EnteroMedics Inc., a Roseville company that is developing a pacemaker-like device to combat obesity, said Friday it has raised $15.9 million in a private placement.
The funds will be used to pay for a clinical study testing the device, which blocks electrical impulses to the vagus nerve, telling the brain when the stomach is empty.
CEO Mark Knudson said it took about a week to find investors, despite a dire economy.
"We set out to raise $10 million to $20 million, but in this market people are really looking for great stories," Knudson said. "We had an amazing response."
The double-blinded placebo study has enrolled 294 patients, two-thirds of whom are treated with the device, called VBLOC. Thirteen hospitals in the United States, including the University of Minnesota and the Mayo Clinic, are involved in the clinical trial.
The results will be used when the company files for Food and Drug Administration approval later this year.
The company entered into agreements for the sale of about 13 million shares of common stock, with warrants to purchase 6.6 million shares of stock in the private placement with investors, who were not named in the news release. The warrants will have an exercise price of $1.38 a share. The placement is expected to close Feb. 24.
EnteroMedics' stock closed Friday at $1.15, down 2 cents.