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Document and Entity Information - shares	3 Months Ended
Document and Entity Information - shares	Mar. 31, 2015	Apr. 30, 2015
Document Information [Line Items]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Mar. 31, 2015
Document Fiscal Year Focus	2015
Document Fiscal Period Focus	Q1
Trading Symbol	ETRM
Entity Registrant Name	EnteroMedics Inc
Entity Central Index Key	0001371217
Current Fiscal Year End Date	--12-31
Entity Filer Category	Accelerated Filer
Entity Common Stock, Shares Outstanding		74,404,378

Consolidated Balance Sheets - USD ($)	Mar. 31, 2015	Dec. 31, 2014
Current assets:
Cash and cash equivalents	$ 11,432,234	$ 11,619,167
Accounts receivable	1,478	2,812
Inventory	1,126,297	980,519
Prepaid expenses and other current assets	462,986	421,673
Total current assets	13,022,995	13,024,171
Property and equipment, net	446,876	481,522
Other assets	866,554	879,905
Total assets	14,336,425	14,385,598
Current liabilities:
Current portion of notes payable (net of discounts of $10,313 and $23,836 at March 31, 2015 and December 31, 2014, respectively)	1,989,687	2,976,164
Accounts payable	47,522	399,336
Accrued expenses	4,473,759	3,830,766
Accrued interest payable	510,635	514,937
Total current liabilities	7,021,603	7,721,203
Total liabilities	7,021,603	7,721,203
Commitments and contingencies (note 4)
Stockholders' equity:
Common stock, $0.01 par value; 200,000,000 shares authorized; 74,404,378 and 69,570,444 shares issued and outstanding at March 31, 2015 and December 31, 2014, respectively	744,044	695,704
Additional paid-in capital	265,826,592	258,050,482
Accumulated deficit	(259,255,814)	(252,081,791)
Total stockholders' equity	7,314,822	6,664,395
Total liabilities and stockholders' equity	$ 14,336,425	$ 14,385,598

Consolidated Balance Sheets (Parenthetical) - USD ($)	Mar. 31, 2015	Dec. 31, 2014
Current portion of notes payable, discounts	$ 10,313	$ 23,836
Common stock, par value	$ 0.01	$ 0.01
Common stock, shares authorized	200,000,000	200,000,000
Common stock, shares issued	74,404,378	69,570,444
Common stock, shares outstanding	74,404,378	69,570,444

Consolidated Statements of Operations - USD ($)	3 Months Ended
Consolidated Statements of Operations - USD ($)	Mar. 31, 2015	Mar. 31, 2014
Sales	$ 0	$ 0
Cost of goods sold	0	0
Gross profit	0	0
Operating expenses:
Selling, general and administrative	4,727,519	3,934,977
Research and development	2,236,606	2,623,021
Total operating expenses	6,964,125	6,557,998
Operating loss	(6,964,125)	(6,557,998)
Other income (expense):
Interest income	867	1,004
Interest expense	(214,546)	(169,373)
Other, net	3,781	(5,957)
Net loss	$ (7,174,023)	$ (6,732,324)
Net loss per share - basic and diluted	$ (0.10)	$ (0.10)
Shares used to compute basic and diluted net loss per share	72,735,912	65,656,591

Consolidated Statements of Comprehensive Loss - USD ($)	3 Months Ended
Consolidated Statements of Comprehensive Loss - USD ($)	Mar. 31, 2015	Mar. 31, 2014
Net loss	$ (7,174,023)	$ (6,732,324)
Comprehensive loss	$ (7,174,023)	$ (6,732,324)

- Definition

The portion of profit or loss for the period, net of income taxes, which is attributable to the parent.

+ References + Details

Consolidated Statements of Cash Flows - USD ($)	3 Months Ended
Consolidated Statements of Cash Flows - USD ($)	Mar. 31, 2015	Mar. 31, 2014
Cash flows from operating activities:
Net loss	$ (7,174,023)	$ (6,732,324)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation	48,651	47,495
Stock-based compensation	1,372,076	1,537,378
Amortization of commitment fees, debt issuance costs and original issue discount	165,291	38,031
Change in operating assets and liabilities:
Accounts receivable	1,334	17,742
Inventory	(145,778)	36,773
Prepaid expenses and other current assets	(41,313)	(71,975)
Other assets	(138,417)	(52,383)
Accounts payable	(347,163)	146,708
Accrued expenses	642,993	(565,937)
Accrued interest payable	(4,302)	(2,214)
Net cash used in operating activities	(5,620,651)	(5,600,706)
Cash flows from investing activities:
Purchases of property and equipment	(18,656)	(7,281)
Net cash used in investing activities	(18,656)	(7,281)
Cash flows from financing activities:
Proceeds from warrants exercised		2,026,765
Proceeds from sale of common stock and warrants for purchase of common stock	6,651,931	5,836,072
Common stock financing costs	(199,557)	(116,295)
Repayments on notes payable	(1,000,000)	(1,000,000)
Net cash provided by financing activities	5,452,374	6,746,542
Net (decrease) increase in cash and cash equivalents	(186,933)	1,138,555
Cash and cash equivalents:
Beginning of period	11,619,167	23,297,479
End of period	11,432,234	24,436,034
Supplemental disclosure:
Interest paid	$ 53,556	$ 133,556

Summary of Significant Accounting Policies

3 Months Ended

Mar. 31, 2015

Summary of Significant Accounting Policies

(1) Summary of Significant Accounting Policies

Description of Business

EnteroMedics Inc. (the Company) is developing implantable systems to treat obesity, metabolic diseases and other gastrointestinal disorders. The Company was incorporated in the state of Minnesota on December 19, 2002 and was reincorporated in Delaware on July 22, 2004. The Company is headquartered in St. Paul, Minnesota. In January 2006, the Company established EnteroMedics Europe Sárl, a wholly-owned subsidiary located in Switzerland.

