Obalon Therapeutics, Inc.
Q3 2018 Earnings Call Transcript

Published: 2 Nov 2018

[Operator:]

Good day, ladies and gentlemen, and welcome to Obalon Therapeutics’ Third Quarter 2018 Financial Results Conference Call. At this time, all participants are in listen-only mode. Later, we will conduct a question and answer session. Instructions will follow at that time. [Operator Instructions] As a reminder, this conference call is being recorded. I would now like to turn the conference over to Bill Plovanic, Chief Financial Officer of Obalon. You may begin.

[William Plovanic:]

Thank you. Good morning and welcome to Obalon Therapeutics’ third quarter 2018 financial results conference call. With me on today’s call is, Andy Rasdal, Chief Executive Officer and Kelly Huang, President and Chief Operating Officer of Obalon. This morning, the Company issued a press release detailing financial results for the three and nine months ended September 30, 2018. This release can be accessed through the Investor Relations section of the Obalon website at obalon.com. You can also access the webcast of this call from there. Before we get started, I would like to remind everyone that any statements made on today’s conference call that express the belief, expectation, projection, forecast, anticipation or intent regarding future events and the company’s future performance maybe considered forward-looking statements as defined by the Private Securities Litigation Reform Act. Forward-looking statements in this release include Obalon’s financial guidance for the full year 2018 and its expectation regarding the near and long-term growth potential of its business. These forward-looking statements are based on information available to Obalon management as of today and involve risks and uncertainties, which include, but are not limited to, the risk factors disclosed in the periodic and current reports by the Company filed with the SEC from time-to-time including the Form 10-Q for the quarter ended September 30, 2018. Such forward-looking statements are not guarantees of future performance. Actual results may differ materially from those projected in the forward-looking statements. Listeners are cautioned not to place undue reliance on these forward-looking statements, which speaks only as of the date hereof. Obalon specifically disclaims any intent or obligation to update these forward-looking statements except as required by law. The archived webcast will be available for one year on the Company’s website, obalon.com. For the benefit of those who may be listening to the archived webcast, this call was held and recorded on November 2nd, 2018, since then, Obalon may have made announcements related to the topics discussed, so please reference the Company’s most recent press releases and SEC filings. And with that, I’ll turn the call over to Obalon’s CEO, Andy Rasdal.

[Andrew Rasdal:]

