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Here Are Two Things We're Looking For From Reshape Lifesciences Inc (NASDAQ:RSLS)

Here Are Two Things We're Looking For From Reshape Lifesciences Inc (NASDAQ:RSLS)
Written by
Chris Sandburg
Published on
November 1, 2017
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Regular readers will know that we’ve been covering EnteroMedics with relatively high frequency over the last twelve months.The company is a biotech stock with a solid product but a few mitigating circumstances that are making it tough to gain any real traction in terms of upside revaluation. RSLS Daily ChartWell, last time we covered EnteroMedics, we noted that there were a couple of key developments that would likely drive value medium term. One was an ongoing trial of its lead portfolio asset, what's called vBloc, and the second was a then-pending acquisition of an entity called ReShape.Since that coverage, the company has closed on the acquisition and has made a move we weren't expecting – it's rebranding in line with that of its acquired entity and, as of session open on October 26, the company now trades as Reshape Lifesciences Inc (NASDAQ:RSLS).So what are the implications of this?Well, as outlined last time, the primary implications are an expanded product portfolio. In addition to its vBloc product, the newly named Reshape now has a non-surgical weight loss procedure on its books that involves the installation of a balloon-type device in a patient's stomach to make them feel full quicker and an investigational product that wraps around the stomach (in the same way that a gastric sleeve would) but that is laparoscopically implanted, meaning the surgery required to get the product in patients is minimally invasive.The latter of these two products is new to us but, at first glance, it looks pretty good. Gastric bands can be tough on patients and the surgery required for fitting necessitates general anesthetic. GA is very dangerous in morbidly obese people, which are, of course, the patients that need this type of treatment. If Reshape can get a therapy to market that doesn’t require invasive surgery (and, by proxy, can be administered using a local anesthetic) it could be a game changer for a large portion of patients.From a catalyst perspective, then, we'd love to see some developmental advance of this latter product (it's called the GastricVest) towards commercialization in the US.Sticking with catalysts, we're also on the lookout for any update as to how the post approval study of vBloc (the one that kicked off early September) is going in the circa 15 centers that are carrying out the investigation. This is a 200 patient study that (again, as we outlined last time) could provide the data that the company needs to convince insurers to cover its vBloc product in the US. This coverage problem has been the company's major hurdle to success in this arena to-date and, reportedly, many of the major payers have indicated that a 200 individual strong study that demonstrates real-world benefit would be enough to change some of their minds regarding coverage.If this data is strong, therefore, it's a major step towards a key milestone and – by proxy – a major potential upside driver as and when it hits press. We're probably looking at early next year before we see full data but there's the potential for interim discussion to offer some degree of insight much nearer term.Which brings us nicely to a very near term event that could shed light on all of the above-discussed items – a conference call set up to discuss the company's third-quarter financials and, undoubtedly, operational highlights over the last few months. The call is set to take place on November 14 at 1:30 PM Pacific Time.We're going to be sitting in on the call to try and get an idea of where GastricVest along its development pathway and – hopefully – to get some insight into how the real world vBloc study is going at its various centers.Check out our coverage of ETRM (pre name change) here. We will be updating our subscribers as soon as we know more. For the latest updates on RSLS, sign up below!Image courtesy of Magnus D via FlickrDisclosure: We have no position in RSLS and have not been compensated for this article.

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