SecProbe.io

Mail Stop 3030
August 31, 2016

Via E -mail
Andrew Rasdal
President and Chief Executive Officer
Obalon Therapeutics, Inc.
5421 Avenida Encinas, Suite F
Carlsbad, CA 92008

Re: Obalon Therapeutics, Inc.
Draft Registration Statement on Form S -1
Submitted August 4, 2016
  CIK No. 0001427570

Dear Mr. Rasdal :

We have reviewed your draft registration statement  and have the following comments.  In
some of our comments, we may ask you to provide us with information so we may better
understand your disclosure.

Please respond to this letter by providing the requested information and either submitting
an amended draft registration statement or  publicly  filing your registration statement on
EDGAR.  If you do not believe our comments apply to your facts and circumstances or do not
believe an amendment is appropriate, please tell us why in your response.

After reviewing the information you provide in response to these  comments  and your
amended draft registration statement or filed registration statement,  we may have  additional
comments.

Prospectus Summary, page 1

The Obesity Epidemic, page 1

1. Please revise to clarify what you mean by “medical costs associated with obesity.”  If this
phrase includes costs related to the effects of obesity, rather than merely related to the
treatment for obesity, please revise to clarify.  Also revise to clarify what portion of that
amount relates to the treatment of obesity.

Andrew Rasdal
Obalon  Therapeutics, Inc.
August 31, 2016
Page 2

 Our Solution, page 2

Favorable Safety Profile, page 2

2. Please reconcile your disclosure here  that all the reported serious adverse device events
from your product occurred when the product was not used according to approved
labelling with your disclosure in the first full paragraph on page 16 which indicates that
in one instance you could not obt ain enough information to verify an injury’s cause.

Simple and Convenient Placement, page 2

3. If you believe it is appropriate to highlight the fact that your product can be placed
without anesthesia or an endoscopy, please also provide disclosure, such as that found on
page 4, indicating that removal of your product does require an endoscopy and sedation.

Implications of Being an Emerging Growth Company, page 6

4. Please supplementally provide us with copies of all written communications, as defined
in Rule 405 under the Securities Act, that you, or anyone authorized to do so on your
behalf, present to potential investors in reliance on Section 5(d) of the Securities Act,
whether or not they retain copies of the communications.

Summary Consolidated Fi nancial Data, page 9

5. We note on page 10 and throughout the filing that you have presented pro forma
adjustments relating to the automatic conversion of all the outstanding shares of your
convertible preferred stock into common stock and ultimately the automatic conversion
of your outstanding preferred warrants to purchase common stock.   We further note from
pages F -43 and F -44 that all of the preferred stock is automatically converted into
common stock upon the company’s sale of your common stock in a firm commitment
underwritt en public offering in which the per share is price is at least   $4.29.   Explain to
us why you believe these pro forma adjustments related to the conversion of your
preferred shares upon the initial public offering are factually supportable by confirming
to us that you presently expect the offering to meet such conditions.   If management
subsequently concludes the conditions may not be satisfied, please revise the filing
accordingly.

6. Explain to us why you believe that the outstanding preferred stock warra nts and other
warrants will be ultimately converted into common stock upon the initial public offering
and are directly attributable to the transaction and factually supportable.

Andrew Rasdal
Obalon  Therapeutics, Inc.
August 31, 2016
Page 3

 Risk Factors, page 11

7. Given your disclosure on pages 52 and 130, please re vise to clarify whether you will be a
controlled company under applicable exchange rules and, if so, whether that status
creates material risks.  Also revise your disclosure beginning on page 114, as appropriate.

Use of Proceeds, page 56

8. Please revise to clarify what you mean by “commercialization” of your product.  If that
term includes multiple, discrete uses to which you will apply proceeds, such as expanding
your domestic sales force and manufacturing facilities, as noted on page 71, please
describe  those uses separately.  Also describe whether the amount of proceeds will be
sufficient or whether you will require additional funds.

