November 2024 issue, BioElectRx Business Report
November 30, 2024 | ReShape Lifesciences Inc., the Irvine, CA manufacturer of neuromodulation systems to treat diabetes and related disorders, is one of several neuromodulation firms that have struggled to commercialize an implantable neuromodulation device to treat obesity. The company, which is now known more for its LapBand obesity device, developed the vBloc system under the name EnteroMedics Inc., which was located in St. Paul, MN. That company changed its name to ReShape Lifesciences in 2017, when it acquired ReShape Medical Inc. and BarioSurg, Inc., two firms with minimally invasive obesity devices.
In 2009, EnteroMedics failed to meet its primary endpoint in its EMPOWER study of its vBloc therapy for obesity. In 2013, the company’s ReCharge pivotal trial failed to meet its primary efficacy endpoints. But the company gained approval in European and Australian markets and later got FDA approval in 2015 based on revised CDRH guidance. EnteroMedics raised $40 million in an IPO in 2007 and another $30 million in 2010 and $13.8 million in 2013 public offerings. But despite market approval, reimbursement and product sales of the Maestro device languished and the company’s market cap declined, triggering a 1- for 70 reverse stock split in 2016. Many observers wrote off the prospects of vBloc therapy achieving commercial success.
Other firms who had dabbled but failed in this market include IntraPace Inc., which developed an endoscopically delivered gastric stimulation system, Leptos Biomedical, MetaCure, which had an implanted duodenum stimulator, and Cyberonics (now LivaNova), which explored a project with J&J to use VNS for obesity. GI Dynamics, which also developed a gastric stimulation system more than 20 years ago, rebranded itself as Morphic Medical last year, but is still waiting for FDA approval of its RESET system for Type 2 diabetes and obesity. The company was delisted from the ASX in 2020.
But despite the setbacks, ReShape continued work on its vBloc therapy. In 2020, the company announced preclinical research demonstrating their Diabetes Bloc-Stim Neuromodulation proprietary device, which uses vBloc technology, combined with vagus nerve stimulation, for the treatment of type 2 diabetes mellitus, was well-tolerated and met the study endpoints. The study was conducted as a part of the NIH Small Business Innovation Research Phase I grant that was awarded in 2019. The preclinical investigation consisted of simultaneous electrical blockade and stimulation of individual vagal nerve branches and was conducted in a type 2 diabetic porcine animal model. Results showed a significant reduction of blood glucose. Histopathology of organ systems effected by the neuromodulation demonstrated healthy tissue. In 2023, the company was awarded an additional $331,541 SBIR grant.
Earlier this year, ReShape announced that the company was awarded a $241,000 supplementary grant from the NIH, with the University of Southern California’s Center for Autonomic Nerve Recording and Stimulation Systems. The award will fund large-animal testing of USC’s next-generation Parylene-based cuff electrodes. The company said that the supplementary grant will help ReShape conduct minimally invasive laparoscopic surgical electrode implantation techniques as well as long duration safety and blood glucose modulation experiments in a porcine model of diabetes.
“ReShape’s DBSN device effectively regulates vagal block and stimulation to the liver and pancreas, respectively, resulting in improved blood glucose management. This has been demonstrated through successful glycemic control in a Zucker rat model of Type 2 diabetes and an alloxan treated swine model of Type 2 diabetes, with the support of prior NIH grants,” said Jonathan Waataja, director of research at ReShape Lifesciences. “This non-dilutive supplemental grant, awarded over the course of one year will fund studies to test the safety and efficacy of a the next-generation electrodes which can potentially double the nerve contact area to increase the effectiveness of delivering DBSN signals while reducing power consumption. We look forward to collaborating with CARSS to further the development of the novel DBSN device as a potential treatment for diabetes and hypoglycemia.”
“This fourth grant from the NIH brings our total received awards to $1.15 million, demonstrating the viability of our non-dilutive funding strategy and the NIH’s keen interest in our novel DBSN technology and its potential in the global diabetes market,” said Paul Hickey, president and CEO of ReShape. “With these funds, our team has successfully completed the pre-clinical development of the device, utilizing bioelectronics to regulate insulin production and manage blood glucose levels for the potential treatment of Type 2 diabetes and hypoglycemia. This innovative technology has demonstrated the ability to reduce the reliance on medications for diabetics in a personalized manner, aiming to lower treatment costs and complications associated with poorly controlled blood glucose and medication non-compliance.”
The DBSN system is implanted minimally invasively and delivers bioelectronic neuromodulation of vagus nerve branches that are innervating organs which regulate plasma glucose. The system stimulates vagus celiac fibers of the pancreas to release insulin during stimulation, while blocking the hepatic vagal branch, innervating the liver, to decrease glucose release and decrease insulin resistance following ligation. The system uses a proprietary, reversible and adjustable electrical blockade.
Earlier this year, ReShape announced that it has entered into an asset purchase agreement with Biorad Medisys, Pvt. Ltd., an India-based manufacturer of neurovascular pursuant to which ReShape has agreed to sell substantially all of its assets to Biorad, including the Lap-Band system, its Obalon gastric balloon system and the DBSN system for $5.16 million, with Biorad assuming all liabilities. At closing of the asset purchase agreement, the DBSN system will be owned by Biorad.
At the same time, ReShape entered into a merger agreement with Vyome Therapeutics Inc., a Cambridge, MA clinical-stage company targeting immuno-inflammatory and rare diseases. The combined company will focus on advancing the development of its immuno-inflammatory assets and on identifying additional opportunities between the world-class Indian innovation corridor and the U.S. market. Existing ReShape stockholders will own approximately 11.1% of the combined company immediately following the closing of the merger, subject to adjustment based on ReShape’s actual net cash at closing compared to a target net cash amount of $5 million. At the closing of the merger, ReShape will be renamed Vyome Holdings, Inc. and expects to trade under the Nasdaq ticker symbol “HIND,” representing the company’s alignment with the U.S.-India relationship.
ReShape Lifesciences revenue totaled $6.2 million for the nine months ended September 30, 2024, which represents a contraction of 7.4%, compared to the same period in 2023. This primarily resulted from a decrease in sales volume, primarily due to GLP-1 pharmaceutical weight-loss alternatives.
It remains to be seen whether and to what extent Biorad will keep the ReShape branding and product mix intact. But in all likelihood, the story is not yet over for vagus-nerve neuromodulation for treating obesity.
