San Clemente-based USGI Medical Inc. is making a big push to sell its less-invasive surgical devices.
USGI, which has raised $60 million in venture capital funding during its seven-year history, has formed a pair of divisions, hired a manager from Allergan Inc.’s medical division and is targeting weight loss procedures for growth.
The company makes devices that doctors insert through a patient’s mouth or other openings in order to perform colonoscopies or to remove appendixes and gall bladders.
USGI is also looking to use one of its devices to reduce stomach pouches in patients who have regained weight after gastric bypass surgery, said Eugene Chen, the company’s chief executive and cofounder.
USGI has done some studies on the weight reduction application and “the results look very promising,” Chen said.
“We’re looking to bring that to a wider audience,” he added.
The company is targeting a growing market stoked by concerns about morbid obesity,a report from Windhover Information’s MedTech Insight said that the U.S market for weight loss devices and drugs, which totaled $360 million in 2005, was expected to grow 36% a year and should reach more than $1.6 billion by 2010.
FDA Approval
Even though USGI received Food and Drug Administration clearance for its weight loss device, called the TransPort EndoSurgical Operating Plat-form, in 2007, the company’s taken a slow and deliberate approach to introducing it.
The company has been working with doctors to create a portfolio of success stories before launching the device to a wider audience.
“What that’s allowed us to do is kind of build a body of evidence we can take out into the marketplace,” Chen said.
USGI has formed a pair of divisions as part of its commercialization push.
The company tapped Bart Bandy, a senior vice president from Irvine-based Allergan’s medical unit, to head its flexible surgery division. USGI’s flexible surgery division will sell devices to doctors who perform surgeries with little or no incisions.
Bandy was involved in the development of the Lap-Band, which Allergan got in its 2006 buy of Inamed Corp. The Lap-Band is touted as a less invasive alternative to gastric bypass surgery.
Bandy “just brings in the perfect background for us to tap” into stomach surgery marketing, according to Chen.
John Cox was promoted to general manager of its endosurgery division, which is going to focus on expanding uses of USGI’s devices within patients’ gastrointestinal tracts, in-cluding leading the weight loss application. Cox previously was USGI’s vice president of sales and marketing.
Sales Force
As for selling the devices, USGI is building its own sales and distribution force for its domestic clients and is in talks with potential partners for foreign distribution.
USGI is funding this growth from venture capital backers InterWest Partners LLC of Menlo Park and Alta Partners of San Francisco, among others.
USGI also is receiving revenue from a deal to license its incisionless surgical technology to Intuitive Surgical Inc., a public company based in the Bay Area. That deal was announced in May, but financial terms weren’t disclosed.
Chen declined to provide a revenue estimate for the company, saying that USGI is just starting to sell its devices.
He did say, however, that USGI isn’t making money yet.
Chen and former USGI president Vahid Saadat cofounded the company in 2001 with funding from Alta.
Prior to USGI, Chen, whose experience includes a stint at Santa Margarita-based Applied Medical Resources Corp., was entrepreneur-in-residence and venture partner at Alta. Saadat now is chief executive of Voyage Medical, a Santa Clara-based device maker.
USGI has some 50 workers, the majority of whom work in San Clemente.
