by our Sponsor, in each case, in the event certain trading price thresholds are not met during the applicable vesting periods. If the actual facts are different than these assumptions (which they are likely to be), the percentage ownership retained by CPSR’s existing stockholders in New Gelesis will be different.
There are currently outstanding an aggregate of 21,320,000 warrants to acquire shares of CPSR Class A Common Stock, which are comprised of 7,520,000 Private Placement Warrants held by our initial stockholders and 13,800,000 Public Warrants. Each of our outstanding whole warrants is exercisable commencing the later of 30 days following the Closing and 12 months from the closing of the Initial Public Offering, which occurred on July 7, 2020, for one share of Class A Common Stock and, following the consummation of the Business Combination, will entitle the holder thereof to purchase one share of New Gelesis Common Stock in accordance with its terms. Therefore, as of the date of this proxy statement/prospectus, if we assume that each outstanding whole warrant is exercised and one share of New Gelesis Common Stock is issued as a result of such exercise, with payment to New Gelesis of the exercise price of $11.50 per whole warrant for one whole share, our fully-diluted share capital would increase by a total of 21,320,000 shares, with approximately $245,180,000 paid to exercise the warrants.
See the section titled “Unaudited Pro Forma Condensed Combined Financial Information” for further information.
Q.
Did the Board obtain a third-party valuation or fairness opinion in determining whether or not to proceed with the Business Combination?
A.
The Board did not obtain a third-party valuation or fairness opinion in connection with its determination to approve the Business Combination. The Board believes that based upon the financial skills and background of its directors, it was qualified to conclude that the Business Combination was fair from a financial perspective to its stockholders. The Board also determined, without seeking a valuation from a financial advisor, that Gelesis’ fair market value was at least 80% of the assets held in the Trust Account (excluding the deferred underwriting commissions and taxes payable on the income earned on the Trust Account). Accordingly, investors will be relying on the judgment of the Board as described above in valuing Gelesis’ business and assuming the risk that the Board may not have properly valued such business. For further information, see the section entitled “Business Combination Proposal — Satisfaction of 80% Test.”
Q:
Why is CPSR providing stockholders with the opportunity to vote on the Business Combination?
A:
Under the Current Charter, CPSR must provide all holders of its Public Shares with the opportunity to have their Public Shares redeemed upon the consummation of CPSR’s initial business combination either in conjunction with a tender offer or in conjunction with a stockholder vote. For business and other reasons, CPSR has elected to provide its stockholders with the opportunity to have their Public Shares redeemed in connection with a stockholder vote rather than a tender offer. Therefore, CPSR is seeking to obtain the approval of its stockholders of the Business Combination Proposal in order to allow its Public Stockholders to effectuate redemptions of their Public Shares in connection with the Closing.
Q:
Are there any arrangements to help ensure that New Gelesis will have sufficient funds, together with the proceeds in its Trust Account, to fund the Business Combination?
A:
Yes. CPSR has entered into subscription agreements with the PIPE Investors named therein providing for the issuance by CPSR of 9,000,000 shares of Class A Common Stock through the PIPE Financing (subject to certain conditions, including that all conditions precedent to the Closing will have been satisfied or waived (other than those conditions that are to be satisfied at the Closing)), for gross proceeds to CPSR of $90 million.
 
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To the extent not utilized to consummate the Business Combination, the proceeds from the Trust Account will be used for general corporate purposes, including, but not limited to, working capital for operations, capital expenditures and future acquisitions. CPSR will agree that it (or its successor) will file with the SEC a registration statement registering the resale of the shares purchased in the PIPE Financing and maintain an effective registration statement under the Securities Act covering such securities and certain other securities of New Gelesis.
Q:
How many votes do I have at the Special Meeting?
A:
CPSR stockholders are entitled to one (1) vote at the Special Meeting for each share of CPSR Common Stock held as of the Record Date. As of the close of business on the Record Date, there were           outstanding shares of CPSR Common Stock.
Q:
What constitutes a quorum at the Special Meeting?
A:
Holders of a majority in voting power of CPSR Common Stock issued and outstanding and entitled to vote at the Special Meeting constitute a quorum. In the absence of a quorum, the chairman of the meeting has power to adjourn the Special Meeting. As of the Record Date,                 shares of CPSR Common Stock would be required to achieve a quorum.
Q:
May CPSR, the Sponsor or CPSR’s directors, officers, advisors or their affiliates purchase shares or warrants in connection with the Business Combination?
A:
In connection with the stockholder vote to approve the proposed Business Combination, the Sponsor, directors, officers or advisors or their respective affiliates may privately negotiate transactions to purchase shares and/or warrants from stockholders who would have otherwise elected to have their shares redeemed in conjunction with a proxy solicitation pursuant to the proxy rules for a per-share pro rata portion of the Trust Account. None of CPSR’s Sponsor, directors, officers or advisors or their respective affiliates will make any such purchases when they are in possession of any material non-public information not disclosed to the seller or during a restricted period under Regulation M under the Exchange Act. Such a purchase would include a contractual acknowledgment that such stockholder, although still the record holder of CPSR shares, is no longer the beneficial owner thereof and therefore agrees not to exercise its redemption rights, and could include a contractual provision that directs such stockholder to vote such shares in a manner directed by the purchaser. In the event that the Sponsor, directors, officers or advisors or their affiliates purchase shares in privately negotiated transactions from Public Stockholders who have already elected to exercise their redemption rights, such selling stockholders would be required to revoke their prior elections to redeem their shares. Any such privately negotiated purchases may be effected at purchase prices that are below or in excess of the per-share pro rata portion of the Trust Account.
Q:
How will the Sponsor, directors and officers vote?
A:
The Sponsor, R. Steven Hicks, Rodrigo de la Torre, Jamie Weinstein, Kathryn Cavanaugh, John Ghiselli, James Whittenburg and the PIMCO Private Funds, the other holders of the Founders Shares, have agreed to vote their shares in favor of the Business Combination. As of the Record Date, the Sponsor and such other stockholders own approximately            % of the issued and outstanding shares of CPSR Common Stock, including all of the Founders Shares, and will be able to vote all such shares at the Special Meeting. Accordingly, it is more likely that the necessary stockholder approval will be received than would be the case if the Sponsor and such other stockholders had agreed to vote their shares of CPSR Common Stock in accordance with the majority of the votes cast by Public Stockholders.
Q:
What interests do CPSR’s current officers and directors have in the Business Combination?
A:
The Sponsor, members of the Board and our executive officers have interests in the Business Combination that are different from or in addition to (and which may conflict with) your interest. These interests include, among other things:

Unless CPSR consummates an initial business combination by July 7, 2022, CPSR will: (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but no more
 
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than ten (10) business days thereafter, redeem the Public Shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account, including interest earned on the funds held in the Trust Account and not previously released to us to pay CPSR’s taxes (less up to $100,000 of interest to pay dissolution expenses), divided by the number of then outstanding Public Shares, which redemption will completely extinguish Public Stockholders’ rights as stockholders (including the right to receive further liquidating distributions, if any), and (iii) as promptly as reasonably possible following such redemption, subject to the approval of CPSR’s remaining stockholders and the Board, liquidate and dissolve, subject in each case to CPSR’s obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law.

There will be no liquidating distributions from the Trust Account with respect to the Founders Shares if CPSR fails to complete a business combination within the required period. Our Sponsor purchased the Founders Shares prior to the Initial Public Offering for an aggregate purchase price of $25,000, and transferred 15,000 Founders Shares to each of Kathryn Cavanaugh and John Ghiselli and 22,500 Founders shares to James Whittenburg, each of whom is a director of CPSR. On July 1, 2020, we effected a stock dividend of 1,150,000 shares of Class B Common Stock, resulting in each of Ms. Cavanaugh and Mr. Ghiselli holding 18,000 Founders Shares and Mr. Whittenburg holding 27,000 Founders Shares.

Concurrently with the closing of the Initial Public Offering, our Sponsor purchased 7,520,000 Private Placement Warrants, at a price of $1.00 per warrant in a private placement. The Private Placement Warrants are each exercisable commencing the later of 30 days following the Closing and 12 months from the closing of our Initial Public Offering, which occurred on July 7, 2020, for one share of CPSR Class A Common Stock at $11.50 per share. If CPSR does not consummate a business combination transaction by July 7, 2022, then the proceeds from the sale of the Private Placement Warrants will be part of the liquidating distribution to the Public Stockholders and the Private Placement Warrants held by the Sponsor will be worthless.

The Sponsor, officers and directors collectively (including entities controlled by officers and directors) have made an aggregate average investment of $0.004 per Founders Share as of the consummation of the Initial Public Offering. As a result of the significantly lower investment per share of our Sponsor, officers and directors as compared with the investment per share of our Public Stockholders, a transaction which results in an increase in the value of the investment of our Sponsor, officers and directors may result in a decrease in the value of the investment of our Public Stockholders.

The Sponsor and CPSR’s officers and directors will lose their entire investment in CPSR if CPSR does not complete a business combination by July 7, 2022. Certain of them may continue to serve as officers and/or directors of CPSR after the Closing. As such, in the future they may receive any cash fees, stock options or stock awards that the Board determines to pay to its directors and/or officers.

CPSR’s initial stockholders and officers and directors have agreed to waive their rights to liquidating distributions from the Trust Account with respect to their Founders Shares and Private Placement Warrants if CPSR fails to complete a business combination by July 7, 2022.

In order to protect the amounts held in the Trust Account, the Sponsor has agreed that it will be liable to us if and to the extent any claims by a third party for services rendered or products sold to us, or a prospective target business with which we have entered into a written letter of intent, confidentiality or similar agreement, reduce the amount of funds in the Trust Account to below the lesser of (i) $10.00 per Public Share and (ii) the actual amount per Public Share held in the Trust Account as of the liquidation of the Trust Account, if less than $10.00 per Public Share due to reductions in the value of the trust assets, less taxes payable. This liability will not apply with respect to any claims by a third party or prospective target business who executed a waiver of any and all rights to the monies held in the Trust Account or to any claims under our indemnity of the underwriters of the Initial Public Offering against certain liabilities, including liabilities under the Securities Act.

Following the Closing, the Sponsor would be entitled to the repayment of any working capital loan and advances that have been made to CPSR and remain outstanding. As of the date of this proxy statement/prospectus, there are no outstanding advances from the Sponsor to us for working
 
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capital expenses. If CPSR does not complete an initial business combination within the required period, CPSR may use a portion of its working capital held outside the Trust Account to repay the working capital loans, but no proceeds held in the Trust Account would be used to repay the working capital loans.

Following the Closing, CPSR will continue to indemnify CPSR’s existing directors and officers and will maintain a directors’ and officers’ liability insurance policy.

Upon the Closing, subject to the terms and conditions of the Business Combination Agreement, the Sponsor, CPSR’s officers and directors and their respective affiliates may be entitled to reimbursement for any reasonable out-of-pocket expenses related to identifying, investigating and consummating an initial business combination, and repayment of any other loans, if any, and on such terms as to be determined by CPSR from time to time, made by the Sponsor or certain of our officers and directors to finance transaction costs in connection with an intended initial business combination.
These interests may influence CPSR’s directors in making their recommendation that you vote in favor of the approval of the Business Combination.
Q:
What happens if I sell my shares of CPSR Common Stock before the Special Meeting?
A:
The Record Date is earlier than the date of the Special Meeting. If you transfer your shares of CPSR Common Stock after the Record Date, but before the Special Meeting, unless the transferee obtains from you a proxy to vote those shares, you will retain your right to vote at the Special Meeting. However, you will not be able to seek redemption of your shares because you will no longer be able to deliver them for cancellation upon Closing. If you transfer your shares of CPSR Common Stock prior to the Record Date, you will have no right to vote those shares at the Special Meeting or redeem those shares for a pro rata portion of the proceeds held in our Trust Account.
Q:
What happens if I vote against the Business Combination Proposal?
A:
Pursuant to the Current Charter, if the Business Combination Proposal is not approved and CPSR does not otherwise consummate an alternative business combination by July 7, 2022, CPSR will be required to dissolve and liquidate its Trust Account by returning the then remaining funds in such account to the Public Stockholders.
Q:
Do I have redemption rights?
A:
Pursuant to the Current Charter, holders of Public Shares may elect to have their shares redeemed for cash at the applicable redemption price per share calculated in accordance with the Current Charter. As of Record Date, based on funds in the Trust Account of approximately $           , this would have amounted to approximately $            per share. If a holder exercises its redemption rights, then such holder will be exchanging its Public Shares for cash. Such a holder will be entitled to receive cash for its Public Shares only if it properly demands redemption and delivers its shares (either physically or electronically) to CPSR’s transfer agent prior to the Special Meeting. See the section titled “Special Meeting of CPSR — Redemption Rights” for the procedures to be followed if you wish to redeem your shares for cash.
Q:
Will how I vote affect my ability to exercise redemption rights?
A:
No. You may exercise your redemption rights whether you vote your Public Shares “FOR” or “AGAINST” the Business Combination Proposal or any other proposal described by this proxy statement/prospectus. As a result, the Business Combination Agreement can be approved by stockholders who will redeem their shares and no longer remain stockholders, leaving stockholders who choose not to redeem their shares holding shares in a company with a potentially less liquid trading market, fewer stockholders, potentially less cash and the potential inability to meet the listing standards of the NYSE.
Q:
How do I exercise my redemption rights?
A:
In order to exercise your redemption rights, you must (i)(a) hold Public Shares or (b) hold Public Shares through Units and elect to separate your Units into the underlying Public Shares and Public
 
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Warrants prior to exercising your redemption rights with respect to the Public Shares, and (ii) prior to            , 2021 (two (2) business days before the Special Meeting), tender your shares physically or electronically and submit a request in writing that CPSR redeem your Public Shares for cash to Continental Stock Transfer & Trust Company, our transfer agent, at the following address:
Continental Stock Transfer & Trust Company
One State Street Plaza, 30th Floor
New York, New York 10004
Attn: Mark Zimkind
E-mail: mzimkind@continentalstock.com
Holders of Units must elect to separate the underlying Public Shares and Public Warrants prior to exercising redemption rights with respect to the Public Shares. If holders hold their Units in an account at a brokerage firm or bank, holders must notify their broker or bank that they elect to separate the Units into the underlying Public Shares and Public Warrants, or if a holder holds Units registered in its own name, the holder must contact Continental directly and instruct them to do so.
In the written request to redeem your Public Share for cash to Continental Stock Transfer & Trust Company, please provide a “Stockholder Certification” if you are not acting in concert or as a “group” (as defined in Section 13d-3 of the Exchange Act) with any other stockholder with respect to shares of Class A Common Stock. Notwithstanding the foregoing, a holder of the Public Shares, together with any affiliate of his or any other person with whom he is acting in concert or as a “group” ​(as defined in Section 13d-3 of the Exchange Act) will be restricted from seeking redemption rights with respect to an aggregate of 15% or more of the shares of Class A Common Stock issued in the Initial Public Offering, which is referred to as the “15% threshold” in this proxy statement/prospectus. Accordingly, all Public Shares in excess of the 15% threshold beneficially owned by a Public Stockholder or group will not be redeemed for cash.
Stockholders seeking to exercise their redemption rights and opting to deliver physical certificates should allot sufficient time to obtain physical certificates from the transfer agent and time to effect delivery. It is CPSR’s understanding that stockholders should generally allot at least two (2) weeks to obtain physical certificates from the transfer agent. However, CPSR does not have any control over this process and it may take longer than two (2) weeks. Stockholders who hold their shares in street name will have to coordinate with their bank, broker or other nominee to have the shares certificated or delivered electronically.
Any demand for redemption, once made, may be withdrawn at any time until the deadline for exercising redemption requests and thereafter, with CPSR’s consent, until the closing of the Business Combination. If you deliver your Public Shares for redemption to CPSR’s transfer agent and decide within the required timeframe not to exercise your redemption rights, you may request that CPSR’s transfer agent return the Public Shares (physically or electronically). You may make such request by contacting CPSR’s transfer agent at the phone number or address listed under the question “Who can help answer my questions?” below.
If you are a holder of Public Shares and you exercise your redemption rights, it will not result in the loss of any CPSR warrants that you may hold.
Q:
If I am a holder of Units, can I exercise redemption rights with respect to my Units?
A:
No. Holders of outstanding Units must elect to separate the Units into the underlying Public Shares and Public Warrants prior to exercising redemption rights with respect to the Public Shares. If you hold your Units in an account at a brokerage firm or bank, you must notify your broker or bank that you elect to separate the Units into the underlying Public Shares and Public Warrants, or if you hold Units registered in your own name, you must contact Continental, CPSR’s transfer agent, directly and instruct them to do so. If you fail to cause your Units to be separated and delivered to Continental, CPSR’s transfer agent, by      , 2021 (two (2) business days before the Special Meeting), you will not be able to exercise your redemption rights with respect to your Public Shares.
 
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Q:
What are the U.S. federal income tax consequences of exercising my redemption rights?
A:
The U.S. federal income tax consequences of CPSR stockholders who exercise their redemption rights to receive cash in exchange for their Public Shares depend on the stockholder’s particular facts and circumstances. Such stockholder generally will be required to treat the transaction as a sale of such shares and recognize gain or loss upon the redemption in an amount equal to the difference, if any, between the amount of cash received and the tax basis of the Public Shares redeemed. Such gain or loss should be treated as capital gain or loss if such shares were held as a capital asset on the date of the redemption. The redemption, however, may be treated as a distribution to a redeeming stockholder for U.S. federal income tax purposes if the redemption does not effect a sufficient reduction (as determined under applicable federal income tax law) in the redeeming stockholder’s percentage ownership in us (whether such ownership is direct or through the application of certain attribution and constructive ownership rules). Any amounts treated as such a distribution will constitute a dividend to the extent not in excess of our current and accumulated earnings and profits as measured for U.S. federal income tax purposes. Any amounts treated as a distribution and that are in excess of our current and accumulated earnings and profits will reduce the redeeming stockholder’s basis in his or her redeemed Public Shares, and any remaining amount will be treated as gain realized on the sale or other disposition of Public Shares. These tax consequences are described in more detail in the section titled “U.S. Federal Income Tax Considerations — Material U.S. Federal Income Tax Considerations of the Redemption and Business Combination to CPSR Equityholders.” We urge you to consult your tax advisor regarding the tax consequences of exercising your redemption rights.
Q:
Do I have dissenter rights if I object to the proposed Business Combination?
A:
No. CPSR stockholders are not entitled to exercise dissenters’ rights under Delaware law in connection with the Business Combination. Dissenters’ rights are unavailable under Delaware law in connection with the Business Combination to holders of Class A Common Stock because it is currently listed on a national securities exchange and such holders are not required to receive any consideration (other than continuing to hold their shares of Class A Common Stock, which will become an equal number of shares of Common Stock of New Gelesis after giving effect to the Business Combination). Holders of Class A Common Stock may vote against the Business Combination Proposal or redeem their Public Shares if they are not in favor of the adoption of the Business Combination Agreement or the Business Combination. Dissenters’ rights are unavailable under Delaware law in connection with the Business Combination to holders of Class B Common Stock because they have agreed to vote in favor of the Business Combination.
Q:
What happens to the funds held in the Trust Account upon Closing?
A:
If the Business Combination is consummated, the funds held in the Trust Account will be released to pay:

CPSR stockholders who properly exercise their redemption rights;

the underwriters their deferred underwriting commissions;

certain other fees, costs and expenses (including regulatory fees, legal fees, accounting fees, printer fees, and other professional fees) that were incurred by CPSR or Gelesis in connection with the transactions contemplated by the Business Combination and pursuant to the terms of the Business Combination Agreement;

unpaid franchise and income taxes of CPSR; and

for general corporate purposes, including for maintenance or expansion of operations of New Gelesis, the payment of principal or interest due on indebtedness incurred in completing the Business Combination, to fund the purchase of other companies or for working capital.
 
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Q:
What happens if the Business Combination is not consummated?
A:
There are certain circumstances under which the Business Combination Agreement may be terminated. See the section titled “Business Combination Proposal — The Business Combination Agreement — Termination” for information regarding the parties’ specific termination rights.
If the Business Combination Agreement is not adopted by CPSR stockholders or if the Business Combination is not completed for any other reason by January 18, 2022, then we will seek to consummate an alternative initial business combination prior to July 7, 2022. If, as a result of the termination of the Business Combination Agreement or otherwise, CPSR is unable to complete the Business Combination or another initial business combination transaction by July 7, 2022, the Current Charter provides that it will (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than ten (10) business days thereafter, redeem 100% of the outstanding Public Shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account, including interest earned on the funds held in the Trust Account and not previously released to CPSR to pay its taxes (less up to $100,000 of interest to pay dissolution expenses), divided by the number of then outstanding Public Shares, which redemption will completely extinguish the Public Stockholders’ rights as stockholders (including the right to receive further liquidating distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible following such redemption, subject to the approval of CPSR’s remaining stockholders and the Board, dissolve and liquidate, subject in each case to CPSR’s obligations under the DGCL to provide for claims of creditors and the requirements of other applicable law. If we do not consummate an initial business combination by July 7, 2022, we will cease all operations except for the purpose of winding up and redeem our Public Shares and liquidate the Trust Account, in which case our public stockholders may only receive approximately $10.00 per share and our warrants will expire worthless.
CPSR expects that the amount of any distribution its Public Stockholders will be entitled to receive upon its dissolution will be approximately the same as the amount they would have received if they had redeemed their shares in connection with the Business Combination, subject in each case to CPSR’s obligations under the DGCL to provide for claims of creditors and other requirements of applicable law. If we do not consummate an initial business combination by July 7, 2022, our warrants will expire worthless. Holders of Founders Shares have waived any right to any liquidating distribution with respect to those shares.
Q:
When is the Business Combination expected to be completed?
A:
The Closing is expected to take place (a) the second business day following the satisfaction or waiver of the conditions described below under the section titled “Business Combination Proposal — The Business Combination Agreement — Conditions to Closing of the Business Combination”; or (b) such other date as agreed to by CPSR and Gelesis in writing, in each case, subject to the satisfaction or waiver (where permitted by applicable law) of the Closing conditions. The Business Combination Agreement may be terminated by either CPSR or Gelesis if the Closing has not occurred by January 18, 2022, subject to certain exceptions.
For a description of the conditions to the completion of the Business Combination, see the section titled “Business Combination Proposal — The Business Combination Agreement — Conditions to Closing of the Business Combination.”
Q:
What do I need to do now?
A:
You are urged to read carefully and consider the information contained in this proxy statement/prospectus, including the Annexes, and to consider how the Business Combination will affect you as a stockholder. You should then vote as soon as possible in accordance with the instructions provided in this proxy statement/prospectus and on the enclosed proxy card or, if you hold your shares through a brokerage firm, bank or other nominee, on the voting instruction form provided by the broker, bank or nominee.
Q:
How do I vote?
A.
If you were a holder of record of CPSR Common Stock on           , 2021, the Record Date, you
 
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may vote with respect to the applicable Proposals online at the Special Meeting or by completing, signing, dating and returning the enclosed proxy card in the postage-paid envelope provided. If you choose to participate in the Special Meeting, you can vote your shares electronically during the Special Meeting via live webcast by visiting                  . You will need the 12-digit meeting control number that is printed on your proxy card to enter the Special Meeting. CPSR recommends that you log in at least 15 minutes before the Special Meeting to ensure you are logged in when the Special Meeting starts.
If on the Record Date your shares were held, not in your name, but rather in an account at a brokerage firm, bank, dealer or other similar organization, then you are the beneficial owner of shares held in “street name” and these proxy materials are being forwarded to you by that organization. As a beneficial owner, you have the right to direct your broker or other agent on how to vote the shares in your account. You are also invited to attend the Special Meeting online. However, since you are not the stockholder of record, you may not vote your shares online at the Special Meeting unless you first request and obtain a valid legal proxy from your broker or other agent. You must then e-mail a copy (a legible photograph is sufficient) of your legal proxy to Continental Stock Transfer & Trust Company at proxy@continentalstock.com. Beneficial owners who e-mail a valid legal proxy will be issued a 12-digit meeting control number that will allow them to register to attend and participate in the Special Meeting. Beneficial owners who wish to attend the special meeting online should contact Continental no later than           to obtain this information.
Q:
What will happen if I abstain from voting or fail to vote at the Special Meeting?
A:
At the Special Meeting, CPSR will count a properly executed proxy card marked “ABSTAIN” with respect to a particular proposal as present for purposes of determining whether a quorum is present. The failure to vote, abstentions and broker non-votes will have the same effect as a vote “AGAINST” the Charter Amendment Proposal. The failure to vote, abstentions and broker non-votes will not be counted as votes cast and will have no effect on any of the Business Combination Proposal, the NYSE Stock Issuance Proposal, the Advisory Charter Amendment Proposals, the Director Election Proposal, the Equity Incentive Plan Proposal and the Adjournment Proposal.
Q:
What will happen if I sign and return my proxy card without indicating how I wish to vote?
A:
Signed and dated proxies received by CPSR without an indication of how the stockholder intends to vote on a proposal will be voted “FOR” each proposal presented to the stockholders. The proxyholders may use their discretion to vote on any other matters which properly come before the Special Meeting.
Q.
How can I attend the Special Meeting?
A:
You may attend the Special Meeting and vote your shares online during the Special Meeting via live webcast by visiting                  . As a registered stockholder, you received a proxy card from Continental, which contains instructions on how to attend the Special Meeting online, including the URL address, along with your 12-digit meeting control number. You will need the 12-digit meeting control number that is printed on your proxy card to enter the Special Meeting. If you do not have your 12-digit meeting control number, contact Continental at (917) 262-2373 or e-mail Continental at proxy@continentalstock.com. Please note that you will not be able to physically attend the Special Meeting in person, but may attend the Special Meeting online by following the instructions below.
You can pre-register to attend the Special Meeting online starting,      , 2021. Enter the URL address into your browser, and enter your 12-digit meeting control number, name and email address. Once you pre-register you can vote or enter questions in the chat box. Prior to or at the start of the Special Meeting you will need to re-log in using your 12-digit meeting control number and will also be prompted to enter your 12-digit meeting control number if you vote online during the Special Meeting. CPSR recommends that you log in at least 15 minutes before the Special Meeting to ensure you are logged in when the Special Meeting starts.
If your shares are held in “street name,” you may attend the Special Meeting. You will need to contact Continental at the number or email address above, to receive a 12-digit meeting control number and gain access to the Special Meeting or otherwise contact your broker, bank, or other nominee as soon as
 
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possible, to do so. Please allow up to 72 hours prior to the Special Meeting for processing your 12-digit meeting control number.
If you do not have Internet capabilities, you can listen only to the Special Meeting by dialing       (outside of the United States and Canada), when prompted enter the pin #           . This is listen only and you will not be able to vote or enter questions during the Special Meeting.
Q:
If I am not going to attend the Special Meeting, should I return my proxy card instead?
A:
Yes. Whether you plan to attend the Special Meeting or not, please read the enclosed proxy statement/prospectus carefully, and vote your shares by completing, signing, dating and returning the enclosed proxy card in the postage-paid envelope provided.
In order to exercise your redemption rights, you must properly demand redemption and deliver your Public Shares (either physically or electronically) to our transfer agent at least two (2) business days prior to the Special Meeting. See “— How do I exercise my redemption rights” above.
Q:
May I change my vote after I have mailed my signed proxy card?
A:
Yes. If you are a stockholder of record of CPSR Common Stock as of the close of business on the Record Date, you can change or revoke your proxy before it is voted at the meeting in one of the following ways:

submit a new proxy card bearing a later date;

give written notice of your revocation to CPSR’s corporate secretary, which notice must be received by CPSR’s corporate secretary prior to the vote at the Special Meeting; or

vote electronically at the Special Meeting by visiting                   and entering the control number found on your proxy card, voting instruction form or notice you previously received. Please note that your attendance at the Special Meeting will not alone serve to revoke your proxy.
If your shares are held in “street name” by your broker, bank or another nominee as of the close of business on the Record Date, you must follow the instructions of your broker, bank or other nominee to revoke or change your voting instructions.
Q:
What should I do if I receive more than one set of voting materials?
A:
You may receive more than one set of voting materials, including multiple copies of this proxy statement/prospectus and multiple proxy cards or voting instruction cards. For example, if you hold your shares in more than one brokerage account, you will receive a separate voting instruction card for each brokerage account in which you hold shares. If you are a holder of record and your shares are registered in more than one name, you will receive more than one proxy card. Please complete, sign, date and return each proxy card and voting instruction card that you receive in order to cast your vote with respect to all of your shares.
Q:
Who will solicit and pay the cost of soliciting proxies?
A:
CPSR will pay the cost of soliciting proxies for the Special Meeting. CPSR has engaged MacKenzie Partners, Inc., a proxy solicitor, to assist in the solicitation of proxies for the Special Meeting. CPSR has agreed to pay MacKenzie Partners $17,500, plus disbursements for their proxy solicitation services. CPSR will also reimburse banks, brokers and other custodians, nominees and fiduciaries representing beneficial owners of shares of CPSR Common Stock for their expenses in forwarding soliciting materials to beneficial owners of the CPSR Common Stock and in obtaining voting instructions from those owners. CPSR’s directors, officers and employees may also solicit proxies by telephone, by facsimile, by mail, on the Internet or in person. They will not be paid any additional amounts for soliciting proxies.
Q:
Are there any risks that I should consider as a CPSR stockholder in deciding how to vote or whether to exercise my redemption rights?
A:
Yes. You should read and carefully consider the risk factors set forth in the section titled “Risk Factors” in this proxy statement/prospectus.
 
