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Medigus launches device to treat acid reflux without surgery

By Tova Cohen

TEL AVIV (Reuters) - Israeli medical device maker Medigus expects revenue of a few million dollars in 2014 as it begins to sell its flexible endoscope for the treatment of acid reflux.

Gastroesophageal reflux disease (GERD) is caused by abnormal regurgitation of fluids from the stomach into the esophagus. Patients who do not respond to treatment with drugs often undergo laparoscopic surgery.

Medigus' system enables treatment in an outpatient setting with no incisions. Its endoscope - a surgical tool inserted through the mouth - staples the stomach to the wall of the esophagus to close a gap that allows acid to rise up.

A tiny video camera on the tip enables physicians to see what they are doing. Ultrasound guides alignment once the tip reaches tissue blocking the view.

"We are at the early stage of commercialization. In the medical device world you need to get ... innovators to try the product," Chris Rowland, an American who took over as chief executive of Medigus in October, told Reuters on Tuesday.

By the end of 2014 Medigus expects to have 10 centers in the United States and 10 in Europe performing procedures with its device, which has received U.S. and European regulatory approval. Medigus will focus on commercial expansion in 2016-2017 and expects to be profitable by 2017.

Twenty one million Americans have chronic or severe GERD, Rowland said, noting these patients often have to sleep sitting up. The cost of surgery ranges from $18,000 to $25,000 compared with $10,000-$12,000 for the Medigus procedure.

The potential U.S. market for its endoscope is 16-17 million patients who have given up on drug therapy but not yet decided on surgery. The United States is about 25 percent of the global market.

"By the end of the year it (revenue) will be in the millions of dollar," Rowland said.

Medigus had 1.6 million shekels ($454,000) in revenue in the first nine months of 2013 mainly from its video cameras, some of which are less than 1 mm in size. Rowland said there are many medical and industrial applications for the cameras, including at nuclear reactors and on NASA's space station.

Competitors include the Stretta system made by Mederi Therapeutics that uses radiofrequency energy to remodel muscles in the digestive system.

California-based Rowland was brought to Medigus by the OrbiMed healthcare fund, which invested $8 million last year and owns 24 percent. Another 15 percent is held by Johnson & Johnson and Israel's Dexcel Pharma.

Rowland plans to keep development in Israel and move commercial staff to offices in the United States and Austria.

($1 = 3.525 shekels)

(Reporting by Tova Cohen; Editing by Jeffrey Heller)

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