UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended September 30, 2017March 31, 2020
or
☐ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Commission file number: 0-21419
BioCardia, Inc.
(Exact name of registrant as specified in its charter)
Delaware | 23-2753988 |
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification Number) |
125 Shoreway Road, Suite B
San Carlos, California 94070
(Address of principal executive offices including zip code)code)
(650) 226-0120
(Registrant’s telephone number, including area code)code)
N/A
(Former name, former address and former fiscal year, if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No ☐
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer |
| ☐ |
| |||
|
|
| ☐ | |||
|
|
|
| |||
Non-accelerated filer |
| ☒ | Smaller reporting company | ☒ | ||
Emerging growth company | ☐ |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒
Securities registered pursuant to Section 12(b) of the Act:
Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
Common Stock, par value $0.001 Warrant to Purchase Common Stock | BCDA BCDAW | The Nasdaq Capital Market The Nasdaq Capital Market |
Indicate the number of shares outstanding of each of the issuer’sissuer’s classes of common stock, as of the latest practicable date.
There were 38,220,1416,848,355 shares of the registrant’s Common Stock issued and outstanding as of November 8, 2017.May 7, 2020.
Part I. |
| 4 |
|
|
|
Item 1. | Unaudited Condensed Consolidated Financial Statements | |
| Condensed Consolidated Balance Sheets as of |
|
| Condensed Consolidated Statements of Operations for the three |
|
Condensed Consolidated Statements of Shareholders’ Equity (Deficit) for the three months ended March 31, 2020 and 2019 | 6 | |
| Condensed Consolidated Statements of Cash Flows for the |
|
| Notes to |
|
Item 2. |
|
|
Item 3. | Quantitative and Qualitative Disclosures About Market Risk |
|
Item 4. | Controls and Procedures | |
|
|
|
Part II. |
| 28 |
|
| |
Item 1. | Legal Proceedings |
|
Item 1A. | Risk Factors | |
Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds |
|
Item 3. | Defaults Upon Senior Securities | |
Item 4. | Mine Safety Disclosures | |
Item 5. | Other Information | |
Item 6. | Exhibits |
|
|
|
|
|
| |
EXHIBIT INDEX |
| |
SIGNATURES | 31 |
FORWARD-LOOKING INFORMATION
This Quarterly Report on Form 10-Q, or report,report, contains forward-looking statements within the meaning of the U.S. federal securities laws that involve risks and uncertainties. Certain statements contained in this report are not purely historical including, without limitation, statements regarding our expectations, beliefs, intentions, anticipations, commitments or strategies regarding the future that are forward-looking. These statements include those discussed in Item 2, Management’s Discussion and Analysis of Financial Condition and Results of Operations, including “Critical Accounting Policies and Estimates,” “Results of Operations,” “Liquidity and Capital Resources,” and “Future Funding Requirements,” and elsewhere in this report.
In this report, the words “may,“may,” “could,” “would,” “might,” “will,” “should,” “plan,” “ forecast,” “anticipate,” “believe,” “expect,” “intend,” “estimate,” “predict,” “potential,” “continue,” “future,” “moving toward” or the negative of these terms or other similar expressions also identify forward-looking statements. Our actual results could differ materially from those forward-looking statements contained in this report as a result of a number of risk factors including, but not limited to, those listed in our Annual Report on Form 10-K10-K for the year ended December 31, 2019, and elsewhere in this report. You should carefully consider these risks, in addition to the other information in this Reportreport and in our other filings with the SEC. TheseAll forward-looking statements represent our estimates and assumptions onlyreasons why results may differ included in this report are made as of the date of this report, regardless of the time of delivery of this report, and such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. Except as required by law, we undertake no obligation to update any such forward-looking statement or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwisereason why such results might differ after the date of this report.Quarterly Report on Form 10-Q, except as required by law.
PART I. FINANCIAL INFORMATION
ITEM 1. UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
BIOCARDIA, INC.