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Q:
Who can help answer my questions?
A:
If you have questions about the Proposals or if you need additional copies of this proxy statement/prospectus or the enclosed proxy card, please call us at (512) 340-7800.
You may also contact our proxy solicitor at:
MacKenzie Partners, Inc.
1407 Broadway, 27th Floor
New York, NY 10018
Phone: (800) 322-2885
Email: proxy@mackenziepartners.com
To obtain timely delivery, CPSR stockholders must request the materials no later than five (5) business days prior to the Special Meeting.
You may also obtain additional information about CPSR from documents filed with the SEC by following the instructions in the section titled “Where You Can Find More Information.”
If you intend to seek redemption of your Public Shares, you will need to send a letter demanding redemption and deliver your stock (either physically or electronically) to CPSR’s transfer agent prior to the Special Meeting in accordance with the procedures detailed under the question “— How do I exercise my redemption rights”. If you have questions regarding the certification of your position or delivery of your stock, please contact:
Continental Stock Transfer & Trust Company
One State Street Plaza, 30th Floor
New York, New York 10004
Attn: Mark Zimkind
E-mail: mzimkind@continentalstock.com
 
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SUMMARY OF THE PROXY STATEMENT/PROSPECTUS
This summary highlights selected information from this proxy statement/prospectus and does not contain all of the information that is important to you. To better understand the Proposals to be submitted for a vote at the Special Meeting, including the Business Combination, you should read this proxy statement/prospectus, including the Annexes and other documents referred to herein, carefully and in its entirety. The Business Combination Agreement is the legal document that governs the Business Combination and the other transactions that will be undertaken in connection with the Business Combination. The Business Combination Agreement is also described in detail in this proxy statement/prospectus in the section entitled “Business Combination Proposal — The Business Combination Agreement.”
The Parties to the Business Combination
CPSR
Unless otherwise indicated or the context otherwise requires, references in this subsection to “we,” “us,” “our” and other similar terms refer to CPSR and its subsidiaries prior to the Business Combination and to New Gelesis and its consolidated subsidiaries after giving effect to the Business Combination.
We are a blank check company incorporated on February 14, 2020 as a Delaware corporation for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization, or similar business combination with one or more businesses, otherwise referred to as our “initial business combination”.
Our principal executive offices are located at 405 West 14th Street, Austin, Texas 78701 and our telephone number is (512) 340-7800. Our corporate website address is https://www.capstarspac.com. Our website and the information contained on, or that can be accessed through, the website is not deemed to be incorporated by reference in, and is not considered part of, this proxy statement/prospectus.
Gelesis
Unless otherwise indicated or the context otherwise requires, references in this subsection to “we,” “us,” “our” and other similar terms refer to Gelesis and its subsidiaries prior to the Business Combination and to New Gelesis and its consolidated subsidiaries after giving effect to the Business Combination.
We are a biotherapeutics company built for consumer engagement. We aim to transform weight management through our proprietary biomimetic hydrogel technology, inspired by the compositional and mechanical properties of raw vegetables.
Our first product, Plenity®, and our other product candidates are based on a proprietary hydrogel technology that works mechanically, as opposed to via a chemical mode of action, and exclusively in the gastrointestinal, or GI, tract rather than systemically or through surgical intervention. Plenity is indicated for over 150 million Americans, the largest number of adults struggling with excess weight (i.e., a body mass index (kg/m2), or BMI, of 25-40) of any prescription oral weight-management aid and the only one indicated for the entire range of overweight population, including those without co-morbidities such as diabetes and cardiovascular diseases. Plenity is marketed directly to potential members, who access it through telehealth and traditional healthcare provider services in a manner unprecedented among available prescription therapies for weight management. We refer to those who are prescribed Plenity as our members — not customers — because we view our relationship with them as a long-term journey of support, not as a transactional relationship. This consumer-directed model is uniquely enabled by Plenity’s strong safety and tolerability profile. Our business is built on a subscription model, as monthly Plenity kits are delivered to our members’ homes. We leverage the latest technologies with telehealth, mail-order distribution, consumer engagement, and our native digital technology platform. Plenity is an orally administered capsule that employs multiple mechanisms of action along the GI tract to aid in weight management by creating small firm 3D structures, similar to ingested raw vegetables, which create a sensation of feeling fuller. Using a biomimetic approach, we developed the first-of-its-kind superabsorbent hydrogel technology, inspired by the composition (e.g., water and cellulose) and mechanical properties (e.g. elasticity or firmness) of ingested raw vegetables. We designed our hydrogels to address several critical challenges of the modern
 
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diet: portion size, caloric density, and food composition. For optimal safety and efficacy, these hydrogel particles are engineered to rapidly absorb and release water at specific locations in the GI tract. Plenity does not act systemically and is not absorbed by the body. Instead, it acts locally in the GI tract by changing the volume, firmness, and reducing the caloric density of ingested meals. Because it acts mechanically and it is the first of its kind, Plenity is regulated as a novel medical device (de novo pathway). Our product pipeline also includes multiple other potential therapeutic candidates for common chronic conditions affected by gut health that are currently in clinical and preclinical testing, including diabetes, nonalcoholic fatty liver disease, or NAFLD, nonalcoholic steatohepatitis, or NASH, and functional constipation, or FC, all based on the same hydrogel technology.
Obesity and obesity-related metabolic diseases represent a global health challenge for which there are few safe and effective interventions. These conditions are associated with comorbidities such as type 2 diabetes, hypertension, and heart disease. Based on a report from the U.S. Centers for Disease Control and Prevention, or CDC, between 2017 and 2018, 42.5% and 31% of the U.S. adult population 20 years of age and older had obesity or overweight, respectively. Of the existing overweight population, many of these individuals are expected to cross the threshold into obesity in the near future. In the United States, obesity-related medical care costs were an estimated $147 billion in 2008 dollars. Globally, there were more than 1.9 billion adults 18 years of age and older that had an unhealthy weight, of which approximately 650 million in 2016 had obesity, according to the World Health Organization, or WHO.
There are limited available treatments that address the overweight and obesity epidemic safely and effectively. Available therapies include pharmaceuticals and surgical interventions, including device implantation. These approaches are associated with safety concerns that limit their use. Conversely, we believe our hydrogel technology presents a breakthrough in material science as it is the first and only superabsorbent hydrogel that is constructed from building blocks used in foods and specifically engineered to achieve its medical purpose. Our first commercial product based on this technology, Plenity, is clinically validated and received regulatory clearance from the FDA to aid in weight management in adults with overweight or obesity, when used in conjunction with diet and exercise. Plenity has the broadest label of any FDA-regulated weight management approach as it is indicated for the largest number of adults struggling with excess weight, offering a safe, convenient and effective oral treatment option.
Our biomimetic hydrogel, which is engineered to rapidly absorb and release water at specific locations in the GI tract, is synthesized through a multi-step, proprietary process using a specific form of modified cellulose and citric acid, both of which are generally recognized as safe, or GRAS, by the Food and Drug Administration, or FDA, and are commonly used in the food industry. In our manufacturing process, we crosslink the modified cellulose with citric acid to form a three-dimensional matrix, resulting in the desired properties of Plenity. Each Plenity capsule contains thousands of hydrogel particles, with each particle approximately the size of a grain of salt. We designed the Plenity capsule to be ingested with water before a meal. In the stomach, the hydrogel particles are released from the capsules and rapidly absorb water, hydrating to approximately 100 times their original size. When fully hydrated, each gel particle is, on average, approximately 2 mm in diameter and its elastic response (a measurement of the ability of matter to recover its original shape after deformation) is similar to that of ingested raw vegetables. The hydrogel particles mix homogeneously with food and travel through the GI tract and are designed to induce satiety and improve glycemic control through multiple mechanisms of action. Once in the large intestine, the particles partially degrade and release most of the water, which is reabsorbed by the body. The remaining degraded particles are then eliminated by the body in the same manner as raw vegetables.
Our principal executive offices are located at 501 Boylston Street, Suite 6102, Boston, Massachusetts 02116 and our telephone number is (617) 456-4718. Our corporate website address is https://www.gelesis.com. Our website and the information contained on, or that can be accessed through, the website is not deemed to be incorporated by reference in, and is not considered part of, this proxy statement/prospectus.
Merger Sub
Merger Sub is a Delaware corporation and wholly-owned subsidiary of CPSR formed for the purpose of effecting the Business Combination. Merger Sub owns no material assets and does not operate any business.
 
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Merger Sub’s principal executive office is located at CPSR’s principal executive offices at 405 West 14th Street, Austin, Texas 78701.
Proposals to be Presented to the Stockholders of CPSR at the Special Meeting
The following is a summary of the Proposals to be presented to our stockholders at the Special Meeting. Each of the Proposals below, except the Adjournment Proposal, is cross-conditioned on the approval of each other. The Adjournment Proposal is not conditioned upon the approval of any other proposal set forth in this proxy statement/prospectus. The transactions contemplated by the Business Combination Agreement will be consummated only if the Business Combination Proposal and the Condition Precedent Proposals are approved at the Special Meeting.
As discussed in this proxy statement/prospectus, CPSR is asking its stockholders to approve the Business Combination Agreement, pursuant to which, among other things, on the date of Closing, Merger Sub will merge with and into Gelesis, with Gelesis as the surviving company in the Business Combination and, after giving effect to such Business Combination, Gelesis will be a wholly-owned subsidiary of CPSR.
The Board considered a number of factors pertaining to the Business Combination as generally supporting its decision to enter into the Business Combination Agreement and the transactions contemplated thereby, including but not limited to, the following material factors:

Gelesis is a high-growth, consumer and healthcare-oriented business that is disrupting a large addressable market.   There is a large addressable market for weight loss in the United States with nearly 150 million people classified as either clinically overweight or obese. Gelesis has developed a patented, FDA-cleared, hydrogel in Plenity, a unique, proven solution to address weight management and the obesity crisis, with 6 out of 10 adults having lost on average 10% of their weight in a double-blind trial. Gelesis views Plenity as being highly disruptive to the weight loss market because of its safety profile, accessibility and affordability, especially relative to other weight management options, and its effectiveness, with proven trials and strong early consumer acceptance. In addition, we believe that the technology developed by Gelesis has highly effective applications to address other health and wellness issues in the future.

CPSR is well positioned to add value to Gelesis.   The Gelesis management team has created a compelling product and the team at CPSR is comprised of individuals with extensive brand building accomplishments. Because Plenity is a prescribed product, there will be a significant amount of consumer and physician education required to create and build brand awareness. We believe that the brand building and distribution expertise at CPSR, with a broad network of influencers that we can utilize to help raise awareness and engagement, combined with Gelesis’ team and product, will be a productive combination.

Attractive Valuation.   The Board reviewed the market capitalization, enterprise value and implied valuation multiples of two primary public company peer sets, Health and Wellness Consumer (Beyond, Simply Good, Bellring Brands) and Health and Wellness Direct-to-Consumer (Establishment Labs, Hims & Hers, Inmode), which CPSR management deemed relevant based on its professional judgment and expertise. CPSR compared the same to the implied enterprise value of Gelesis determined in accordance with the internal valuation analysis of CPSR management and its advisers. CPSR management found that Gelesis’ implied equity value of approximately $900 million equaled 2.2x estimated 2023 revenue and 3.4x estimated 2023 gross profit, an attractive valuation relative to the peer set especially in light of Gelesis’ early growth and projected margin profile.

Financial Condition.   The Board also considered factors such as Gelesis’ business model, general outlook, the expected length of time that Gelesis would be able to continue operating its business in the normal course based on its current cash and cash equivalents and expected cash to be received from the Trust Account and the PIPE Financing in connection with the closing of the Business Combination. The Board received and reviewed financial projections from Gelesis. Gelesis’ management expects that the net proceeds from the Business Combination and PIPE Financing, together with Gelesis’ available resources and existing cash and cash equivalents, will enable it to fund its operating expenses and capital expenditure requirements over next few years.
 
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Stockholder Liquidity.   The obligation in the Business Combination Agreement to have CPSR Common Stock issued as merger consideration listed on the NYSE, a major U.S. stock exchange, has the potential to offer CPSR stockholders greater liquidity.

Lock-Up.   The Sponsor has agreed to be subject to a twelve (12)-month lockup in respect of its New Gelesis Common Stock and certain current equityholders, officers and directors of Gelesis have agreed to be subject to a six (6)-month lockup in respect of their New Gelesis Common Stock, in each case, subject to certain customary exceptions, which will provide important stability to the leadership and governance of New Gelesis.

Significant Commercial Due Diligence.   The Board considered the significant amount of commercial due diligence that was undertaken by CPSR management and its advisors.

Other Alternatives.   The Board believes, after a thorough review of other business combination opportunities reasonably available to CPSR, that the Business Combination represents the best initial business combination for CPSR and the most attractive opportunity for CPSR’s management to accelerate its business plan based upon the process utilized to evaluate and assess other potential acquisition targets, and the Board’s belief that such process has not presented a better alternative.

Negotiated Transaction.   The financial and other terms of the Business Combination Agreement and the fact that such terms and conditions are reasonable and were the product of arm’s-length negotiations between CPSR and Gelesis.
The Board identified and considered the following factors and risks as weighing negatively against pursuing the Business Combination, although not weighted or in any order of significance:

Dependence on Success of Plenity.   The success of Gelesis’ business is heavily dependent on the success of the full commercial launch of Plenity. Plenity is just reaching commercial production and has only modest sales to date following its beta launch in October 2020.

Benefits May Not Be Achieved.   The risk that the potential benefits of the Business Combination may not be fully achieved or may not be achieved within the expected timeframe.

Liquidation of CPSR.   The risks and costs to CPSR if the Business Combination is not completed, including the risk of diverting management focus and resources from other initial business combination opportunities, which could result in CPSR being unable to effect a business combination by July 7, 2022 and force CPSR to liquidate.

Exclusivity.   The fact that the Business Combination Agreement includes an exclusivity provision that prohibits CPSR from soliciting or engaging in discussions regarding other business combination proposals, which restricts CPSR’s ability, so long as the Business Combination Agreement is in effect, to consider other potential business combinations.

COVID-19.   Uncertainties regarding the potential impacts and disruptions of the COVID-19 virus, including with respect to personnel required to staff the production line at Gelesis’ Italian locations.

Stockholder Vote.   The risk that CPSR’s stockholders may fail to provide the votes necessary to effect the Business Combination.

Redemption Risk.   The potential that a significant number of CPSR stockholders elect to redeem their shares prior to the consummation of the Business Combination and pursuant to the existing Charter, which would potentially make the Business Combination more difficult or impossible to complete, and/or reduce the amount of cash available to New Gelesis following the Closing.

Post-Business Combination Corporate Governance; Terms of the Registration Rights Agreement.   The Board considered the corporate governance provisions of the Business Combination Agreement, the Registration Rights Agreement and the material provisions of the Charter Amendment Proposals. In particular, they considered the nomination rights that certain stockholders would have in New Gelesis, and that these rights are not generally available to Public Stockholders, including stockholders that may hold a large number of shares.

Closing Conditions.   The fact that completion of the Business Combination is conditioned on the satisfaction of certain Closing conditions that are not within CPSR’s control, including the applicable
 
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waiting period under the HSR Act relating to the Business Combination Agreement having expired or been terminated, approval by CPSR stockholders and approval by the NYSE of the initial listing application in connection with the Business Combination.

CPSR Stockholders Receiving a Minority Position in Gelesis.   CPSR stockholders will hold a minority position in New Gelesis.

Litigation.   The possibility of litigation challenging the Business Combination or that an adverse judgment granting permanent injunctive relief could indefinitely enjoin consummation of the Business Combination.

Fees and Expenses.   The fees and expenses associated with completing the Business Combination.

Other Risks.   Various other risks associated with the Business Combination, the business of CPSR and the business of Gelesis described under the section entitled “Risk Factors.”
After consideration of the factors described above and additional items discussed in the section entitled “Business Combination Proposal — The Board’s Reasons for the Business Combination,” the Board concluded that the Business Combination met all of the requirements disclosed in the prospectus for its Initial Public Offering, including that the business of Gelesis had a fair market value of at least 80% of the balance of the funds in the Trust Account (excluding the amount of deferred underwriting discounts held in trust and taxes payable on the interest earned on the Trust Account) at the time of execution of the Business Combination Agreement. For more information about the transactions contemplated by the Business Combination Agreement, see “Business Combination Proposal.”
Consideration to Gelesis Equityholders in the Business Combination
In accordance with the terms and subject to the conditions of the Business Combination Agreement, at the Effective Time, based on an implied equity value of $900 million, (i) each share of CPSR Class A Common Stock and CPSR Class B Common Stock issued and outstanding immediately prior to the Effective Time will become one share of New Gelesis Common Stock, (ii) each share of Gelesis Common Stock as of immediately prior to the Effective Time will be automatically cancelled and extinguished and converted into a right to receive shares of New Gelesis Common Stock, (iii) each share of capital stock of Merger Sub issued and outstanding as of immediately prior to the Effective Time will be automatically cancelled and extinguished and converted into one share of New Gelesis Common Stock, (iv) all Gelesis Options will be assumed by New Gelesis and thereafter be settled or exercisable for shares of New Gelesis Common Stock and (v) all Gelesis Warrants will be exchanged for comparable warrants to purchase shares of New Gelesis Common Stock. In addition, each holder of Gelesis Common Stock, Gelesis Options and Gelesis Warrants will receive its pro rata portion of 15,000,000 restricted Earn Out Shares of New Gelesis Common Stock, which will vest (in part) in equal thirds if the trading price of New Gelesis Common Stock is greater than or equal to $12.50, $15.00 and $17.50, respectively, for any 20 trading days within any 30-trading day period on or prior to the expiration of the five-year Earn Out Period and will also vest in connection with any Change of Control Transaction with respect to New Gelesis if the applicable thresholds are met in such Change of Control Transaction during the Earn Out Period.
For further details, see “Business Combination Proposal — The Business Combination Agreement.”
Conditions to Closing of the Business Combination
The consummation of the Business Combination is conditioned upon, among other things, (i) the approval by our stockholders of the Business Combination Agreement and the Condition Precedent Proposals being obtained; (ii) the applicable waiting period under the HSR Act relating to the Business Combination Agreement having expired or been terminated; (iii) CPSR having at least $5,000,001 of net tangible assets (as determined in accordance with Rule 3a51-1(g)(1) of the Exchange Act) after giving effect to the transactions contemplated by the Business Combination Agreement and the PIPE Financing; (iv) the approval by the NYSE of our initial listing application in connection with the Business Combination; and (v) the total cash of CPSR at the Effective Time, after giving effect to the PIPE Financing, including the funds remaining in the Trust Account after giving effect to required CPSR stockholder redemptions, but prior to the payment of certain CPSR and Gelesis transaction and related expenses or any unpaid or
 
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contingent liabilities of CPSR (the “Available Cash”) must not be less than $105 million (the “Minimum Cash”, and such condition also referred to herein as the “Minimum Cash Condition”). Therefore, unless these conditions are waived by the applicable parties to the Business Combination Agreement, the Business Combination Agreement could terminate and the Business Combination may not be consummated.
The Business Combination Agreement contains representations, warranties and covenants that the respective parties made to each other as of the date of the Business Combination Agreement or other specific dates. The assertions embodied in those representations, warranties and covenants were made for purposes of the contract among the respective parties and are subject to important qualifications and limitations agreed to by the parties in connection with negotiating the Business Combination Agreement. The representations, warranties and covenants in the Business Combination Agreement are also modified in part by the underlying disclosure schedules (the “Disclosure Schedules”), which are not filed publicly and which are subject to a contractual standard of materiality different from that generally applicable to stockholders and were used for the purpose of allocating risk among the parties rather than establishing matters as facts. We do not believe that the Disclosure Schedules contain information that is material to an investment decision. Additionally, the representations and warranties of the parties to the Business Combination Agreement may or may not have been accurate as of any specific date and do not purport to be accurate as of the date of this proxy statement/prospectus. Accordingly, no person should rely on the representations and warranties in the Business Combination Agreement or the summaries thereof in this proxy statement/prospectus as characterizations of the actual state of facts about CPSR, Sponsor, Gelesis or any other matter.
CPSR stockholders will be asked to vote on the following Proposals at the Special Meeting:
1.
The Business Combination Proposal — to adopt and approve the Business Combination Agreement and approve the Business Combination.
2.
The Charter Amendment Proposal — to approve, assuming the Business Combination Proposal is approved and adopted, the Proposed Charter, which will amend and restate the Current Charter, and which Proposed Charter will be in effect when duly filed with the Secretary of State of the State of Delaware in connection with the Closing.
3.
The Advisory Charter Amendment Proposals — to approve, on a non-binding advisory basis, the following material differences between the Proposed Charter and the Current Charter, which are being presented in accordance with the requirements of the SEC as seven (7) separate sub-proposals:
(a)
Advisory Charter Proposal A — to change the corporate name of New Gelesis to “Gelesis Holdings, Inc.”;
(b)
Advisory Charter Proposal B — to increase CPSR’s capitalization so that it will have 900,000,000 authorized shares of common stock and 250,000,000 authorized shares of preferred stock;
(c)
Advisory Charter Proposal C — to divide the New Gelesis board of directors into three classes with staggered three-year terms;
(d)
Advisory Charter Proposal D — to provide that the removal of any director be only for cause and only by the affirmative vote of holders of at least 6623% of New Gelesis’ then outstanding shares entitled to vote at an election of directors;
(e)
Advisory Charter Proposal E — to provide that certain amendments to provisions of the Proposed Charter will require the affirmative vote of holders of at least 6623% of New Gelesis’ then outstanding shares of capital stock entitled to vote thereon, and the affirmative vote of at least 6623% of New Gelesis’ then outstanding shares of each class entitled to vote thereon as a class;
(f)
Advisory Charter Proposal F — to make New Gelesis’ corporate existence perpetual as opposed to CPSR’s corporate existence, which is required to be dissolved and liquidated twenty-four (24) months following the closing of its initial public offering, and to remove from the Proposed Charter the various provisions applicable only to blank check companies; and
 
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(g)
Advisory Charter Proposal G — to remove the provisions setting the Court of Chancery of the State of Delaware as the sole and exclusive forum for certain stockholder actions.
4.
The NYSE Stock Issuance Proposal — to approve, assuming the Business Combination Proposal is approved and adopted, for purposes of complying with the applicable provisions of Section 312 of the NYSE Listed Company Manual, (a) the issuance of up to 108,950,726 newly issued shares of New Gelesis Common Stock in the Business Combination, which amount will be determined as described in more detail in the accompanying proxy statement/prospectus under the heading titled “Business Combination Proposal — Ownership of New Gelesis” and (b) the issuance and sale of 9,000,000 newly issued shares of Class A Common Stock in connection with the PIPE Financing.
5.
The Director Election Proposal — to approve, assuming the Business Combination Proposal is approved and adopted, the appointment of nine directors who, upon consummation of the Business Combination, will become directors of New Gelesis.
6.
The Equity Incentive Plan Proposal — to approve, assuming the Business Combination Proposal is approved and adopted, the Gelesis Holdings, Inc. 2021 Stock and Incentive Plan, a copy of which is appended to this proxy statement/prospectus as Exhibit H to the Business Combination Agreement, a copy of which is attached to the accompanying proxy statement/prospectus as Annex A, which will become effective as of the date immediately preceding the date of the Closing.
7.
The Adjournment Proposal — to approve a proposal to adjourn the Special Meeting to a later date or dates, if necessary, to permit further solicitation and vote of proxies if, based upon the tabulated vote at the time of the Special Meeting, there are not sufficient votes to approve the Business Combination Proposal, the Charter Amendment Proposal, the Advisory Charter Amendment Proposals, the NYSE Stock Issuance Proposal, the Director Election Proposal, or the Equity Incentive Plan Proposal, or we determine that one or more of the Closing conditions under the Business Combination Agreement is not satisfied or waived.
Emerging Growth Company
CPSR is an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the JOBS Act, and it may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies, including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.
Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable. CPSR has elected not to opt out of such extended transition period, which means that when a standard is issued or revised and it has different application dates for public or private companies, CPSR, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of CPSR’s financial statements with certain other public companies difficult or impossible because of the potential differences in accounting standards used.
We will remain an emerging growth company until the earlier of: (i) the last day of the fiscal year (a) following the fifth anniversary of the closing of CPSR’s initial public offering, (b) in which we have total annual gross revenue of at least $1.07 billion, or (c) in which we are deemed to be a large accelerated filer, which means the market value of our common equity that is held by non-affiliates exceeds $700 million as of the last business day of its most recently completed second fiscal quarter; and (ii) the date on which we
 
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have issued more than $1.00 billion in non-convertible debt securities during the prior three (3)-year period. References herein to “emerging growth company” have the meaning associated with it in the JOBS Act.
Smaller Reporting Company
Additionally, we are a “smaller reporting company” as defined in Item 10(f)(1) of Regulation S-K. Smaller reporting companies may take advantage of certain reduced disclosure obligations, including, among other things, providing only two years of audited financial statements. We will remain a smaller reporting company until the last day of the fiscal year in which (i) the market value of our common stock held by non-affiliates exceeds $250 million as of the prior June 30, or (ii) our annual revenues exceeded $100 million during such completed fiscal year and the market value of our common stock held by non-affiliates exceeds $700 million as of the prior June 30.
Summary Risk Factors
You should consider all the information contained in this proxy statement/prospectus in deciding how to vote for the proposals presented in this proxy statement/prospectus. In particular, you should consider the risk factors described under “Risk Factors” beginning on page 32. Some of these risks that relate to Gelesis include, but are not limited to:
Risks Related to Product Development, Regulatory Approval and Commercialization

Gelesis is dependent on the success of its hydrogel therapeutics for Plenity, which is currently its only marketed and FDA authorized product.

Plenity may cause undesirable side effects that could result in significant negative consequences, including product liability or other litigation, that may be costly to Gelesis and/or adversely impact the commercial success of Plenity.

The broad prescription pharmaceutical and medical device market for overweight and obesity is strictly regulated. Several competitors have attempted unsuccessfully to generate significant, sustainable sales in that market.

Gelesis is, and will continue to be, subject to ongoing and extensive regulatory requirements. Any failure to comply with applicable laws and regulations, including those pertaining to the advertising and promotion of healthcare products, could expose Gelesis to criminal sanctions, civil penalties, contractual damages, reputational harm and diminished profits and future earnings, and substantially harm Gelesis’ business.

Plenity is currently regulated as a medical device by the FDA and may become subject to similar or other therapeutic regulatory requirements outside the United States.

Recently enacted and future legislation may increase the difficulty and cost for us to further commercialize Plenity and any other products Gelesis may develop in the future and decrease the prices Gelesis may obtain for its approved products.

Gelesis is responsible for manufacturing Plenity and it currently has one active production site and two additional product sites under development in southern Italy. Gelesis will continue to invest in manufacturing capacity at these sites and possibly build additional manufacturing sites to meet increased demand as Plenity is launched through new channels or in new markets. Gelesis’ inability to produce an adequate supply of Plenity, due to the loss of these facilities or other future facilities or any material limitation of production at these facilities, could materially and adversely impact the commercial growth and success of Plenity and, consequently, could cause Gelesis’ revenue, earnings or reputation to suffer.

There is no guarantee that Gelesis will be able to successfully commercialize Plenity through the channels, or in the markets, it is targeting or at all.

The telehealth market is immature and volatile, and if it does not develop, if it develops more slowly than Gelesis expects, or if it encounters negative publicity, Gelesis’ ability to fully commercialize Plenity and grow its business will be harmed.
 
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Successful commercialization of Plenity is dependent on the willingness of the ultimate patient to pay out-of-pocket. If there is not sufficient patient demand for Plenity, Gelesis’ financial results and future prospects will be harmed.

Competing products and technologies could emerge, including pharmaceuticals, devices, and surgical procedures, that adversely affect Gelesis’ opportunity to generate sales of Plenity and achieve profitability.
Risks Relating to Intellectual Property Rights

If Gelesis is unable to adequately protect its proprietary technology or maintain issued patents that are sufficient to protect Plenity, or if competitors are able to market competitive products without infringing Gelesis’ protected intellectual property rights, others could compete against Gelesis in ways that would have a material adverse impact on Gelesis’ business, results of operations, financial condition and prospects.

Gelesis has licensed Plenity to third party partners (e.g. for launch in the Chinese market) and has also granted limited licenses to practice patent rights for noncommercial, research purposes. Gelesis may continue to outlicense its intellectual property and may agree under certain circumstances to grant limited exclusive or non-exclusive commercial rights as well. There can be no guarantee that the third party’s activities will not in any way overlap or interfere with the commercialization of Plenity. Additionally, there is always the possibility that Gelesis may become dependent on obtaining access to third party intellectual property in connection with the commercialization of Plenity or for other new product candidates in the future.

Gelesis may infringe the intellectual property rights of others, which may prevent or delay its development efforts or stop Gelesis from commercializing or increase the costs of commercializing Plenity.

Gelesis may be involved in lawsuits to protect or enforce its patents, which could be expensive, time-consuming, and unsuccessful.

Issued patents covering Plenity could be found invalid or unenforceable if challenged in court.

Changes in U.S. patent law could diminish the value of patents in general, thereby impairing Gelesis’ ability to protect its products.
Risks Related to Our Business and Strategy

Gelesis will need to continue to develop and expand its company, and if it fails to manage such development and expansion effectively, its expenses could increase more than expected, its revenue may not increase sufficiently to generate sustainable profits and it may be unable to successfully execute on its growth initiatives, business strategies or operating plans.

Gelesis’ ability to identify, engage with, and retain Plenity patients is essential to its ability to grow and sustain its sales.

Gelesis relies on a limited number of channels for the distribution of Plenity, with a few qualified distributors currently accounting for substantially all of its revenue. The loss of one or more of such qualified distributors would materially harm its business.

Gelesis’ future success depends on its ability to retain its senior executive officers, and to attract and keep senior management and key scientific and commercial personnel.

Gelesis may not be successful in its efforts to identify or discover additional product candidates.

Gelesis faces potential product liability exposure and, if claims are brought against Gelesis, it may incur substantial liability.

If Gelesis does not continually enhance its brand recognition, increase distribution of Plenity, attract new patients and introduce new and innovative products, either on a timely basis or at all, its business may suffer.
 
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Gelesis’ international operations for the supply chain of Plenity pose certain political, legal and compliance, operational, regulatory, economic and other risks to its business that may be different from or more significant than risks associated with its U.S. operations.

Competition from other weight management and wellness industry participants or the development of more effective or more favorably perceived weight management methods could result in decreased demand for Plenity.
Risks Related to Financial Position and Financing Needs

Gelesis is a commercial stage biotherapeutics company, but to date has generated limited product sales. Gelesis has incurred significant operating losses since its inception and anticipates that it will continue to incur continued losses for the next several years.

Gelesis may be unable to accurately forecast revenue and appropriately plan its expenses in the future.

In order to support its business, Gelesis has and may need to incur additional indebtedness or seek capital through new equity or debt financings, which sources of additional indebtedness or capital may not be available on acceptable terms, if at all, and the failure to obtain this additional funding when needed may force Gelesis to delay, limit or terminate its product development efforts or other operations.
The ability to execute CPSR’s strategic plan could be negatively impacted to the extent a significant number of stockholders choose to redeem their shares in connection with the Business Combination.
 
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RISK FACTORS
The following risk factors will apply to our business and operations following the completion of the Business Combination. These risk factors are not exhaustive and investors are encouraged to perform their own investigation with respect to the business, prospects, financial condition and operating results of Gelesis and our business, prospects, financial condition and operating results following the completion of the Business Combination. You should carefully consider the following risk factors in addition to the other information included in this proxy statement/prospectus, including matters addressed in the section titled “Cautionary Note Regarding Forward-Looking Statements,” before deciding how to vote your shares of CPSR Common Stock. We may face additional risks and uncertainties that are not presently known to us, or that we currently deem immaterial, which may also impair our business, prospects, financial condition or operating results. The following discussion should be read in conjunction with our financial statements and the financial statements of Gelesis and the notes to the financial statements included herein.
Risks Related to Gelesis’ Business and Industry
Unless the context otherwise requires, all references in this “Risks Related to Gelesis’ Business and Industry” section to “we,” “us,” or “our” refer to Gelesis, Inc.
Risks Related to Product Development, Regulatory Approval and Commercialization
Gelesis is dependent on the success of our hydrogel therapeutics for Plenity, which is currently our only marketed and FDA-authorized product.
Plenity is currently our only marketed FDA de novo authorized product and our business depends on the successful commercialization of Plenity. We may never be able to achieve widespread market acceptance of Plenity or, if we do, be able to develop additional indications for Plenity, which will require substantial additional clinical development, testing and regulatory approval before we are permitted to commercialize those indications. The manufacturing and marketing of Plenity is subject to extensive and rigorous review and regulation by numerous government authorities in the United States and in other countries where we intend to market Plenity. Because our business is almost entirely dependent upon Plenity and its underlying hydrogel technology, any setback in our pursuit of commercialization of Plenity would have a material adverse effect on our business and prospects.
Plenity may cause undesirable side effects that could result in significant negative consequences, including product liability or other litigation, that may be costly to Gelesis and/or adversely impact the commercial success of Plenity.
Undesirable side effects caused by Plenity could cause us, the FDA or European regulatory authorities to interrupt, delay or halt the continued commercialization of Plenity and could result in more restrictive labeling, or withdrawal or limitations on Plenity’s marketing approval. To date, the main adverse events in patients taking Plenity have been bloating, flatulence, abdominal pain and diarrhea. However, there have been no serious adverse events attributed to Plenity and the difference in adverse events between Plenity and placebo has been negligible. If we or others identify other undesirable side effects caused by Plenity, a number of potentially significant consequences could result, including:

the FDA or European notified bodies may withdraw or limit their marketing approval of the product;

the FDA or European notified bodies may require the addition of labeling statements, such as a black box warning or a contraindication;

we may be required to change the way the product is distributed or administered, conduct additional clinical trials or change the labeling of the product;

we may decide to remove the products from the marketplace;

we could be sued and held liable for injury caused to individuals using our product; and

our reputation may suffer.
 
