EnteroMedics Inc. (ETRM, Financial) filed Quarterly Report for the period ended 2010-09-30.
Enteromedics Inc. has a market cap of $14.88 million; its shares were traded at around $1.99 . ETRM is in the portfolios of Bill Frels of Mairs & Power Inc. , Jim Simons of Renaissance Technologies LLC.
Selling, General and Administrative Expenses. Selling, general and administrative expenses were $5.5 million for the nine months ended September 30, 2010, compared to $6.8 million for the nine months ended September 30, 2009. The decrease of $1.3 million, or 18.9%, is primarily made up of decreases of $499,000, $288,000 and $277,000 in stock-based compensation, compensation and benefits expense and professional services, respectively. The decreases in stock-based compensation and compensation and benefits expense are primarily the result of a 40% reduction-in-force completed October 27, 2009. The decrease in professional services includes decreases of $115,000 in audit and legal fees and $114,000 in consulting costs.
Interest Income. Interest income was $1,500 for the nine months ended September 30, 2010, compared to $79,000 for the nine months ended September 30, 2009. The decrease of $78,000, or 98.1%, is primarily due to a decrease in total cash available to invest. The cash, cash equivalents and short-term investments balance was $12.6 million at September 30, 2010, including $5.5 million of funds received on September 30, 2010 from the sale of preferred stock and common stock warrants in a private placement transaction, compared to $14.7 million at September 30, 2009. The average cash, cash equivalents and short-term investments balance was $12.8 million and $32.2 million for the nine months ended September 30, 2010 and 2009, respectively. The decrease is the result of $29.7
We have incurred losses since our inception in December 2002 and, as of September 30, 2010 we had experienced net losses during the development stage of $146.6 million. We have financed our operations to date principally through the sale of capital stock, debt financing and interest earned on investments. Through December 31, 2009, we had received net proceeds of $122.2 million from the sale of common stock and preferred stock, including $39.1 million from our initial public offering in November 2007 and $19.9 million from private placement and registered direct offerings in 2009, and $35.8 million in debt financing, $746,000 to finance equipment purchases and $35.0 million to finance working capital. On January 20, 2010, we completed the sale of 1,239,717 shares of our common stock in a registered direct offering, at a purchase price of $3.90 per share. We received gross proceeds of $4.8 million before deducting estimated offering expenses. On September 30, 2010, we completed the sale of 3,394,309 shares of Series A non-voting convertible preferred stock, together with warrants to purchase an aggregate of 3,394,309 shares of common stock with an exercise price of $2.15 per share in a private placement transaction at a purchase price of $1.72 per share and $0.125 per share, respectively. We received gross proceeds of $6.3 million before deducting offering expenses.
On July 8, 2010 we entered into a Second Amendment (the Second Amendment) to the Loan Agreement with SVB. The Second Amendment modified the repayment terms of the Term Loan such that from the date of the Second Amendment through December 31, 2010, we are only required to make interest only monthly payments on the Term Loan, thereby reducing our monthly debt payment. Then, beginning on January 1, 2011, the remaining balance due on the Term Loan will amortize over 30 equal payments of principal and interest, which will be payable monthly. In addition, the Second Amendment amended the interest rate due on the remaining principal amount of the Term Loan from 10.0% to a fixed annual rate of 11.0%, payable monthly. The Second Amendment also revised the terms of the financial covenants related to the liquidity ratio and new capital transactions. Pursuant to the Second Amendment, the liquidity ratio equals the ratio of (i) the sum of our unrestricted cash and cash equivalents held with SVB and SVBs affiliates plus eligible accounts, divided by (ii) the outstanding principal amount of the Term Loan and is not permitted to be less than 1.00:1.00. Pursuant to the Second Amendment, we must receive aggregate net proceeds from New Capital Transactions (as defined in the Loan Agreement) of not less than $2.0 million from the date of the Second Amendment through August 31, 2010, $7.0 million from the date of the Second Amendment through October 31, 2010, $15.0 million from the date of the Second Amendment through January 31, 2011 and $35.0 million from the date of the Second Amendment through June 30, 2011. If we meet these financing requirements, we will satisfy the covenant; however, if we do not receive aggregate net proceeds from New Capital Transactions of at least $3.5 million from the date of the Second Amendment through August 31, 2010, $7.5 million from the date of the Second Amendment through October 31, 2010, $15.0 million from the date of the Second Amendment through January 31, 2011 and $35.0 million from the date of the Second Amendment through June 30, 2011, SVBs springing lien on our intellectual property will convert to a full lien on the intellectual property as of the date such Proposed Capital Raise was missed. We received approximately $6.3 million from the sale of preferred stock and common stock warrants in a private placement transaction that closed on September 30, 2010, which was less than the amount required by the Second Amendment and resulted in us entering into a Third Amendment to the Loan Agreement (the Third Amendment) with SVB on November 4, 2010. See details of the Third Amendment below. Finally, the Second Amendment revised the definition of Make-Whole Premium so that only Term Loan payments of principal made after the date of the Second Amendment will be counted for purposes of determining whether we have made twelve regularly scheduled monthly payments of principal in accordance with Section 2.1.1(d) of the Loan Agreement when the Make-Whole Premium comes due.
