SCHEDULE: Nantahala Capital Discloses 9.99% Stake in Fractyl Health

Nantahala Capital Management, along with Wilmot B. Harkey and Daniel Mack, reported a 9.99% beneficial ownership stake in Fractyl Health, Inc. as of September 30, 2025.

Summary

• Nantahala Capital Management, LLC, Wilmot B. Harkey, and Daniel Mack (the "Reporting Persons") collectively reported beneficial ownership of 13,283,628 shares of Fractyl Health, Inc. Common Stock.
• This ownership represents 9.99% of the total class of securities outstanding.
• The reported shares include 1,146,711 shares that can be acquired within sixty days through the exercise of warrants.
• The Reporting Persons hold shared voting power and shared dispositive power over all 13,283,628 shares.
• Nantahala Capital Management, LLC is classified as an investment adviser, and Messrs. Harkey and Mack are its managing members and control persons.
• The securities were acquired and are held in the ordinary course of business, without the purpose or effect of changing or influencing control of Fractyl Health, Inc.

Sentiment

Score: 7

Explanation: The disclosure of a significant, passive stake by a reputable investment firm like Nantahala Capital Management is generally viewed as a positive signal, indicating institutional confidence in the company without suggesting any immediate control contest or activist intent.

Positives

• A significant stake (9.99%) by an institutional investor like Nantahala Capital Management can signal confidence in the company's long-term prospects.
• The disclosure that the shares are held in the ordinary course of business and not for control purposes suggests a passive, long-term investment strategy.

Negatives

• No specific negative information is contained within this beneficial ownership report.

Risks

• No specific risks related to Fractyl Health, Inc.'s operations or financial health are disclosed in this beneficial ownership report.

Future Outlook

This filing does not contain any forward-looking statements or guidance regarding Fractyl Health, Inc.'s future outlook.

Management Comments

• "By signing below I certify that, to the best of my knowledge and belief, the securities referred to above were acquired and are held in the ordinary course of business and were not acquired and are not held for the purpose of or with the effect of changing or influencing the control of the issuer of the securities and were not acquired and are not held in connection with or as a participant in any transaction having that purpose or effect, other than activities solely in connection with a nomination under §§ 240.14a-11."

Industry Context

The filing of a Schedule 13G by an investment adviser like Nantahala Capital Management for a healthcare company like Fractyl Health, Inc. is a routine disclosure. It indicates an institutional investor has taken a significant, passive stake, which is common across various industries, including the biotechnology and healthcare sectors.

Comparison to Industry Standards

• The 9.99% stake is a substantial position, nearing the 10% threshold that would trigger additional reporting requirements (e.g., potential insider status).
• Nantahala Capital Management's classification as an investment adviser (IA) and the certification of passive intent are standard for Schedule 13G filings by such entities, aligning with typical institutional investment practices.

Stakeholder Impact

• Shareholders: The disclosure of a significant institutional investor holding a nearly 10% stake could be viewed positively, potentially increasing investor confidence and liquidity.
• Management: Awareness of a large, passive institutional holder may influence strategic decisions, though the filing explicitly states no intent to influence control.

Key Dates

Recommendation

The filing indicates a significant institutional investor has taken a substantial, passive stake in Fractyl Health. While this is generally a positive signal of confidence, the filing itself does not provide new operational or financial data to warrant a 'buy' or 'sell' recommendation. It primarily confirms a change in beneficial ownership structure. Therefore, a 'hold' recommendation is appropriate, suggesting investors maintain their current position while monitoring future company performance and further disclosures.

Keywords

Fractyl Health, Nantahala Capital Management, Beneficial Ownership, Schedule 13G, Common Stock, Investment Adviser, Healthcare, Biotechnology