Allurion Technologies Inc

Invention:	Swallowable gastric balloon
Trademark:	Allurion® Balloon
Patents:	17
NYSE:	ALUR

The invention

The Allurion Balloon is a first of its kind, procedure-less intragastric balloon that does not require any surgery, endoscopy, or anesthesia for placement or removal. The balloon is swallowed in a capsule during a discrete outpatient office visit that takes approximately 15 minutes (though times may vary across different outpatient offices). Once the capsule is in the stomach, a delivery catheter is used to fill the Allurion Balloon with approximately 550 milliliters of filling fluid. Approximately four months later, a patented ReleaseValve™ opens and allows the balloon to empty and pass out of the body naturally. The patient does not need to return to the doctor to have the balloon removed.
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Over 130,000 patients have already been treated commercially with the Allurion Balloon in over 50 countries globally outside of the United States.

The performance advantage

Whereas incumbent intragastric balloons require endoscopy for implantation and removal, the Allurion balloon is swallowed and after 4 months will deflate and leave the body in a bowel movement. As a result, the Allurion balloon outperforms incumbent products on dimensions of convenience and consumer anxiety concerning surgery. 
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Novel balloon features

The Allurion Balloon is comprised of several novel and innovative features that differentiate it from previous intragastric balloons and enable it to be swallowed and then naturally passed, including:

• Dissolvable capsule: The capsule is large enough to accommodate the folded balloon, yet small enough to be swallowed. The capsule is titrated to optimize dissolution timing. If the capsule dissolves too quickly, the balloon could be prematurely released before entering the stomach, and if too slowly, the patient and physician are inconvenienced by having to wait longer to fill the balloon.
• Balloon film: The film is made from a polyether polyurethane that was specifically chosen to be extrudable into a film thin enough to fit into a capsule and pass through the gastrointestinal tract yet impervious to the chemical environment and mechanical forces of the stomach. The film is biocompatible, cost-effective to extrude and manufacture, and puncture resistant, all while being smooth and atraumatic to the gastrointestinal lining.
• Balloon valves: The Allurion Balloon contains two valves: a Fill Valve and ReleaseValve™. The valves are constructed from polyurethane film and unlike valves used in other intragastric balloons, there are no rigid parts. This design ensures that the valves are atraumatic to the stomach lining and can pass through the gastrointestinal tract without obstructing. Both valves are small and flexible so that they can be folded to fit inside the capsule. 1. The Fill Valve is designed to reseal after the delivery catheter is removed. It also contains a radiopaque marker so that the Balloon can be visualized on x-ray. 2. The ReleaseValve™ is constructed from a degradable polymer that faces the inside of the Balloon. Once the degradable polymer is fully degraded, the ReleaseValve™ opens, the Balloon empties, and then passes through the gastrointestinal tract to be excreted.
• Delivery catheter: The delivery catheter is designed to quickly fill the Allurion Balloon. It is small, flexible, and smooth in order to minimize any potential discomfort to the patient during balloon placement. In addition, the catheter contains length markings to measure transit through the esophagus and into the stomach and is radiopaque to facilitate visualization on x-ray.

Here is a comparison of marketed gastric balloons on various performance dimensions (Stavrou, et al. 2021):
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Gross margins

Gross margins for FY 2022 were 78%. 

Capital intensity

Allurion has a low level of capital intensity. The company generated $45m in revenue for the 9 months ending Sept 2023, and held inventories of $4m and net property plant and equipment of $3.3m as at Sept 2023.

Unit growth and upside

If we take the three European markets of France, Spain and UK from 2017 to 2021, we see high rates of unit growth. Unit sales in France have increased at 86% annually over the five year period to around 4,500 balloons by 2021, Spain at 89% to around 7,500 balloons, and the UK at 227% to around 3,500 balloons. ​

Market penetration rates for these markets as at 2021 were very low (at 0.1%, 0.28%, and 0.5%, respectively), providing substantial upside. 

