EnteroMedics to Acquire California Weight-Loss Device Maker
Medical device maker EnteroMedics announced Tuesday that it was acquiring San Clemente, California-based ReShape Medical in a cash and stock deal.
Both companies make devices for obesity and gastrointestinal-related issues. ReShape currently manufactures the Dual Weight Loss Balloon, an intragastric balloon designed for weight loss in obese patients.
“We are pleased to announce this significant transaction, which adds a new minimally invasive, revenue-generating technology to the EnteroMedics portfolio,” EnteroMedics CEO Dan Gladney said in a statement.
Under terms of the agreement, Roseville-based EnteroMedics will provide ReShape with 2.36 million shares of common stock, 187,772 series C convertible preferred stock (which is convertible into 18.77 million shares of common stock) and about $5 million to cover transaction expenses and pay off ReShape’s secured debt.
EnteroMedics has long struggled financially, with sales and profits falling in its most-recent quarter. Much of this can be attributed to its flagship device, the vBloc device, which helps with weight loss in obese patient by decreasing their hunger through electrical pulses, not unlike a pacemaker. While the device has shown promise in clinical trials, it lacks coverage from major insurers.
The addition of an already-marketable product in ReShape’s Dual Weigh Loss Balloon could buoy the company’s fortunes. Investors certainly thought so: Shares of EnteroMedics shot up following the announcement. By midday Tuesday, shares hovered around $2 per share—a 15 percent increase from the day before.