Condensed Consolidated Balance Sheets
(In thousands, except share and per share amounts)
March 31, | December 31, | |||||||||||||||
| September 30, 2017 | December 31, 2016 | 2020 | 2019 | ||||||||||||
(unaudited) | (unaudited) | |||||||||||||||
Assets | ||||||||||||||||
Current assets: | ||||||||||||||||
Cash and cash equivalents | $ | 13,326 | $ | 21,352 | $ | 2,587 | $ | 5,585 | ||||||||
Accounts receivable, net of allowance for doubtful accounts of $3 and $2 at September 30, 2017 and December 31, 2016, respectively | 90 | 74 | ||||||||||||||
Accounts receivable, net of allowance for doubtful accounts of $2 and $2 at March 31, 2020 and December 31, 2019 | 179 | 147 | ||||||||||||||
Inventory | 240 | 135 | — | 4 | ||||||||||||
Short-term investments | 1,799 | — | ||||||||||||||
Prepaid expenses | 188 | 356 | ||||||||||||||
Prepaid expenses and other current assets | 453 | 642 | ||||||||||||||
Total current assets | 15,643 | 21,917 | 3,219 | 6,378 | ||||||||||||
Property and equipment, net | 163 | 111 | 164 | 181 | ||||||||||||
Operating lease right-of-use asset, net | 947 | 1,065 | ||||||||||||||
Other assets | 54 | 54 | 54 | 54 | ||||||||||||
Total assets | $ | 15,860 | $ | 22,082 | $ | 4,384 | $ | 7,678 | ||||||||
Liabilities and Stockholders’ Equity | ||||||||||||||||
Liabilities and Stockholders’ Equity | ||||||||||||||||
Current liabilities: | ||||||||||||||||
Accounts payable | $ | 447 | $ | 525 | $ | 1,108 | $ | 914 | ||||||||
Accrued expenses and other current liabilities | 1,393 | 848 | 2,854 | 2,561 | ||||||||||||
Operating lease liability - current | 548 | 528 | ||||||||||||||
Total current liabilities | 4,510 | 4,003 | ||||||||||||||
Operating lease liability - noncurrent | 468 | 614 | ||||||||||||||
Deferred revenue | 160 | 71 | 689 | 691 | ||||||||||||
Total current liabilities | 2,000 | 1,444 | ||||||||||||||
Deferred rent | 75 | 56 | ||||||||||||||
Total liabilities | 2,075 | 1,500 | 5,667 | 5,308 | ||||||||||||
Stockholders’ equity: | ||||||||||||||||
Preferred stock, $0.001 par value, 50,000,000 shares authorized; no shares issued and outstanding as of September 30, 2017 and December 31, 2016 | ||||||||||||||||
Common stock, $0.001 par value, 750,000,000 shares authorized as of September 30, 2017 and December 31, 2016 respectively; 38,151,548 shares and 38,131,303 shares issued and outstanding at September 30, 2017 and December 31, 2016, respectively | 38 | 38 | ||||||||||||||
Stockholders’ equity: | ||||||||||||||||
Preferred stock, $0.001 par value, 25,000,000 shares authorized as of March 31, 2020 and December 31, 2019; no shares issued and outstanding as of March 31, 2020 and December 31, 2019 | — | — | ||||||||||||||
Common stock, $0.001 par value, 100,000,000 shares authorized as of March 31, 2020 and December 31, 2019; 6,848,355 and 6,825,183 shares issued and outstanding as of March 31, 2020 and December 31, 2019 | 7 | 7 | ||||||||||||||
Additional paid-in capital | 82,711 | 80,686 | 104,374 | 103,433 | ||||||||||||
Accumulated deficit | (68,964 | ) | (60,142 | ) | (105,664 | ) | (101,070 | ) | ||||||||
Total stockholders’ equity | 13,785 | 20,582 | ||||||||||||||
Total liabilities and stockholders’ equity | $ | 15,860 | $ | 22,082 | ||||||||||||
Total stockholders’ (deficit) equity | (1,283 | ) | 2,370 | |||||||||||||
Total liabilities and stockholders’ equity | $ | 4,384 | $ | 7,678 |
See accompanying notes to condensed consolidated financial statements. |
BIOCARDIA, INC.
