Investors have agreed to buy $5 million worth of GI Dynamics’ (ASX:GID) common stock, representing 6.9 million shares.
The Lexington, Mass.-based company said it will use the money to fund the continued development of its EndoBarrier device and for general working capital. EndoBarrier is a plastic gut sleeve designed to treat type 2 diabetes and obesity by preventing the absorption of nutrients from food as it exits the stomach and enters the intestinal tract. In August, the FDA granted EndoBarrier an investigational device exemption (IDE) to begin enrollment in a pivotal trial, pending Institutional Review Board approval.
The investment represents another positive note for the company, which has faced a number of hurdles with its device over the past few years, including shutting down an initial FDA-approved study, being pulled off the shelves in Australia and losing its CE Mark approval in the European Union in November 2017.
Investors from Australia, the U.S. and the U.K. agreed to purchase the stock at an issue price of AUD 0.02¢ to raise approximately AUD $7 million. The stock will be issued in two tranches, beginning on or before Sept. 25. The company is also in the early stages of considering whether to seek a listing on NASDAQ or the London Stock Exchange.
“We are focused on the U.S. pivotal trial of EndoBarrier, with expected patient enrollment to begin during Q1 2019,” said Scott Schorer, president & CEO of GI Dynamics, in a prepared statement. “We continue to work toward conducting additional clinical studies and partnerships outside the U.S., regaining our CE Mark, and seeking additional capital to fund clinical studies and company operations.”
The IDE will have staged enrollment, with the initial approval for treatment of up to 67 study participants including 50 EndoBarrier and approximately 17 control participants, according to the company. Following FDA review of the interim safety report, the company will apply for approval to expand enrollment to a planned total study population of approximately 240 participants.