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Obalon Announces Second Quarter 2019 Financial Results
SAN DIEGO, CA 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

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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 were $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.

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




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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 revenue
679

 
1,732

 
1,911

 
2,501

Gross (deficit) profit
(293
)
 
1,000

 
250

 
1,577

Operating expenses:
 
 
 

 
 

 
 

Research and development
1,788

 
3,352

 
4,227

 
5,991

Selling, general and administrative
4,332

 
7,250

 
10,536

 
17,256

Total operating expenses
6,120

 
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 diluted
26,877,568

 
17,039,876

 
25,005,475

 
17,013,529





















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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, respectively
447

 
870

Inventory
2,107

 
1,580

Other current assets
954

 
2,462

Total current assets
17,021

 
28,647

Property and equipment, net
1,038

 
1,739

Lease right-of-use assets
1,140

 
—

Total assets
$
19,199

 
$
30,386

Liabilities and Stockholders’ Equity
 

 
 

Current liabilities:
 

 
 

Accounts payable
$
1,082

 
$
1,159

Accrued compensation
1,093

 
3,805

Deferred revenue
320

 
352

Other current liabilities
2,127

 
1,985

Current portion of lease liabilities
468

 
—

Current portion of long-term loan
5,000

 
9,930

Total current liabilities
10,090

 
17,231

Lease liabilities long-term
722

 
—

Other long-term liabilities
—

 
48

Total long-term liabilities
722

 
48

Total liabilities
10,812

 
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, respectively
36

 
23

Additional paid-in capital
172,162

 
161,838

Accumulated deficit
(163,811
)
 
(148,754
)
Total stockholders’ equity
8,387

 
13,107

Total liabilities and stockholders’ equity
$
19,199

 
$
30,386















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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:
 
 
 

Depreciation
256

 
276

Stock-based compensation
1,641

 
2,603

Loss on disposal of fixed assets
95

 
107

Amortization of right-of-use asset
186

 
—

Accretion of investment discount, net
(2
)
 
(7
)
Amortization of debt discount
70

 
22

Change in operating assets and liabilities:
 
 
 

Accounts receivable, net
423

 
1,174

Inventory
(157
)
 
(424
)
Other current assets
1,760

 
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 investments
2,550

 
23,301

Purchase of property and equipment
(20
)
 
(657
)
Net cash provided by (used in) investing activities
2,530

 
21,649

Financing activities:
 

 
 

Proceeds from long-term loan
10,000

 
—

Payment on long-term loan
(15,000
)
 
—

Proceeds from issuance of common stock, net of issuance costs
8,793

 
—

Proceeds from stock issued under employee stock purchase plan
—

 
148

Proceeds from sale of common stock upon exercise of stock options
1

 
31

Net cash provided by financing activities
3,794

 
179

Net (decrease) increase in cash and cash equivalents
(7,674
)
 
3,104

Cash and cash equivalents at beginning of period
21,187

 
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



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