Obalon Therapeutics, Inc.

 

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April 27, 2015 Issue

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Non-Surgical, Reversible Weight Loss Device

 


Andy Rasdal

CEO

 

Obalon Therapeutics, Inc.

www.obalon.com

 

Interview conducted by:

Lynn Fosse, Senior Editor, CEOCFO Magazine, Published – April 26, 2015

 

CEOCFO: Mr. Rasdal, what is the concept behind Obalon Therapeutics?

Mr. Rasdal: Obalon’s primary purpose was to develop a novel technology that would create a non-surgical, non-permanent medical device to help people who suffer from obesity to lose weight.

 

CEOCFO: Is that not still the concept?

Mr. Rasdal: It still is the concept. It is more than a concept though, because now it is a real product that is helping patients in markets outside the US and we are currently in a pivotal clinical trial in the US intended to support FDA approval in the future.

 

CEOCFO: What have you figured out?

Mr. Rasdal: What we have developed is a novel intragastric balloon for weight loss. An intragastric balloon is it is basically a space-occupying device placed inside the patient’s stomach intended to make the patient to feel full sooner. As a result, they eat less, and they lose weight. It does not require an interventional procedure to place the balloon, does not create permanent changes to the anatomy, unlike surgery, and could be repeated in the future if needed. During the therapy period, patients lose weight by reducing portion size and calories and then, hopefully, will be able to maintain those habits to either maintain that weight or continue to lose weight. Obalon did not invent the idea of the intragastric balloon or a space-occupying device. Those concepts have been around for 25 to 30 years, and it is a very obvious and intuitive approach. However, Obalon is the first to develop a swallowable, gas-filled intragastric balloon.

 

CEOCFO: What is it about your balloon or the way in which your product works that differs from what has been available or what has been considered?

Mr. Rasdal: Compared to what has been done historically, primarily outside the US, the uniqueness of the Obalon balloon is that the balloon is actually folded up into a swallowable capsule that the patient simply swallows with a glass of water to get it into their stomach, rather than having it placed endoscopically, a procedure, which requires anesthesia. Our administration is very simple. You simply swallow the capsule – no sedation or anesthesia required - and then it is remotely inflated with gas via a microcatheter, which is then removed. Other gastric balloons are placed with endoscopy under anesthesia and filled with liquid. The result is we have something that is easier to place for both the patient and the practitioner and provides a very different method of action. Because we fill it with gas, it is light and buoyant, and it sits up in the fundus, or the top of the stomach, which for us makes more sense in terms of making you feel full, whereas traditional balloons that have been filled with saline reside at the bottom of the stomach near the pylorus.

 

CEOCFO: How are you able to make it safe so that it goes where intended and stays in place?

Mr. Rasdal: Safety is without question the foremost priority. The core team at Obalon has been together for over 20 years now, and for most of our careers has been focused on class III, fully implantable, life-sustaining products. We developed one of the first coronary stents and first aortic stent grafts. First and foremost, we are committed to comprehensive testing, so we started ground up to create materials that can withstand both the chemical and the mechanical forces of the stomach. Unlike other balloons, which are typically made of silicone, we have developed a multi-layer polymer to endure both the mechanical and the chemical forces of the stomach. We performed rigorous testing, both on the bench and in animal models, before it went to humans. We have conducted seven clinical trials and have more than 11,500 balloons now used commercially in markets outside the US. Based on all the data we have collected, the safety profile remains very strong.

 

CEOCFO: How do you inflate remotely?

Mr. Rasdal: There is a small threadlike micro-catheter that is attached to the balloon, so when the patient swallows the capsule, the micro-catheter follows. Once it is in their stomach, the capsule dissolves just like a normal pill would and releases the balloon. We then attach a gas source to the other end of that catheter, inflate the balloon, and then simply detach the catheter and pull it back out of the patient’s mouth, leaving only the balloon behind. The entire procedure, from the time they swallow the balloon to the time it is inflated and the catheter removed is approximately five minutes.

 

CEOCFO: Are you aiming at the US market or outside?