Risks and Uncertainties

The Company is focused on the design and development of medical devices that use neuroblocking technology to treat obesity, metabolic diseases and other gastrointestinal disorders and currently has approvals to commercially launch the Maestro Rechargeable System in the United States and in Australia, the European Economic Area and other countries that recognize the European CE Mark. The Company has devoted substantially all of its resources to recruiting personnel, developing its product technology, obtaining patents to protect its intellectual property and raising capital, and thus far has only derived revenues from its primary business activity in 2012.

The Company’s products require approval from the U.S. Food and Drug Administration (FDA) or corresponding foreign regulatory agencies prior to commercial sales. The Company received FDA approval on January 14, 2015 for vBloc Therapy, delivered via the Maestro Rechargeable System, and has begun a controlled commercial launch at select bariatric centers of excellence in the United States. The Maestro Rechargeable System has also received CE Mark and is listed on the Australian Register of Therapeutic Goods.

The medical device industry is characterized by frequent and extensive litigation and administrative proceedings over patent and other intellectual property rights. Whether a product infringes a patent involves complex legal and factual issues, the determination of which is often difficult to predict, and the outcome may be uncertain until the court has entered final judgment and all appeals are exhausted. The Company’s competitors may assert that its products or the use of the Company’s products are covered by U.S. or foreign patents held by them.

The Company’s activities are subject to significant risks and uncertainties, including the ability to obtain additional financing and there can be no assurance that the Company will be successful in obtaining additional financing on favorable terms, or at all. If adequate funds are not available, the Company may have to delay development or commercialization of products or license to third parties the rights to commercialize products or technologies that the Company would otherwise seek to commercialize.

Basis of Presentation

The Company has prepared the accompanying condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States of America. The Company’s fiscal year ends on December 31.

The accompanying condensed consolidated financial statements and notes thereto are unaudited. In the opinion of the Company’s management, these statements include all adjustments, which are of a normal recurring nature, necessary to present a fair presentation. Interim results are not necessarily indicative of results for a full year. The condensed consolidated balance sheet as of December 31, 2014 was derived from audited consolidated financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States of America. The information included in this Form 10-Q should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2014.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.

Principles of Consolidation

The accompanying condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary. All intercompany transactions and accounts have been eliminated in consolidation.

Fair Value of Financial Instruments

Carrying amounts of certain of the Company’s financial instruments, including cash and cash equivalents, accounts receivable, prepaid expenses and other current assets, accounts payable and accrued liabilities approximate fair value due to their short maturities. The fair value of the Company’s debt is approximately $2.5 million as of March 31, 2015 based on the present value of estimated future cash flows using a discount rate commensurate with borrowing rates available to the Company. If measured at fair value in the condensed consolidated financial statements, debt would be classified as Level 2 in the fair value hierarchy.

The Company’s assets that are measured at fair value on a recurring basis are classified within Level 1 or Level 2 of the fair value hierarchy. The Company does not hold any assets that are measured at fair value using Level 3 inputs. The types of instruments the Company invests in that are valued based on quoted market prices in active markets include U.S. treasury securities. Such instruments are classified by the Company within Level 1 of the fair value hierarchy. U.S. treasuries are valued using unadjusted quoted prices for identical assets in active markets that the Company can access.

The types of instruments the Company invests in that are valued based on quoted prices in less active markets, broker or dealer quotations, or alternative pricing sources with reasonable levels of price transparency include U.S. agency securities, commercial paper, U.S. corporate bonds and municipal obligations. Such instruments are classified by the Company within Level 2 of the fair value hierarchy. The Company values these types of assets using consensus pricing or a weighted average price, which is based on multiple pricing sources received from a variety of industry standard data providers (e.g. Bloomberg), security master files from large financial institutions, and other third-party sources. The multiple prices obtained are then used as inputs into a distribution-curve-based algorithm to determine the daily market price.

The Company did not hold any short-term investments as of March 31, 2015 and December 31, 2014.

Cash and Cash Equivalents

The Company considers highly liquid investments generally with maturities of 90 days or less when purchased to be cash equivalents. Cash equivalents are stated at cost, which approximates market value. The Company’s cash equivalents are primarily in money market funds and certificates of deposit. The Company deposits its cash and cash equivalents in high-quality credit institutions. Under terms of the Company’s note payable agreement (see Note 5), in the event of default, the lender has the right to enforce an account control agreement and restrict the Company’s access to their cash and investment accounts.

Inventory

The Company accounts for inventory at the lower of cost or market and records any long-term inventory as other assets in the condensed consolidated balance sheets.

