San Clemente, CA / ACCESSWIRE / August 14, 2019 / ReShape Lifesciences Inc. (OTCQB: RSLS), a developer of minimally invasive medical devices to treat obesity and metabolic diseases, today reported financial results for the three months ended June 30, 2019.
Recent Highlights and Accomplishments
- Recognized record revenue of $4.4 million in the second quarter of 2019 compared to revenue of $3.1 million in the first quarter of 2019, a 42% increase
- Fully assumed distribution of LAP-BAND® in Australia, recognizing all revenue from the Australian market since April 1st
- Appointed Kevin Condrin as Senior Vice President of Commercial adding extensive bariatric product commercialization experience to the executive leadership team
- Continued patient enrollment in the ENDURE II clinical trial for CE Marking of the ReShape VestTM in the European Union
- Completed private placement offering raising net proceeds of $7.2 million
“I could not be more proud of the record results we achieved this quarter, which reflect the hard work our team has put in to optimize our corporate and sales strategy as we re-entered the market with LAP-BAND,” said Bart Bandy, President and Chief Executive Officer at ReShape Lifesciences. “We have worked diligently to understand the market and to educate surgeons and patients about the demonstrated clinical outcomes of our technology and the committed support from our company. There is a great deal of excitement for the future of ReShape Lifesciences.”
Second Quarter 2019 Financial Results
Revenue for the three months ended June 30, 2019, was $4.4 million compared to $3.1 million in revenues for the three months ended March 31, 2019.
Gross profit for the second quarter of 2019 was $1.8 million compared to $2.2 million for the three months ended March 31, 2019.
Selling, general and administrative expenses for the three months ended June 30, 2019 were $6.8 million compared to $5.4 million for the three months ended March 31, 2019.
Research and development expenses were $1.0 million for the second quarter of 2019 compared to $1.0 million for the three months ended March 31, 2019.
As of June 30, 2019, the Company had cash and cash equivalents totaling $4.4 million following the repayment of approximately $2.2 million of liability associated with the subordinated convertible debentures from the financing completed March 29, 2019.
Conference Call
Management will host an investment community conference call today beginning at 1:30 p.m. Pacific Time 4:30 p.m. Eastern Time.
Individuals interested in listening to the conference call may do so by dialing (877) 280-7473 for domestic callers or (707) 287-9370 for international callers, using Conference ID: 7258935. To listen to a live webcast or a replay, please visit the investor relations section of the Company website at: http://ir.reshapelifesciences.com/.
About ReShape Lifesciences Inc.
ReShape Lifesciences™ is a medical device company focused on technologies to treat obesity and metabolic diseases. The FDA-approved LAP-BAND® Adjustable Gastric Banding System is designed to provide minimally invasive long-term treatment of severe obesity and is an alternative to more invasive surgical stapling procedures such as the gastric bypass or sleeve gastrectomy. The ReShape Vest™ System is an investigational, minimally invasive, laparoscopically implanted medical device that wraps around the stomach, emulating the gastric volume reduction effect of conventional weight-loss surgery, and is intended to enable rapid weight loss in obese and morbidly obese patients without permanently changing patient anatomy.
Forward-Looking Safe Harbor Statement:
This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements generally can be identified by the use of words such as "expect," "plan," "anticipate," "could," "may," "intend," "will," "continue," "future," other words of similar meaning and the use of future dates. These forward-looking statements are based on the current expectations of our management and involve known and unknown risks and uncertainties that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. Such risks and uncertainties include, among others: risks and uncertainties related to our acquisition of the Lap-Band system, including the risk of default under our security agreement with Apollo Endosurgery entered into in connection with the transaction; our ability to continue as a going concern if we are unable to improve our operating results or obtain additional financing; risks related to ownership of our securities as a result of our delisting from the Nasdaq Capital Market; our proposed ReShape Vest product may not be successfully developed and commercialized; our limited history of operations; our losses since inception and for the foreseeable future; our limited commercial sales experience; the competitive industry in which we operate; our dependence on third parties to initiate and perform our clinical trials; the need to obtain regulatory approval for our ReShape Vest and any modifications to our vBloc system and LAP-BAND system; physician adoption of our products; our ability to obtain third party coding, coverage or payment levels; ongoing regulatory compliance; our dependence on third party manufacturers and suppliers; the successful development of our sales and marketing capabilities; our ability to raise additional capital when needed; international commercialization and operation; our ability to attract and retain management and other personnel and to manage our growth effectively; potential product liability claims; the cost and management time of operating a public company; potential healthcare fraud and abuse claims; healthcare legislative reform; and our ability to obtain and maintain intellectual property protection for our technology and products. These and additional risks and uncertainties are described more fully in the Company's filings with the Securities and Exchange Commission, particularly those factors identified as "risk factors" in our annual report on Form 10-K filed May 16, 2019 and subsequent quarterly reports on Form 10-Q. We are providing this information as of the date of this press release and do not undertake any obligation to update any forward-looking statements contained in this document as a result of new information, future events or otherwise, except as required by law.
Investor Contact:
Scott Youngstrom
Chief Financial Officer
ReShape Lifesciences Inc.
949-429-6680 x106
[email protected]
or
Debbie Kaster
Investor Relations
Gilmartin Group
415-937-5403
[email protected]
RESHAPE LIFESCIENCES INC.
