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EnteroMedics Inc. Message Board

  • adeiflig adeiflig May 12, 2014 10:26 AM Flag

    Earnings of 50 cents per share in 2015

    We are now able to make some proper earnings projects based on the shelf registration. We now know that ETRM will go at it alone by marketing VLBOC to stomach staple clinics.

    They will need approximately 15 sales people to target the 400 clinics which cover 300,000 Obese patients per year. These patients pay up to $ 35,000 for stomach staple surgery without insurance coverage so there is demand for treatment.

    There are 20 million eligible patients and each year 300,000 patients undergo this surgery. Patients will now be offered a safer alternative. It is only logical that patients will first try VBLOC and then if unsuccessful opt to remove stomach. Trend may be as follows: tried diet pills then to VBLOC, if not successful then stomach surgery.

    VBLOC has shown it does work so it will make stomach staple surgery OBOSLETE.

    In terms of earnings projections, assuming a 10% penetration in 1st year which is conservative:

    10% * 400 clinics = 40 clinics
    Each clinic does 750 stomach staple surgeries
    This means 40 clinics * 750 patients = 30,000 VBLOC patients 1st year

    Revenue: 30,000 VBLOC patients 1st year * $ 10,000 per device = $ 300,000,000 in sales

    Assuming 25% bottom line = $ 75,000,000 in net income

    Assuming 150 million shares outstanding gives eanings of 50 cents per share in 2015

    Trading at a multiple of 30x earnings gives $ 15 stock price in 2015.

    Solid numbers....infrastructure in terms of clinics, doctors and patients is there. All that is needed is A CHOICE.


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    • I love your enthusiasm but you are WAY to optimistic. It will take at least six months to get the sales arm educated. You need people to talk to surgeons. My bet is they spend a lot of time with the insurance industry trying to get them on board for reimbursement. This procedure should be less than half of bariatric. ETRM will only make money for the sale of the device. You have to convince a lot of people, especially the patients that our device works. Doctors will be skeptical at first as they usually are, and the surgeons will be taking a huge cut in pay from bariatric.

      Be that as it may, I think the company will get the health insurers on board and that in and of itself in a staggering success. My bet. They are cash flow positive by Q3 2015 and profitable in Q2 2016. They will need $30-40 million at a minimum to ratchet the whole process up. The device is not like an Apple I-phone. It is also a surgical procedure. And there will not be 150 MM shares out by next year. They filed for $75MM dollars not shares. Upon approval they will be wined and dined by the big players in the device space. While they will try it themselves for a while, I expect a buyout within 15 months at $20.

      Sleep well.

      • 2 Replies to innsbrooklad
      • The sales force will not get educated in 6 months. They are not hiring mules, they are hiring human beings whom are fairly intelligent and who specialize in the obesity field or medical at least. What is so complicated to learn? Give 3 weeks of training and salesperson is ready.

        With regards to launch time, there are 400 clinics, not 400,000 that does stomach staple surgery. It is like locating large hospitals and presenting a sales pitch. It shouldn't take long before the market is covered.

        Remember that infrastructure is already in place in terms of clinics, doctors and patients. The doctors whom do stomach staple surgery will be able to do a VBLOC surgery with their eyes closed.

        This is how to sales pitch a doctor. You tell him that his clinic does 750 patients per year on stomach staple surgery however it can do 10 times that amount as there are 20 million eligible patients and 100 million obese patients overall. The bang for his buck will be made by performing easier surgeries more quickly and in abundance costing him less insurance and lawsuits since there is no risk.

        With patient safety and doctor greed VBLOC sales will take off....


      • innsbrooklad: Yours is the most rational post. adeiflig overlooks the fact that the FDA briefing documents will be lukewarm, at best, toward VBLOC. The benefit to hypertension and diabetes are not in the original SPA and will only incidentally be mentioned in the briefing docs. The FDA will ask at least two questions: 1) Is the device safe? I expect an almost unanimous yes. 2) Is the device effective enough given the modest risk factor? I there are 17 votes, I expect 10-6 yes, with possibly 1 abstension. I give the FDA chances of approval at about 65%.

    • ade: as usual you are shamelessly pumping: If approved, VBLOC won't launch until 4th qtr 2014 and all of 2015 will see losses due to the heavy investment in a sales and support staff. VERY VERY FEW companies show a profit in the launch of a new product. VBLOC would be lucky to turn a profit in 2016/2017. It's not like they have a cancer drug with a huge profit margin.

      • 1 Reply to dctrig
      • And this projection of yours which you say is so certain is based on what? A gut feeling in your stomach.

        How can you know how VBLOC is going to do when it has not even been launched?

        I made projections where-as you refute my projections with an accusation of pumping and assertion as a fact that they won`t be lucky to make a profit by 2016/2017.

        Can you show me hard evidence of this analysis you made? Based on what comparative, as VBLOC is unique without any other competitor out there.

        It is this closed minded attitude of settling that really pushes me to the edge. How can you expect to succeed if you start with a FAILURE attitude. If you don`t believe in VBLOC then go buy a stock you do believe in.

        VBLOC will be the easiest sale out there. I would market is as follows: you get to keep your stomach, you get to keep your life, you get no adverse effects, you get benefits (diebetic and hypertension reduction), you get to lose weight, you get to keep your eating habits, you get to reverse procedure if you don`t like it and you get to save 60% of what stomach staple surgery costs


        We use all American way of thinking, go in your belly, remove everything whether good or bad, and worry about it later when your health pays it through a deficit.

        Get it through your THICK HEAD, VBLCO will make stomach staple surgery OBSOLETE.

        Do you understand or do I need to spoonfeed you some more.


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