Northstar Neuroscience, Inc.
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China opens the Beijing Stock Exchange to boost direct funding for innovation-driven small- and medium-size enterprises. But a closer look at the listings shows that biotech firms will largely miss the party.
Numerous physiologic pathways lead to obesity; those related to hunger, satiety, the breakdown and absorption of nutrients, and the regulation of energy. Given the complexity of obesity, it's not surprising that diet and exercise aren't currently effective and that drugs have had only modest success. Bariatric surgery, on the other hand, which reduces the size of the stomach (and, in some versions, also reroutes part of the small intestine so that food bypasses it) is extremely successful. Many patients that have undergone the Roux-en-Y gastric bypass procedure have sustained losses of 50% of their excess weight out to ten years and beyond. Now companies with minimally invasive devices for the treatment of obesity hope to fill the therapy gap between dieting and invasive surgery. It's too early to claim victory, but start-ups and scientists are benefiting from a better understanding of why gastric bypass surgery works.
In early October, EnteroMedics announced the preliminary results of its pivotaltrial on its vagal nerve blocking approach to obesity. The verdict: the study did not meet primary or secondary end points. This was the second neuromodulation company working in obesity (Medtronic was the first) to experience a disappointment in pivotal clinical trials after early results looked so good. Several neurostimulation companies are still targeting obesity. Should their investors be worried? Is this troubling news for the field of neuromodulation at large? Not surprisingly, executives from two neurostimulation companies--IntraPace and Leptos Biomedical--answer the questions simply: no and no.
This article first appeared in the March 2009 issue of Start-Up. The current economic crisis is hard on everyone, including investors and start-ups. But the news isn't all bad for medical device VCs. Those with capital will find the prices to be right in today's depressed economy. On the flip side, those venture firms without new funds or sufficient reserve capital will get penalized by declining valuations and punitive terms offered up by some new investors in their companies. Medical device companies, meanwhile, face tougher scrutiny from investors. During all this, both VCs and start-ups must answer new questions being posed by regulatory bodies, public investors, corporate acquirers, and potential customers.