Thanks, Bill. Good morning, everyone. Thank you for joining us today. This morning, we announced that as part of a planned succession on January 2nd, 2019, the company will promote Kelly Huang to the role of Chief Executive Officer and I will be moving to the role of Chairman of the Board. More than a year ago, we’ve brought Kelly as Chief Operating Officer to lead Commercial Operations including, sales, marketing, manufacturing and quality assurance. Based on his strong performance in that initial role, in August, we promoted Kelly to the President of Obalon and added the R&D and clinical regulatory functions to his responsibility. Kelly has continued to demonstrate that he is a strong and capable leader and we believe he will be effective [Ph] as CEO of Obalon. After serving as CEO for over ten years, I continue to be as optimistic as ever about Obalon’s future. Most importantly, we have demonstrated that we have a differentiated solution that is functioning as intended to meaningfully address one of the largest global healthcare crises, obesity. I intend to stay actively involved as Chairman, primarily to service the resource to Kelly and will also focus on several key strategic projects to help build the intragastric balloon markets and great sustainable value for Obalon. We will provide more specifics on the transition in roles when the change becomes effected in January. I will now review the highlights of our commercial progress and our products and clinical performance in the third quarter. I will then hand the call over to Kelly to discuss his thoughts about the transition and future strategy. Following that, Bill will review our third quarter financial results and specifics about our underlying business. We will then briefly answer questions. We were pleased to see Q3 2018 global revenue improved 9% as compared to Q2 2018 led by a growth in U.S. revenues of 17% versus the second quarter of 2018. Reorder sales continued to drive growth sequentially rising 45% from Q2 2018 and accounting for 79% of U.S. revenues in Q3 2018. We were very pleased that our customers are finding both clinical and economic value for using the Obalon balloon system in their practices. The number of new accounts sold in Q3 2018 declined as expected giving our revised go to market strategy and our more selective targeting and sell into new accounts that we believe will become productive faster. We continue to be encouraged by our initial results in and potential for the aesthetic retail medicine channel going forward. We now have initial experience with several such accounts of different sizes and practice configurations. The one common denominator we see in this retail medicine channel is a more efficient patient funnel that results in higher patient conversion rates and treatments. However, not all pilot programs are maiden successful out of the gate, but rather, in a new therapy category require very co-operative and flexible partnership approach. We have spoken previously about one of our largest potential retail medicine customers, Sono Bello. Although we have been impressed with our sophisticated patient acquisition version capabilities, we have not been able to obtain and align with them on the best clinical implementations for the Obalon balloon systems. Sono Bello has not expanded into as many new sites as would have expected when we signed a new agreement with them in Q2 2018. At this time, we have declined our request for purchases to fall outside the terms of our agreement and as a result, they have indicated their intent to reduce or continue – discontinue future purchases of our product. We are progressing with other pilots in the retail medicine channel and Kelly will speak in more detail later about our strategy for expanding our presence in this channel. We have continued to work on the approval and potential commercialization of the Obalon Navigation System, which is intended to eliminate the need for extra imaging during balloon placement and to remove what we believe to be the largest barrier to getting a new account on board and productive more quickly. We believe navigation has the potential to both increased adoption in our existing target channels, bariatric surgeons, GIs and aesthetics and could also potentially expand the use of Obalon into new channels with other specialties such as OBGYMs and bariatricians. During Q3 2018, we submitted a new PMA supplement for the Obalon Navigation System including human clinical data from a large multi-center clinical study. This PMA supplement also supports a modification to the Obalon Navigaion System to be compatible with the touch dispenser. In late October 2018, we received a major deficiency letter from the FDA in response to this filing in which the agency requested additional information analysis of clarification. Importantly, there was no specific request for additional human clinical data. We expect to submit a response to the deficiency letter in a timely manner with a goal to meet our initial timeline expectations and still obtain a decision from the FDA on navigation in the first quarter of 2019. However, we cannot actually predict the FDA’s timing for a decision or the outcome of their ultimate decision. As we previously announced, we received FDA approval for our PMA supplement for the touch inflation dispenser in Q3. Although this time, we only intend to launch touch in combination with the navigation system if approved. In Q3 2018, we also improved our financial efficiencies resulting in lower cash use, increased gross margins and reduced OpEx spend through a more focused set of activities. These increased efficiencies, along with the $10 million equity raise in Q3, and access to an additional $10 million loan facility that we’ve previously announced, our extended – or intended to extend our financial runway. Finally, and most importantly, our product performance continues to be strong in the commercial setting. As was observed with the liquid filled balloons, FDA approval does not always mean products perform the same in commercial use as they have in controlled clinical trials, especially in the field of obesity. We believe we have a novel clearly differentiated technology that is performing as intended in practice in the clinical and scientific communities are increasingly taking notes. On November 14, the Commercial Registry Outcomes Data that was systematically collected on over 1300 patients from 108 sites during our first year of commercial use will be presented at the American Society for Metabolic and Bariatric Surgery or ASMBS Conference, the largest medical and scientific meeting focused on obesity. We believe these data will provide further clarity surrounding performance of the Obalon Balloon System and will further differentiate our solution from other temporary weight loss devices including the liquid-filled balloons. That completes my prepared remarks and I would now like to turn the call over Kelly.

[Kelly Huang:]

Thanks, Andy. I joined Obalon in August 2017 as COO based on the opportunity I saw for the Obalon technologies to impact obesity, one of the largest public health concerns globally. Attacking this problem is our primary mission. We believe that our Obalon balloon system offers a true solution for weight-loss practitioners and obese adults. In my view, this opportunity has the potential to create significant and sustainable value for patients, to health systems and our shareholders. I would like to thank Andy and the Board for placing their confidence in me to lead Obalon as CEO beginning next year. Moreover, I am pleased that Andy will stay on as active Chairman allowing me ready access with vast knowledge and experience with Obalon and the obesity markets. During my tenure thus far at Obalon, I have been most impressed by the quality, commitment and passion of the teams. I’ve retained many members of the original team, but I will also rebuild the sales marketing and operational teams in order to take Obalon to the next level of performance. I will provide more detail around our strategy and tactics for 2019 and beyond when my transition as CEO becomes effected in January 2019. In the mean time, I will briefly highlight several key areas that our focus for Obalon. First, patient safety, clinical outcomes, and product quality will continue to be our highest priorities as we establish the differentiated benefits of our weight loss solutions. Second, we look to accelerate our commercial penetration by creating a sustainable viewer demand with an emphasis on expanding in aesthetic retail channels and leverage those capabilities to help traditional providers become more productive. Third, we will continue to advance the new product pipeline, especially the potential approval and if approved, the launch of navigation with the touch dispenser which we believe is on path to obtain a decision from the FDA in the first quarter of 2019. And finally, I will be working closely with Bill Plovanic in an effort to improve our financial performance and financial strategies that ultimately make us more financially independent. And with that, I will now turn the call back over to Bill Plovanic to review the financial results for the third quarter. Bill?

