With an estimated 300 million clinically obese people on the planet, companies that are looking to help ease that epidemic will likely have no shortage of customers.
And investors looking to cash in on this opportunity have a new candidate for their dollars: Columbus, Ohio-based startup EndoRetics Inc. is developing a clamp-like device designed to shrink the opening in a patient’s stomach and restrict food intake. Unlike traditional gastric bypass surgery, the procedure to implant EndoRetics’ device requires no incision, minimal anesthesia, can be performed on an outpatient basis and can easily be reversed.
CEO Vince Kazmer refers to EndoRetics as a “virtual company” because it hasn’t raised any significant funding. Plus, Kazmer still works as CEO of Interventional Imaging Inc., a Cleveland-based firm that develops MRI coils. He hopes to get to the point where he’s forced to choose between the two.
EndoRetics has shown enough early promise to receive a $50,000 investment from economic development group TechColumbus, which the company has used primarily for market research. Kazmer plans to start fundraising in earnest shortly, hoping for an initial $500,000 in seed funding to be followed by a $5 million Series A round.
EndoRetics’ device was created by two Ohio State University professors, Dr. Jeffrey Hazey and Dr. Bradley Needleman, who are also co-founders of the company with Kazmer. Ohio State’s Technology Licensing & Commercialization office funded the development of a prototype, which has been tested on an extracted animal stomach.
Here’s how the procedure to implant the device works: A delivery tube is inserted into the patient’s mouth, allowing the device to travel through the esophagus and to the upper part of the patient’s stomach. Then a vacuum is used to pull stomach tissue into the device and a clamp to hold the tissue in place is released, locking the device in. The device reduces the size of the opening in the upper part of the stomach, theoretically restricting food intake and enabling weight loss. The outpatient procedure will take about 20 minutes, and, if necessary, the device can be removed just as easily as it was implanted, Kazmer said.
The company plans to initially focus on the self-pay, elective market of American adults with a body mass index (BMI) greater than 25, since most insurers only cover bariatric procedures for patients with a BMI of greater than 35. The number of adult Americans estimated to have a BMI greater than 25, which includes both overweight and obese people, is estimated at 142 million (PDF). If EndoRetics can grab just 20,000 of the annual 250,000 bariatric surgeries in the U.S., Kazmer estimates that would translate to revenues between $30 million and $50 million.
Kazmer’s next challenge is to convert that market potential to fundraising. EndoRetics would use the investment capital it hopes to raise to fund additional prototyping and animal testing that would eventually lead to human clinical trials. If things go as planned the device could be on the market within about four years, Kazmer said.