Manchester University spinout Phagenesis raises $42m

University of Manchester spinout firm Phagenesis, which has developed a neurostimulation system to treat swallowing dysfunction, has closed a $42 million Series D financing all equity investment round.

The combined European and United States investment syndicate involved was led by EQT Life Sciences and co-led by Sectoral Asset Management, with new investors British Patient Capital, Northern Gritstone and Aphelion/Cardeation Capital also joining the round.

“This substantial investment reflects their recognition of the transformative potential of Phagenesis’ cutting-edge therapy, Phagenyx,” said Phagenesis.

“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 because of 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 commercialization in the United States and deepen penetration in Europe. It will also support clinical trials, regulatory activities, as well as research and development of pipeline products.”

Phagenesis CEO Reinhard Krickl said: “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 the millions of patients every year 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 hospital length of stay, the risk of complications, and lengthens recovery time.

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

“This is strongly aligned 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, said: “Dysphagia associated complications are known to substantially increase mortality, 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 to make Phagenyx more broadly available, specifically in the United States.”