Obalon Announces Fourth Quarter and Full Year 2020 Financial Results


SAN DIEGO, March 12, 2021 (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 fourth quarter and full year ended December 31, 2020. On November 10, 2020, the Company signed a non-binding term sheet for merger with ReShape Lifesciences Inc. and, on January 20, 2021, announced that a definitive agreement had been signed on January 19, 2020 for a merger with ReShape Lifesciences Inc.

Financial results for the fourth quarter of 2020
Revenue for the fourth quarter of 2020 was $0.1 million, compared to $0.8 million for the fourth quarter of 2019, with the decrease primarily due to the suspension of operations in the second quarter of 2020. Net loss for the fourth quarter of 2020 was $1.3 million, compared to $4.9 million for the fourth quarter of 2019. Net loss per share for the fourth quarter of 2020 was $0.17, compared to $0.64 for the fourth quarter of 2019.

Cost of revenue was $0 for the fourth quarter of 2020, down from $0.6 million for the fourth quarter of 2019. Gross profit for the fourth quarter of 2020 was $0.1 million compared to $0.2 million for the fourth quarter of 2019.

Research and Development expense for the fourth quarter of 2020 totaled $0.2 million, down from $1.5 million for the fourth quarter of 2019. Selling, General and Administrative expense decreased to $1.2 million for the fourth quarter of 2020, compared to $3.6 million for the fourth quarter of 2019.

Operating loss for the fourth quarter of 2020 was $1.4 million, down from a loss of $5.0 million for the fourth quarter of 2019.

As of December 31, 2020, the Company had cash and cash equivalents of $3.9 million and $0.4 million of debt related to its Payroll Protection Program loan.

Financial results for the full year of 2020
Revenue for the full year of 2020 was $1.6 million, compared to $3.3 million for the full year of 2019, with the decrease primarily due to the suspension of operations in the second quarter of 2020. Net loss for the full year of 2020 was $12.3 million, compared to $23.7 million for the full year of 2019. Net loss per share for the full year of 2020 was $1.59, compared to $5.03 for the full year of 2019.

Cost of revenue was $1.0 million for the full year of 2020, down from $3.0 million for the full year of 2019. Gross profit for the full year of 2020 was $0.6 million compared to $0.3 million for the full year of 2019.

Research and Development expense for the full year of 2020 totaled $2.5 million, down from $6.9 million for the full year of 2019. Selling, General and Administrative expense decreased to $8.8 million for the full year of 2020, compared to $16.7 million for the full year of 2019. Operating loss for the full year of 2020 was $12.0 million, down from a loss of $23.2 million for the full year of 2019.

Subsequent Events

From January 1, 2021 through March 2, 2021, the Company’s warrant holders covering 2.3 million shares exercised the warrants and common stock was issued in exchange for proceeds of $9.5 million.

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.

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 the potential merger with ReShape Lifesciences Inc. 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, 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 December 31, Twelve Months Ended December 31,
 2020    2019    2020    2019
Revenue$61  $787  $1,588  $3,281 
Cost of revenue (1)  627   1,004   2,950 
Gross profit (deficit) 62   (160)  584   331 
Operating expenses:           
Research and development 157   1,492   2,450   6,893 
Selling, general and administrative 1,230   3,643   8,776   16,668 
Asset impairment and other charges       1,310    
Total operating expenses 1,387   5,135   12,536   23,561 
Loss from operations (1,326)  (4,975)  (11,952)  (23,230)
Interest (expense) income, net    63   29   (385)
Other expense, net    (1)  (411)  (61)
Net loss and comprehensive loss$(1,326) $(4,913) $(12,334) $(23,676)
Net loss per share, basic and diluted$(0.17) $(0.64) $(1.59) $(5.03)
Weighted-average common shares outstanding, basic and diluted 7,770,698   7,692,673   7,738,355   4,706,775 
                

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

 December 31, 
 2020    2019
Assets     
Current assets:     
Cash and cash equivalents$3,905  $14,055 
Accounts receivable, net    285 
Inventory    1,936 
Other current assets 3,930   1,959 
Total current assets 7,835   18,235 
Lease right-of-use assets 521   1,077 
Property and equipment, net 957   1,081 
Other long-term assets 1,304    
Total assets$10,617  $20,393 
Liabilities and Stockholders’ Equity     
Current liabilities:     
Accounts payable$615  $648 
Accrued compensation 65   820 
Deferred revenue    424 
Other current liabilities 3,802   1,524 
Current portion of lease liabilities 564   561 
Total current liabilities 5,046   3,977 
Lease liabilities, long-term 438   567 
Long-term debt 430    
Other long-term liabilities 38    
Total liabilities 5,952   4,544 
      
Commitments and contingencies      
      
Stockholders’ equity:     
Common stock, $0.001 par value; 100,000,000 shares authorized as of December 31, 2020 and December 31, 2019; 7,770,698 and 7,724,100 shares issued and outstanding as of December 31, 2020 and December 31, 2019, respectively 8   8 
Additional paid-in capital 189,421   188,271 
Accumulated deficit (184,764)  (172,430)
Total stockholders’ equity 4,665   15,849 
Total liabilities and stockholders’ equity$10,617  $20,393 
        

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

 Year ended December 31, 
 2020    2019
Operating activities:     
Net loss$(12,334) $(23,676)
Adjustments to reconcile net loss to net cash used in operating activities:     
Depreciation 340   479 
Stock-based compensation 1,089   2,983 
Fair value of cash-settled options 38    
Issuance of warrants for the purchase of common stock 45    
Amortization of right-of-use assets 503   415 
Loss on disposal of fixed asset    128 
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   585 
Inventory (525)  12 
Other current assets (1,804)  411 
Accounts payable (33)  (543)
Accrued compensation (740)  (2,985)
Deferred revenue (424)  72 
Lease liabilities, net (427)  (364)
Other current and long-term liabilities 2,268   (451)
Net cash used in operating activities (10,409)  (22,866)
Investing activities:     
Maturities of short-term investments    2,550 
Purchases of property and equipment (171)  (194)
Net cash (used in) provided by investing activities (171)  2,356 
Financing activities:     
Proceeds from issuance of common stock and warrants, net of issuance costs    23,377 
Proceeds from long-term loan, net of issuance costs 430   10,000 
Repayments of long-term loans    (20,000)
Proceeds from sale of common stock upon exercise of stock options    1 
Net cash provided by financing activities 430   13,378 
Net (decrease) increase in cash and cash equivalents (10,150)  (7,132)
Cash and cash equivalents at beginning of period 14,055   21,187 
Cash and cash equivalents at end of period$3,905  $14,055 
Supplemental cash flow information:     
Interest paid$  $719 
Income taxes paid$  $ 
Property and equipment in accounts payable$  $32 
        
 

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