GI Dynamics Looks to Tackle Two Global Epidemics with Single Device, Reveals Seedling Roots

9/19/08

GI Dynamics has ambitious plans to gain regulatory approvals to treat two global epidemics—obesity and type 2 diabetes—with its experimental intestinal liner. The reversible, minimally invasive procedure to place the device in patients could appeal to an even wider market than permanent surgeries such as gastric bypass that are currently popular options.

The Lexington, MA, medical devices startup unveiled significant results from a pilot study of its liner in patients with type 2 diabetes this week. (Check out Luke’s story on the trial, which showed that the so-called EndoBarrier device dramatically reduced blood sugar levels.) But GI Dynamics CEO Stuart Randle says that the first major health problem the company aims to tackle with the device is obesity. Randle also detailed how the firm, which has remained somewhat quiet during its five-odd years in operation, has convinced some of the best-known venture capitalists in the Boston area to bet on the potential of the EndoBarrier.

The EndoBarrier is a two-foot long, flexible sleeve designed to limit absorption of calories and nutrients by physically blocking food from coming in contact with a segment of the small intestine. Using endoscopic tools, doctors can slip the device into place via a patient’s mouth; to remove the liner they essentially reverse the procedure. (For more details on the device, here is a list of U.S. patents assigned to the company.) Given that there are about 24 million American diabetics and some 70 million obese Americans, GI’s technology could tap huge markets worth billions of dollars.

“I think the bottom line is we are very excited about where we are,” Randle says. “We have a single technology that we can apply to two global epidemics in obesity and diabetes. We’re going to continue to expand our clinical trials and continue moving forward.”

Within the next few months, Randle says, the company plans to begin further studies, outside the U.S., of EndoBarrier for weight loss. He adds that the firm plans to have discussions with the FDA in the next year about the design of a pivotal clinical trial of the device for that indication. As is typical in the medtech business, the firm expects to gain a CE Mark for European marketing clearance before the FDA gives it a green light to begin sales in this country.

And what about all those folks here and abroad who aren’t considered obese but would like to lose some weight anyway, I asked Randle, will the company seek approval for the device to be marketed to them? “We expect that we will. We will work with the regulatory agency to work on that,” he said, though he declined to elaborate further on development of the product for uses that could be considered more aesthetic than medical.

GI does have competitors in the development of alternatives to invasive surgery for obesity treatment. For example, St. Paul, MN-based EnteroMedics proposes to implant electrodes that block hunger signals sent from the brain to the vagus nerve.

Though I’m inclined to be skeptical of any medical device startup with plans to solve health epidemics with seemingly simple implants, I was impressed to learn that some big names in life sciences were attached to GI. For one, Christoph Westphal led Polaris Venture Partners’ early investment in GI back in 2004 before he became the full-time CEO of Cambridge, MA, biotech firm Sirtris. And among GI’s investors http://www.gidynamics.com/investors, who have pumped $46 million in VC financing in the firm, is Johnson & Johnson Development, the venture arm of medical products giant J&J (NYSE:JNJ).

GI is actually a product of former Newton, MA, medical-devices incubator Seedling Enterprises, which was launched in 2000 with $3 million in funding from individual investors. Andy Levine, a co-founder of Seedling and former engineer for Boston Scientific (NYSE:BSX) and other device giants, led the initial development of GI’s EndoBarrier and became founding CEO of the firm in 2003, Randle says. Randle was an investor in Seedling and took the GI deal to Waltham VC firm Advanced Technology Ventures, where he was an entrepreneur in residence before taking the helm at GI in 2004. Levine now serves as GI’s chief technology officer.

Randle says that Seedling has invested all of its $3 million and is no longer in operation, yet it retains equity stakes in some of the companies it helped form including Massachusetts medical devices startups LumeRx, a developer of light-based treatments for intestinal bacteria known as H. pylori, and Angstrom Medica, a maker of orthopedic implants, which was sold Pioneer Surgical Technology of Michigan last year. (I covered the lukewarm feelings of one investor toward LumeRx in this recent story for Mass High Tech.) GI, however, could prove to be the most impressive company to sprout from Seedling depending on the success of EndoBarrier in the multibillion-dollar obesity and diabetes markets. Actually, breaking into just one of the two markets would likely do the trick.

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