EnteroMedics reports financial results for 2009 third quarter

EnteroMedics Inc. (NASDAQ: ETRM), the developer of medical devices using neuroblocking technology to treat obesity and other gastrointestinal disorders, today reported financial results for the three and nine months ended September 30, 2009.

For the three months ended September 30, 2009, the Company reported a net loss of $12.0 million, or $0.40 per share, including non-cash expense of $3.8 million related to the revaluation of warrant liability, research and development expenses of $4.6 million, and general and administrative expenses of $2.7 million. For the nine months ended September 30, 2009, the Company reported a net loss of $29.0 million, or $1.06 per share. Operating expenses were primarily associated with the cost of supporting the Company’s clinical trials and the development of VBLOC® vagal blocking therapy delivered through the Company’s Maestro® System. On September 30, 2009, the Company's cash, cash equivalents and short-term investments totaled $27.1 million, which does not reflect the proceeds of its October 2, 2009 agreement with an institutional investor to raise $4.9 million in a registered direct offering of its common stock.

“We expect to complete our evaluation of the one year data from the EMPOWER trial during the fourth quarter. This process will help us determine the Company’s plans for VBLOC Therapy,” said President and CEO Mark B. Knudson, Ph.D. "We remain fully committed to the support of the patients and health care professionals involved in our ongoing clinical studies."

“Our cash position gives us operating flexibility well into 2010,” stated Gregory S. Lea, Senior Vice President and Chief Financial Officer of EnteroMedics. “We are focused on effectively managing our expenses while we finalize our next steps with the Maestro System.”

NASDAQ Notice of Deficiency

EnteroMedics also announced today that on October 19, 2009 it received a Nasdaq Staff Deficiency Letter indicating that, for ten consecutive business days, the Company's common stock did not maintain the minimum Market Value of Listed Securities (MVLS) of $50,000,000 as required by Listing Rule 5450(b)(2)(A). The Company has been provided 90 calendar days, or until January 19, 2010, to regain listing compliance, which can be achieved if the Company’s MVLS closes at $50,000,000 or more for a minimum of ten consecutive business days during this time. The Company will continue to be listed on the NASDAQ Global Market during this period.

In the event the Company does not regain compliance prior to expiration of the 90 days, it will receive written notification that its securities are subject to delisting. The Company may, at that time, appeal the Staff's determination to a Hearings Panel. Such an appeal, if granted, would stay delisting until a Panel ruling. Alternatively, the Company may choose to apply for transfer to the Nasdaq Capital Market, provided it satisfies the requirements for continued listing on that market. There can be no assurance that the Company will be able to reestablish or maintain compliance with listing criteria on either Nasdaq market or that an appeal, if taken, would be successful.