Income Taxes

Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carry-forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance for deferred income tax assets is recorded when it is more likely than not that some portion or all of the deferred income tax assets will not be realized. The Company has provided a full valuation allowance against the gross deferred tax assets. The Company’s policy is to classify interest and penalties related to income taxes as income tax expense in the condensed consolidated statements of operations.

Comprehensive Loss

Comprehensive loss is defined as the change in equity of a company during a period from transactions and other events and circumstances excluding transactions resulting from investment owners and distributions to owners. There was no difference from reported net loss for the three months ended March 31, 2015 and 2014.

Revenue Recognition

Revenue is recognized when persuasive evidence of an arrangement exists, title or risk of loss has passed, the selling price is fixed or determinable and collection is reasonably assured. Products are sold internationally through distributors and revenue is recognized upon sale to the distributor as these sales are considered to be final and no right of return or price protection exists. Terms of sales to international distributors are generally EXW, reflecting that goods are shipped “ex works,” in which risk of loss is assumed by the distributor at the shipping point. The Company does not provide for rights of return to customers on product sales and therefore does not record a provision for returns.

Research and Development Expenses

Research and development expenses are charged to expense as incurred. Research and development expenses include, but are not limited to, product development, clinical trial expenses, including supplies, devices, explants and revisions, quality assurance, regulatory expenses, payroll and other personnel expenses, materials and consulting costs.

Net Loss Per Share

Basic net loss per share is computed by dividing net loss by the weighted-average number of common shares outstanding during the period. Diluted net loss per share is based on the weighted-average common shares outstanding during the period plus dilutive potential common shares calculated using the treasury stock method. Such potentially dilutive shares are excluded when the effect would be to reduce a net loss per share. The Company’s potential dilutive shares, which include outstanding common stock options and warrants, have not been included in the computation of diluted net loss per share for all periods as the result would be anti-dilutive.

The following table sets forth the computation of basic and diluted net loss per share for the three months ended March 31, 2015 and 2014:


	Three months ended March 31,
	2015			2014
Numerator:
Net loss	$	(7,174,023	)	$	(6,732,324	)

Denominator for basic and diluted net loss per share:
Weighted-average common shares outstanding		72,735,912			65,656,591

Net loss per share—basic and diluted	$	(0.10	)	$	(0.10	)

The following table sets forth the potential shares of common stock that are not included in the calculation of diluted net loss per share because to do so would be anti-dilutive as of the end of each period presented:


	March 31,
	2015		2014
Stock options outstanding		14,232,792		11,666,051
Warrants to purchase common stock		24,199,705		24,411,389

Recently Issued Accounting Standards

In June 2014, the Financial Accounting Standards Board (FASB) issued Development Stage Entities, Topic 915 (Accounting Standards Update No. 2014-10 (ASU 2014-10)), which eliminates certain financial reporting requirements, with the objective of improving financial reporting by reducing the cost and complexity associated with the incremental reporting requirements for development stage entities. This guidance is effective for interim and annual reporting periods beginning after December 15, 2014; however, early application was permitted for any annual reporting period or interim period for which an entity’s financial statements had not yet been issued. The Company elected to adopt ASU 2014-10 effective with the quarter ending June 30, 2014.

In May 2014, FASB issued Revenue from Contracts with Customers, Topic 606 (Accounting Standards Update No. 2014-09 (ASU 2014-09)), which provides a framework for the recognition of revenue, with the objective that recognized revenues properly reflect amounts an entity is entitled to receive in exchange for goods and services. This guidance will be effective for interim and annual reporting periods beginning after December 15, 2016. The Company is currently evaluating the impact of adopting ASU 2014-09 on its consolidated financial statements.

There have been no other significant changes in recent accounting pronouncements during the three months ended March 31, 2015 as compared to the recent accounting pronouncements described in the Company’s Annual Report on Form 10-K for the year ended December 31, 2014.

Liquidity and Management's Plans

3 Months Ended

Mar. 31, 2015

Liquidity and Management's Plans

(2) Liquidity and Management’s Plans

The accompanying condensed consolidated financial statements have been prepared assuming the Company will continue as a going concern. The Company has financed its operations to date principally through the sale of equity securities, debt financing and interest earned on investments. As of March 31, 2015, the Company had $11.4 million of cash and cash equivalents to fund its anticipated operations for 2015 and also has an “at-the-market” equity offering program (ATM) under which it can raise additional funds by instructing Cowen and Company, LLC (Cowen), the Company’s sales agent, to sell shares of the Company’s common stock having aggregate gross sales proceeds of up to $25.0 million (the Cowen ATM), of which $17.4 million remains available as of May 8, 2015 (further described in Note 7). These anticipated operations include plans that consider the controlled commercial launch of vBloc Therapy, delivered via the Maestro Rechargeable System, which was approved by the FDA on January 14, 2015. In order to finance these anticipated operations, including the increase in internal expenditures resulting from the controlled commercial launch noted above, the Company has raised $6.7 million in gross proceeds before deducting offering expenses from the Cowen ATM subsequent to December 31, 2014 through May 8, 2015. In addition, the Company believes that it has the ability to raise additional capital through (i) the sale of additional equity securities, including, but not limited to, the use of the Cowen ATM and the exercise of outstanding warrants; (ii) the sale of debt securities; or (iii) establishing a credit facility, and has the flexibility to manage the growth of its expenditures and expand operations.

