Sphinx Medical secures £600,000
Sphinx Medical enters fast growing market following successful fund raising with DC Consulting.
Sphinx Medical was started last year to focus on the development, manufacture, and distribution of implantable silicone devices for the management of severe incontinence.
The company has raised £600,000 in an initial financing round led by Borders-based angel syndicate TRI Cap, with members of the Kelvin Capital syndicate, investing through TRI Cap, contributing the majority of the private equity to the deal. The round also included investments by the Scottish Investment Bank’s Scottish Co-Investment Fund and by management.
Sphinx’s initial product is an artificial anal sphincter (AAS), which addresses a problem that is forecast to increase rapidly as the population ages. Incontinence can affect women after childbirth when the sphincter muscles are unable to recapture their full strength, but it is with the elderly that the problem becomes more widespread. Incontinence causes acute embarrassment to its sufferers; colostomy is available for the most severe cases, but otherwise there are few effective treatments that can restore a patient’s dignity. Sphinx’s device is intended to play a major role in doing exactly that.
The AAS replaces the anal sphincter muscles with a silicone pump operating silicone gel pads, which can be manually activated. The device was developed in Glasgow by Dr Ian Finlay and it has been successfully implanted in more than 20 patients, some of whom have benefited for a period in excess of ten years. The device has been issued with a CE mark and the procedure has gained recognition from NICE.
The centres which have used the trial devices in the past, and have staff already trained and approved to carry out the procedure, are keen to order more when the finished product is available early next year, meaning that the company has a ready-made sales pipeline in place. The market is in effect new, and Sphinx has only one direct competitor, with a product based on old technology, over which the AAS is believed to have significant competitive advantages.
Whilst closing the investment the executive team continued to explore adjacent options to enhance the overall Sphinx offering and secured Heads of Terms to acquired a complementary device for the treatment of urinary incontinence.
According to DC Consulting, which advised Sphinx on its fundraising, the product development process and timeline for the AAS is similar to that of the gastric band, which took 18 years to launch into the market, and was subsequently purchased just two years later by Johnson and Johnson for $110 million. The AAS device has a significantly larger market opportunity than the gastric band, and Sphinx’s board believes that a trade sale within a five year period is the most likely exit route for investors.
Sphinx has assembled an experienced management team led by chief executive Jonathan Lintott and chief operating officer Joseph Gallagher. The company is building a dedicated manufacturing facility at its site in Bellshill, and is planning to start shipment of the devices in early 2012. Joe Gallagher said “We are moving rapidly to install and validate our new manufacturing facility and we target gaining regulatory approval for its use by the end of 2011. This will allow us to meet our goal of commencing manufacture during 2011.”
CEO Jonathan Lintott said “I am very excited that we have received this support from our investors. This will allow us to build a new medical device business aimed at meeting the needs of patients across the world and further reinforcing Scotland’s position in the biomedical field.”
Dr Finlay, who will be involved in the future direction of the company, added “I am pleased to be part of this venture. Sphinx will ensure this device – which has the potential to dramatically improve the quality of life – is available to patients “. TRI Cap is represented on the board of Sphinx by member Dr John Hall, who brings with him extensive experience in the pharma and life sciences sectors. Sphinx has been supported in its development by Scottish Enterprise’s National High Growth team.