Release Date: August 15, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Achieved a 45% reduction in overall operating costs for the first six months of 2024 compared to the same period last year.
- Stabilized and increased gross profit margins despite lower sales due to the adoption of GLP-1s.
- Successfully negotiated with Series C shareholders to substantially lower their liquidation preference.
- Positive initial feedback from surgeons on the limited market release of the redesigned Lap-Band 2.0 FLEX.
- Secured a $5.16 million asset purchase agreement with Biorad, which will help pay down costs associated with the Vyome transaction.
Negative Points
- Revenue decreased by $300,000 for the three months ended June 30, 2024, compared to the same period in 2023.
- Revenue for the six months ended June 30, 2024, decreased by $600,000 compared to the same period in 2023.
- Sales and marketing expenses decreased significantly, indicating potential challenges in maintaining market presence.
- Research and development expenses decreased due to a reduction in consulting and clinical trials, potentially impacting future innovation.
- Non-GAAP adjusted EBITDA loss was $1.9 million for the three months ended June 30, 2024, indicating ongoing financial challenges.
Q & A Highlights
Q: Can you provide more details on the cost reduction plan and its impact on the company's financials?
A: (Thomas Stankovich, CFO) We have achieved a 45% reduction in overall operating costs for the first six months of 2024 compared to the same period last year. This includes reductions in advertising, marketing, payroll, and rent expenses. These measures have helped stabilize and increase our gross profit margins despite lower sales due to the adoption of GLP-1s.
Q: What are the key drivers behind the revenue decline in the second quarter?
A: (Thomas Stankovich, CFO) Our revenue totaled $2 million for the three months ended June 30, 2024, a reduction of $300,000 compared to the same period in 2023. This decline is primarily due to a decrease in sales volume, which is mainly attributed to the widespread adoption of GLP-1 pharmaceuticals.
Q: How is the limited market release of the Lap-Band 2.0 FLEX progressing?
A: (Paul Hickey, CEO) The limited market release of the Lap-Band 2.0 FLEX is nearing completion and is going exceptionally well. Initial surgeon feedback has been very positive, and we are gathering data and metrics to support an anticipated widespread commercial launch.
Q: Can you elaborate on the merger agreement with Vyome Therapeutics and its expected benefits?
A: (Paul Hickey, CEO) The merger with Vyome Therapeutics, along with the concurrent asset sale to Biorad, presents a significant opportunity for our shareholders. Vyome is a clinical-stage company focused on treating immuno-inflammatory diseases. The merger will create Vyome Holdings, Inc., and we believe this will maximize stockholder value and earnings potential.
Q: What are the strategic advantages of the Vyome merger for ReShape Lifesciences?
A: (Krishna Gupta, Director, Vyome Therapeutics) Vyome brings a strong pipeline in the immuno-inflammation sector, leveraging world-class talent and research connections to India. This merger will provide access to significant growth opportunities and partnerships, enhancing value creation for shareholders.
Q: How will the asset purchase agreement with Biorad impact ReShape's financial position?
A: (Paul Hickey, CEO) The asset purchase agreement with Biorad for $5.16 million in cash will allow us to pay down costs associated with the Vyome transaction. This includes selling our Lap-Band system, Obalon Gastric Balloon System, and the Diabetes Bloc-Stim Neuromodulation system, which we believe will bring value to our shareholders.
Q: What are the future plans for the combined company post-merger?
A: (Krishna Gupta, Director, Vyome Therapeutics) Post-merger, the company will be renamed Vyome Holdings, Inc., and will focus on building multiple accretive assets under the Vyome umbrella. We plan to leverage our connections to India for cost-effective research and development, targeting significant unmet medical needs in the US market.
Q: How does Vyome plan to fund its operations and growth post-merger?
A: (Krishna Gupta, Director, Vyome Therapeutics) Vyome has commitments for additional capital, including a minimum $7.3 million private placement from current stockholders. This funding, along with our anticipated cash flow projections, should provide adequate liquidity to self-fund into the second half of 2025, enabling us to unlock significant value in our pipeline.
Q: What are the anticipated benefits for shareholders from the merger and asset sale?
A: (Paul Hickey, CEO) The merger and asset sale are expected to deliver significant benefits to shareholders, including enhanced value creation, access to new growth opportunities, and a stronger financial position. The Board of Directors unanimously recommended these transactions, reflecting our confidence in their potential to maximize shareholder value.
Q: How will the company's focus shift post-merger with Vyome?
A: (Krishna Gupta, Director, Vyome Therapeutics) Post-merger, the focus will shift towards developing and commercializing Vyome's pipeline of novel drugs for immuno-inflammatory diseases. We aim to leverage our scientific expertise and strategic connections to drive growth and create value for shareholders.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