Inventory

3 Months Ended

Mar. 31, 2015

Inventory

(3) Inventory

From inception, inventory related purchases had been used for research and development related activities and had accordingly been expensed as incurred. In December 2011, the Company began receiving Australian Register of Therapeutic Goods (ARTG) listings for components of the Maestro Rechargeable System from the Australian Therapeutic Goods Administration, with the final components being listed on the ARTG in January 2012. As a result, the Company determined certain assets were recoverable as inventory beginning in December 2011. The Company accounts for inventory at the lower of cost or market and records any long-term inventory as other assets in the condensed consolidated balance sheets. There was approximately $776,000 and $825,000 of long-term inventory, primarily consisting of raw materials, as of March 31, 2015 and December 31, 2014, respectively.

Current inventory consists of the following as of:


	March 31, 2015		December 31, 2014
Raw materials	$	419,085	$	322,157
Work-in-process		679,036		632,615
Finished goods		28,176		25,747

Inventory	$	1,126,297	$	980,519

Commitments and Contingencies

3 Months Ended

Mar. 31, 2015

Commitments and Contingencies

(4) Commitments and Contingencies

Operating Lease

The Company rents its office, warehouse and laboratory facilities under an operating lease, which expires on September 30, 2015. Total rent expense recognized for each of the three months ended March 31, 2015 and 2014 was $67,718. At March 31, 2015, future minimum payments under the lease are as follows:


Year ending December 31:
Remaining nine months in 2015	$	147,859

The Company is exposed to product liability claims that are inherent in the testing, production, marketing and sale of medical devices. Management believes any losses that may occur from these matters are adequately covered by insurance, and the ultimate outcome of these matters will not have a material effect on the Company’s financial position or results of operations. The Company is not currently a party to any litigation and is not aware of any pending or threatened litigation that could have a material adverse effect on the Company’s business, operating results or financial condition.

The Company is evaluating the Maestro System in human clinical trials, including the EMPOWER trial and ReCharge trial. Both of these clinical trials require patients to be followed out to 60 months. The Company is required to pay for patient follow up visits only to the extent they occur. In the event a patient does not attend a follow up visit, the Company has no financial obligation. The Company is also required to pay for explants or revisions, including potential conversions of ReCharge control devices to active devices, should a patient request or be required to have one during the course of the clinical trials. The Company has no financial obligation unless an explant, revision or conversion is requested or required. Clinical trial costs are expensed as incurred.

Notes Payable

3 Months Ended

Mar. 31, 2015

Notes Payable

(5) Notes Payable

On April 16, 2012, the Company entered into a Loan and Security Agreement (the Loan Agreement) with Silicon Valley Bank (SVB) pursuant to which SVB agreed to make term loans in an aggregate principal amount of up to $20.0 million ($10.0 million of which is not available as the Company did not meet the predefined primary efficacy measures of the ReCharge trial and did not meet certain financial objectives for 2012), on the terms and conditions set forth in the Loan Agreement.

Pursuant to the Loan Agreement, a term loan was funded in the aggregate principal amount of $10.0 million on April 23, 2012, a portion of which was used to repay in full outstanding debt of approximately $4.7 million. The term loan required interest only payments monthly through March 31, 2013 followed by 30 equal payments of principal in the amount of $333,333 plus accrued interest beginning on April 1, 2013 and ending on September 1, 2015, payable monthly. Amounts borrowed under the Loan Agreement bear interest at a fixed annual rate equal to 8.0%. A 5.0% final payment fee will be due on September 1, 2015. The Company may voluntarily prepay the term loan in full, but not in part, and any voluntary or mandatory prepayment is subject to applicable prepayment premiums and will also include the final payment fee. The Company was required to comply with certain financial covenants that required the Company to generate certain minimum amounts of revenue from the sale of its Maestro Rechargeable System and to implant certain minimum numbers of Maestro Rechargeable Systems during cumulative quarterly measurement periods beginning with the period ended March 31, 2013 and ending with the period ending June 30, 2015. The Company did not meet the financial covenants for the period ended March 31, 2013 and therefore entered into a First Amendment (the First Amendment) to the Loan Agreement on May 9, 2013 pursuant to which the Company and SVB agreed to new financial covenants.

The First Amendment eliminated the financial covenants that required the Company to generate certain minimum amounts of revenue from the sale of its Maestro Rechargeable System and to implant certain minimum numbers of Maestro Rechargeable Systems during cumulative quarterly measurement periods beginning with the period ended March 31, 2013 and ending with the period ending June 30, 2015. It also removed SVB’s ability to require the Company to maintain a restricted cash balance of $7.5 million in an SVB account as a result of the Company not meeting the predefined primary efficacy measures of the ReCharge trial.

The First Amendment added two new financial covenants, one of which required the Company to receive cumulative aggregate net proceeds of at least $5.0 million by November 15, 2013 and $10.0 million by April 15, 2014 from new capital transactions, both of which have been fulfilled. The second financial covenant required the Company to maintain a liquidity ratio (unrestricted cash divided by outstanding debt) of at least 1.25:1.00 until it received FDA approval for the Maestro Rechargeable System on January 14, 2015, at which point it was reduced to 0.75:1.00. The First Amendment did not change the interest rate or the amortization structure. The Company is required to pay SVB a $187,000 success fee as a result of receiving FDA approval for the Maestro Rechargeable System on January 14, 2015.

