ReShape Lifesciences Inc. - FORM 8-K - EX-99.1 - EXHIBIT 99.1 - November 3, 2017

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Obalon Announces Third Quarter 2017 Financial Results
SAN DIEGO, CA November 3, 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 third quarter ended September 30, 2017.
Third Quarter 2017 highlights:
•
Revenue grew 42% sequentially over Q2-17 to $2.8 million
•
Gross margin improved to 53%
•
First sales to multi-store aesthetic national account
•
Submitted PMA-Supplement for Obalon Navigation System
•
Submitted PMA-Supplement for Obalon Touch Inflation Dispenser
The Company reported total revenues of $2.8 million for the third quarter of 2017, compared to $0.8 million for the third quarter of 2016. Net loss was reported at $9.2 million compared to a net loss of $5.3 million in the third quarter of 2016 and net loss per share for the quarter was $0.55 as compared to net loss per share of $5.46 in the third quarter of 2016.
Cost of goods sold was $1.3 million during the three months ended September 30, 2017, up from $0.6 million for the prior year period. Gross profit for the third quarter of 2017 was $1.5 million, resulting in a gross margin of 53%, compared to a gross profit of $0.1 million and gross margin of 17% for the third quarter of 2016.
Research and Development expense for the third quarter of 2017 totaled $2.8 million, up from $2.2 million in the third quarter of 2016, and Selling, General and Administrative expense increased to $7.8 million for the third quarter of 2017, compared to $2.4 million in the third quarter 2016. Selling, General and Administrative expenses in the third quarter 2017 included a one-time, non-cash charge of $1.4 million for litigation settlement.
Operating loss for the third quarter of 2017 was $9.1 million, compared to an operating loss of $4.5 million for the third quarter of 2016.
As of September 30, 2017, cash, cash equivalents and short-term investments were $53.4 million and debt was $10.0 million.

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Call Information
A conference call to discuss third quarter 2017 financial results is scheduled for today, November 3, 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 5996758.  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/m6/p/5238gynk.
A replay of the call will be available through November 10, 2017, 10:30 AM EST by calling (855) 859-2056 (U.S.) or (404) 537-3406 (international), using passcode 5996758.  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.
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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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,
 
2017
 
2016
 
2017
 
2016
 
 
 
 
 
 
 
 
 
(Unaudited)
Revenue:
 

 
 

 
 
 
 
Revenue
$
2,787

 
$
—

 
$
6,222

 
$
—

Revenue, related party
—

 
773

 
—

 
2,621

Total revenue
2,787

 
773

 
6,222

 
2,621

Cost of revenue
1,314

 
644

 
3,127

 
1,938

Gross profit
1,473

 
129

 
3,095

 
683

Operating expenses:
 
 
 

 
 

 
 
Research and development
2,798

 
2,169

 
7,958

 
7,267

Selling, general and administrative
7,813

 
2,412

 
19,606

 
5,387

Total operating expenses
10,611

 
4,581

 
27,564

 
12,654

Loss from operations
(9,138
)
 
(4,452
)
 
(24,469
)
 
(11,971
)
Interest expense, net
(21
)
 
(135
)
 
(110
)
 
(425
)
Loss from change in fair value of warrant liability
—

 
(669
)
 
—

 
(550
)
Other expense, net
(11
)
 
(4
)
 
(66
)
 
(26
)
      Net loss
(9,170
)
 
(5,260
)
 
(24,645
)
 
(12,972
)
Other comprehensive income (loss)
15

 
1

 
(3
)
 
5

Net loss and comprehensive loss
$
(9,155
)
 
$
(5,259
)
 
$
(24,648
)
 
$
(12,967
)
Net loss per share, basic and diluted
$
(0.55
)
 
$
(5.46
)
 
$
(1.48
)
 
$
(18.36
)
Weighted-average common shares outstanding, basic and diluted
16,747,791

 
963,724

 
16,649,447

 
706,688




















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OBALON THERAPEUTICS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except shares and par value data)
 
September 30, 2017
 
December 31, 2016
 
(Unaudited)
 
