Improving metabolic disorders without major changes in diet and exercise is typically seen as impossible, unless bariatric surgery is involved. But that’s precisely what Fractyl Laboratories Inc. aims to do. It plans to start a pivotal trial of its duodenal mucosal resurfacing system, Revita DMR, before year end.

Now, the Lexington, Mass.-based startup has raised a $55 million series E round to support that U.S. pivotal trial, as well as to aid in securing reimbursement in some European countries including Germany and the U.K.

Revita DMR already has a CE mark; its indications in Europe were expanded earlier this year beyond poorly controlled type 2 diabetes on oral medications to include insulin withdrawal for type 2 diabetes patients, improvements in nonalcoholic fatty liver disease (NAFLD)/nonalcoholic steatohepatitis (NASH) in type 2 diabetes patients, and improvements in insulin sensitivity in patients with polycystic ovary syndrome (PCOS).

COVID implications

Fractyl has the potential to be stymied by the unfolding pandemic as it pursues the pivotal trial. But, given that type 2 diabetes is associated with significantly greater risks of hospitalization and mortality for patients with COVID-19 infections, the approach also is timely. A disease-modifying treatment that could enable type 2 diabetes patients to get off insulin would be a game-changer. Although it might be unlikely for the treatment to be of use to combat the pandemic, the current situation has laid bare how important metabolic health is to overall well-being.

“It's the underlying disease itself that really seems to be the risk factor; it's not the blood sugar level per se,” co-founder and CEO of Fractyl Harith Rajagopalan told BioWorld on COVID-19. “What seems to be resonating with investors is that the steps that we're taking to manage the disease today with medicines are putting a Band-Aid on one of the symptoms of the disease, which is blood sugar. But it's not really changing the patient's underlying metabolic condition.”

“Our investors understand well that an ability to intervene on the underlying disease ‒ to be able to affect not just blood sugar control but things that cause the body to be sick and cause the blood sugar to go up in the first place ‒ are the same things that are putting people at risk for coronavirus,” he continued. “That's what we're tackling with our intervention. I do believe that that message is resonating.”

The Revita DMR treatment resurfaces the upper intestine during an endoscopic, outpatient procedure. This minimally invasive approach thins the duodenal mucosa, which typically thickens with a poor quality diet; this has been shown to improve metabolic markers such as insulin resistance, blood glucose, liver fat and weight for type 2 diabetes patients. The system has been tested already in about 300 patients at 20 centers globally.

Pivotal specs

The upcoming pivotal trial is expected to recruit about 300 patients across 30 to 35 centers. The study population will specifically be type 2 diabetes patients who are treated with long-acting insulin but still do not have sufficient blood glucose control. Each center will conduct two procedures in an open-label study first, then it will proceed to recruit the remaining patients in a randomized, double-blinded, sham-controlled manner.

Managing patients with insulin can be costly, totaling roughly $20,000 per patient annually. These are the most expensive patients to manage, and the most at-risk for serious disease complications. If Fractyl achieves a U.S. FDA approval in this group, it expects to move earlier in the disease to type 2 diabetes patients who are on oral medications or as yet unmedicated, as well as into additional adjacent metabolic diseases such as NAFLD/NASH.

The primary endpoint of the pivotal trial will be the percentage of patients who are able to achieve target glycemic control of HbA1c less than or equal to 7% without the need for insulin at 24 weeks after the procedure. This is a new primary endpoint that the company negotiated with the FDA, given the novel nature of its endeavor. Secondary endpoints will include additional glycemic, hepatic and cardiovascular measures.

The open-label data should be reported by the end of 2021. Depending on the pace of patient recruitment amidst the pandemic, the final data may be available by the first half of 2023.

“We want to make sure that we take precautions in order to make sure that everyone is safe and well cared for during this,” said Rajagopalan. “It's a bit paradoxical, because it's so obvious that diabetes and the chronic inflammation associated with metabolic disease is a significant contributor to adverse outcomes in COVID. We believe that our therapy that we are testing has even more value in this environment, rather than less.”

“As we've been talking to hospitals and endoscopists preparing for the pivotal study, we've been really heartened by the fact that people seem to be figuring out how to continue clinical operations, even in this time,” he added. “There are precautions that we are taking following the guidance of societies and hospitals in order to ensure that patients who come in are not COVID-positive and are going to be treated properly. But in-hospital transmission rates have been really low in the past quarter--and despite coronavirus I do believe we're going to be able to continue to execute this trial.”

The series E financing was led by Taiwania Capital Management Corp. Existing investors Bessemer Venture Partners, General Catalyst, Domain Associates, Mithril Capital Management, Emergent Medical Partners, True Ventures, and GV all participated, as did new investors, Catalio Capital Management, CDIB Venture Capital Corp. and YJ Capital. Michael Huang, Managing Partner at Taiwania, is joining the Fractyl board as part of the financing.

“Type 2 diabetes and NAFLD/NASH are eroding our global health and are responsible for a large portion of global health care costs,” said Huang. “Fractyl has established through rigorous clinical studies that Revita, a breakthrough non-drug, non-surgical treatment, has the potential to significantly improve type 2 diabetes outcomes.”

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