EnteroMedics Inc. (NASDAQ: ETRM), the developer of medical devices
using neuroblocking technology to treat obesity, metabolic diseases
and other gastrointestinal disorders, today announced that it has
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 new growth capital loan is structured such that $10 million will
be funded immediately, a portion of which will be used to repay in
full the Company's outstanding debt of approximately $4.7 million. An
additional $10 million will become available assuming the Company
meets the primary endpoints of the ReCharge Study as well as certain
financial objectives for 2012. Proceeds from the loan will supplement
the Company's cash, cash equivalents and short-term investments, which
totaled $29.7 million as of December 31, 2011. The loan facility is
structured with an interest-only period until March 2013, followed by
a 30-month amortization period.
The Company also entered into a definitive agreement with a current
significant stockholder of the Company, to sell 2,271,705 shares of
the Company's common stock in a registered direct equity offering, at
a price of $2.22 per share, for gross proceeds of approximately
$5,050,000, before deducting placement agent fees and estimated
offering expenses. Craig-Hallum Capital Group LLC acted as the sole
placement agent for the offering. The offering is expected to close on
or about April 20, 2012, subject to satisfaction of customary closing
The Company intends to use the proceeds from the loan and the
registered direct equity offering to fund its work toward regulatory
approval of the Maestro Rechargeable System in the United States, for
international commercialization efforts, for clinical and product
development activities and for other working capital and general
"Our current cash, combined with the additional resources added from
these two transactions, solidifies our long range capital plan," said
Senior Vice President and Chief Financial Officer Gregory S. Lea.
"These contemporaneous financings, achieved with continued support
from Silicon Valley Bank and the individual stockholder, allows the
Company to reach well beyond its anticipated submission of the Food
and Drug Administration Premarket Approval application for the Maestro
Rechargeable system in obesity, following positive data from the
ReCharge Study pivotal trial."
A shelf registration statement (file no. 333-166011) relating to the
securities described above was declared effective by the Securities
and Exchange Commission on May 6, 2010. These securities may be
offered only by means of a prospectus, including a prospectus
supplement, forming a part of the effective registration statement.
When available, copies of the final prospectus supplement and
accompanying base prospectus relating to this offering may be obtained
at the Securities and Exchange Commission's website at
http://www.sec.gov(http://www.sec.gov) or from Craig Hallum Capital
Group LLC at 222 South Ninth Street, Suite 350, Minneapolis, MN 55402.
This press release does not constitute an offer to sell or the
solicitation of offers to buy any securities of the Company, and shall
not constitute an offer, solicitation or sale of any security in any
state or jurisdiction in which such offer, solicitation or sale would
be unlawful prior to registration or qualification under the
securities laws of any such state or jurisdiction.
About EnteroMedics Inc.
EnteroMedics is a medical device company focused on the development
and commercialization of its neuroscience based technology to treat
obesity and metabolic diseases. EnteroMedics' proprietary technology,
VBLOC@ vagal blocking therapy, delivered by a pacemaker-like device
called the Maestro@ Rechargeable System, is designed to intermittently
block the vagus nerves using high-frequency, low-energy, electrical
impulses. VBLOC allows people with obesity to take a positive path
towards weight loss, addressing the lifelong challenge of obesity and
its comorbidities without sacrificing wellbeing or comfort.
EnteroMedics has received CE Mark and is listed on the Australian
Register of Therapeutic Goods.
Forward-Looking Safe Harbor Statement:
This press release contains forward-looking statements about
EnteroMedics Inc. Our actual results could differ materially from
those discussed due to known and unknown risks, uncertainties and
other factors including our limited history of operations; our losses
since inception and for the foreseeable future; our lack of commercial
regulatory approval for our Maestro@ System for the treatment of
obesity in the United States or in any foreign market other than
Australia and the European Community; our preliminary findings from
our EMPOWER pivotal trial; our ability to comply with the Nasdaq
continued listing requirements; our ability to commercialize our
Maestro System; our dependence on third parties to initiate and
perform our clinical trials; the need to obtain regulatory approval
for any modifications to our Maestro System; physician adoption of our
Maestro System and VBLOC@ vagal blocking therapy; our ability to
obtain third party coding, coverage or payment levels; ongoing
regulatory compliance; our dependence on third party manufacturers and
suppliers; the successful development of our sales and marketing
capabilities; our ability to raise additional capital when needed;
international commercialization and operation; our ability to attract
and retain management and other personnel and to manage our growth
effectively; potential product liability claims; potential healthcare
fraud and abuse claims; healthcare legislative reform; and our ability
to obtain and maintain intellectual property protection for our
technology and products. These and additional risks and uncertainties
are described more fully in the Company's filings with the Securities
and Exchange Commission, particularly those factors identified as
"risk factors" in the annual report on Form 10-K filed March 15, 2012.
We are providing this information as of the date of this press release
and do not undertake any obligation to update any forward-looking
statements contained in this document as a result of new information,
future events or otherwise.
Caution - Investigational device. Limited by Federal (United States)
law to investigational use.
The implantation procedure and usage of the Maestro@ System carry some
risks, such as the risks generally associated with laparoscopic
procedures and those related to treatment as described in the ReCharge
clinical trial informed consent.