ReShape unveils $6M offering, stock falls 50%

ReShape's gastric balloons (ReShape)

Shares in ReShape Lifesciences tumbled after the company disclosed a $6 million registered direct offering. The financing gives ReShape, formerly known as EnteroMedics, money to support the commercialization of its weight loss devices, but the move caused investors to buck.

San Clemente, California-based ReShape sells the FDA-approved ReShape balloon system and vBloc Therapy to help obese patients lose weight. The saline-filled silicone balloons sit in the stomach to decrease the space available for food and thereby help patients feel full sooner. VBloc has the same goal, but it seeks to achieve it by blocking hunger signals sent along the vagus nerve.

Penny stock ReShape closed out the third quarter with $23.4 million in cash and put together the direct offering to increase the funds it has available to support the commercialization of its products. The offering delivers that cash boost, but ReShape pulled it off by pricing its stock at $0.75 a pop, well below its closing price prior to news of the financing. 

Whitepaper

Overcoming Risk in Oncology Drug Development

Oncology drug development is full of potential obstacles and risks, and you must carefully plan each step. Download this whitepaper for tips on finding the fast track. Premier Research. Built for Biotech.

Investors responded by driving down the company’s stock price by more than 50%. The stock is now trading at $0.70 a share, just below the offering price. 

The steep decline continues the turbulent ride for ReShape and its investors, which went through a 1-for-70 reverse stock split when the company was known as EnteroMedics. Last year, EnteroMedics sought to improve its fortunes by acquiring ReShape for its balloon system and then adopting the name of the purchased business. 

Suggested Articles

The FDA approved the first spinal tether to correct the most common form of scoliosis—a ropelike implant that pulls the vertebrae into shape.

Agilent launched a new analyzer for research that observes cell behavior in real time while also collecting biosensor information.

Five years after Congress passed a law to reduce unnecessary MRIs and CT scans, federal officials have yet to implement it.