[William Plovanic:]

Thanks, Kelly. Today, I’d like to share details on our financial results for the third quarter ended September 30, 2018. As a reminder, we began U.S. commercialization of the Obalon Balloon System in January 2017, and in the third quarter of 2017, we began shipping our current generation six-months treatment product to our Middle East distributor. I will compare Q3 2018 to Q2 2018 is I believe sequential growth is what the majority of investors are most interested in at this stage of our development. Third quarter revenue was reported at $3 million, compared to $2.7 million in the second quarter of 2018. U.S. revenues of $1.8 million were up compared over 17% compared with $1.5 million in the second quarter of 2018 and that was driven by a 45% increase in reorder kit sales. Reorder kit sales grew to $1.4 million in the Q3 2018 and represented about 79% of US revenues. This was up sequentially from about $1 million of reorder kits sales in the second quarter of 2018, which represented approximately 64% of US revenues. Furthermore, the number of active accounts increased to 62 as of September 30, 2018, up from 50 as of June 30, 2018. And as a reminder, we define inactive accounts as a practice site purchased reorder kits in the prior six months period. In the third quarter 2018, we sold 12 new – net new starter kits, as compared to 26 in the second quarter and 17 in the first quarter of 2018. As a reminder, at the end of the second quarter of 2018, we made changes to the sales force which included consolidating new account acquisitions and existing account business development growth. We also made our new account targeting process more selective with the intent to have new accounts to become more productive faster. International sales were $1.2 million in both the third quarter 2018 and the second quarter 2018. As a reminder, we began shipping our current generation Gen-3 six month duration product to our Middle East distributors in the third quarter of 2017. We continue to believe our greatest opportunity for creating value is meaningfully executing in the U.S. We plan to continue to make the U.S. our highest priority. Our contracts with our Middle East distributors expires at the end of 2019. We expect to comment more about the future of that relationship later in 2019. Cost of revenue was your $1.4 million in the third quarter 2018, as compared to $1.7 million in the second quarter of 2018. Gross profit for the third quarter of 2018 was $1.6 million and that compared to $1 million in the second quarter. Gross margins were up sequentially to 53% in the third quarter versus 37% in the second quarter. Improvements in scraps and increase in the U.S. sales and a reduction in the impact from components of our value-added marketing programs contributed to this sequential improvements. I would also note that overhead continues to be the largest component of cost of goods sold. And therefore, higher volumes would provide improved cost efficiencies. R&D expense for the third quarter of 2018 totaled $2.4 million and that’s compared to the $3.4 million in the second quarter of 2018. The second quarter of 2018 included cost associated with gathering a significant amount of clinical data for support of our PMAS filing for the Navigation System, with the touch dispenser. We have continued to make investments to support development of our new product pipelines primarily intended to make the Obalon balloon system easier to use, more convenient and more economically attractive to help expand our overall market opportunity. SG&A expense for the third quarter totaled $5.8 million, and that’s down from $7.3 million in the second quarter of 2018. At the end of the second quarter of 2018, we revised our go to market strategy, which include the changes to our sales force structure. We also implemented a targeted plan of action to prioritize our operational spend and more efficiently support our existing and future customers. This resulted in a reduced spending across operational functions. The operating loss for the third quarter was $6.6 million, that’s a $3 million improvement from a loss of $9.6 million in the second quarter of 2018. Net loss for the third quarter of 2018 was $6.7 million or $0.35 per share based on diluted - weighted diluted average common shares outstanding, as compared to $9.8 million, or $0.57 per share in the second quarter of 2018. We ended September 30 2018 with $29.7 million in cash, cash equivalents and short-term investments. We reduced our cash usage in Q3 2018 by 33% or $2.8 million to $5.5 million of cash usage in the third quarter of 2018. This compared to $8.3 million in the second quarter of 2018. Combining our cash – access to capital with our amended loan facility and the manner in which we are now managing our spend, we believe that we have extended our cash runway through Q4 2019. Although we may still spend opportunistically to accelerate adoption and market development or raise additional capital. We are tightening our global revenue guidance for 2018 to a range of $9.0 million to $9.9 million from a range of $9.0 million to $10.5 million. For the U.S. we are targeting revenue in a range of $4.6 million to $5.4 million, down from $5.5 million to $6.5 million. For international, we are targeting revenue of approximately $4.4 million, up from a range of $3.5 million to $4 million. The updated U.S. revenue range includes the following assumptions