Condensed Consolidated Statements of Operations
(In thousands, except share and per share amounts)
(unaudited)
Three Months ended September 30, | Nine Months ended September 30, | Three months ended March 31, | ||||||||||||||||||||||
2017 | 2016 | 2017 | 2016 | 2020 | 2019 | |||||||||||||||||||
Revenue: | ||||||||||||||||||||||||
Net product revenue | $ | 88 | $ | 100 | $ | 298 | $ | 406 | $ | 5 | $ | 76 | ||||||||||||
Collaboration agreement revenue | 42 | 17 | 81 | 33 | 33 | 140 | ||||||||||||||||||
Total revenue | 130 | 117 | 379 | 439 | 38 | 216 | ||||||||||||||||||
Costs and expenses: | ||||||||||||||||||||||||
Cost of goods sold | 147 | 196 | 525 | 578 | 4 | 106 | ||||||||||||||||||
Research and development | 1,700 | 684 | 4,028 | 1,622 | 2,786 | 2,166 | ||||||||||||||||||
Selling, general and administrative | 1,322 | 919 | 4,708 | 2,375 | 1,857 | 1,631 | ||||||||||||||||||
Total costs and expenses | 3,169 | 1,799 | 9,261 | 4,575 | 4,647 | 3,903 | ||||||||||||||||||
Operating loss | (3,039 | ) | (1,682 | ) | (8,882 | ) | (4,136 | ) | (4,609 | ) | (3,687 | ) | ||||||||||||
Other income (expense): | ||||||||||||||||||||||||
Interest income | 35 | — | 58 | — | 16 | 23 | ||||||||||||||||||
Interest expense | — | (520 | ) | — | (1,627 | ) | ||||||||||||||||||
Change in fair value of convertible preferred stock warrant liability | — | 30 | — | 250 | ||||||||||||||||||||
Change in fair value of maturity date preferred stock warrant liability | — | 3 | — | 10 | ||||||||||||||||||||
Change in fair value of convertible shareholder notes derivative liability | — | (1,085 | ) | — | (1,224 | ) | ||||||||||||||||||
Other expense | 3 | — | 2 | (1 | ) | (1 | ) | (1 | ) | |||||||||||||||
Total other income (expense), net | 38 | (1,572 | ) | 60 | (2,592 | ) | 15 | 22 | ||||||||||||||||
Net loss | $ | (3,001 | ) | $ | (3,254 | ) | $ | (8,822 | ) | $ | (6,728 | ) | $ | (4,594 | ) | $ | (3,665 | ) | ||||||
Net loss per share, basic and diluted | $ | (0.08 | ) | $ | (2.06 | ) | $ | (0.23 | ) | $ | (4.26 | ) | $ | (0.67 | ) | $ | (0.86 | ) | ||||||
Weighted-average shares used in computing net loss per share, basic and diluted | 38,146,751 | 1,579,852 | 38,141,654 | 1,579,264 | 6,831,976 | 4,248,450 |
See accompanying notes to condensed consolidated financial statements. |
BIOCARDIA, INC.
