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Obalon Announces Third Quarter 2017 Financial Results

SAN DIEGO, Nov. 03, 2017 (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 unaudited financial results as of and for the third quarter ended September 30, 2017. 

Third Quarter 2017 highlights:

  • Revenue grew 42% sequentially over Q2-17 to $2.8 million
  • Gross margin improved to 53%
  • First sales to multi-store aesthetic national account
  • Submitted PMA-Supplement for Obalon Navigation System
  • Submitted PMA-Supplement for Obalon Touch Inflation Dispenser

The Company reported total revenues of $2.8 million for the third quarter of 2017, compared to $0.8 million for the third quarter of 2016. Net loss was reported at $9.2 million compared to a net loss of $5.3 million in the third quarter of 2016 and net loss per share for the quarter was $0.55 as compared to net loss per share of $5.46 in the third quarter of 2016.

Cost of goods sold was $1.3 million during the three months ended September 30, 2017, up from $0.6 million for the prior year period. Gross profit for the third quarter of 2017 was $1.5 million, resulting in a gross margin of 53%, compared to a gross profit of $0.1 million and gross margin of 17% for the third quarter of 2016.

Research and Development expense for the third quarter of 2017 totaled $2.8 million, up from $2.2 million in the third quarter of 2016, and Selling, General and Administrative expense increased to $7.8 million for the third quarter of 2017, compared to $2.4 million in the third quarter 2016. Selling, General and Administrative expenses in the third quarter 2017 included a one-time, non-cash charge of $1.4 million for litigation settlement.   

Operating loss for the third quarter of 2017 was $9.1 million, compared to an operating loss of $4.5 million for the third quarter of 2016.

As of September 30, 2017, cash, cash equivalents and short-term investments were $53.4 million and debt was $10.0 million.

Call Information

A conference call to discuss third quarter 2017 financial results is scheduled for today, November 3, 2017, at 8:30 AM Eastern Daylight Time (5:30 AM Pacific Time). Interested parties may access the conference call by dialing (844) 889-7791 (U.S.) or (661) 378-9934 (international) using passcode 5996758.  Media and individuals will be in a listen-only mode. Participants are asked to dial in a few minutes prior to the call to register for the event. The conference call will also be webcast live at:  http://edge.media-server.com/m6/p/5238gynk.

A replay of the call will be available through November 10, 2017, 10:30 AM EST by calling (855) 859-2056 (U.S.) or (404) 537-3406 (international), using passcode 5996758.  An archive of the webcast will be available for twelve months following the event on the Obalon Therapeutics, Inc. website located at http://investor.obalon.com in the “News & Events” section. 

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. The Obalon management team has over 150 combined years of experience in developing and commercializing novel medical technologies with a track record of financial and clinical excellence. For more information, please visit www.obalon.com.

For Obalon Therapeutics, Inc.

Investor Contact:
William Plovanic
Chief Financial Officer
Obalon Therapeutics, Inc.
Office: +1 760 607 5103
wplovanic@obalon.com

Media:
Megan Driscoll
EvolveMKD
Office Phone: +1 646 517 4220
mdriscoll@evolvemkd.com


OBALON THERAPEUTICS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(in thousands, except shares and per share data)
       
  Three Months Ended September 30,   Nine Months Ended September 30,
  2017   2016   2017   2016
               
  (Unaudited)
Revenue:              
Revenue $ 2,787     $     $ 6,222     $  
Revenue, related party     773         2,621  
Total revenue 2,787     773     6,222     2,621  
Cost of revenue 1,314     644     3,127     1,938  
Gross profit 1,473     129     3,095     683  
Operating expenses:              
Research and development 2,798     2,169     7,958     7,267  
Selling, general and administrative 7,813     2,412     19,606     5,387  
Total operating expenses 10,611     4,581     27,564     12,654  
Loss from operations (9,138 )   (4,452 )   (24,469 )   (11,971 )
Interest expense, net (21 )   (135 )   (110 )   (425 )
Loss from change in fair value of warrant liability     (669 )       (550 )
Other expense, net (11 )   (4 )   (66 )   (26 )
  Net loss (9,170 )   (5,260 )   (24,645 )   (12,972 )
Other comprehensive income (loss) 15     1     (3 )   5  
Net loss and comprehensive loss $ (9,155 )   $ (5,259 )   $ (24,648 )   $ (12,967 )
Net loss per share, basic and diluted $ (0.55 )   $ (5.46 )   $ (1.48 )   $ (18.36 )
Weighted-average common shares outstanding, basic and diluted 16,747,791     963,724     16,649,447     706,688  


