ReShape Lifesciences Inc. - FORM 8-K - EX-99.1 - EXHIBIT 99.1 - November 2, 2018

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Obalon Announces Third Quarter 2018 Financial Results
SAN DIEGO, CA November 2, 2018 (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, 2018.
Third Quarter 2018 highlights:
•
Total revenue of $3.0 million increased 9% vs Q2-18
•
US revenue of $1.8 million increased 17% vs Q2-18
•
US Reorders were $1.4 million, or 79% of US sales, an increase of 45% vs Q2-18
•
Gross margin of 53% increased from 37% in Q2-18
•
Operating loss of $6.6 million improved 31% vs $9.6 million in Q2-18
•
Net cash use of $5.5 million decreased 33% vs. use of $8.3 million in Q2-18
•
Completed Private Placement raising gross proceeds of $10.0 million
•
Received FDA PMA-S approval for the Obalon Touch Inflation System
•
As part of a planned succession, on January 2, 2019 the Company will transition Kelly Huang, Ph.D. to the role of Chief Executive Officer and Andy Rasdal to the role of Chairman of the Board

The Company reported revenue of $3.0 million for the third quarter of 2018, compared to $2.7 million for the second quarter of 2018 and $2.8 million for the third quarter of 2017. Net loss was reported at $6.7 million for the third quarter of 2018, compared to $9.8 million for the second quarter of 2018 and $9.2 million for the third quarter of 2017. Net loss per share for the third quarter of 2018 was $0.35 as compared to $0.57 for the second quarter of 2018 and $0.55 for the third quarter of 2017.
Cost of revenue was $1.4 million for the third quarter of 2018, down from $1.7 million for the second quarter of 2018, and up from $1.3 million for third quarter of 2017. Gross profit for the third quarter of 2018 was $1.6 million, resulting in a gross margin of 53%, compared to a gross

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profit of $1.0 million and gross margin of 37% for the second quarter of 2018 and a gross profit of $1.5 million and gross margin of 53% for the third quarter of 2017.
Research and Development expense for the third quarter of 2018 totaled $2.4 million, down from $3.4 million for the second quarter of 2018 and $2.8 million for the third quarter of 2017. Selling, General and Administrative expense decreased to $5.8 million for the third quarter of 2018 as compared to $7.3 million for the second quarter of 2018 and $7.8 million for the third quarter of 2017.
Operating loss for the third quarter of 2018 was $6.6 million, down from $9.6 million for the second quarter of 2018 and $9.1 million for the third quarter of 2017.
As of September 30, 2018, cash, cash equivalents and short-term investments were $29.7 million.
Call Information
A conference call to discuss third quarter 2018 financial results is scheduled for today, November 2, 2018, 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 6045357.  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: https://edge.media-server.com/m6/p/7sfacf89.
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 http://www.obalon.com.
For Obalon Therapeutics, Inc.
Investor Contact:
William Plovanic

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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,
 
2018
 
2017
 
2018
 
2017
 
(Unaudited)
Revenue
$
2,987

 
$
2,787

 
$
7,065

 
$
6,222

Cost of revenue
1,418

 
1,314

 
3,919

 
3,127

Gross profit
1,569

 
1,473

 
3,146

 
3,095

Operating expenses:
 
 
 

 
 
 
 
Research and development
2,368

 
2,798

 
8,359

 
7,958

Selling, general and administrative
5,836

 
7,813

 
23,092

 
19,606

Total operating expenses
8,204

 
10,611

 
31,451

 
27,564

Loss from operations
(6,635
)
 
(9,138
)
 
(28,305
)
 
(24,469
)
Interest expense, net
(70
)
 
(21
)
 
(164
)
 
(110
)
Other expense
(40
)
 
(11
)
 
(155
)
 
(66
)
      Net loss
(6,745
)
 
(9,170
)
 
(28,624
)
 
(24,645
)
Other comprehensive (loss) income
(3
)
 
15

 
3

 
(3
)
Total comprehensive loss
$
(6,748
)
 
$
(9,155
)
 
$
(28,621
)
 
$
(24,648
)
Net loss per share, basic and diluted
$
(0.35
)
 
$
(0.55
)
 