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Any of these events could prevent us from achieving or maintaining market acceptance of Plenity and could substantially increase the costs of commercializing the product and/or significantly impact our ability to successfully commercialize and generate product sales.
The broad prescription pharmaceutical and medical device market for overweight and obesity is strictly regulated.
Even though we obtained the required regulatory approval in the United States, our ability to generate product sales is dependent on our ability to market and sell Plenity, which depends upon the awareness and acceptance of Plenity among the medical community, including physicians and patients. If Plenity does not achieve an adequate level of acceptance by patients and physicians, we will not generate sufficient product sales of Plenity to become or remain profitable. Our efforts to educate the medical community about the benefits of Plenity may require significant resources and may never be successful.
Gelesis is, and will continue to be, subject to ongoing and extensive regulatory requirements, and its failure to comply with these requirements could substantially harm its business.
We are, and will continue to be, subject to ongoing FDA requirements and continued regulatory oversight and review, including routine inspections by the FDA of our manufacturing facilities and compliance with requirements such as the Quality System Regulation, or QSR, which establishes extensive requirements for quality assurance and control as well as manufacturing procedures; requirements pertaining to the registration of our manufacturing facilities and the listing of Plenity with the FDA; continued complaint, adverse event and malfunction reporting; corrections and removals reporting; and labeling and promotional requirements. The promotional claims we are, and will continue to be, able to make for Plenity are limited to the approved indications for use. We may also be subject to additional FDA post-marketing requirements. If we are not able to maintain regulatory compliance, we may not be permitted to market Plenity and/or may be subject to enforcement by the FDA such as the issuance of warning or untitled letters, the imposition of fines, injunctions, and civil penalties; the recall or seizure of products; the imposition of operating restrictions; and the institution of criminal prosecution. In addition, we will be subject to similar regulatory regimes in Europe for Plenity. Adverse EU Competent Authority or FDA action in any of these areas could significantly increase our expenses and limit our product sales and profitability.
The FDA and other regulatory authorities actively enforce the laws and regulations pertaining to the advertising and promotion of healthcare products. If Gelesis is found to have improperly promoted off-label uses, including for the use of an unapproved indication or in an unapproved age group or dosage, Gelesis may become subject to significant liability and corresponding litigation.
The FDA and European regulatory authorities strictly regulate the promotional claims that may be made about prescription products, such as Plenity. In particular, a medical device may not be promoted for uses that are not approved by the FDA or other regulatory authorities as reflected in the product’s approved labeling. For example, we are not allowed to make claims for Plenity pertaining to diabetes management or glycemic control in prediabetic and type 2 diabetic patients without approval of specific labeling regarding such use. Even though we received marketing approval for Plenity to aid in weight management in overweight and obese adults with a Body Mass Index (BMI) of 25 – 40 kg/m2, when used in conjunction with diet and exercise, physicians may nevertheless prescribe Plenity to their patients in a manner that is inconsistent with the approved label. If we are found to have promoted such off-label uses, we may become subject to enforcement action by the FDA, including warning or untitled letters. In addition, the federal government has levied large civil and criminal fines against companies for alleged improper promotion and has enjoined companies from engaging in off-label promotion. The FDA has also requested that companies enter into consent decrees of permanent injunctions under which specified promotional conduct is changed or curtailed. If we cannot successfully manage the promotion of Plenity, we could become subject to significant liability, which would materially adversely affect our business and financial condition.
Healthcare laws and regulations expose Gelesis to criminal sanctions, civil penalties, contractual damages, reputational harm and diminished profits and future earnings, and its direct marketing strategy could enhance such exposure.
Healthcare providers, physicians and others play a primary role in the recommendation and prescription of Plenity. Any arrangements with third party payors will expose us to broadly applicable fraud and abuse
 
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and other healthcare laws and regulations that may constrain the business or financial arrangements and relationships through which we market, sell and distribute Plenity. Restrictions under applicable federal and state healthcare laws and regulations include the following:

The federal anti-kickback statute prohibits, among other things, persons from knowingly and willfully soliciting, offering, receiving or providing remuneration, directly or indirectly, in cash or in kind, to induce or reward either the referral of an individual for, or the purchase, order or recommendation of, any good or service, for which payment may be made under federal healthcare programs such as Medicare and Medicaid.

The federal False Claims Act imposes criminal and civil penalties, including those from civil whistleblower or qui tam actions, against individuals or entities for knowingly presenting, or causing to be presented, to the federal government, claims for payment that are false or fraudulent or making a false statement to avoid, decrease, or conceal an obligation to pay money to the federal government.

The federal Health Insurance Portability and Accountability Act of 1996, as amended by the Health Information Technology for Economic and Clinical Health Act, imposes criminal and civil liability for executing a scheme to defraud any healthcare benefit program and also imposes obligations, including mandatory contractual terms, with respect to safeguarding the privacy, security and transmission of individually identifiable health information.

The federal false statements statute prohibits knowingly and willfully falsifying, concealing or covering up a material fact or making any materially false statement in connection with the delivery of or payment for healthcare benefits, items or services.

The federal transparency requirements, sometimes referred to as the “Sunshine Act,” under the Patient Protection and Affordable Care Act, require manufacturers of drugs, medical devices, biologics and medical supplies to report to the Department of Health and Human Services information related to physician payments and other transfers of value and physician ownership and investment interests.

Analogous state laws and regulations, such as state anti-kickback and false claims laws and transparency laws, may apply to sales or marketing arrangements and claims involving healthcare items or services reimbursed by non-governmental third party payors, including private insurers. Some state laws require medical device companies to comply with the medical device industry’s voluntary compliance guidelines and the relevant compliance guidance promulgated by the federal government in addition to requiring device manufacturers to report information related to payments to physicians and other healthcare providers or marketing expenditures and pricing, with the reported information to be made publicly available on a searchable website.

Ensuring that our future business arrangements with third parties comply with applicable healthcare laws and regulations could be costly. It is possible that governmental authorities will conclude that our business practices do not comply with current or future statutes, regulations or case law involving applicable fraud and abuse or other healthcare laws and regulations. If our operations, including current or future activities to be conducted by our or a collaborator’s sales team, were found to be in violation of any of these laws or any other governmental regulations that may apply to us, we may be subject to significant civil, criminal and administrative penalties, damages, fines and exclusion from government funded healthcare programs, such as Medicare and Medicaid, any of which could substantially disrupt our operations. If any of the physicians or other providers or entities with whom we expect to do business are found not to be in compliance with applicable laws, they may be subject to criminal, civil or administrative sanctions, including exclusions from government funded healthcare programs.
Plenity is currently regulated as a medical device by the FDA and may become subject to similar or other therapeutic regulatory requirements outside the United States.
Plenity is currently regulated by the FDA as a medical device, and may become subject to similar or other therapeutic regulatory requirements outside of the United States. We expect to expand the sales of
 
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Plenity internationally, and as we do so we will also become subject to similar regulations by foreign governments. Government regulations specific to medical devices are wide ranging and govern, among other things:

product design, development and manufacture;

laboratory, preclinical and clinical testing, labeling, packaging, storage, and distribution;

premarketing clearance or approval or de novo authorization;

record keeping;

product marketing, promotion and advertising, sales and distribution; and

post-marketing surveillance, including reporting of deaths, serious injuries and product malfunctions, recalls, corrections and removals.
Before a new medical device, or a new intended use for a device in commercial distribution, can be marketed in the United States, a company must first submit and receive either 510(k) clearance pursuant to section 510(k) of the Federal Food, Drug, and Cosmetic Act, or FDCA, unless an exemption applies; approval of a premarket approval, or PMA, application from the FDA; or de novo classification or authorization. In the 510(k) clearance process, the FDA must determine that a proposed device is “substantially equivalent” to a device legally on the market, known as a “predicate” device, in order to clear the proposed device for marketing. To be substantially equivalent, the proposed device must have the same intended use as the predicate device, and either have the same technological characteristics as the predicate device or have different technological characteristics and not raise different questions of safety or effectiveness than the predicate device. Clinical data is sometimes required to support substantial equivalence. Failure to demonstrate substantial equivalence to a predicate device to the FDA’s satisfaction will require the submission and approval by the FDA of a PMA application. However, the FDA can reclassify, or use “de novo classification” for, a device for which there was no predicate device if the device is low or moderate risk. The FDA will identify “special controls” that the manufacturer must implement, which often include labeling and other restrictions. Subsequent applicants can rely on the de novo product as a predicate for a 510(k) clearance. The FDA’s 510(k) clearance process usually takes from three to 12 months, but may last longer. The process for obtaining a PMA approval takes from one to three years, or even longer, from the time the PMA is submitted to the FDA until an approval is obtained. Any delay or failure to obtain necessary regulatory approvals, authorizations, or clearances for new product offerings, if any, could have a material adverse effect on our business, financial condition and results of operations. Material modifications to the intended use or technological characteristics of Plenity may also require new 510(k) clearances, premarket approvals, or de novo authorizations prior to implementing the modifications, or require us to recall or cease marketing Plenity until these clearances, approvals or authorizations are obtained.
In addition, we are required to timely submit various reports with the FDA, including reports that Plenity may have caused or contributed to a death or serious injury or malfunctioned in a way that would likely cause or contribute to a death or serious injury if the malfunction were to recur. If these reports are not filed in a timely manner, regulators may impose sanctions and we may be subject to product liability or regulatory enforcement actions, all of which could harm our business, financial condition and results of operations. Any corrective actions can be costly, time-consuming, and divert resources from other portions of our business. Furthermore, the submission of these reports could be used by competitors against us, which could harm our reputation.
The FDA and the FTC also regulate the advertising and promotion of Plenity and services to ensure that the claims we make are consistent with our marketing authorizations, that there is adequate and reasonable data to substantiate the claims and that our promotional labeling and advertising are neither false nor misleading. If the FDA or FTC determines that any of our advertising or promotional claims are misleading, not substantiated or not permissible, we may be subject to enforcement actions, including warning letters, and we may be required to revise our promotional claims and make other corrections or restitutions.
Recently enacted and future legislation may increase the difficulty and cost for us to further commercialize Plenity and any other products we may develop in the future and decrease the prices we may obtain for our approved products.
In the United States and some foreign jurisdictions, there have been a number of legislative and regulatory changes and proposed changes regarding the healthcare system that could prevent or delay
 
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marketing approval of our products, restrict or regulate post-approval activities, and affect our ability to profitably sell our approved products and any product candidates for which we obtain marketing approval.
In March 2010, the Patient Protection and Affordable Care Act, or ACA, was enacted into law. The ACA is a sweeping law intended to broaden access to health insurance, reduce or constrain the growth of healthcare spending, enhance remedies against fraud and abuse, add new transparency requirements for the healthcare and health insurance industries, impose new taxes and fees on the health industry, and impose additional health policy reforms.
Among the provisions of the ACA of importance to Plenity and other product candidates are the following:

expansion of healthcare fraud and abuse laws, including the False Claims Act and the Anti-Kickback Statute, new government investigative powers, and enhanced penalties for non-compliance;

extension of manufacturers’ Medicaid rebate liability;

expansion of eligibility criteria for Medicaid programs;

expansion of the entities eligible for discounts under the Public Health Service pharmaceutical pricing program;

requirements to report financial arrangements with physicians and teaching hospitals; and

a Patient-Centered Outcomes Research Institute to oversee, identify priorities in, and conduct comparative clinical effectiveness research, along with funding for such research.
Some of the provisions of the ACA have yet to be fully implemented, while certain provisions have been subject to reform through legislation and executive orders by the previous U.S. presidential administration and to judicial challenges. In 2012, the U.S. Supreme Court heard challenges to the constitutionality of the individual mandate and the viability of certain provisions of the ACA. The U.S. Supreme Court’s decision upheld most of the ACA and determined that requiring individuals to maintain “minimum essential” health insurance coverage or pay a penalty to the Internal Revenue Service was within Congress’s constitutional taxing authority. However, as a result of tax reform legislation enacted into law in late December 2017, the individual mandate has been eliminated, effective January 1, 2019. On December 14, 2018, a U.S. District Court judge in the Northern District of Texas ruled that the individual mandate is a critical and inseverable feature of the ACA, and therefore, because it was repealed as part of the 2017 Tax Reform Act, the remaining provisions of the ACA are invalid as well. On December 18, 2019, the Fifth Circuit U.S. Court of Appeals held that the individual mandate is unconstitutional. On March 2, 2020, the U.S. Supreme Court granted the petitions for writs of certiorari to review this case, and held oral arguments on November 10, 2020. On June 17, 2021, the U.S. Supreme Court dismissed the most recent judicial challenge to the ACA brought by several states without specifically ruling on the constitutionality of the ACA. Prior to the U.S. Supreme Court’s decision, President Biden issued an executive order to initiate a special enrollment period from February 15, 2021 through August 15, 2021 for the purpose of obtaining health insurance coverage through the ACA marketplace. The executive order also instructed certain governmental agencies to review and reconsider their existing policies and rules that limit access to healthcare, including among others, reexamining Medicaid demonstration projects and waiver programs that include work requirements, and policies that create unnecessary barriers to obtaining access to health insurance coverage through Medicaid or the ACA. It is unclear how other healthcare reform measures of the Biden administration or other efforts, if any, to challenge, repeal or replace the ACA will impact our business.
Other legislative changes have also been proposed and adopted since the ACA was enacted that, directly or indirectly, affect or are likely to affect, the pharmaceutical industry and the commercialization of our products, including the Budget Control Act of 2011, or BCA, the American Taxpayer Relief Act of 2012, or ATRA, and the Middle Class Tax Relief and Job Creation Act of 2012. In August 2011, the BCA, among other things, created measures for spending reductions by Congress. A Joint Select Committee on Deficit Reduction, tasked with recommending a targeted deficit reduction of at least $1.2 trillion for the years 2013 through 2021, was unable to reach required goals, thereby triggering the legislation’s automatic reduction to several government programs. This includes aggregate reductions of Medicare payments to
 
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providers up to 2% per fiscal year, and, due to subsequent legislative amendments, will remain in effect through 2030 unless additional Congressional action is taken.
However, the Medicare sequester reductions under the BCA have been suspended from May 1, 2020 through December 31, 2021 due to the COVID-19 pandemic. The ATRA, among other things, reduced Medicare payments to several providers, including hospitals, imaging centers and cancer treatment centers, and increased the statute of limitations period for the government to recover overpayments to providers from three to five years.
We expect that the ACA, as well as other healthcare reform measures that may be adopted in the future, may result in more rigorous coverage criteria and in additional downward pressure on the price that we receive for our products that obtain marketing approval. Any reduction in reimbursement from Medicare or other government programs may result in a similar reduction in payments from private payors. The implementation of cost-containment measures or other healthcare reforms may prevent us from being able to generate revenue, attain profitability, or commercialize our products.
Individual states in the United States have also become increasingly aggressive in passing legislation and implementing regulations designed to control product pricing, including price or patient reimbursement constraints, discounts, restrictions on certain product access, and marketing cost disclosure and transparency measures, and, in some cases, designed to encourage importation from other countries and bulk purchasing.
There have been, and likely will continue to be, legislative and regulatory proposals at the foreign, federal and state levels directed at containing or lowering the cost of healthcare. The implementation of cost-containment measures or other healthcare reforms may prevent us from being able to generate revenue, attain profitability, or commercialize our products. Such reforms could have an adverse effect on anticipated revenue from our products and product candidates that we may successfully develop and for which we may obtain regulatory approval and may affect our overall financial condition and ability to develop future product candidates. We cannot predict the initiatives that may be adopted in the future. The continuing efforts of the government, insurance companies, managed care organizations, and other payors of healthcare services to contain or reduce costs of healthcare and/or impose price controls may adversely affect:

the demand for our product and product candidates, if approved;

our ability to receive or set a price that we believe is fair for our products;

our ability to generate revenue and achieve or maintain profitability;

the amount of taxes that we are required to pay; and

the availability of capital.
We expect that the ACA, as well as other healthcare reform measures that may be adopted in the future, may result in additional reductions in Medicare and other healthcare funding, more rigorous coverage criteria, lower reimbursement, and new payment methodologies. This could lower the price that we receive for our approved products. Any denial in coverage or reduction in reimbursement from Medicare or other government-funded programs may result in a similar denial or reduction in payments from private payors, which may prevent us from being able to generate sufficient revenue, attain profitability or commercialize our product and product candidates, if approved. Litigation and legislative efforts to change or repeal the ACA are likely to continue, with unpredictable and uncertain results.
Gelesis is responsible for manufacturing Plenity and it currently has one active production site and two additional product sites under development in southern Italy. Gelesis will continue to invest in manufacturing capacity at these sites and possibly build additional manufacturing sites to meet increased demand as Plenity is launched through new channels or in new markets. Gelesis’ inability to produce an adequate supply of Plenity, due to the loss of these facilities or other future facilities or any material limitation of production at these facilities, could materially and adversely impact the commercial growth and success of Plenity and, consequently, could cause Gelesis’ revenue, earnings or reputation to suffer.
We have developed proprietary processes and manufacturing technologies for the production of Plenity. Our subsidiary, Gelesis S.r.l., operates manufacturing and research and development facilities in
 
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southern Italy that produce Plenity. These facilities are currently our sole supplier of Plenity and while we currently plan to triple the output of this facility by early 2022 to meet the near term demands associated with the commercialization of Plenity there are no assurances that we will be able to do so successfully or at all. Any performance failure by us could delay or otherwise adversely affect the commercialization of Plenity and we may encounter difficulties involving the production yields, regulatory compliance, lot release, quality control and quality assurance, as well as shortages of qualified personnel. Moreover, the ability to manufacture and supply Plenity adequately and in a timely manner is dependent on the uninterrupted and efficient operation of Gelesis S.r.l., which may be impacted by many manufacturing variables, including, but not limited to:

availability of raw materials from suppliers;

contamination of raw materials and components used in the manufacturing process;

capacity of our facilities or those of our contract manufacturers, if any;

the ability to adjust to changes in actual or anticipated use of the facility, including with respect to having sufficient capacity and a sufficient number of qualified personnel;

facility contamination by microorganisms or viruses or cross contamination;

compliance with regulatory requirements, including inspectional notices of violation and warning letters;

changes in actual or forecasted demand;

timing and number of production runs;

production success rates; and

timing and outcome of product quality testing.
In addition, we may encounter delays and problems in manufacturing Plenity for a variety of reasons, including accidents during operations, failure of equipment, delays in receiving materials, natural or other disasters, political or governmental unrest or changes, social unrest, epidemics and pandemics, intentional misconduct or other factors inherent in operating complex manufacturing facilities. We may not be able to operate our manufacturing facility in a cost-effective manner or in a time frame that is consistent with manufacturing needs. If we cease or interrupt production or if other third parties fail to supply materials, products or services to us for any reason, such interruption could delay the commercial supply of Plenity, with the potential for additional costs and lost product sales. If this were to occur, we may also need to seek alternative means to fulfill our manufacturing needs. If we encounter unexpected failures or difficulties in our manufacturing process or require amounts of Plenity in excess of our current estimates we may be unable to manufacture sufficient supplies to support its commercialization, which will adversely impact the growth and success of Plenity and, consequently, could cause our revenue, earnings or reputation to suffer.
Furthermore, we will also be subject to ongoing periodic inspection, which may be unannounced, by the FDA, corresponding state authorities and European regulatory authorities to ensure strict compliance with QSR requirements and other applicable government regulations and corresponding foreign standards. If we fail to maintain compliance or otherwise experience setbacks, we could be subject to enforcement action, including warning or untitled letters or civil or criminal penalties, the production of Plenity could be interrupted or suspended, or Plenity could be recalled or withdrawn, resulting in delays, additional costs and potentially lost product sales.
There is no guarantee that Gelesis will be able to successfully commercialize Plenity through the channels or in the markets it is targeting or at all.
The commercial success of Plenity depends upon the awareness and acceptance of Plenity among the medical community, including physicians and patients. Market acceptance of Plenity depends on a number of factors, including, among others:

Plenity’s demonstrated ability to aid in weight management in overweight and obese patients;
 
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the perceived advantages and disadvantages of Plenity over existing products and other competitive treatments and technologies for weight management in overweight and obese patients;

the prevalence and severity of any adverse side effects associated with Plenity, such as bloating, flatulence, abdominal pain and diarrhea;

limitations or warnings contained in the labeling approved for Plenity by the FDA or certain European notified bodies;

availability of alternative treatments, including a number of competitive obesity therapies already approved or expected to be commercially launched in the near future;

the extent to which physicians prescribe Plenity;

the willingness of the target patient population to try new therapies;

the strength of marketing and distribution support and timing of market introduction of competitive products;

publicity concerning our products or competing products and treatments;

pricing and cost effectiveness;

the effectiveness of our sales and marketing strategies; and

the willingness of patients to pay out-of-pocket in the absence of third party reimbursement.
If Plenity does not achieve an adequate level of acceptance by patients and physicians, we will not generate sufficient product sales of Plenity to become or remain profitable. Our efforts to educate the medical community about the benefits of Plenity may require significant resources and may never be successful.
The telehealth market is immature and volatile, and if it does not develop, if it develops more slowly than Gelesis expects, or if it encounters negative publicity, Gelesis’ ability to fully commercialize Plenity and grow its business will be harmed.
Our ability to fully commercialize Plenity and grow our business will depend, to a certain extent, upon the willingness of patients to use, and extent of their utilization of, telehealth services. The telehealth market is relatively new and unproven, and it is uncertain whether it will achieve and sustain high levels of demand, consumer acceptance and market adoption. The outbreak of the COVID-19 pandemic has increased utilization of telehealth services, but it is uncertain whether such increase in demand will continue post-pandemic. Negative publicity concerning the telehealth market as a whole could limit market acceptance of, or ability to generate sales of, Plenity. If patients do not engage with Plenity through telehealth services then our ability to access potential patients and, accordingly, our market, may be limited, may develop more slowly than we expect, or may not develop at all. Similarly, individual and healthcare industry concerns or negative publicity regarding patient confidentiality and privacy in the context of telehealth could limit the use of telehealth services to access Plenity. If any of these events occurs, it could have a material adverse effect on our business, financial condition and results of operations.
Gelesis’ ability to market and sell Plenity through telehealth services in a particular jurisdiction is directly dependent on the applicable laws that govern remote healthcare and the practice of medicine and healthcare delivery in general in such jurisdiction, which are subject to changing political, regulatory and other influences that may restrict Gelesis’ use of telehealth services or otherwise negatively impact its business model and growth.
The ability of our qualified distributors to market and sell Plenity through telehealth services in a particular jurisdiction is directly dependent upon the applicable laws in such jurisdiction that govern remote healthcare and the practice of medicine and healthcare delivery in general in such jurisdictions, which are subject to changing political, regulatory and other influences. Some state medical boards have established rules or interpreted existing rules in a manner that may limit or restrict the ability of our qualified distributors to use telehealth services in connection with providing patients with access to Plenity or otherwise negatively impact our business model and growth.
 
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Telehealth offers patients the ability to see a licensed medical professional for advice, diagnosis and treatment of routine health conditions on a remote basis, which has been particularly important during the COVID-19 pandemic. Due to the nature of this service and the provision of medical care and treatment by licensed medical professionals, certain of our qualified distributors and their physicians and healthcare professionals who prescribe our products via telehealth are and may in the future be subject to complaints, inquiries and compliance orders by national and state medical boards. Such complaints, inquiries or compliance orders may result in disciplinary actions taken by these medical boards against the licensed physicians who provide Plenity through these telehealth services, which could include suspension, restriction or revocation of the physician’s medical license, probation, required continuing medical education courses, monetary fines, administrative actions and other conditions and would, in turn, limit the distribution of Plenity and slow our commercialization efforts.
Due to the uncertain regulatory environment, certain states may determine that our qualified distributors and their affiliated physicians or healthcare professionals are in violation of their laws and regulations or such laws and regulations may change. In the event that we must remedy such violations, we may be required to modify how we utilize telehealth services, if at all, in connection with the distribution of Plenity in such states in a manner that undermines our business, we may become subject to fines or other penalties or, if we determine that the requirements to operate in compliance in such states are overly burdensome, we may elect to terminate our operations in such states. In each case, our revenue may decline and our business, financial condition and results of operations could be materially adversely affected.
In order to sell, market and distribute Plenity, Gelesis may enter into additional strategic collaborations with third parties. Gelesis has limited experience with such collaborations and if Gelesis has problems establishing these relationships, the commercialization of Plenity could be impaired.
We are continually evaluating changing consumer preferences and the competitive environment of the weight management industry and seeking out opportunities to improve our performance through the implementation of selected strategic collaborations. The goal of these efforts is to develop and implement a comprehensive and competitive business strategy that addresses those changes and drives the sale and distribution of Plenity. We may not be able to successfully implement our strategic collaborations and realize the intended business opportunities, growth prospects, including new business channels, and competitive advantages. Our efforts to capitalize on business opportunities may not bring the intended results. Assumptions underlying expected financial results or consumer demand and receptivity may not be met or economic conditions may deteriorate. We also may be unable to attract and retain highly qualified and skilled personnel to implement our strategic collaborations and we have limited experience implementing such arrangements with third parties. If we have problems establishing these relationships or executing thereunder, the commercialization of Plenity could be impaired.
Successful commercialization of Plenity is dependent on the willingness of the ultimate patient to pay out-of-pocket. If there is not sufficient patient demand for Plenity, Gelesis’ financial results and future prospects will be harmed.
We cannot be certain that third party reimbursement will be available for Plenity, and, if reimbursement is available, the amount of any such reimbursement. As a result, we expect that our success will be dependent on the willingness of patients to pay out-of-pocket for Plenity. The decision by a patient to elect to undergo treatment with Plenity may be influenced by a number of factors, such as:

the success of any sales and marketing programs, including direct-to-consumer marketing efforts, that we, or any third parties we engage, undertake, and as to which we have limited experience;

the extent to which physicians prescribe Plenity for their patients;

the extent to which Plenity satisfies patient expectations;

the cost, safety, and effectiveness of Plenity as compared to other treatments; and

general consumer confidence, which may be impacted by economic and political conditions.
Our financial performance will be materially harmed if we cannot generate significant patient demand for Plenity.
 
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Competing products and technologies could emerge, including pharmaceuticals, devices and surgical procedures, that adversely affect Gelesis’ opportunity to generate sales of Plenity and achieve profitability.
The biotechnology, pharmaceutical and medical device industries are intensely competitive and subject to rapid and significant technological change. We have competitors in a number of jurisdictions, many of which have substantially greater name recognition, commercial infrastructures and financial, technical and personnel resources than we have. Competitors may invest heavily to quickly discover and develop products that could make Plenity obsolete or economically disadvantageous. Competitors may also choose to develop a substantial equivalent of Plenity and obtain clearance through the FDA’s 510(k) clearance process, taking advantage of our investment and work. A new product that competes with Plenity may need to demonstrate that it is substantially equivalent to Plenity or that it has compelling advantages in efficacy, convenience, tolerability and safety to be commercially successful, which if demonstrated, could adversely affect our sales of Plenity and, therefore, our profitability. Competing products, whether substantially equivalent or not, may also be sold at lower prices. This and other competitive factors could force us to lower prices or could result in reduced sales. In addition, products developed by others could emerge as competitors to Plenity. If we are not able to compete effectively against our competitors, our financial condition and operations will suffer.
Our competitors in the obesity market include drugs that are FDA-approved and currently marketed for the treatment of obesity. Plenity primarily competes with orlistat, phentermine/topiramate and naltrexone/bupropion, three orally administered, marketed pharmaceutical products in the United States for the treatment of obesity, and several older products, indicated for short-term administration, including phentermine, phendimetrazine, benzphetamine and diethylpropion. Orlistat is marketed in the United States by Roche Group under the brand name Xenical and over-the-counter under the brand name alli, at half the prescribed dose, by GlaxoSmithKline. Vivus, Inc. also has a combination product, phentermine/topiramate, which is marketed under the trade name Qsymia, Further, Orexigen Therapeutics, Inc. received FDA approval of naltrexone/bupropion which is marketed under the brand name Contrave in the United States and has also received marketing approval under the name Mysimba in the European Union. Plenity also competes with injectable pharmaceutical obesity therapies, including Saxenda and Wegovy marketed by Novo Nordisk. In addition, other approaches which utilize various implantable devices or surgical tools marketed by Apollo EndoSurgery, Inc., Obalon Therapeutics, Inc., Aspire Bariatrics, Inc., Scientific Intake Limited Co., and BioEnterics Corporation.
Many of our competitors have significantly greater financial, technical, manufacturing, marketing, sales and supply resources or experience than we have. Competing products could present superior treatment alternatives, including by being more effective, safer, less expensive or marketed and sold more effectively than any products we may develop. Competitors also may make any products we develop obsolete or noncompetitive before we recover the expense of developing and commercializing our product candidates. Such competitors could also recruit our employees, which could negatively impact our level of expertise and our ability to execute our business plan.
Risks Related to Intellectual Property Rights
If Gelesis is unable to adequately protect its proprietary technology or maintain issued patents that are sufficient to protect Plenity, or if competitors are able to market competitive products without infringing Gelesis’ protected intellectual property rights, others could compete against Gelesis in ways that would have a material adverse impact on Gelesis’ business, results of operations, financial condition and prospects.
Our commercial success will depend in part on our success in obtaining and maintaining issued patents and other intellectual property rights in the United States and elsewhere and protecting our proprietary technology. If we do not adequately protect our intellectual property and proprietary technology, competitors may be able to use our technologies without infringing on our intellectual property rights and erode or negate any competitive advantage that we may have, which could harm our business and ability to achieve profitability.
As of July 30, 2021, we own nine families of patents and patent applications relating to our hydrogel technology, two of which are directed to methods of treating obesity and reducing caloric intake using certain hydrogels, the hydrogel composition in Plenity and methods of producing hydrogels. The issued U.S.
 