Condensed Consolidated Statements of Stockholders’ Equity (Deficit)
(In thousands, except share amounts)
(unaudited)
Common stock | Additional | Accumulated | ||||||||||||||||||
Shares | Cost | paid in capital | deficit | Total | ||||||||||||||||
Balance at December 31, 2019 | 6,825,183 | $ | 7 | $ | 103,433 | $ | (101,070 | ) | $ | 2,370 | ||||||||||
Restricted stock units vested and issued | 23,172 | — | — | — | — | |||||||||||||||
Share-based compensation | — | — | 941 | — | 941 | |||||||||||||||
Net loss | — | — | — | (4,594 | ) | (4,594 | ) | |||||||||||||
Balance at March 31, 2020 | 6,848,355 | $ | 7 | $ | 104,374 | $ | (105,664 | ) | $ | (1,283 | ) | |||||||||
Balance at December 31, 2018 | 4,845,697 | $ | 5 | $ | 90,148 | $ | (86,361 | ) | $ | 3,792 | ||||||||||
Restricted stock units vested and issued | 2,268 | — | — | — | — | |||||||||||||||
Share-based compensation | — | — | 690 | — | 690 | |||||||||||||||
Net loss | — | — | — | (3,665 | ) | (3,665 | ) | |||||||||||||
Balance at March 31, 2019 | 4,847,965 | $ | 5 | $ | 90,838 | $ | (90,026 | ) | $ | 817 |
See accompanying notes to condensed consolidated financial statements.
BIOCARDIA, INC.
Condensed Consolidated Statements of Cash Flows
(In thousands)
(unaudited)
Nine Months ended September 30, | Three months ended March 31, | |||||||||||||||
2017 | 2016 | 2020 | 2019 | |||||||||||||
Operating activities: | ||||||||||||||||
Net loss | $ | (8,822 | ) | $ | (6,728 | ) | $ | (4,594 | ) | $ | (3,665 | ) | ||||
Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||||||||||
Depreciation and amortization | 57 | 30 | ||||||||||||||
Change in fair value of convertible preferred stock warrant liability | — | (250 | ) | |||||||||||||
Change in fair value of maturity date preferred stock warrant liability | — | (10 | ) | |||||||||||||
Change in fair value of convertible shareholder notes derivative liability | — | 1,224 | ||||||||||||||
Stock based compensation | 1,999 | 145 | ||||||||||||||
Non-cash interest expense on convertible shareholder notes | — | 1,627 | ||||||||||||||
Write-off of inventory | 3 | — | ||||||||||||||
Depreciation | 22 | 23 | ||||||||||||||
Reduction in the carrying amount of right-of-use assets | 118 | 105 | ||||||||||||||
Share-based compensation | 941 | 690 | ||||||||||||||
Changes in operating assets and liabilities: | ||||||||||||||||
Accounts receivable | (16 | ) | 45 | (32 | ) | (13 | ) | |||||||||
Inventory | (105 | ) | 44 | 1 | 23 | |||||||||||
Prepaid expenses and other current assets | 168 | 111 | 189 | 160 | ||||||||||||
Accounts payable | (80 | ) | 505 | 194 | 122 | |||||||||||
Accrued liabilities excluding accrued interest on convertible note | 545 | 235 | ||||||||||||||
Accrued liabilities and other current liabilities | 293 | (36 | ) | |||||||||||||
Operating lease liability - current | 20 | — | ||||||||||||||
Deferred revenue | 89 | 37 | (2 | ) | — | |||||||||||
Deferred rent | 19 | (22 | ) | |||||||||||||
Operating lease liability - noncurrent | (146 | ) | 126 | |||||||||||||
Net cash used in operating activities | (6,146 | ) | (3,007 | ) | (2,993 | ) | (2,465 | ) | ||||||||
Investing activities: | ||||||||||||||||
Purchase of property and equipment | (107 | ) | — | (5 | ) | (55 | ) | |||||||||
Purchase of short-term investments | (1,799 | ) | — | |||||||||||||
Net cash used in investing activities | (1,906 | ) | — | |||||||||||||
Net cash used provided in investing activities | (5 | ) | (55 | ) | ||||||||||||
Financing activities: | ||||||||||||||||
Proceeds from the exercise of common stock options | 26 | 2 | ||||||||||||||
Net cash provided by financing activities | 26 | 2 | — | — | ||||||||||||
Net decrease in cash and cash equivalents | (8,026 | ) | (3,005 | ) | ||||||||||||
Net change in cash and cash equivalents | (2,998 | ) | (2,520 | ) | ||||||||||||
