Company Update (NASDAQ:ETRM): EnteroMedics Inc Reports Second Quarter 2016 Financial Results

EnteroMedics Inc (NASDAQ:ETRM), the developer of medical devices using neuroblocking technology to treat obesity, metabolic diseases and other gastrointestinal disorders, today announced financial results for the three months ended June 30, 2016.

“EnteroMedics continues to build momentum into the second half of the year, with a four-fold increase in vBloc procedures seen in the second quarter over the first quarter, all while maintaining lower-than-forecasted expenses,” said Dan Gladney, Chief Executive Officer of EnteroMedics. “We remain focused on sustaining this momentum by executing on a highly targeted patient recruitment campaign, building close partnerships with KOLs and leading bariatric centers, and working toward driving reimbursement.  Combining vBloc® with our vBloc Achieve program, a comprehensive, personalized weight loss support program to help vBloc patients reach and maintain health goals, we continue to be encouraged by the growing number of powerful, first-hand patient success stories from the field. These stories have translated not only into health benefits, but pharmacoeconomic benefits, which remain crucial in our effort to secure broad reimbursement coverage.”

Commercial Update

As part of its commercial strategy, EnteroMedics remains focused on four key areas:

  • Executing on a focused Direct-to-Patient marketing campaign to build vBloc awareness in strategic markets, including a focus on cash paying patients in high income/obesity regions, where the Company manages patients from initial contact all the way through surgery.  As part of this effort, the Company is developing commercial vBloc Institutes and KOL surgeon partners, and is focused on top centers, independent delivery networks (IDNs), and VA hospitals.
    • To date, these efforts have led to a four-fold increase in procedures for the second quarter as compared to the first quarter of 2016.
  • Pursuing positive Payer coverage decisions by leveraging vBloc’s safety, efficacy, and the economic value it brings as a less invasive and durable care delivery model for treating diabetes and other obesity comorbidities.
  • Measuring, evaluating, and driving opportunities that are synergistic and will quickly expand the Company’s commercial reach.  This includes rescue procedures for gastric sleeves, such as the first-of-its-kind procedures recently performed at the VA North Texas Health Care System by Sachin Kukreja, M.D., Director of Bariatric Surgery.
  • Continuing to collect and publish vBloc clinical data including both long-term clinical trial data from the Company’s studies, short-term results from commercial patients, and health economics data.

vBloc Therapy is approved for use in helping with weight loss in people aged 18 years and older who are obese, with a BMI of 40 to 45 kg/m2, or a BMI of 35 to 39.9 kg/m2 with a related health condition such as Type 2 diabetes, high blood pressure, high cholesterol levels or obstructive sleep apnea.

As the Company recently hosted a commercialization update conference call, it will not host a conference call to discuss second quarter results.  The Company expects to host a second commercialization conference call later in 2016, as additional progress has been achieved in its vBloc program.

Financial Results

For the three months ended June 30, 2016, the Company reported sales of $276,000 with gross profit totaling $120,696. The Company reported a net loss of $5.0 million, or $0.49 per share, which includes $1.6 million, or $0.16 per share, of interest expense and certain non-cash items, including stock based compensation and depreciation. The results of the second quarter also include the positive impact of the change in the fair value of the Company’s warrant and notes payable liabilities of approximately $2.5 million. Selling, general and administrative expenses for the quarter were $5.6 million, and research and development expenses were $1.2 million.  Combined, these two operating expenses decreased 11.7% during the second quarter from the first quarter of 2016.

For the six months ended June 30, 2016, the Company reported sales of $348,000 with gross profit totaling $152,561. The Company reported a net loss of $12.4 million, or $1.37 per share.  The six month net loss amount includes approximately $3.9 million, or $0.43 per share, of interest expense and certain non-cash items, including stock based compensation and depreciation. Additionally, the six month results include approximately $3.8 million in gains resulting from valuation adjustments from the Company’s convertible notes payable and warrant liabilities.

On June 30, 2016 the Company’s cash, cash equivalents and short-term investments totaled $11.5 million. (Original Source)

Shares of Enteromedics jumped nearly 17% to $0.222 in pre-market trading Tuesday. ETRM has a 1-year high of $5.85 and a 1-year low of $0.17. The stock’s 50-day moving average is $0.29 and its 200-day moving average is $0.74.

On the ratings front, Roth Capital analyst Chris Lewis downgraded ETRM to Hold, with a price target of $0.50, in a report issued on June 9. The current price target implies an upside of 163.2% from current levels. According to, Lewis has a yearly average return of 4.2%, a 52.8% success rate, and is ranked #692 out of 4003 analysts.

EnteroMedics, Inc. is a clinical development stage medical device company that engages in the design and development of devices that use neuroblocking technology to treat obesity, metabolic diseases and other gastrointestinal disorders. Its proprietary neuroblocking technology is designed to intermittently block the vagus nerve using high frequency, low energy, electrical impulses. Its initial product Maestro System, which uses VBLOC therapy to affect metabolic regulatory control, limit the expansion of the stomach, help control hunger sensations between meals, reduce the frequency and intensity of stomach contractions and produce a feeling of early and prolonged fullness. 

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