The Company has granted SVB a security interest in all of the Company’s assets, excluding intellectual property except with respect to all license, royalty fees and other revenues and income arising out of or relating to any of the intellectual property and all proceeds of the intellectual property. The Company also has entered into a negative pledge arrangement with SVB pursuant to which it has agreed not to encumber any of its intellectual property without SVB’s prior written consent.

Pursuant to the Loan Agreement, on April 16, 2012, the Company issued SVB a warrant to purchase 106,746 shares of common stock, exercisable for ten years from the date of grant, at an exercise price of $2.34 per share.

Scheduled debt principal payments are as follows as of March 31, 2015:


Year Ending December 31:
Remaining nine months in 2015	$	2,000,000
Less: Original issue discount		(10,313	)

Notes payable, net	$	1,989,687

Stock-based Compensation

3 Months Ended

Mar. 31, 2015

Stock-based Compensation

(6) Stock-based Compensation

The fair value method of accounting for share-based payments is applied to all share-based payment awards issued to employees and where appropriate, nonemployees, unless another source of literature applies. When determining the measurement date of a nonemployee’s share-based payment award, the Company measures the stock options at fair value and remeasures such stock options to the current fair value until the performance date has been reached.

Based on the application of these standards, stock-based compensation expense for stock-based awards under the Company’s Amended and Restated 2003 Stock Incentive Plan for the three months ended March 31, 2015 and 2014 was allocated to operating expenses and employees and nonemployees as follows:


	Three months ended March 31,
	2015			2014
Selling, general and administrative	$	1,036,446		$	1,155,555
Research and development		335,630			381,823

Total	$	1,372,076		$	1,537,378


Employees	$	1,387,924		$	1,490,341
Nonemployees		(15,848	)		47,037

Total	$	1,372,076		$	1,537,378

As of March 31, 2015 there was approximately $9.3 million of total unrecognized compensation costs, net of estimated forfeitures, related to employee unvested stock option awards, which are expected to be recognized over a weighted-average period of 2.13 years.

The estimated grant-date fair values of the stock options were calculated using the Black-Scholes valuation model, based on the following assumptions for the three months ended March 31, 2015 and 2014:


		Employees
		Three months ended March 31,
		2015
Risk-free interest rates		1.65%-1.80%
Expected life		6.25 years
Expected dividends		0%
Expected volatility		110.32%-111.77%

There were no new employee grants for the three months ended March 31, 2014.


	Nonemployees
	Three months ended March 31,
	2015	2014
Risk-free interest rates	0.03%-1.77%	0.21%-2.63%
Expected life	0.25-8.51 years	1.25-9.51 years
Expected dividends	0%	0%
Expected volatility	37.36%-131.49%	79.90%-139.65%

Option activity under the Company’s Amended and Restated 2003 Stock Incentive Plan for the three months ended March 31, 2015 was as follows:


				Outstanding Options
	Shares Available For Grant			Number of Shares		Weighted- Average Exercise Price
Balance, December 31, 2014		7,073,726			12,655,792	$	2.47
Shares reserved		—			—		—
Options granted		(1,577,000	)		1,577,000		1.12
Options exercised		—			—		—
Options cancelled		—			—		—

Balance, March 31, 2015		5,496,726			14,232,792	$	2.32

Stock Sales

3 Months Ended

Mar. 31, 2015

Stock Sales

(7) Stock Sales

Sales Agreement—June 2014

On June 13, 2014, the Company entered into a sales agreement with Cowen and Company, LLC (Cowen) to sell shares of the Company’s common stock having aggregate gross sales proceeds of up to $25.0 million, from time to time, through an ATM under which Cowen will act as the Company’s sales agent (the Cowen ATM). The Company will determine, at its sole discretion, the timing and number of shares to be sold under the Cowen ATM. The Company will pay Cowen a commission for its services in acting as agent in the sale of common stock equal to 3.0% of the gross sales price per share of all shares sold through it as agent under the sales agreement. As of March 31, 2015, the Company had sold 5,518,536 shares under the Cowen ATM at a weighted-average selling price of $1.37 per share for gross proceeds of $7.6 million before deducting offering expenses. There have been no shares sold under the Cowen ATM subsequent to March 31, 2015 through May 8, 2015.

Equity Distribution Agreement—July 2013

On July 31, 2013, the Company entered into an equity distribution agreement with Canaccord Genuity Inc. (Canaccord) to sell shares of the Company’s common stock having aggregate gross sales proceeds of up to $20.0 million, from time to time, through an ATM under which Canaccord acted as the Company’s sales agent (the Canaccord ATM). The Company determined, at its sole discretion, the timing and number of shares sold under the Canaccord ATM. The Company paid Canaccord a commission for its services in acting as agent in the sale of common stock equal to 2.0% of the gross sales price per share of all shares sold through it as agent under the equity distribution agreement. The equity distribution agreement with Canaccord was terminated effective June 10, 2014. As of the termination date, the Company had sold a total of 11,923,977 shares under the Canaccord ATM at a weighted-average selling price of $1.67 per share for gross proceeds of $19.9 million before deducting offering expenses.

