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

Megan Driscoll
Office Phone: +1 646 517 4220

(in thousands, except shares and per share data)
Three Months Ended September 30, Nine Months Ended September 30,
2017 2016 2017 2016
Revenue$2,787 $ $6,222 $
Revenue, related party 773 2,621
Total revenue2,787 773 6,222 2,621
Cost of revenue1,314 644 3,127 1,938
Gross profit1,473 129 3,095 683
Operating expenses:
Research and development2,798 2,169 7,958 7,267
Selling, general and administrative7,813 2,412 19,606 5,387
Total operating expenses10,611 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 diluted16,747,791 963,724 16,649,447 706,688

(in thousands, except shares and par value data)
September 30, 2017 December 31, 2016
Current assets:
Cash and cash equivalents$12,083 $72,975
Short-term investments41,289 2,500
Accounts receivable, net2,515
Accounts receivable, related party 515
Inventory911 827
Other current assets1,006 1,244
Total current assets57,804 78,061
Property and equipment, net1,274 717
Total assets$59,078 $78,778
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable and accrued expenses$1,143 $595
Accrued compensation2,671 2,497
Accrued clinical expenses140 101
Deferred revenue193 121
Other current liabilities1,477 1,278
Current portion of long-term loan957
Total current liabilities6,581 4,592
Deferred rent26
Long-term loan, excluding current portion8,955 9,881
Total long-term liabilities8,981 9,881
Total liabilities15,562 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, respectively17 17
Additional paid-in capital144,757 140,898
Accumulated other comprehensive loss(4) (1)
Accumulated deficit(101,254) (76,609)
Total stockholders’ equity43,516 64,305
Total liabilities and stockholders’ equity$59,078 $78,778

(in thousands)
Nine Months Ended September 30,
2017 2016
Operating activities:
Net loss$(24,645) $(12,972)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization221 142
Stock-based compensation2,102 200
Fair value of stock issued for legal settlement1,398
Loss on disposal of fixed assets 13
Change in fair value of warrant liability 550
Amortization of investment premium, net24 96
Amortization of debt discount31 60
Change in operating assets and liabilities:
Accounts receivable, net(2,515)
Accounts receivable from related party515 121
Inventory(84) (75)
Other current assets240 (2,597)
Accounts payable and accrued expenses534 519
Accrued compensation174 (566)
Accrued clinical expenses39 (774)
Deferred revenue72
Other current and long term liabilities467 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 investments41,500 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 plan210
Proceeds from sale of common stock upon exercise of stock options46 1,065
Net cash provided by financing activities256 15,567
Net decrease in cash and cash equivalents(60,892) (1,032)
Cash and cash equivalents at beginning of period72,975 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 $

Source:Obalon Therapeutics, Inc.