Earlier this year, Lexington, MA-based GI Dynamics faced a challenge that’s all too common these days in life sciences: It needed to raise $80 million to get through the next three years, and there are limited options for medical-device companies seeking that much cash. The company is developing a weight-loss device, and the money was vital to commercialize the product overseas and start new U.S. trials.
“The U.S. IPO market was closed,” says Michael Carusi, a general partner at Advanced Technology Ventures (ATV), one of GI Dynamics’ early investors. “And we didn’t want to do two $40 million private rounds.”
So on September 7, GI Dynamics went public on the Australian stock exchange, which, when combined with a simultaneous private offering, brought in all $80 million. Why Australia? First of all, GI Dynamics introduced its device, called EndoBarrier Gastrointestinal Liner, to the Australian market last month. “When companies launch products in a market, investors there hear buzz,” Carusi says. Secondly, he adds, Australian investors have more of a buy-and-hold mentality when it comes to life sciences companies than U.S. investors do.
That patience will likely come in handy for GI Dynamics’ investors. The company hopes to get regulatory approvals around the world to use its device to treat two separate but related epidemics: obesity and Type 2 diabetes. It’s an ambitious plan, especially at a time when the FDA is under pressure to improve its scrutiny of medical devices. Regulatory approval in the U.S. vs. other countries, says GI Dynamics CEO Stuart Randle, “will be a much longer process.”
The EndoBarrier is a two-foot-long device that doctors can implant into the intestine during a minimally invasive endoscopic procedure. It acts as a block along part of the intestine wall, which slows down digestion and