Summary of Significant Accounting Policies (Policies)

3 Months Ended

Mar. 31, 2015

Description of Business

Description of Business

Basis of Presentation

Basis of Presentation

Use of Estimates

Use of Estimates

Principles of Consolidation

Principles of Consolidation

Fair Value of Financial Instruments

Fair Value of Financial Instruments

The Company did not hold any short-term investments as of March 31, 2015 and December 31, 2014.

Cash and Cash Equivalents

Cash and Cash Equivalents

Inventory

Inventory

The Company accounts for inventory at the lower of cost or market and records any long-term inventory as other assets in the condensed consolidated balance sheets.

Income Taxes

Income Taxes

Comprehensive Loss

Comprehensive Loss

Revenue Recognition

Revenue Recognition

Research and Development Expenses

Research and Development Expenses

Net Loss Per Share

Net Loss Per Share

The following table sets forth the computation of basic and diluted net loss per share for the three months ended March 31, 2015 and 2014:


	Three months ended March 31,
	2015			2014
Numerator:
Net loss	$	(7,174,023	)	$	(6,732,324	)

Denominator for basic and diluted net loss per share:
Weighted-average common shares outstanding		72,735,912			65,656,591

Net loss per share—basic and diluted	$	(0.10	)	$	(0.10	)


	March 31,
	2015		2014
Stock options outstanding		14,232,792		11,666,051
Warrants to purchase common stock		24,199,705		24,411,389

Recently Issued Accounting Standards

Recently Issued Accounting Standards

Summary of Significant Accounting Policies (Tables)

3 Months Ended

Mar. 31, 2015

Computation of Basic and Diluted Net Loss per Share

The following table sets forth the computation of basic and diluted net loss per share for the three months ended March 31, 2015 and 2014:


	Three months ended March 31,
	2015			2014
Numerator:
Net loss	$	(7,174,023	)	$	(6,732,324	)

Denominator for basic and diluted net loss per share:
Weighted-average common shares outstanding		72,735,912			65,656,591

Net loss per share—basic and diluted	$	(0.10	)	$	(0.10	)

Antidilutive Securities


	March 31,
	2015		2014
Stock options outstanding		14,232,792		11,666,051
Warrants to purchase common stock		24,199,705		24,411,389

Inventory (Tables)

3 Months Ended

Mar. 31, 2015

Current Inventory

Current inventory consists of the following as of:


	March 31, 2015		December 31, 2014
Raw materials	$	419,085	$	322,157
Work-in-process		679,036		632,615
Finished goods		28,176		25,747

Inventory	$	1,126,297	$	980,519

Commitments and Contingencies (Tables)

3 Months Ended

Mar. 31, 2015

Future Minimum Payments under Lease

At March 31, 2015, future minimum payments under the lease are as follows:


Year ending December 31:
Remaining nine months in 2015	$	147,859

Notes Payable (Tables)

3 Months Ended

Mar. 31, 2015

Scheduled of Debt Principal Payments

Scheduled debt principal payments are as follows as of March 31, 2015:


Year Ending December 31:
Remaining nine months in 2015	$	2,000,000
Less: Original issue discount		(10,313	)

Notes payable, net	$	1,989,687

Stock-based Compensation (Tables)

3 Months Ended

Mar. 31, 2015

Summary of Operating Expenses and Employee and Nonemployees


	Three months ended March 31,
	2015			2014
Selling, general and administrative	$	1,036,446		$	1,155,555
Research and development		335,630			381,823

Total	$	1,372,076		$	1,537,378


Employees	$	1,387,924		$	1,490,341
Nonemployees		(15,848	)		47,037

Total	$	1,372,076		$	1,537,378

Stock Option Valuation Assumptions


		Employees
		Three months ended March 31,
		2015
Risk-free interest rates		1.65%-1.80%
Expected life		6.25 years
Expected dividends		0%
Expected volatility		110.32%-111.77%

There were no new employee grants for the three months ended March 31, 2014.


	Nonemployees
	Three months ended March 31,
	2015	2014
Risk-free interest rates	0.03%-1.77%	0.21%-2.63%
Expected life	0.25-8.51 years	1.25-9.51 years
Expected dividends	0%	0%
Expected volatility	37.36%-131.49%	79.90%-139.65%

Summary of Stock Option Activity

Option activity under the Company’s Amended and Restated 2003 Stock Incentive Plan for the three months ended March 31, 2015 was as follows:


				Outstanding Options
	Shares Available For Grant			Number of Shares		Weighted- Average Exercise Price
Balance, December 31, 2014		7,073,726			12,655,792	$	2.47
Shares reserved		—			—		—
Options granted		(1,577,000	)		1,577,000		1.12
Options exercised		—			—		—
Options cancelled		—			—		—

