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Exclusive: Medtech Phagenesis nets $42M Series D

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Mar 4, 2024
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Illustration: Annelise Capossela/Axios

Swallowing dysfunction treatment developer Phagenesis gobbled up $42 million in Series D financing, CEO Reinhard Krickl tells Axios exclusively.

Why it matters: Swallowing difficulties or dysphagia result from brain injuries like stroke and are linked with longer hospital stays and higher rates of complications and deaths.

Zoom in: EQT Life Sciences and Sectoral led the round and were joined by new backers British Patient Capital, Northern Gritstone, and Aphelion.

  • Funds will go towards U.S. commercialization efforts, powering clinical trials, and real-world data collection in pursuit of long-term U.S. reimbursement.
  • Krickl declined to say when he foresees Phagenesis raising again but said he hopes for this to be among their last rounds.

How it works: Manchester, England-based Phagenesis makes an FDA-approved dysphagia neurostimulation system called Phagenyx.

  • The system focuses on restoring swallowing coordination and control.
  • Krickl plans to secure roughly 65% reimbursement for the technology via the New Technology Add-On Payments (NTAP) pathway, which allows hospitals to receive reimbursement for new medical services and technology not yet included in Diagnosis-Related Group (DRG) rates.

What they're saying: "We see this raise as a recognition that this is a serious issue, a recognition of that unmet need, and of our company being a game-changer in that space," says Krickl.

Between the lines: Krickl and EQT Life Sciences partner Drew Burdon acknowledge the challenges associated with being a new device in a new market.

  • "The advantage of being first-in-class is the market is yours for a period; the challenge is your customers aren't used to this type of product," says Burdon.
  • "It's easier to raise money into a market with a product category everybody knows," Krickl says. "It's much more difficult if you're going to market where it's harder to assess the value of your newly-introduced therapy."

State of play: Neurostimulation medical device companies raised significant rounds — including later-stage funding — in January alone.

  • Motif Neurotech, a developer of brain stimulation devices for depression, in January collected $18.75 million in Series A funding.
  • Cognito Therapeutics, a medical device company using light and sound to treat neurodegenerative disease, in January raised $35 million in Series B extension financing.
  • Brain data tracking company Rune Labs closed a $12 million Series A extension.
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