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patents in these two families have expiration dates or projected expiration dates ranging from 2028 to 2033. We cannot provide any assurances that competitors will practice the claims in our issued patents, or that claims in our issued patents are valid. Further, we cannot provide any assurances that the scope of the claims is sufficient to protect Plenity or its uses or that competitors will practice the claims. In Europe, there are additional issued patents directed to the hydrogel in Plenity, its production and uses of certain hydrogels to treat obesity and reduce caloric intake. In one of the seven other patent families, we have pending applications directed to treating overweight and obesity with certain hydrogels that are projected to expire in 2035.
We cannot provide any assurances that any of our patents have, or that any of our pending patent applications that mature into issued patents will include, claims with a scope sufficient to protect Plenity, that they will be sufficient to prevent competitors from marketing competitive products or that any indications obtained for Plenity, now or in the future, will be protected by any issued or future claim. Other parties have developed technologies that may be related or competitive to our approach and may have filed or may file patent applications and may have received or may receive patents that may overlap or conflict with our patent applications, either by claiming the same methods or formulations or by claiming subject matter that could dominate our patent position. The patent positions of biotechnology, pharmaceutical and medical device companies, including our patent position, involve complex legal and factual questions and, therefore, the issuance, scope, validity, and enforceability of any patent claims that we may obtain cannot be predicted with certainty. Patent law is continually evolving and rapidly changing, creating uncertainty and risk. Patents, if issued, may be challenged, deemed unenforceable, invalidated, or circumvented or it may be determined that competitive products do not infringe upon our rights. U.S. patents and patent applications may also be subject to interference proceedings, ex parte reexamination, inter partes review proceedings, post-grant review proceedings and challenges in district court. Patents may also be subjected to opposition, post-grant review, or comparable proceedings lodged in various foreign, both national and regional, patent offices. These proceedings could result in either loss of the patent or denial of the patent application or loss or reduction in the scope of one or more of the claims of the patent or patent application. In addition, such proceedings may be costly. Thus, any patents that we own may not provide any protection against competitors. Furthermore, an adverse decision in an interference proceeding can result in a third party receiving the patent right sought by us, which in turn could affect our ability to develop, market or otherwise commercialize Plenity.
Furthermore, though an issued patent is presumed valid and enforceable, its issuance is not conclusive as to its validity or its enforceability, and it may not provide us with adequate proprietary protection or competitive advantages against competitors with similar or equivalent products. Competitors may also be able to design around our patents. Other parties may develop and obtain patent protection for more effective technologies, designs or methods. We may not be able to prevent the unauthorized disclosure or use of our technical knowledge or trade secrets by consultants, vendors, former employees and current employees. We also may encounter significant problems in protecting our proprietary rights in foreign countries. If these developments were to occur, they could have a material adverse effect on our sales.
Our ability to enforce our patent rights depends on the scope of our claims and our ability to detect infringement. It is difficult to detect infringers who do not advertise the components of their products or how they are made. Moreover, it may be difficult or impossible to obtain evidence of infringement in a competitor’s potential competitor’s product or methods of production. Any litigation to enforce or defend our patent rights, even if we were to prevail, could be costly and time-consuming and would divert the attention of our management and key personnel from our business operations. We may not prevail in any lawsuits that we initiate and the damages or other remedies awarded if we were to prevail may not be commercially meaningful. Third parties may also assert claims that they do not practice our patents and seek a determination of non-infringement.
In addition, proceedings to enforce or defend our patents could put our patents at risk of being invalidated, held unenforceable, or interpreted narrowly. Such proceedings could also provoke third parties to assert claims against us, including that some or all of the claims in one or more of our patents are invalid or otherwise unenforceable. If any of our patents covering Plenity are invalidated or found unenforceable, our financial position and results of operations would be materially and adversely impacted.
The degree of future protection for our proprietary rights is uncertain, and we cannot ensure that:
 
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any of our patents, or any of our pending patent applications, if issued, will include claims having a scope sufficient to protect Plenity;

any of our pending patent applications will issue as patents;

we will be able to successfully commercialize Plenity, before our relevant patents expire;

we were the first to make the inventions covered by each of our patents and pending patent applications;

we were the first to file patent applications for these inventions;

others will not develop similar or alternative technologies that do not infringe our patents;

any of our patents will be found to ultimately be infringed;

any of our patents will be found to ultimately be valid and enforceable;

any patents issued to us will provide a basis for an exclusive market for our commercially viable products, will provide us with any competitive advantages or will not be challenged by third parties;

we will develop additional proprietary technologies or product candidates that are separately patentable; or

that our commercial activities or products will not infringe upon the patents of others.
We also rely upon unpatented trade secrets, unpatented know-how, and continuing technological innovation to develop and maintain our competitive position, which we seek to protect, in part, by confidentiality agreements with our employees and our collaborators and consultants. We also have agreements with our employees and selected consultants that obligate them to assign their inventions to us and have non-compete agreements with some, but not all, of our consultants. It is possible that technology relevant to our business will be independently developed by a person that is not a party to such an agreement. Furthermore, if the employees and consultants who are parties to these agreements breach or violate the terms of these agreements, we may not have adequate remedies for any such breach or violation, and we could lose our trade secrets through such breaches or violations. Further, our trade secrets could otherwise become known or be independently discovered by our competitors, which could adversely affect our business, financial condition and results of operations.
Gelesis has licensed Plenity to third party partners (e.g. for launch in the Chinese market) and has also granted limited licenses to practice patent rights for noncommercial, research purposes. Gelesis may continue to out-license its intellectual property and may agree under certain circumstances to grant limited exclusive or non-exclusive commercial rights as well. There can be no guarantee that the third party’s activities will not in any way overlap or interfere with the commercialization of Plenity. Additionally, there is always the possibility that Gelesis may become dependent on obtaining access to third party intellectual property in connection with the commercialization of Plenity or for other new product candidates in the future.
We have acquired certain patent rights that cover Plenity and these rights impose various obligations on us, including a requirement to make certain milestone and royalty payments and to prosecute and maintain the patent rights. We have also granted a non-exclusive license to practice the patent rights for noncommercial, research purposes, and we have agreed under certain circumstances to grant an additional non-blocking license for the development and commercialization of certain drug delivery products that do not include any composition of matter that is claimed by the patent rights, exclusive of products relating to obesity, weight loss, diabetes, metabolic diseases, GI disorders, laxatives and liquid removal. While we believe that the scope of any non-blocking license will be clearly distinct from our field of interest, there can be no guarantee that a disagreement will not arise over a particular product area, or that such a disagreement could not materially and adversely impact our business. In addition, we have aso granted an exclusive, transferable, sublicensable, and royalty-bearing license of our intellectual property to develop, import, register, manufacture, and commercialize Plenity in Greater China (including Mainland China, Hong Kong, Macau, and Taiwan), Singapore and United Arab Emirates.
Additionally, under these agreements, such third parties have agreed to assign to us certain future technology relating to food products that they develop during the term of the agreements, as well as other
 
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improvements to our existing intellectual property rights that result from activities they perform under the agreements. There can be no guarantee, however, such third parties will not attempt to act contrary to such obligations or that, if they do, we would succeed in a legal action to stop them from doing so.
We may be required to enter into additional license(s) to use third party intellectual property that we find necessary or useful to our business, or because that third party owner asserts we are infringing on such third party intellectual property. In such a case, even if we are successful in obtaining terms that are commercially reasonable, such a future licensor might also allege that we have breached our license agreement and may accordingly seek to terminate our license with them, or may insist on the right to terminate such a license at will. If successful, any such termination could result in our loss of the right to use the licensed intellectual property, which could materially adversely affect our ability to develop and commercialize a product candidate or product, if approved, as well as harm our competitive business position and our business prospects.
Gelesis may infringe the intellectual property rights of others, which may prevent or delay its development efforts or stop Gelesis from commercializing or increase the costs of commercializing Plenity.
Our success will depend in part on our ability to operate without infringing the intellectual property and proprietary rights of third parties. We cannot assure you that our business, products and methods do not or will not infringe the patents or other intellectual property rights of third parties.
The medical device, pharmaceutical and biotechnology industries are characterized by extensive litigation regarding patents and other intellectual property rights. Other parties may allege that Plenity or the use of our technologies infringes patent claims or other intellectual property rights held by them or that we are employing their proprietary technology without authorization. Patent and other types of intellectual property litigation can involve complex factual and legal questions, and their outcome is uncertain. Any claim relating to intellectual property infringement that is successfully asserted against us may require us to pay substantial damages, including treble damages and attorney’s fees if we are found to be willfully infringing another party’s patents, for past use of the asserted intellectual property and royalties and other consideration going forward if we are forced to take a license. In addition, if any such claim were successfully asserted against us and we could not obtain such a license, we may be forced to stop or delay developing, manufacturing, selling or otherwise commercializing Plenity or our other product candidates.
Even if we are successful in these proceedings, we may incur substantial costs and divert management time and attention in pursuing these proceedings, which could have a material adverse effect on us. If we are unable to avoid infringing the patent rights of others, we may be required to seek a license, defend an infringement action or challenge the validity of the patents in court, or redesign our products. Patent litigation is costly and time consuming. We may not have sufficient resources to bring these actions to a successful conclusion. In addition, intellectual property litigation or claims could force us to do one or more of the following:

cease selling or otherwise commercializing Plenity;

pay substantial damages for past use of the asserted intellectual property;

obtain a license from the holder of the asserted intellectual property, which license may not be available on reasonable terms, if at all; and

in the case of trademark claims, redesign or rename Plenity to avoid infringing the intellectual property rights of third parties, which may not be possible and, even if possible, could be costly and time-consuming.
Any of these risks coming to fruition could have a material adverse effect on our business, results of operations, financial condition and prospects.
Gelesis may be subject to claims challenging the inventorship or ownership of its patents and other intellectual property.
We may also be subject to claims that former employees, collaborators, or other third parties have an ownership interest in our patents or other intellectual property. For example, each of our patents and patent
 
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applications names one or more inventors affiliated with other institutions, any of whom may assert an ownership claim. Litigation may be necessary to defend against these and other claims challenging inventorship or ownership. If we fail in defending any such claims, in addition to paying monetary damages, we may lose valuable intellectual property rights, such as exclusive ownership of, or right to use, valuable intellectual property. Such an outcome could have a material adverse effect on our business. Even if we are successful in defending against such claims, litigation could result in substantial costs and be a distraction to management and other employees.
Obtaining and maintaining our patent protection depends on compliance with various procedural, document submission, fee payment and other requirements imposed by governmental patent agencies, and Gelesis’ patent protection could be reduced or eliminated for non-compliance with these requirements.
The U.S. Patent and Trademark Office, or USPTO, and various foreign governmental patent agencies require compliance with a number of procedural, documentary, fee payment and other provisions during the patent process. There are situations in which noncompliance can result in abandonment or lapse of a patent or patent application, resulting in partial or complete loss of patent rights in the relevant jurisdiction. In such an event, competitors might be able to enter the market earlier than would otherwise have been the case.
Gelesis may be involved in lawsuits to protect or enforce its patents, which could be expensive, time-consuming and unsuccessful.
Competitors may infringe our patents. To counter infringement or unauthorized use, we may be required to file infringement claims, which can be expensive and time-consuming. In addition, in an infringement proceeding, a court may decide that a patent of ours is not valid, is unenforceable and/or is not infringed, or may refuse to stop the other party from using the technology at issue on the grounds that our patents do not cover the technology in question. An adverse result in any litigation or defense proceedings could put one or more of our patents at risk of being invalidated or interpreted narrowly and could put our patent applications at risk of not issuing.
Interference proceedings provoked by third parties or brought by us may be necessary to determine the priority of inventions with respect to our patents or patent applications. An unfavorable outcome could require us to cease using the related technology or to attempt to license rights to it from the prevailing party. Our business could be harmed if the prevailing party does not offer us a license on commercially reasonable terms. Our defense of litigation or interference proceedings may fail and, even if successful, may result in substantial costs and distract our management and other employees. We may not be able to prevent misappropriation of our intellectual property rights, particularly in countries where the laws may not protect those rights as fully as in the United States.
Furthermore, because of the substantial amount of discovery required in connection with intellectual property litigation, there is a risk that some of our confidential information could be compromised by disclosure during this type of litigation. There could also be public announcements of the results of hearings, motions or other interim proceedings or developments. If securities analysts or investors perceive these results to be negative, it could have a material adverse effect on the price of our common stock.
Issued patents covering Plenity could be found invalid or unenforceable if challenged in court.
If we initiated legal proceedings against a third party to enforce a patent covering our product candidate, the defendant could counterclaim that the patent covering our product candidate is invalid and/or unenforceable. In patent litigation in the United States, defendant counterclaims alleging invalidity and/or unenforceability are commonplace. Grounds for a validity challenge include alleged failures to meet any of several statutory requirements, including lack of novelty, obviousness, indefiniteness or non-enablement. Grounds for unenforceability assertions include allegations that someone connected with prosecution of the patent withheld relevant information from the USPTO, or made a misleading statement during prosecution. Third parties may also raise similar claims before administrative bodies in the United States or abroad, even outside the context of litigation. Such mechanisms include re-examination, post grant review and equivalent proceedings in foreign jurisdictions, e.g., opposition proceedings. Such proceedings could result in revocation or amendment of our patents in such a way that they do not cover Plenity or competitive
 
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products. The outcome following legal assertions of invalidity and unenforceability is unpredictable. With respect to validity, for example, we cannot be certain that there is no invalidating prior art of which we and the patent examiner were unaware during prosecution. If a defendant were to prevail on a legal assertion of invalidity and/or unenforceability, we would lose at least part, and perhaps all, of the patent protection on Plenity. Such a loss of patent protection would have a material adverse impact on our business.
Gelesis does not seek to protect its intellectual property rights in all jurisdictions throughout the world and Gelesis may not be able to adequately enforce its intellectual property rights even in the jurisdictions where it seeks protection.
Filing, prosecuting and defending patents on Plenity and any other product candidates in all countries and jurisdictions throughout the world would be prohibitively expensive, and we did not pursue intellectual property rights in some countries outside the United States. In addition, the laws of some foreign countries do not protect intellectual property rights to the same extent as in other jurisdictions. Consequently, we may not be able to prevent third parties from practicing our inventions in all jurisdictions, or from selling or importing products made using our inventions in and into the United States or other jurisdictions. Competitors may use our technologies in jurisdictions where we have not obtained patent protection to develop their own products and further, may export otherwise infringing products to territories where we have patent protection, but where enforcement is limited. These products may compete with our products, and our patents or other intellectual property rights may not be effective or sufficient to prevent them from competing.
Many companies have encountered significant problems in protecting and defending intellectual property rights in foreign jurisdictions. The legal systems of certain countries, particularly certain developing countries, do not favor the enforcement of patents and other intellectual property protection, particularly those relating to biopharmaceuticals and medical devices, which could make it difficult for us to stop the infringement of our patents or marketing of competing products in violation of our proprietary rights generally. Proceedings to enforce our patent rights in foreign jurisdictions could result in substantial costs and divert our efforts and attention from other aspects of our business, could put our patents at risk of being invalidated or interpreted narrowly, could put our patent applications at risk of not issuing and could provoke third parties to assert claims against us. We may not prevail in any lawsuits that we initiate and the damages or other remedies awarded, if any, may not be commercially meaningful. Accordingly, our efforts to enforce our intellectual property rights around the world may be inadequate to obtain a significant commercial advantage from the intellectual property that we develop or license.
Changes in U.S. patent law could diminish the value of patents in general, thereby impairing Gelesis’ ability to protect its products.
The United States has implemented the America Invents Act of 2011, which was wide-ranging patent reform legislation. Further, the Federal Circuit and the U.S. Supreme Court has ruled on several patent cases in recent years, either narrowing the scope of patent protection available in certain circumstances or weakening the rights of patent owners in certain situations, such as with respect to patent claims using “consisting essentially of” transitional language. In addition to increasing uncertainty with regard to our ability to obtain future patents, this combination of events has created uncertainty with respect to the value of patents, once obtained. Depending on decisions by the U.S. Congress, the federal courts and the USPTO, the laws and regulations governing patents could change in unpredictable ways that would weaken our ability to obtain new patents or to enforce our existing patents or future patents.
Gelesis may be subject to damages resulting from claims that Gelesis, its employees, consultants or third parties Gelesis engages to manufacture its products have wrongfully used or disclosed alleged trade secrets of its competitors or are in breach of non-competition or non-solicitation agreements with its competitors.
Many of our employees were previously employed at pharmaceutical companies and other medical device companies, including our potential competitors, in some cases until recently. We may be subject to claims that we, our employees, consultants or third parties have inadvertently or otherwise used or disclosed alleged trade secrets or proprietary information of these former employers or competitors. In addition, we
 
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may be subject to claims that we caused an employee to breach the terms of his or her non-competition or non-solicitation agreement. Litigation may be necessary to defend against these claims. Even if we are successful in defending against these claims, litigation could result in substantial costs and could be a distraction for our management. If our defense to those claims fails, in addition to paying monetary damages, we may lose valuable intellectual property rights or personnel. Any litigation or the threat thereof may adversely affect our ability to hire employees or contract with third parties. A loss of key personnel or their work product could have an adverse effect on our business, results of operations and financial condition.
Risks Related to Gelesis’ Business and Strategy
Gelesis will need to continue to develop and expand, and if it fails to manage such development and expansion effectively, its expenses could increase more than expected, its revenue may not increase sufficiently to generate sustainable profits and Gelesis may be unable to successfully execute on its growth initiatives, business strategies or operating plans.
As of June 30, 2021, we had 98 full-time employees and 15 consultants and we expect to continue to increase the number of our administrative employees. We also plan to expand the scope of our operations including the development of a commercial-scale manufacturing line and hiring manufacturing staff. To manage our anticipated development and expansion, we must continue to implement and improve our managerial, operational and financial systems, expand our facilities and continue to recruit and train additional qualified personnel. Also, our management may need to divert a disproportionate amount of its attention away from its day-to-day activities and devote a substantial amount of time to managing these development activities. Due to our limited resources and the limited experience of our management team in managing a company with such anticipated growth, we may not be able to effectively manage such development and the expansion of our operations or recruit and train additional qualified personnel. This may result in weaknesses in our infrastructure, give rise to operational mistakes, loss of business opportunities, loss of employees and reduced productivity among remaining employees. The physical expansion of our operations may lead to significant costs and may divert financial resources from other projects, such as the commercialization of Plenity, and we may not be able to sufficiently increase our revenue to generate sustainable profits. If our management is unable to effectively manage our expected development and expansion, our expenses may increase more than expected, our ability to generate or increase our product sales could be reduced, and we may not be able to successfully execute on our growth initiatives, business strategies or operating plans. Our future financial performance and our ability to commercialize Plenity and compete effectively will depend in part on our ability to effectively manage the future development and expansion of our company.
Gelesis’ estimated addressable market is subject to inherent challenges and uncertainties. If Gelesis has overestimated the size of its addressable market generally or markets in which it intends to offer Plenity, its future growth opportunities may be limited.
Data regarding the size and potential growth of the addressable market for weight management and weight loss solutions, generally, and the size of the target market for Plenity, specifically in the United States, is based upon, in part, internal estimates, forecasts and information obtained from independent trade associations, industry publications and surveys and other independent sources, proprietary research studies and management’s knowledge of the industry, and is subject to significant uncertainty and is based on assumptions that may not prove accurate. While these estimates are made in good faith and are based on assumptions and estimates we believe to be reasonable, they may not be accurate and are subject to change. If we have overestimated the size of the addressable market for Plenity, including within the markets in which we intend to offer Plenity, our future growth opportunities may be limited.
Gelesis’ ability to identify, engage with and retain Plenity patients is essential to its ability to grow and sustain its sales.
Sales of Plenity are our sole source of revenue, and our future growth depends upon our ability to identify, engage with, retain and grow our patient base and audience. To do so will require us to address changing consumer demands and developments in technology and improve Plenity, including by developing additional indications, while continuing to provide our distributors and patients with guidance and
 
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inspiring them on their weight management journeys by providing a product that provides meaningful results. We have invested and will continue to invest significant resources in these efforts, but there is no assurance that we will be able to successfully maintain and increase our patient base or that we will be able to do so without taking steps such as reducing pricing or incurring manufacturing costs that would affect our revenues, margin and/or profitability.
Gelesis depends on a limited number of third-party suppliers, and the loss of any of these suppliers or their inability to provide Gelesis with an adequate supply of materials or distribution could harm its business.
We rely on a limited number of third party suppliers to provide certain components for the hydrogel technology utilized in the manufacture of Plenity as well as related packaging for Plenity. The supply and price of these components are subject to market conditions and are influenced by many factors beyond our control, including pandemics (such as the COVID-19 pandemic) or other outbreaks of contagious diseases, weather patterns affecting component production, governmental programs and regulations, labor disruptions, and inflation. Although we strive to maintain relationships with suppliers with the objective of ensuring that we have adequate sources for the supply of such components and packaging materials, increases in demand for such items, both within our industry and in general, can result in shortages and higher costs. Our suppliers may not be able to meet our delivery schedules, we may lose a significant supplier, a supplier may not be able to meet performance and quality specifications and we may not be able to purchase such items at a competitive cost. Our freight costs may increase due to factors such as limited carrier availability, increased fuel costs, increased compliance costs associated with new or changing government regulations, pandemics (such as the COVID-19 pandemic) or other outbreaks of contagious diseases and inflation. Higher prices for natural gas, propane, electricity and fuel also may increase our component, production and delivery costs. The prices charged for Plenity may not reflect changes in our component, packaging material, freight, tariff and energy costs at the time they occur, or at all.
The loss of key supply sources, for any reason, our inability to obtain necessary quantities of components and packaging materials or changes in freight or energy costs may limit our ability to maintain existing margins and may have a material adverse effect on our business, financial condition, results of operations and cash flows. If we fail or are unable to hedge and prices subsequently increase, or if we institute a hedge and prices subsequently decrease, our costs may be greater than anticipated or greater than our competitors’ costs, and our business, financial condition, results of operations and cash flows could be adversely affected.
Gelesis relies on a limited number of channels for the distribution of Plenity, with a few qualified distributors currently accounting for substantially all of its revenue. The loss of one or more of such qualified distributors would materially harm Gelesis’ business.
For the year and quarter ended December 31, 2020 and March 31, 2021, respectively, we relied on three customers or distributors for the distribution of Plenity accounting for 100% of our revenue. We also rely on our reputation and recommendations from key qualified distributors in order to promote Plenity to potential new patients. The loss of any of our key qualified distributors, or a failure of some of them to renew or expand their relationships with us, could have a significant impact on the growth rate of our revenue, reputation and our ability to obtain new users. In addition, mergers and acquisitions involving our qualified distributors could lead to cancellation or non-renewal of our contracts with those distributors or by the acquiring or combining companies, thereby reducing the number of our existing and potential distributors, which would materially harm our business.
If Gelesis’ existing qualified distributors do not continue or renew their contracts with Gelesis, renew at lower price levels or decline to purchase additional amounts of Plenity from Gelesis, it could have a material adverse effect on Gelesis’ business, financial condition and results of operations.
We expect to derive a significant portion of our revenue from renewal of existing qualified distributor contracts and sales of Plenity to existing distributors. As part of our growth strategy, for instance, we have recently focused on the distribution of Plenity through telehealth services as well as using our salesforce to drive sales of Plenity. As a result, increasing sales of Plenity is critical to our future business, revenue growth and results of operations.
 
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Factors that may affect our ability to increase sales of Plenity include, but are not limited to, the following:

the price, performance and safety of Plenity;

the availability, price, performance and functionality of competing solutions;

changes in healthcare laws, regulations, enforcement of such laws and regulations, or other trends; and

the business environment of our qualified distributors.
We enter into exclusive supply and distribution agreements with our qualified distributors. Most of our distributors have no obligation to renew their contracts with us after the initial term expires. In addition, our distributors may negotiate terms less advantageous to us upon renewal, which may reduce our revenue from these distributors. Our future results of operations also depend, in part, on our ability to expand the number of our distributors. If our distributors fail to renew their contracts, renew their contracts upon less favorable terms or at lower fee levels or fail to purchase new products and services from us, our revenue may decline, or our future revenue growth may be constrained.
Gelesis’ future success depends on its ability to retain its senior executive officers and to attract and keep senior management and key scientific and commercial personnel.
Our success depends in part on our continued ability to attract, retain and motivate highly qualified management, clinical and scientific personnel. We are highly dependent upon our senior management, particularly Yishai Zohar, our Chief Executive Officer and President, as well as other employees and consultants. Although none of these individuals has informed us to date that he intends to retire or resign in the near future, the loss of services of any of these individuals or one or more of our other members of senior management could delay or prevent the successful commercialization of Plenity and the development of future product candidates.
Although we have not historically experienced unique difficulties attracting and retaining qualified employees, we could experience such problems in the future. For example, competition for qualified personnel in the biotechnology, pharmaceutical and medical device field is intense, and we face competition for the hiring of scientific and clinical personnel from other biotechnology and pharmaceutical companies, as well as universities and research institutions. In addition, the consultants and advisors, including scientific and clinical advisors, upon whom we rely to assist us in formulating our research development and commercialization strategy, may be employed by employers other than us and may have commitments under consulting or advisory contracts with other entities that may limit their availability to us. In addition, we will need to hire additional personnel as we expand our clinical development and commercial activities. We may not be able to attract and retain quality personnel on acceptable terms, if at all.
Gelesis may not be successful in its efforts to identify or discover additional product candidates.
The success of our business depends primarily upon our ability to identify, develop and commercialize products using our proprietary hydrogel technology. Although Plenity is currently in the early stages of commercialization, our research programs may fail to identify other potential product candidates for clinical development for a number of reasons. Our research methodology may be unsuccessful in identifying potential product candidates or our potential product candidates may be shown to have harmful side effects or may have other characteristics that may make the products unmarketable or unlikely to receive marketing approval.
If any of these events occur, we may be forced to abandon our development efforts for a program or programs, which would have a material adverse effect on our business and could potentially cause us to cease operations. Research programs to identify new product candidates require substantial technical, financial and human resources. We may focus our efforts and resources on potential programs or product candidates that ultimately prove to be unsuccessful.
 
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Gelesis’ employees may engage in misconduct or other improper activities, including violating applicable regulatory standards and requirements or engaging in insider trading, which could significantly harm Gelesis’ business.
We are exposed to the risk of employee fraud or other misconduct. Misconduct by employees could include intentional failures to comply with the regulations of the FDA and European regulatory authorities, provide accurate information to the FDA and applicable non-U.S. regulators, comply with healthcare fraud and abuse laws and regulations in the United States and abroad, as well as the Foreign Corrupt Practices Act, or FCPA, report financial information or data accurately or disclose unauthorized activities to us. In particular, sales, marketing and business arrangements in the healthcare industry are subject to extensive laws and regulations intended to prevent fraud, misconduct, kickbacks, self-dealing and other abusive practices. These laws and regulations restrict or prohibit a wide range of pricing, discounting, marketing and promotion, sales commission, customer incentive programs and other business arrangements. Employee misconduct could also involve the improper use of, including trading on, information obtained in the course of clinical trials, which could result in regulatory sanctions and serious harm to our reputation. We have adopted a code of conduct, but it is not always possible to identify and deter employee misconduct, and the precautions we take to detect and prevent this activity may be ineffective in controlling unknown or unmanaged risks or losses or in protecting us from governmental investigations or other actions or lawsuits stemming from a failure to comply with these laws or regulations. If any such actions are instituted against us, and we are not successful in defending ourselves or asserting our rights, those actions could have a significant impact on our business, including the imposition of significant fines or other sanctions.
Gelesis faces potential product liability exposure and if claims are brought against Gelesis, it may incur substantial liability.
The sale of Plenity exposes us to the risk of product liability claims. Product liability claims might be brought against us by patients, healthcare providers or others selling or otherwise coming into contact with Plenity. For example, we may be sued if any product we develop allegedly causes injury or is found to be otherwise unsuitable during manufacturing, marketing or sale. Any such product liability claims may include allegations of defects in manufacturing, defects in design, a failure to warn of dangers inherent in the product, negligence, strict liability and a breach of warranties. Claims could also be asserted under state consumer protection acts. If we become subject to product liability claims and cannot successfully defend ourselves against them, we could incur substantial liabilities.
In addition, regardless of merit or eventual outcome, product liability claims may result in, among other things:

withdrawal of patients from our clinical trials;

substantial monetary awards to patients or other claimants;

decreased demand for Plenity or any future product candidates following marketing approval, if obtained;

damage to our reputation and exposure to adverse publicity;

increased FDA warnings on product labels;

litigation costs;

distraction of management’s attention from our primary business;

loss of sales; and

the inability to successfully commercialize Plenity or any future product candidates, if approved.
Our insurance coverage may be insufficient to reimburse us for any expenses or losses we may suffer. Moreover, in the future, we may not be able to maintain insurance coverage at a reasonable cost or in sufficient amounts to protect us against losses, including if insurance coverage becomes increasingly expensive. Significant judgments have been awarded in class action lawsuits based on drugs and medical devices that had unanticipated side effects. The cost of any product liability litigation or other proceedings, even if resolved in our favor, could be substantial, particularly in light of the size of our business and financial resources. A
 
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product liability claim or series of claims brought against us could cause the stock price of Gelesis to decline, and if we are unsuccessful in defending such a claim or claims and the resulting judgments exceed our insurance coverage, our financial condition, business and prospects could be materially adversely affected.
If the weight management industry is subject to adverse publicity, Gelesis’ business could be harmed.
Unfavorable publicity regarding, for example, the weight management industry, the healthcare industry, litigation or regulatory activity, the actions of the entities included or otherwise involved in our platform, negative perceptions of Plenity, our hydrogel technology, pricing, our data privacy or data security practices, telehealth services or our revenue could materially adversely affect our reputation. Such negative publicity also could have an adverse effect on our ability to attract and retain consumers, patients, business partners or employees, and result in decreased revenue, which would materially adversely affect our business, financial condition and results of operations.
If the perception of Gelesis’ brands or business reputation is damaged, customers and the ultimate user may not purchase Plenity, which could materially and adversely affect Gelesis’ business, financial condition and results of operations.
We are building our reputation on the efficacy of Plenity and the high-quality nature of the product, its availability and the limited side effects. We must protect and expand on the value of Plenity to continue to be successful in the future. Any incident that erodes consumer or patient affinity for Plenity could significantly reduce our value and damage our business. For example, negative third-party reports regarding Plenity, related side effects or the quality and availability of the product generally, whether accurate or not, may adversely affect consumer and patient perceptions, which could cause our value to suffer and adversely affect our business. In addition, if we are forced or voluntarily elect to recall Plenity or there are other regulatory actions taken with respect to Plenity, the public perception of the quality, safety and efficacy of Plenity may be diminished. We may also be adversely affected by news or other negative publicity, regardless of accuracy, regarding other aspects of our business, such as public health concerns, illness, safety, security breaches of personal information or employee information, employee-related claims relating to alleged employment discrimination, health care and benefits issues or government or industry findings about our retailers, distributors, manufacturers or others across the industry supply chain.
As part of our marketing initiatives, we have contracted with certain public figures to market and endorse our products. While we maintain specific selection criteria and are diligent in our efforts to seek out public figures that resonate genuinely and effectively with our consumer audience, the individuals we choose to market and endorse Plenity may fall into negative favor with the general public. Because our consumers may associate the public figures that market and endorse Plenity with us, any negative publicity on behalf of such individuals may cause negative publicity about us and Plenity. This negative publicity could materially and adversely affect our brands and reputation and our revenue and profits.
Negative information, including inaccurate information about Gelesis on social media, which may include information attributable to spokespersons with whom Gelesis has a relationship, may harm its reputation and brand, which could have a material adverse effect on its business, financial condition and results of operations.
There has been a marked increase in the use of social media platforms and similar channels, including the use of celebrity endorsements or spokespersons with whom we may have a relationship with, that provide individuals with access to a broad audience of consumers and other interested persons. The availability of information on social media platforms is virtually immediate, as is its effect. Many social media platforms immediately publish the content their subscribers and participants post, often without filters or checks on accuracy of the content posted. The opportunity for dissemination of information, including inaccurate information, is potentially limitless. Information about our business and Plenity may be posted on such platforms at any time. Negative views regarding Plenity and its efficacy may continue to be posted in the future, and are out of our control. Regardless of their accuracy or authenticity, such information and views may be adverse to our interests and may harm our reputation and brand. The harm may be immediate without affording an opportunity for redress or correction. Ultimately, the risks associated with any such negative publicity cannot be eliminated or completely mitigated and may materially and adversely affect our business, financial condition and results of operations.
 
