EnteroMedics Inc. (NASDAQ:ETRM) Acquires ReShape Medical

EnteroMedics Inc. (NASDAQ:ETRM)

Shares of EnteroMedics Inc. (NASDAQ:ETRM) gained 12.3% after the developer of minimally invasive medical devices announced the acquisition of ReShape Medical. The acquisition of the privately held medical technology company will expand the company’s addressable market and revenue stream.

EnteroMedics Inc. (NASDAQ:ETRM)

ReShape Acquisition

The acquisition will likely compliment the company’s EnteroMedics Inc. (NASDAQ:ETRM) existing products at a time when the company is in dire need of new catalysts. ReShape Medical is the owner and marketer of the FDA-approved ReShape Dual Weight Loss Balloon, designed to treat obese patients with body mass index of between 30 and 40.

Investor confidence in EnteroMedics Inc. (NASDAQ:ETRM) hit at all-time lows as the stock slumped to multi-year lows. ETRM is down by more than 80% for the year after coming under immense selling pressure. Tuesday’s rally did little to strengthen investors’ confidence on the stock as it continued to trade in a strong downtrend.

EnteroMedics Inc. (NASDAQ:ETRM) is in dire need of new products if it is to reinvigorate its growth prospects in the industry. The company has long struggled financially as sales and profits continue to drop. Much of the company’s troubles stem from its flagship device vBloc which lacks coverage from major insurers despite showing promise.

The Chief Executive Officer, Dan Gladney, is however confident about the company’s prospects especially with the acquisition of ReShape Medical.

“EnteroMedics and ReShape Medical are two innovative companies that share a strong strategic focus on providing proprietary, patient-friendly technologies to address the global obesity epidemic. We look forward to combining the complementary expertise and capabilities of both companies for the benefit of our customers, patients, employees, and stockholders,” said Mr. Gladney.

Acquisition Terms

Under the terms of the acquisition agreement, EnteroMedics Inc. (NASDAQ:ETRM) is to add two designees of ReShape Medical to its board of directors. ReShape Medical is also entitled to 2.36 million shares of EnteroMedics common stock, 187,772 shares of series C convertible preferred stock as well as $5 million in cash.

The $5 million cash is to be used to pay ReShape’s outstanding senior secured indebtedness among other transaction expenses. EnteroMedics Inc. (NASDAQ:ETRM) is to hold a special meeting of shareholders on December 31, 2017, to seek approval of the conversion of Series C convertible preferred stock.

I have no positions in any of the stocks mentioned, and have no plans to initiate any positions within the next 72 hours. All information, including any data, is provided without any guarantees of accuracy.

Don’t miss out! Stay informed on $ETRM and receive breaking news on other hot stocks by signing up for our free newsletter!

About the author: James Marion is a University of Houston student studying Business with a concentration in Finance. James has interned with several investment professionals and hopes to pursue a career as a professional stock analyst after graduation.

EnteroMedics Inc (NASDAQ:ETRM)

EnteroMedics Inc (NASDAQ:ETRM) After-Hours News Hits Stock

EnteroMedics Inc (NASDAQ:ETRM)

EnteroMedics Inc (NASDAQ:ETRM) stock was up over 17% in Monday’s after-hours trading session, to end at $4.49, after the company announced a loss of $6.8 million in its second quarter. Revenues came in at $93,000 – less than what was expected. However, on a per-share basis, the St. Paul, MN-based, medical device company lost (-$0.91) which beat street estimates by $0.02.

EnteroMedics Inc (NASDAQ:ETRM)
Six month Enteromedics price chart

Importantly, implantations of the company’s lead revenue generator, the vBloc®, was up over 83% from the same quarter last year. For the six months ended June 30, 2017, the Company placed 50 units, primarily from the vBloc Now program, a 72% increase compared to 29 units for the same period in 2016. As of June 30, 2017, the Company had cash, cash equivalents and short-term investments totaling $11.2 million and it had no debt.

EnteroMedics Inc (NASDAQ:ETRM) is a developer of medical devices that cater to the weight-loss market. The company developed the FDA-approved vBloc® neurometabolic therapy. The vBloc® therapy is delivered by a pacemaker-like device called the Maestro® Rechargeable System. This device is designed to help patients feel full and eat less by intermittently blocking hunger signals on the vagus nerve – thereby allowing patients to safely lose weight by helping patients feel less hungry, reduce the amount of food eaten at a meal, and feel full longer in between meals. The vBloc® Therapy is a non-anatomy altering or restricting, and is reversible.  therapy that allows patients to safely lose weight by helping patients feel less hungry, reduce the amount of food eaten at a meal, and feel full longer in between meals.

