Interview – $29m for prototype-stage G-Therapeutics

Recent trends have shown venture capital’s unwillingness to invest in medtech companies at the very early stages. Now an exception has appeared – and what an exception. G-Therapeutics has secured the second largest series A round this year despite its spinal cord stimulation technology still being preclinical. 

“We will start a very small pilot study this year with a research prototype that is a combination of our own software and some components that we got from another company,” its chief executive, Sjaak Deckers, tells EP Vantage. He adds that G-Therapeutics is around six years from the European, let alone the US, market – an extremely long period by recent standards. So how has it achieved this extraordinary feat?

“We knew the people,” says Patrick Van Beneden, a partner at Gimv, one of the VCs that participated in the €26m ($29m) series A round. Mr Deckers was previously CEO of Sapiens Steering Brain Stimulation, which was acquired by Medtronic in 2014 for €155m,and G-Therapeutics’ vice-president of clinical affairs worked for Endosense, bought by St. Jude Medical for SFr 159m ($170m) plus milestones in 2013.

Gimv had invested in Endosense and “that worked out quite well for us”, Mr Van Beneden says.

There is more to it than that, of course: Mr Van Beneden cites the burgeoning field of neurostimulation and the “quite spectacular” results seen in animals with G-Therapeutics’ technology as other reasons to invest.

But the crucial aspect is the timing of the Sapiens acquisition. Medtronic bought Sapiens before it had attained CE mark for its brain stimulation technology, and G-Therapeutics’ backers, which include LSP, INKEF Capital and Wellington Partners as well as Gimv, might be betting that Mr Deckers can repeat the trick.

Six years to market

If a buyer does not emerge that soon, Mr Deckers says the series A funds – in addition to funding from the Dutch government – will be enough to see the company all the way through to CE mark.

Two clinical trials will have to come to a successful conclusion first. While the exploratory pilot trial with the prototype is under way, G-Therapeutics will develop the real product, the class 3 implantable device that will, if all goes well, be submitted for premarket approval.

“We plan to have that ready in the next three and a half years,” Mr Deckers says. After that a larger European clinical trial will begin in either 2019 or 2020, “it will take quite some years to do that study.”

A viable product is thus unlikely to hit the market before 2022.

The company has a good idea of what the product will consist of, though. Electrodes will be implanted in the epidural space and connected to the patient’s spinal cord, with wires leading to a pulse generator implanted in the abdomen. A remote device would allow the patient to control the pulse generator, and the system would be accessible on a tablet computer, allowing the rehab doctor to programme the device and adjust the settings.

The neurostimulation system will incorporate real-time motion feedback, allowing it to send impulses to the right nerves at the right time to help the patient raise and lower their legs and feet during walking. In animals, this combination of neurostimulation and will-powered training has been shown to remodel residual neural connections and restore control over paralysed limbs.

Once the product has been built, trialled and CE marked, the company will begin commercialisation in Europe, and in parallel start studies in the US. It even has plans to develop a second-generation system.

Potential buyers

It is clear that, while Mr Deckers says his first priority is building a company, the group is very alive to the possibility of an acquisition.

“I am not busy with the exit, but of course our investors invested to get a return in the years to come,” Mr Deckers says. He says that more companies are exploring neurostimulation as technologies are developed to address more disorders, and has put together a list of potential acquirers for G-Therapeutics which he has presented to investors.

Groups including Nevro, Greatbatch Medical and Sorin, following its acquisition of Cyberonics, are all interested in this space, he says. “It has moved beyond the big three – Boston, St. Jude and Medtronic,” he says. “There are several companies that are strong and large enough.”

Naturally Mr Van Beneden of Gimv agrees. “If we have the right data we are convinced that one of the bigger players in the sector should be interested,” he says. If this does not transpire, a syndicate could be formed to fund an initial sales infrastructure – though after that he says G-Therapeutics could still be acquired by one of the big players.

In recent times VCs have exhibited a marked preference for companies with not just European but US approval, plus established sales and even reimbursement (Huge medtech venture rounds mean start-ups starve, January 19, 2016). This level of interest in a company that has not even started human trials is almost unknown. However, if G-Therapeutics’ investors see a decent return, it could be hoped other VCs might be spurred to start backing earlier start-ups.

Top 10 medtech series A rounds of the past five years
Financing date Company Investment ($m)
November 2, 2014 Butterfly Network 100.0
February 21, 2014 GC Aesthetics 60.0
April 9, 2013 ElectroCore 50.0
January 26, 2016 Inivata 45.0
June 12, 2014 Chrono Therapeutics 32.0
November 14, 2014 ProNova Solutions 30.0
April 19, 2016 G-Therapeutics 29.4
November 26, 2013 Palmaz Scientific 26.3
March 17, 2016 Gecko Biomedical 25.4
September 19, 2014 iHealth Lab 25.0
Data sourced to EvaluateMedtech

To contact the writer of this story email Elizabeth Cairns in London at or follow @LizEPVantage on Twitter

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