10-Q 1 obln-20210331x10q.htm 10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2021

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission File Number: 001-37897

OBALON THERAPEUTICS, INC.

(Exact Name of Registrant as Specified in Its Charter)


Delaware		26-1828101
(State of Incorporation)		(I.R.S. Employer
		Identification No.)

5421 Avenida Encinas, Suite F
Carlsbad, California		92008
(Address of Principal Executive Offices)		(Zip Code)

(844) 362-2566

(Registrant’s Telephone Number, Including Area Code)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common stock, par value $0.001 per share	OBLN	The NASDAQ Stock Market LLC (NASDAQ Global Market)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ⌧ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ⌧ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Securities Exchange Act of 1934.



Large accelerated filer	¨	Accelerated filer	¨
Non-accelerated filer	⌧	Smaller reporting company	⌧
		Emerging growth company	⌧

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financing accounting standards provided pursuant to Section 13(a) of the Exchange Act. ⌧

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ⌧

Total shares of common stock outstanding as of the close of business on May 5, 2021 was 10,021,568


PART I. FINANCIAL INFORMATION		2

Item 1.	Condensed Consolidated Financial Statements (unaudited)	2
	Condensed Consolidated Balance Sheets as of March 31, 2021 and December 31, 2020	2
	Condensed Consolidated Statements of Operations and Comprehensive Loss for the Three months ended March 31, 2021 and 2020	3
	Condensed Consolidated Statements of Stockholders’ Equity for the Three months ended March 31, 2021 and 2020	4
	Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2021 and 2020	6
	Notes to Unaudited Interim Condensed Consolidated Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	20
Item 3.	Quantitative and Qualitative Disclosure about Market Risk	27
Item 4.	Controls and Procedures	27

PART II. OTHER INFORMATION		29

Item 1.	Legal Proceedings	29
Item 1A.	Risk Factors	30
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	31
Item 3.	Defaults Upon Senior Securities	31
Item 4.	Mine Safety Disclosures	31
Item 5.	Other Information	31
Item 6.	Exhibits	32

SIGNATURES		33


	March 31,		December 31,
	2021		2020
Assets
Current assets:
Cash and cash equivalents	$	8,972	$	3,905
Other current assets		3,822		3,930
Total current assets		12,794		7,835
Lease right-of-use assets		421		521
Property and equipment, net		891		957
Clinical-use assets		1,304		1,304
Other long-term assets		1,933		—
Total assets	$	17,343	$	10,617
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	582	$	615
Accrued compensation		602		65
Debt		430		—
Other current liabilities		4,699		3,802
Current portion of lease liabilities		550		564
Total current liabilities		6,863		5,046
Lease liabilities, long-term		344		438
Long-term debt		—		430
Other long-term liabilities		38		38
Total liabilities		7,245		5,952

Commitments and contingencies (See Note 10)

Stockholders’ equity:
Common stock, $0.001 par value; 100,000,000 shares authorized as of March 31, 2021 and December 31, 2020, 10,021,568 and 7,770,698 shares issued and outstanding as of March 31, 2021 and December 31, 2020, respectively		10		8
Additional paid-in capital		199,019		189,421
Accumulated deficit		(188,931)		(184,764)
Total stockholders’ equity		10,098		4,665
Total liabilities and stockholders’ equity	$	17,343	$	10,617


	Three Months ended March 31,
	2021		2020

Revenue	$	—	$	780
Cost of revenue		—		541
Gross profit		—		239
Operating expenses:
Research and development		112		1,257
Selling, general and administrative		4,056		3,893
Total operating expenses		4,168		5,150
Loss from operations		(4,168)		(4,911)
Interest income (expense), net		1		35
Other expense		—		(385)
Net loss		(4,167)		(5,261)
Net loss and comprehensive loss	$	(4,167)	$	(5,261)
Net loss per share, basic and diluted	$	(0.44)	$	(0.68)
Weighted-average common shares outstanding, basic and diluted		9,444,241		7,725,205


				Additional				Total
	Common stock			paid-in		Accumulated		stockholders’
	Shares	Amount		capital		deficit		equity
Balance at December 31, 2020	7,770,698	$	8	$	189,421	$	(184,764)	$	4,665
Stock-based compensation	—		—		91		—		91
Exercise of warrants for the purchase of common stock	2,250,870		2		9,507		—		9,509
Net loss	—		—		—		(4,167)		(4,167)
Balance at March 31, 2021	10,021,568	$	10	$	199,019	$	(188,931)	$	10,098


			Fair value measurements at reporting date using
			Quoted prices		Significant
			in active		other		Significant
			markets for		observable		unobservable
	Balance as of		identical assets		inputs		inputs
	March 31, 2021		(Level 1)		(Level 2)		(Level 3)
Assets:
Cash	$	3,580	$	3,580		—		—
Cash Equivalents:
Money Market Funds		5,392		5,392	$	—	$	—
Total assets	$	8,972	$	8,972	$	—	$	—


	Three months ended
	March 31, 2020
Assumed risk-free interest rate (1)	1.73	%
Assumed volatility (2)	65.13	%
Expected option life (3)	6.1 years
Expected dividend yield (4)	—	%


	Fair value
	measurements at
	reporting date
	using significant
	unobservable
	inputs (Level 3)
Balance as of December 31, 2020	$	38
Issuance of cash settled equity awards		—
Change in fair value of warrant and cash settled award liabilities		—
Balance as of March 31, 2021	$	38


				Weighted-
				average
		Weighted-		remaining
		average		contractual	Aggregate
	Number of	exercise		life	intrinsic value
	shares	price per share		(in years)	(in thousands)
Outstanding at December 31, 2020	1,099,855		11.97	8.70		—
Options granted	—		—
Options exercised	—		—
Options canceled	—		—
Outstanding at March 31, 2021	1,099,855	$	11.97	8.45	$	—
Vested and expected to vest at March 31, 2021	1,099,855	$	11.97	8.45	$	—
Vested and exercisable at March 31, 2021	474,561	$	25.47	6.22	$	—


Stock options issued and outstanding		1,099,855
Restricted stock units issued and outstanding		1,500
Warrants for the purchase of common stock		1,110,999
Authorized for future option and ongoing vesting of award grants		376,329
Authorized for future issuance under ESPP		190,222
Total		2,778,905


Operating leases:
2021 (remaining nine months)	$	433
2022		219
2023		105
2024		108
2025		61
Total undiscounted lease payments - operating leases		926
Less: imputed interest		(32)
Lease liability		894
Less: current portion of lease liability		(550)
Lease liability, less current portion	$	344


	March 31,		December 31,
	2021		2020
Computer hardware	$	261	$	261
Computer software		274		274
Leasehold improvements		427		427
Furniture and fixtures		179		179
Scientific equipment		2,013		2,013
Construction in progress, or CIP		407		407
		3,561		3,561
Less: accumulated depreciation		(2,670)		(2,604)
Total	$	891	$	957

Year ended March 31,

Consolidated statements of operations data:

SEC Form 10-Q filed by Obalon Therapeutics, Inc.