EnteroMedics Wraps $61M Funding Round to Cover Recent Acquisition
Weight loss device maker EnteroMedics has wrapped its largest funding round to date, raising upwards of $61 million, according to an SEC filing released Tuesday.
Thirteen investors contributed to the round, which will go toward covering the cost of the Roseville-based company’s purchase of ReShape Medical.
EnteroMedics announced its acquisition of ReShape, a maker of non-surgical weight loss solutions, on October 3—just a day before it began raising funds, its SEC filing indicates. The local medtech company said at the time of its purchase announcement that both parties agreed to a cash and stock deal amounting to roughly $61 million.
EnteroMedics is best known for its flagship vBloc System, a pacemaker-shaped device designed to curb hunger by manipulating nerve signals between the brain and body. The system, however, has struggled to attract buyers despite receiving FDA approval and strong clinical support. The reason: a lack of coverage from major insurers.
Currently, patients fitted with the vBloc System face potential out-of-pocket expenses of $19,000 before hospital fees. While some insurers won’t cover the device’s costs, others have offered to cover just part of the bill.
EnteroMedics’ purchase of ReShape widens its portfolio, most notably with the addition of an intragastic balloon. The single-use device, ideal for patients with a body mass index between 30 and 40, inflates when it hits the stomach and helps eliminate hunger by creating a sense of fullness.
At the time of the deal, EnteroMedics CEO Dan Gladney said the addition of ReShape “complements our existing products… [and] expands our addressable market.”
After the deal’s announcement, Gladney told investors during a conference call that the company would be shifting its headquarters to San Clemente, California—where ReShape is located. EnteroMedics expects to keep a “satellite office” in Minnesota, but would have its main operations stationed where ReShape held its offices and manufacturing facility.