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Obalon Announces Second Quarter 2017 Financial Results

SAN DIEGO, Aug. 02, 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 second quarter ended June 30, 2017. 

Second Quarter 2017 highlights:

  • Revenue grew 33% sequentially over Q1-17 to $2.0 million
  • Gross margin improved to 50%
  • First commercial shipments of 6-month product to Middle East in July 2017
  • First US shipments of HPMC, vegetable based capsule, in July 2017

The Company reported total revenues of $2.0 million for the second quarter of 2017, compared to $0.8 million for the second quarter of 2016. Net loss was reported at $7.7 million compared to a net loss of $4.1 million in the second quarter of 2016 and net loss per share for the quarter was $0.46 as compared to net loss per share of $7.15 in the second quarter of 2016.

Cost of goods sold was $1.0 million during the three months ended June 30, 2017, up from $0.7 million for the prior year period. Gross profit for the second quarter of 2017 was $1.0 million, resulting in a gross margin of 50%, compared to a gross profit of $0.1 million and gross margin of 14% for the second quarter of 2016.

Research and Development expense for the second quarter of 2017 totaled $2.8 million, up from $2.6 million in the second quarter of 2016, and Selling, General and Administrative expense increased to $5.9 million for the second quarter of 2017, compared to $1.6 million in the second quarter 2016.

Operating loss for the second quarter of 2017 was $7.6 million, compared to an operating loss of $4.1 million for the second quarter of 2016.

At June 30, 2017, cash, cash equivalents and short-term investments were $60.7 million and long-term debt was $10.0 million.

Call Information

A conference call to discuss second quarter 2017 financial results is scheduled for today, August 2, 2017, 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 61524873.  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/m/p/si96igkx.

A replay of the call will be available through August 9, 2017, 11:30 AM EDT by calling (855) 859-2056 (U.S.) or (404) 537-3406 (international), using passcode 61524873.  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.

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,
  2017   2016   2017   2016
  (Unaudited)
Revenue:              
Revenue $ 1,963     $     $ 3,435     $  
Revenue, related party     779         1,848  
Total revenue 1,963     779     3,435     1,848  
Cost of revenue 990     672     1,813     1,294  
Gross profit 973     107     1,622     554  
Operating expenses:              
Research and development 2,760     2,586     5,160     5,098  
Selling, general and administrative 5,853     1,596     11,793     2,975  
Total operating expenses 8,613     4,182     16,953     8,073  
Loss from operations (7,640 )   (4,075 )   (15,331 )   (7,519 )
Interest expense, net (35 )   (143 )   (89 )   (290 )
Gain from change in fair value of warrant liability     96         119  
Other expense, net (55 )   (9 )   (55 )   (22 )
Net loss (7,730 )   (4,131 )   (15,475 )   (7,712 )
Other comprehensive (loss) income     6     (18 )   4  
Net loss and comprehensive loss $ (7,730 )   $ (4,125 )   $ (15,493 )   $ (7,708 )
Net loss per share, basic and diluted $ (0.46 )   $ (7.15 )   $ (0.93 )   $ (13.37 )
Weighted-average common shares outstanding, basic and diluted 16,637,335     577,659     16,599,891     576,757  


OBALON THERAPEUTICS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except shares and par value data)
 
  June 30, 2017   December 31, 2016
  (Unaudited)    
Assets      
Current assets:      
Cash and cash equivalents $ 5,827     $ 72,975  
Short-term investments 54,898     2,500  
Accounts receivable, net 1,757      
Accounts receivable, related party     515  
Inventory 747     827  
Other current assets 705     1,244  
Total current assets 63,934     78,061  
Property and equipment, net 1,044     717  
Total assets $ 64,978     $ 78,778  
Liabilities and Stockholders’ Equity      
       
Current liabilities:      
Accounts payable and accrued expenses $ 697     $ 595  
Accrued compensation 2,381     2,497  
Accrued clinical expenses 192     101  
Deferred revenue 206     121  
Other current liabilities 1,341     1,278  
Total current liabilities 4,817     4,592  
Deferred rent 39      
Long-term loan, excluding current portion 9,901     9,881  
Total long-term liabilities 9,940       9,881  
Total liabilities 14,757     14,473  
Commitments and contingencies      
Stockholders’ equity:      
Common stock, $0.001 par value; 300,000,000 shares authorized as of June 30, 2017
  and December 31, 2016; 16,822,416 and 16,773,205 shares issued and outstanding as of
  June 30, 2017 and December 31, 2016, respectively
17     17  
Additional paid-in capital 142,307     140,898  
Accumulated other comprehensive loss (19 )   (1 )
Accumulated deficit (92,084 )   (76,609 )
Total stockholders’ equity 50,221     64,305  
Total liabilities and stockholders’ equity
$ 64,978     $ 78,778  



OBALON THERAPEUTICS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
 
  Six Months Ended June 30,
  2017   2016
  (Unaudited)
Operating activities:      
Net loss $ (15,475 )   $ (7,712 )
Adjustments to reconcile net loss to net cash used in operating activities:      
Depreciation and amortization 136     90  
Stock-based compensation 1,079     145  
Loss on disposal of fixed assets     13  
Change in fair value of warrant liability     (119 )
Amortization of investment premium, net 11     55  
Amortization of debt discount 20     43  
Change in operating assets and liabilities:      
Accounts receivable (1,757 )    
Accounts receivable from related party 515     51  
Inventory 80     (114 )
Other current assets 539     46  
Accounts payable and accrued expenses 58     60  
Accrued compensation (116 )   (1,014 )
Accrued clinical expenses 91     (301 )
Deferred revenue 85      
Other current and long term liabilities 326     94  
Net cash used in operating activities (14,408 )   (8,663 )
Investing activities:      
Purchases of short-term investments (64,928 )   (14,979 )
Maturities of short-term investments 12,500     10,150  
Purchase of property and equipment (559 )   (63 )
Net cash used in investing activities (52,987 )   (4,892 )
Financing activities:      
Issuance of preferred stock for cash, net of offering costs     14,517  
Proceeds from stock issued under employee stock purchase plan 210      
Proceeds from sale of common stock upon exercise of stock options 37     11  
Net cash provided by financing activities 247     14,528  
Net (decrease) increase in cash and cash equivalents (67,148 )   973  
Cash and cash equivalents at beginning of period 72,975     3,356  
Cash and cash equivalents at end of period $ 5,827     $ 4,329  
Supplemental cash flow information:      
Interest paid $ 270     $ 266  
Non-cash investing and financing activities:      
Property and equipment in accounts payable $ 96     $ 121  

/EIN News/ --  

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

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