Medical device startup Alimetry raising US$15 million in Series B round

Medical device startup Alimetry is getting significant interest from potential lead investors for its new US$15 million (NZ$24.5 million) Series B funding round. 

Founder and CEO Professor Greg O’Grady says half the funds have already been committed, with existing investors such as IP Group and Movac indicating they’ll likely invest more.

O’Grady says he’s looking for a lead investor who can provide some heft for the medtech company’s planned expansion into the US market, bringing more than just money to the table. 

Alimetry raised $16.3 million in late 2021 in a heavily oversubscribed Series A round that included IP Group, Matū Karihi, K1W1 and UniServices, and has raised just under $20 million to date. 

The startup’s main product, Gastric Alimetry, is a wearable medical device that helps diagnose gastric disease by measuring the pattern and intensity of electrical waves in the stomach. Until now there have been no tests that definitively show the cause of many of those chronic complaints and Alimetry’s device has a novel way of assessing patients and validating and monitoring their symptoms. 

The device comprises a thin, flexible sensor array pad embedded with electrodes that pick up electrical impulses that drive muscle contractions in the digestive tract.

Recordings are taken before and after a meal from a sensor stuck on the bellies of patients who then log their symptoms into the Gastric Alimetry app. The system records digestive patterns and delivers clinical reports via the cloud to help inform the diagnosis of gastric diseases and support personalised therapy.

The company was founded by O’Grady and Dr Armen Gharibans, evolving out of work by the gastro-bioengineering group at the University of Auckland-based Auckland Bioengineering Institute (ABI) and the university’s faculty of medical and health sciences. It was spun out from Auckland University in 2019.

Movac’s research notes on its investment into Alimetry note it is still rare to have a deeptech founder capable of making a great company out of their research. The notes say O’Grady, a university professor and gastrointestinal surgeon, has a ‘crystal clear vision of creating a multibillion-dollar, publicly listed, life sciences company right here in New Zealand’.

The co-founders’ deep clinical experience has seen the company gain approval to sell in multiple countries and also speedy approval for crucial US Food and Drug Administration (FDA) clearance in June 2022 of its hero product. It has also gained a second FDA clearance for updates to the non-invasive device. 

Alimetry is selling direct to hospitals in the US, as it does in the UK and New Zealand. O’Grady says the roll-out in the US is going well, with more than 20 hospitals adopting the device including the prestigious Stanford Health Care Hospital and another 30 are in the pipeline. Some 2,500 tests have been completed in six countries.

The money raised will be spent on expanding the sales team in the US but also pushing hard to get through the tricky and lengthy process of insurer reimbursement through the publicly funded Medicare system.

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The R&D pipeline

Gastric Alimetry is just the first product in Alimetry’s R&D pipeline.

The next is a paediatric version of the device following requests from those working at the frontline with children.

O’Grady says the company is also interested in other organs such as the colon.

In partnership with the University of Auckland, it also received $1 million in funding over three years last September from the Endeavour Fund’s Smart Ideas funding pool to further develop a multimodal wearable device that will help rapidly detect complications after gut surgery.

O’Grady has said the R&D project is about using smart sensors and AI for monitoring patients post-surgery to improve recovery rates.

For commercial reasons he’s reluctant to get into too much detail on the new products at this stage, but has made no secret he’s always envisioned Alimetry as having a range of gut-related products.  

However, the focus now is on beefing up sales of Gastric Alimetry in the US, and going global “is in the five-year plan”, he says.

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