SAN DIEGO, July 24, 2019 (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, 2019.

Second Quarter 2019 highlights:

  • Further streamlined operations and spend to support new commercial strategy
  • Promoted William Plovanic to President and Chief Financial Officer
  • Appointed Robert MacDonald as Chief Retail Officer to create network of Obalon-branded retail outlets
  • Signed store lease to begin the development of Obalon's first Company-owned retail weight loss center targeted to open in Fall 2019
  • Raised $8.8 million in equity capital
  • Reduced debt by $15 million

"We worked throughout the second quarter to restructure the organization, making key leadership changes, significantly reducing expenses, and improving our balance sheet in preparation of the roll out of our new business model later this fall,” said William J. Plovanic, Obalon’s President and Chief Financial Officer. “There continues to be significant patient interest in our proprietary and patented FDA-approved weight loss solution, and our strategy to create a network of retail centers dedicated to treatment with the Obalon Balloon System is intended make this safe and effective technology available to obese individuals who are frustrated with not being able to lose weight with diet and exercise-alone and who are not interested in surgery. I look forward to providing more detail on the Obalon retail center strategy on our earnings call today.”

Revenues for the second quarter of 2019 was $0.4 million, compared to $2.7 million for the second quarter of 2018, as the Company restructured its operations, eliminating its direct field sales force in advance of a transition to its new strategy and business model. Obalon intends to create a network of Company-owned retail weight loss centers dedicated to delivering the Obalon Balloon System. Net loss for the second quarter of 2019 was $6.8 million, compared to $9.8 million for the second quarter of 2018. Net loss per share for the second quarter of 2019 was $0.25, compared to $0.57 for the second quarter of 2018.

Cost of revenue was $0.7 million for the second quarter of 2019, down from $1.7 million for the second quarter of 2018. Gross deficit for the second quarter of 2019 was $0.3 million, compared to a gross profit of $1.0 million for the second quarter of 2018.

Research and Development expense for the second quarter of 2019 totaled $1.8 million, down from $3.4 million for the second quarter of 2018. Selling, General and Administrative expense decreased to $4.3 million for the second quarter of 2019, compared to $7.3 million for the second quarter of 2018.

Operating loss for the second quarter of 2019 was $6.4 million, down from a loss of $9.6 million for the second quarter of 2018.

As of June 30, 2019, the Company had cash and cash equivalents of $13.5 million and $5.0 million of debt outstanding under its loan and security agreement. The terms of the loan and security agreement require the Company to maintain a cash balance in its account with the lender in an amount equal to the amount of outstanding indebtedness.

Call Information

A conference call to discuss second quarter 2019 financial results is scheduled for today, July 24, 2019, at 8:30 AM Eastern 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 1787979. 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/mmc/p/vvo9cozg.

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. For more information, please visit http://www.obalon.com.

For Obalon Therapeutics, Inc.

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


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

 Three Months Ended June 30, Six Months Ended June 30,
 2019 2018 2019 2018
        
 (Unaudited)
Revenue$386  $2,732  $2,161  $4,078 
Cost of revenue679  1,732  1,911  2,501 
Gross (deficit) profit(293) 1,000  250  1,577 
Operating expenses:       
Research and development1,788  3,352  4,227  5,991 
Selling, general and administrative4,332  7,250  10,536  17,256 
Total operating expenses6,120  10,602  14,763  23,247 
Loss from operations(6,413) (9,602) (14,513) (21,670)
Interest expense, net(295) (57) (485) (94)
Other expense, net(59) (94) (59) (115)
Net loss(6,767) (9,753) (15,057) (21,879)
Other comprehensive income      6 
Net loss and comprehensive loss$(6,767) $(9,753) $(15,057) $(21,873)
Net loss per share, basic and diluted$(0.25) $(0.57) $(0.60) $(1.29)
Weighted-average common shares outstanding, basic and diluted26,877,568  17,039,876  25,005,475  17,013,529 



OBALON THERAPEUTICS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except shares and par value data)

 June 30, 2019 December 31, 2018
Assets(Unaudited)
Current assets:   
Cash and cash equivalents$13,513  $21,187 
Short-term investments  2,548 
Accounts receivable, net of allowance of $900 and $665, respectively447  870 
Inventory2,107  1,580 
Other current assets954  2,462 
Total current assets17,021  28,647 
Property and equipment, net1,038  1,739 
Lease right-of-use assets1,140   
Total assets$19,199  $30,386 
Liabilities and Stockholders’ Equity   
Current liabilities:   
Accounts payable$1,082  $1,159 
Accrued compensation1,093  3,805 
Deferred revenue320  352 
Other current liabilities2,127  1,985 
Current portion of lease liabilities468   
Current portion of long-term loan5,000  9,930 
Total current liabilities10,090  17,231 
Lease liabilities long-term722   
Other long-term liabilities  48 
Total long-term liabilities722  48 
Total liabilities10,812  17,279 
Commitments and contingencies   
Stockholders’ equity:   
Common stock, $0.001 par value; 100,000,000 shares authorized as of June 30, 2019 and December 31, 2018; 35,582,614 and 23,513,292 shares issued and outstanding as of June 30, 2019 and December 31, 2018, respectively36  23 
Additional paid-in capital172,162  161,838 
Accumulated deficit(163,811) (148,754)
Total stockholders’ equity8,387  13,107 
Total liabilities and stockholders’ equity$19,199  $30,386 



OBALON THERAPEUTICS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)

 Six Months Ended June 30,
 2019 2018
 (Unaudited)
Operating activities:   
Net loss$(15,057) $(21,879)
Adjustments to reconcile net loss to net cash used in operating activities:   
Depreciation256  276 
Stock-based compensation1,641  2,603 
Loss on disposal of fixed assets95  107 
Amortization of right-of-use asset186   
Accretion of investment discount, net(2) (7)
Amortization of debt discount70  22 
Change in operating assets and liabilities:   
Accounts receivable, net423  1,174 
Inventory(157) (424)
Other current assets1,760  857 
Accounts payable(191) 275 
Accrued compensation(2,712) (2,362)
Deferred revenue(32) (208)
Lease liabilities, net(136)  
Other current and long term liabilities(142) 842 
     Net cash used in operating activities(13,998) (18,724)
Investing activities:   
Purchases of short-term investments  (995)
Maturities of short-term investments2,550  23,301 
Purchase of property and equipment(20) (657)
     Net cash provided by (used in) investing activities2,530  21,649 
Financing activities:   
Proceeds from long-term loan10,000   
Payment on long-term loan(15,000)  
Proceeds from issuance of common stock, net of issuance costs8,793   
Proceeds from stock issued under employee stock purchase plan  148 
Proceeds from sale of common stock upon exercise of stock options1  31 
     Net cash provided by financing activities3,794  179 
     Net (decrease) increase in cash and cash equivalents(7,674) 3,104 
Cash and cash equivalents at beginning of period21,187  21,108 
Cash and cash equivalents at end of period$13,513  $24,212 
Supplemental cash flow information:   
Interest paid$563  $307 
Unpaid issuance costs$377  $ 
Property and equipment in accounts payable$  $106