A Medical Device Daily

EndoGastric Solutions (EGS; Redmond, Washington), which calls itself “the world leader” in natural orifice surgery (NOS), reported completing a D-round $30 million in private financing.

The financing was led by DeNovo Ventures (Palo Alto, California), and in connection with the investment, Joe Mandato of DeNovo will join the company’s board.

EGS said it plans to use the proceeds to expand sales and product marketing for its StomaphyX device, FDA-cleared in March, as well as the anticipated launch of its EsophyX device later in 2007.

In addition to the new lead investor, the company’s existing investors, including Chicago Growth Partners, MPM Capital, Advanced Technology Ventures, Foundation Medical Partners, and Oakwood Medical Investors also participated in the financing.

Mandato said, “We believe that EndoGastric Solutions is ahead of other companies in this space. The combination of technological know-how, product portfolio, the large underserved targeted population together with the experience of its management team makes EGS an attractive investment opportunity. EGS’ innovative products provide significant benefits to patients because, unlike laparoscopic or open surgical procedures, they allow for incision-less, less-invasive and less-time consuming procedures.”

Thierry Thaure, president/CEO of EGS, said, “We are delighted to have the support of a sophisticated investor group like DeNovo. Their team brings a unique depth of industry experience to bear on the exciting challenges that face EndoGastric Solutions in the upcoming quarters as we transition out of pure new product development and clinical trial phases and into building a solid customer base with US and international product revenues.”

EGS says it is pioneering NOS procedures for the treatment of gastrointestinal diseases, including gastrointestinal reflux disease and other surgical applications in the GI tract. The company is developing transoral procedures and products to address what it calls the largest unmet needs in gastrointestinal diseases. Its technologies involve modifying current open surgical and/or laparoscopic approaches by using transoral access instead of abdominal incisions.

The company manufactures single-use instruments enabling incision-less solutions, and focuses on clinically based products for use by gastroenterologists and surgeons.

Its StomaphyX product is available in the U.S. EsophyX is currently under FDA 510(k) review. Both devices are CE marked and available in the European Union.

MedAssets (Alpharetta, Georgia), a provider of cash management software for healthcare providers, has filed with the Securities Exchange Commission for an initial public offering of potentially up to $230 million. If the IPO is successful, MedAssets would trade on the NASDAQ under the symbol MDAS.

MedAssets said it plans to use the offering proceeds to repay outstanding debt on a term loan facility and a revolving loan facility, both of which mature in 2011. It also will use the proceeds for further development and expansion of its products, and potential acquisitions of complementary businesses, technologies or other assets.

MedAssets provides company-hosted, or ASP-based, software designed to improve the operating margin and cash flow of hospitals and health systems.

Its two business segments focus on revenue cycle management and non-labor expense management. The company’s Spend Managment segment operates a group purchasing organization which negotiates prices for hospitals and health systems. Its Revenue Cycle Management segment provides software and consulting services that help track and analyze a hospital’s revenue stream to increase collections and reduce account balances. It counts more than 125 health systems as customers.

Among the risks cited in the company’s SEC filing is that many of the technologies it uses “ may incorporate so-called “open source” software, and we may incorporate open source software into other products in the future.” And it says, “If an author or other third party that distributes such open source software were to allege that we had not complied with the conditions of one or more of these licenses, we could be required to incur significant legal costs defending ourselves against such allegations.”

MedAssets also has purchased XactiMed and MD-X, and said that achieving the benefits of these purchases will depend on their successful integration into its existing operations, and that this includes a variety of risks. For the six months ended June 30, the company reported a loss of $1.5 million, compared to a loss of $2.9 million in the first half of 2006. Revenue for the period rose to $108 million from $90.7 million in the first six months of 2006. The 2007 figures include the results of XactiMed, which the company acquired in May.

Bruce Wesson, a company director, through his holdings in Galen Associates, controls nearly 24% of the company.

Morgan Stanley, Lehman Brothers, Deutsche Bank Securities, Goldman, Sachs & Co., Piper Jaffray, William Blair & Co. and Wachovia Securities are listed as the underwriters for the offering.