Interview – VCs must think CeQur PaQs a punch

At a time when venture cash for medtech companies is scarce, Swiss diabetes company CeQur’s $100m financing is impressive. The series C round is the third largest this year so far (see table), and is particularly remarkable given that the group is still two years from full launch of its wearable insulin pump, PaQ, even though the device was approved in Europe in 2012.

“We chose not to go to market as the initial version that we CE marked was designed to get us into the clinic quickly but wasn’t designed for low cost,” CeQur’s chief executive, Doug Lawrence, tells EP Vantage. The company is now developing a stripped-down version, and its cash infusion will go towards scale-up.

CeQur’s pump is designed to replace the insulin injections type 2 diabetes patients must administer several times a day. The patient fills it with insulin and attaches it to their abdomen, where a plastic cannula is introduced into the patient. PaQ delivers a steady basal level of insulin, and at mealtimes the patient presses a button to deliver a bolus dose.

It stays in place for three days, after which it is removed and discarded, and the patient attaches another one.

“It is designed for simplicity – making it very easy to do the right thing,” Mr Lawrence says. He points out that compliance with injections is poor, with around 50% of type 2 diabetes patients failing to meet their target glucose levels.

Simple and low cost

The simplicity of PaQ is key. Another wearable insulin pump is already on sale in Europe: the OmniPod developed by pump specialist Insulet. This is a sophisticated electronic device with a separate computerised controller incorporating a blood glucose meter.

But the OmniPod is relatively expensive – more expensive than many non-wearable insulin pumps – and times are tight. CeQur’s device needs no controller as the basal dose is pre-set by the doctor, and is entirely mechanical, with no electronics.

It took time for CeQur to create a product at the right price point: Mr Lawrence says that, had the group gone to market with the initial version, it would have lost money on every sale it made. Final pricing of the simpler second-generation PaQ has not yet been fixed, but it is intended to be competitive with the pen injectors used by many diabetic patients.

The company will put the cash it has raised into increasing its manufacturing power with the aim of starting a gradual launch in Europe next year, with a full-scale worldwide launch in 2017.  

The PaQ may have to compete with Insulet’s OmniPod – although CeQur obviously believes it can occupy a separate niche based on cost – but it has benefitted from having a forerunner. For a start it can follow the 510(k) clearance regulatory path using OmniPod as the predicate in the US, but there is also another aspect.

“Insulet is the first to ever do a wearable insulin device, but they had to demonstrate that the concept was valid. We don’t really need to do that with our much simpler device – it’s accepted that pumps can be worn on the body,” Mr Lawrence says.

Alliances

CeQur has a familiar technology in a vast and fast-growing market, and one that can be sold at a lower price than the only similar device. No wonder the company has attracted investors.

But the group’s venture backers, which include Woodford Investment Management and Arthurian Life Sciences, will want a return at some point, and diabetes is a popular area for acquisitions. Medtronic has been particularly keen on diabetes device developers (IBM collaboration is Medtronic's fifth diabetes deal in a month, April 14, 2015). Mr Lawrence downplays the idea of CeQur as a takeover target.

“We think we have got ourselves onto a large enough opportunity that we can build a standalone company, and we are heading towards having an initial public offering someday,” he says. Based in Switzerland, CeQur could list in Europe, Mr Lawrence says, though he agrees that the Nasdaq may allow a larger IPO.

While the company is set on avoiding a takeout, other deals are not off the table.

“There are a number of large firms that are strategically interested in this space and there is definitely the possiblilty that a strategic co-operative alliance deal with one of those firms could be in our future,” he says.

The question for CeQur is whether potential collaborators will be as keen on its technology as have been VCs.

Top five VC rounds of 2015 so far
Date Round Company Investment ($m)
August 4, 2015 Series H Mevion Medical Systems 200.0
July 21, 2015 Series H Oxford Nanopore Technologies 109.0
September 1, 2015 Series C  CeQur 100.0
March 5, 2015 Series E EndoChoice 57.0
April 6, 2015 Series F Natera 55.5

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

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