A Roller Coaster Ride For ReShape Lifesciences Stock

Reshape Lifesciences Inc. RSLS experienced some major volatility Monday, skyrocketing from Friday’s closing price of $2.22 to as high as $7.32 before coming back down to trade mostly flat in midday trading.

What Happened

The extreme volatility came after ReShape announced the completion of an investigator meeting related to its ReShape Vest. Reshape says it's on track to begin testing its vest in Europe starting in 2019.

Why It’s Important

ReShape claims its Reshape Vest can help treat obesity and other metabolic diseases. The vest is an implantable device that restricts stomach volume without cutting, stapling or removing portions of the stomach.

“The early Gastric Vest clinical study from Mexico is very promising and we are excited about the outcomes,” Professor Martin Fried, MD, PhD, Head of OB Klinka Center for Treatment of Obesity and Metabolic Disorders in Prague, Czech Republic, said following the meeting.

According to Grand View Research, the global obesity treatment market will reach $15.6 billion in size by 2024. With a market cap of only about $182 million, Reshape LifeSciences could be one of the big winners in obesity treatment if its vest trial yields positive results.

What’s Next

Monday’s news was a positive for ReShape stock, and the spike in trading volume triggered a massive morning run-up in the thinly-traded stock. As of 12:30 p.m. ET Monday, the stock had already generated more than 13 million shares of trading volume, more than 10 times its average three-month daily volume of about 103,940 shares.

The early buying pressure was met with selling pressure as well as traders realize it will likely be a long, winding path to market for the ReShape Vest with trials set to begin in Spain, the Czech Republic, Germany, Belgium and The Netherlands some time in 2019.

For now, traders will be watching for updates on when the trial will begin and when to expect the first set of data.

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