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Gelesis must expend resources to maintain consumer awareness of Plenity, build brand loyalty and generate increasing sales. Gelesis’ marketing strategies and channels will evolve and its programs may or may not be successful.
To remain competitive and expand, we may need to increase our marketing and advertising spending to maintain and increase consumer awareness of Plenity, protect and grow our existing market share or promote new products, which could affect our operating results. Substantial advertising and promotional expenditures may be required to maintain or improve our brand’s market position or to introduce new products to the market or new indications for Plenity, when and if available, and participants in our industry are increasingly engaging with non-traditional media, including consumer outreach through social media, celebrity promotions and web-based channels, which may not prove successful and may have a negative impact on perception of Plenity or reduce market acceptance of Plenity. An increase in our marketing and advertising efforts may not maintain or increase our current reputation, or lead to increased brand awareness. Moreover, we may not maintain current awareness of our brand due to any potential fragmentation of our marketing efforts as we continue to focus on a particular target market for weight management patients. Our inability to increase or maintain sales of Plenity could negatively impact our ability to develop other indications for Plenity as well as other product offerings, which may have an adverse effect on our business, financial condition and results of operations.
If Gelesis does not continually enhance its brand recognition, increase distribution of Plenity, attract new patients and introduce new and innovative products, either on a timely basis or at all, Gelesis’ business may suffer.
The weight management industry is subject to rapid and frequent changes in consumer demands and preferences. Because consumers are constantly seeking new products and strategies to achieve their weight goals, our success relies heavily on our ability to enhance our brand awareness through the increased distribution of Plenity, by attracting new patients and by continuing to develop and market new and innovative products that build on Plenity’s commercialization. Since Plenity is currently our only product offering, our ability to generate sales of Plenity and for it to achieve widespread market acceptance is essential to the success of our business. To respond to new and evolving consumer demands and preferences, continue to enhance brand recognition and keep pace with new weight management, technological and other developments, we must constantly introduce new and innovative products into the market, after regulatory approval, some of which may not be accepted by consumers, or may not be achieved in a timely manner that allows us to build off of the commercialization of Plenity. If we cannot commercialize Plenity or other new products, our revenue may not grow as expected, which would materially and adversely affect our business, financial condition and results of operations.
If Gelesis’ security measures fail or are breached and unauthorized access to personal information and data is obtained, Gelesis may incur significant liabilities, Gelesis’ reputation may be harmed and it could lose sales, customers and patients.
Breaches of data security, website defacements and other malicious acts, which are increasingly negatively impacting companies, could result in unauthorized access to personal information or data, or cause interruptions to our manufacturing and supply chain for Plenity and therefore, limited supply of Plenity and access thereto. Such unauthorized access or interruptions could cause us to incur significant liabilities, harm our reputation, and may result in a decrease in sales and/or the loss of existing or potential customers and patients. We rely upon sophisticated information technology systems to operate our business. In the ordinary course of business, we collect, store and utilize personal information and data, and it is critical that we do so in a secure manner to maintain the integrity of such personal information and data as well as to comply with applicable regulatory requirements and contractual obligations.
We also have outsourced the majority of elements that comprise our information technology infrastructure and, as a result, we manage multiple independent vendor relationships with third parties who may or could have access to the personal information and data that we collect. The size and complexity of our information technology and information security systems, and those of our third-party vendors with whom we contract, make such systems potentially vulnerable to security breaches. While we have invested, including by maintaining cybersecurity insurance coverage, and developed systems and processes designed
 
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to protect such proprietary or customer information or data, these measures are costly, and there can be no assurance that our efforts will prevent service interruptions or security breaches.
Existing, proposed or new data privacy legislation and regulations, including interpretations thereof, could also significantly affect our business. Data protection and privacy laws have been enacted by the U.S. federal and state governments, including the California Consumer Privacy Act (CCPA), which became effective on January 1, 2020, the Health Insurance Portability and Accountability Act (HIPAA), and other relevant statutes, as well as in Europe, including the European Genera Data Protection Regulation, which took effect in May 2018. These laws also typically include notification obligations and impose significant penalties and potential liability for non-compliance. The data privacy and security regulatory regime continues to evolve and is increasingly demanding. Many U.S. states are considering privacy and security legislation and there are ongoing discussions regarding a national privacy law. Variations in requirements across U.S. and foreign jurisdictions could present compliance challenges, and any failures to comply with such requirements may have an adverse effect on our business or results of operations.
Further, many jurisdictions require that customers be notified if a security breach results in the disclosure of their personal financial account or other information, and additional jurisdictions and governmental entities are considering such laws. In addition, other public disclosure laws may require that material security breaches be reported. If we experience, or in certain cases suspect, a security breach and such notice or public disclosure is required in the future, our reputation, brands and business may be harmed. Prospective and existing customers and patients may have concerns regarding our use of personal information or data collected on our website, such as weight management information, financial data, email addresses and home addresses. These privacy concerns could keep customers and patients from using our website or purchasing Plenity, and third parties from partnering with us.
While no cybersecurity breach or attack to date has had a material impact on our business or results of operations, there can be no assurance that our efforts to maintain the security and integrity of our information technology networks and related systems will be effective or that attempted security breaches or disruptions would not be successful or damaging. In addition, the transmission of computer viruses, or similar malware, could adversely affect our information technology systems and harm our business operations. As a result, it may become necessary to expend significant additional amounts of capital and other resources to protect against, or to alleviate, problems caused by security breaches. These expenditures, however, may not prove to be a sufficient protection or remedy and our business, financial condition and results of operations could be materially and adversely impacted.
Any failure of Gelesis’ technology or systems to perform satisfactorily could result in an adverse impact on its business.
We rely on software, hardware, network systems and similar technology, including cloud-based technology, that is licensed from or maintained by third parties to operate our websites, to access Plenity and other services and products to support our business operations, including our manufacturing and supply chain operations. As much of this technology is complex, there may be future errors, defects or performance problems, including when we update our technology or integrate new technology to expand and enhance our capabilities. Our technology may malfunction or suffer from defects that become apparent only after extended use. The integrity of our technology may also be compromised as a result of third-party cyber-attacks, such as hacking, spear phishing campaigns and denial of service attacks, which are increasingly negatively impacting companies. In addition, our operations depend on our ability to protect our information technology systems against damage from third-party cyber-attacks, fire, power loss, water, earthquakes, telecommunications failures and similar unexpected adverse events. Disruptions in our websites, services and products or network systems could result from a number of factors, including unknown technical defects, insufficient capacity and the failure of our third-party providers to provide continuous and uninterrupted service. Such disruptions would be most impactful if they reduced accessibility to Plenity, including by delaying or halting the manufacture of Plenity and access to our supply chain. While we maintain disaster recovery capabilities to return to normal operation in a timely manner and we deploy multiple parallel instances of our applications across multiple computer resources, we do not have a fully redundant system that includes an instantaneous recovery capability. In the event we experience significant disruptions, we may be unable to repair our systems in an efficient and timely manner, which could have an adverse impact on our business.
 
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As a result of such possible defects, failures, interruptions or other problems, Plenity could be rendered unreliable or be perceived as unreliable by customers, which could result in harm to our reputation and brands. Any failure of our technology or systems could result in an adverse impact on our business.
Gelesis may acquire businesses or products or form strategic alliances in the future, and it may not realize the benefits of such acquisitions.
We may acquire additional businesses or products, form strategic alliances or create joint ventures with third parties that we believe will complement or augment our existing business. If we acquire businesses with promising markets or technologies, we may not be able to realize the benefit of acquiring such businesses if we are unable to successfully integrate them with our existing operations and company culture. We may encounter numerous difficulties in developing, manufacturing and marketing any new products resulting from a strategic alliance or acquisition that delay or prevent us from realizing their expected benefits or enhancing our business. We cannot assure you that following any such acquisition we will achieve the expected synergies to justify the transaction.
Gelesis’ international operations for the supply chain and manufacture of Plenity pose certain political, legal and compliance, operational, regulatory, economic and other risks to its business that may be different from or more significant than risks associated with its U.S. operations.
The international nature of our operations for the supply chain and manufacture of Plenity involves a number of risks, including changes in U.S. and foreign regulations, tariffs, taxes and exchange controls; economic downturns; inflation and political and social instability in the countries in which we operate; weakening or loss of the protection of intellectual property rights in some countries and limitations on our ability to enforce our intellectual property rights under some local laws; and our dependence on foreign personnel. Foreign regulations may also restrict our ability to operate in some countries, acquire new businesses or repatriate cash from foreign subsidiaries back to the United States. If we expand our operations into additional foreign countries, we may be subject to additional risks, including the ability to successfully adapt to local culture and navigate regulatory, economic, political, social and intellectual property risks. We cannot be certain that we will be able to enter and successfully compete in additional foreign markets or that we will be able to continue to compete in the foreign markets in which we currently operate.
Foreign currency exchange rate fluctuations could adversely affect Gelesis’ business, financial condition and results of operations.
A significant portion of our revenues and operating costs are denominated in foreign currencies. We are therefore exposed to fluctuations in the exchange rates between the U.S. dollar and the currencies in which our foreign operations receive revenues and pay expenses. We do not currently hedge, and have not historically hedged, our exposure to foreign currency fluctuations. Our consolidated financial results are presented in U.S. dollars and therefore, the assets and liabilities of our non-U.S. subsidiaries are translated into U.S. dollars at the exchange rates in effect at the balance sheet date. Revenues and expenses are translated into U.S. dollars at the average exchange rate for the period. Translation adjustments arising from the use of differing exchange rates from period to period are recorded in shareholders’ equity as accumulated other comprehensive income (loss). Translation adjustments arising from intercompany receivables and payables with our foreign subsidiaries are generally recorded as a component of other expense (income). Accordingly, changes in currency exchange rates will cause our revenues, operating costs, net income and shareholders’ equity to fluctuate and could adversely affect our business, financial conditions and results of operations.
Competition from other weight management and wellness industry participants or the development of more effective or more favorably perceived weight management methods could result in decreased demand for Plenity.
The weight management and wellness industry is highly competitive. We compete against a wide range of providers of weight management services and products and wellness industry participants. Our competitors include: commercial weight management programs; weight loss and wellness apps; surgical procedures; the pharmaceutical industry; the genetics and biotechnology industry; self-help weight management regimens and other self-help weight management products, services and publications, such as books, magazines,
 
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websites and social media influencers and groups; dietary supplements and meal replacement products; healthy living services, coaching, products, content and publications; weight management services administered by doctors, nutritionists and dieticians; government agencies and non-profit groups that offer weight management services; fitness centers; and national drug store chains. As we or others develop new or different weight management services, products, methods or technologies, additional competitors may emerge. Furthermore, existing competitors may enter new markets or expand their current offerings or advertising and marketing programs. More effective or more favorably perceived diet and weight management methods, including pharmaceutical treatments, fat and sugar substitutes or other technological and scientific advancements in weight management methods, also may be developed. This competition may reduce demand for Plenity.
The purchasing decisions of weight management and healthy living consumers are highly subjective and can be influenced by many factors, such as brand image, marketing programs, cost, social media presence and sentiment, consumer trends, the digital platform, content and user experience and perception of the efficacy of the product offerings. Moreover, consumers can, and frequently do, change approaches easily and at little cost. Any decrease in demand for Plenity may adversely affect our business, financial condition or results of operations.
If Gelesis fails to comply with environmental, health and safety laws and regulations, Gelesis could become subject to fines or penalties or incur costs that could have a material adverse effect on its business.
We are subject to numerous environmental, health and safety laws and regulations, including those governing laboratory procedures and the handling, use, storage, treatment and disposal of hazardous materials and wastes. Our operations involve the use of hazardous and flammable materials, including chemicals and biological materials. Our operations also produce hazardous waste products. We cannot eliminate the risk of contamination or injury from these materials. In the event of contamination or injury resulting from our use of hazardous materials, we could be held liable for any resulting damages, and any liability could exceed our resources. We also could incur significant costs associated with civil or criminal fines and penalties.
Although we maintain workers’ compensation insurance to cover us for costs and expenses we may incur due to injuries to our employees resulting from the use of hazardous materials, this insurance may not provide adequate coverage against potential liabilities. We do not maintain insurance for environmental liability or toxic tort claims that may be asserted against us in connection with our storage or disposal of biological, hazardous or radioactive materials.
In addition, we may incur substantial costs in order to comply with current or future environmental, health and safety laws and regulations. These current or future laws and regulations may impair our research, development or production efforts. Failure to comply with these laws and regulations also may result in substantial fines, penalties or other sanctions, which could have a material adverse effect on our operations.
Changes in federal, state, local or foreign tax law or interpretations of existing tax law, or adverse determinations by tax authorities, could increase Gelesis’ tax burden or otherwise adversely affect its financial condition, results of operations or cash flows.
We are subject to taxation at the federal, state and local levels in the U.S. and other countries and jurisdictions. Our future effective tax rate could be affected by changes in the composition of earnings in jurisdictions with differing tax rates, changes in statutory rates and other legislative changes, changes in the valuation of our deferred tax assets and liabilities, or changes in determinations regarding the jurisdictions in which we are subject to tax. From time to time, the U.S. federal, state and local and foreign governments make substantive changes to tax rules and their application, which could result in materially higher taxes than would be incurred under existing tax law or interpretation and could adversely affect our profitability, financial condition, results of operations or cash flows. State and local tax authorities have also increased their efforts to increase revenues through changes in tax law and audits. Such changes and proposals, if enacted, could increase our future effective income tax rates. We are subject to ongoing and periodic tax audits and disputes in various jurisdictions. An unfavorable outcome from any tax audit could result in higher tax costs, penalties and interest, thereby adversely impacting our financial condition, results of operations or cash flows.
 
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Global economic, political and social conditions and uncertainties in the markets that Gelesis serves, including risks and uncertainties caused by the COVID-19 pandemic, may adversely impact its business.
Our results of operations could be adversely affected by general conditions in the global economy and in the global financial markets, including risks and uncertainties caused by the COVID-19 pandemic, including, weakened demand for any of our future products and our ability to raise additional capital when needed on acceptable terms, if at all. A weak or declining economy could also result in supply disruption or cause our customers to delay making payments for our services. Any of the foregoing could harm our business and we cannot anticipate all of the ways in which the current economic climate and financial market conditions could adversely impact our business.
Natural or man-made disasters and other similar events may significantly disrupt Gelesis’ business and negatively impact its business, financial condition and results of operations.
Our ability to make, move and sell products in coordination with our suppliers, manufacturer and business partners is critical to our success. Damage or disruption to our collective supply, manufacturing or distribution capabilities resulting from weather, any potential effects of climate change, natural disaster, pandemics (such as the COVID-19 pandemic) or other outbreaks of contagious diseases, fire, explosion, cyber-attacks, terrorism, strikes, repairs or enhancements at facilities manufacturing or delivering Plenity or other reasons could impair our ability to manufacture, sell or timely deliver Plenity to customers and patients.
We rely on a limited number of third party suppliers to provide certain components and packaging materials, and currently have two manufacturing facilities in southern Italy. Adverse events affecting such suppliers or manufacturers may limit our ability to obtain such raw materials, or alternatives for these raw materials, at competitive prices, or at all. Competitors can be affected differently by weather conditions and natural disasters depending on the location of their suppliers and operations. Failure to take adequate steps to reduce the likelihood or mitigate the potential impact of such events, or to effectively manage such events if they occur, particularly when a component or packaging material is sourced from a single location or supplier or produced by a single manufacturer, could adversely affect our business, financial condition, results of operations and/or require additional resources to restore our supply chain or manufacturing capabilities, as applicable.
Risks Related to Financial Position and Financing Needs
Gelesis is a commercial stage biotherapeutic company, but to date has generated limited product sales. Gelesis has incurred significant operating losses since its inception and anticipates that it will continue to incur continued losses for the next several years.
We are a commercial stage biotherapeutics company and to date we have funded our operations through proceeds from collaborations, the issuance of common stock and convertible preferred stock, the issuance of convertible and non-convertible debt and non-dilutive grants received from government agencies. We have incurred losses in each year since our inception, other than fiscal 2013. Our net loss was $18.6 million and $25.9 million for the quarter ended March 31, 2021 and the year ended December 31, 2020, respectively, and we had an accumulated deficit of $190.5 million and $171.8 million as of March 31, 2021 and December 31, 2020, respectively. Our prior losses, combined with expected future losses, have had and will continue to have an adverse effect on our stockholders’ deficit and working capital. We expect to incur increasing levels of operating losses over at least the next several years. We expect to continue to incur significant sales and marketing expenses and additional costs associated with operating as a public company. Because of the numerous risks and uncertainties associated with commercializing Plenity and developing any future product candidates, we are unable to predict the extent of any future losses or when we will become profitable, if at all. Even if we do become profitable, we may not be able to sustain or increase our profitability on a quarterly or annual basis.
Our ability to become profitable depends upon our ability to generate product sales. To date, we have generated limited product sales of Plenity, and we do not know when or if we will generate meaningful product sales from Plenity. Our ability to generate product sales depends on a number of factors, including, but not limited to, our ability to:
 
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commercialize Plenity by developing a sales force or entering into collaborations with third parties;

achieve market acceptance of Plenity in the medical community and with patients, many of whom could be required to pay out-of-pocket for Plenity; and

supplement our clinical scale to meet demand in a facility owned or leased by us or by a strategic collaboration partner or third-party manufacturer.
We expect to incur significant sales and marketing costs as we commercialize Plenity and we may not achieve profitability soon after generating product sales, if ever, and we may be unable to continue operations without continued funding. Failure to successfully commercialize Plenity would materially harm our business, financial condition and results of operations.
Gelesis may be unable to accurately forecast revenue and appropriately plan its expenses in the future.
We base our current and future expense levels on our operating forecasts and estimates of future income. Income and results of operations are difficult to forecast because they generally depend on our ability to fully commercialize Plenity, including our ability to quickly and efficiently scale production thereof, which remains uncertain. Additionally, our business is affected by general economic and business conditions around the world, including the impact of the COVID-19 pandemic. A softening in income, whether caused by changes in consumer preferences or a weakening in global economies, may result in decreased demand for Plenity or our ability to generate adequate supply of Plenity, which in turn would negatively impact our revenue levels and make it increasingly difficult to achieve and maintain profitability. If so, and we are unable to adjust our spending in a timely manner to compensate for any unexpected shortfall in the commercialization of Plenity, we could experience lower net income or greater net loss in a given quarter than expected.
In order to support its business, Gelesis has and may need to incur additional indebtedness or seek capital through new equity or debt financings, which sources of additional indebtedness or capital may not be available on acceptable terms, if at all, and the failure to obtain this additional funding when needed may force Gelesis to delay, limit or terminate its product development efforts or other operations.
We are currently commercializing Plenity. Manufacturing and marketing our hydrogel technology is expensive and, accordingly, we expect our manufacturing and marketing expenses to increase substantially in connection with our ongoing commercialization activities. Depending on the progress we make in manufacturing and selling Plenity, we may require additional capital to fund our growth and operating needs. We will also need to raise additional funds sooner if we choose to pursue additional indications and/or geographies for Plenity or otherwise expand more rapidly than we presently anticipate.
As of December 31, 2020 and March 31, 2021, our cash and cash equivalents and marketable securities were $72.1 million and $59.9 million, respectively. Assuming consummation of the Business Combination and no significant redemptions in connection with the Business Combination, we believe that the cash that will become available upon consummation of the Business Combination and PIPE Financing will be sufficient to fund our short-term liquidity needs and the execution of our business plan through at least the twelve month-period from the date of Business Combination. However, our operating plan may change as a result of many factors currently unknown to us, and we may need to seek additional funds sooner than planned, through public or private equity or debt financings, government or other third party funding, marketing and distribution arrangements and other collaborations, strategic alliances and licensing arrangements or a combination of these sources. We will require additional capital to commercialize Plenity and to develop and commercialize any future product candidates. Even if we believe we have sufficient funds for our current or future operating plans, we may seek additional capital through debt or equity financings if market conditions are favorable or if we have specific strategic considerations. There can be no assurance that such debt or equity financings will be available on acceptable terms or will be able to be completed at all. See “Management’s Discussion and Analysis of Financial Condition and Results of Operations of Gelesis — Liquidity and Capital Resources” for further information.
If we are unable to obtain funding on a timely basis, or at all, we may be required to significantly curtail, delay or discontinue one or more of our research or development programs or the commercialization of Plenity or be unable to expand our operations or otherwise capitalize on our business opportunities, as desired, which could materially affect our business, financial condition and results of operations.
 
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Raising additional funding in the future may cause dilution to the stockholders of New Gelesis, restrict its operations or require it to relinquish rights.
We may seek additional capital through a combination of private and public equity and debt offerings, government or other third party funding, marketing and distribution arrangements and other collaborations, strategic alliances and licensing arrangements or a combination of these sources. To the extent that we raise additional capital through the sale of common stock or securities convertible or exchangeable into common stock, your ownership interest in New Gelesis will be diluted. In addition, the terms of any such securities may include liquidation or other preferences that materially adversely affect your rights as a stockholder. Debt financing, if available, would increase our fixed payment obligations and may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends. If we raise additional funds through collaborations, strategic partnerships and licensing arrangements with third parties, we may have to relinquish valuable rights to Plenity, our intellectual property or future revenue streams or grant licenses on terms that are not favorable to us.
Gelesis’ ability to use its net operating loss carryforwards and certain tax credit carry forwards may be subject to limitation.
We had federal and state net operating loss carryforwards of $114.4 million (federal) and $114.0 million (state), as of December 31, 2020 and March 31, 2021, respectively. Our federal net operating loss carryforwards begin to expire in 2026, and our state net operating loss carryforwards began to expire in 2015. Under Section 382 of the Code, changes in our ownership may limit the amount of our net operating loss carryforwards and research and development tax credit carryforwards that could be utilized annually to offset our future taxable income, if any. Any such limitation may significantly reduce our ability to utilize our net operating loss carryforwards and research and development tax credit carryforwards before they expire. These limitations, whether as the result of the Business Combination, the PIPE Financing, prior private placements, sales of our common stock by our existing stockholders or additional sales of our common stock by us hereafter, could have a material adverse effect on the amount of net operating losses we can utilize to offset future taxable income.
Risks Related to CPSR and the Business Combination
Unless the context otherwise requires, references in this subsection “—  Risks Related to CPSR and the Business Combination” to “we”, “us” and “our” generally refer to CPSR in the present tense or New Gelesis from and after the Business Combination.
CPSR’s Sponsor, directors and officers have interests in the Business Combination which may be different from or in addition to (and which may conflict with) the interests of its stockholders.
CPSR’s Sponsor, officers and directors and their respective affiliates and associates have interests in and arising from the Business Combination that are different from, or in addition to, (and which may conflict with) the interests of the Public Stockholders and warrant holders, which could result in a real or perceived conflict of interest. These interests include, among other things, the interests listed below:

If we are unable to complete our initial business combination by July 7, 2022, we will: (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem 100% of the outstanding Public Shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account, including interest earned on the funds held in the Trust Account and not previously released to CPSR to pay its taxes (less up to $100,000 of interest to pay dissolution expenses), divided by the number of then outstanding Public Shares, which redemption will completely extinguish Public Stockholders’ rights as stockholders (including the right to receive further liquidating distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible following such redemption, subject to the approval of CPSR’s remaining stockholders and the Board, dissolve and liquidate, subject in each case to CPSR’s obligations under Delaware law to provide for claims of creditors and the requirements
 
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of other applicable law. There will be no redemption rights or liquidating distributions with respect to our warrants, which will expire worthless if we fail to complete our initial Business Combination by July 7, 2022.

There will be no liquidating distributions from the Trust Account with respect to the Founders Shares if we fail to complete a business combination by July 7, 2022. Our Sponsor purchased the Founders Shares prior to the Initial Public Offering for an aggregate purchase price of $25,000, and transferred 15,000 Founders Shares to each of Kathryn Cavanaugh and John Ghiselli and 22,500 Founders Shares to James Whittenburg. On July 1, 2020, we effected a stock dividend of 1,150,000 shares of Class B Common Stock, resulting in each of Ms. Cavanaugh and Mr. Ghiselli holding 18,000 Founders Shares and Mr. Whittenburg holding 27,000 Founders Shares.

Simultaneously with the closing of the Initial Public Offering, CPSR consummated a private sale of 7,520,000 Private Placement Warrants at a price of $1.00 per Private Placement Warrant to our Sponsor. The Private Placement Warrants are each exercisable commencing the later of 30 days following the Closing and 12 months from the closing of our Initial Public Offering, which occurred on July 7, 2020, for one share of CPSR Class A Common Stock at $11.50 per share. If we do not consummate a business combination transaction by July 7, 2022, then the proceeds from the sale of the Private Placement Warrants will be part of the liquidating distribution to the Public Stockholders and the Private Placement Warrants held by the Sponsor will be worthless. The warrants held by our Sponsor had an aggregate market value of approximately $7.144 million based upon the closing price of $0.95 per warrant on the NYSE on August 9, 2021.

Our Sponsor, officers and directors collectively (including entities controlled by officers and directors) have made an aggregate average investment of $0.004 per Founders Share as of the consummation of the Initial Public Offering. As a result of the significantly lower investment per share of our Sponsor, officers and directors as compared with the investment per share of our Public Stockholders, a transaction which results in an increase in the value of the investment of our Sponsor, officers and directors may result in a decrease in the value of the investment of our Public Stockholders.

Our Sponsor, officers and directors will lose their entire investment in us if we do not complete a business combination by July 7, 2022. Certain of them may continue to serve as officers and/or directors of CPSR after the Closing. As such, in the future they may receive any cash fees, stock options or stock awards that the Board determines to pay to its directors and/or officers.

Our initial stockholders and our officers and directors have agreed to waive their rights to liquidating distributions from the Trust Account with respect to their Founders Shares if CPSR fails to complete a business combination by July 7, 2022.

In order to protect the amounts held in the Trust Account, the Sponsor has agreed that it will be liable to us if and to the extent any claims by a third party for services rendered or products sold to us, or a prospective target business with which we have entered into a written letter of intent, confidentiality or similar agreement, reduce the amount of funds in the Trust Account to below the lesser of (i) $10.00 per Public Share and (ii) the actual amount per Public Share held in the Trust Account as of the liquidation of the Trust Account, if less than $10.00 per Public Share due to reductions in the value of the trust assets, less taxes payable. This liability will not apply with respect to any claims by a third party or prospective target business who executed a waiver of any and all rights to the monies held in the Trust Account or to any claims under our indemnity of the underwriters of the Initial Public Offering against certain liabilities, including liabilities under the Securities Act.

Following the Closing, our Sponsor would be entitled to the repayment of any working capital loan and advances that have been made to CPSR and remain outstanding. As of the date of this proxy statement/prospectus, there are no outstanding advances from the Sponsor to us for working capital expenses. If we do not complete an initial business combination within the required period, we may use a portion of our working capital held outside the Trust Account to repay the working capital loans, but no proceeds held in the Trust Account would be used to repay the working capital loans.
 
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Following the Closing, we will continue to indemnify our existing directors and officers and will maintain a directors’ and officers’ liability insurance policy.

Upon the Closing, subject to the terms and conditions of the Business Combination Agreement, our Sponsor, our officers and directors and their respective affiliates may be entitled to reimbursement for any reasonable out-of-pocket expenses related to identifying, investigating and consummating an initial business combination, and repayment of any other loans, if any, and on such terms as to be determined by CPSR from time to time, made by our Sponsor or certain of our officers and directors to finance transaction costs in connection with an intended initial business combination.
See “Business Combination Proposal — Interests of CPSR’s Directors and Executive Officers in the Business Combination” for additional information on interests of CPSR’s directors and executive officers.
These financial interests of the Sponsor as well as CPSR’s directors and officers may have influenced their motivation in identifying and selecting Gelesis as a business combination target, and their decision to approve the Business Combination. In considering the recommendations of the Board to vote for the Proposals, its stockholders should consider these interests.
Activities taken by CPSR’s affiliates to purchase, directly or indirectly, Public Shares or Public Warrants will increase the likelihood of approval of the Business Combination Proposal and the other Proposals and may affect the market price of the CPSR’s securities.
CPSR’s Sponsor, directors, officers, advisors or their affiliates may purchase shares or Public Warrants in privately negotiated transactions either prior to or following the Closing, although they are under no obligation to do so. None of CPSR’s Sponsor, directors, officers, advisors or their affiliates will make any such purchases when such parties are in possession of any material non-public information not disclosed to the seller or during a restricted period under Regulation M under the Exchange Act. Although none of CPSR’s Sponsor, directors, officers, advisors or their affiliates currently anticipate paying any premium purchase price for such Public Shares or Public Warrants, in the event such parties do, the payment of a premium may not be in the best interest of those stockholders not receiving any such additional consideration. There is no limit on the number of shares or warrants that could be acquired by CPSR’s Sponsor, directors, officers, advisors or their affiliates, or the price such parties may pay, subject to compliance with applicable law and NYSE rules.
If such transactions are effected, the consequence could be to cause the Business Combination to be approved in circumstances where such approval could not otherwise be obtained. Purchases of shares or warrants by the persons described above would allow them to exert more influence over the approval of the Business Combination Proposal and other proposals and would likely increase the chances that such Proposals would be approved. If the market does not view the Business Combination positively, purchases of Public Shares or Public Warrants may have the effect of counteracting the market’s view, which would otherwise be reflected in a decline in the market price of CPSR’s securities. In addition, the termination of the support provided by these purchases may materially adversely affect the market price of CPSR’s securities. In addition, if such purchases are made, the public “float” of Class A Common Stock and the number of beneficial holders of Class A Common Stock may be reduced, possibly making it difficult to obtain or maintain the quotation, listing or trading of Class A Common Stock and warrants on a national securities exchange.
Other than as expressly stated herein, there are no current commitments, plans or intentions to engage in any such transactions and no terms or conditions for any such transaction have been formulated. None of the funds in the Trust Account will be used to purchase shares or warrants in such transactions.
Warrants will become exercisable for New Gelesis Common Stock, which would increase the number of shares eligible for future resale in the public market and result in dilution to our stockholders.
Following the Business Combination, there will be 13,800,000 outstanding Public Warrants to purchase 13,800,000 shares of New Gelesis Common Stock at an exercise price of $11.50 per share, which warrants will become exercisable commencing the later of thirty (30) days following the Closing and twelve (12) months from the closing of our Initial Public Offering, which occurred on July 7, 2020. In addition, there
 
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will be 7,520,000 Private Placement Warrants outstanding exercisable for 7,520,000 shares of New Gelesis Common Stock at an exercise price of $11.50 per share. To the extent such warrants are exercised, additional shares of New Gelesis Common Stock will be issued, which will result in dilution to the holders of New Gelesis Common Stock and increase the number of shares eligible for resale in the public market. Sales of substantial numbers of such shares in the public market could adversely affect the market price of New Gelesis Common Stock, the impact of which is increased as the value of our stock price increases.
We may redeem your unexpired warrants prior to their exercise at a time that is disadvantageous to you, thereby making your warrants worthless.
New Gelesis will have the ability to redeem outstanding Public Warrants at any time after they become exercisable and prior to their expiration, at a price of $0.01 per warrant, provided that the closing price of New Gelesis Common Stock equals or exceeds $18.00 per share for any twenty (20) trading days within a thirty (30) trading-day period ending on the third trading day prior to the date we give notice of redemption. If and when the warrants become redeemable by New Gelesis, New Gelesis may exercise the redemption right even if it is unable to register or qualify the underlying securities for sale under all applicable state securities laws. Redemption of the outstanding warrants could force holders to (i) exercise the warrants and pay the exercise price therefor at a time when it may be disadvantageous to do so, (ii) sell the warrants at the then-current market price when the holder might otherwise wish to hold onto such warrants or (iii) accept the nominal redemption price which, at the time the outstanding warrants are called for redemption, is likely to be substantially less than the market value of the warrants. None of the private placement warrants will be redeemable by us so long as they are held by their initial purchasers or their permitted transferees.
In addition, New Gelesis may redeem your warrants after they become exercisable for a number of shares of New Gelesis Common Stock determined based on the redemption date and the fair market value of New Gelesis Common Stock. Any such redemption may have similar consequences to a cash redemption described above. In addition, such redemption may occur at a time when the warrants are “out-of-the-money,” in which case you would lose any potential embedded value from a subsequent increase in the value of our common stock had your warrants remained outstanding.
Our warrants are accounted for as derivative liabilities and are recorded at fair value upon issuance with changes in fair value each period reported in earnings, which may have an adverse effect on the market price of our securities or may make it more difficult for us to consummate the proposed Business Combination.
We have 21,320,000 warrants outstanding (comprised of 13,800,000 Public Warrants as part of the Units offered in the Initial Public Offering and 7,520,000 Private Placement Warrants). We account for both the Public Warrants and the Private Placement Warrants as a warrant liability. At each reporting period (1) the accounting treatment of the warrants will be re-evaluated for proper accounting treatment as a liability or equity and (2) the fair value of the liability of the Public Warrants and Private Placement Warrants will be remeasured and the change in the fair value of the liability will be recorded as other income (expense) in our income statement. The impact of changes in fair value on earnings may have an adverse effect on the market price of our common stock, which may make it more difficult for us to consummate the proposed Business Combination.
Even if we consummate the Business Combination, there can be no assurance that the warrants will be in the money at the time they become exercisable, and they may expire worthless.
The exercise price for the outstanding warrants is $11.50 per share of New Gelesis Common Stock. There can be no assurance that the warrants will be in the money following the time they become exercisable and prior to their expiration, and as such, the warrants may expire worthless.
CPSR did not obtain an opinion from an independent investment banking or accounting firm, and consequently, there can be no assurance from an independent source that the price CPSR is paying for is fair to CPSR from a financial point of view.
CPSR is not required to obtain an opinion from an independent investment banking or accounting firm that the price CPSR is paying in connection with the Business Combination is fair to CPSR from a financial point of view. The Board did not obtain a third-party valuation or fairness opinion in connection
 
