Obalon Therapeutics is exploring financial and strategic alternatives because of the impact of COVID-19 on elective procedures. The weight loss solutions company said on Wednesday that these alternatives could include equity or debt financing; a sale of the company; a business combination; or a merger or a reverse merger with another party.
Obalon has developed a gas-filled intragastric balloon system that treats obesity. The device won a nod from FDA back in 2016.
The company has engaged Canaccord Genuity as its advisor.
Nearly a year ago, Obalon made a similar play, albeit for different reasons. In 2019, the San Diego, CA-based company had cut about 50% of its workforce as it began a plan to shift from a traditional sales model to offering its balloon weight loss system through special centers. The first center was in San Diego.
Now in 2020, that center is hurting, as the restriction on elective procedures and the specific directives issued by the Governor of California regarding COVID-19 has had an immediate impact on its business.
The firm pointed out that patients who are already in treatment with the Obalon Balloon System at the retail treatment centers will continue to receive full care, but sales to new patients have been halted.
In a release, Obalon said, “this is particularly disappointing as the San Diego center had generated an average of approximately 30 new patient sales per month for the three months preceding the Covid-19 crisis, which annualizes to a run-rate approaching $2 million of gross patient sales in that center alone.”
The company said it ended Dec. 31, 2019, with $14 million in cash and equivalents.
Obalon is the second medtech company this week to announce taking drastic measures to combat the financial impact of COVID-19. Conformis, a developer of customized orthopedic implants said on Monday it was going to furlough about one-third (or 80) of its employees as a cost-saving measure.