On Tuesday, the company reported revenue of about $123,000 in the first quarter of the year that were garnered from the sale of its implantable neuromodulation system — Maestro RC — to a distribution partner in Australia.For the three months endedMarch 31, EnteroMedics had a net loss of$5.6 million, or$0.15per share. The company has $21.7 million in cash and cash equivalents.
The good news had an immediate impact on the stock — in midday trading on Tuesday, the stock was up 3.9 percent to $2.65.
In a conference call with analysts, CEO Mark Knudson said that the first commercial shipment of the company’s Maestro system in Australia achieved several key goals.
“Firstly, we succeeded in translating the promise of Vbloc technology into an approved, marketed product,” Knudson said in prepared remarks. “Secondly, we established a foothold in a major obesity and diabetes market. Thirdly, we took a major step forward in developing our processes, both internal and external, to allow us to implement our global, commercial relations strategy in an important market.”
The implantable device provides electrical stimulation to the vagus nerve, which controls hunger and satiety. Known as Vbloc therapy, the electrical pulses block the signals of hunger and fullness between the brain and the vagus nerve.
EnteroMedics has previously announced that it has a distribution partner in Saudi Arabia who will market the product in Gulf countries in the Middle East. However, when analyst William Plovanic with Canaccord Genuity asked for some information on when EnteroMedics will begin to ship product there, chief financial officer Greg Lea declined to say anything more specific than the fact that it will happen “relatively soon.”
It appears Europe, while an important market to EnteroMedics, is not a top priority in the immediate future. The Maestro system has the CE Mark, but CEO Knudson implied that Europe is not a homogeneous market.
“The issue with Europe is that there really is no such thing as Europe,” he said in response to a question from Debbie Wang with Morningstar. “It’s the U.K., it’s Germany, it’s France, it’s Italy and with our limited resources, we feel that we are much better off targeting some of the other geographies initially and work with just specific key opinion leaders in Europe without doing a formal launch.”
All eyes are now squarely on the U.S. At the end of the year, the clinical trial on which the product’s fate with the U.S. Food and Drug Administration rests will be complete. EnteroMedics expects to file a premarket approval application with the FDA in the first half of 2013 if the data from the trial is positive.