Mr. Rasdal: There is no question in medical devices that the US is the largest and most important market for a company, especially in the field of obesity. That being said, historically the FDA approval process for obesity devices has been characterized by a number of unsuccessful pivotal trials. However, the FDA’s view on obesity has changed to be much more favorable over the past few years and we are currently enrolling a pivotal trial intended to support FDA approval. Prior to this, we focused our efforts on commercializing devices in key markets outside the US. We are commercial in Europe, the Middle East and in Mexico, both to begin to drive the business and, importantly, to gain the experience and the knowledge that it takes to commercialize a device like this and bring it back to the United States.

 

CEOCFO: What has been the response from customers?

Mr. Rasdal: I think there is great enthusiasm for weight loss. Almost two-thirds of the world’s population is considered overweight or obese, and that is a tremendous amount of people. It is perhaps the largest chronic disease on the planet, and there are really only two solutions: diet and exercise or surgery. If diet and exercise alone worked, we would not see this high incidence of obesity. Surgery is primarily applicable to the group of people who have a BMI of 40 or greater, which would be considered morbidly obese, and represents a very small percent of that overweight and obese population. Our goal was really to create a device that has a safety, usability and affordability profile to give people an option besides diet and exercise, before they even need to consider surgery. From a healthcare policy standpoint, we want to intervene earlier in the progression of the disease in patients with BMIs less than 40 to either retard or reverse the disease before the patients become so obese that they would have to even consider something as drastic as surgery for weight loss. From the business standpoint, those patients represent some 90% of the available market for overweight and obese people, creating a bigger business opportunity. As one of a few first technologies that would play into that category, I think there has been great enthusiasm by patients who are desperately looking for a solution other than something like surgery and who are frustrated with diet and exercise. Additionally, we have had very strong interest from clinicians who are frustrated with their inability to treat these patients, have watch them get progressively more obese and have more comorbidities. For everybody, whether Obalon or other companies working on other types of devices, I think there is great enthusiasm by clinicians and patients, and I think there is currently great effort by the FDA to potentially make an armament of devices available for clinicians in the US to treat this epidemic of obesity.


CEOCFO: What happens with the balloon when you overeat?

Mr. Rasdal: There is no gastric procedure, including surgery, which cannot be defeated. This is an unusual disease state, and it really does require patient participation. We are very frank that this is not a cure for obesity or a permanent solution for weight loss. Of course, if there is such a thing, I am unaware of it. It is intended for the patient who wants help beyond diet and exercise to lose weight without doing something as drastic as surgery. The balloon helps you feel full sooner, eat smaller portions and lose weight. If they continue to overeat, they start to get uncomfortably full. If they regularly decide to go past that and be highly uncomfortable just to continue eating, as they can do with any therapy, then they will not lose weight. One of the nice thing about an approach like this is if you lose some weight, but then sometime later regain some of that weight and need some extra help losing it again, there is no reason that you could not repeat this procedure.

 

One of the primary features that makes Obalon extremely unique is the swallowability of the balloon. Although it is obvious this eliminates a procedure and the risk of that procedure, we believe the most important benefit is that it allows the patients to easily have additional “doses” of the balloon during the therapy period to extend weight loss. Historically with balloons, only one very large, and usually heavy, balloon is placed for the entire therapy period. As a result, patients often experience a great deal of nausea, vomiting and discomfort for the first week or so. They lose weight during that period but then, as the stomach accommodates the balloon, they may feel less full and not maintain the same amount of weight loss. Our approach is to put in a smaller, lighter balloon initially that is gas-filled and sits up at the top of the stomach to creates a sensation of fullness, but also seeks to reduce or eliminate that nausea, vomiting and the adverse events. We intend to make you feel full enough to reduce portions and begin losing weight, but not to induce a great deal of discomfort. Around the end of the first month, as the feeling of fullness begins to wane, patients simply come in and swallow an additional balloon for another “dose” of the therapy. Somewhere around the end of the second month or middle of the third month, patients will come in and get a third balloon and then stay with that volume throughout the treatment period.

