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Biotech Stock Mailbag: Enteromedics, ARCA Biopharma, Keryx Pharma

Stocks in this article: ETRMABIOKERXVVUSFMSAMRN

BOSTON (TheStreet) -- Before I open this week's Biotech Stock Mailbag, I want to remind everyone to vote for the Best Biotech CEO of 2013 award.

This year's nominees are Francois Naper of NPS Pharma (NPSP), Tony Coles of Onyx Pharma, Bristol-Myer Squibb's  (BMY) Lamberto Andreotti, Bob Hugin of Celgene  (CELG) and Ligand Pharma's  (LGND) John Higgins.

Vote! Twice, if necessary. This year's nominees for Worst Biotech CEO of 2013 will be unveiled on Monday.

I also want to thank David Sable and David Shaywitz for my new nickname -- the Colonel Jessep of biotech and drug stocks. I will try to live up to the new moniker below.

Arthur H. asks:

Adam, have you looked at the new Enteromedics  (ETRM) data issued this week? I'd like to know if you think this will lead to an FDA approval? I know you don't like the obesity pills but Enteromedics device could be a better alternative for people. I'd appreciate hearing what you have to say. Thanks.

Enteromedics is a complicated story but I'm going to try to simplify things, starting with a question:

How much weight did obese patients lose after being implanted with the Enteromedics VBLOC Therapy device?

Enteromedics announced results from the 12-month VBLOC phase III study last February (the study failed) but numerical or even percentage weight loss by patients was not disclosed. This week, Enteromedics announced an 18-month update from the phase III study with only a brief -- and cryptic -- disclosure about actual weight loss.

I found it odd that a company seeking FDA approval for a surgically implanted weight-loss pacemaker would be so coy about disclosing weight loss data, so I asked Enteromedics CFO Greg Lea. Here are the weight-loss data from the VLBOC "Recharge" study:

Patients with active VBLOC Therapy devices lost an average of 9.2% (23 pounds) of their body weight after one year. Patients with implanted devices that were not turned on -- the control arm of the study -- loss 6% (15 pounds) over one year.

This means average VBLOC Therapy weight loss was 3% (8 pounds) adjusted for the control.

Is 8 pounds of weight loss over one year clinically meaningful? That's a question FDA must decide but seems dicey to me given the VBLOC pacemaker must be surgically implanted and treatment requires patients to wear a control belt around their waist for 9-12 hours per day.

Enteromedics' Lea argues that the control arm from the study should be disregarded because patients were surgically implanted with an inactive device. These are not real "placebo" patients, he says, so it's more meaningful to look at the weight loss derived from active VBLOC Therapy on its own.

Fine. A year's worth of VBLOC Therapy resulted in an average 9% weight loss, which is equivalent to the weight loss patients get with a year's worth of Vivus'  (VVUS) Qsymia, minus the surgery, the belt, and the hours upon hours of electrical zaps to your vagus nerve.

I don't find Lea's argument persuasive, but again, it's the FDA's call.

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