Dive Brief:

• EndoGastric Solutions (EGS) has raised $30.5 million to commercialize a device that enables the endoscopic treatment of gastroesophageal reflux disease (GERD).

• Using the EsophyX device, physicians can reconstruct gastroesophageal valves and thereby reduce reflux.

• The financing comes two years after the FDA cleared the latest version of EsophyX for use in the U.S.

Dive Insight:

GERD is characterized by leaking acid from the stomach up into the esophagus, where it causes heartburn and other symptoms. Typically, GERD stems from the weakening of muscles at the junction between the esophagus and the gastrointestinal tract. In healthy individuals, these muscles allow food into the gastrointestinal tract but stop stomach acid from going the other way. However, when the muscles weaken they fail to provide an effective barrier to stomach acids.

Lifestyle changes and over-the-counter medicines can bring reflux symptoms under control but some patients require more aggressive treatment. Prescription drugs including proton-pump inhibitors can help by reducing the production of stomach acid. These drugs do not address the root cause of the problem, though.

Patients not helped by prescription drugs or do not want to be on long-term medication can undergo surgery to tighten the muscle at the bottom of the esophagus. Surgeons normally access the muscles through a small incision.

EGS thinks it can improve on this keyhole surgical approach by removing the need to make an incision. Instead, the EsophyX and an endoscope are inserted through the mouth of a patient under general anesthetic and passed down the esophagus. Once in the stomach, the surgeon views images from the endoscope and uses EsophyX to deploy fasteners and reconstruct the esophageal valve.  

EGS has spent a considerable amount of money developing the device. In the past four years alone, EGS has raised more than $100 million and it pulled in other $20-million-plus rounds earlier in its 15-year history. Advanced Technology Ventures, Canaan Partners and other investors who participated in the previous rounds returned for the latest $30.5 million financing.

Some of the money will support commercial expansion of the device. EGS will also use the money to improve its engineering and thereby increase its profit margins. The success of these initiatives will dictate whether EGS can turn EsophyX into a major product and deliver a return for its investors