SAN DIEGO, July 30, 2020 (GLOBE NEWSWIRE) -- Obalon Therapeutics, Inc. 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, 2020.
Financial results for the second quarter of 2020
Revenue for the second quarter of 2020 was $0.7 million, compared to $0.4 million for the second quarter of 2019, primarily due to reversals of revenue reserves as a result of suspending business operations at the company-branded retail treatment centers. Net loss for the second quarter of 2020 was $4.2 million, compared to $6.8 million for the second quarter of 2019. Net loss per share for the second quarter of 2020 was $0.54, compared to $2.52 for the second quarter of 2019.
Cost of revenue was $0.4 million for the second quarter of 2020, down from $0.7 million for the second quarter of 2019. Gross profit for the second quarter of 2020 was $0.3 million, compared to a gross deficit of $0.3 million for the second quarter of 2019.
Research and Development expense for the second quarter of 2020 totaled $0.8 million, down from $1.8 million for the second quarter of 2019. Selling, General and Administrative expense decreased to $2.4 million for the second quarter of 2020, compared to $4.3 million for the second quarter of 2019.
The Company recognized $1.3 million impairment expense and other charges related to its inventory and long-lived assets during the second quarter of 2020, as a result in the Company's shift in business strategy away from the retail treatment centers to reimbursement.
Operating loss for the second quarter of 2020 was $4.2 million, down from a loss of $6.4 million for the second quarter of 2019.
As of June 30, 2020, the Company had cash and cash equivalents of $6.8 million and $0.4 million of debt related to its Payroll Protection Program loan. The Company intends to continue exploring the potential for third-party reimbursement for the Obalon Balloon System, as well as exploring and evaluating financial alternatives to help meet its capital needs and strategic alternatives that might enhance stockholder value. There is no assurance that any financial or strategic alternative will be identified. If the Company is not able to raise additional capital to meet its needs or to identify a strategic alternative in the best interest of stockholders, it will have to discontinue all operations and may be required to declare bankruptcy or dissolve.
About Obalon Therapeutics, Inc.
Obalon Therapeutics, Inc. OBLN is a San Diego-based company focused on developing and commercializing novel technologies for weight loss.
Cautionary Statement Regarding Forward Looking Statements
This press release contains forward-looking statements that are not purely historical regarding Obalon's or its management's intentions, beliefs, expectations and strategies for the future, including those related to new products and their potential benefits. All forward-looking statements and reasons why results might differ included in this press release are made as of the date of this release, based on information currently available to Obalon, deal with future events, are subject to various risks and uncertainties, and actual results could differ materially from those anticipated in those forward looking statements. The risks and uncertainties that may cause actual results to differ materially from Obalon's current expectations are more fully described in Obalon's annual report on Form 10-K for the period ended December 31, 2019, periodic reports on Form 10-Q for the period ended June 30, 2020 and March 31, 2020 and its other reports, each as filed with the Securities and Exchange Commission. Except as required by law, Obalon assumes no obligation to update any such forward-looking statement after the date of this report or to conform these forward-looking statements to actual results.
| OBALON THERAPEUTICS, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (unaudited) (in thousands, except shares and per share data) | |||||||||||||||||||||||||||||||||||||||
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||||||||||||||||||
| 2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||||||||||||||||||
| Revenue | $ | 703 | $ | 386 | $ | 1,483 | $ | 2,161 | |||||||||||||||||||||||||||||||
| Cost of revenue | 423 | 679 | 964 | 1,911 | |||||||||||||||||||||||||||||||||||
| Gross profit (deficit) | 280 | (293 | ) | 519 | 250 | ||||||||||||||||||||||||||||||||||
| Operating expenses: | |||||||||||||||||||||||||||||||||||||||
| Research and development | 765 | 1,788 | 2,022 | 4,227 | |||||||||||||||||||||||||||||||||||
| Selling, general and administrative | 2,362 | 4,332 | 6,255 | 10,536 | |||||||||||||||||||||||||||||||||||
| Asset impairment and other charges | 1,310 | — | 1,310 | — | |||||||||||||||||||||||||||||||||||
| Total operating expenses | 4,437 | 6,120 | 9,587 | 14,763 | |||||||||||||||||||||||||||||||||||
| Loss from operations | (4,157 | ) | (6,413 | ) | (9,068 | ) | (14,513 | ) | |||||||||||||||||||||||||||||||
| Interest (expense) income, net | (5 | ) | (295 | ) | 30 | (485 | ) | ||||||||||||||||||||||||||||||||
| Other expense, net | (26 | ) | (59 | ) | (411 | ) | (59 | ) | |||||||||||||||||||||||||||||||