Dilution, page 60

9. Please expand the disclosure on page 61 to clarify how the numbers and percentages in
the table on th at page would change assuming the exercise of all outstanding warrants
and options.

Management’s Discussion and Analysis of Financial Condition and Results of Operations, page
66

Overview, page 66

10. Please revise to clarify why it was necessary to disco ntinue sales in Europe and Mexico
to focus on developing and seeking domestic regulatory approval of your current product.

Results of Operations, page 69

11. Please revise your discussion of revenues throughout this section to discuss, and where
possible quantify, the changes in your revenues resulting from changes in prices, changes
in volume or a combination of both items.   Please refer to Item 303 and the related
instructions in Regulations S -K as well as SEC Interpretive Release No. 33 -8350.

Liquidity  and Capital Resources, page 70

12. We note from disclosures on page F -10 that a significant portion of your revenue is
derived from foreign sources.   We also note on pages F -3 and F -27 that your balance
sheet presents cash and cash equivalents of approximate ly $3.3 million and $4.3 million
as of December 31, 2015 and June 30, 2016, respectively.   Please revise your liquidity
discussion in Management’s Discussion and Analysis in future filings, to the extent that

Andrew Rasdal
Obalon  Therapeutics, Inc.
August 31, 2016
Page 4

 you believe material, to disclose the amount of  cash and cash equivalents as well as liquid
investments held by foreign subsidiaries at each balance sheet date presented in your
financial statements and quantify the amount that would not be available for use in the
United States without incurring U.S t axes.   Please further provide a discussion of any
known trends, demands or uncertainties as a result of your policies of permanently
reinvesting earnings outside the United States that are reasonably likely to have a
material effect on the business as a wh ole or that may be relevant to your financial
flexibility.   Refer to Item 303(a)(1) of Regulation S -K.

13. Given the historical amounts of cash you have used for the periods disclosed in your
financial statements and amounts in the table on page 74, please re vise to clarify why you
believe the $18.3 million of cash, cash equivalents and short -term investments you hold
as of June 30, 2016 will not be sufficient for the next 12 months, absent the proceeds of
this offering.

Contractual Obligations, page 74

14. Please revise to quantify the amounts subject to the contracts noted in the first full
paragraph following the table.

Critical Accounting Policies and Estimates, page 74

Stock -Based Compensation, page 75

15. We note on page F -42 that you granted 1,482,662 o ptions to purchase common stock
during the six months ended June 30, 2016. With respect to these options granted, please
provide us with your analysis in valuing those grants including a detailed analysis on how
you determined the underlying fair value of your common stock.

16. We note that for determining the expected volatility you relied on the volatility of a peer
group that are publicly traded.   Please provide to us the names of the companies you
considered peer companies for purposes of determining the v olatility assumption, the
volatility of each, and how you concluded that each company was similar to you.   Tell us
whether you considered industry, stage of life cycle, size, and financial leverage.   Refer
to FASB ASC 718 -10-55-25.

Andrew Rasdal
Obalon  Therapeutics, Inc.
August 31, 2016
Page 5

 17. We note that you disclo sed a placeholder for the aggregate intrinsic value of all
outstanding options based on the midpoint of the estimated IPO price range.   Please
include an updated discussion of each significant factor contributing to the difference
between the fair value as  of the date of grant and the estimated IPO price for options
granted during the six months prior to the date of the most recent balance sheet once you
have determined your IPO price range.

Business, page 81

Overview, page 81

18. Given your disclosure on page 95 regarding saline -filled balloons previously approved by
the FDA and your disclosure on page 98 regarding the requirements for approval of Class
II devices, please revise to clarify why you are seeking approval pursuant to t he “PMA
process.”

Recently developed treatment alternatives, page 84

19. We note the data from your competitors’ clinical trials.  Please expand to disclose the
data relating to the amount of pounds lost during and as of the completion of those trials,
simil ar to the information you disclose on pages 91 and 92 regarding your clinical trial.

