Daily News: April 17, 2012

EnteroMedics Secures $20 Million Term Loan With Silicon Valley Bank

EnteroMedics Inc., the developer of medical devices using neuroblocking technology to treat obesity, metabolic diseases and other gastrointestinal disorders, announced that it has closed on a growth capital term loan for $20 million, amending its existing debt agreement with Silicon Valley Bank, and entered into a purchase agreement for a $5 million equity offering.

The new growth capital loan is structured such that $10 million will be funded immediately, a portion of which will be used to repay in full the company’s outstanding debt of approximately $4.7 million. An additional $10 million will become available assuming the company meets the primary endpoints of the ReCharge Study as well as certain financial objectives for 2012. Proceeds from the loan will supplement the company’s cash, cash equivalents and short-term investments, which totaled $29.7 million as of December 31, 2011. The loan facility is structured with an interest-only period until March 2013, followed by a 30-month amortization period.

The company also entered into a definitive agreement with a current significant stockholder of the company, to sell 2,271,705 shares of the company’s common stock in a registered direct equity offering, at a price of $2.22 per share, for gross proceeds of approximately $5.05 million, before deducting placement agent fees and estimated offering expenses. Craig-Hallum Capital Group LLC acted as the sole placement agent for the offering. The offering is expected to close on or about April 20, 2012.

The company intends to use the proceeds from the loan and the registered direct equity offering to fund its work toward regulatory approval of the Maestro Rechargeable System in the United States, for international commercialization efforts, for clinical and product development activities and for other working capital and general corporate purposes.

“Our current cash, combined with the additional resources added from these two transactions, solidifies our long range capital plan,” said SVP and CFO Gregory S. Lea. “These contemporaneous financings, achieved with continued support from Silicon Valley Bank and the individual stockholder, allows the Company to reach well beyond its anticipated submission of the Food and Drug Administration Premarket Approval application for the Maestro Rechargeable system in obesity, following positive data from the ReCharge Study pivotal trial.”