Balance, March 31, 2015		5,496,726			14,232,792	$	2.32

Summary of Significant Accounting Policies - Additional Information (Detail) $ in Millions	3 Months Ended
	Mar. 31, 2015 USD ($)
Schedule Of Significant Accounting Policies [Line Items]
Risks and Uncertainties	The Company is focused on the design and development of medical devices that use neuroblocking technology to treat obesity, metabolic diseases and other gastrointestinal disorders and currently has approvals to commercially launch the Maestro Rechargeable System in the United States and in Australia, the European Economic Area and other countries that recognize the European CE Mark. The Company has devoted substantially all of its resources to recruiting personnel, developing its product technology, obtaining patents to protect its intellectual property and raising capital, and thus far has only derived revenues from its primary business activity in 2012.Most of the products developed by the Company require approval from the U.S. Food and Drug Administration (FDA) or corresponding foreign regulatory agencies prior to commercial sales. The Company received FDA approval on January 14, 2015 for vBloc Therapy, delivered via the Maestro Rechargeable System, and has begun a controlled commercial launch at select bariatric centers of excellence in the United States. The Maestro Rechargeable System has also received CE Mark and is listed on the Australian Register of Therapeutic Goods. The medical device industry is characterized by frequent and extensive litigation and administrative proceedings over patent and other intellectual property rights. Whether a product infringes a patent involves complex legal and factual issues, the determination of which is often difficult to predict, and the outcome may be uncertain until the court has entered final judgment and all appeals are exhausted. The Company’s competitors may assert that its products or the use of the Company’s products are covered by U.S. or foreign patents held by them. The Company’s activities are subject to significant risk and uncertainties, including the ability to obtain additional financing and there can be no assurance that the Company will be successful in obtaining additional financing on favorable terms, or at all. If adequate funds are not available, the Company may have to delay development or commercialization of products or license to third parties the rights to commercialize products or technologies that the Company would otherwise seek to commercialize.
Fair value of debt	$ 2.5
Cash equivalents maturity period	90 days

Computation of Basic and Diluted Net Loss Per Share (Detail) - USD ($)	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Numerator:
Net loss	$ (7,174,023)	$ (6,732,324)
Denominator for basic and diluted net loss per share:
Weighted-average common shares outstanding	72,735,912	65,656,591
Net loss per share-basic and diluted	$ (0.10)	$ (0.10)

- Definition

The portion of profit or loss for the period, net of income taxes, which is attributable to the parent.

+ References + Details

Potential Shares of Common Stock Not Included in Calculation of Diluted Net Loss per Share (Detail) - shares	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Stock Option Outstanding
Anti-dilutive Securities
Anti-dilutive as of end of each period	14,232,792	11,666,051
Warrants to purchase common stock
Anti-dilutive Securities
Anti-dilutive as of end of each period	24,199,705	24,411,389

Liquidity and Management's Plans - Additional Information (Detail) - USD ($)			3 Months Ended	4 Months Ended
	May 08, 2015	Jun. 13, 2014	Mar. 31, 2015	May 08, 2015	Dec. 31, 2014	Mar. 31, 2014	Dec. 31, 2013
Liquidity and Managements Plans [Line Items]
Cash and cash equivalents			$ 11,432,234		$ 11,619,167	$ 24,436,034	$ 23,297,479
Cowen and Company Llc
Liquidity and Managements Plans [Line Items]
Cash and cash equivalents			11,400,000
Gross proceeds before deducting estimate offering expenses			$ 7,600,000
Cowen and Company Llc \| Maximum
Liquidity and Managements Plans [Line Items]
Gross proceeds before deducting estimate offering expenses		$ 25,000,000
Subsequent Event \| Cowen and Company Llc
Liquidity and Managements Plans [Line Items]
Gross proceeds before deducting estimate offering expenses	$ 17,400,000			$ 6,700,000

Inventory - Additional Information (Detail) - USD ($)	Mar. 31, 2015	Dec. 31, 2014
Inventory [Line Items]
Long-term inventory	$ 776,000	$ 825,000

Current Inventory (Detail) - USD ($)	Mar. 31, 2015	Dec. 31, 2014
Inventory [Line Items]
Raw materials	$ 419,085	$ 322,157
Work-in-process	679,036	632,615
Finished goods	28,176	25,747
Inventory	$ 1,126,297	$ 980,519

Commitments and Contingencies - Additional Information (Detail) - USD ($)	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Loss Contingencies [Line Items]
Operating lease agreement expiration date	Sep. 30, 2015
Total rent expense	$ 67,718	$ 67,718
Number of months that require patients to be followed out in clinical trials	60 months

Future Minimum Lease Payment (Detail)	Mar. 31, 2015 USD ($)
Leases Future Minimum Payments [Line Items]
Remaining nine months in 2015	$ 147,859

Notes Payable - Additional Information (Detail)				3 Months Ended
Notes Payable - Additional Information (Detail)	May 09, 2013 USD ($)	Apr. 23, 2012 USD ($) Installment	Apr. 16, 2012 USD ($) $ / shares shares	Mar. 31, 2015 USD ($)
Debt Instrument [Line Items]
Principal amount of loan		$ 10,000,000	$ 10,000,000
Amount used to repay outstanding debt		$ 4,700,000
Repayment of principal amount				$ 333,333
Loan agreement with fixed annual rate		8.00%
Final payment fee percentage				5.00%
Conditional amount to be placed in restricted account at SVB				$ 7,500,000
Silicon Valley Bank
Debt Instrument [Line Items]
Term loans, agreed sum			$ 20,000,000
Number of installments of repayment of debt \| Installment		30
Issued warrant \| shares			106,746
Time for exercising warrant			10 years
Warrants exercise price \| $ / shares			$ 2.34
Silicon Valley Bank \| First Amendment
Debt Instrument [Line Items]
Success fee percentage in the event the Company receives FDA approval for the Maestro Rechargeable System	$ 187,000
Silicon Valley Bank \| First Amendment \| November 15, 2013
Debt Instrument [Line Items]
Cumulative aggregate proceeds from new capital transactions	5,000,000
Silicon Valley Bank \| First Amendment \| April 15, 2014
Debt Instrument [Line Items]
Cumulative aggregate proceeds from new capital transactions	$ 10,000,000
Silicon Valley Bank \| First Amendment \| Until it received FDA approval for the Maestro Rechargeable System
Debt Instrument [Line Items]
Liquidity ratio (unrestricted cash divided by outstanding debt)	1.25
Silicon Valley Bank \| First Amendment \| After FDA approval for the Maestro Rechargeable System
Debt Instrument [Line Items]
Liquidity ratio (unrestricted cash divided by outstanding debt)	0.75

