EndoChoice grabs $43M to back merger with Israeli GI startup

EndoChoice's drive to develop a better gastrointestinal endoscopic tool has led to a merger with an Israeli startup and a $43 million round of financing to back the deal and fuel future expansion.

Sequoia Capital led the round, though existing investors also participated, according to the company. EndoChoice used its new funding infusion to merge with Peer Medical in Israel, a small, private company developing next-generation endoscopy tech. EndoChoice will remain headquartered in Alpharetta, GA, but Peer now becomes the company's Israeli-based R&D center.

The bid to build a more precise endoscopic tool is a strategically smart one for EndoChoice. Endoscopy devices are a steady growth driver for giants in the industry such as Olympus ($OCPNY), a struggling Japanese technology giant that is also the largest maker of endoscopic equipment. Boston Scientific ($BSX) sees endoscopy tools as a growth driver that will help pull it out of stagnant sales. And: the North American endoscopy device market is expected to grow from $2.5 billion in 2011 to $4.3 billion by 2017 as health awareness increases and the industry moves toward high-end technologies, Transparency Market Research concludes.

But there is also plenty of room for innovation. Not many have advanced the field in a major way, save for Israel's Given Imaging ($GIVN), the maker of the PillCam endoscopic camera pill that patients swallow and then captures images of the colon as it passes through the GI tract.

In the case of EndoChoice, which focuses on gastrointestinal endoscopy, its Peer purchase will enable it to advance development of a more thorough endoscopic tool. EndoChoice asserts that traditional colonoscopies miss up to 25 to 40 percent of polyps--with a 170 degree field of view. But Peer's technology offers "side windows" that expand that radius to up to 330 degrees, the company notes.

"Conventional scopes are comparable to driving a car without side windows," EndoChoice founder and CEO Mark Gilreath said in a statement, noting that Peer's advance "provides the side windows for a full view and it is a tremendous difference.

"This technology," he added, "will save lives."

- read the release

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