Obesity devices aim for the U.S. as Obalon gets $30M to complete pivotal trial in 2015, EnteroMedics gains FDA approval

The Maestro implant--Courtesy of EnteroMedics

Micro cap EnteroMedics ($ETRM) is up 35% in early trading on the news that it has garnered an FDA approval for its Maestro vagal blocking therapy as an obesity treatment. The device was narrowly supported by a June FDA panel due to concerns about efficacy. In addition, another obesity device company, Obalon Therapeutics, has secured $30 million to complete a U.S. pivotal trial in 2015 for its nonsurgical weight loss balloon.

Despite the boost for EnteroMedics from investors today, its market cap remains only about $105 million due to skepticism that the company will be able to achieve substantial reimbursement or sales for the Maestro system. Still, this is the first new medical device for weight loss approved in the U.S. in over a decade.

In a pivotal study, only a bit more than half of patients treated with the VBLOC therapy lost 20% of more of their excess weight. Overall, the treatment group had an average loss of 24.4% of their excess weight at 12 months.

The agency approved the device to treat patients who have a body mass index (BMI) of at least 40 to 45, or a BMI of at least 35 to 39.9 with a related health condition such as high blood pressure or high cholesterol levels, and who have tried to lose weight in a supervised weight management program within the past five years.

EnteroMedics is one of several medical device companies racing to provide obese U.S. patients with more efficacy than existing drugs, but a less invasive option than surgical intervention. ReShape Medical has already submitted its balloon product to the FDA for review, with an outcome expected during the first half of 2015.

Obalon capsule--Courtesy of Obalon

Another obesity balloon company, Obalon Therapeutics has secured a $20 million Series D and $10 million in debt to advance its nonsurgical balloon through a U.S. pivotal trial this year.

Existing investors Domain Associates, InterWest Partners and Okapi Venture Capital backed the round alongside new investors including Axon Ventures, Bader Sultan, Mirae Asset Venture Investment, NeoPlux Co and Striker Asia Opportunities Fund. Square 1 Bank provided the term loan.

The Obalon balloon is swallowed by the patient in a capsule and subsequently inflated in the stomach; additional balloons can be placed to aid weight loss. After the treatment period, the balloons are removed in an endoscopic procedure.

"We are impressed with Obalon's leadership, clinical data and growth strategy and look forward to partnering with the company for years to come," Scott Foote, senior vice president and managing director of Square 1 Bank's life sciences practice in the West, said in a statement.

Obalon has raised a total of $65 million since its 2008 inception.

Both the EnteroMedics and the Obalon devices are available in Europe under a CE mark.

- here are the EnteroMedics and Obalon releases