[Operator:]

Thank you. [Operator Instructions] And our first question comes from David Solomon from Roth Capital Partners. Your line is now open.

[David Solomon:]

Hey guys. Congrats on the quarter and congrats, Kelly on the promotion. Thanks for taking my questions. Now I just wanted to get started with Sono Bello quickly. The way – what are they going to be doing with their inventory? Are they planning on just treating the patients they have? Or what’s – can we get any more color on that? I understand if it could have some material impact on revenue in the next couple quarters, but just want to understand how to think about this?

[Andrew Rasdal:]

Yes, I think for Sono Bello adding an interventional weight loss product to their service offering required a shift in their clinical logistics just as moving the aesthetic retail medicine channel was new for Obalon. I don’t think it’s unexpected there were challenges on both sides to optimize the results. We can’t comment on the specifics but again, we are going to impress with their very sophisticated patient acquisition, conversion capabilities and we’ve learned a great deal that we continue to leverage into that and traditional provider channels. We couldn’t agree to the purchase terms that they demanded that fell outside of the agreement at that time, we are continuing to expand our efforts to the retail medical channel. We are interested in working co-operatively in a partnership approach with all such accounts including Sono Bello, again to establish – this is an important and viable channel for this weight loss treatment. And so, ultimately, how they continue forward will be up to them. We remain open willing and able to work with them under the terms that we had established.

[David Solomon:]

Great. It was my understanding that they are potentially increasing sites. So, that’s why I was just kind of surprised that with this news morning. And then, lastly, on this major deficiency letter for Navigation, can we get just a little bit more color on that? That would be really helpful.

[Andrew Rasdal:]

Yes, sure. I think, the major deficiency letters are not at all unusual. In this case, they have requested additional information analysis and clarification. I think most importantly there was no specific request for any additional human clinical data. We expect to submit or respond to the FDA in a very timely manner and get them back on the clock with the goal to meet our initial timeline expectation and a decision in 2019. We believe that we’ve provide with the FDA with a very significant and extensive evidence of the safety and efficacy to Navigation, both in terms of engineering test and the clinical trial data. We’ve previously said that, we’ve ran a trial with roughly 400 balloon placements at 15 sites with literally 100% success for both the touch and Navigation in that. And so, we believe that Navigation and touch are important to not only to Obalon, the evolution of the category of physicians and patients to both improve ease of use, reliability and potentially improve the economics for both of those and we will continue to vigorously pursue FDA approval in the most timely manner.

[David Solomon:]

Great. So, do you think this would be more of a delay than – is this more of a when than an if or is it hard to say at this point?

[Andrew Rasdal:]

Well, I think, we are still – all that I think we can comment on is that we believe that we are still on track for a decision in the first quarter. Always hesitant to more accurately predict the timing around that or their ultimate decision, but as I said the dataset is very compelling.

[David Solomon:]

Absolutely. And then just lastly, Kelly, congrats again on the promotion and I understand that there have been a number of tangible steps that you guys are trying to take to improve the patient lead to patients treated ratio including a call center and a whole number of other things that you guys recently discussed on our call and I was just wondering if any of the increase in reorder revenue recently has been driven from any of those initiatives? Or are we still waiting to take some of those tangible steps? Thanks for taking my questions guys.

[Kelly Huang:]

Thanks, David. You are right. We are working towards making that process more efficient. I think, as we look at retail medicine, the idea of treating patients like consumers is something that we believe in and we are trying to bring those capabilities to even the traditional private practice account. So we are early in those stages, Dave. And I don’t want to give any quantitative metrics on that. But yes, I do believe that are embracing of our top performing and top potential accounts, as well as adding value-added services to help make this a more retail like experience for their patients is starting to take traction and we will continue as we drive our pilots and formalize larger scale implementations.

