THIS STORY HAS BEEN FORMATTED FOR EASY PRINTING

Endoscope innovator is sold

By Robert Weisman
Globe Staff / July 6, 2011

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Spirus Medical Inc., a West Bridgewater start-up that is developing a spiral endoscope to improve tests for gastrointestinal disorders, has been acquired by a Japanese buyer.

The parties did not disclose financial terms of the Spirus sale to Japan’s Olympus Corp., an industrial conglomerate specializing in medical devices and consumer electronics. But life sciences professionals, who asked not to be identified because they were not authorized to discuss the purchase price, said the deal could be worth as much as $60 million if Spirus meets a series of milestones en route to winning regulatory approvals for its device.

That would make it one of the largest acquisitions of a venture-backed medical technology company in Massachusetts so far this year. The deal also showcases a new dynamic of investors backing “virtual companies’’ with smart ideas but few employees, growing them in a cost-efficient way by subcontracting work and partnering with established companies, and selling them before their products have entered the marketplace.

Olympus is the global market leader in endoscopes, insertion devices used for a variety of procedures ranging from colonoscopies to panendoscopies. The company “is clearly interested in this [Spirus] technology being part of their next generation of devices,’’ said Marc Goldberg, general partner at BioVentures Investors in Wellesley. The venture capital firm was one of the lead investors in Spirus, which has only about a half dozen employees.

Before the breakthroughs pioneered at Spirus, “there had not been a lot of innovation in the GI space for the last two decades,’’ Goldberg said. Olympus competes with two other Japanese companies, Fujitsu Ltd. and Pentax Corp., to sell endoscopes to doctors groups around the world - all offering commodity products with little technological differentiation.

Spirus founders Bob Ailinger and Jim Frassica have been working on a spiraling sheath that fits over an endoscope, enabling gastroenterologists to manually rotate it through the GI tract, and more recently they have worked on a powered version of the device. Both represent advances over today’s scopes, which must be pushed into the tract. In clinical trials outside the United States, they have been shown to speed up imaging tests and give doctors visibility into more areas.

“What this means is you’ll be able to see the entire GI tract any time you want, with full diagnostic and therapeutic capabilities,’’ said Dr. Paul Akerman, clinical assistant professor of medicine and surgery at Brown Medical School in Providence. “Right now you can’t really get to the small bowel. With this technology, we’ll be able to see the entire small bowel. This is a significant game changer.’’

Spirus has been working out of an innovation center in West Bridgewater set up by Stoughton-based STD Med Inc., a medical device manufacturer that was another lead investor in Spirus. The company will be moving to an Olympus office in Southborough.

Robert Weisman can be reached at weisman@globe.com.