Medtronic Inc. (NYSE:MDT) took out a $15 million minority stake in GI Dynamics, the Lexington, Mass.-based developer of a non-surgical treatment for Type 2 diabetes and obesity.
Minneapolis-based Medtronic has been working to extend its diabetes business, announcing the launch of a new research and education center in San Antonio, Texas, in May, 2009. The growing Texas operation, supported by a $6 million investment by a state development program, is expected to employ 1,400 people by 2014.
GI Dynamics, meanwhile, has been attracting considerable attention in recent months in both the financial and medical circles. The company’s EndoBarrier digestive tract liner won CE Mark approval in December, 2009, clearing the way for sales to begin within the European Union this year. The firm earlier in 2009 also closed on $15 million in Series C funding from a host of investors, including Waltham, Mass.-based Polaris Venture Partners and Johnson & Johnson Development Corp., the private-equity arm of the healthcare giant J&J (NYSE:JNJ).
Company officials were not immediately available for comment, but in prepared remarks, GI Dynamics CEO Stuart Randle said that “attracting capital from a leading company in the diabetes space is further testament to the significant potential of the EndoBarrier.”
EndoBarrier is a a non-surgical “sleeve” placed in the upper intestines, helping regulate the absorption of carbohydrates from food and reducing the buildup of sugar in red blood cells in people with Type 2 diabetes. The device, originally developed for weight control, is in clinical trials ahead of an application for Food & Drug Administration clearance, but the company has not disclosed a timeline for the likely application.*
*Correction, Aug. 19, 2010: This article originally stated that GI Dynamics is prepping the EndoBarrier for a Phase II clinical trial. The company has not released a timeline either for a Phase II trial or for any FDA applications. Return to the corrected sentence.