Cash and cash equivalents at beginning of period | 21,352 | 3,557 | 5,585 | 5,358 | ||||||||||||
Cash and cash equivalents at end of period | $ | 13,326 | $ | 552 | $ | 2,587 | $ | 2,838 | ||||||||
Supplemental disclosures for noncash investing activity: | ||||||||||||||||
Accounts payable recognized for the purchase of equipment | $ | 2 | $ | — | ||||||||||||
Supplementary disclosure of non-cash activities: | ||||||||||||||||
Right-of-use assets obtained in exchange for lease obligations | $ | — | $ | 1,505 |
See accompanying notes to condensed consolidated financial statements. |
(1) | Summary of Business and Basis of Presentation |
(a) | Description of Business | |
BioCardia, Inc., (BioCardia or the Company), is a clinical-stage regenerative medicine company developing novel therapeutics for cardiovascular diseases with significant unmet medical needs. The Company’s lead therapeutic candidate is the CardiAMP® cell therapy system and its second therapeutic candidate is the CardiALLO™ cell therapy system. To date, the Company has devoted substantially all its resources to research and development efforts relating to its therapeutic candidates and biotherapeutic delivery systems including conducting clinical trials, developing manufacturing and sales capabilities, in-licensing related intellectual property, providing general and administrative support for these operations and protecting its intellectual property. | ||
BioCardia also has three enabling device product lines: (1) the CardiAMP cell processing system; (2) the Helix biotherapeutic delivery system, or Helix; and (3) the Morph vascular access product line, or Morph. The Company manages its operations as a single segment for the purposes of assessing performance and making operating decisions. |
BioCardia, Inc., or the Company, is a clinical-stage regenerative medicine company developing novel therapeutics for cardiovascular diseases with large unmet medical needs. Its lead therapeutic candidate is the CardiAMP cell therapy system and its second therapeutic candidate is the CardiALLO cell therapy system. To date, the Company has devoted substantially all of its resources to research and development efforts relating to its therapeutic candidates and biotherapeutic delivery systems including conducting clinical trials, developing manufacturing and sales capabilities, in-licensing related intellectual property, providing general and administrative support for these operations and protecting its intellectual property.
The Company has three enabling device product lines: (1) the CardiAMP cell processing system; (2) the Helix biotherapeutic delivery system, or Helix; and (3) the Morph vascular access product line, or Morph. The Company manages its operations as a single segment for the purposes of assessing performance and making operating decisions.
|
|
On or about September 25, 2017, the Company received written consents from holders of approximately 63.6% of the total issued and outstanding shares of voting stock of the Company excluding any holdback shares to authorize the Company’s Board of Directors to approve a 12-to-1 reverse stock split of our issued and outstanding shares of Common Stock (the Reverse Stock Split). The Company’s shares of common stock commenced trading on a split-adjusted basis on November 3, 2017.
Following the Reverse Stock Split, certain reclassifications have been made to the prior periods’ financial statements to conform to the current period's presentation. The Company adjusted stockholders’ equity to reflect the Reverse Stock Split by reclassifying an amount equal to the par value of the shares eliminated by the split from common stock to the additional paid-in capital for all periods presented in these condensed consolidated financial statements, resulting in no net impact to stockholders’ equity on the condensed consolidated balance sheets.
