For Immediate Release

EnteroMedics Closes $16.9 Million Series B Financing

Proceeds to Support Clinical Development of Treatment for Obesity

November 30, 2004

Paul, MN, EnteroMedics Inc., a leading developer of medical devices for the treatment of obesity and gastrointestinal disorders, today announced the closing of a $16.9 million Series B preferred stock financing. Proceeds from the financing will be used to advance the clinical development of the company's lead product candidate for the treatment of obesity.

The financing was led by Bay City Capital with other participating investors including MPM Capital, Aberdare Ventures and Charter Life Sciences. With the closing of the financing, Carl Goldfischer, M.D., of Bay City Capital, Terry Spraker, Ph.D., of Aberdare Ventures and Donald Harrison, M.D., of Charter Life Sciences will join EnteroMedics' board of directors. Current directors, Luke Evnin, Ph.D., of MPM Capital and Mark Knudson, Ph.D., president and CEO of EnteroMedics, will remain on the board.

“EnteroMedics is pleased to have achieved this important financial milestone with this consortium of experienced life science investors,” said Mark Knudson. “This funding not only provides capital for the continued development of our lead obesity product, but also demonstrates critical validation of our fundamental technology platform.”

EnteroMedics' lead product candidate is an implantable system for the treatment of obesity. Based on the company's Vagal Smart Modulation™ (VSM™)therapeutic platform, the product is designed to down-regulate (controllably block) the activity of the vagus nerve. The superior versatility of the VSM platform would make it the first technology to simultaneously control multiple major biological functions related to obesity, including food intake, hunger perception and digestion.

By acting on these key functions, the VSM technology will allow patients to avoid major surgery while providing significant advantages as compared to current drug or device treatments that only address one or two such causes of obesity. Furthermore, VSM treatment is reversible and can be adjusted and programmed to meet an individual patient's treatment needs.

“The innovative nature of the VSM technology, as well as its great potential to treat large market conditions such as obesity, makes EnteroMedics a very attractive investment opportunity,” stated Carl Goldfischer. “EnteroMedics' management team has a strong history of successful product development and we are confident in the team's ability to leverage the VSM platform into high-value products that offer significant benefits to a wide range of patients.”

About EnteroMedics

EnteroMedics Inc. is developing novel medical devices to treat obesity and gastrointestinal disorders through modulation (controllable, reversible modification) of vagus nerve activity. EnteroMedics' products are based on the company's proprietary Vagal Smart Modulation™ (VSM™) system. This technology, which is designed to control vagus nerve signals to key organs, including the stomach and pancreas, offers targeted therapeutic outcomes not currently available with existing technologies. The company's lead product is currently in clinical development for the treatment of obesity.

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