Aug 2, 2023 - Economy

Allurion, maker of weight loss balloons, goes public

Photo: Allurion

Allurion Technologies, a Massachusetts-based maker of swallowable gastric balloons, today will go public on the New York Stock Exchange.

Why it matters: Anti-obesity is health care's new big thing, thanks to the popularity of new drugs like Ozempic, after a long history of most prescribed treatments being behavioral.

How it works: Allurion patients undergo a 15-minute procedure during which they swallow a capsule that holds the uninflated balloon.

  • The capsule is tied to a small catheter that's subsequently filled with water, thus inflating the balloon inside of the patient's stomach and suppressing appetite for around four months. A couple days of post-procedure nausea is common.
  • Allurion also offers virtual care technologies to patients, including a companion app, connected scale and health tracker. The goal would be to establish long-term behavioral change, although some patients have been known to take a second balloon.

State of play: Allurion balloons have been legal in Europe for more than seven years, with the company generating more than $60 million in 2022 revenue.

  • It's still awaiting FDA approval, and warns in its prospectus that it would expect most U.S. sales to be out-of-pocket rather than reimbursable by insurance.
  • That's in keeping with the current framework for anti-obesity drugs, although there are reimbursable exceptions (including via Medicare) for those diagnosed with conditions like diabetes.
  • "We believe there will be reimbursement in the long-term, and certain sets of people could be reimbursable earlier, but we'll build our business without counting on it," says company co-chairman Krishna Gupta, who also leads REMUS Capital and is the company's first and largest outside shareholder.
  • People used to ask if the market was big enough," Gupta adds. "No one asks that anymore."
  • Allurion does have competition, namely an FDA-approved gastric balloon made by Apollo Endosurgery — a company bought last year for $615 million by Boston Scientific. One big procedural difference, however, is that the Apollo balloon requires patient sedation.

Financial details: Allurion is going public via a reverse merger with a blank check company led by former Medtronic CEO Omar Ishrak.

  • It previously raised over $200 million in equity and debt from firms like Runway Growth Capital, Romulus Capital and Novalis LifeSciences.

The bottom line: No one wants to hear that they've "ballooned," but soon that phrase could refer to weight lost rather than weight gained. "

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