the completion of a private placement transaction that resulted in gross proceeds of $6.3 million for the issuance of preferred stock and common stock warrants, of which $781,000 was received in early October, offset by $43,000 in financing costs incurred through September 30, 2010 and a registered direct offering that resulted in gross proceeds of $4.8 million for the issuance of common stock, offset by $340,000 in financing costs, partially offset by repayments on our long-term debt. Net cash provided by financing activities for the nine months ended September 30, 2009 is primarily attributable to the completion of a private placement transaction that resulted in gross proceeds of $15.9 million for the issuance of common stock and common stock warrants, offset by $806,000 in financing costs incurred through September 30, 2009 and debt funding proceeds of $5.0 million automatically funded on April 28, 2009 per the terms of the $20.0 million debt facility we entered into on November 18, 2008, partially offset by repayments on our long-term debt.
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Enteromedics Inc. has a market cap of $14.88 million; its shares were traded at around $1.99 . ETRM is in the portfolios of Bill Frels of Mairs & Power Inc. , Jim Simons of Renaissance Technologies LLC.
Highlight of Business Operations:
Selling, General and Administrative Expenses. Selling, general and administrative expenses were $1.8 million for the three months ended September 30, 2010, compared to $2.7 million for the three months ended September 30, 2009. The decrease of $950,000, or 35.2%, is primarily due to decreases of $477,000, $277,000 and $112,000 in stock-based compensation (employee and nonemployee), professional services and compensation and benefit expense, respectively. The decrease in compensation and benefits expense and employee stock-based compensation is primarily the result of a 40% reduction-in-force completed October 27, 2009. The decrease in the nonemployee stock-based compensation is the result of fully expensing the one remaining nonemployee stock option, whereas, for the three months ended September 30, 2009 there were four nonemployee grants being expensed. The decrease in professional services includes decreases of $130,000 in audit and legal fees and $125,000 in general consulting services.Selling, General and Administrative Expenses. Selling, general and administrative expenses were $5.5 million for the nine months ended September 30, 2010, compared to $6.8 million for the nine months ended September 30, 2009. The decrease of $1.3 million, or 18.9%, is primarily made up of decreases of $499,000, $288,000 and $277,000 in stock-based compensation, compensation and benefits expense and professional services, respectively. The decreases in stock-based compensation and compensation and benefits expense are primarily the result of a 40% reduction-in-force completed October 27, 2009. The decrease in professional services includes decreases of $115,000 in audit and legal fees and $114,000 in consulting costs.
