EnteroMedics slides after FDA squints at obesity device

EnteroMedics says its Maestro implant is on track for an approval decision by mid-2014.--Courtesy of EnteroMedics

Minnesota's EnteroMedics ($ETRM) is again preaching patience after the FDA asked for more information on its obesity-treating implant, and the company's shares dipped as much as 10% on the revelation.

According to the company, the FDA's questions about device testing and clinical data are perfectly normal, and the company is still confident it can keep its timeline for Maestro, a nerve-stimulating implant designed to curb hunger. EnteroMedics said it plans to land in front of an agency panel in either the fourth quarter of this year or the first quarter of 2014, lining up an approval decision by midyear.

"We are very encouraged by the responsiveness of the FDA and are confident in our ability to address their questions in a timely manner," CEO Mark Knudson said in a statement. "We will continue to work closely with the FDA throughout this process."

But any hiccup in the plan is likely to spook investors after February's share-tanking news that Maestro failed to meet its primary efficacy endpoints. Those results slashed EnteroMedics' stock price by about 60% overnight, and the company has been glacially crawling away from penny-stock territory since announcing in June that it would file for FDA approval anyway.

Despite the worry, Knudson remains all-in on Maestro's benefits, pointing out that the device contributed to 24.4% excess weight loss in obese patients, above the statistical significance threshold, and that 52.5% of patients in the trial lost at least 20% of their excess pounds.

Whether that'll be enough to convince the FDA remains to be seen, and despite having a CE mark for Maestro, the company has thus far only racked up net losses, shedding $6.3 million last quarter.

Maestro, EnteroMedics' only product, is an implant outfitted with two electrodes that stimulate the vagus nerve between the esophagus and the stomach, giving patients the sensation of fullness.

- read the statement