Seeking Alpha

Lake Street likes EnteroMedics in 2014

  • "First, the current macro favors companies whose products address unmet treatment needs while making healthcare delivery more efficient and effective," Lake Street's Bruce Jackson says, in a note touting EnteroMedics (ETRM) as one of the firm's favorite ideas for the new year.
  • Jackson thinks small cap growth stocks are likely to benefit from the acquisitive nature of large companies "with strong balance sheets."
  • Lake Street is also positive on VBLOC.
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Comments (2)
  • Ernest Marmer
    , contributor
    Comments (67) | Send Message
     
    Mr. Jackson's analysis is first seen after the 18-month data is "generated" by ETRM a few months ago, where he signs off on a $3.00 target - on a therapy which has failed outright for efficacy on its both its major phase-III trials.

     

    A very curious analysis indeed - in general, ETRM prospects seem to be based largely on the 18-month data cited as "proving" efficacy for VBLOC and the derivative opinions of other analysts. It doesn't seem to be at all known that the data allegedly "proving" efficacy is:

     

    a) only for a small subset of patients (n=159) and then
    b) only those who performed best, and then
    c) not prospective data from the clinical trial
    d) nor the intent-to-treat data analysis (where n= 239) valued by the FDA approval granters.

     

    This data was clearly cherry-picked by ETRM.

     

    There was no 18-month efficacy endpoint in the trial protocol. Primary efficacy measurement ended at 12 months, where the VBLOC therapy failed outright on all three primary efficacy goals.

     

    That included one endpoint which required a minimum of 55% of all treated patients seeing 20% or more excess-weight loss (EWL). The data then supposedly so "impressive" saw only 54% and that in only a smaller subset of patients. By the intent-to-treat analysis only 39% of treated patients reached that 20% EWL at the 18-month look, which is well shy of the FDA required level.

     

    The "impressive" 18-month data Mr. Jackson relies on also left out the most important single efficacy "endpoint": overall EWL. One assumes because that main 'endpoint' as presented also failed the FDA hurdle for statistical significance it was glossed over. On an intent-to-treat basis that data at 18 months also failed clinical as well as statistical significance.

     

    Also curious is the non-mention (when citing both Australian and EU marketing approvals and this Lake Street analyst's market share thoughts) of the fact that in Australia and the EU there have been - literally - no sales of the product since spring of 2012. None - for almost two years now.

     

    That would have to both a) matter to Mr Jackson's sales projections as well as b) be explained away frankly before making projections of a "meaningful share" of 350,000 potential patients. He'd also be compelled to address the extreme cost of this therapy -- about $30,000/patient in the US -- all of which would have to come out of the patient's own pocket as there is no insurance coverage in place or in sight for this therapy. That, too, would impact sales dramatically - probably explaining zero sales internationally. And it would surely have plenty of concern raised for any potential "buyers".
    5 Jan 2014, 02:56 PM Reply Like
  • 19136401
    , contributor
    Comments (23) | Send Message
     
    The data provided by the Company are different. They describe an overall very significant (p<0.001) benefit for the Maestro patients over the sham patients in obtaining EWL. Where did you find your data and the protocol?
    19 Jan 2014, 02:29 AM Reply Like
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