Arundhati Parmar

Type 2 diabetes is an expensive, chronic condition that has been managed for decades using drugs in combination with regular exercise and close monitoring of patients' diets.

But some startups are taking a device approach to tackling the disease.

One of those, Fractyl Labs, announced Thursday that it has closed a $57 million, Series C funding round. The investors in the round are Deerfield Management Company as well as existing investors Mithril Capital Management, General Catalyst Partners, Bessemer Venture Partners and Domain Associates.

Fractyl has developed the Revita Duodenal Mucosal Resurfacing System, a same-day endoscopic procedure that ablates a portion of duodenum mucosa and has the potential to improve glucose control in patients struggling to manage the disease.

"The growing burden of Type 2 diabetes on individuals and the economy is well recognized," said Avi Kometz,  partner at Deerfield. "The potential for a device-based procedure to work in conjunction with other medical and dietary approaches is a significant development in this field. We are excited to support Fractyl in developing this innovative therapy."

In late September, Fractyl announced results of a 39-patient study who were on at least one oral diabetes medication and whose blood glucose levels were poorly controlled. The results showed that those whose duodenum mucosa were ablated more - 9 cm instead of 6 cm - showed larger reduction of their A1C levels at a six month follow-up. A1C measures the average blood glucose in the previous two to three months and is the metric used to understand if the glycemic levels are under control. 

This group who had more of their duodenum mucosa ablated saw A1C levels drop to 7.1% from 8.5% at six months accompanied by a small weight reduction of a little over 5 pounds.

At the time the results were published - Sept. 28 - a bariatric surgeon was optimistic about the future of device procedures in controlling Type 2 diabetes.

"Earlier this month, our team published a five-year follow-up study showing that surgery may be more effective than standard medical treatments for the long-term control of Type 2 diabetes in obese patients,” said Dr. Francesco Rubino, chair of bariatric surgery at King’s College London and Consultant Surgeon at King’s College Hospital in London, in a statement. “This is a huge shift in how we think about the disease. It will be exciting to see if these early results using a much less invasive duodenal mucosal resurfacing approach will be reproduced in larger studies.”

That is what Fractyl is currently trying to do: a multicenter clinical trial that will enroll 50 patients across 10 centers in Europe and South America. And in 2016, the Waltham, Massachusetts company will launch a double-blinded sham controlled trial that will enroll up 240 patients. 

While Fractyl revs up to gather the clinical evidence for its device approach to diabetes, another company that has adopted an endoscopic approach with a temporary implant for obese patients with Type 2 diabetes has stumbled.

GI Dynamics, whose stock trades on the Australian Stock Exchange, developed the EndoBarrier therapy that created a sleeve inside a person's digestive tract temporarily to prevent food from coming in contact with stomach enzymes. While the treatment is approved in Europe and Australia, the U.S. pivotal trial was terminated in July after many patients developed a bacterial infection of the liver. FDA and the company could not agree to a path to address the problem and the trial was abandoned. 

In August, GI Dynamics announced it would be slashing its workforce by a whopping 46% by the end of the year and retain only 29 full time employees.

Fractyl Labs' procedure, however, does not include any implants - temporary or otherwise.

Arundhati Parmar is senior editor at MD+DI. Reach her at [email protected] and on Twitter @aparmarbb

CORRECTION: An earlier version of the story wrongly identified a location for the multicenter clinical trial. It is being conducted in Europe and South America.