Lloyd Mencinger, Aqua Medical - Vapor-Based Endoscopic Ablation Therapy | LSI Europe '24

Lloyd Mencinger 00:02
A bit about what we're doing at Aqua Medical. So our target is type two diabetes. I pulled this infographic from the ADA website because I thought the headline really captured its staggering cost. But the problem is, most of their numbers are wrong because they're all increasing so fast. So here it's showing 34 million in the US with type two diabetes; it's 38 million now. It says 88 million with prediabetes; it's already 98 million now, so more than one in three adults. Notwithstanding, there are now 60 pharmacologics. Most patients are not well managed, even with the GLP-1s, a host of complications, true epidemic, and we're not really changing the course of the disease. Also, there is no drug that can halt or reverse progression. Basically, what happens is the disease progresses, and the drugs mask or control the symptoms. If you discontinue the drugs, the disease is revealed.

Okay, so what are we doing? Our goal is to change the course of the disease, and we have a device-based approach to that. It's a 30-minute outpatient procedure, and we use water vapor ablation in the GI tract. And here's what it looks like. It's a garden variety upper endoscopy procedure. So here you can see the endoscope going through the esophagus or the stomach into this 10-inch or so section called the duodenum, and our catheter, the blue one, exits. What we do is deploy two shape memory disks, and they create a neat little treatment chamber. From the center shaft, we precisely dose hot water vapor. Water vapor is the perfect ablation agent because it has very high energy. It can get uniform coverage into the irregularities, and then it can ablate to a controlled depth into the mucosa, producing this beautiful kind of what we call the box effect.

So the question that comes up here is, well, how does this work for type two diabetes? And actually, it is not surprising at all because the bariatric surgery procedures for obesity, like gastric bypass and Roux-en-Y, in those procedures, patients lose weight over weeks and months, but the next day, in fact, their diabetes is resolved. The reason is those procedures have in common that they exclude or bypass the duodenum.

A company actually had a clever idea. They said, "Well, hey, if the duodenum is a secret, why don't we just make a tube or a sleeve to attach to the lower stomach, cover the duodenum, and the food will bypass?" They actually did get very similar results. What happened is patients lost weight over time, but almost immediate, dramatic improvement in type two diabetes. The problem is the company had trouble keeping that in place, but they did validate the precept, and since then, there have been companies that have used endoscopic approaches to ablate the duodenum with really impressive results.

So here's an extract from one study from one company, showing significant hemoglobin A1c reduction. What I thought was really impressive is durability out to 24 months—kind of unexpected for me. Now, the issue is, you look at their catheter; it's enormous, right? This is a catheter. It's bigger than the endoscope. So picture this: the physician has to manipulate two devices through the patient's mouth, all the way through the esophagus, the stomach, and duodenum, steering it from the mouth. It's very difficult, time-consuming, and needs an expert, and it's hospital-only. So it really constrains the market. But as you saw for ours, this is basically one device, and they steer it right at the tip, so pretty much any GI can perform this procedure, which means we're in a whole different league of being able to commercialize than this.

Now there's another product that also has the same kind of thing. A catheter alongside this company has raised $430 million; another one in the space has raised $100 million. We've gotten here with only $20 million. Now we're thrilled because the big news for us is we have a first-in-human clinical study. These are all top key opinion leaders, all experienced in metabolics and advanced endoscopic procedures. The first thing is we did a dosimetry, a dose escalation. So we started with a low dose, 180 joules, one application, all the way to 200 joules, two applications.

And the results: first, safety was our goal. It's incredibly safe—no SAEs, no unanticipated device events, and also pretty much zero on the pain scale. So very safe. Now the results: this is the daily finger stick glucose that patients take. You see the blue line is really the run-in. It's a 28-day run-in period, so you can see lower is better, right? The run-in period reduced slightly because what they're paying attention to. Then immediately after the procedure, immediate drop, immediate dramatic drop, improvement in hemoglobin and in finger stick glucose. Now hemoglobin A1c, of course, is the gold standard for diabetes. You see at baseline some improvement in the run-in, and then at six months, we have a very strong 1% reduction.

Now what we demonstrated with this dosimetry is when we had the lowest dose, we wanted to be really safe. We actually got very little response—like no responders. Then as we upped the dose to the higher dose, we got 71% responders. Now, the beauty of this is we are not even close to optimizing this procedure yet. We have a long way to go to improve, and even with this kind of conservative dose, we're at best in class compared to the others in the space at six months for the first in human.

All right, so these are the comments from those KOLs. Now, by the way, the guy on the end there has done more of the competitor than anyone in the globe, and his comments were "game changer, incredibly easy to use." The big one is right here: you have a 20-minute procedure. Most of these procedures are multi-hours, maybe an hour at best case. But 20 minutes fits in the workflow of an ambulatory surgery center, which is really the profit zone for GI endoscopy.

Now, if you look at all our advantages—procedure time, usability, learning curve—because we're through the endoscope and they are not, we have those. They require fluoroscopy and general anesthesia. None of those really exist in the ambulatory surgery center. So we have huge advantages. And on top of all that, we think we have a really strong team.

So this is Greg Plamondon, the chairman, and he sold—he actually created the ablation market for esophageal ablation for Barrett's esophagus. He sold Barrx to Covidien for $425 million. We sold a spine company a few years ago. I worked with him for many years. He's a very hands-on, operator type, very engaged. Some of you might know Bill Starling. He's pretty well known up in Portola Valley, and it's funny because I tried to put his resume on one page, and I could basically just fit his IPOs on one page. I mean, all his products that he's developed are selling over $4 billion out there. So a really great guy, too. He's really helpful. I meet with him every couple of weeks up there in, you know, the rich area where all the super-rich are staying, right?

So anyway, also Boston Scientific. So this was Pete Nix, who was the founder of Boston Scientific, and he invested in us every round from the beginning. He passed away last year and passed the torch to his son. Ithaca Partners, they continue to invest. So now they've invested over $4 million and continue to support us. The investor, Shang Bay. Some of you may know Shang Bay Capital. I think they were rated the most active VC four years in a row by HSBC and Silicon Valley Bank. So he's a great partner with us, leading our Series A.

And this is our founder, Vivek Sharma. He's a serial entrepreneur, ex-Mayo Clinic, very, very inventive, and I've been around the block. I've run a bunch of businesses as well. So we are raising—we've raised $30 million so far. We're raising a Series B, $40 million. If that fits with any thesis of any investors, we are always happy to talk about money. So thank you. Applause.