Our solution, page 85

20. Your disclosure here and on page  93 implies that the sustainability of weight loss relates
to the use of your product.  You r disclosure on page 8 4 implies that use of your
competitors’ products relates to lower sustained weight loss than if your product w ere
used.  If so, please revise to clarify the basis for this conclusion.  Please address in your
response your consideration of other factors und erlying the ability to sustain weight loss
following use of your product relative to your competitors, such as the individual
behaviors of the participants in the studies, as opposed to the characteristics of the
products .  Please also clarify whether simi lar six -month follow -up was performed for the
sham -control group.

Sales and Marketing, page 94

21. Please expand to discuss the material features of your distribution agreement with Bader,
including the minimum purchase requirements and other terms mention ed on pages 20
and 21.

Andrew Rasdal
Obalon  Therapeutics, Inc.
August 31, 2016
Page 6

 Competition, page 94

22. Please revise to clarify the nature of the intragastric balloon developed by Allurion
Technologies, as noted on page 95.

Intellectual Property, page 96

23. Please revise to clarify the claims covered by the i ntellectual property described on this
page.  Ensure you r revisions address the “proprietary” features of the gas mix used to
inflate balloons and how those features are protected.

Principal Stockholders, page 129

24. Please disclose all natural persons who exercise the sole or shared voting and/or
dispositive powers with respect to the shares held in the name of the entities identified in
the table on page 130.  Also, please tell us why you do not include your Chief Fi nancial
Officer.

Shares eligible for future sale, page 138

25. Please clarify the reference to “substantially all” security holders who entered into the
lock-up agreements.  Please also file those agreements as exhibits.

Consolidated Financial Statement s

Note 2.   Summary of Significant Accounting Policies

Revenue Recognition, page F -12

26. We note that you sell your products to distributors including your related party distributor
arrangement with Bader Sultan & Bros. Co W.L.L.   Please revise your disclos ure to
summarize the significant terms of these arrangements with distributors, including any
post shipment obligations and acceptance provisions that may exist and how you account
for such obligations.   Within your discussion, please explain if you grant price
concessions to your distributors and, if so, how you account for price concessions.   Refer
to SAB Topic 13.B.

27. We further note that you recognized revenue net of allowances, discounts, and other
adjustments.   Please tell us and revise your filing to explain the nature of the allowances,
discounts, and other adjustments for which you adjust revenue.   Explain how you account
for these allowances, discounts, and other adjustments.

Andrew Rasdal
Obalon  Therapeutics, Inc.
August 31, 2016
Page 7

 Note 3.   Fair Value Measurements, page F -15

28. Please revise your filing to  explain how you determined the underlying significant
assumptions within the Black -Scholes option pricing model to determine the fair value of
your outstanding warrant liability.   Refer to ASC 718 -10-50-2(f)(2).

Note 9.   Income Taxes, page F -25

29. We note from disclosures on page F -25 that you do not provide U.S. taxes and foreign
withholding taxes on the undistributed earnings of foreign subsidiaries because you
intend to permanently reinvest such earnings outside the U.S.   Please revise your filing to
disclose the amount of undistributed earnings related to your foreign subsidiaries that you
consider to be indefinitely reinvested.   Refer to the guidance in FASB ASC 740 -30-50-
2(b).

You may contact Tara Harkins  at (202) 551 -3639  or Kate Tillan, Assistant Chief
Accountant,  at (202) 551 -3604  if you have questions regarding comments on the financial
statements and related matters.  Please contact Caleb French  at (202) 551 -6947  or Geoff
Kruczek, Senior Attorney,  at (202) 551 -3641  with any other questions.

Sincerely,

 /s/ Geoff Kruczek for

 Amanda Ravitz
Assistant Director
Office of Electronics and Machinery

cc:  Robert A. Freedman, Esq.
 Fenwick & West LLP