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.

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