 
Assets
 

 
 

Current assets:
 

 
 

Cash and cash equivalents
$
12,083

 
$
72,975

Short-term investments
41,289

 
2,500

Accounts receivable, net
2,515

 
—

Accounts receivable, related party
—

 
515

Inventory
911

 
827

Other current assets
1,006

 
1,244

Total current assets
57,804

 
78,061

Property and equipment, net
1,274

 
717

Total assets
$
59,078

 
$
78,778

Liabilities and Stockholders’ Equity
 

 
 

Current liabilities:
 

 
 

Accounts payable and accrued expenses
$
1,143

 
$
595

Accrued compensation
2,671

 
2,497

Accrued clinical expenses
140

 
101

Deferred revenue
193

 
121

Other current liabilities
1,477

 
1,278

Current portion of long-term loan
957

 
—

Total current liabilities
6,581

 
4,592

     Deferred rent
26

 
—

     Long-term loan, excluding current portion
8,955

 
9,881

Total long-term liabilities
8,981

 
9,881

Total liabilities
15,562

 
14,473

Commitments and contingencies
 
 
 
Stockholders’ equity:
 

 
 

   Common stock, $0.001 par value; 300,000,000 shares authorized as of September 30, 2017 and December 31, 2016; 17,372,214 and 16,773,205 shares issued and outstanding as of September 30, 2017 and December 31, 2016, respectively
17

 
17

Additional paid-in capital
144,757

 
140,898

Accumulated other comprehensive loss
(4
)
 
(1
)
Accumulated deficit
(101,254
)
 
(76,609
)
Total stockholders’ equity
43,516

 
64,305

Total liabilities and stockholders’ equity
$
59,078

 
$
78,778













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OBALON THERAPEUTICS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
 
Nine Months Ended September 30,
 
2017
 
2016
 
 
 
 
 
(Unaudited)
Operating activities:
 

 
 

Net loss
$
(24,645
)
 
$
(12,972
)
Adjustments to reconcile net loss to net cash used in operating activities:
 

 
 

Depreciation and amortization
221

 
142

Stock-based compensation
2,102

 
200

Fair value of stock issued for legal settlement
1,398

 
—

Loss on disposal of fixed assets
—

 
13

Change in fair value of warrant liability
—

 
550

Amortization of investment premium, net
24

 
96

Amortization of debt discount
31

 
60

Change in operating assets and liabilities:
 

 
 

Accounts receivable, net
(2,515
)
 
—

Accounts receivable from related party
515

 
121

Inventory
(84
)
 
(75
)
Other current assets
240

 
(2,597
)
Accounts payable and accrued expenses
534

 
519

Accrued compensation
174

 
(566
)
Accrued clinical expenses
39

 
(774
)
Deferred revenue
72

 
—

Other current and long term liabilities
467

 
1,690

Net cash used in operating activities
(21,427
)
 
(13,593
)
Investing activities:
 

 
 

Purchases of short-term investments
(80,317
)
 
(18,897
)
Maturities of short-term investments
41,500

 
16,150

Purchase of property and equipment
(904
)
 
(259
)
Net cash used in investing activities
(39,721
)
 
(3,006
)
Financing activities:
 

 
 

Issuance of preferred stock for cash, net of offering costs
—

 
14,517

Fees paid in connection with loan amendment
—

 
(15
)
Proceeds from stock issued under employee stock purchase plan
210

 
—

Proceeds from sale of common stock upon exercise of stock options
46

 
1,065

Net cash provided by financing activities
256

 
15,567

Net decrease in cash and cash equivalents
(60,892
)
 
(1,032
)
Cash and cash equivalents at beginning of period
72,975

 
3,356

Cash and cash equivalents at end of period
$
12,083

 
$
2,324

Supplemental cash flow information:
 

 
 

Interest paid
$
416

 
$
405

Conversion of customer deposit from related party to preferred stock
$
—

 
$
1,283

Property and equipment in accounts payable
$
126

 
$
—



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ReShape Lifesciences Inc. Reports