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with its initial determination to approve and recommend the Business Combination. Accordingly, investors will be relying solely on the judgment of the Board in valuing Gelesis’ business, and assuming the risk that the Board may not have properly valued the Business Combination.
The Sponsor and the other holders of the Founders Shares have agreed to vote in favor of the Business Combination, regardless of how the Public Stockholders vote.
Unlike some other blank check companies in which the initial stockholders agree to vote their founders shares in accordance with the majority of the votes cast by the public stockholders in connection with an initial business combination, the holders of the Founders Shares, including our Sponsor, R. Steven Hicks, Rodrigo de la Torre, Jamie Weinstein, Kathryn Cavanaugh, John Ghiselli, James Whittenburg and the PIMCO Private Funds, have agreed, among other things, to vote their shares in favor of the Business Combination. As of the Record Date, the Sponsor and such other stockholders own approximately 20% of our outstanding shares prior to the Business Combination. As a result, in addition to the shares held by our Sponsor and the other holders of the Founders Shares, CPSR would need approximately    % of the shares of CPSR Common Stock to be voted in favor of the Business Combination in order to have the Business Combination approved. Accordingly, it is more likely that the necessary stockholder approval will be received than would be the case if the Sponsor and the other holders of the Founders Shares had agreed to vote their shares of CPSR Common Stock in accordance with the majority of the votes cast by the Public Stockholders.
Following the Closing, New Gelesis’ only significant asset will be ownership of 100% of Gelesis and such ownership may not be sufficient to pay dividends or make distributions or loans to enable it to pay any dividends on its Common Stock.
Following the Closing, New Gelesis will have no direct operations and no significant assets other than the ownership of 100% of Gelesis. New Gelesis will depend on Gelesis for distributions, loans and other payments to generate the funds necessary to meet New Gelesis’ financial obligations, including expenses related to operating as a publicly traded company, and to pay any dividends with respect to its Common Stock. The earnings from, or other available assets of, Gelesis, may not be sufficient to pay dividends or make distributions or loans to enable New Gelesis to pay any dividends on its Common Stock.
Subsequent to the Closing, CPSR may be required to take write-downs or write-offs, restructuring and impairment or other charges that could have a significant negative effect on its financial condition, results of operations and stock price, which could cause you to lose some or all of your investment.
Although CPSR has conducted due diligence on Gelesis, CPSR cannot assure you that this diligence revealed all material issues that may be present in Gelesis’ business, that it would be possible to uncover all material issues through a customary amount of due diligence, or that factors outside of CPSR’s and Gelesis’ control will not later arise. As a result, CPSR may be forced to later write-down or write-off assets, restructure its operations, or incur impairment or other charges that could result in losses. Even if CPSR’s due diligence successfully identifies certain risks, unexpected risks may arise and previously known risks may materialize in a manner not consistent with CPSR’s preliminary risk analysis. Even though these charges may be non-cash items and may not have an immediate impact on CPSR’s liquidity, the fact that CPSR reports charges of this nature could contribute to negative market perceptions about New Gelesis’ or CPSR’s securities. In addition, charges of this nature may cause CPSR to be unable to obtain future financing on favorable terms or at all. Accordingly, any CPSR stockholder who chooses to remain a stockholder of New Gelesis following the Business Combination could suffer a reduction in the value of their shares. Such stockholders are unlikely to have a remedy for such reduction in value unless they are able to successfully claim that the reduction was due to the breach by CPSR’s officers or directors of a duty of care or other fiduciary duty owed to them, or if they are able to successfully bring a private claim under securities laws that the proxy solicitation relating to the Business Combination contained an actionable material misstatement or material omission.
CPSR’s actual financial position and results of operations may differ materially from the unaudited pro forma condensed combined financial information included in this proxy statement/prospectus and may not be indicative of what CPSR’s actual financial position or results of operations would have been.
The unaudited pro forma condensed combined financial information in this proxy statement/prospectus is presented for illustrative purposes only and is not necessarily indicative of what CPSR’s actual
 
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financial position or results of operations would have been had the Business Combination been completed on the dates indicated. See the section titled “Unaudited Pro Forma Condensed Combined Financial Information” for more information.
If third parties bring claims against CPSR or if CPSR files a bankruptcy petition or an involuntary bankruptcy petition is filed against CPSR that is not dismissed, the proceeds held in trust could be reduced and the per-share redemption price received by stockholders may be less than $10.00 (which was the offering price in our Initial Public Offering).
CPSR’s placing of funds in trust may not protect those funds from third party claims against CPSR. Although CPSR will seek to have all vendors and service providers (except for our independent registered public accounting firm) CPSR engages and prospective target businesses CPSR negotiates with execute agreements with CPSR waiving any right, title, interest or claim of any kind in or to any monies held in the Trust Account for the benefit of the Public Stockholders, they may not execute such agreements. Furthermore, even if such entities execute such agreements with CPSR, they may seek recourse against the Trust Account. Additionally, a court may not uphold the validity of such agreements. Accordingly, the proceeds held in the Trust Account could be subject to claims which could take priority over those of the Public Stockholders.
Additionally, if CPSR is forced to file a bankruptcy case or an involuntary bankruptcy case is filed against CPSR’s which is not dismissed, the proceeds held in the Trust Account could be subject to applicable bankruptcy law, and may be included in CPSR’s bankruptcy estate and subject to the claims of third parties with priority over the claims of CPSR’s stockholders. To the extent any bankruptcy claims deplete the Trust Account, CPSR may not be able to return to the Public Stockholders at least $10.00 (which was the offering price in our initial public offering). As a result, if any such claims were successfully made against the Trust Account, the funds available for CPSR’s initial business combination, including the Business Combination, and redemptions could be reduced to less than $10.00 per Public Share.
CPSR’s stockholders may be held liable for claims by third parties against CPSR to the extent of distributions received by them.
The Current Charter states that we must complete our initial business combination by July 7, 2022. If we have not completed an initial business combination by then (or such later date as our stockholders may approve in accordance with the Current Charter), we will: (i) cease all operations except for the purpose of winding up; (ii) as promptly as reasonably possible but not more than ten (10) business days thereafter, redeem the Public Shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account, including interest not previously released to us to pay our franchise and income taxes (less up to $100,000 to pay dissolution expenses), divided by the number of then issued and outstanding Public Shares, which redemption will completely extinguish public stockholders’ rights as stockholders (including the right to receive further liquidating distributions, if any); and (iii) as promptly as reasonably possible following such redemption, subject to the approval of our remaining stockholders and our Board, liquidate and dissolve, subject in each case to our obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law. In such case, our public stockholders may only receive approximately $10.00 per share and our warrants will expire worthless.
If CPSR is forced to file a bankruptcy case or an involuntary bankruptcy case is filed against CPSR which is not dismissed, any distributions received by stockholders could be viewed under applicable debtor/creditor and/or bankruptcy laws as either a “preferential transfer” or a “fraudulent conveyance.” As a result, a bankruptcy court could seek to recover all amounts received by CPSR’s stockholders. Furthermore, because CPSR intends to distribute the proceeds held in the Public Shares to the Public Stockholders promptly after expiration of the time CPSR has to complete an initial business combination, this may be viewed or interpreted as giving preference to the Public Stockholders over any potential creditors with respect to access to or distributions from CPSR’s assets. Furthermore, the Board may be viewed as having breached their fiduciary duties to CPSR’s creditors and/or may have acted in bad faith, and thereby exposing itself and CPSR to claims of punitive damages, by paying Public Stockholders from the Trust Account prior to addressing the claims of creditors. CPSR cannot assure you that claims will not be brought against it for these reasons.
 
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There can be no assurance that New Gelesis will be able to comply with the continued listing standards of the NYSE.
New Gelesis Common Stock and warrants are expected to be listed on the NYSE following the Business Combination. New Gelesis’ continued eligibility for listing may depend on the number of shares of Class A Common Stock that are redeemed. If, after the Business Combination, the NYSE delists New Gelesis’ securities from trading on its exchange for failure to meet the listing standards, New Gelesis and its stockholders could face significant material adverse consequences including:

limited availability of market quotations for New Gelesis’ securities;

a determination that New Gelesis Common Stock is a “penny stock” which will require brokers trading in its New Gelesis Common Stock to adhere to more stringent rules, possibly resulting in a reduced level of trading activity in the secondary trading market for New Gelesis Common Stock;

a limited amount of analyst coverage; and

a decreased ability to issue additional securities or obtain additional financing in the future.
Our directors may decide not to enforce the indemnification obligations of our Sponsor, resulting in a reduction in the amount of funds in the Trust Account available for distribution to our Public Stockholders.
In the event that the proceeds in the Trust Account are reduced below the lesser of (i) $10.00 per share and (ii) the actual amount per Public Share held in the Trust Account as of the date of the liquidation of the Trust Account if less than $10.00 per Public Share due to reductions in the value of the trust assets, in each case less taxes payable, and our Sponsor asserts that it is unable to satisfy its obligations or that it has no indemnification obligations related to a particular claim, our independent directors would determine whether to take legal action against our Sponsor to enforce its indemnification obligations. While we currently expect that our independent directors would take legal action on our behalf against our Sponsor to enforce its indemnification obligations to us, it is possible that our independent directors in exercising their business judgment and subject to their fiduciary duties may choose not to do so in any particular instance. If our independent directors choose not to enforce these indemnification obligations, the amount of funds in the Trust Account available for distribution to our Public Stockholders may be reduced below $10.00 per Public Share.
If the Business Combination’s benefits do not meet the expectations of investors, stockholders or financial analysts, the market price of New Gelesis’ securities may decline.
If the benefits of the Business Combination do not meet the expectations of investors or securities analysts, the market price of New Gelesis’ securities prior to the Closing may decline. The market values of New Gelesis’ securities at the time of the Business Combination may vary significantly from their prices on the date the Business Combination Agreement was executed, the date of this proxy statement/prospectus, or the date on which CPSR’s stockholders vote on the Business Combination. Because the number of shares to be issued pursuant to the Business Combination Agreement is fixed and will not be adjusted to reflect any changes in the market price of Class A Common Stock, the market value of New Gelesis stock issued in the Business Combination may be higher or lower than the value of these shares on an earlier date.
The Public Stockholders will experience immediate dilution as a consequence of, among other transactions, the issuance of New Gelesis Common Stock as consideration in the Business Combination and the PIPE Financing. Having a minority share position may reduce the influence that CPSR’s current stockholders have on the management of New Gelesis.
It is anticipated that, upon the Closing and based on ownership as of the Record Date, the Public Stockholders (other than the PIPE Investors) will retain an ownership interest of approximately     % in New Gelesis, the PIPE Investors will own approximately     % of New Gelesis (such that Public Stockholders, including PIPE Investors, will own approximately     % of New Gelesis), Sponsor and CPSR’s other initial stockholders will own approximately     % in New Gelesis and the Gelesis Equityholders will own approximately     % of New Gelesis.
 
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There are currently outstanding an aggregate of 21,320,000 warrants to acquire CPSR Class A Common Stock, which comprise 7,520,000 Private Placement Warrants held by CPSR’s initial stockholders at the time of CPSR’s Initial Public Offering and 13,800,000 Public Warrants. Each of CPSR’s outstanding whole warrants is exercisable commencing the later of 30 days following the Closing and 12 months from the closing of our Initial Public Offering, which occurred on July 7, 2020, for one share of CPSR Class A Common Stock in accordance with its terms. Therefore, as of the date of this proxy statement/prospectus, if we assume that each outstanding whole warrant is exercised and one share of CPSR Class A Common Stock is issued as a result of such exercise, with payment of the exercise price of $11.50 per share, our fully-diluted share capital would increase by a total of 21,320,000 shares, with approximately $245,180,000 paid to exercise the warrants.
The ownership percentage with respect to New Gelesis following the Business Combination does not take into account (i) the redemption of any shares by the Public Stockholders, (ii) Public Warrants and Private Placement Warrants that will remain outstanding immediately following the Business Combination, (iii) the issuance of any shares upon the Closing under the Equity Incentive Plan or (iv) the potential forfeiture of any Earn Out Shares issued to Gelesis Equityholders and/or certain Founders Shares held by our Sponsor, in each case, in the event certain trading price thresholds are not met during the applicable vesting periods. If the actual facts are different than these assumptions, the percentage ownership retained by CPSR’s existing stockholders in New Gelesis will be different.
The Closing of the Business Combination is subject to conditions, including certain conditions that may not be satisfied on a timely basis, if at all.
The completion of the Business Combination is subject to a number of conditions, including (i) the approval by our stockholders of the Proposals necessary to consummate the Business Combination being obtained; (ii) the applicable waiting period under the HSR Act relating to the Business Combination Agreement having expired or been terminated; (iii) CPSR having at least $5,000,001 of net tangible assets (as determined in accordance with Rule 3a51-1(g)(1) of the Exchange Act) after giving effect to the transactions contemplated by the Business Combination Agreement and the PIPE Financing; (iv) the approval by the NYSE of our initial listing application in connection with the Business Combination; and (v) the Minimum Cash Condition. The completion of the Business Combination is not assured and is subject to risks, including the risk that approval of the Business Combination by CPSR stockholders is not obtained, or that other Closing conditions are not satisfied. Subject to needing to satisfy those Closing conditions that are required by applicable law (such as the applicable waiting periods under the HSR Act having expired), the other Closing conditions that are required for CPSR to close can be waived by CPSR and the other Closing conditions that are required for Gelesis to close can be waived by Gelesis, but neither party is required to waive any Closing conditions. If CPSR does not complete the Business Combination, it could be subject to several risks, including:

the parties may be liable for damages to one another under the terms and conditions of the Business Combination Agreement;

negative reactions from the financial markets, including declines in the price of Class A Common Stock due to the fact that current prices may reflect a market assumption that the Business Combination will be completed; and

the attention of CPSR’s management will have been diverted to the Business Combination rather than the pursuit of other opportunities in respect of an initial business combination.
For more information about the Closing conditions to the Business Combination, see the section titled “Business Combination Proposal — The Business Combination Agreement — Conditions to Closing of the Business Combination.”
CPSR or Gelesis may waive one or more of the Closing conditions without re-soliciting stockholder approval.
Certain conditions to CPSR’s or Gelesis’ obligations to complete the Business Combination may be waived, in whole or in part, to the extent permitted by law, either unilaterally or by agreement of CPSR and
 
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Gelesis. In the event of a waiver of a condition, the Board will evaluate the materiality of any such waiver to determine whether amendment of this proxy statement/prospectus and re-solicitation of proxies is necessary.
In the event that the Board, in its own reasonable discretion, determines any such waiver is not significant enough to require re-solicitation of its stockholders, it will have the discretion to complete the Business Combination without seeking further stockholder approval, which decision may have a material adverse effect on the CPSR stockholders. For example, if the Board elected to waive the requirement that New Gelesis’ NYSE application be accepted for listing, and elected to proceed to Closing, the shares of Common Stock that CPSR stockholders hold following the Closing will be suspended from trading until the NYSE has approved the New Gelesis listing application. By way of further example, if the Board elected to waive the requirement that there be no Gelesis Material Adverse Effect that has occurred since the date of entry into the Business Combination Agreement that is continuing, the market may react negatively to such news, causing an immediate substantial decline in the price of the New Gelesis Common Stock following the Closing, causing the value of a stockholder’s interest in CPSR to be materially diminished.
For more information about the Closing conditions to the Business Combination, see the section titled “Business Combination Proposal — The Business Combination Agreement — Conditions to Closing of the Business Combination.”
Obtaining required regulatory approvals may prevent or delay completion of the Business Combination or reduce the anticipated benefits of the Business Combination or may require changes to the structure or terms of the Business Combination.
Consummation of the Business Combination is conditioned upon, among other things, the expiration or termination of the waiting period (and any extensions thereof) applicable to the Business Combination under the HSR Act. At any time before or after the Business Combination is consummated, any of the U.S. Department of Justice, which we refer to as the DOJ, the FTC, or U.S. state attorneys general could take action under the antitrust laws in opposition to the Business Combination, including seeking to enjoin completion of the Business Combination, condition completion of the Business Combination upon the divestiture of assets of our company, Gelesis or their subsidiaries or impose restrictions on New Gelesis’ post-consummation operations. These could negatively affect the results of operations and financial condition of the combined company following completion of the Business Combination. Any such requirements or restrictions may prevent or delay completion of the Business Combination or may reduce the anticipated benefits of the Business Combination, which could also have a material adverse effect on the combined company’s business and cash flows, financial condition and results of operations. Additionally, we have agreed to take certain actions, conditioned on the closing, to the extent necessary to ensure satisfaction, on or prior to the outside date (as it may be extended), of certain conditions to the closing of the Business Combination relating to regulatory approvals. Certain of these actions may be taken after receipt of the Business Combination approval.
If the Business Combination does not qualify as a reorganization under Section 368(a) of the Code, Gelesis Equityholders may incur a substantially greater U.S. federal income tax liability as a result of the Business Combination.
CPSR and Gelesis intend for the Business Combination to be treated for U.S. federal income tax purposes as a reorganization within the meaning of Section 368(a) of the Code. However, neither CPSR nor Gelesis has requested, or intends to request, an opinion of tax counsel or a ruling from the Internal Revenue Service, or IRS, with respect to the tax consequences of the Business Combination and there can be no assurance that the companies’ position would be sustained by a court if challenged by the IRS. Accordingly, if the IRS or a court determines that the Business Combination does not qualify as a reorganization under Section 368(a) of the Code and is therefore fully taxable for U.S. federal income tax purposes, Gelesis Equityholders generally would recognize taxable gain or loss on their receipt of New Gelesis Common Stock in connection with the Business Combination.
 
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We are not registering the shares of Class A Common Stock issuable upon exercise of the warrants under the Securities Act or any state securities laws at this time, and such registration may not be in place when an investor desires to exercise warrants, thus precluding such investor from being able to exercise its warrants except on a cashless basis. If the issuance of the shares upon exercise of warrants is not registered, qualified or exempt from registration or qualification, the holder of such warrant will not be entitled to exercise such warrant and such warrant may have no value and expire worthless.
We are not registering the shares of common stock issuable upon exercise of the warrants under the Securities Act or any state securities laws at this time. However, under the terms of the warrant agreement, we have agreed that as soon as practicable, but in no event later than fifteen (15) business days after the closing of our initial business combination, we will use our best efforts to file with the SEC a registration statement for the registration under the Securities Act of the shares of common stock issuable upon exercise of the warrants and thereafter will use our best efforts to cause the same to become effective within sixty (60) business days following our initial business combination and to maintain a current prospectus relating to the shares of common stock issuable upon exercise of the warrants, until the expiration of the warrants in accordance with the provisions of the warrant agreement. We cannot assure you that we will be able to do so if, for example, any facts or events arise which represent a fundamental change in the information set forth in the registration statement or prospectus, the financial statements contained or incorporated by reference therein are not current or correct or the SEC issues a stop order. If the shares issuable upon exercise of the warrants are not registered under the Securities Act, we will be required to permit holders to exercise their warrants on a cashless basis. However, no warrant will be exercisable for cash or on a cashless basis, and we will not be obligated to issue any shares to holders seeking to exercise their warrants, unless the issuance of the shares upon such exercise is registered or qualified under the securities laws of the state of the exercising holder, or an exemption from registration is available. If that exemption, or another exemption, is not available, holders will not be able to exercise their warrants on a cashless basis. In no event will we be required to net cash settle any warrant, or issue securities or other compensation in exchange for the warrants in the event that we are unable to register or qualify the shares underlying the warrants under applicable state securities laws and there is no exemption available. If the issuance of the shares upon exercise of the warrants is not so registered or qualified or exempt from registration or qualification, the holder of such warrant will not be entitled to exercise such warrant and such warrant may have no value and expire worthless. In such event, holders who acquired their warrants as part of a purchase of Units will have paid the full Unit purchase price solely for the shares of common stock included in the Units. If and when the warrants become redeemable by us, we may not exercise our redemption right if the issuance of shares of common stock upon exercise of the warrants is not exempt from registration or qualification under applicable state blue sky laws or we are unable to effect such registration or qualification. We will use our best efforts to register or qualify such shares of common stock under the blue sky laws of the state of residence in those states in which the warrants were offered by us in our Initial Public Offering. However, there may be instances in which holders of our Public Warrants may be unable to exercise such Public Warrants but holders of our Private Placement Warrants may be able to exercise such Private Placement Warrants.
CPSR’s and Gelesis’ ability to consummate the Business Combination, and the operations of New Gelesis following the Business Combination, may be materially adversely affected by the COVID-19 pandemic.
The COVID-19 pandemic has resulted, and other infectious diseases could result, in a widespread health crisis that has and could continue to adversely affect the economies and financial markets worldwide, which may delay or prevent the consummation of the Business Combination, and the business of Gelesis or New Gelesis following the Business Combination could be materially and adversely affected. The extent of such impact will depend on future developments, which are highly uncertain and cannot be predicted.
The parties will be required to consummate the Business Combination even if Gelesis, its business, financial condition and results of operations are materially affected by COVID-19. The disruptions posed by COVID-19 have continued, and other matters of global concern may continue, for an extensive period of time, and if Gelesis is unable to recover from business disruptions due to COVID-19 or other matters of global concern on a timely basis, Gelesis’ ability to consummate the Business Combination and New Gelesis’ financial condition and results of operations following the Business Combination may be materially adversely affected. Each of Gelesis and New Gelesis may also incur additional costs due to delays caused by COVID-19, which could adversely affect New Gelesis’ financial condition and results of operations.
 
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Risks Related to Ownership of New Gelesis Common Stock Following the Business Combination
New Gelesis does not know whether an active, liquid and orderly trading market will develop for its common stock or what the market price of the New Gelesis Common Stock will be and, as a result, it may be difficult for you to sell your common stock.
Prior to the Business Combination, there was no public trading market for Gelesis’ common stock. Although, upon the successful consummation of the Business Combination, New Gelesis’ Common Stock will be listed on the NYSE, an active trading market for its shares may never develop or be sustained following the Business Combination. You may not be able to sell your shares quickly or at the market price if trading in New Gelesis’ Common Stock is not active. Further, an inactive market may also impair New Gelesis’ ability to raise capital by selling New Gelesis’ Common Stock and may impair New Gelesis’ ability to enter into strategic partnerships or acquire companies or products by using New Gelesis’ Common Stock as consideration.
The price of New Gelesis Common Stock may be volatile, and you could lose all or part of your investment.
The trading price of New Gelesis Common Stock following the Business Combination is likely to be highly volatile and could be subject to wide fluctuations in response to various factors, some of which are beyond New Gelesis’ control, including limited trading volume. These factors include:

any delay in New Gelesis’ regulatory filings or any adverse regulatory decisions, including failure to receive regulatory approval of New Gelesis’ product candidates;

changes in laws or regulations applicable to New Gelesis’ product candidates, including but not limited to clinical trial requirements for approvals;

adverse developments concerning New Gelesis’ manufacturers or its manufacturing plans;

New Gelesis’ ability to generate sufficient patient demand for its product and product candidates;

New Gelesis’ inability to establish collaborations, if needed;

New Gelesis’ failure to commercialize its product candidates;

departures of key scientific, commercial or management personnel;

unanticipated serious safety concerns related to the use of New Gelesis’ product candidates;

introduction of new products or services offered by New Gelesis or its competitors;

announcements of significant acquisitions, strategic partnerships, joint ventures or capital commitments by New Gelesis or its competitors;

New Gelesis’ ability to effectively manage its growth;

actual or anticipated variations in quarterly operating results;

New Gelesis’ cash position;

New Gelesis’ failure to meet the estimates and projections of the investment community or that New Gelesis may otherwise provide to the public;

publication of research reports about New Gelesis or its industry, or positive or negative recommendations or withdrawal of research coverage by securities analysts;

changes in the market valuations of similar companies;

overall performance of the equity markets;

sales of New Gelesis Common Stock by New Gelesis or its shareholders in the future;

trading volume of New Gelesis Common Stock;

changes in accounting practices;

ineffectiveness of New Gelesis’ internal controls;
 
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disputes or other developments relating to proprietary rights, including patents, litigation matters and New Gelesis’ ability to obtain patent protection for its technologies;

significant lawsuits, including patent or shareholder litigation;

general political and economic conditions; and

other events or factors, many of which are beyond New Gelesis’ control.
In addition, the stock market in general, and the NYSE and biotechnology companies in particular, have experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of these companies. Broad market and industry factors may negatively affect the market price of New Gelesis Common Stock, regardless of New Gelesis’ actual operating performance. In the past, securities class action litigation has often been instituted against companies following periods of volatility in the market price of a company’s securities. This type of litigation, if instituted, could result in substantial costs and a diversion of management’s attention and resources, which would harm New Gelesis’ business, financial condition and results of operations.
If securities or industry analysts do not publish research or reports about New Gelesis’ business, if they adversely change their recommendations regarding New Gelesis’ shares or if New Gelesis’ results of operations do not meet their expectations, New Gelesis’ stock price and trading volume could decline.
The trading market for shares of New Gelesis will be influenced by the research and reports that industry or securities analysts publish about new Gelesis or its business. New Gelesis will not have any control over these analysts. If one or more of these analysts cease coverage of New Gelesis or fail to publish reports on New Gelesis regularly, New Gelesis could lose visibility in the financial markets, which in turn could cause its stock price or trading volume to decline. Moreover, if one or more of the analysts who cover New Gelesis downgrade its stock, or if New Gelesis’ results of operations do not meet their expectations, New Gelesis’ stock price could decline.
Future sales and issuances of New Gelesis Common Stock or rights to purchase New Gelesis Common Stock, including pursuant to the Equity Incentive Plan and future exercise of registration rights, could result in additional dilution of the percentage ownership of New Gelesis’ shareholders and could cause New Gelesis’ share price to fall.
New Gelesis expects that significant additional capital may be needed in the future to continue its planned operations, including expanding commercial operations, self-commercialization of its products in new markets, conducting clinical trials, expanded research and development activities, and costs associated with operating as a public company. To raise capital, New Gelesis may sell shares of New Gelesis Common Stock, convertible securities or other equity securities in one or more transactions at prices and in a manner New Gelesis determines from time to time. If New Gelesis sells shares of New Gelesis Common Stock, convertible securities or other equity securities, investors may be materially diluted by subsequent sales. Such sales may also result in material dilution to New Gelesis’ existing shareholders, and new investors could gain rights, preferences, and privileges senior to the holders of New Gelesis Common Stock, including shares of New Gelesis Common Stock sold in this offering.
Pursuant to the Equity Incentive Plan, which will become effective the day prior to the Closing, New Gelesis is authorized to grant equity awards to its employees, directors and consultants.
Initially, the aggregate number of New Gelesis Common Stock that may be issued pursuant to share awards under the Equity Incentive Plan will be equal to eight percent (8%) of the fully diluted shares of New Gelesis Common Stock as of immediately following the Effective Time, including the shares of New Gelesis Common Stock issuable upon the exercise of the Rollover Warrants. The Equity Incentive Plan will provide that the number of shares of New Gelesis Common Stock reserved for issuance thereunder will automatically increase annually on the first day of each calendar year, beginning on January 1, 2023, by an amount equal to four percent (4%) of the number of shares of New Gelesis Common Stock outstanding on December 31 of the immediately preceding calendar year or such lesser amount as determined by the administrator of the Equity Incentive Plan. Unless New Gelesis’ board of directors elects not to increase
 
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the number of shares available for future grants each year, New Gelesis’ shareholders may experience additional dilution, which could cause New Gelesis’ share price to fall.
Pursuant to the Amended and Restated Registration and Stockholder Rights Agreement to be entered into in connection with the Business Combination, certain stockholders of CPSR and Gelesis can each demand that New Gelesis register their registrable securities under certain circumstances and will each also have piggyback registration rights for these securities. In addition, following the Closing, New Gelesis is required to file and maintain an effective registration statement under the Securities Act covering such securities and certain other securities of New Gelesis. The registration of these securities will permit the public sale of such securities, subject to certain contractual restrictions imposed by the Amended and Restated Registration and Stockholder Rights Agreement and the Business Combination Agreement. The presence of these additional shares of common stock trading in the public market may have an adverse effect on the market price of New Gelesis Entity’s securities.
New Gelesis does not intend to pay dividends on its Common Stock, so any returns will be limited to the value of New Gelesis Common Stock.
New Gelesis currently anticipates that it will retain future earnings for the development, operation and expansion of its business and does not anticipate declaring or paying any cash dividends for the foreseeable future. In addition, New Gelesis may enter into agreements that prohibit it from paying cash dividends without prior written consent from New Gelesis’ contracting parties, or which other terms prohibiting or limiting the amount of dividends that may be declared or paid on New Gelesis Common Stock. Any return to shareholders will therefore be limited to the appreciation of their New Gelesis Common Stock, which may never occur.
New Gelesis is an emerging growth company, and it cannot be certain if the reduced reporting requirements applicable to emerging growth companies will make New Gelesis Common Stock less attractive to investors.
New Gelesis is an emerging growth company, as defined in the JOBS Act. For as long as New Gelesis continues to be an emerging growth company, New Gelesis may take advantage of exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies, including not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in this prospectus and New Gelesis’ periodic reports and proxy statements, exemptions from the requirements of holding nonbinding advisory votes on executive compensation and shareholder approval of any golden parachute payments not previously approved, and an exemption from compliance with the requirement of the Public Accounting Oversight Board regarding the communication of critical audit matters in the auditor’s report on the financial statements. New Gelesis could be an emerging growth company for up to five (5) years following the year in which CPSR completed its initial public offering, although circumstances could cause New Gelesis to lose that status earlier. New Gelesis will remain an emerging growth company until the earlier of (1) the last day of the fiscal year (a) following the fifth anniversary of the date of the completion of CPSR’s Initial Public Offering, (b) in which New Gelesis has total annual gross revenue of at least $1.07 billion or (c) in which New Gelesis is deemed to be a large accelerated filer, which requires the market value of New Gelesis Common Stock that are held by non-affiliates to exceed $700 million as of the prior June 30th, and (2) the date on which New Gelesis has issued more than $1.0 billion in non-convertible debt during the prior three (3)-year period.
Under the JOBS Act, emerging growth companies can also delay adopting new or revised accounting standards until such time as those standards apply to private companies. New Gelesis has elected to use this extended transition period for complying with new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date New Gelesis (i) is no longer an emerging growth company or (ii) affirmatively and irrevocably opts out of the extended transition period provided in the JOBS Act. As a result, New Gelesis will not be subject to the same new or revised accounting standards as other public companies that are not emerging growth companies and New Gelesis’ financial statements may not be comparable to other public companies that comply with new or revised accounting pronouncements as of public company effective dates. New Gelesis may choose to early adopt any new or revised accounting standards whenever such early adoption is permitted for private companies.
 