[David Solomon:]

Excellent. Thanks for taking my questions guys.

[Andrew Rasdal:]

Thanks, Dave.

[Kelly Huang:]

Thanks, Dave.

[Operator:]

Thank you. And our next question comes from Kyle Rose from Canaccord. Your line is now open.

[Kyle Rose:]

Great. Thank you very much for taking the question. Wanted to kind of circle back on Sono Bello. Maybe could you frame that out a little bit – the decision process and I guess, we know what happened over the course of the last three months since that we last checked in? And then, I guess, help us understand, is it more of a commercial disagreement? Or was there something in the way that they were thinking about treating patients on maybe two balloons or just three balloons? Is there something that was different in the treatment method that they were thinking about that that led to the separation? Or was it purely two parties can’t agree on commercial terms?

[Andrew Rasdal:]

Yes, look, I’d like to be real clear with it. First and foremost, there was no safety concerns from our aspect or I would hope Sono Bello’s that led anything. It is just – this is a very different channel of business for retail medicine to adopt and there is a number of complexities on both sides of that. And so, like I said, we remain extremely impressed with their capabilities in patient acquisition. Their ability to convert that into treatments and then I think to provide the patient with a very sophisticated retail experience. But as we’ve said, I think specifically, there were commercial disagreements on the commercial terms for this quarter. And so, they have expressed that they may either slow or discontinue at this time.

[Kelly Huang:]

But, Kyle, to be clear, in terms of the implementation, we have seen across the field implementation of three balloon therapy for a significant majority of the patients. The product is being used by the field as indicated as a three balloon therapy.

[Kyle Rose:]

Okay. Thank you very much. I appreciate the additional color there. That makes it much clear. And then, Bill, when I think about OpEx, and I know that you guys have made some own changes as far as how you are allocating resources in this – in term period before Navigation comes on. That said, some of the OpEx came in a bit lower than we were expecting. I guess, can you kind of frame this out for us? Is this what we should think as a floor moving forward to kind of base our modeling off of or was there something one-time in terms of where expenses fell this quarter that we should think about when we are modeling?

[William Plovanic:]

Yes, Kyle. So, at the end of the second quarter we had said we made some changes – the revised go to market strategy with the sales force combining the role of the acquisition and the business development into one role. So that component would be a permanent change. Some of the other things just tightened our belt a little on spending it became more efficient. During the first 18 months of commercialization we learned a lot of things. We spent some money in some areas that we learned from and we learned not to reinvest in and we become more frugal in our spending. That said, we are growing a market. We are growing a business here. We expand the sales force or if one we expand the sales force and we continue to invest in new products or technologies, that would require investment on our part. So, I don’t think we can look at this and say that this is sustainable for foreseeable future. I mean, we will continue to invest in the business as we see dips.

[Kyle Rose:]

Okay. Very helpful. Thank you very much and congrats on the opportunity Kelly. And we will keep in touch, Andy.

[Andrew Rasdal:]

Thanks, Kyle.

[Kelly Huang:]

Thanks, Kyle.

[Operator:]

Thank you. And our next question comes from Rick Wise from Stifel. Your line is now open.

[Unidentified Analyst:]

Good morning everyone. This is [Inaudible]on for Rick. Thanks for taking the question.

[Andrew Rasdal:]

Good morning Don.

[Unidentified Analyst:]

Good morning. I just had a question on the pipeline. It’s encouraging to see the touch inflation and approval and nice to hear you are not expecting any impact on the timings for Navigation. But once you do get Navigation, can you provide some color on your expectations for the impact that any implications that could have for new account opening, better utilization and what the kind of rollout strategy might be if initially either again in new accounts or bringing that to some of your current accounts? Also, is that good to have any impact on the Sono Bello relationship?

[Kelly Huang:]

Yes, thanks Joe and Kelly here. We certainly look at Navigation and touch dispenser being a easier implement solution across multiple channels. So, we believe that that will certainly help physicians adopt the Obalon solution. Certainly, we look at customers that we go today and potential new targets potential new areas of territory that we do not cover. So we do look at Navigation as a significant catalyst for the company.