$
(1.60
)
 
$
(1.48
)
Weighted-average common shares outstanding, basic and diluted
19,457,971

 
16,747,791

 
17,837,297

 
16,649,447
























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OBALON THERAPEUTICS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except shares and par value data)
 
September 30, 2018
 
December 31, 2017
Assets
(Unaudited)
Current assets:
 

 
 

Cash and cash equivalents
$
21,552

 
$
21,108

Short-term investments
8,116

 
23,292

Accounts receivable, net of allowance of $538 and $239, respectively
2,775

 
4,223

Inventory
1,955

 
1,418

Other current assets
909

 
1,714

Total current assets
35,307

 
51,755

Property and equipment, net
1,572

 
1,346

Total assets
$
36,879

 
$
53,101

Liabilities and Stockholders’ Equity
 

 
 

Current liabilities:
 

 
 

Accounts payable
$
1,458

 
$
1,276

Accrued compensation
2,671

 
4,494

Deferred revenue
301

 
510

Other current liabilities
2,328

 
1,773

Current portion of long-term loan
523

 
1,958

Total current liabilities
7,281

 
10,011

     Deferred rent
46

 
13

     Long-term loan, excluding current portion
9,399

 
7,964

Total long-term liabilities
9,445

 
7,977

Total liabilities
16,726

 
17,988

Commitments and contingencies
 
 
 
Stockholders’ equity:
 

 
 

Common stock, $0.001 par value; 100,000,000 and 300,000,000 shares authorized as of September 30, 2018 and December 31, 2017, respectively; 23,280,310 and 17,500,604 shares issued and outstanding as of September 30, 2018 and December 31, 2017, respectively
23

 
18

Additional paid-in capital
160,130

 
146,474

Accumulated other comprehensive loss
(2
)
 
(5
)
Accumulated deficit
(139,998
)
 
(111,374
)
Total stockholders’ equity
20,153

 
35,113

Total liabilities and stockholders’ equity
$
36,879

 
$
53,101
















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OBALON THERAPEUTICS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
 
Nine Months Ended September 30,
 
2018
 
2017
 
(Unaudited)
Operating activities:
 

 
 

Net loss
$
(28,624
)
 
$
(24,645
)
Adjustments to reconcile net loss to net cash used in operating activities:
 
 
 

Depreciation
428

 
221

Stock-based compensation
3,610

 
2,102

Fair value of stock issued for legal settlement
—

 
1,398

Loss on disposal of fixed assets
107

 
—

(Accretion) amortization of investment (discount) premium, net
(20
)
 
24

Amortization of debt discount
29

 
31

Change in operating assets and liabilities:
 
 
 

Accounts receivable, net
1,448

 
(2,515
)
Accounts receivable from related party
—

 
515

Inventory
(537
)
 
(84
)
Other current assets
805

 
240

Accounts payable
135

 
534

Accrued compensation
(1,823
)
 
174

Deferred revenue
(209
)
 
72

Other current and long term liabilities
634

 
506

Net cash used in operating activities
(24,017
)
 
(21,427
)
Investing activities:
 

 
 

Purchases of short-term investments
(9,103
)
 
(80,317
)
Maturities of short-term investments
24,302

 
41,500

Purchase of property and equipment
(867
)
 
(904
)
Net cash provided by (used in) investing activities
14,332

 
(39,721
)
Financing activities:
 

 
 

Fees paid in connection with loan amendment
(30
)
 
—

Proceeds from issuance of common stock, net of issuance costs
9,973

 
—

Proceeds from stock issued under employee stock purchase plan
148

 
210

Proceeds from sale of common stock upon exercise of stock options
38

 
46

Net cash provided by financing activities
10,129

 
256

Net increase (decrease) in cash and cash equivalents
444

 
(60,892
)
Cash and cash equivalents at beginning of period
21,108

 
72,975

Cash and cash equivalents at end of period
$
21,552

 
$
12,083

Supplemental cash flow information:
 

 
 

Interest paid
$
473

 
$
416

Unpaid issuance costs
$
160

 
$
—

Property and equipment in accounts payable
$
106

 
$
126



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ReShape Lifesciences Inc. Reports