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Further, even after New Gelesis no longer qualifies as an emerging growth company, it may still qualify as a “smaller reporting company,” which would allow New Gelesis to take advantage of many of the same exemptions from disclosure requirements, including reduced disclosure obligations regarding executive compensation in New Gelesis’ periodic reports and proxy statements.
New Gelesis cannot predict if investors will find its common stock less attractive because New Gelesis may rely on these exemptions. If some investors find New Gelesis Common Stock less attractive as a result, there may be a less active trading market for New Gelesis Common Stock and New Gelesis’ share price may be more volatile.
New Gelesis will incur significant increased costs as a result of operating as a public company, and New Gelesis’ management will be required to devote substantial time to new compliance initiatives.
As a public company, New Gelesis will incur significant legal, accounting, insurance and other expenses that it did not incur as a private company. New Gelesis will be subject to the reporting requirements of the Exchange Act which will require, among other things, that New Gelesis file with the SEC annual, quarterly and current reports with respect to its business and financial condition. In addition, the Sarbanes-Oxley Act, as well as rules subsequently adopted by the SEC, and the NYSE to implement provisions of the Sarbanes-Oxley Act, impose significant requirements on public companies, including requiring establishment and maintenance of effective disclosure and financial controls and changes in corporate governance practices. Further, in July 2010, the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act), was enacted. There are significant corporate governance and executive compensation related provisions in the Dodd-Frank Act that require the SEC to adopt additional rules and regulations in these areas, such as “say-on-pay” and proxy access. Recent legislation permits emerging growth companies to implement many of these requirements over a longer period and up to five (5) years following the year in which CPSR completed its initial public offering. New Gelesis intends to take advantage of this new legislation but cannot guarantee that it will not be required to implement these requirements sooner than budgeted or planned and thereby incur unexpected expenses. Shareholder activism, the current political environment and the current high level of government intervention and regulatory reform may lead to substantial new regulations and disclosure obligations, which may lead to additional compliance costs and impact the manner in which New Gelesis operates its business in ways New Gelesis cannot currently anticipate.
New Gelesis expects the rules and regulations applicable to public companies to substantially increase its legal and financial compliance costs and to make some activities more time-consuming and costly. If these requirements divert the attention of New Gelesis’ management and personnel from other business concerns, they could have a material adverse effect on New Gelesis’ business, financial condition, and results of operations. The increased costs will decrease New Gelesis’ net income or increase its net loss and may require New Gelesis to reduce costs in other areas of its business or increase the prices of its products or services. For example, New Gelesis expects these rules and regulations to make it more difficult and more expensive for New Gelesis to obtain director and officer liability insurance and New Gelesis may be required to incur substantial costs to maintain the same or similar coverage. New Gelesis cannot predict or estimate the amount or timing of additional costs New Gelesis may incur to respond to these requirements. The impact of these requirements could also make it more difficult for New Gelesis to attract and retain qualified persons to serve on its board of directors, its board committees, or as executive officers.
Pursuant to Section 404 of the Sarbanes-Oxley Act (Section 404), New Gelesis will be required to furnish a report by its management on its internal control over financial reporting. However, while New Gelesis remains an emerging growth company, it will not be required to include an attestation report on internal control over financial reporting issued by its independent registered public accounting firm. To achieve compliance with Section 404, New Gelesis will be engaged in a process to document and evaluate its internal control over financial reporting, which is both costly and challenging. In this regard, New Gelesis will need to continue to dedicate internal resources, potentially engage outside consultants, adopt a detailed work plan to assess and document the adequacy of internal control over financial reporting, continue steps to improve control processes as appropriate, validate through testing whether such controls are functioning as documented, and implement a continuous reporting and improvement process for internal control over financial reporting. Despite New Gelesis’ efforts, there is a risk that New Gelesis will not be able to conclude, within the prescribed timeframe or at all, that its internal control over financial reporting is
 
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effective as required by Section 404. In addition, investors’ perceptions that New Gelesis’ internal controls are inadequate or that it is unable to produce accurate financial statements on a timely basis may harm the market price of its shares.
If New Gelesis fails to establish and maintain proper and effective internal control over financial reporting, its operating results and its ability to operate its business could be harmed.
Ensuring that New Gelesis has adequate internal financial and accounting controls and procedures in place so that it can produce accurate financial statements on a timely basis is a costly and time-consuming effort that needs to be re-evaluated frequently. New Gelesis’ internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements in accordance with generally accepted accounting principles. In connection with the Business Combination, New Gelesis intends to begin the process of documenting, reviewing and improving its internal controls and procedures for compliance with Section 404 of the Sarbanes-Oxley Act and applicable United States laws, which will require annual management assessment of the effectiveness of its internal control over financial reporting. New Gelesis has begun recruiting additional finance and accounting personnel with certain skill sets that it will need as a public company.
Implementing any appropriate changes to New Gelesis’ internal controls may distract its officers and employees, entail substantial costs to modify its existing processes, and take significant time to complete. These changes may not, however, be effective in maintaining the adequacy of its internal controls, and any failure to maintain that adequacy, or consequent inability to produce accurate financial statements on a timely basis, could increase its operating costs and harm its business. In New Gelesis’ efforts to maintain proper and effective internal control over financial reporting, it may discover significant deficiencies or material weaknesses in its internal control over financial reporting, which it may not successfully remediate on a timely basis or at all. Any failure to remediate any significant deficiencies or material weaknesses identified by New Gelesis or to implement required new or improved controls, or difficulties encountered in their implementation, could cause New Gelesis to fail to meet its reporting obligations or result in material misstatements in its financial statements. If New Gelesis identifies one or more material weaknesses in its internal control over financial reporting in the future, it could result in an adverse reaction in the financial markets due to a loss of confidence in the reliability of New Gelesis’ financial statements, which may harm the market price of New Gelesis Common Stock.
The Proposed Charter and the Proposed Bylaws of New Gelesis and certain Delaware laws contain provisions that may have the effect of delaying, preventing or making undesirable an acquisition of all or a significant portion of New Gelesis’ shares or assets or preventing a change in control.
Certain provisions of New Gelesis’ Proposed Charter and Proposed Bylaws to be in effect following the consummation of the Business Combination and certain Delaware laws, together or separately, could discourage potential acquisition proposals, delay or prevent a change in control and limit the price that certain investors may be willing to pay for New Gelesis Common Stock. For instance, New Gelesis’ Proposed Bylaws to be effective upon the consummation of the Business Combination contain provisions that establish certain advance notice procedures for nomination of candidates for election as directors at shareholders’ meetings.
The Proposed Bylaws of New Gelesis will designate the Court of Chancery of the State of Delaware as the sole and exclusive forum for certain types of actions and proceedings that may be initiated by our stockholders, which could limit our stockholders’ ability to obtain a favorable judicial forum for disputes with our company or our company’s directors, officers, or other employees.
The Proposed Bylaws of New Gelesis will require, unless we consent in writing to the selection of an alternative forum, to the fullest extent permitted by law, that derivative actions brought in our name, actions against our directors, officers, other employees or stockholders for breach of fiduciary duty and other similar actions may be brought only in the Court of Chancery in the State of Delaware.
Unless we consent in writing to the selection of an alternative forum, the federal district courts of the United States will, to the fullest extent permitted by applicable law, be the exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act or the rules and regulations
 
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promulgated thereunder. This choice of forum provision may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or any of our directors, officers, other employees or stockholders, which may discourage lawsuits with respect to such claims, although our stockholders will not be deemed to have waived our compliance with federal securities laws and the rules and regulations thereunder. Alternatively, if a court were to find the choice of forum provision contained in the Proposed Bylaws to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could harm our business, operating results and financial condition.
The Proposed Bylaws of New Gelesis will provide that the exclusive forum provision will be applicable to the fullest extent permitted by applicable law, subject to certain exceptions. Section 27 of the Exchange Act creates exclusive federal jurisdiction over all suits brought to enforce any duty or liability created by the Exchange Act or the rules and regulations promulgated thereunder. As a result, the exclusive forum provision will not apply to suits brought to enforce any duty or liability created by the Exchange Act or any other claim for which the federal courts have exclusive jurisdiction. In addition, the Proposed Bylaws of New Gelesis will provide that, unless we consent in writing to the selection of an alternative forum, the federal district courts of the United States of America will, to the fullest extent permitted by law, be the exclusive forum for the resolution of any complaint asserting a cause of action arising under the Securities Act or the rules and regulations promulgated thereunder. We note, however, that there is uncertainty as to whether a court would enforce this provision and that investors cannot waive compliance with the federal securities laws and the rules and regulations thereunder. Section 22 of the Securities Act creates concurrent jurisdiction for state and federal courts over all suits brought to enforce any duty or liability created by the Securities Act or the rules and regulations thereunder.
Risks Related to the Redemption
Unless the context otherwise requires, references in this subsection “—  Risks Related to the Redemption” to “we”, “us” and “our” generally refer to CPSR in the present tense or New Gelesis from and after the Business Combination.
If you or a “group” of stockholders of which you are a part are deemed to hold an aggregate of 15% or more of Class A Common Stock issued in the Initial Public Offering, you (or, if a member of such a group, all of the members of such group in the aggregate) will lose the ability to redeem all such shares of 15% or more of Class A Common Stock issued in the Initial Public Offering.
A Public Stockholder, together with any of his, her or its affiliates or any other person with whom it is acting in concert or as a “group” ​(as defined under Section 13 of the Exchange Act), will be restricted from redeeming in the aggregate his, her or its shares or, if part of such a group, the group’s shares, of fifteen percent (15%) or more of the shares of Class A Common Stock issued in the Initial Public Offering. CPSR refers to such shares in excess of an aggregation of fifteen percent (15%) or more of the shares issued in the Initial Public Offering as “Unredeemable Shares.” In order to determine whether a stockholder is acting in concert or as a group with another stockholder, CPSR will require each Public Stockholder seeking to exercise redemption rights to certify to CPSR whether such stockholder is acting in concert or as a group with any other stockholder. Such certifications, together with other public information relating to stock ownership available to CPSR at that time, such as Section 13D, Section 13G and Section 16 filings under the Exchange Act, will be the sole basis on which CPSR makes the above-referenced determination. Your inability to redeem any Unredeemable Shares will reduce your influence over CPSR’s ability to consummate the Business Combination and you could suffer a material loss on your investment in CPSR if you sell Unredeemable Shares in open market transactions. Additionally, you will not receive redemption distributions with respect to the Unredeemable Shares if CPSR consummates the Business Combination. As a result, in order to dispose of such shares, you would be required to sell your stock in open market transactions, potentially at a loss. Notwithstanding the foregoing, stockholders may challenge CPSR’s determination as to whether a stockholder is acting in concert or as a group with another stockholder in a court of competent jurisdiction.
There is no guarantee that a stockholder’s decision whether to redeem their shares for a pro rata portion of the Trust Account will put the stockholder in a better future economic position.
CPSR can give no assurance as to the price at which a stockholder may be able to sell its Public Shares in the future following the completion of the Business Combination or any alternative business combination.
 
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Certain events following the consummation of any initial business combination, including this Business Combination, may cause an increase in CPSR’s share price, and may result in a lower value realized now for a stockholder redeeming their shares than a stockholder of CPSR might realize in the future. Similarly, if a stockholder does not redeem their shares, the stockholder will bear the risk of ownership of the Public Shares after the consummation of any initial business combination, and there can be no assurance that a stockholder can sell its shares in the future for a greater amount than the redemption price set forth in this proxy statement/prospectus. A stockholder should consult the stockholder’s own tax and/or financial advisor for assistance on how this may affect his, her or its individual situation.
CPSR’s stockholders who wish to redeem their shares for a pro rata portion of the Trust Account must comply with specific requirements for redemption that may make it more difficult for them to exercise their redemption rights prior to the deadline.
The Public Stockholders who wish to redeem their shares for a pro rata portion of the Trust Account must, among other things as fully described in the section titled “Special Meeting of CPSR  —  Redemption Rights,” tender their certificates to CPSR’s transfer agent or deliver their shares to the transfer agent electronically through the Depository Trust Company, or DTC, at least two (2) business days prior to the Special Meeting. In order to obtain a physical stock certificate, a stockholder’s broker and/or clearing broker, DTC and CPSR’s transfer agent will need to act to facilitate this request. It is CPSR’s understanding that stockholders should generally allot at least two (2) weeks to obtain physical certificates from the transfer agent. However, because CPSR does not have any control over this process or over the brokers or DTC, it may take significantly longer than two (2) weeks to obtain a physical stock certificate. If it takes longer than anticipated to obtain a physical certificate, stockholders who wish to redeem their shares may be unable to obtain physical certificates by the deadline for exercising their redemption rights and thus will be unable to redeem their shares. In addition, Holders of Units must elect to separate the underlying Public Shares and Public Warrants prior to exercising redemption rights with respect to the Public Shares. If holders hold their Units in an account at a brokerage firm or bank, holders must notify their broker or bank that they elect to separate the Units into the underlying Public Shares and Public Warrants, or if a holder holds Units registered in its own name, the holder must contact the transfer agent, directly and instruct it to do so.
If CPSR’s stockholders fail to comply with the redemption requirements specified in this proxy statement/prospectus, they will not be entitled to redeem their shares of Class A Common Stock for a pro rata portion of the funds held in the Trust Account.
Holders of Public Shares are required to submit a request in writing and deliver their stock (either physically or electronically) to CPSR’s transfer agent at least two (2) business days prior to the Special Meeting in order to exercise their rights to redeem their shares for a pro rata portion of the Trust Account. Stockholders electing to redeem their shares will receive their pro rata portion of the aggregate amount then on deposit in the Trust Account, including interest earned on the funds held in the Trust Account and not previously released to it to pay the Company’s franchise and income taxes, calculated as of two (2) business days prior to the anticipated Closing. See the section titled “Special Meeting of CPSR  —  Redemption Rights” for additional information on how to exercise your redemption rights.
CPSR does not have a specified maximum redemption threshold. The absence of such a redemption threshold may make it possible for CPSR to complete an initial business combination with which a substantial majority of its stockholders do not agree.
           Our amended and restated certificate of incorporation does not provide for a specified maximum redemption threshold, except that in no event will we redeem our Public Shares in an amount that would cause our net tangible assets to be less than $5,000,001 upon consummation of our initial business combination and after payment of underwriters’ fees and commissions (such that we are not subject to the SEC’s “penny stock” rules) or any greater net tangible asset or cash requirement which may be contained in the agreement relating to our initial business combination. As a result, we may be able to complete our initial business combination even though a substantial majority of our Public Stockholders do not agree with the transaction and have redeemed their shares or, if we seek stockholder approval of our initial business combination and do not conduct redemptions in connection with our initial business combination pursuant to the tender offer rules, have entered into privately negotiated agreements to sell their shares to our
 
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Sponsor, officers, directors, advisors or their affiliates. In the event the aggregate cash consideration we would be required to pay for all shares of Class A Common Stock that are validly submitted for redemption plus any amount required to satisfy cash conditions pursuant to the terms of the proposed initial business combination exceed the aggregate amount of cash available to us, we will not complete the initial business combination or redeem any shares, all shares of Class A Common Stock submitted for redemption will be returned to the holders thereof, and we instead may search for an alternate business combination.
 
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SPECIAL MEETING OF CPSR
General
CPSR is furnishing this proxy statement/prospectus to CPSR’s stockholders as part of the solicitation of proxies by the Board for use at the Special Meeting of CPSR to be held on           , 2021, and at any adjournment thereof. This proxy statement/prospectus is first being furnished to CPSR’s stockholders on or about                 , 2021 in connection with the vote on the proposals described in this proxy statement/prospectus. This proxy statement/prospectus provides CPSR’s stockholders with information they need to know to be able to vote or instruct their vote to be cast at the Special Meeting.
Date, Time and Place
The Special Meeting will be held virtually on           , 2021, at           , Eastern Time, at           . CPSR stockholders may attend, vote and examine the list of CPSR stockholders entitled to vote at the Special Meeting by visiting           and entering the control number found on their proxy card, voting instruction form or notice they previously received. In light of public health concerns regarding the coronavirus (COVID-19), the Special Meeting will be held in a virtual meeting format only. You will not be able to attend the Special Meeting physically.
Purpose of the CPSR Special Meeting
At the Special Meeting, CPSR is asking stockholders to consider and vote upon the following Proposals:
1.
The Business Combination Proposal — To adopt and approve the Business Combination Agreement and approve the Business Combination.
2.
The Charter Amendment Proposal — To approve, assuming the Business Combination Proposal is approved and adopted, the Proposed Charter, which will amend and restate the Current Charter, and which Proposed Charter will be in effect when duly filed with the Secretary of State of the State of Delaware in connection with the Closing.
3.
The Advisory Charter Amendment Proposals — To approve, on a non-binding advisory basis, the following material differences between the Proposed Charter and the Current Charter, which are being presented in accordance with the requirements of the SEC as seven (7) separate sub-proposals:
(a)
Advisory Charter Proposal A — to change the corporate name of New Gelesis to “Gelesis Holdings, Inc.”;
(b)
Advisory Charter Proposal B — to increase CPSR’s capitalization so that it will have 900,000,000 authorized shares of common stock and 250,000,000 authorized shares of preferred stock;
(c)
Advisory Charter Proposal C — to divide the New Gelesis board of directors into three classes with staggered three-year terms;
(d)
Advisory Charter Proposal D — to provide that the removal of any director be only for cause and only by the affirmative vote of holders of at least 6623% of New Gelesis’ then outstanding shares entitled to vote at an election of directors;
(e)
Advisory Charter Proposal E — to provide that certain amendments to provisions of the Proposed Charter will require the affirmative vote of holders of at least 6623% of New Gelesis’ then outstanding shares of capital stock entitled to vote thereon, and the affirmative vote of at least 6623% of New Gelesis’ then outstanding shares of each class entitled to vote thereon as a class;
(f)
Advisory Charter Proposal F — to make New Gelesis’ corporate existence perpetual as opposed to CPSR’s corporate existence, which is required to be dissolved and liquidated twenty-four (24) months following the closing of its initial public offering, and to remove from the Proposed Charter the various provisions applicable only to blank check companies; and
 
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(g)
Advisory Charter Proposal G — to remove the provisions setting the Court of Chancery of the State of Delaware as the sole and exclusive forum for certain stockholder actions.
4.
The NYSE Stock Issuance Proposal — to approve, assuming the Business Combination Proposal is approved and adopted, for purposes of complying with the applicable provisions of Section 312 of the NYSE Listed Company Manual, the issuance of up to 108,950,726 newly issued shares of New Gelesis Common Stock in the Business Combination, which amount will be determined as described in more detail in the accompanying proxy statement/prospectus under the heading titled “Business Combination Proposal — Ownership of New Gelesis” and (b) the issuance and sale of 9,000,000 newly issued shares of Class A Common Stock in connection with the PIPE Financing.
5.
The Director Election Proposal — to approve, assuming the Business Combination Proposal is approved and adopted, the appointment of nine (9) directors who, upon consummation of the Business Combination, will become directors of New Gelesis.
6.
The Equity Incentive Plan Proposal — to approve, assuming the Business Combination Proposal is approved and adopted, the Equity Incentive Plan, a copy of which is appended to this proxy statement/prospectus as Exhibit H to the Business Combination Agreement, a copy of which is attached to the accompanying proxy statement/prospectus as Annex A, which will become effective as of the date immediately preceding the date of the Closing.
7.
The Adjournment Proposal — to approve a proposal to adjourn the Special Meeting to a later date or dates, if necessary, to permit further solicitation and vote of proxies if, based upon the tabulated vote at the time of the Special Meeting, there are not sufficient votes to approve the Business Combination Proposal, the Charter Amendment Proposal, the Advisory Charter Amendment Proposals, the NYSE Stock Issuance Proposal, the Director Election Proposal, or the Equity Incentive Plan Proposal, or we determine that one or more of the Closing conditions under the Business Combination Agreement is not satisfied or waived.
Recommendation of the Board
The Board believes that the Business Combination Proposal and the other proposals to be presented at the Special Meeting of CPSR are in the best interest of CPSR and its stockholders and unanimously recommends that its stockholders vote “FOR” the Business Combination Proposal, “FOR” the Charter Amendment Proposal, “FOR” each of the Advisory Charter Amendment Proposals, “FOR” the NYSE Stock Issuance Proposal, “FOR” the Director Election Proposal, “FOR” the Equity Incentive Plan Proposal, and “FOR” the Adjournment Proposal, in each case, if presented to the Special Meeting.
The existence of financial and personal interests of one or more of CPSR’s directors may result in a conflict of interest on the part of such director(s) between what she, he or they may believe is in the best interests of CPSR and its stockholders and what she, he or they may believe is best for herself, himself or themselves in determining to recommend that stockholders vote for the proposals. In addition, CPSR’s officers have interests in the Business Combination that may conflict with your interests as a stockholder. See the section entitled “Business Combination Proposal — Interests of CPSR’s Directors and Executive Officers in the Business Combination” for a further discussion of these considerations.
Record Date; Who is Entitled to Vote
Stockholders will be entitled to vote or direct votes to be cast at the Special Meeting if they owned CPSR Common Stock at the close of business on                 , 2021, the Record Date. Stockholders will have one (1) vote for each share of CPSR Common Stock owned at the close of business on the Record Date. If your shares are held in “street name” or are in a margin or similar account, you should contact your broker to ensure that votes related to the shares you beneficially own are properly counted. On the Record Date, there were shares of CPSR Common Stock entitled to vote at the Special Meeting,                 shares of which were owned by the Sponsor or an affiliate thereof.
Quorum
A quorum of CPSR stockholders is necessary to hold a valid meeting. A quorum will be present at the Special Meeting if a majority of the voting power of all outstanding shares of CPSR Common Stock entitled
 
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to vote at the meeting are represented in person (which would include presence at a virtual meeting) or by proxy. As of the Record Date, there were       shares of Class A Common Stock and       shares of Class B Common Stock outstanding; therefore, a total of                 shares of CPSR Common Stock must be represented at the Special Meeting in order to constitute a quorum. The Sponsor holds approximately    % of the outstanding CPSR Common Stock.
Abstentions and Broker Non-Votes
Proxies that are marked “abstain” and proxies relating to “street name” shares that are returned to CPSR but marked by brokers as “not voted” will be treated as shares present for purposes of determining the presence of a quorum on all matters. Abstentions and broker non-votes, while considered present for the purposes of establishing a quorum, will not count as votes cast at the Special Meeting, and otherwise will have no effect on a particular proposal. If a stockholder does not give the broker voting instructions, under applicable self-regulatory organization rules, its broker may not vote its shares on “non-routine” proposals, such as the Business Combination Proposal or any of the other Condition Precedent Proposals. As a result, if you do not provide voting instructions, a broker “non-vote” will be deemed to have occurred for each such Proposal.
Each share of CPSR Common Stock that you own in your name entitles you to one (1) vote. If you are a record owner of your shares, there are two (2) ways to vote your shares of CPSR Common Stock at the Special Meeting:

You Can Vote By Signing and Returning the Enclosed Proxy Card. If you vote by proxy card, your “proxy,” whose name is listed on the proxy card, will vote your shares as you instruct on the proxy card. If you sign and return the proxy card but do not give instructions on how to vote your shares, your shares will be voted as recommended by the Board “FOR” the Business Combination Proposal, “FOR” the Charter Amendment Proposal, “FOR” the Advisory Charter Amendment Proposals, “FOR” the Equity Incentive Plan Proposal, “FOR” the NYSE Stock Issuance Proposal, “FOR” the Director Election Proposal and “FOR” the Adjournment Proposal (if presented). Votes received after a matter has been voted upon at the Special Meeting will not be counted.

You Can Virtually Attend the Special Meeting and Vote Through the Internet. You will be able to attend the Special Meeting online and vote during the meeting by visiting                   and entering the control number included on your proxy card or on the instructions that accompanied your proxy materials, as applicable.
If your shares are held in “street name” or are in a margin or similar account, you should contact your broker to ensure that votes related to the shares you beneficially own are properly counted. If you wish to attend the meeting and vote online and your shares are held in “street name,” you must obtain a legal proxy from your broker, bank or nominee. That is the only way CPSR can be sure that the broker, bank or nominee has not already voted your shares.
Revoking Your Proxy
If you are a record owner of your shares and you give a proxy, you may change or revoke it at any time before it is exercised by doing any one of the following:

submit a new proxy card bearing a later date;

give written notice of your revocation to CPSR’s corporate secretary, which notice must be received by CPSR’s corporate secretary prior to the vote at the Special Meeting; or

vote electronically at the Special Meeting by visiting                   and entering the control number found on your proxy card, voting instruction form or notice you previously received. Please note that your attendance at the Special Meeting will not alone serve to revoke your proxy.
If your shares are held in “street name” by your broker, bank or another nominee as of the close of business on the Record Date, you must follow the instructions of your broker, bank or other nominee to revoke or change your voting instructions.
 
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Who Can Answer Your Questions About Voting Your Shares
If you are a stockholder and have any questions about how to vote or direct a vote in respect of your CPSR Common Stock, you may call MacKenzie Partners, Inc. (“MacKenzie Partners”), CPSR’s proxy solicitor, at (800) 322-2885 or email: proxy@mackenziepartners.com.
No Additional Matters May Be Presented at the Special Meeting
The Special Meeting has been called only to consider the approval of the Business Combination Proposal, the Charter Amendment Proposal, the Equity Incentive Plan Proposal, the Advisory Charter Amendment Proposals, the NYSE Stock Issuance Proposal, the Director Election Proposal and the Adjournment Proposal. Under the Current Bylaws, other than procedural matters incident to the conduct of the Special Meeting, no other matters may be considered at the Special Meeting if they are not included in this proxy statement/prospectus, which serves as the notice of the Special Meeting.
Redemption Rights
Pursuant to the Current Charter, any holders of Public Shares may demand that such shares be redeemed in exchange for a pro rata share of the aggregate amount on deposit in the Trust Account, less franchise and income taxes payable. If demand is properly made and the Business Combination is consummated, these shares, immediately prior to the Business Combination, will cease to be outstanding and will represent only the right to receive a pro rata share of the aggregate amount on deposit in the Trust Account, which holds the proceeds of the Initial Public Offering (including interest earned on the funds held in the Trust Account and not previously released to it to pay the Company’s franchise and income taxes). For illustrative purposes, based on funds in the Trust Account of approximately $                  on the Record Date, the estimated per share redemption price would have been approximately $      .
In order to exercise your redemption rights, you must:

(a) hold Public Shares or (b) hold Public Shares through Units and you elect to separate your Units into the underlying Public Shares and Public Warrants prior to exercising your redemption rights with respect to the Public Shares; and

prior to 5:00 PM Eastern time on           , 2021 (two (2) business days before the Special Meeting), tender your shares physically or electronically and submit a request in writing that we redeem your Public Shares for cash to Continental Stock Transfer & Trust Company, CPSR’s transfer agent, at the following address:
Continental Stock Transfer & Trust Company
One State Street Plaza, 30th Floor
New York, New York 10004
Attn: Mark Zimkind
E-mail: mzimkind@continentalstock.com; and

deliver your Public Shares either physically or electronically through the Depository Trust Company to CPSR’s transfer agent at least two (2) business days before the Special Meeting. Stockholders seeking to exercise their redemption rights and opting to deliver physical certificates should allot sufficient time to obtain physical certificates from the transfer agent and time to effect delivery. It is CPSR’s understanding that stockholders should generally allot at least two (2) weeks to obtain physical certificates from the transfer agent. However, CPSR does not have any control over this process and it may take longer than two (2) weeks. Stockholders who hold their shares in street name will have to coordinate with their bank, broker or other nominee to have the shares certificated or delivered electronically. If you do not submit a written request and deliver your Public Shares as described above, your shares will not be redeemed.
Holders of Units must elect to separate the underlying Public Shares and Public Warrants prior to exercising redemption rights with respect to the Public Shares. If holders hold their Units in an account at a brokerage firm or bank, holders must notify their broker or bank that they elect to separate the Units into the underlying Public Shares and Public Warrants, or if a holder holds Units registered in its own name, the holder must contact the transfer agent, directly and instruct them to do so.
 
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Any demand for redemption, once made, may be withdrawn at any time until the deadline for exercising redemption requests (and submitting shares to the transfer agent) and thereafter, with CPSR’s consent, until the closing of the Business Combination. If you delivered your shares for redemption to CPSR’s transfer agent and decide within the required timeframe not to exercise your redemption rights, you may request that CPSR’s transfer agent return the shares (physically or electronically). You may make such request by contacting CPSR’s transfer agent at the phone number or address listed above.
Prior to exercising redemption rights, stockholders should verify the market price of Class A Common Stock as they may receive higher proceeds from the sale of their Class A Common Stock in the public market than from exercising their redemption rights if the market price per share is higher than the redemption price. We cannot assure you that you will be able to sell your shares of Class A Common Stock in the open market, even if the market price per share is higher than the redemption price stated above, as there may not be sufficient liquidity in CPSR Common Stock when you wish to sell your shares.
If you exercise your redemption rights, your shares of Class A Common Stock will cease to be outstanding immediately prior to the Business Combination and will only represent the right to receive a pro rata share of the aggregate amount on deposit in the Trust Account. You will no longer own those shares and will have no right to participate in, or have any interest in, the future growth of New Gelesis, if any. You will be entitled to receive cash for these shares only if you properly and timely demand redemption.
If the Business Combination is not approved or completed for any reason, then Public Stockholders who elected to exercise their redemption rights will not be entitled to redeem their shares. In such case CPSR will promptly return any Public Shares previously delivered by the public holders.
Holders of our warrants will not have redemption rights with respect to the warrants.
Appraisal Rights
Appraisal rights are statutory rights under the DGCL that enable stockholders who object to certain extraordinary transactions to demand that the corporation pay such stockholders the fair value of their shares instead of receiving the consideration offered to stockholders in connection with the extraordinary transaction. However, appraisal rights are not available in all circumstances. None of CPSR’s stockholders or warrant holders, have appraisal rights in connection with the Business Combination under Delaware law.
Proxy Solicitation Costs
CPSR is soliciting proxies on behalf of the Board. This solicitation is being made by mail but also may be made by telephone or in person. CPSR and its directors, officers and employees may also solicit proxies in person. CPSR will file with the SEC all scripts and other electronic communications as proxy soliciting materials. CPSR will bear the cost of the solicitation.
CPSR has engaged MacKenzie Partners to assist in the solicitation of proxies. CPSR will pay that firm a fee of $17,500, plus disbursements for such services.
CPSR will ask banks, brokers and other institutions, nominees and fiduciaries to forward the proxy materials to their principals and to obtain their authority to execute proxies and voting instructions. CPSR will reimburse them for their reasonable expenses.
Potential Purchases of Shares and/or Public Warrants
In connection with the stockholder vote to approve the proposed Business Combination, the Sponsor, directors, officers or advisors or their respective affiliates may privately negotiate transactions to purchase shares and/or warrants from stockholders who would have otherwise elected to have their shares redeemed in conjunction with a proxy solicitation pursuant to the proxy rules for a per-share pro rata portion of the Trust Account. None of CPSR’s Sponsor, directors, officers or advisors or their respective affiliates will make any such purchases when they are in possession of any material non-public information not disclosed to the seller or during a restricted period under Regulation M under the Exchange Act. Such a purchase would include a contractual acknowledgment that such stockholder, although still the record holder of CPSR shares, is no longer the beneficial owner thereof and therefore agrees not to exercise its redemption rights,
 
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and could include a contractual provision that directs such stockholder to vote such shares in a manner directed by the purchaser. In the event that the Sponsor, directors, officers or advisors or their affiliates purchase shares in privately negotiated transactions from Public Stockholders who have already elected to exercise their redemption rights, such selling stockholders would be required to revoke their prior elections to redeem their shares. Any such privately negotiated purchases may be effected at purchase prices that are below or in excess of the per-share pro rata portion of the Trust Account.
Stock Exchange Listing
CPSR’s Units, Class A Common Stock and Public Warrants are publicly traded on the NYSE under the symbols “CPSR.U”, “CPSR” and “CPSR WS”, respectively. CPSR intends to apply to list the New Gelesis Common Stock and Public Warrants on the NYSE under the symbols “GLS” and “GLS WS”, respectively, upon the Closing of the Business Combination. New Gelesis will not have Units traded following the Closing of the Business Combination.
 
