Individuals Who Purchased, or Otherwise Acquired, Obalon Securities Pursuant and/or Traceable to Obalon’s Registration Statement and Prospectus, Issued in Connection with Obalon’s Initial Public Offering On or About October 5, 2016, and/or On the Open Market Between October 5, 2016 and January 23, 2018, Both Dates Inclusive
Kehoe Law Firm, P.C. continues its investigation of Obalon Therapeutics and advises investors of Obalon Therapeutics (NASDAQ: OBLN) that on February 22, 2018, a class action lawsuit was filed against Obalon Therapeutics, Inc. and certain executives on behalf of a class consisting of all persons, other than the Obalon defendants, who purchased, or otherwise acquired, Obalon securities pursuant and/or traceable to Obalon’s alleged false and misleading Registration Statement and Prospectus issued in connection with the Obalon’s initial public offering on or about October 5, 2016 and/or on the open market between October 5, 2016 and January 23, 2018, both dates inclusive (the “Class Period”).
The class action lawsuit, filed in United States District Court, Southern District of California, seeks to recover damages caused by the Obalon defendants’ alleged violations of the Securities Act of 1933 and the Securities Exchange Act of 1934.
According to the class action complaint, throughout the Class Period, the Obalon defendants made materially false and misleading statements regarding Obalon’s business, operational, and compliance policies. Specifically, the Obalon defendants made false and/or misleading statements and/or failed to disclose that Obalon recognized revenue in violation of Generally Accepted Accounting principles (“GAAP”); Obalon lacked adequate internal controls over accounting and financial reporting; and, consequently, Obalon’s public statements were materially false and misleading at all relevant times.
On January 23, 2018, Obalon Therapeutics, Inc., “a San Diego-based company focused on developing and commercializing novel technologies for weight loss,” issued a press release
. . . announc[ing] the termination of the underwriting agreement and cancellation of its previously announced public offering . . . of 5,454,545 shares of its common stock at a public offering price of $5.50 per share.
UBS Investment Bank, Canaccord Genuity and Stifel were acting as joint book-running managers for the offering. BTIG was acting as a co-manager. The offering was being made pursuant to a shelf registration statement . . . previously filed with and declared effective by the U.S. Securities and Exchange Commission.
[Obalon’s] [o]ffering was scheduled to close on January 23, 2018. However, a purported whistleblower contacted KPMG LLP, [Obalon’s] independent auditors, to make certain allegations relating to allegedly improper revenue recognition during [Obalon Therapeutics’] fourth fiscal quarter of 2017 (“Q4 2017”).
These allegations were reported to Obalon late in the day on January 22, 2018, making it infeasible for the [Obalon] to complete an investigation of the allegations prior to the intended closing of the public offering.
Obalon’s Audit Committee will oversee an internal investigation of these allegations . . .. [Obalon Therapeutics] is currently unable to predict the timing or outcome of the [i]nvestigation. Based on information known at this time, [Obalon’s] management does not currently believe material adjustments to the preliminary, unaudited revenue for Q4 2017 and full year 2017 previously reported by [Obalon] will be required as a result of these allegations. [Obalon Therapeutics] intends to make a further announcement regarding the outcome of the Investigation as soon as practicable.
On this news, Obalon’s share price fell $1.73, or 33.33%, to close at $3.46 on January 23, 2018, on unusually heavy volume, representing a total decline of $11.54, or nearly 77%, from the IPO price of $15.00 per share.
Obalon Therapeutics, Inc.
. . . an engineering-driven medical technology company with a singular focus on innovative, high-quality gastric balloon technology. Located in San Diego, California, the technical team at Obalon has a long history of working closely with leading clinicians to develop innovative medical products that revolutionize treatment of chronic disease. As a company, [Obalon] believe[s] in the fundamental value of imagination and invention, combined with rigorous testing and analysis, to ensure the highest levels of safety and performance. The result is a user-focused approach that deploys the power of advanced technological thinking to support clinical treatment objectives.
Obalon Therapeutics Investors and Stock Holders
If you own, or otherwise acquired, Obalon securities and have questions or concerns about the class action investigation, please contact John Kehoe, Esq., (215) 792-6676, Ext. 801, [email protected], complete the form above on the right or e-mail [email protected].