Fractyl Labs ropes in $44M in series D funding for balloon ablation device for Type 2 diabetes

Fractyl Labs reeled in $44 million in series D funding to spur development of its balloon ablation device for Type 2 diabetes.

An “undisclosed new investor” led the round, joining other new investors such as GV, True Ventures and the IDO Fund, Fractyl said in a statement. Returning investors including General Catalyst, Bessemer Venture Partners, Domain Associates, Mithril Capital Management, Emergent Medical Partners and Deerfield Management Company also chipped in funds.

Fractyl plans to use the funds to develop its water-filled balloon device, Revita DMR. The cash will be used for an ongoing clinical trial of the device.

The Waltham, MA-based company has already charted progress with Revita. In 2015, Fractyl showed in a study of 39 patients that its technology helped reduce hemoglobin A1C levels (HbA1c) up to six months after the procedure.

The device, which is already CE marked, works by burning the lining of the duodenum, a part of the small intestine that produces hormones that regulate food intake and blood sugar, to improve blood glucose levels in patients. The process, called duodenal mucosal resurfacing, could be used to treat individuals with diabetes who aren’t a good fit for or who opt out of weight-loss surgery.

Investors seem sold on Revita’s potential. In September 2014, Fractyl locked down $40 million in series C funding on the heels of promising clinical trial results for its device. Type 2 diabetes cost the U.S. healthcare system $245 million in 2012, Fractyl pointed out at the time, and the company’s Revita system can be performed endoscopically in a clinical setting without much pain or discomfort—a potential selling point to payers.

"More than 50 new drugs have been approved to manage Type 2 diabetes, yet too many patients still remain unable to control their disease and are at risk for serious complications from their disease. At Fractyl we have developed a minimally invasive, catheter-based procedural therapy that we believe can help reverse Type 2 diabetes,” Fractyl CEO Harith Rajagopalan said in a statement.