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BUSINESS COMBINATION PROPOSAL
Overview
On July 19, 2021, CPSR, Merger Sub and Gelesis entered into the Business Combination Agreement. We are asking our stockholders to adopt and approve the Business Combination Agreement, certain related agreements and the transactions contemplated thereby (including the Business Combination). CPSR stockholders should read carefully this proxy statement/prospectus in its entirety for more detailed information concerning the Business Combination Agreement, which is attached as Annex A to this proxy statement/prospectus, and the transactions contemplated thereby. Please see “—  The Business Combination Agreement” below for additional information and a summary of certain terms of the Business Combination Agreement. You are urged to read carefully the Business Combination Agreement in its entirety before voting on this proposal.
Because we are holding a stockholder vote on the Business Combination, we may consummate the Business Combination only if it is approved by the affirmative vote of a majority of the issued and outstanding CPSR Common Stock voting together as a single class as of the record date fixed for our meeting.
The Business Combination Agreement
This subsection of the proxy statement/prospectus describes the material provisions of the Business Combination Agreement, but does not purport to describe all of the terms of the Business Combination Agreement. The following summary is qualified in its entirety by reference to the complete text of the Business Combination Agreement, which is attached as Annex A to this proxy statement/prospectus. You are urged to read the Business Combination Agreement in its entirety because it is the primary legal document that governs the Business Combination.
The Business Combination Agreement contains representations, warranties and covenants that the respective parties made to each other as of the date of the Business Combination Agreement or other specific dates. The assertions embodied in those representations, warranties and covenants were made for purposes of the contract among the respective parties and are subject to important qualifications and limitations agreed to by the parties in connection with negotiating the Business Combination Agreement. The representations, warranties and covenants in the Business Combination Agreement are also modified in part by the underlying Disclosure Schedules, which are not filed publicly and which are subject to a contractual standard of materiality different from that generally applicable to stockholders and were used for the purpose of allocating risk among the parties rather than establishing matters as facts. We do not believe that the Disclosure Schedules contain information that is material to an investment decision. Additionally, the representations and warranties of the parties to the Business Combination Agreement may or may not have been accurate as of any specific date and do not purport to be accurate as of the date of this proxy statement/prospectus. Accordingly, no person should rely on the representations and warranties in the Business Combination Agreement or the summaries thereof in this proxy statement/prospectus as characterizations of the actual state of facts about CPSR, Sponsor, Gelesis or any other matter.
The Business Combination Agreement provides that, at the Closing, the parties to the Business Combination Agreement will cause a certificate of merger to be executed and filed with the Secretary of State of the State of Delaware, pursuant to which Merger Sub will merge with and into Gelesis, with Gelesis as the surviving company in the Merger and, after giving effect to such Merger, Gelesis will be a wholly-owned subsidiary of CPSR. The time this Merger becomes effective is referred to as the “Effective Time.”
In accordance with the terms and subject to the conditions of the Business Combination Agreement, at the Effective Time, based on an implied equity value of $900 million,
(i)
each share of CPSR Class A Common Stock and CPSR Class B Common Stock that is issued and outstanding immediately prior to the Effective Time will become one (1) share of New Gelesis Common Stock;
(ii)
each share of Gelesis Common Stock issued and outstanding as of immediately prior to the Effective Time will be automatically canceled and extinguished and converted into the right to
 
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receive the pro rata portion of the Transaction Share Consideration comprised of shares of New Gelesis Common Stock, as determined in accordance with the Business Combination Agreement; provided, that any shares of Gelesis Common Stock that are restricted shares will be converted into restricted shares of New Gelesis Common Stock, subject to the same vesting, transfer and other restrictions as the applicable restricted shares of Gelesis Common Stock;
(iii)
each share of capital stock of Merger Sub issued and outstanding as of immediately prior to the Effective Time will be automatically cancelled and extinguished and converted into one share of New Gelesis Common Stock;
(iv)
each vested and unvested Gelesis Option will be assumed by New Gelesis and will cease to represent the right to purchase shares of Gelesis Common Stock and will become a “Rollover Option” thereafter exercisable for shares of New Gelesis Common Stock in an amount, at an exercise price and subject to such terms and conditions, in each case, as set forth on the Allocation Schedule attached to the Business Combination Agreement;
(v)
each Gelesis Warrant will cease to represent the right to purchase shares of Gelesis Common Stock and will be canceled in exchange for a “Rollover Warrant” to purchase shares of New Gelesis Common Stock in an amount, at an exercise price and subject to such terms and conditions, in each case, as set forth on the Allocation Schedule attached to the Business Combination Agreement; and
(vi)
each holder of Gelesis Common Stock, Gelesis Options and Gelesis Warrants will receive its pro rata portion of 15,000,000 restricted Earn Out Shares of New Gelesis Common Stock, subject to the vesting and forfeiture conditions set forth below under “— Earn Out Shares”.
Earn Out Shares
The Earn Out Shares will be subject to the following vesting conditions during the five (5) year Earn Out Period immediately following the Closing:

one third (1/3) of the Earn Out Shares will vest (and no longer be subject to forfeiture) at such time as the volume weighted average price of New Gelesis Common Stock is first equal to or exceeds $12.50 per share for any twenty (20) trading days within any thirty (30) trading day period;

one third (1/3) of the Earn Out Shares will vest (and no longer be subject to forfeiture) at such time as the volume weighted average price of New Gelesis Common Stock is first equal to or exceeds $15.00 per share for any twenty (20) trading days within any thirty (30) trading day period; and

one third (1/3) of the Earn Out Shares will vest (and no longer be subject to forfeiture) at such time as the volume weighted average price of New Gelesis Common Stock is first equal to or exceeds $17.50 per share for any twenty (20) trading days within any thirty (30) trading day period;
provided, that in addition to the above vesting and forfeiture provisions, any Earn Out Shares issued with respect to unvested Gelesis Options will be subject to the vesting criteria applicable to such unvested Gelesis Option as of immediately prior to the Effective Time. If prior to vesting, any unvested Gelesis Options are forfeited in accordance with their terms, then at the time of such forfeiture, all Earn Out Shares issued with respect to such unvested Gelesis Options will be automatically forfeited and deemed transferred to CPSR for no consideration (all Earn Out Shares so forfeited and transferred to CPSR, collectively, the “Reserve Earn Out Shares”). The New Gelesis Board may, in its sole discretion, reissue Reserve Earn Out Shares to holders of Earn Out Shares. Any Reserve Earn Out Shares that remain unissued as of the end of the Earn Out Period will be cancelled by New Gelesis and cease to exist.
Each Gelesis stockholder, each holder of Gelesis Options and each holder of Gelesis Warrants issued Earn Out Shares at the Closing will be entitled to the voting and dividend rights generally granted to holders of shares of New Gelesis Common Stock; provided that the Earn Out Shares will not entitle the holder thereof to any consideration in connection with any sale or other transaction and may not be offered, sold, transferred, redeemed, assigned, pledged, hypothecated, encumbered or otherwise disposed of (whether by operation of law or otherwise) by such person or be subject to execution, attachment or similar process without the consent of New Gelesis, and will bear a customary legend with respect to such transfer restrictions.
 
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Any attempt to so sell, transfer, assign, pledge, hypothecate, encumber or otherwise dispose of such Earn Out Shares will be null and void.
If the vesting of any Earn Out Shares has not occurred prior to the expiration of the Earn Out Period, then all Earn Out Shares unvested as of the end of the Earn Out Period will be automatically forfeited and deemed transferred to New Gelesis for no consideration and will be cancelled by New Gelesis and cease to exist.
In the event that there is a Change of Control Transaction with respect to New Gelesis after the Closing and during the Earn Out Period then immediately prior to the consummation of such Change of Control Transaction, any Earn Out Shares unvested at such time will vest (and no longer be subject to forfeiture) in accordance with the vesting conditions provided above, with the volume weighted average price per share of New Gelesis Common Stock deemed to be the per share Capstar Sale Price (as defined in the Business Combination Agreement) to be received by holders of shares of New Gelesis Common Stock in such Change of Control Transaction, and the holders of such vested Earn Out Shares will be eligible to participate in such Change of Control Transaction. For avoidance of doubt, assuming no prior vesting of such Earn Out Shares has occurred: if the Capstar Sale Price for acquisition of the shares of New Gelesis Common Stock in the Change of Control Transaction is greater than or equal to $17.50 per share, all of the Earn Out Shares will be deemed to have fully vested; provided that if the Capstar Sale Price for acquisition of the shares of New Gelesis Common Stock in the Change of Control Transaction is less than $12.50 per share, then none of the Earn Out Shares will be deemed to have vested and all such Earn Out Shares will be automatically forfeited and deemed transferred to New Gelesis for no consideration and will be cancelled by New Gelesis and cease to exist.
If, during the Earn Out Period, the outstanding shares of New Gelesis Common Stock are changed into a different number of shares or a different class, by reason of any dividend, subdivision, reclassification, recapitalization, split, combination or exchange, or any similar event will have occurred, then the applicable price per share set forth above will be equitably adjusted to reflect such change.
PIPE Financing
In connection with the foregoing and substantially concurrent with the execution of the Business Combination Agreement, CPSR entered into Subscription Agreements with each of the PIPE Investors, pursuant to which, among other things, the PIPE Investors have agreed to subscribe for and purchase, and CPSR has agreed to issue and sell to the PIPE Investors, an aggregate of 9,000,000 shares of Class A Common Stock at a price of $10.00 per share, for aggregate gross proceeds of $90 million. Affiliates of the Sponsor will fund up to $35 million in the PIPE Financing. A PIPE subscription with a prospective investor who had indicated an interest in providing us with a contingent combination of a $100 million senior secured credit facility and PIPE financing in the amount of $10 million was terminated before definitive debt agreements were executed and the investment could be concluded. The shares of Class A Common Stock to be issued pursuant to the Subscription Agreements have not been registered under the Securities Act in reliance upon the exemption provided in Section 4(a)(2) of the Securities Act. CPSR has granted the PIPE Investors certain registration rights in connection with the PIPE Investment. The PIPE Investment is contingent upon, among other things, the substantially concurrent closing of the Business Combination.
Related Agreements
In connection with the Business Combination, certain related agreements have been, or will be entered into on or prior to the closing of the Business Combination, including the Sponsor Letter Agreement, Subscription Agreements, Transaction Support Agreements and the Amended and Restated Registration and Stockholder Rights Agreement (each as defined in the accompanying proxy statement/prospectus). See the section below entitled “—  Related Agreements” for more information.
Aggregate New Gelesis Proceeds
The aggregate cash proceeds available for release to New Gelesis from the Trust Account in connection with the transactions contemplated hereby (after, for the avoidance of doubt, giving effect to any redemptions by the Public Stockholders that exercise redemption rights with respect to their shares of Class A Common
 
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Stock) and the aggregate cash proceeds actually received by New Gelesis in respect of the PIPE Investment, in each case, will be used for general corporate purposes after the Business Combination.
Closing and Effective Time of the Business Combination
The Closing of the transactions contemplated by the Business Combination Agreement is required to take place electronically by exchange of the closing deliverables as promptly as reasonably practicable, but in no event later than the third (3rd) business day, following the satisfaction (or, to the extent permitted by applicable law, waiver) of the conditions described below under the section entitled “—  Conditions to Closing of the Business Combination,” ​(other than those conditions that by their nature are to be satisfied at the Closing, but subject to satisfaction or waiver of such conditions) or at such other place, date and/or time as CPSR and Gelesis may agree in writing.
Conditions to Closing of the Business Combination
Conditions to Each Party’s Obligations
The respective obligations of each party to the Business Combination Agreement to consummate the transactions contemplated by the Business Combination are subject to the satisfaction or, if permitted by applicable law, waiver by the party whose benefit such condition exists, of the following conditions:

the applicable waiting period under the HSR Act relating to the Business Combination having been expired or been terminated and any other required regulatory approvals applicable to the transactions contemplated by the Business Combination Agreement and related agreements having been obtained;

each of (i) a written consent approving and adopting the Business Combination Agreement, the ancillary documents and the transactions contemplated thereby, duly executed by the Gelesis Equityholders required to approve and adopt such matters in accordance with the DGCL, Gelesis’ governing documents and stockholders agreement (the “Company Stockholder Written Consent”) and (ii) a written consent of the holders of Gelesis’ preferred stock pursuant to which the Gelesis preferred stock then issued and outstanding will be converted into shares of Gelesis Common Stock in accordance with the terms of Gelesis’ governing documents (the “Company Preferred Stockholder Approval”), having been obtained and not rescinded or amended in any respect;

no order or law issued by any court of competent jurisdiction or other governmental entity or other legal restraint or prohibition preventing the consummation of the transactions contemplated by Business Combination Agreement pending or being in effect;

this Registration Statement/proxy statement becoming effective in accordance with the provisions of the Securities Act, no stop order being issued by the SEC and remaining in effect with respect to this Registration Statement/proxy statement, and no proceeding seeking such a stop order being threatened or initiated by the SEC and remaining pending;

CPSR’s initial listing application with the NYSE in connection with the transactions contemplated by the Business Combination Agreement being approved and, immediately following the Effective Time, CPSR satisfying any applicable initial and continuing listing requirements of the NYSE, and CPSR not having received any notice of non-compliance in connection therewith that has not been cured or would not be cured at or immediately following the Effective Time, and the shares of New Gelesis Common Stock (including the shares of New Gelesis Common Stock to be issued in connection with the Business Combination), being approved for listing on the NYSE;

after giving effect to the transactions contemplated by the Business Combination Agreement (including the PIPE Investment), CPSR having at least $5,000,001 of net tangible assets (as determined in accordance with Rule 3a51-1(g)(1) of the Exchange Act) immediately after the Effective Time of the Business Combination;

the board of directors of New Gelesis (the “New Gelesis Board”) consisting of the number of directors, and comprising the individuals, determined as specified in the Business Combination Agreement; and
 
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the Required Capstar Stockholder Approval (as defined in the Business Combination Agreement) by the affirmative vote of the holders of the requisite number of shares of Class A Common Stock being obtained in accordance with CPSR’s governing documents and applicable law.
Other Conditions to the Obligations of the CPSR and Merger Sub
The obligations of the CPSR and Merger Sub (collectively, the “Capstar Parties”) to consummate the transactions contemplated by the Business Combination Agreement are subject to the satisfaction or, if permitted by applicable law, waiver by CPSR (on behalf of itself and the other Capstar Parties) of the following further conditions:

the representations and warranties of Gelesis regarding organization and qualification of Gelesis and its subsidiaries, certain representations and warranties regarding the capitalization of Gelesis, representations and warranties of Gelesis regarding the authority of Gelesis to, among other things, consummate the transactions contemplated by the Business Combination Agreement, the representation and warranty regarding no Company Material Adverse Effect (as defined in the Business Combination Agreement) having occurred and the representation and warranty of Gelesis regarding brokers fees being true and correct (without giving effect to any limitation of “materiality” or “Company Material Adverse Effect” or any similar limitation set forth in the Business Combination Agreement) in all respects (except for de minimis inaccuracies) as of the Closing Date as if made at and as of such date (or, if given as of an earlier date, as of such earlier date);

the other representations and warranties of Gelesis being true and correct (without giving effect to any limitation as to “materiality” or “Company Material Adverse Effect” or any similar limitation set forth in the Business Combination Agreement) in all respects as of the Closing Date (or, if given as of an earlier date, as of such earlier date), except where the failure of such representations and warranties to be true and correct, taken as a whole, does not cause a Company Material Adverse Effect;

Gelesis having performed and complied in all material respects with the covenants and agreements required to be performed or complied with by it under the Business Combination Agreement at or prior to the Closing;

since the date of the Business Combination Agreement, no Company Material Adverse Effect has occurred that is continuing;

CPSR must have received a certificate executed by an authorized officer of Gelesis confirming that the conditions set forth in the first four bullet points in this section have been satisfied;

CPSR must have received the Amended and Restated Registration and Stockholder Rights Agreement duly executed by the Gelesis stockholders set forth therein; and

the Minimum Cash Condition.
Other Conditions to the Obligations of Gelesis
The obligations of Gelesis to consummate the transactions contemplated by the Business Combination Agreement are subject to the satisfaction or, if permitted by applicable law, waiver by Gelesis of the following further conditions:

the representations and warranties regarding organization and qualification of the Capstar Parties, the authority of CPSR to execute and deliver the Business Combination Agreement, and each of the ancillary documents thereto to which it is or will be a party and to consummate the transactions contemplated thereby, certain representations and warranties regarding the capitalization of the Capstar Parties and brokers fees and the representation and warranty regarding no Capstar Material Adverse Effect (as defined in the Business Combination Agreement) having occurred being true and correct in all respects (except for de minimis inaccuracies) as of the Closing Date, as though made on and as of the Closing Date (or, if given as of an earlier date, as of such earlier date);

the other representations and warranties of the Capstar Parties being true and correct (without giving effect to any limitation of “materiality” or “Capstar Material Adverse Effect” or any similar
 
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limitation set forth in the Business Combination Agreement) in all respects as of the Closing Date, except where the failure of such representations and warranties to be true and correct, taken as a whole, does not cause a Capstar Material Adverse Effect;

the Capstar Parties having performed and complied in all material respects with the covenants and agreements required to be performed or complied with by them under the Business Combination Agreement at or prior to the Closing;

Gelesis must have received a certificate executed by an authorized officer of CPSR confirming that the conditions set forth in the first three bullet points of this section have been satisfied;

Gelesis must have received the Amended and Restated Registration and Stockholder Rights Agreement duly executed by CPSR and the Sponsor; and

the Minimum Cash Condition.
Representations and Warranties
In the Business Combination Agreement, Gelesis makes certain representations and warranties (with certain exceptions set forth in the Disclosure Schedules to the Business Combination Agreement) relating to, among other things:

its corporate organization, qualification to do business in each jurisdiction in which its properties are owned or leased by it or where the operation of its business as currently conducted makes such qualification necessary, good standing and corporate power required to own and operate its properties and assets and to carry out the business as presently conducted;

its capital structure, including with respect to (i) the duly authorized and validly issued and outstanding equity securities of Gelesis; (ii) the number and class or series of all equity securities of Gelesis; (iii) all indebtedness of Gelesis; and (iv) additional matters with respect to its options, warrant and restricted shares;

its having requisite corporate authority to enter into the Business Combination Agreement and to complete the Business Combination;

Gelesis’ financial statements as of and for the periods ended December 31, 2018, December 31, 2019 and December 31, 2020 and March 31, 2021 fairly present, in all material respects, the financial position of Gelesis as of the dates thereof and the results of operations of Gelesis for the periods reflected therein, and have been prepared in conformity with U.S. generally accepted accounting principles (“GAAP”) applied on a consistent basis and were audited in accordance with the requirements of the Public Company Accounting Oversight Board;

(i) its maintenance of financial books and records that accurately and completely reflect the revenues, expenses, assets and liabilities of Gelesis in all material respects, and (ii) its proper internal controls over accounting which are designed to provide reasonable assurance that (A) transactions are executed in accordance with management’s authorizations; and (B) transactions are recorded as necessary to permit preparation of proper and accurate financial statements in conformity with GAAP and to maintain asset accountability;

(i) Gelesis has all material necessary permits and licenses to conduct its business as currently conducted, (ii) all such permits are in full force and effect, (iii) no written notice of revocation, cancellation or termination of any material permit has been received by Gelesis and (iv) there are, and have been, no proceedings pending, or to Gelesis’ knowledge, threatened relating to the suspension, revocation or material and adverse modification of any material permit;

the transactions contemplated by the Business Combination will not require any notice to any governmental authority or the approval of any material permit for the continued conduct of the business of Gelesis as currently conducted;

that each of its material contracts (i) is a valid and binding agreement, (ii) is in full force and effect and enforceable, (iii) there are no known material breaches of such materials contracts and (iv) no
 
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event has occurred that would result in a material breach of, or default under, any material contract by Gelesis or, to Gelesis’ knowledge, the counterparties thereto;

since December 31, 2020, no material supplier or material customer has canceled, terminated or materially and adversely altered its relationship with Gelesis, or to Gelesis’ knowledge, threatened in writing to cancel or terminate its relationship with Gelesis, and there have been no material disputes between Gelesis and any material supplier or material customer since the latest balance sheet date;

since December 31, 2020, (a) no Company Material Adverse Effect has occurred, (b) Gelesis has conducted its business in the ordinary course in all material respects and (c) has not taken any action that would require the consent of CPSR if taken during the period from the signing of the Business Combination Agreement until the Closing;

there is (and for the past three (3) years there has been) no material pending litigation against Gelesis;

that it is in compliance with all applicable laws, including, without limitation, those relating to foreign corrupt practices, lending activities and any law regulating or covering conduct in, or the nature of, the workplace, including regarding sexual harassment or, on any impermissible basis, a hostile work environment;

matters related to its employees as well as its compliance with applicable laws related to employment matters, proper tax withholding and employee benefit plans, including with respect to ERISA and tax matters relating thereto;

environmental matters, including that Gelesis is in compliance with environmental laws;

Gelesis’ ownership or appropriate licenses to use intellectual property used in its business, including with respect to the absence of rights of third parties to any of its intellectual property rights, and any infringement by a third party of Gelesis’ intellectual property rights;

its maintenance of proper insurance policies;

various matters related to taxes, including that (i) Gelesis has duly and timely filed all material tax returns, which are true and complete in all material respects; (ii) no statute of limitations in respect of the assessment or collection of any taxes of Gelesis has been waived or extended, other than any such waiver or extension that is no longer in effect or that was an extension of time to file a tax return obtained in the ordinary course of business; (iii) Gelesis has timely withheld and paid over to the applicable taxing authority all material amounts required to be withheld or paid by Gelesis in connection with amounts paid or owing to any employee, individual independent contractor, other service providers, equity interest holder or other third party; (iv) there is no lien (other than certain permitted liens specified in the Business Combination Agreement) for material taxes upon any of the assets of Gelesis; (v) in the past five years, no claim has ever been made by a taxing authority in a jurisdiction where Gelesis does not file tax returns, asserting that Gelesis is or may be subject to tax in such jurisdiction; (vi) Gelesis has no permanent establishment or other place of business other than in the country in which it is organized, and Gelesis is a tax resident solely in its country of incorporation; (vii) Gelesis is not a party to any tax sharing, allocation, indemnification or similar contract; and (viii) Gelesis has not taken any action, and is not aware of any fact or circumstances, that would reasonably be expected to prevent the Business Combination from qualifying as a “reorganization” within the meaning of Section 368(a) of the Code;

except as disclosed by Gelesis, no investment banker, broker, finder or other intermediary which has been retained by or is authorized to act on behalf of Gelesis and its affiliates will be entitled to any fee or commissions from Gelesis upon consummation of the Business Combination;

that it has good and marketable title to all of its owned real property, free and clear of all liens, except permitted liens and it has good, marketable and indefeasible title to, or a valid leasehold interest in or license or right to use, all of the material assets and properties of Gelesis reflected in the financial statements;

that it has (i) implemented written policies relating to the processing of personal data and (ii) complied in all material respects with all applicable privacy laws;
 
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that (i) it is in material compliance with applicable sanctions and export control laws, anti-corruption laws and anti-money laundering laws, (ii) it is not and has not, nor has any of its representatives, been named on any sanctions and export control laws related list or otherwise engaged in unlawful dealings with or for the benefit of any persons on such list, and (iii) neither it nor, to its knowledge, any of its representatives, have made, offered, promised, paid or received any improper payments under any anti-corruption laws;

matters related to regulatory compliance, including with respect to applicable healthcare laws, and that all company products are being, and have at all times been, researched, developed, tested, investigated, manufactured, prepared, packaged, labeled, stored, marketed, distributed and sold in compliance in all material respects with applicable healthcare laws; and

other customary representations and warranties.
In the Business Combination Agreement, CPSR makes certain representations and warranties relating to, among other things:

its proper corporate organization and similar corporate matters;

authorization, execution, delivery and enforceability of the Business Combination Agreement and other transaction documents;

except as disclosed by CPSR, no investment banker, broker, finder or other intermediary which has been retained by or is authorized to act on behalf of CPSR and its affiliates will be entitled to any fee or commissions from Gelesis upon consummation of the Business Combination;

its capital structure, including with respect to (i) the duly authorized and validly issued and outstanding equity securities of CPSR; (ii) the number and class or series of all equity securities of CPSR; and (iii) additional matters with respect to its options;

there is no pending material litigation against CPSR;

it is in compliance with all applicable laws, including, without limitation, those relating to privacy laws, lending laws, foreign corrupt practices, and any law regulating or covering conduct in, or the nature of, the workplace, including regarding sexual harassment or, on any impermissible basis, a hostile work environment;

it has (i) established internal controls over financial reporting sufficient to provide reasonable assurance regarding the reliability of CPSR’s financial reporting and the preparation of CPSR’s financial statements for external purposes in accordance with GAAP and (ii) established and maintained disclosure controls and procedures designed to ensure that material information relating to CPSR is made known to CPSR’s principal executive officer and principal financial officer; and

other customary representations and warranties.
Material Adverse Effect
Under the Business Combination Agreement, certain representations and warranties of Gelesis and CPSR are qualified in whole or in part by materiality thresholds. In addition, certain representations and warranties of Gelesis and CPSR are qualified in whole or in part by a material adverse effect standard for purposes of determining whether a breach of such representations and warranties has occurred.
Pursuant to the Business Combination Agreement, a “Company Material Adverse Effect” means any change, event, effect or occurrence that, individually or in the aggregate with any other change, event, effect or occurrence, has had or would reasonably be expected to have a material adverse effect on (a) the business, results of operations or financial condition of Gelesis and its subsidiaries, taken as a whole, or (b) the ability of Gelesis to consummate the transactions contemplated by the Business Combination Agreement in accordance with its terms; provided, however, that, in the case of clause (a), none of the following will be taken into account in determining whether a Company Material Adverse Effect has occurred or is reasonably likely to occur: any adverse change, event, effect or occurrence arising after the date of the Business Combination Agreement from or related to (i) general business or economic conditions in or affecting the United States, or changes therein, or the global economy generally, (ii) any national or international political
 
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or social conditions in the United States or any other country, including the engagement by the United States or any other country in hostilities, whether or not pursuant to the declaration of a national emergency or war, or the occurrence in any place of any military or terrorist attack, sabotage or cyberterrorism, (iii) changes in conditions of the financial, banking, capital or securities markets generally in the United States or any other country or region in the world, including changes in interest rates in the United States or any other country and changes in exchange rates for the currencies of any countries, (iv) changes in any applicable laws after the date of the Business Combination Agreement, (v) any change, event, effect or occurrence that is generally applicable to the industries or markets in which the Company operates, (vi) the execution or public announcement of the Business Combination Agreement or the pendency or consummation of the transactions contemplated by the Business Combination Agreement, including the impact thereof on the relationships, contractual or otherwise, of Gelesis or any of its subsidiaries with employees, customers, investors, contractors, lenders, suppliers, vendors, partners, licensors, licensees, payors or other third parties related thereto (provided that the exception in this clause (vi) will not apply to the representations and warranties set forth in Section 3.5(b) of the Business Combination Agreement to the extent that its purpose is to address the consequences resulting from the public announcement or pendency or consummation of the transactions contemplated by the Business Combination Agreement or the condition set forth in Section 6.2(a) of the Business Combination Agreement to the extent it relates to such representations and warranties), (vii) any failure by Gelesis or any of its subsidiaries to meet, or changes to, any internal or published budgets, projections, forecasts, estimates or predictions (although the underlying facts and circumstances resulting in such failure may be taken into account to the extent not otherwise excluded from this definition pursuant to clauses (i) through (vi) or (viii)), or (viii) any hurricane, tornado, flood, earthquake, tsunami, natural disaster, mudslides, wild fires, epidemics, pandemics (including COVID-19) or quarantines, acts of God or other natural disasters or comparable events in the United States or any other country or region in the world, or any escalation of the foregoing; provided, however, that any change, event, effect or occurrence described in or resulting from a matter described in any of the foregoing clauses (i) through (v) or (viii) may be taken into account in determining whether a Company Material Adverse Effect has occurred or is reasonably likely to occur to the extent such change, event, effect or occurrence has had or would reasonably be expected to have a materially disproportionate adverse effect on Gelesis or any of its subsidiaries, taken as a whole, relative to other participants operating in the industries or markets in which Gelesis or any of its subsidiaries operate.
Under the Business Combination Agreement, certain representations and warranties of the Capstar Parties are qualified in whole or in part by a material adverse effect standard for purposes of determining whether a breach of such representations and warranties has occurred. Pursuant to the Business Combination Agreement, a “Capstar Material Adverse Effect” means any change, event, effect or occurrence that, individually or in the aggregate with any other change, event, effect or occurrence, has had or would reasonably be expected to have a material adverse effect on the ability of any Capstar Party to consummate the transactions contemplated by this Agreement in accordance with its terms.
Covenants of Gelesis
Gelesis made certain covenants under the Business Combination Agreement, including, among others, the following:

Subject to certain exceptions or as consented to in writing by CPSR (such consent not to be unreasonably withheld, conditioned or delayed), prior to the Closing, Gelesis will and will cause its subsidiaries to, operate the business of Gelesis and its subsidiaries in the ordinary course in all material respects and use commercially reasonable efforts to maintain and preserve intact in all material respects the business organization, assets, properties and material business relations of Gelesis and its subsidiaries.

Subject to certain exceptions, prior to the Closing, Gelesis will and will cause its subsidiaries to, not do any of the following without CPSR’s consent (such consent not to be unreasonably withheld, conditioned or delayed except in the case of the first, second, fifth, twelfth, fourteenth, fifteenth or sixteenth sub-bullets below):

declare, set aside, make or pay any dividends or distribution or payment in respect of, or repurchase any outstanding, any equity securities of Gelesis or any subsidiary;
 
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merge, consolidate, combine or amalgamate with any person or purchase or otherwise acquire any business entity or organization;

adopt any amendments, supplements, restatements or modifications to any Gelesis governing documents, the Gelesis shareholders agreement or the Gelesis registration rights agreement;

dispose or subject to a lien any equity interests of Gelesis or its subsidiaries or issue any options or other rights obligating Gelesis or any of its subsidiaries to issue any equity interests;

incur, create or assume any indebtedness other than ordinary course trade payables;