GI Dynamics gets expanded reimbursement in Germany

GI Dynamics (ASX:GID) has secured expanded reimbursement coverage in Germany for its EndoBarrier Therapy treatment for obesity and type 2 diabetes.

InEk, the German Institute for the Hospital Remuneration System, has assigned the device NUB Status 1, which allows hospitals to negotiate with insurance companies for additional funding to cover the cost of an agreed on number of EndoBarrier procedures.

NUB is the preferred path to bring the procedure cost of a treatment into the German reimbursement system, and status 1 is the highest class available.

“This favourable decision from InEk represents a significant step forward in our national reimbursement efforts in Germany to establish EndoBarrier Therapy as an accessible treatment option for people who are struggling with type 2 diabetes and obesity,” GI Dynamics CEO Stuart A Randle said.

GI Dynamics last week reported a 237% surge in 2013 revenue to US$2.3 million ($2.58 million). In a research note, Bell Potter Securities healthcare and biotech analyst Tanushree Jain estimated that GI Dynamics sold 368 EndoBarrier units in 2H13, up from 290 units in the first half.

“We expect this positive trend to continue in 2014 with 20 new centres potentially being opened in key self-pay markets of Australia, Brazil and Israel,”  she said, adding that she expects significant volume growth this financial year thanks to the pending launch in Brazil.

But Bell Potter has reduced its near- to mid-term revenue forecasts for the company due in part to anticipated delays launching the product in Brazil and India.

Bell Potter now values GDI CDIs at $1.53 base case and $2.40 optimistic case, with a price target of $1.53, but has retained its buy recommendation. This is down from $1.59 base case and $2.48 optimistic case.

GI Dynamics (ASX:GID) shares were trading 1.27% lower at $0.78 as of around 1 pm on Wednesday.