EnteroMedics Inc (NASDAQ:ETRM)
ETRM’s vBloc FDA-approved weight loss aid/device

Bariosurge Inc. was recently acquired by EnteroMedics Inc (NASDAQ:ETRM) which gave the company an additional revenue stream originating from the weight-loss market. Bariosurge is the developer of the Gastric Vest System™. The Gastric Vest is being developed as a minimally invasive, laparoscopically implanted medical device for weight loss in morbidly obese patients. The device wraps around the stomach, emulating the effect of conventional weight-loss surgery, and is intended to reduce the size of the stomach without permanently changing one’s anatomy.

EnteroMedics Inc (NASDAQ:ETRM) continues to address the primary cause of drag on the stock price – a lack of coverage by major insurance companies. It is important to remember that the stock blasted over 700% on the news that the company had two new facilities agree to be used for device implantation. It appears the market will reward the company for any advancement of its device into the medical mainstream.

I have no positions in any of the stocks mentioned, and have no plans to initiate any positions within the next 72 hours. All information, including any data, is provided without any guarantees of accuracy.

Don’t miss out! Stay informed on $ETRM and receive breaking news on other hot stocks by signing up for our free newsletter!

About the author: Steve Clark is a 23-year Wall St professional with stints in M&A, risk management, and algorithm trading. Steve keeps his head in the game by looking for, and writing about, small companies that often get overlooked by the big investment firms.

EnteroMedics Inc. (NASDAQ:ETRM)

EnteroMedics Inc. (NASDAQ:ETRM) Expands Offerings With Gastric Vest Acquisition

EnteroMedics Inc. (NASDAQ:ETRM)

EnteroMedics Inc. (NASDAQ:ETRM) has completed the acquisition of BarioSurg, Inc. thereby gaining access to its minimally invasive, medical device, Gastric Vest System. The device is being studied as an offering for people struggling with obesity.

Gastric Vest for Weight Loss

The Gastric Vest wraps around the stomach. By doing so, the device enables gastric volume reduction without changing the user’s anatomy.

“We are excited to both incorporate BarioSurg’s Gastric Vest into our now further differentiated portfolio of medical devices for fighting obesity and related comorbidities, and to explore potential clinical opportunities to combine the Vest and vBloc Therapy,” said EnteroMedics Chief executive officer, Dan Gladney.

The vest has already demonstrated a mean 85% weight loss probability in a pilot study carried outside the U.S. Given the positive results, EnteroMedics Inc. (NASDAQ:ETRM) is now planning to build a strong foundation as it looks to gain regulatory approval for the device. Given that the device has the potential to be a game-changer in the field of bariatrics, approval will mark a major milestone for the company.

EnteroMedics Inc. (NASDAQ:ETRM) is planning to pay 1.38 million unregistered shares for the acquisition of BarioSurg Inc. in addition to 1 million unregistered shares of conditional convertible preferred stock. Shares of common stock issued in the acquisition represent 19.99% of the company’s total outstanding shares. The company is to hold a special meeting of shareholders to approve the conversion of the conditional convertible preferred shares in the summer.

EnteroMedics Inc. (NASDAQ:ETRM) is fresh from completing its first vBloc Neurometabolic therapy implant at the McGuire Veterans Affairs Medical center. The vBloc system is designed to control sensation of hunger using a pacemaker-like device that is usually implanted under the skin. The device gives patients the sensation of fullness helping them control their calorie intake.

Q1 Financial Results

Separately, EnteroMedics Inc. (NASDAQ:ETRM) recently reported financial results for the first three months of the year. Net loss for the quarter came in at $7.4 million representing a loss of $1.27 a share. Sales in the quarter totaled $40,000 with selling, general and administrative expenses coming in at $5.9 million.

Research and development expenses on the other hand totaled $1.1 million. The company exited the quarter with cash and cash equivalent of $18.7 million.

EnteroMedics Inc. (NASDAQ:ETRM) stock was up by 10.68% in Tuesday’s trading session, ending the day at $5.08 a share.

I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. All information, or data, is provided with no guarantees of accuracy.

About the author: James Marion is a University of Houston student studying Business with a concentration in Finance.

EnteroMedics Inc (NASDAQ:ETRM) Reports Q1 2017 $7.4 million Net Loss

EnteroMedics Inc (NASDAQ:ETRM)

EnteroMedics Inc (NASDAQ:ETRM) has reported $7.4 million net loss according to the financial results for the first quarter of 2017 that the company released recently.  The company employs neuroblocking technology to develop medical equipment used in treating metabolic diseases, obesity and other gastrointestinal complications.

In a statement issued by EnteroMedics Inc (NASDAQ:ETRM)’s President, Chief Executive Officer, and Chairman of the Board Dan Gladney, the company has taken robust steps in rebuilding its capital structure. This was initiated by plans to cut on the company’s expenses which came into operation in the last quarter of the last financial year and have been in use all through the first half of the first quarter of this year.

