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Obalon Announces Third Quarter 2018 Financial Results

SAN DIEGO, Nov. 02, 2018 (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, 2018.

Third Quarter 2018 highlights:

  • Total revenue of $3.0 million increased 9% vs Q2-18
  • US revenue of $1.8 million increased 17% vs Q2-18
  • US Reorders were $1.4 million, or 79% of US sales, an increase of 45% vs Q2-18
  • Gross margin of 53% increased from 37% in Q2-18
  • Operating loss of $6.6 million improved 31% vs $9.6 million in Q2-18
  • Net cash use of $5.5 million decreased 33% vs. use of $8.3 million in Q2-18
  • Completed Private Placement raising gross proceeds of $10.0 million
  • Received FDA PMA-S approval for the Obalon Touch Inflation System
  • As part of a planned succession, on January 2, 2019 the Company will transition Kelly Huang, Ph.D. to the role of Chief Executive Officer and Andy Rasdal to the role of Chairman of the Board

The Company reported revenue of $3.0 million for the third quarter of 2018, compared to $2.7 million for the second quarter of 2018 and $2.8 million for the third quarter of 2017. Net loss was reported at $6.7 million for the third quarter of 2018, compared to $9.8 million for the second quarter of 2018 and $9.2 million for the third quarter of 2017. Net loss per share for the third quarter of 2018 was $0.35 as compared to $0.57 for the second quarter of 2018 and $0.55 for the third quarter of 2017.

Cost of revenue was $1.4 million for the third quarter of 2018, down from $1.7 million for the second quarter of 2018, and up from $1.3 million for third quarter of 2017. Gross profit for the third quarter of 2018 was $1.6 million, resulting in a gross margin of 53%, compared to a gross profit of $1.0 million and gross margin of 37% for the second quarter of 2018 and a gross profit of $1.5 million and gross margin of 53% for the third quarter of 2017.

Research and Development expense for the third quarter of 2018 totaled $2.4 million, down from $3.4 million for the second quarter of 2018 and $2.8 million for the third quarter of 2017.  Selling, General and Administrative expense decreased to $5.8 million for the third quarter of 2018 as compared to $7.3 million for the second quarter of 2018 and $7.8 million for the third quarter of 2017.

Operating loss for the third quarter of 2018 was $6.6 million, down from $9.6 million for the second quarter of 2018 and $9.1 million for the third quarter of 2017.

As of September 30, 2018, cash, cash equivalents and short-term investments were $29.7 million.

Call Information
A conference call to discuss third quarter 2018 financial results is scheduled for today, November 2, 2018, 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 6045357.  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: https://edge.media-server.com/m6/p/7sfacf89.

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 http://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,
 2018 2017 2018 2017
 (Unaudited)
Revenue$2,987  $2,787  $7,065  $6,222 
Cost of revenue1,418  1,314  3,919  3,127 
Gross profit1,569  1,473  3,146  3,095 
Operating expenses:       
Research and development2,368  2,798  8,359  7,958 
Selling, general and administrative5,836  7,813  23,092  19,606 
Total operating expenses8,204  10,611  31,451  27,564 
Loss from operations(6,635) (9,138) (28,305) (24,469)
Interest expense, net(70) (21) (164) (110)
Other expense(40) (11) (155) (66)
Net loss(6,745) (9,170) (28,624) (24,645)
Other comprehensive (loss) income(3) 15  3  (3)
Total comprehensive loss$(6,748) $(9,155) $(28,621) $(24,648)
Net loss per share, basic and diluted$(0.35) $(0.55) $(1.60) $(1.48)
Weighted-average common shares outstanding, basic and diluted19,457,971  16,747,791  17,837,297  16,649,447 
            

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

 September 30, 2018 December 31, 2017
Assets(Unaudited)
Current assets:   
Cash and cash equivalents$21,552  $21,108 
Short-term investments8,116  23,292 
Accounts receivable, net of allowance of $538 and $239, respectively2,775  4,223 
Inventory1,955  1,418 
Other current assets909  1,714 
Total current assets35,307  51,755 
Property and equipment, net1,572  1,346 
Total assets$36,879  $53,101 
Liabilities and Stockholders’ Equity   
Current liabilities:   
Accounts payable$1,458  $1,276 
Accrued compensation2,671  4,494 
Deferred revenue301  510 
Other current liabilities2,328  1,773 
Current portion of long-term loan523  1,958 
Total current liabilities7,281  10,011 
Deferred rent46  13 
Long-term loan, excluding current portion9,399  7,964 
Total long-term liabilities9,445  7,977 
Total liabilities16,726  17,988 
Commitments and contingencies   
Stockholders’ equity:   
Common stock, $0.001 par value; 100,000,000 and 300,000,000 shares authorized as of September 30, 2018 and December 31, 2017, respectively; 23,280,310 and 17,500,604 shares issued and outstanding as of September 30, 2018 and December 31, 2017, respectively23  18 
Additional paid-in capital160,130  146,474 
Accumulated other comprehensive loss(2) (5)
Accumulated deficit(139,998) (111,374)
Total stockholders’ equity20,153  35,113 
Total liabilities and stockholders’ equity$36,879  $53,101 
        

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

 Nine Months Ended September 30,
 2018 2017
 (Unaudited)
Operating activities:   
Net loss$(28,624) $(24,645)
Adjustments to reconcile net loss to net cash used in operating activities:   
Depreciation428  221 
Stock-based compensation3,610  2,102 
Fair value of stock issued for legal settlement  1,398 
Loss on disposal of fixed assets107   
(Accretion) amortization of investment (discount) premium, net(20) 24 
Amortization of debt discount29  31 
Change in operating assets and liabilities:   
Accounts receivable, net1,448  (2,515)
Accounts receivable from related party  515 
Inventory(537) (84)
Other current assets805  240 
Accounts payable135  534 
Accrued compensation(1,823) 174 
Deferred revenue(209) 72 
Other current and long term liabilities634  506 
Net cash used in operating activities(24,017) (21,427)
Investing activities:   
Purchases of short-term investments(9,103) (80,317)
Maturities of short-term investments24,302  41,500 
Purchase of property and equipment(867) (904)
Net cash provided by (used in) investing activities14,332  (39,721)
Financing activities:   
Fees paid in connection with loan amendment(30)  
Proceeds from issuance of common stock, net of issuance costs9,973   
Proceeds from stock issued under employee stock purchase plan148  210 
Proceeds from sale of common stock upon exercise of stock options38  46 
Net cash provided by financing activities10,129  256 
Net increase (decrease) in cash and cash equivalents444  (60,892)
Cash and cash equivalents at beginning of period21,108  72,975 
Cash and cash equivalents at end of period$21,552  $12,083 
Supplemental cash flow information:   
Interest paid$473  $416 
Unpaid issuance costs$160  $ 
Property and equipment in accounts payable$106  $126 
        
Friday, November 2, 2018 - 08:01