Schedule of Debt Principal Payments (Detail)	Mar. 31, 2015 USD ($)
Debt Instrument [Line Items]
Remaining nine months in 2015	$ 2,000,000
Less: Original issue discount	(10,313)
Notes payable, net	$ 1,989,687

Stock-Based Compensation Expense for Stock-Based Awards (Detail) - USD ($)	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Stock-based compensation	$ 1,372,076	$ 1,537,378
Selling, general and administrative
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Stock-based compensation	1,036,446	1,155,555
Research and development
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Stock-based compensation	335,630	381,823
Employees
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Stock-based compensation	1,387,924	1,490,341
Nonemployees
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Stock-based compensation	$ (15,848)	$ 47,037

Stock Options - Additional Information (Detail) $ in Millions	3 Months Ended
	Mar. 31, 2015 USD ($)
Schedule Of Stock Options [Line Items]
Total unrecognized compensation costs related to non-vested stock options	$ 9.3
Total unrecognized compensation costs related to non-vested stock options, weighted-average period of recognition	2 years 1 month 17 days

Estimated Grant-Date Fair Values of Employee Stock Options (Detail)	3 Months Ended
	Mar. 31, 2015	Mar. 31, 2014
Employees
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Risk-free interest rates, minimum	1.65%
Risk-free interest rate, maximum	1.80%
Expected life	6 years 3 months
Expected dividends	0.00%
Expected volatility, minimum	110.32%
Expected volatility, maximum	111.77%
Nonemployees
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Risk-free interest rates, minimum	0.03%	0.21%
Risk-free interest rate, maximum	1.77%	2.63%
Expected dividends	0.00%	0.00%
Expected volatility, minimum	37.36%	79.90%
Expected volatility, maximum	131.49%	139.65%
Nonemployees \| Minimum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expected life	3 months	1 year 3 months
Nonemployees \| Maximum
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expected life	8 years 6 months 4 days	9 years 6 months 4 days

Stock-Based Compensation - Additional Information (Detail)	3 Months Ended
	Mar. 31, 2014 shares
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
New employee grants	0

Summary of Stock Option Activity (Detail) - $ / shares	3 Months Ended
Summary of Stock Option Activity (Detail) - $ / shares	Mar. 31, 2015	Mar. 31, 2014
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Outstanding Options, Number of Shares, Options granted		0
Stock Incentive Plan 2003
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares Available For Grant, Beginning Balance	7,073,726
Shares Available For Grant, Shares reserved	0
Shares Available For Grant, Options granted	(1,577,000)
Shares Available For Grant, Options exercised	0
Shares Available For Grant, Options cancelled	0
Shares Available For Grant, Ending Balance	5,496,726
Outstanding Options, Number of Shares, Beginning Balance	12,655,792
Outstanding Options, Number of Shares, Shares reserved	0
Outstanding Options, Number of Shares, Options granted	1,577,000
Outstanding Options, Number of Shares, Options exercised	0
Outstanding Options, Number of Shares, Options cancelled	0
Outstanding Options, Number of Shares, Ending Balance	14,232,792
Outstanding Options, Weighted-Average Exercise Price, Beginning Balance	$ 2.47
Outstanding Options, Weighted-Average Exercise Price, Shares reserved	0
Outstanding Options, Weighted-Average Exercise Price, Options granted	1.12
Outstanding Options, Weighted-Average Exercise Price, Options exercised	0
Outstanding Options, Weighted-Average Exercise Price, Options cancelled	0
Outstanding Options, Weighted-Average Exercise Price, Ending Balance	$ 2.32

Stock Sales - Additional Information (Detail) - USD ($) $ / shares in Units, $ in Millions				3 Months Ended
	Jun. 13, 2014	Jun. 10, 2014	Jul. 31, 2013	Mar. 31, 2015
Cowen and Company Llc
Class of Stock [Line Items]
Gross proceeds before deducting estimate offering expenses				$ 7.6
Commission or discount percentage on issue of shares	3.00%
Number of shares sold				5,518,536
Weighted average selling price of shares sold				$ 1.37
Canaccord Genuity Inc
Class of Stock [Line Items]
Gross proceeds before deducting estimate offering expenses		$ 19.9
Commission or discount percentage on issue of shares			2.00%
Number of shares sold		11,923,977
Weighted average selling price of shares sold		$ 1.67
Agreement termination effective date		Jun. 10, 2014
Maximum \| Cowen and Company Llc
Class of Stock [Line Items]
Gross proceeds before deducting estimate offering expenses	$ 25.0
Maximum \| Canaccord Genuity Inc
Class of Stock [Line Items]
Gross proceeds before deducting estimate offering expenses			$ 20.0