September 7, 2011

VentureWire

GI Dynamics Raises A$80M Through Australian IPO

GI Dynamics Inc. has raised 80 million Australian dollars ($84.2 million) by going public in Australia as it prepares to expand the international launch of its medical-device treatment for Type 2 diabetes.

Going public in the U.S. isn't much of an option for most small medical-technology companies, but the Australian market has been more welcoming. In December, venture-backed medical-device company REVA Medical Inc. went public in Australia as well.

GI Dynamics, which will continue to be based in Lexington, Mass., raised about three years' worth of funding and plans to expand sales of its EndoBarrier product in Europe and to launch in Australia, said Chief Executive Stuart A. Randle.

The device is available in Chile, Germany, the Netherlands and the U.K. GI Dynamics also has approval to launch a pilot trial in the U.S. Randle declined to discuss revenue or to give sales projections.

The company, which raised $76 million privately, saw all its major venture backers participate in the initial public offering, including Advanced Technology Ventures, Cutlass Capital, Domain Associates, Johnson & Johnson Development Corp., Medtronic Inc. and Polaris Venture Partners. Its market capitalization stands at about A304 million ($319.8 million).

Randle declined to say if GI Dynamics would need to raise more capital or to discuss other financial specifics, such as when the company expects to turn profitable. Investors from Hong Kong, Singapore and the U.K. have taken stakes in the company, Randle said, but he declined to name them.

GI Dynamics's implantable, gastrointestinal-liner is designed to treat Type 2 diabetes and also to help patients lose weight. It may reduce or eliminate patients' need for medications during the treatment period.

The device, inserted and removed through the mouth, is placed in the gastrointestinal tract. There, it forms a barrier between food ingested and the upper section of the intestinal wall. This mimics the effects of gastric-bypass surgery and helps patients improve blood-glucose tolerance and lose weight, according to the company.

EndoBarrier has approval in Europe for implant periods of up to 12 months to treat Type 2 diabetes and obesity. After that the device is removed, but clinical studies suggest that its effects on blood-glucose levels and weight loss persist, possibly because the device helps reset certain metabolic pathways, according to the company.

Part of its effort to launch EndoBarrier includes establishing centers of excellence at existing medical centers. Patients treated at these centers would have access to EndoBarrier and also to specialists who can prescribe medications and offer dietary and behavioral counseling, Randle said.