Article preview from Start-Up - December, 2011
A long-time darling of venture capital, the gastrointestinal sector has yet to meet expectation of VCs who wagered on technologies to treat gastroesophageal reflux disease, Barrett’s esophagus and even obesity. But some notable acquisitions, including Covidien’s purchase of privately held Barrx, may present a ray of hope for investors in GI companies.
Article preview from Start-Up - December, 2011
A long-time darling of venture capital, the gastrointestinal sector has yet to meet expectation of VCs who wagered on technologies to treat gastroesophageal reflux disease, Barrett’s esophagus and even obesity. But some notable acquisitions – including Covidien Ltd.’s purchase of privately held Barrx Medical Inc.– may present a ray of hope for investors in GI companies.
Over the past six years, venture capitalists have invested close to $500 million in privately held GI players. Investments hit the high water mark in 2006, but VCs continue to back these companies even though specialists in the area have proven slow to adopt new innovations. Clinicians’ weak appetite for new technologies explains why GI companies hadn’t generated even close to the same amont through acquisitions until Covidien agreed to pay $325 million plus potential earn outs for Barrx and its radiofrequency-ablation treatment of Barrett’s esophagus, a pre-cancerous condition marked by esophageal tissue damage brought on by sto mach acid spill over. Barrx’ HaloFlex system also can be used to treat the cancer itself, by burning surface layers of tissue where the cancer takes root.
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