Friday, May 30, 2008

Future is unclear as LumeRx shuffles execs, Gabrieli ends funding

By Ryan McBride

Amid major leadership changes, medical devices startup LumeRx Inc. is plotting its next move to commercialize a light-based system for killing stomach bacteria.

Medical devices executive Jon McGrath has stepped down from his post as CEO of LumeRx, and company director David Hendren, a general partner at Newton venture capital firm Catalyst Health Ventures, said he has taken over day-to-day operations. Company director Christopher Gabrieli, a managing director at Ironwood Capital Management LLC of Boston, said he has decided not to participate in future financing rounds for LumeRx. 

The leadership changes and Gabrieli’s decision not to invest further in LumeRx come after a clinical trial in India last year that showed the company’s device, as tested, would not gain approval as an initial treatment for H. pylori bacteria, company officials said.

“It’s safe to say that we need to do further optimization for this to be brought forward to the market as a primary treatment,” Hendren said, adding that the device, as is, may be viable as a treatment for patients who do not respond to antibiotics — the normally prescribed therapy. The company is now operating virtually from Hendren’s Catalyst office in Newton.

Gabrieli, who had invested in LumeRx in his former role as a partner with Bessemer Venture Partners, said he decided not to invest further in the company after the clinical trial results showed it would need more capital to improve its device to serve as a primary treatment for H. pylori.

H. pylori is a common stomach bacteria found in about half of the world’s population and is linked to cancer and gastrointestinal ulcers. The bacteria are typically treated with antibiotics made by such pharmaceutical firms as Pfizer Inc., headquartered in New York; Abbott Laboratories of Illinois; and Galderma&t=1">Galderma of Switzerland.

LumeRx’s device consists of a catheter that delivers visible light to the stomach via a patient’s mouth. LumeRx has raised some $9 million in a Series A round of venture capital and supplemental financing rounds, and its investors included Bessemer, which has a local office in Wellesley Hills; Catalyst; Origin Partners of Natick and Echelon Ventures of Waltham, according to its website.

McGrath, who had been CEO of LumeRx until early this year, is serving as a consultant and advisor to the startup, Hendren said. 

What had attracted the investors to LumeRx, Gabrieli said, was its completely new approach to the widespread problem of H. pylori infection. “It’s definitely the type of thing that you like to do as a venture capitalist,” Gabrieli said. “It was a completely new modality.”