GI Dynamics, Inc - A pivotal year
GI Dynamics (GID) is preparing to commence a pivotal US clinical study for EndoBarrier, which remains to our knowledge the only implant targeted for treatment of type 2 diabetes mellitus (T2DM) plus obesity. GID would need to capture only a small share of a vast patient pool (up to 30m patients in the US alone) to achieve significant commercial potential.EndoBarrier is less invasive, less risky than gastric bypass surgery and combined with diabetes medication offers disease-modifying benefits. To date, the device has been implanted into c 4,000 patients with T2DM and/or obesity.
Efficacy is supported by data from extensive clinical studies including from the REVISE randomised controlled National Health Service (NHS) study. New NHS registry data indicate that 10-year cardiovascular risk was reduced following EndoBarrier treatment including a fall in risk of fatal stroke and coronary heart disease. Median insulin dose fell in patients concerned and 10/35 eliminated it altogether. In our view, the findings are highly supportive of the clinical and disease-modifying benefits of EndoBarrier in treating the major symptoms and co-morbidities of T2DM as well as promoting significant weight loss.
GID recently cleared one of the final hurdles prior to initiating the US study, having received IRB clearance to initiate Stage I. It has also attracted new expertise including industry veteran Stephen Linhares as VP of Clinical and Regulatory Affairs to help take GID forward through the next stage of its strategy. GID is preparing to launch the FDA trial with site selection expected to be announced imminently.
Our SOTP DCF valuation increases to $47.3m – updating for FY18 results and rolling forwards. This value includes $22.3m for US, $17.1m in CE Mark regions and $9.3m in India. A range of key events are anticipated in the next 6 – 12 months including CE Mark Certification, start of the IDE study and a trial for the India market in consort with partner Apollo Sugar: all suggesting that the current market capitalisation appears to present an attract opportunity to invest ahead of these potentially significant catalysts.
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