GI Dynamics raises $57.5m for US diabetes trial

GI Dynamics (ASX:GID) has raised $57.5 million through an oversubscribed placement, to help fund US phase II trials of its EndoBarrier implants in obese patients with type 2 diabetes.

The company placed 108.5 million CHESS Depositary Interests (CDIs) at an issue price of $0.53 apiece, mostly to Australian and US investors.

GI Dynamics plans to follow this up with a share purchase plan to raise up to a further $2.5 million.

“With the FDA’s approval last year to allow us to move forward with a pivotal trial in the United States rather than a pilot trial, our clinical investment needs increased,” GI Dynamics CEO Stuart A Randle said.

“This financing allows us to fully and rapidly resource [the trial] while continuing to expand our commercial footprint and sales ramp in Europe, Australia, South America and the Middle East.”

The 25-site EndoBarrier trial will involve around 500 obese patients with uncontrolled type 2 diabetes. Results will be used to support a pre-market application for the product with the FDA.

EndoBarrier is a tube-shaped liner designed to be inserted non-surgically through the mouth into the intestine. Here it acts as a barrier between food and a portion of the intestinal wall, achieving an effect similar to a gastric bypass.

The product is approved for use in type 2 diabetes and available for sale in Australia. It also has marketing approval in the EU and is being sold in parts of the region.

GI Dynamics shares were trading unchanged at $0.63 as of around 1 pm on Thursday.