Obalon Therapeutics, Inc. (OBLN) stock prices were down by 15.13% as of the market closing on May 6th, 2021, bringing the price per share down to USD$2.02. Subsequent pre-market fluctuations have seen the stock rally by 9.90%, bringing it up to UD$2.22.
Merger with ReShape Lifesciences
The pioneer of the FDA-approved balloon system of treatment for obesity announced on November 10th, 2020 that it had signed a non-binding term sheet to merge with ReShape Lifesciences Inc. A definitive agreement was signed on January 19th, 2021 for OBLN’s merger with ReShape Lifesciences.
Revenues and Net Loss
Revenues for the fourth quarter of 2020 were USD$0.1 million, down from the USD$0.8 million reported for the comparative quarter of the prior year. The decrease is primarily attributable to Q2 2020 having seen the indefinite suspension of operations. Net loss for Q4 2020 was reported at USD$1.3 million, down from the USD$4.9 million reported in the fourth quarter of 2019. Net loss per share for Q4 2020 was USD$0.17, a vast improvement on the USD$0.64 net loss reported for Q4 2019.
Expenses and Gross Profits
The company did not report any cost of revenue for the fourth quarter of 2020, whereas Q4 2019 had reported USD$0.6 million in expenses derived from the generation of revenue. Gross profits were down to USD$0.01 million in Q4 2020 as compared to the USD$0.2 million reported in the fourth quarter of the fiscal year 2019.
R&D and Peripheral Costs
Research and Development costs for the last quarter of 2020 were USD$0.2 million, down from the USD$1.5 million reported in the fourth quarter of the year prior. Selling, General, and Administrative costs were also down, from USD$3.6 million in Q4 2019 to USD$1.2 million in the fourth quarter of 2020. Operating loss for Q4 2020 was USD$1.4 million, down from USD$5 million in Q4 2019.
Solid Liquidity Position
OBLN reported having cash and cash equivalents in the amount of USD$3.9 million as of December 31st, 2020. With the ravaging of global economies by the prolonged Covid-19 pandemic, the U.S. government launched its Payroll Protection Program which serves to safeguard employment rates by subsidizing payroll costs. OBLN took advantage of this program and, consequently, had USD$0.4 million in debt related to its PPP loan.
Future Outlook for OBLN
As economies start to slowly recover from the attritional damaged incurred since the onset of the global pandemic, OBLN has focused on staying afloat while strategizing for future profitability in a post-pandemic market. Having shown improvement in some key areas across their financial reports, the company is poised to leverage its solid liquidity position to usher in sustained and significant increases in shareholder value.