[Andrew Rasdal:]

I think the impact obviously have not having to purchase an X-ray and all of the logistics associated with getting that up, especially and like the retail medicine channel where the retail medicine channel you wouldn’t expect to have X-rays imaging equipment at this time. Eliminating that barrier, I think is potentially very important to – if you are a chain and you are looking to expand to multiple or more accounts, it makes it faster, less expensive, easier and hopefully, ultimately, more profitable for those chains as well.

[Unidentified Analyst:]

Thank you.

[Operator:]

Thanks, Don.

[Operator:]

Thank you. And our next question comes from Ben Haynor from Alliance Global Partners. Your line is now open.

[Ben Haynor:]

Good morning gentlemen. Thanks for taking the questions.

[Andrew Rasdal:]

Hi, Ben.

[Kelly Huang:]

Good morning.

[Ben Haynor:]

First off for me, just on the – I know, you kind of mentioned the retail milestone and how impressed have you been at least with Sono Bello’s kind of conversions funnel? And, what you’ve learned and how you maybe it’ll apply that to bariatric and some of the other channels. I guess, early on, is there any anecdotal information that you can give us on the receptiveness of some of these other channels that maybe aren’t heels to the retail medicine type conversion funnels?

[Andrew Rasdal:]

Yes, absolutely, Ben. I mean, the simple one is, just the number of enquiries you’ll get on the procedure and being able to call these patients back. Our experience with the social media channels is a lot of these patients, you need to call back within minutes, not days. So, we have a lot of interest among our private practice accounts help and do that. We are absolutely converting those people that are interested in the treatment. It’s something that we feel we can help accounts do better and there is a lot of reception to that.

[Kelly Huang:]

And certainly, as I’ve been, the other thing it does is it takes someone - Sono Bello or some of these other retail channels. We get good benchmarking in what the conversion rates are. They tend to be substantially above the more traditional channels. And once you share with them what other folks can do, we find that they at least want to rise to the challenge. In many cases, are moving on a path to be as productive in converting two phases right, that initial lead or interest into consultation and then increasing their ability once the patients in consultation to convert that to actual treatments.

[Ben Haynor:]

Okay. That’s simply helpful. Thank you. And then, Bill, on the guidance update, does that effectively assume that Sono Bello discontinues entirely or it is to assume kind of the runrate for October is the runrate for the remainder of the year? Or do you have any additional color on how that impacted the guidance for 2018?

[William Plovanic:]

Yes, Ben, at this point, we looked at the numbers and frankly, we’ve discontinued them in our numbers 100%.

[Ben Haynor:]

Okay. Perfect. And then, and lastly, I don’t know how much probably you can give on this Andy. But you mentioned the strategic projects you will undertake once you transition over to Chairman. Any additional color that you can provide there?

[Andrew Rasdal:]

I think, we will probably defer that as we said to the time at the actual transition or I would expect, most importantly, Kelly can give more specific thoughts about what his plans are for 2019 in board, especially as he will be fully responsible for the day-to-day operations and decisions. And with that, we will probably give a little bit more color around the general categories of the activities I pursue. But I certainly – I’ve been more than a decade here remain committed and passionate and involved.

[Ben Haynor:]

Okay. And then, lastly from me, if I can sneak one more in here. Obviously, the 1300 plus patients that we are going to see here at SMBS, are there any other posters or presentations or papers that we should be on the lookout for at the conference here in a couple weeks?

[William Plovanic:]

Ben, we will also be hosting a Symposium. We will put a press release out next week that on balloons will be hosted the day prior. So the data will be presented on November 15 and then on November 14 there will be a symposium that will be held that we will press release next week with more details.

[Andrew Rasdal:]

Yes, I think, this will be the primary dataset. It’s our belief this is the largest single dataset ever prospectively could collect on the commercial use of an intragastric balloon, 1300 patients, consecutive sequential, not cherry picked in any manner. It’s a very, very powerful dataset and so I think we will keep the focus on that.

[Ben Haynor:]

Excellent. That’s exciting. All right thanks for taking the questions and congrats, Kelly.

[Andrew Rasdal:]

Thanks, Ben.

[Kelly Huang:]

Thanks, Ben.

[Operator:]

Thank you. And I am showing no further questions at this time. I’d like to turn the call back to Bill Plovanic, Chief Financial Officer for any further remarks.

[William Plovanic:]

Great. Thank you for your continued interest in Obalon. Have a great day.

[Operator:]

Ladies and gentlemen, thank you for your participation in today’s conference. This concludes today’s program. You may all disconnect. Everyone have a great day.