Enteromedics seeks to strengthen position in obesity treatment market with Bariosurg buy

May 24, 2017 – 8:41 AM | By Andrea Gonzalez | No comments yet

By Omar Ford, Staff Writer

Enteromedics Inc. has acquired obesity treatment specialist Bariosurg Inc. Lake Forest, Calif.-based Bariosurg is developing the Gastric Vest, an investigational, minimally invasive, laparoscopically implanted device being studied for weight loss in morbidly obese patients. The device wraps around the stomach and emulates the effect of conventional weight loss surgery. It also enables gastric volume reduction without permanently changing patient anatomy. Shares of St. Paul, Minn.-based Enteromedics (NASDAQ:ETRM) were up 10.68 percent and closed at $5.08 on Tuesday.

The consideration paid by Enteromedics for Bariosurg consists of 1.38 million unregistered shares of Enteromedics common stock, 1 million unregistered shares of conditional convertible preferred stock and $2 million in cash.

Enteromedics developed Vbloc technology, an implantable device designed to block signals between the brain and the stomach, which it launched about two years ago. (See Medical Device Daily, May 21, 2015.)

“In the two years since its FDA approval, Vbloc has gained significant traction, however, unmet needs still exist for morbidly obese patients seeking a solution,” Dan Gladney, Enteromedics president, CEO and board chairman, said during a Tuesday morning conference call. “If you can imagine what these two complementary medical devices can offer doctors and patients when paired together – the Vbloc and the Gastric Vest – you can understand our future path.”

In a pilot study of 14 patients conducted outside the U.S., at 12 months, Gastric Vest patients demonstrated a mean percent excess weight loss of 85 percent, an average drop in HbA1c of 2.1 points, and an average waist circumference reduction of 38 centimeters, or about 15 inches.

Gladney said the company plans to do studies beyond 12 months to see the impact of the Gastric Vest. He noted that a clinical study of the Gastric Vest could come sometime in 2018.

“We’ve never seen a device offered in the bariatric space that had this amount of weight loss, that literally competes very effectively with the gold standards of bariatric surgery,” said Gladney. “That in itself drove a high level of interest in [Bariosurg].”

In connection with the acquisition, Raj Nihalani, inventor of the Gastric Vest System, founder and former CEO of Bariosurg has been appointed CTO of Enteromedics.

DEVELOPMENTS IN OBESITY TREATMENT LANDSCAPE

Gladney’s firm has been in the process of securing data. The technology faces a bevy of competitors in the obesity treatment space, and data is crucial for companies hoping to have a significant foothold in the space.

In February, Enteromedics reported the publication of three-year data from its Vbloc DM2 Study of obese patients with type 2 diabetes. The publication, titled “Vagal nerve block for improvements in glycemic control in obese patients with type 2 diabetes mellitus: Three-year results of the VBLOC DM2 study,” was published in the Journal of Diabetes and Obesity in February. Results from the study demonstrate that after three years, the average percentage excess weight loss was 21 percent with reductions in hemoglobin A(1c)(HbA(1c)) of 0.6 percentage points from a baseline of 7.8 percent.

Enteromedic’s rivals have also been compiling data. On Tuesday, GI Dynamics Inc. presented data from an investigator-initiated meta-analysis of 14 studies of 431 showing its Endobarrier device improved glycemic control in a clinically impactful manner in patients with type 2 diabetes and obesity.

However, the company has had some significant stumbling blocks. Last week, the Boston-based company saw the CE mark for its Endobarrier device suspended due to pending closure of nonconformance issues related to its quality management system. (See Medical Device Daily, May 19, 2017.)

The Endobarrier, a plastic sleeve-like device that creates a barrier between food and the wall of the small intestine to treat obesity, received the CE mark in 2009, but has yet to garner FDA approval. (See Medical Device Daily, Dec. 23, 2009.)

2015 BREAKOUT FOR OBESITY DEVICES 2015

In 2015, most companies in the space made significant strides towards bringing these technologies to market. During this time, Dublin-based Medtronic plc introduced the Gastrisail, an FDA-cleared device designed to improve the consistency and efficiency of sleeve gastrectomy procedures about two years ago.

Medtronic inherited the device through its $43 billion acquisition of Covidien.

San Clemente, Calif.-based Reshape Medical Inc. won a PMA for its dual balloon for nonsurgical weight loss for patients with a BMI of 30 to 40 kg/m2.

Apollo Endosurgery Inc., of Austin, Texas, inherited both the Lap-Band and the Orbera intragastric balloon through its $110 million acquisition of Dublin-based Allergan plc’s obesity intervention division in 2013.

The company reported pivotal trial results in May 2015, supporting the use of the Orbera balloon for weight loss and received approval for the device a few months later. (See Medical Device Daily, Aug. 7, 2015.)

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