Company Update (NASDAQ:ETRM): EnteroMedics Inc Announces Closing of $11 Million Tranche from Previously-Announced Convertible Notes Offering

EnteroMedics Inc (NASDAQ:ETRM), the developer of medical devices using neuroblocking technology to treat obesity, metabolic diseases and other gastrointestinal disorders, today announced that the second tranche of the $25 million Senior Amortizing Convertible Notes (the “Notes”) offering announced on November 5, 2015, has closed, for proceeds of $11 million. EnteroMedics received $1.5 million at the initial closing on November 9, 2015.  The third and final tranche, for proceeds of $12.5 million, is scheduled to fund in approximately 45 days.  The Company intends to use the net proceeds from this offering to continue its commercialization efforts for the Maestro Rechargeable System, for clinical and product development activities and for other working capital and general corporate purposes.

The Notes are payable in monthly installments, accrue interest at a rate of 7.0% per annum from the date of issuance and will mature 24 months after the initial closing. At each monthly installment date, the Notes may be repaid, at the Company’s election, in either cash or shares of the Company’s common stock at a discount to the then-current market price. The Notes are also convertible from time to time, at the election of the holders, into shares of the Company’s common stock at an initial conversion price of $4.35 per share (split adjusted). Additionally, in connection with each issuance of the Notes, the Company will also issue to the investors warrants to purchase a certain number of shares of common stock equal to approximately 30% of the number of shares that would be issued if the principal were converted.  The warrants are callable under certain circumstances.

Northland Securities, Inc. acted as exclusive placement agent for the offering. (Original Source)

Shares of Enteromedics closed yesterday at $1.45. ETRM has a 1-year high of $30.75 and a 1-year low of $1.21. The stock’s 50-day moving average is $2.16 and its 200-day moving average is $3.77.

On the ratings front, Roth Capital analyst Chris Lewis maintained a Buy rating on ETRM, with a price target of $11.25, in a report issued on November 16. The current price target implies an upside of 675.9% from current levels. According to, Lewis has a total average return of 0.0%, a 37.7% success rate, and is ranked #2027 out of 3609 analysts.

EnteroMedics Inc is a medical device company. The Company is focused on the design and development of devices that use neuroblocking technology to treat obesity, metabolic diseases and other gastrointestinal disorders.


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