GI Dynamics scores Israeli win for EndoBarrier

GI Dynamics (ASX:GID) has secured reimbursement coverage in Israel for its obesity and diabetes treatment, EndoBarrier Therapy, and has announced the product’s expanded availability in Australia.

Clalit Health Services, one of Israel’s four HMOs, has established a reimbursement coverage policy for the medical device therapy. This will allow participating Israeli hospitals to negotiate on the total charge.

The policy enables patients with type 2 diabetes and obesity who are insured through the HMO and enrolled in its supplementary insurance plan to receive reimbursement for at least 50% of the total negotiated cost of treatment. Around 2.7 million people are enrolled through the insurance plan.

EndoBarrier Therapy is a flexible tube-shaped liner designed to be inserted non-surgically, and then act as a barrier between food and a portion of the intestinal wall.

The product is approved in Australia, Europe and a number of South American and Middle Eastern countries. GI Dynamics has so far also secured reimbursement coverage in Germany and in the Netherlands.

In a research note, Bell Potter Securities said the firm views the announcement as “extremely positive for the company given that it’s the first reimbursement win for the company in the Middle East [and] the first reimbursement win for GID in a profit environment or non-government setting”.

The next milestone for the company in terms of reimbursement coverage in Israel will be national-level reimbursement, Bell Potter said, which will require the company to secure coverage under the nation’s Uniform Benefits Package.

Bell Potter retained its buy rating on GI Dynamics CDIs, with a target price of $1.53 each.

GI Dynamics separately revealed that two more Australian centres have started treating patients with EndoBarrier - Adelaide Obesity Surgery and Perth’s Upper GI West.

GI Dynamics CEO Stuart A Randle said there are now expert centres in place in Melbourne, Sydney, Perth and Adelaide, and more centres are currently being trained. The first two Australian clinics started offering EndoBarrier in September 2012.

GI Dynamics (ASX:GID) shares were trading 7.55% lower at $0.49 as of around 12.30 pm on Tuesday