The Five Dumbest Things on Wall Street This Week: Feb. 15
5. EnteroMedics Gets Zapped
If only EnteroMedics'(ETRM) diet device could slim obese patients as well as it did the company's stock price, then the company's shareholders would be in a much weightier position.
Shares of EnteroMedics plummeted 56% to $1.26 last Friday, after it reported disappointing clinical trial results for its Maestro System, which uses electrical charges to block the primary nerve regulating digestion. Unlike pacemakers, patients power the surgically implanted device on and off with a control belt worn around the waist.
Top-line results from the 233 person phase III study known as ReCharge showed that patients implanted with an active Maestro device lost just 8.5% more "excess weight" than those implanted with a dummy device. In order for the study to be successful, Maestro needed to hit a 10% statistical superiority margin over the sham device, according to TheStreet's biotech ax Adam Feuerstein.
In other words, for all its pumped-up publicity, EnteroMedics' fat zapper turned out to be nothing more than a pulsing placebo.
Nevertheless, the less-than-impressive ReCharge results are still not stopping the company from filing for marketing clearance with the Food and Drug Administration during the second quarter.
"Based on these compelling results, and the totality of our clinical experience with the Maestro System, which now includes more than 600 patients worldwide, we believe EnteroMedics is well-positioned to deliver this novel therapy to people with obesity in the U.S.," said the company's CEO, Dr. Mark B. Knudson.
No way, Knudson. No matter how you try and spin it, those results were anything but "compelling." And even in the unlikely case that the FDA approves your device despite two failed phase III studies, why would anybody shock themselves svelte when they will soon be able to simply pop a diet pill from the likes of Arena(ARNA) , Vivus(VVUS) or Orexigen(OREX) ?
Like it or not, that's the real skinny on EnteroMedics.
4. Carnival's Crisis
Go ahead, Carnival Corp. (CCL) . Set your cruise ships adrift in the Gulf of Mexico. Stranding them at sea is absolutely the smartest move you can make.
We're not kidding. It may tick off your passengers, but your shareholders will absolutely love the ride.
Here's what happened: An engine-room fire caused the company's Triumph cruise ship, which was bound for port at Galveston, Texas, to lose power 150 miles off southern Mexico's Yucatan peninsula on Sunday. None of the 3,143 guests nor 1,086 crew members on board were injured, according to the cruise line operator. That said, inoperable toilets and a lack of air conditioning reportedly made the tug-boat-aided trip to Mobile, Ala., far less than luxurious. Shares of the company's stock fell just under 1% on the news.
The cruise line canceled the next two Triumph departures to fix the problem. It also offered full refunds and vouchers to the travelers whose vacations were ruined.