Condensed Consolidated Balance Sheets
(dollars in thousands, except per share amounts; unaudited)
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June 30, | December 31, | ||||||
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2019 | 2018 | ||||||
|
ASSETS
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Current assets:
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||||||||
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Cash and cash equivalents
|
$ | 4,355 | $ | 5,548 | ||||
|
Accounts and other receivables (net of allowance for bad debts of $387 at June 30, 2019 and $236 at December 31, 2018)
|
4,625 | 917 | ||||||
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Finished goods inventory
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1,348 | 985 | ||||||
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Prepaid expenses and other current assets
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2,303 | 1,269 | ||||||
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Total current assets
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12,631 | 8,719 | ||||||
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Property and equipment, net
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27 | 64 | ||||||
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Operating lease right-of-use assets
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963 | - | ||||||
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Other intangible assets, net
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29,506 | 36,927 | ||||||
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Other assets
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563 | 563 | ||||||
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Total assets
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$ | 43,690 | $ | 46,273 | ||||
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LIABILITIES AND STOCKHOLDERS' EQUITY
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Current liabilities:
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||||||||
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Accounts payable and accrued liabilities
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$ | 9,853 | $ | 6,456 | ||||
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Asset purchase consideration payable, current
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1,955 | 1,907 | ||||||
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Operating lease liabilities, current
|
343 | - | ||||||
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Total current liabilities
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12,151 | 8,363 | ||||||
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Asset purchase consideration payable, noncurrent
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4,520 | 4,403 | ||||||
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Operating lease liabilities, noncurrent
|
626 | - | ||||||
|
Deferred income taxes
|
1,258 | 1,844 | ||||||
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Common stock warrant liability
|
11,743 | - | ||||||
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Total liabilities
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30,298 | 14,610 | ||||||
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Commitments and contingencies
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Stockholders' equity:
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Preferred stock, 5,000,000 shares authorized:
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Series B convertible preferred stock, $0.01 par value; 3 and 159 shares issued and outstanding at June 30, 2019 and December 31, 2018, respectively
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- | - | ||||||
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Series C convertible preferred stock, $0.01 par value; 95,388 shares issued and outstanding at June 30, 2019 and December 31, 2018
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1 | 1 | ||||||
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Common stock, $0.01 par value; 275,000,000 shares authorized at June 30, 2019 and December 31, 2018; 28,505,233 and 8,770,433 shares issued and outstanding at June 30, 2019 and December 31, 2018, respectively
|
285 | 88 | ||||||
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Additional paid-in capital
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452,492 | 450,564 | ||||||
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Accumulated deficit
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(439,386 | ) | (418,990 | ) | ||||
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Total stockholders' equity
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13,392 | 31,663 | ||||||
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Total liabilities and stockholders' equity
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$ | 43,690 | $ | 46,273 | ||||
RESHAPE LIFESCIENCES INC.
Condensed Consolidated Statements of Operations
(dollars in thousands, except per share amounts; unaudited)
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Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
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2019 | 2018 | 2019 | 2018 | ||||||||||||
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Revenue
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$ | 4,450 | $ | 10 | $ | 7,524 | $ | 149 | ||||||||
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Cost of revenue
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1,593 | 3 | 2,436 | 63 | ||||||||||||
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Gross profit
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2,857 | 7 | 5,088 | 86 | ||||||||||||
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Operating expenses:
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||||||||||||||||
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Selling, general and administrative
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6,792 | 4,327 | 12,213 | 10,663 | ||||||||||||
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Research and development
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960 | 2,053 | 2,016 | 4,553 | ||||||||||||
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Impairment of intangible assets
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6,588 | 14,005 | 6,588 | 14,005 | ||||||||||||
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Total operating expenses
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14,340 | 20,385 | 20,817 | 29,221 | ||||||||||||
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Operating loss
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(11,483 | ) | (20,378 | ) | (15,729 | ) | (29,135 | ) | ||||||||
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Other expense (income), net:
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Interest expense, net
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213 | 1 | 316 | 2 | ||||||||||||
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Loss on extinguishment of debt
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71 | - | 71 | - | ||||||||||||
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Warrant expense
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4,127 | 145 | 4,257 | 145 | ||||||||||||
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Other, net
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612 | (3 | ) | 609 | (2 | ) | ||||||||||
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Loss from continuing operations before income taxes
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(16,506 | ) | (20,521 | ) | (20,982 | ) | (29,280 | ) | ||||||||
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Income tax benefit
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586 | 1,209 | 586 | 2,591 | ||||||||||||
|
Loss from continuing operations
|
(15,920 | ) | (19,312 | ) | (20,396 | ) | (26,689 | ) | ||||||||
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Loss from discontinued operations, net of tax
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- | (15,939 | ) | - | (19,795 | ) | ||||||||||
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Net loss
|
$ | (15,920 | ) | $ | (35,251 | ) | $ | (20,396 | ) | $ | (46,484 | ) | ||||
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Less: Down round adjustments for convertible preferred stock and warrants
|
- | (3,842 | ) | - | (3,842 | ) | ||||||||||
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Net loss attributable to common shareholders
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(15,920 | ) | (39,093 | ) | (20,396 | ) | (50,326 | ) | ||||||||
|
Net loss per share - basic and diluted:
|
||||||||||||||||
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Continuing operations
|
(1.25 | ) | (1,307.98 | ) | $ | (1.94 | ) | $ | (1,881.15 | ) | ||||||
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Discontinued operations
|
- | (900.41 | ) | - | (1,219.65 | ) | ||||||||||
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Net loss per share - basic and diluted
|
$ | (1.25 | ) | $ | (2,208.39 | ) | $ | (1.94 | ) | $ | (3,100.80 | ) | ||||
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Shares used to compute basic and diluted net loss per share
|
12,715,277 | 17,702 | 10,491,220 | 16,230 | ||||||||||||
SOURCE: ReShape Lifesciences Inc.