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TOPIC: (ETRM) MCap $72 M / Mega Obesity Product near Approval = 500%++ Potential

(ETRM) MCap $72 M / Mega Obesity Product near Approval = 500%++ Potential 6 years 6 months ago #3577

EnteroMedics (ETRM)

Market Cap : $72 M

Price : $1.31

Shares Out : 55 M ( 35 M held by Investors )

"EnteroMedics remains well funded to support our regulatory efforts for commercialization of the Maestro ReChargeable System in the United States, with a PMA application on track to be submitted to the Food and Drug Administration in the second quarter of 2013," said Greg S. Lea, Senior Vice President, Chief Financial Officer and Chief Operating Officer.


Obesity is not only a deadly disease it is also a pain on the bottom line of insurance companies. With the decline in Lap-Band sales over the last year amid negative publicity regarding the high risks, there is a nice potential niche market for ETRM. Right now the market is not reflecting that potential in shares of ETRM. Allergan (AGN), the maker of the Lap-Band, is looking to sell the Lap-Band business right now with annual sales of $132M. If ETRM were to gain FDA approval and grab this market, the market cap upside potential could be very large. VVUS expects annual sales this year of only $43m and trades in excess of $1 billion in market cap. ARNA has a $1.7 billion market cap. ETRM is currently trading at a market cap of $50m, with $34m of that in cash, giving it tremendous upside potential. As we have outlined in previous articles on bad news biotech stocks, the upside potential AFTER bad news drops can be very nice, especially when the trial data shows some positives. Also, the company is seeking FDA approval and plans to file for this approval in the second quarter. That news, from these depressed prices, could give investors some nice upside with minimal near term downside. Also, given the safety profile for the Maestro system, insurance coverage may be much easier to attain. Assuming ETRM is able to garner only half of the Lap-Band PEAK market sales of $250m, and ETRM is valued along the lines of ARNA and VVUS, we would be looking at a return to its 2009 price of $20 per share. This may sound outrageous but look at the lofty valuations for the other players in the obesity market. It's ETRM's turn to join the diet party--
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