Obalon Announces Third Quarter 2020 Financial Results

SAN DIEGO, Nov. 06, 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 third quarter ended September 30, 2020.

Financial results for the third quarter of 2020

Revenue for the third quarter of 2020 was $44,000, compared to $0.3 million for the third quarter of 2019, with the decrease primarily due to the suspension of operations in the second quarter of 2020. Net loss for the third quarter of 2020 was $1.6 million, compared to $3.7 million for the third quarter of 2019. Net loss per share for the third quarter of 2020 was $0.20, compared to $0.61 for the third quarter of 2019.

Cost of revenue was $41,000 for the third quarter of 2020, down from $0.4 million for the third quarter of 2019. Gross profit for the third quarter of 2020 was $3,000 compared to a gross deficit of $0.1 million for the third quarter of 2019.

Research and Development expense for the third quarter of 2020 totaled $0.3 million, down from $1.2 million for the third quarter of 2019. Selling, General and Administrative expense decreased to $1.3 million for the third quarter of 2020, compared to $2.5 million for the third quarter of 2019.

Operating loss for the third quarter of 2020 was $1.6 million, down from a loss of $3.7 million for the third quarter of 2019.

As of September 30, 2020, the Company had cash and cash equivalents of $5.5 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 suitable strategic alternative, 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 periods ended September 30, 2020, 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 September 30,   Nine Months Ended September 30,
  2020   2019   2020   2019
                               
                               
Revenue $ 44     $ 333     $ 1,527     $ 2,494  
Cost of revenue   41       412       1,005       2,323  
Gross profit (deficit)   3       (79 )     522       171  
Operating expenses:                              
Research and development   271       1,174       2,293       5,401  
Selling, general and administrative   1,291       2,489       7,546       13,025  
Asset impairment and other charges          —       1,310        —  
Total operating expenses   1,562       3,663       11,149       18,426  
Loss from operations   (1,559 )     (3,742 )     (10,627 )     (18,255 )
Interest (expense) income, net   (1 )     37       29       (448 )
Other expense, net         (1 )     (411 )     (60 )
Net loss and comprehensive loss $ (1,560 )   $ (3,706 )   $ (11,009 )   $ (18,763 )
Net loss per share, basic and diluted $ (0.20 )   $ (0.61 )   $ (1.42 )   $ (5.07 )
Weighted-average common shares outstanding, basic and diluted   7,728,639       6,061,248       7,727,494       3,700,538  

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

  September 30,
2020
  December 31,
2019
Assets  (unaudited)         
Current assets:              
Cash and cash equivalents $ 5,514     $ 14,055  
Accounts receivable, net         285  
Inventory         1,936  
Other current assets   3,517       1,959  
Total current assets   9,031       18,235  
Property and equipment, net   982       1,081  
Lease right-of-use assets   646       1,077  
Other long-term assets   1,303        
Total assets $ 11,962     $ 20,393  
Liabilities and Stockholders’ Equity              
Current liabilities:              
Accounts payable $ 656     $ 648  
Accrued compensation   116       820  
Deferred revenue   61       424  
Other current liabilities   3,634       1,524  
Current portion of lease liabilities   583       561  
Total current liabilities   5,050       3,977  
Lease liabilities, long-term   553       567  
Long-term debt   430        
Other long-term liabilities   7        
Total long-term liabilities   990       567  
Total liabilities   6,040       4,544  
Commitments and contingencies              
Stockholders’ equity:              
Common stock, $0.001 par value; 100,000,000 shares authorized as of September 30, 2020 and December 31, 2019; 7,770,698 and 7,724,100 shares issued and outstanding as of September 30, 2020 and December 31, 2019, respectively   8       8  
Additional paid-in capital   189,353       188,271  
Accumulated deficit   (183,439 )     (172,430 )
Total stockholders’ equity   5,922       15,849  
Total liabilities and stockholders’ equity $ 11,962     $ 20,393  

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

  Nine Months Ended September 30,     
  2020    2019 
Operating activities:              
Net loss $ (11,009 )   $ (18,763 )
Adjustments to reconcile net loss to net cash used in operating activities:              
Depreciation   260       361  
Stock-based compensation   1,021       2,300  
Issuance of cash-settled options   7        
Issuance of warrants for the purchase of common stock   45        
Loss on disposal of fixed assets         128  
Amortization of right-of-use assets   378       301  
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       632  
Inventory   (524 )     (117 )
Other long-term assets   (9 )      
Other current assets   (1,389 )     1,604  
Accounts payable   8       (724 )
Accrued compensation   (688 )     (3,097 )
Deferred revenue   (363 )     (69 )
Lease liabilities, net   (293 )     (248 )
Other current and long term liabilities   2,107       (363 )
Net cash used in operating activities   (8,854 )     (17,987 )
Investing activities:              
Maturities of short-term investments         2,550  
Purchase of property and equipment   (117 )     (44 )
Net cash (used in) provided by investing activities   (117 )     2,506  
Financing activities:              
Proceeds from long-term loan   430       10,000  
Payment on long-term loan         (20,000 )
Proceeds from issuance of common and warrants, net of paid issuance costs         15,014  
Proceeds from issuance of common stock, net of issuance costs         8,659  
Proceeds from sale of common stock upon exercise of stock options         1  
Net cash provided by financing activities   430       13,674  
Net decrease in cash and cash equivalents   (8,541 )     (1,807 )
Cash and cash equivalents at beginning of period   14,055       21,187  
Cash and cash equivalents at end of period $ 5,514     $ 19,380  
Supplemental cash flow information:              
Interest paid $     $ 700  
Unpaid issuance costs $     $ 295  

 

For Obalon Therapeutics, Inc.

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

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