The digestive system measures up to 30 feet long in adults, including the esophagus, stomach, small intestine, large intestine, liver and pancreas. That’s a long pipeline for gastrointestinal disorder therapeutics, a market projected to reach nearly $64 billion in 2021, according to a study by BBC Research & Consulting.
Santa Ana-based Aqua Medical Inc. is preparing to be part of the growth. It recently closed $4 million in series A funding.
“We were seeking $2.5 million; we exceeded [that amount],” said Chief Executive Lloyd Mencinger.
Proceeds will be used to support research and development. Aqua will submit its technology for Food and Drug Administration approval this year for the device.
The company was founded in January 2017.
Thermal Vapor
The medical device maker develops an ablation technology that uses high-temperature water vapor to treat gastrointestinal diseases. The vapor is created by a radio frequency generator and delivered endoscopically through a catheter. It’s designed to prevent gastrointestinal cancers by treating pancreatic cysts and Barrett’s esophagus—symptoms that increase the risk of developing pancreatic and esophageal cancers.
Founder and Chief Medical Officer Virender Sharma created the technology. The entrepreneur has founded several gastrointestinal-focused companies, including EndoStim Inc., a medical device maker specializing in treatment of acid reflux through electrical stimulation, and SynerZ Medical Inc., which targets obesity and Type 2 diabetes.
“Ten years ago, there’s nothing you can do to treat [these symptoms],” said Mencinger, pointing out that the prior standard of care for pancreatic cysts and Barrett’s esophagus was surveillance alone. He said the company’s vapor technology allows early intervention to prevent progression to gastrointestinal cancers.
Medical-device giant Medtronic PLC (NYSE: MDT), which has operations in Santa Ana and recently leased space in Irvine, offers a portfolio of radiofrequency ablation products that Mencinger said are more invasive because of their size. Sharma said Medtronic’s device, the Halo Ablation Catheter, which treats Barrett’s esophagus, is the current market leader. “The catheter is large and cannot be passed through an endoscope and hence has to be placed and maneuvered in the esophagus alongside the endoscope over a guidewire, making the procedure technically challenging,” he explained. Aqua’s device is smaller, a through-the-endoscope catheter.
“The rigid electrode array does not perfectly contact esophageal tissue resulting in incomplete ablation, requiring multiple repeat procedures to achieve complete remission,” he added, pointing out that Aqua’s technology allows the free-form vapor spray to uniformly cover the esophageal lining … resulting in a more complete ablation of the targeted tissue.”
Medtronic didn’t immediately respond to a request for comment on Mencinger’s claims.
Looking for the Exit
Aqua, a one-person team for now, plans to remain lean and focus on R&D. It doesn’t rule out the possibility of an early exit via acquisition, that much is clear based on board member track records.
Board Chairman Mark Gilreath was chief executive of EndoChoice Inc., which was sold to Boston Scientific Corp. (NYSE: BSX) in 2016 for $210 million, and president and chief marketing officer of Given Imaging Ltd., which was acquired in 2014 for $860 million by Covidien PLC. Medtronic purchased Covidien a year later for nearly $43 billion. Gilreath is an operating partner of healthcare-focused investment firm Frazier Healthcare Partners.
Board member Greg Barrett was chief executive of DFINE Inc., which was sold to Merit Medical Systems for $100 million; BARRX Medical, which was sold to Medtronic for $400 million; and ACMI Circon, which was acquired by Olympus America Medical.
Board Adviser and Investor Pete Nicholas was founder, chairman and director emeritus of Boston Scientific.
Mencinger, who came from Boston Scientific and later got involved with several early-stage companies, including DFINE, doesn’t eliminate the possibility of a sale after Aqua gets FDA clearance.
