GI Dynamics (ASX:GID) had a less-than-auspicious début on the Australian stock exchange yesterday, where GID share prices dropped 13 percent in their first day of public trading.
The Lexington, Mass.-based weight-loss device maker went public on the Australian Securities Exchange with an initial public offering August 11 that raised about $86 million. Yesterday marked the first day of public trading for the stock.
GID shares opened at A$1.07, or about $1.13 U.S. (and also the stock’s high-water mark for the day). Prices bottomed out at A$0.90 (roughly 95 cents U.S.) before closing at A$0.93, or about 98 pennies.
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The health care segment of the S&P ASX 200 gained 2.4 percent on the day; the index overall gained 2.65 percent yesterday.
GI Dynamics put up some 72.7 million chess depository interests for A$1.10 per CDI, a type of security used by the Australian exchange for international companies. The IPO ran alongside a private placement offering, with existing investors Medtronic Inc. (NYSE:MDT), Advanced Technology Ventures, Domain, Polaris Ventures and Cutlass Capital along for the ride.
GI Dynamics plans to use the proceeds to fund a U.S. pivotal study and the commercialization of its EndoBarrier gastrointestinal sleeve, which recently won Australian approval for treatment of Type II diabetes and obesity. The device won CE Mark approval in the European Union in December 2009 for a six-month course of treatment; a 12-month course was later given the nod across the pond. Company officials estimate the cost of a full U.S. clinical trial to run about $26 million.
Founded in 2003, GID raised $76 million in three funding rounds and another $6 million in a convertible notes offering. As of the end of 2010, GI Dynamics had spent about $62.9 million developing the device, according to regulatory documents filed in conjunction with the IPO.
The EndoBarrier is a plastic sleeve inserted endoscopically into the small intestine, where it slows the uptake of nutrients from food to induce weight loss and help control the symptoms of diabetes. The EndoBarrier is commercially available in Chile, Germany, the U.K. and the Netherlands. GI Dynamics also won an investigational device exemption from the FDA for a pilot trial of the EndoBarrier in the U.S.
The device can be implanted without surgery, which company president & CEO Stuart Randle views as the next wave for medical devices. “I think the next generation of technologies is going to be combinations of devices, combinations of drugs and combinations of devices and drugs, all focused on effecting multiple mechanisms of action simultaneously — and less invasively than surgery,” Randle told MassDevice in a June 2009 interview.
A series of clinical studies in 2009, as well as more recent research, has shown that patients treated with the EndoBarrier reduced their average blood glucose levels and lowered other diabetic factors including fasting blood glucose; morbidly obese patients lost significant amounts of weight in the trials.