Small Medtech Firm Tripled. Then Its CEO Left After 5 Months

(Bloomberg) -- It’s been quite the week for micro-cap medtech company Obalon Therapeutics Inc.

Less than an hour after Obalon shares more than tripled in a record-setting trading day -- making it no longer a penny-stock -- it disclosed chief executive Kelly Huang resigned after less than five months on the job. Huang, who took over the helm of the company in January, notified the Board of his plans on Monday when shares traded for less than 45 cents, the filing showed.

The maker of a swallowable, gas-filled balloon system for the treatment of obesity saw its stock skyrocket on almost 50 times the average daily volume on Wednesday after presenting data for the system at an industry meeting in San Diego. The stock traded as high as $1.64 intraday, good for a gain of more than 325%, before settling at $1.30.

After shares added to gains in early trading on the news of Huang’s exodus, the company announced a plan to take advantage of the stock’s spike by offering 5 million shares at a price of just 60 cents. The discount to Wednesday’s close came at a whopping 54% as the Carlsbad, California-based company said it plans to use the $3 million for general corporate purposes.

Obalon declined to comment.

Shares were roughly halved after trading resumed Thursday and fell as low as 66 cents.

To contact the reporter on this story: Bailey Lipschultz in New York at blipschultz@bloomberg.net

To contact the editors responsible for this story: Catherine Larkin at clarkin4@bloomberg.net, Scott Schnipper

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