EnteroMedics Reports Third Quarter 2013 Financial Results

EnteroMedics Reports Third Quarter 2013 Financial Results 
Company to Host Conference Call Today, October 31, 2013, at 11:00 AM
ST. PAUL, MN -- (Marketwired) -- 10/31/13 --  EnteroMedics Inc.
(NASDAQ: ETRM), the developer of medical devices using neuroblocking
technology to treat obesity, metabolic diseases and other
gastrointestinal disorders, today announced financial results for the
three and nine months ended September 30, 2013. 
For the three months ended September 30, 2013, the Company reported a
net loss of $6.3 million, or $0.11 per share. Research and
development expenses were $2.8 million, and general and
administrative expenses were $3.2 million. For the nine months ended
September 30, 2013, the Company reported a net loss of $19.2 million,
or $0.36 per share. Operating expenses were primarily associated with
the cost of supporting multiple ongoing clinical trials, including
the ReCharge Study, the Company's Premarket Approval (PMA)
application for FDA approval of VBLOC(R) vagal blocking therapy in
obesity, and the continued development of VBLOC Therapy delivered
through the Company's Maestro(R) Rechargeable System. On September
30, 2013, the Company's cash, cash equivalents, restricted cash and
short-term investments totaled $21.3 million, which includes
approximately $3.6 million raised through the Company's
"at-the-market" (ATM) equity facility. As of October 28, 2013 the
Company has raised a total of $6.3 million under its $20.0 million
ATM equity facility.  
"EnteroMedics achieved several key milestones during the third
quarter, including strengthening our balance sheet, acceptance of our
premarket approval application (PMA) in July, and receiving a timely,
formal response from the FDA," said Greg S. Lea, Senior Vice
President, Chief Financial Officer and Chief Operating Officer. "We
continue to prepare, in consultation with experts in both process and
content, for an anticipated Advisory Committee panel meeting, which
remains on-track for the first quarter of 2014. Panel approval could
then be followed by an FDA approval decision in the first half of
Conference Call Details 
The third quarter conference call may be accessed by dialing (877)
280-7473 (U.S. and Canada) or (707) 287-9370 (international), and
entering passcode 86494901. A replay of the call will be available
from October 31, 2013 at 2:00 PM Eastern Time through January 21,
2014 at 11:59 PM Eastern Time by dialing (855) 859-2056 (U.S. and
Canada) or (404) 537-3406 (international) and entering passcode
To access the live webcast, visit the events page of the investor
relations section of EnteroMedics' website at www.enteromedics.com. A
replay of the webcast will be available immediately after the
conference call.  
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(R) vagal blocking therapy, delivered by a pacemaker-like device
called the Maestro(R) 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' Maestro Rechargeable System has
received CE Mark and is listed on the Australian Register of
Therapeutic Goods.  
About Maestro(R) System 
The Maestro(R)System delivers VBLOC(R) vagal blocking therapy via two
small electrodes that are laparoscopically implanted and placed in
contact with the trunks of the vagus nerve just above the junction
between the esophagus and the stomach.  
About VBLOC(R) Therapy 
EnteroMedics developed VBLOC(R) vagal blocking therapy to offer
bariatric surgeons and their patients a less invasive alternative to
existing surgical weight loss procedures that may present significant
risks and alter digestive system anatomy, lifestyle and food choices.
VBLOC Therapy is delivered via the Maestro(R) System through
laparoscopically implanted leads to intermittently block the vagus
nerves using high-frequency, low-energy electrical impulses. VBLOC
Therapy is designed to target the multiple digestive functions under
control of the vagus nerves and to affect the perception of hunger
and fullness. 
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(R) 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(TM) and ReCharge pivotal trials; 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(R) 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 7, 2013. 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
Caution - Investigational device. Limited by Federal (United States)
law to investigational use.  
The implantation procedure and usage of the Maestro(R) 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.  
(See attached tables) 

                             ENTEROMEDICS INC.                              
                       (A Development Stage Company)                        
        Condensed Consolidated Statements of Operations (unaudited)         
                   (in thousands, except per share data)                    
                                  Three Months Ended     Nine Months Ended  
                                     September 30,         September 30,    
                                 --------------------  -------------------- 
                                    2013       2012       2013       2012   
                                 ---------  ---------  ---------  --------- 
Sales                            $       -  $       -  $       -  $     312 
Cost of goods sold                       -          -          -        232 
                                 ---------  ---------  ---------  --------- 
    Gross profit                         -          -          -         80 
                                 ---------  ---------  ---------  --------- 
Operating expenses:                                                         
  Research and development           2,762      2,581      8,207      7,521 
  Selling, general and                                                      
   administrative                    3,208      2,992     10,153      8,347 
                                 ---------  ---------  ---------  --------- 
    Total operating expenses         5,970      5,573     18,360     15,868 
                                 ---------  ---------  ---------  --------- 
Operating loss                      (5,970)    (5,573)   (18,360)   (15,788)
Other income (expense), net           (333)      (274)      (847)      (645)
                                 ---------  ---------  ---------  --------- 
    Net loss                     $  (6,303) $  (5,847) $ (19,207) $ (16,433)
                                 =========  =========  =========  ========= 
  Net loss per share - basic and                                            
   diluted                       $   (0.11) $   (0.14) $   (0.36) $   (0.42)
                                 =========  =========  =========  ========= 
  Shares used to compute basic                                              
   and diluted net loss per                                                 
   share                            55,978     40,984     52,864     38,811 
                                 =========  =========  =========  ========= 
                              ENTEROMEDICS INC.                             
                        (A Development Stage Company)                       
              Condensed Consolidated Balance Sheets (unaudited)             
                               (in thousands)                               
                                                September 30,  December 31, 
                                                    2013           2012     
                                               -------------- --------------
Cash, cash equivalents and short-term                                       
 investments                                   $       21,142 $       22,309
Restricted cash                                           200            200
Inventory                                               1,172          1,271
Prepaid expenses and other current assets                 624            624
Property and equipment, net                               632            610
Other assets                                              894          1,082
                                               -------------- --------------
    Total assets                               $       24,664 $       26,096
                                               ============== ==============
                    LIABILITIES AND STOCKHOLDERS' EQUITY                    
  Accounts payable                             $          180 $          341
  Debt                                                  7,828          9,684
  Other liabilities                                     4,255          4,196
                                               -------------- --------------
    Total liabilities                                  12,263         14,221
Stockholders' equity                                   12,401         11,875
                                               -------------- --------------
    Total liabilities and stockholders' equity $       24,664 $       26,096
                                               ============== ==============

EnteroMedics Inc.
Greg S. Lea
(651) 789-2860
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