|
|
On August 22, 2016, the Company, its wholly-owned subsidiary, Icicle Acquisition Corp, and BioCardia Lifesciences, Inc., or BioCardia Lifesciences (at the time named, BioCardia, Inc.), entered into an Agreement and Plan of Merger, or the Merger Agreement. The transactions contemplated by the Merger Agreement closed on October 24, 2016, pursuant to which Icicle Acquisition Corp. merged with and into BioCardia Lifesciences, with BioCardia Lifesciences continuing as the surviving company, or the Merger. BioCardia Lifesciences was determined to be the accounting acquirer in the Merger based upon the terms of the Merger and other factors, including: (i) former BioCardia Lifesciences security holders owned approximately 54% of the combined company (on a fully diluted basis) immediately following the closing of the Merger, (ii) former BioCardia Lifesciences directors hold the majority of the board seats in the combined company, and (iii) former BioCardia Lifesciences management holds all of the key positions in the management of the combined company. Following the completion of the Merger, the Company changed its name to BioCardia, Inc.
Exchange Ratio
Pursuant to the Merger Agreement, each share of BioCardia Lifesciences common stock issued and outstanding prior to the Merger, including shares of common stock underlying outstanding preferred stock, convertible notes (which converted into common stock immediately prior to the Merger), and stock options were converted into the right to receive 19.3678009 shares of Company common stock (approximately 1.6139834 shares after giving effect to the Company’s reverse stock split effected November 3, 2017), or the Exchange Ratio. The accompanying condensed consolidated financial statements and notes to the condensed consolidated financial statements give retroactive effect to the capital structure as a result of the Merger.
(2) | Significant Accounting Policies |
(a) | Basis of Preparation | |
The accompanying condensed consolidated balance sheets, statements of operations, shareholders’ equity, and cash flows as of March 31, 2020 and for the three months ended March 31, 2020 and 2019 are unaudited. The condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (U.S. GAAP) and applicable rules and regulations of the Securities and Exchange Commission (SEC) for interim financial information and on a basis consistent with the annual financial statements and, in the opinion of management, reflect all adjustments which include only normal recurring adjustments, necessary to present fairly its financial position as of March 31, 2020, results of operations for the three months ended March 31, 2020 and 2019, and cash flows for the three months ended March 31, 2020 and 2019. | ||
These condensed consolidated financial statements should be read in conjunction with the audited financial statements and related notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019, filed with the SEC on April 9, 2020. The results for the three months ended March 31, 2020 are not necessarily indicative of the results to be expected for the year ending December 31, 2020 or for any other interim period or for any other future year, particularly in light of the novel coronavirus pandemic, or COVID-19, and its impact on domestic and global economies. To limit the spread of COVID-19, governments have taken various actions including the issuance of stay-at-home orders and social distancing guidelines, causing some businesses to suspend operations and/or experience a reduction in demand for many products from direct or ultimate customers. Accordingly, businesses have adjusted, reduced or suspended operating activities. Beginning March 17, 2020, substantially all of the Company’s workforce began working from home. On April 6, manufacturing operations resumed at the Company’s facilities, with substantially all other staff continuing to work from home under the stay-at-home orders. The effects of the stay-at-home orders and BioCardia’s work-from-home policies may negatively impact productivity, disrupt the Company’s business and delay the Company’s development programs, regulatory and commercialization timelines, the magnitude of which will depend, in part, on the length and severity of the restrictions and other limitations on BioCardia’s ability to conduct the Company’s business in the ordinary course. BioCardia’s future research and development expenses and general and administrative expenses may vary significantly if the Company experiences an increased impact from COVID-19 on the costs and timing associated with the conduct of BioCardia’s clinical trials and other related business activities. |
The accompanying condensed consolidated balance sheets, statements of operations and cash flows as of September 30, 2017 and for the three and nine months ended September 30, 2017 and 2016 are unaudited. The condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (U.S. GAAP) and applicable rules and regulations of the Securities and Exchange Commission (SEC) for interim financial information and on a basis consistent with the annual financial statements and, in the opinion of management, reflect all adjustments which include only normal recurring adjustments, necessary to present fairly our financial position as of September 30, 2017, results of operations for the three and nine months ended September 30, 2017 and 2016, and cash flows for the nine months ended September 30, 2017 and 2016. The results for the three and nine months ended September 30, 2017 are not necessarily indicative of the results to be expected for the year ending December 31, 2017 or for any other interim period or for any other future year.
