Diabetes duodenal resurfacing startup Fractyl bumps Series C up to $57M

Fractyl CEO Dr. Harith Rajagopalan

Crossover investor Deerfield Management has joined the syndicate of Fractyl Laboratories with a $17 million addition to a Series C financing to bring it up to a total of $57 million. The startup will use the cash to continue backing clinical testing of its Revita Duodenal Mucosal Resurfacing System, which has already started an international multicenter trial and is slated to begin randomized studies in 2016.

The Waltham, MA-based company hasn't yet laid out its strategy with the FDA, but the regulatory agency is likely to require rigorous testing for duodenal resurfacing. The DMR procedure is expected to be more effective than diabetic medications in controlling blood sugar levels in Type 2 diabetic patients; so, it has the potential to be widely used.

"The growing burden of Type 2 diabetes on individuals and the economy is well recognized," said Deerfield partner Dr. Avi Kometz in a statement. "The potential for a device-based procedure to work in conjunction with other medical and dietary approaches is a significant development in this field." Deerfield joins existing Fractyl investors Mithril, General Catalyst, Bessemer Venture Partners and Domain Associates.

In a proof-of-concept study in 39 patients with poorly controlled diabetes saw a baseline mean HbA1c 8.5% to 7.1% after 6 months in the 28 patients with long-segment DMR, in which more than 9 cm of duodenum were resurfaced.

In July, Fractyl started enrolling the 50 patients for the first phase of its international DMR trial that's slated to enroll up to 240 patients in a second phase that's double-blind and sham-controlled and slated to begin next year.

"We appreciate the strong support of our new and prior investors in our effort to improve the health of patients with Type 2 diabetes and related metabolic diseases," said Fractyl co-founder and CEO Dr. Harith Rajagopalan. "We will use these funds to accelerate our clinical development as we expedite our path to market. To this end, we have already treated 28 patients in our first international multicenter clinical trial and remain on track to begin randomized studies next year."

- here is the announcement

Special Report: FierceMedicalDevices' 2015 Fierce 15 - Fractyl Laboratories