 

CEOCFO: How do you remove it?

Mr. Rasdal: Today the product is removed in a short, outpatient endoscopy taking about five minutes per balloon under conscious sedation and using simple tools. Because it is gas-filled, it is very easy to rapidly deflate and remove the balloon. They reach down to pop it, and then they pull it out.


CEOCFO: It would seem a no brainer that it is simple and easy. What are the next steps and how will you be going to market?

Mr. Rasdal: If it were simple and easy, people would have done it a long time ago. People have tried before, but when we assessed the reasons for failure, we believed we had to create a new technology platform from the ground up. We focused on developing new materials and systems, which would capitalize on new technology to overcome the historic shortcomings of other gastric balloon attempts. I think we are arguably the first company to develop the balloon material from the ground-up specifically for the stomach. Creating a balloon that can be thin enough to fit into a capsule, but robust enough to withstand the chemical and mechanical forces in the stomach proved quite difficult. We spent our first two and a half, almost three years doing nothing but developing these core materials. We believe we have made fundamental invention that is now patented and important. We then worked closely with a few physicians to develop the clinical application and have gained very important knowledge from commercializing internationally.

 

The plan now is we will continue to support and grow our key international markets, but the real focus right now is on successfully completing the US pivotal trial that, if successful, is intended to support FDA approval and enter the US market. It is important to note is that our current product in international markets today is a product intended to be used for a three-month period. As we just announced, we have developed a new set of technologies to create a new product that allow the Obalon Balloon to be used for a six-month treatment period. That six-month product is what we are currently studying in the US pivotal trial.


CEOCFO: Are you funded for the next steps or will you be seeking partners or investors?

Mr. Rasdal: There is never seems to be enough money in any of these ventures, and there are always opportunities for partners to help things move along faster. We just closed a $30 million financing at the end of the year, which will give us the runway to complete our pivotal trial and to make it through a period of time up until approval, But that is certainly never enough money to do everything you would like to do to prepare. We feel fortunate to have raised that much money and be in our current financial position, but I think we will always be looking for new partners and investors.

 

CEOCFO: What have you learned from your prior experiences that has been most helpful as you are moving along with Obalon?

Mr. Rasdal: We have had some good successes in the past that have created substantial value for physicians, patients and investors. The core team at Obalon was responsible for creating DexCom, who introduced the first continuous glucose monitor for patient-use and continues as an independent company here in San Diego with a market cap of approaching $5 billion. Prior to that, we were at Arterial Vascular Engineering, one of the early entrants in the coronary stent market that was ultimately sold to Medtronic for $4.3 billion. We have learned to look for very large chronic disease states that have a real need for new applications, and we try to identify very novel, proprietary technologies. But, the most important thing always remains the team that you build around it, which includes the management team, investors, our vendors and technology partners, and our advisors. Without question, it is the people that have enabled our past successes – and hopefully at least one more.


CEOCFO: What should people remember the most when they read the Obalon Therapeutics story?

Mr. Rasdal: Obalon is a very unique opportunity. There is not a larger opportunity for medical devices that the field of obesity. From the past, our strategy to capture such opportunities has been to bring new, novel technology to bear on a serious clinical problem, which I think that we have done here, and then to move that forward with a capable, experienced team with a track record of success. I think we have that at Obalon with strong, proven investors like Domain and InterWest, and with a management team having worked together for over 20 years with meaningful past successes. We have to go out and execute now, but I think we are genuinely excited about the opportunity.




Obalon Balloon


Obalon Capsule

 

“Obalon is a very unique opportunity. There is not a larger opportunity for medical devices that the field of obesity. From the past, our strategy to capture such opportunities has been to bring new, novel technology to bear on a serious clinical problem, which I think that we have done here, and then to move that forward with a capable, experienced team with a track record of success.” - Andy Rasdal


 

Obalon Therapeutics, Inc.

www.obalon.com

 
Contact:

Andy Rasdal

760.796.6557

arasdal@obalon.com


 


 

 



 

 


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