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Obalon Announces Second Quarter 2020 Financial Results

Obalon Therapeutics, Inc.
·7 min read

SAN DIEGO, July 30, 2020 (GLOBE NEWSWIRE) -- Obalon Therapeutics, Inc. (NASDAQ:OBLN), a vertically integrated medical technology company with the first and only FDA-approved swallowable, gas-filled intragastric balloon system for the treatment of obesity, today announced its financial results for the second quarter ended June 30, 2020.

Financial results for the second quarter of 2020

Revenue for the second quarter of 2020 was $0.7 million, compared to $0.4 million for the second quarter of 2019, primarily due to reversals of revenue reserves as a result of suspending business operations at the company-branded retail treatment centers. Net loss for the second quarter of 2020 was $4.2 million, compared to $6.8 million for the second quarter of 2019. Net loss per share for the second quarter of 2020 was $0.54, compared to $2.52 for the second quarter of 2019.

Cost of revenue was $0.4 million for the second quarter of 2020, down from $0.7 million for the second quarter of 2019. Gross profit for the second quarter of 2020 was $0.3 million, compared to a gross deficit of $0.3 million for the second quarter of 2019.

Research and Development expense for the second quarter of 2020 totaled $0.8 million, down from $1.8 million for the second quarter of 2019. Selling, General and Administrative expense decreased to $2.4 million for the second quarter of 2020, compared to $4.3 million for the second quarter of 2019.

The Company recognized $1.3 million impairment expense and other charges related to its inventory and long-lived assets during the second quarter of 2020, as a result in the Company's shift in business strategy away from the retail treatment centers to reimbursement.

Operating loss for the second quarter of 2020 was $4.2 million, down from a loss of $6.4 million for the second quarter of 2019.

As of June 30, 2020, the Company had cash and cash equivalents of $6.8 million and $0.4 million of debt related to its Payroll Protection Program loan. The Company intends to continue exploring the potential for third-party reimbursement for the Obalon Balloon System, as well as exploring and evaluating financial alternatives to help meet its capital needs and strategic alternatives that might enhance stockholder value. There is no assurance that any financial or strategic alternative will be identified. If the Company is not able to raise additional capital to meet its needs or to identify a strategic alternative in the best interest of stockholders, it will have to discontinue all operations and may be required to declare bankruptcy or dissolve.

About Obalon Therapeutics, Inc.
Obalon Therapeutics, Inc. (NASDAQ:OBLN) is a San Diego-based company focused on developing and commercializing novel technologies for weight loss.

Cautionary Statement Regarding Forward Looking Statements

This press release contains forward-looking statements that are not purely historical regarding Obalon’s or its management’s intentions, beliefs, expectations and strategies for the future, including those related to new products and their potential benefits. All forward-looking statements and reasons why results might differ included in this press release are made as of the date of this release, based on information currently available to Obalon, deal with future events, are subject to various risks and uncertainties, and actual results could differ materially from those anticipated in those forward looking statements. The risks and uncertainties that may cause actual results to differ materially from Obalon’s current expectations are more fully described in Obalon’s annual report on Form 10-K for the period ended December 31, 2019, periodic reports on Form 10-Q for the period ended June 30, 2020 and March 31, 2020 and its other reports, each as filed with the Securities and Exchange Commission. Except as required by law, Obalon assumes no obligation to update any such forward-looking statement after the date of this report or to conform these forward-looking statements to actual results.