OBALON THERAPEUTICS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except shares and par value data)
 
  September 30, 2017   December 31, 2016
  (Unaudited)    
Assets      
Current assets:      
Cash and cash equivalents $ 12,083     $ 72,975  
Short-term investments 41,289     2,500  
Accounts receivable, net 2,515      
Accounts receivable, related party     515  
Inventory 911     827  
Other current assets 1,006     1,244  
Total current assets 57,804     78,061  
Property and equipment, net 1,274     717  
Total assets $ 59,078     $ 78,778  
Liabilities and Stockholders’ Equity      
Current liabilities:      
Accounts payable and accrued expenses $ 1,143     $ 595  
Accrued compensation 2,671     2,497  
Accrued clinical expenses 140     101  
Deferred revenue 193     121  
Other current liabilities 1,477     1,278  
Current portion of long-term loan 957      
Total current liabilities 6,581     4,592  
  Deferred rent 26      
  Long-term loan, excluding current portion 8,955     9,881  
Total long-term liabilities 8,981     9,881  
Total liabilities 15,562     14,473  
       
Commitments and contingencies      
Stockholders’ equity:      
Common stock, $0.001 par value; 300,000,000 shares authorized as of September 30, 2017 and December 31, 2016; 17,372,214 and 16,773,205 shares issued and outstanding as of September 30, 2017 and December 31, 2016, respectively 17     17  
Additional paid-in capital 144,757     140,898  
Accumulated other comprehensive loss (4 )   (1 )
Accumulated deficit (101,254 )   (76,609 )
Total stockholders’ equity 43,516     64,305  
Total liabilities and stockholders’ equity $ 59,078     $ 78,778  


OBALON THERAPEUTICS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
 
  Nine Months Ended September 30,
  2017   2016
       
  (Unaudited)
Operating activities:      
Net loss $ (24,645 )   $ (12,972 )
Adjustments to reconcile net loss to net cash used in operating activities:      
Depreciation and amortization 221     142  
Stock-based compensation 2,102     200  
Fair value of stock issued for legal settlement 1,398      
Loss on disposal of fixed assets     13  
Change in fair value of warrant liability     550  
Amortization of investment premium, net 24     96  
Amortization of debt discount 31     60  
Change in operating assets and liabilities:      
Accounts receivable, net (2,515 )    
Accounts receivable from related party 515     121  
Inventory (84 )   (75 )
Other current assets 240     (2,597 )
Accounts payable and accrued expenses 534     519  
Accrued compensation 174     (566 )
Accrued clinical expenses 39     (774 )
Deferred revenue 72      
Other current and long term liabilities 467     1,690  
Net cash used in operating activities (21,427 )   (13,593 )
Investing activities:      
Purchases of short-term investments (80,317 )   (18,897 )
Maturities of short-term investments 41,500     16,150  
Purchase of property and equipment (904 )   (259 )
Net cash used in investing activities (39,721 )   (3,006 )
Financing activities:      
Issuance of preferred stock for cash, net of offering costs     14,517  
Fees paid in connection with loan amendment     (15 )
Proceeds from stock issued under employee stock purchase plan 210      
Proceeds from sale of common stock upon exercise of stock options 46     1,065  
Net cash provided by financing activities 256     15,567  
Net decrease in cash and cash equivalents (60,892 )   (1,032 )
Cash and cash equivalents at beginning of period 72,975     3,356  
Cash and cash equivalents at end of period $ 12,083     $ 2,324  
Supplemental cash flow information:      
Interest paid $ 416     $ 405  
Conversion of customer deposit from related party to preferred stock $     $ 1,283  
Property and equipment in accounts payable $ 126     $  

 

Obalon Therapeutics, Inc.

IMPORTANT SAFETY INFORMATION
The Obalon Balloon System is intended for adults with a body mass index (BMI) of 30 to 40 kg/m2 willing to follow a diet and exercise program. All Obalon balloons must be removed in 6 months. Patients with prior weight loss surgeries are not eligible. The most common side effects reported were mild abdominal pain and nausea which typically resolved within two weeks. You must take daily acid-blocking medicine prescribed by your doctor. For full Important Safety Information click on Safety Information and Patient Labeling