Interest Income. Interest income was $1,500 for the nine months ended September 30, 2010, compared to $79,000 for the nine months ended September 30, 2009. The decrease of $78,000, or 98.1%, is primarily due to a decrease in total cash available to invest. The cash, cash equivalents and short-term investments balance was $12.6 million at September 30, 2010, including $5.5 million of funds received on September 30, 2010 from the sale of preferred stock and common stock warrants in a private placement transaction, compared to $14.7 million at September 30, 2009. The average cash, cash equivalents and short-term investments balance was $12.8 million and $32.2 million for the nine months ended September 30, 2010 and 2009, respectively. The decrease is the result of $29.7
We have incurred losses since our inception in December 2002 and, as of September 30, 2010 we had experienced net losses during the development stage of $146.6 million. We have financed our operations to date principally through the sale of capital stock, debt financing and interest earned on investments. Through December 31, 2009, we had received net proceeds of $122.2 million from the sale of common stock and preferred stock, including $39.1 million from our initial public offering in November 2007 and $19.9 million from private placement and registered direct offerings in 2009, and $35.8 million in debt financing, $746,000 to finance equipment purchases and $35.0 million to finance working capital. On January 20, 2010, we completed the sale of 1,239,717 shares of our common stock in a registered direct offering, at a purchase price of $3.90 per share. We received gross proceeds of $4.8 million before deducting estimated offering expenses. On September 30, 2010, we completed the sale of 3,394,309 shares of Series A non-voting convertible preferred stock, together with warrants to purchase an aggregate of 3,394,309 shares of common stock with an exercise price of $2.15 per share in a private placement transaction at a purchase price of $1.72 per share and $0.125 per share, respectively. We received gross proceeds of $6.3 million before deducting offering expenses.
On July 8, 2010 we entered into a Second Amendment (the Second Amendment) to the Loan Agreement with SVB. The Second Amendment modified the repayment terms of the Term Loan such that from the date of the Second Amendment through December 31, 2010, we are only required to make interest only monthly payments on the Term Loan, thereby reducing our monthly debt payment. Then, beginning on January 1, 2011, the remaining balance due on the Term Loan will amortize over 30 equal payments of principal and interest, which will be payable monthly. In addition, the Second Amendment amended the interest rate due on the remaining principal amount of the Term Loan from 10.0% to a fixed annual rate of 11.0%, payable monthly. The Second Amendment also revised the terms of the financial covenants related to the liquidity ratio and new capital transactions. Pursuant to the Second Amendment, the liquidity ratio equals the ratio of (i) the sum of our unrestricted cash and cash equivalents held with SVB and SVBs affiliates plus eligible accounts, divided by (ii) the outstanding principal amount of the Term Loan and is not permitted to be less than 1.00:1.00. Pursuant to the Second Amendment, we must receive aggregate net proceeds from New Capital Transactions (as defined in the Loan Agreement) of not less than $2.0 million from the date of the Second Amendment through August 31, 2010, $7.0 million from the date of the Second Amendment through October 31, 2010, $15.0 million from the date of the Second Amendment through January 31, 2011 and $35.0 million from the date of the Second Amendment through June 30, 2011. If we meet these financing requirements, we will satisfy the covenant; however, if we do not receive aggregate net proceeds from New Capital Transactions of at least $3.5 million from the date of the Second Amendment through August 31, 2010, $7.5 million from the date of the Second Amendment through October 31, 2010, $15.0 million from the date of the Second Amendment through January 31, 2011 and $35.0 million from the date of the Second Amendment through June 30, 2011, SVBs springing lien on our intellectual property will convert to a full lien on the intellectual property as of the date such Proposed Capital Raise was missed. We received approximately $6.3 million from the sale of preferred stock and common stock warrants in a private placement transaction that closed on September 30, 2010, which was less than the amount required by the Second Amendment and resulted in us entering into a Third Amendment to the Loan Agreement (the Third Amendment) with SVB on November 4, 2010. See details of the Third Amendment below. Finally, the Second Amendment revised the definition of Make-Whole Premium so that only Term Loan payments of principal made after the date of the Second Amendment will be counted for purposes of determining whether we have made twelve regularly scheduled monthly payments of principal in accordance with Section 2.1.1(d) of the Loan Agreement when the Make-Whole Premium comes due.
the completion of a private placement transaction that resulted in gross proceeds of $6.3 million for the issuance of preferred stock and common stock warrants, of which $781,000 was received in early October, offset by $43,000 in financing costs incurred through September 30, 2010 and a registered direct offering that resulted in gross proceeds of $4.8 million for the issuance of common stock, offset by $340,000 in financing costs, partially offset by repayments on our long-term debt. Net cash provided by financing activities for the nine months ended September 30, 2009 is primarily attributable to the completion of a private placement transaction that resulted in gross proceeds of $15.9 million for the issuance of common stock and common stock warrants, offset by $806,000 in financing costs incurred through September 30, 2009 and debt funding proceeds of $5.0 million automatically funded on April 28, 2009 per the terms of the $20.0 million debt facility we entered into on November 18, 2008, partially offset by repayments on our long-term debt.
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