OBALON THERAPEUTICS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(unaudited)
(in thousands, except shares and per share data)

Three Months Ended June 30,

Six Months Ended June 30,

2020

2019

2020

2019

Revenue

$

703

$

386

$

1,483

$

2,161

Cost of revenue

423

679

964

1,911

Gross profit (deficit)

280

(293

)

519

250

Operating expenses:

Research and development

765

1,788

2,022

4,227

Selling, general and administrative

2,362

4,332

6,255

10,536

Asset impairment and other charges

1,310

1,310

Total operating expenses

4,437

6,120

9,587

14,763

Loss from operations

(4,157

)

(6,413

)

(9,068

)

(14,513

)

Interest (expense) income, net

(5

)

(295

)

30

(485

)

Other expense, net

(26

)

(59

)

(411

)

(59

)

Net loss and comprehensive loss

$

(4,188

)

$

(6,767

)

$

(9,449

)

$

(15,057

)

Net loss per share, basic and diluted

$

(0.54

)

$

(2.52

)

$

(1.22

)

$

(6.02

)

Weighted-average common shares outstanding, basic and diluted

7,728,624

2,687,829

7,726,915

2,500,619


OBALON THERAPEUTICS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except shares and par value data)

June 30, 2020

December 31, 2019

Assets

(unaudited)

Current assets:

Cash and cash equivalents

$

6,804

$

14,055

Accounts receivable, net

285

Inventory

1,936

Other current assets

3,971

1,959

Total current assets

10,775

18,235

Property and equipment, net

1,055

1,081

Lease right-of-use assets

748

1,077

Other long-term assets

1,295

Total assets

$

13,873

$

20,393

Liabilities and Stockholders’ Equity

Current liabilities:

Accounts payable

$

1,054

$

648

Accrued compensation

240

820

Deferred revenue

123

424

Other current liabilities

3,603

1,524

Current portion of lease liabilities

579

561

Total current liabilities

5,599

3,977

Lease liabilities long-term

666

567

Long-term debt

430

Total long-term liabilities

1,096

567

Total liabilities

6,695

4,544

Commitments and contingencies

Stockholders’ equity:

Common stock, $0.001 par value; 100,000,000 shares authorized as of June 30, 2020 and December 31, 2019; 7,731,633 and 7,724,100 shares issued and outstanding as of June 30, 2020 and December 31, 2019, respectively

8

8

Additional paid-in capital

189,049

188,271

Accumulated deficit

(181,879

)

(172,430

)

Total stockholders’ equity

7,178

15,849

Total liabilities and stockholders’ equity

$

13,873

$

20,393


OBALON THERAPEUTICS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
(in thousands)

Six Months Ended June 30,

2020

2019

Operating activities:

Net loss

$

(9,449

)

$

(15,057

)

Adjustments to reconcile net loss to net cash used in operating activities:

Depreciation

187

256

Stock-based compensation

762

1,641

Loss on disposal of fixed assets

95

Amortization of right-of-use assets

239

186

Accretion of investment discount, net

(2

)

Amortization of debt discount

70

Impairment of long-lived assets and other charges

1,257

Impairment of inventory

53

Change in operating assets and liabilities:

Accounts receivable, net

285

423

Inventory

(524

)

(157

)

Other current assets

(1,845

)

1,760

Accounts payable

405

(191

)

Accrued compensation

(564

)

(2,712

)

Deferred revenue

(302

)

(32

)

Lease liabilities, net

(147

)

(136

)

Other current and long term liabilities

2,079

(142

)

Net cash used in operating activities

(7,564

)

(13,998

)

Investing activities:

Maturities of short-term investments

2,550

Purchase of property and equipment

(117

)

(20

)

Net cash (used in) provided by investing activities

(117

)

2,530

Financing activities:

Proceeds from long-term loan

430

10,000

Payment on long-term loan

(15,000

)

Proceeds from issuance of common stock, net of issuance costs

8,793

Proceeds from sale of common stock upon exercise of stock options

1

Net cash provided by financing activities

430

3,794

Net decrease in cash and cash equivalents

(7,251

)

(7,674

)

Cash and cash equivalents at beginning of period

14,055

21,187

Cash and cash equivalents at end of period

$

6,804

$

13,513

Supplemental cash flow information:

Interest paid

$

$

563

Unpaid issuance costs

$

$

377

CONTACT: For Obalon Therapeutics, Inc. Investor Contact: Andrew Rasdal President and Chief Executive Officer Obalon Therapeutics, Inc. Office: +1 844 362 2566 arasdal@obalon.com