Charming Stock: Obalon Therapeutics Inc (NASDAQ: OBLN)

On Wednesday, Obalon Therapeutics Inc (NASDAQ: OBLN) started its trading session with the price $0.74 and closed at price of $0.77 by scoring 3.21%. Day range of the stock was $0.72 – $0.78. OBLN stock traded with total volume of 421,559 shares while the average trading capacity remained 609.03K shares.  Earnings per share was $-4.45. OBLN has total market capitalization of $5.97M.

Obalon Therapeutics, Inc. (OBLN) recently reported its financial results for the first quarter ended March 31, 2020 and provided a business update.

Financial results for the first quarter of 2020

Revenue for the first quarter of 2020 was $0.8M, contrast to $1.8M for the first quarter of 2019. Net loss for the first quarter of 2020 was $5.3M, contrast to $8.3M for the first quarter of 2019. Net loss per share for the first quarter of 2020 was $0.68, contrast to $3.59 for the first quarter of 2019.

Cost of revenue was $0.5M for the first quarter of 2020, down from $1.2M for the first quarter of 2019. Gross profit for the first quarter of 2020 was $0.2M, down from $0.5M for the first quarter of 2019.

Research and development expense for the first quarter of 2020 totaled $1.3M, down from $2.4M for the first quarter of 2019. Selling, general and administrative expense reduced to $3.9M for the first quarter of 2020, contrast to $6.2M for the first quarter of 2019.

Operating loss for the first quarter of 2020 was $4.9M, down from a loss of $8.1M for the first quarter of 2020.

In the first quarter ended March 31, 2020, the Company did not record any asset impairment charges, but it would expect to record certain long-lived asset and inventory impairment charges in the second quarter ended June 30, 2020 related to its decision to move away from the retail treatment center model. The Company estimates the second quarter impairment charge to be in a range between $0.8M and $1.4M.

As of March 31, 2020, the Company had cash and cash equivalents of $8.9M and no debt.  The Company believes its cash and cash equivalents as of March 31, 2020 are sufficient to fund its operations only through the end of 2020.  If the Company is not able to raise additional capital to meet its needs, it will not be able to support any ongoing operations and may not be able to settle all of its liabilities. The Company has actively reviewed financial and planned alternatives, including debt and equity financing, whole or partial sale of the company and a reverse merger in order to meet its capital needs and financial obligations, and to date it has been unable to identify a viable alternative for capital raising.

Its earnings per share (EPS) expected to touch remained 39.40% for this year while earning per share for the next 5-years is expected to reach at -6.57%. CMC has a gross margin of 16.10% and an operating margin of 8.00% while its profit margin remained 5.30% for the last 12 months.

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