US sales are zero as the company awaits its premarket approval from the FDA.
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Intellectual property

As of September 30, 2023, the company owns or has rights to 17 issued and four pending patents in the United States related to various aspects of the Allurion Balloon such as a swallowable, self-deflating and naturally passing gastric balloon, improvements to the fill and release valves therein, methods for deploying and releasing a gastric balloon within the body, and next generation fill and release valves. In addition, the company has 35 issued and five patents pending outside of the United States. 

Competition

In the U.S., there are three manufacturers with an intragastric balloon approved by the FDA at this time: Boston Scientific Corporation, Inc. ReShape Lifesciences, Inc. and Spatz FGIA Inc. All of these balloons require endoscopy and anesthesia for placement and/or removal.

The company also competes against the manufacturers of pharmaceuticals that are directed at treating weight loss, such as NovoNordisk, Eli Lilly, Roche Holding AG, GlaxoSmithKline plc, Arena Pharmaceuticals, Inc., VIVUS, Inc., Orexigen Therapeutics, Inc. and Gelesis Holdings, Inc.

Pricing

Costs vary, but patients typically pay between $3,000 to $4,000 for the Allurion program. In comparison, the list prices for a month’s supply of weight-loss drugs, such as Wegovy and Zepbound, are $1,349, and $1,059, respectively.

Financial position

As at September 2023, the company had $120m in assets (including $80m in cash), total liabilities of $173m, and shareholders equity of -$53m (including $141m paid in capital and -$194m in retained earnings). 

Regulatory status

The Allurion Balloon has demonstrated favorable short and long-term results for weight loss with few adverse events. In a prospective, nonrandomized, open-label, registry study of 1,770 patients, Allurion Balloon patients lost 14% of total body weight or 30 pounds on average after just four months. In another study of 522 patients, average weight loss was 13.9% of total body weight at four months and 13.4% of total body weight at one year after balloon passage, representing a 95% maintenance of total body weight loss. In a study of 232 Allurion Balloon patients who maintained ongoing lifestyle modification after balloon passage, average weight loss was 17% of total body weight at one year.

In a study of 181 patients that combined Allurion Balloon treatment with a GLP-1 weight loss drug, the first multicenter study of balloon and drug combination therapy demonstrating significant synergies, average weight loss was 19% of total body weight at eight months. Finally, in another study of 226 patients with type 2 diabetes or pre-diabetes treated with the Allurion Balloon, those with type 2 diabetes reduced their hemoglobin A1c (HbA1c) on average by 1.5 points and those with pre-diabetes reduced their HbA1c by 1.1 points.

​The FDA approved the IDE for the AUDACITY trial, a 48-week, prospective, randomized, open-label study. The company received approval of the IDE from the FDA in November 2021 to initiate the AUDACITY clinical trial in the United States. The first patient in the study was treated in July 2022. During the third quarter of 2023, the company enrolled 550 patients in the study across 17 sites in the United States. The results of the study are expected to support a pre-market approval, or PMA, submission to the FDA.

Upside

According to Allurion, 1% penetration in existing markets (which excludes the US) translates to ~$500M of annual revenue, which is 10 times current revenue (USD$45m for the 9 months ending Sept 2023). The company's market cap as at February 2024 is USD$142m.
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Sources

Allurion prospectus: 
​https://d18rn0p25nwr6d.cloudfront.net/CIK-0001964979/018fbb65-883d-4dc4-819b-7dfe238f8e4d.pdf

Allurion investor presentation: 
​https://s202.q4cdn.com/535045579/files/doc_presentations/06/Allurion_Presentation_-_June_8_-_Final.pdf

​https://www.today.com/health/diet-fitness/allurion-balloon-weight-loss-rcna135711

Stavrou, Shrewsbury, Kotzampassi. Six intragrastric balloons: Which to choose? 2021. National Library of Medicine. 
https://www.ncbi.nlm.nih.gov/pmc/articles/PMC8394181/​