Fractyl raises $40M for diabetes treatment via endoscopic surgery

Endoscopic surgery isn't usually associated with diabetes, but Fractyl Laboratories yesterday announced encouraging clinical trial results for its endoscopic procedure to treat Type 2 diabetes and revealed a $40 million Series C financing round led by investment firm Mithril Capital Management.

The outpatient procedure was tested clinically in Santiago, Chile. It involves the alteration of the lining of the small intestine in the duodenum. The duodenum is the first portion of the small intestine and produces blood sugar-controlling hormones. Fractyl said that 19 of the 30 patients experienced a greater than two-percentage-point drop in hemoglobin A1C levels three months following the procedure. 

"The company has created an easy-to-use device on the unique insight that diabetes is a treatable, digestive disease. We believe Fractyl's Revita DMR [Duodenal Mucosal Resurfacing] procedure will be the first solution that can scale to meet the challenges of an epidemic of this magnitude, significantly improving the lives of the 400 million people suffering from Type 2 diabetes worldwide," said Mithril co-founder Ajay Royan in a statement.

He is joining Fractyl's board of directors, which also includes leaders of existing investors and Series C participants General Catalyst, Bessemer Venture Partners and Domain Associates. 

Fractyl noted that Type 2 diabetes cost the U.S. healthcare system $245 million in 2012.

"While early, we believe these results validate our approach and indicate the significant impact that the Revita DMR procedure could have for patients afflicted with Type 2 diabetes," said Fractyl CEO Dr. Harith Rajagopalan in a statement. "We are preparing to launch our multinational study by the end of the year and working towards our clinical development efforts in the U.S., which we expect to commence during 2016. We are committed to bringing to market an innovative clinical procedure to improve the health of patients with Type 2 diabetes." 

- read the release