EQT Life Sciences and Sectoral lead $42M investment in medtech Phagenesis

Medtech company Phagenesis, which has developed a revolutionary neurostimulation system to treat swallowing dysfunction, has closed a $42 million Series D financing all-equity investment round. 

The Phagenyx® neurostimulation system targets and restores the neurological components of swallowing coordination and control that are disrupted due to brain injury (including stroke) or prolonged mechanical ventilation.

Patients with swallowing dysfunction (dysphagia) are unable to safely or effectively eat, drink, or manage their own saliva. 

Dysphagia can often lead to life-threatening complications such as pneumonia and is also associated with substantially higher healthcare costs.  

With the recent approval of Phagenyx® by the FDA in the United States, the investment is primarily intended to support commercialisation in the United States and deepen penetration in Europe. 

It will also support clinical trials, regulatory activities, and research and development of pipeline products. 

The combined European and United States investment syndicate was led by EQT Life Sciences and co-led by Sectoral. New investors British Patient Capital, Northern Gritstone, and Aphelion also joined the round. 

According to Reinhard Krickl, CEO of Phagenesis:

“This investment from a highly experienced international investor syndicate will accelerate access to and adoption of our therapy.

We will invest in exceptional talent to scale up our customer outreach and to support passionate clinicians who want to bring our therapy to those who need it. Our novel and proven therapy can help millions of patients who suffer from swallowing disorders.” 

Drew Burdon, Partner at EQT Life Sciences, said:

“Dysphagia is a severe medical condition that affects countless patients in hospital. It can increase the hospital length of stay, the risk of complications, and lengthen recovery time.

The Phagenyx System demonstrates significant reductions in hospital length of stay and corresponding and substantial reduction in healthcare costs, as evidenced by the Company’s strong portfolio of high-quality clinical studies.

This strongly aligns with EQT’s Health Economics strategy of transforming cutting-edge scientific innovation into impactful and cost-effective healthcare solutions. We‘re excited to support the next phase of Phagenesis’ journey.” 

Michael Sjöström, Co-Founder and Partner at Sectoral Asset Management, added:

“Dysphagia-associated complications are known to increase mortality substantially, but there is still a lack of adequate treatment modalities.

That’s why Phagenyx is an amazing innovation with the potential to change care paradigms. It allows treatment of dysphagia very early in the care pathway, which prevents later complications.

Our investment will support the Phagenesis team in making Phagenyx more broadly available, specifically in the United States.” 

Randomised controlled trials have demonstrated clinically significant improvements, which support faster recovery of patients and reduced length of hospital stay. 

As part of this transaction, Drew Burdon, Michael Sjöström and Mark Wyatt will join the Phagenesis’ Board of Directors. 

Lead image: Phagenesis. Photo: uncredited.