MedCity News offers an interesting take this morning on EnteroMedics ($ETRM), which has seemingly come back from the brink of disaster and could one day see the FDA bless its obesity treatment, Maestro.
Earlier this week, the company announced that it had closed on a growth capital term loan for $20 million, amending its existing debt agreement with Silicon Valley Bank, and entered into a purchase agreement for a $5 million equity offering. The company plans on using its proceeds to work toward regulatory approval of the Maestro rechargeable system in the U.S., as well as global commercialization efforts and clinical activities, according to its release.
EnteroMedics' Maestro rechargeable system has CE mark approval for the treatment of obesity, and Australian health regulators have blessed its use as well. In the U.S., the device is being investigated in the ReCharge Study.
Maestro includes a device implanted under the skin from which leads transmit electrical signals to the vagus nerve. It is designed to control feelings of hunger and fullness. The company thinks it is superior to bariatric surgical procedures that can lead to gastrointestinal adverse reactions.
In 2009, a highly anticipated study showed the therapy didn't meet a key goal in a trial, and things looked bleak for the company. But, after looking at results, the company determined that the control group, which wasn't implanted with the full system but did receive low levels of energy from the device, merely had experienced the feelings of fullness 90 minutes later. The hunger block was felt instantly in the treated group.
Although it had to lay off 40% of its workforce, the company soldiered on, scoring funding and regulatory wins.
Still, the company has a long way to go. For 2011, the company reported a net loss of