| Net loss and comprehensive loss | $ | (4,188 | ) | $ | (6,767 | ) | $ | (9,449 | ) | $ | (15,057 | ) | |||||||||||||||||||||||||||
| Net loss per share, basic and diluted | $ | (0.54 | ) | $ | (2.52 | ) | $ | (1.22 | ) | $ | (6.02 | ) | |||||||||||||||||||||||||||
| Weighted-average common shares outstanding, basic and diluted | 7,728,624 | 2,687,829 | 7,726,915 | 2,500,619 | |||||||||||||||||||||||||||||||||||
| OBALON THERAPEUTICS, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands, except shares and par value data) | |||||||||||
| June 30, 2020 | December 31, 2019 | ||||||||||
| Assets | (unaudited) | ||||||||||
| Current assets: | |||||||||||
| Cash and cash equivalents | $ | 6,804 | $ | 14,055 | |||||||
| Accounts receivable, net | — | 285 | |||||||||
| Inventory | — | 1,936 | |||||||||
| Other current assets | 3,971 | 1,959 | |||||||||
| Total current assets | 10,775 | 18,235 | |||||||||
| Property and equipment, net | 1,055 | 1,081 | |||||||||
| Lease right-of-use assets | 748 | 1,077 | |||||||||
| Other long-term assets | 1,295 | — | |||||||||
| Total assets | $ | 13,873 | $ | 20,393 | |||||||
| Liabilities and Stockholders' Equity | |||||||||||
| Current liabilities: | |||||||||||
| Accounts payable | $ | 1,054 | $ | 648 | |||||||
| Accrued compensation | 240 | 820 | |||||||||
| Deferred revenue | 123 | 424 | |||||||||
| Other current liabilities | 3,603 | 1,524 | |||||||||
| Current portion of lease liabilities | 579 | 561 | |||||||||
| Total current liabilities | 5,599 | 3,977 | |||||||||
| Lease liabilities long-term | 666 | 567 | |||||||||
| Long-term debt | 430 | — | |||||||||
| Total long-term liabilities | 1,096 | 567 | |||||||||
| Total liabilities | 6,695 | 4,544 | |||||||||
| Commitments and contingencies | |||||||||||
| Stockholders' equity: | |||||||||||
| Common stock, $0.001 par value; 100,000,000 shares authorized as of June 30, 2020 and December 31, 2019; 7,731,633 and 7,724,100 shares issued and outstanding as of June 30, 2020 and December 31, 2019, respectively | 8 | 8 | |||||||||
| Additional paid-in capital | 189,049 | 188,271 | |||||||||
| Accumulated deficit | (181,879 | ) | (172,430 | ) | |||||||
| Total stockholders' equity | 7,178 | 15,849 | |||||||||
| Total liabilities and stockholders' equity | $ | 13,873 | $ | 20,393 | |||||||
| OBALON THERAPEUTICS, INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) (in thousands) | |||||||||||||||
| Six Months Ended June 30, | |||||||||||||||
| 2020 | 2019 | ||||||||||||||
| Operating activities: | |||||||||||||||
| Net loss | $ | (9,449 | ) | $ | (15,057 | ) | |||||||||
| Adjustments to reconcile net loss to net cash used in operating activities: | |||||||||||||||
| Depreciation | 187 | 256 | |||||||||||||
| Stock-based compensation | 762 | 1,641 | |||||||||||||
| Loss on disposal of fixed assets | — | 95 | |||||||||||||
| Amortization of right-of-use assets | 239 | 186 | |||||||||||||
| Accretion of investment discount, net | — | (2 | ) | ||||||||||||
| Amortization of debt discount | — | 70 | |||||||||||||
| Impairment of long-lived assets and other charges | 1,257 | — | |||||||||||||
| Impairment of inventory | 53 | — | |||||||||||||
| Change in operating assets and liabilities: | |||||||||||||||
| Accounts receivable, net | 285 | 423 | |||||||||||||
| Inventory | (524 | ) | (157 | ) | |||||||||||
| Other current assets | (1,845 | ) | 1,760 | ||||||||||||
| Accounts payable | 405 | (191 | ) | ||||||||||||
| Accrued compensation | (564 | ) | (2,712 | ) | |||||||||||
| Deferred revenue | (302 | ) | (32 | ) | |||||||||||
| Lease liabilities, net | (147 | ) | (136 | ) | |||||||||||
| Other current and long term liabilities | 2,079 | (142 | ) | ||||||||||||
| Net cash used in operating activities | (7,564 | ) | (13,998 | ) | |||||||||||
| Investing activities: | |||||||||||||||
| Maturities of short-term investments | — | 2,550 | |||||||||||||
| Purchase of property and equipment | (117 | ) | (20 | ) | |||||||||||
| Net cash (used in) provided by investing activities | (117 | ) | 2,530 | ||||||||||||
| Financing activities: | |||||||||||||||
| Proceeds from long-term loan | 430 | 10,000 | |||||||||||||
| Payment on long-term loan | — | (15,000 | ) | ||||||||||||
| Proceeds from issuance of common stock, net of issuance costs | — | 8,793 | |||||||||||||
| Proceeds from sale of common stock upon exercise of stock options | — | 1 | |||||||||||||
| Net cash provided by financing activities | 430 | 3,794 | |||||||||||||
| Net decrease in cash and cash equivalents | (7,251 | ) | (7,674 | ) | |||||||||||
| Cash and cash equivalents at beginning of period | 14,055 | 21,187 | |||||||||||||
| Cash and cash equivalents at end of period | $ | 6,804 | $ | 13,513 | |||||||||||
| Supplemental cash flow information: | |||||||||||||||
| Interest paid | $ | — | $ | 563 | |||||||||||
| Unpaid issuance costs | $ | — | $ | 377 | |||||||||||
For Obalon Therapeutics, Inc. Investor Contact: Andrew Rasdal President and Chief Executive Officer Obalon Therapeutics, Inc. Office: +1 844 362 2566 arasdal@obalon.com
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