EnteroMedics readies 1-for-70 reverse split

EnteroMedics (NSDQ:ETRM) said today that its board declared a 1-for-70 reverse stock split effective Dec. 28, as part of the company’s plan to regain compliance with the NASDAQ exchange’s $1.00 minimum bid price.

ETRM shares closed at 49.2¢ apiece yesterday, down -0.8%. The stock was down another -1.2% today in pre-market trading to -48.6¢.

EnteroMedics makes the Maestro device, an implantable neurostimulation device designed to intermittently block the vagus nerves using high-frequency, low-energy impulses. The therapy, which St. Paul, Minn.-based EnteroMedics calls “vBloc,” is approved in the U.S., Europe and Australia to aid in weight loss in obese adults with a body mass index of 40 to 45 or a related health condition and a BMI of 35 to 39.9.

St. Paul, Minn.-based EnteroMedics also said today that it plans to convert all of the nearly $18.8 million it’s carrying in senior amortizing convertible notes as of Dec. 27. Net proceeds are earmarked for commercialization of the vBloc neuromodulation treatment for weight loss “and for other working capital and general corporate purposes,” the company said.

“Completion of the reverse stock split is a crucial step in our strategy to maintain the company’s listing on the Nasdaq Capital Market and to enable the company to continue its diligent work in highlighting vBloc therapy’s role in the ongoing battle against obesity,” chairman, president & CEO Dan Gladney said in prepared remarks. “Additionally, as previously stated, we will meet our goal of converting or redeeming all of our outstanding convertible notes prior to the end of 2016 and look forward to working towards our long-term objective of securing reimbursement coverage for vBloc therapy for all appropriate patients.”

In October, EnteroMedics cancelled a shareholders vote on its proposal to either increase its issued shares or enact a reverse split. The company sought to increase the number of shares of common stock to 650 million in its 1st proposition, or alternatively to initiate a 1-for-10 or 1-for-20 reverse stock in the 2nd.

The meeting, which was scheduled for Oct. 19, was cancelled “due to a lack of a sufficient number of votes” in favor of the proposals, the company said.

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