EnteroMedics Inc (NASDAQ:ETRM) kicked off the commercial operations of the vBloc® Therapy with high hopes that the product’s sales will pick with momentum in the remaining part of the year.  In addition, the company has been working on entering into strategic partnerships in a bid to build a strong third party approval for the vBloc Therapy as a certified, long term and non-anatomy changing obesity treatment as well as related morbidities. The company is counting on its strong and independent balance sheet and a big team of professionals to put itself on track to realizing the full potential from the vBloc.

On the financial front, the company’s sales amounted to $40,000 for the period ended March 31, 2017. This led to $11,000 in gross profits in the first quarter. A net a loss of -$7.4 million or -$1.27 per share was reported in the three months ended March 31, 2017.

EnteroMedics Inc (NASDAQ:ETRM) reported $1.1 million in selling, general and administrative expenses in Q1 of 2017. At the close of the quarter, the company had $18.7 million in cash, cash equivalents, and investments.

The company recently announced changes in its ownership structure. Institutional investors hold $1 million worth of shares in the company. This amounts to 7.9% of the company’s total share float. The company’s top three institutional owners are Renaissance Technologies Llc which has $885,000 worth of shares in EnteroMedics Inc (NASDAQ:ETRM) representing approximately 2.45% of the company’s total market cap and 88.5% of the total institutional hold in the company. Sabby Management, Llc is the second largest shareholder in the company with 33,387 shares valued at $182,000. Vanguard Group Inc has shares in EnteroMedics valued at $104,000. This represents 0.29% of the company’s market cap.

I have no positions in any of the stocks mentioned, and have no plans to initiate any positions within the next 72 hours. All information, including any data, is provided without any guarantees of accuracy.

About the author: Monica Gray has an undergraduate degree in Accounting and an MBA – earned with Honors. She has six years of experience in the financial markets and has been a securities analyst for the past two years.

EnteroMedics Inc (NASDAQ:ETRM) History Of Major Dilution

EnteroMedics Inc (NASDAQ:ETRM)

Earlier in February EnteroMedics Inc (NASDAQ:ETRM) published a PR which updated on the data from the 3-year trial of the vBloc implant. Analysts have a watch on the stock due to the extensive amount of reverse splits and dilution.

The update

Going through the press release, EnteroMedics announced %EWL to be 21% following 3 years. This may not appear all that bad, unless the data is compared alongside the two other related surgeries for aided weight loss; the gastric sleeve and gastric bypass. The former one has over 50%EWL loss after 2 years, whereas bypass surgery recorded almost 70%EWL following 2 years.

Market considered that maybe vBloc was priced low compared to other two candidates, it makes up for the case of poor %EWL. However, it is not the case as all the candidates are almost close to the same price. In, fact the sleeve is nearly $18,000, as is vBloc, whereas bypass surgery is priced slightly higher at almost $23,000.

All that being considered, why would market want to have vBloc? In addition to previous concerns of impact of artificial stimuli to the Vagus nerve, there are numerous other downsides to this type of weight loss. One big drawback is the fact that customer has an electronic piece inside of body that need to be recharged regularly, which many could find as annoying. However, the bypass surgery and sleeve have no such issues. Another thing to view is the fact is that these three processes needs surgery, in and close to the same area.

It would seem that consumers agree to this, because EnteroMedics vBloc has been in market quite some time, and yet failed to record any notable revenue. The initial commercial implantation was done in Kuwait back in 2012. Since then, vBloc has been permitted for use in many notable nations, counting being approved by the U.S. FDA in 2015. In last year or so, it has hardly been able to fetch any significant amount of sales revenue, though it has slightly enhanced each quarter, surpassing at 150,000 gross in 3Q2016.

Some shareholders have considered this slight growth as a promising indication of things to come, but analysts consider that this count will never increase a notable amount, and even if it expands slowly, it still need to cover a long way even before they can compensate the operating loss of almost $5 million per quarter.

On Monday, the stock price of EnteroMedics gained over 1% to close the session at $6.43. The stock recorded increased activity prior to closing hours, which ended in a green session.

3/07/2017
Ticker Symbol ETRM
Last Price a/o 3:21 PM EST  $6.34
Average Volume  8.99M
Market Cap (mlns)  23.02M
Sales (mlns) 0.80M
Shares Outstanding (mlns) 3.58M
Share Float (mlns) 3.48M
Shortable Yes
Optionable Yes
Inside Ownership 8.20%
Short Float 35.30%
Short Interest Ratio 0.14
Quarterly Return 13212.63%
YTD Return 221.50%
Year Return 431.40%