These condensed consolidated financial statements should be read in conjunction with the audited financial statements and related notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016, filed with the SEC on March 30, 2017.
BioCardia’s ability to raise additional funds may be adversely impacted by potential worsening global economic conditions and the recent disruptions to, and volatility in, the credit and financial markets in the United States and worldwide resulting from the ongoing COVID-19 pandemic. |
(b) | Liquidity and Other Risks and Uncertainties |
The Company has incurred net losses and negative cash flows from operations since its inception and had an accumulated deficit of $69.0 million as of September 30, 2017. Management expects operating losses and negative cash flows to continue through at least the next several years. Based on management’s current plans, management believes cash and cash equivalents of $13.3 million and short-term investments of $1.8 million as of September 30, 2017 are sufficient to fund the Company into the third quarter of 2018. These factors raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date these financial statements are issued. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
Our ability to continue as a going concern and to continue further development of the Company’s lead therapeutic candidate, the CardiAMP cell therapy system, and the Company’s second therapeutic candidate, the CardiALLO cell therapy system, through and beyond the third quarter of 2018, will require the Company to raise additional capital. The Company plans to raise additional capital, potentially including debt and equity arrangements, to finance its future operations. If adequate funds are not available, the Company may be required to reduce operating expenses, delay or reduce the scope of its product development programs, obtain funds through arrangements with others that may require the Company to relinquish rights to certain of its technologies or products that the Company would otherwise seek to develop or commercialize itself, or cease operations. While the Company believes in the viability of its strategy to raise additional funds, there can be no assurances to that effect.
Going Concern and Liquidity - The Company has incurred net losses and negative cash flows from operations since its inception and had an accumulated deficit of $105.7 million as of March 31, 2020. Management expects operating losses and negative cash flows to continue through at least the next several years. The Company expects to incur increasing costs as the pivotal CardiAMP Heart Failure trial is advanced and development of the CardiAMP and CardiALLO Cell Therapy Systems continue. Therefore, absent additional funding, management believes cash and cash equivalents of $2.6 million as of March 31, 2020 are not sufficient to fund the Company beyond the second quarter of 2020. These factors raise substantial doubt about the Company’s ability to continue as a going concern beyond one year from the date these financial statements are issued. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. | |||
The Company’s ability to continue as a going concern and to continue further development of its therapeutic candidates beyond the second quarter of 2020, will require the Company to raise additional capital. The Company plans to raise additional capital, potentially including debt and equity arrangements, to finance its future operations. While management believes this plan to raise additional funds will alleviate the conditions that raise substantial doubt, these plans are not entirely within its control and cannot be assessed as being probable of occurring. If adequate funds are not available, the Company may be required to reduce operating expenses, delay or reduce the scope of its product development programs, obtain funds through arrangements with others that may require the Company to relinquish rights to certain of its technologies or products that the Company would otherwise seek to develop or commercialize itself, or cease operations. | |||
(c) | Use of Estimates | ||
The preparation of the financial statements in accordance with U.S. GAAP requires management to make certain estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ materially from those estimates. Significant items subject to such estimates and assumptions include share-based compensation, the useful lives of property and equipment, right-of-use assets and related liabilities, incremental borrowing rate, allowances for doubtful accounts and sales returns, derivative instruments, clinical accruals, and inventory valuation. |
The preparation of the financial statements in accordance with U.S. GAAP requires Company management to make certain estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ materially from those estimates. Significant items subject to such estimates and assumptions include the useful lives of property and equipment; allowances for doubtful accounts and sales returns; inventory valuation; fair value of the convertible preferred stock warrant liability; fair value of the maturity date preferred stock warrant liability; fair value of the convertible shareholder notes derivative liability; and share-based compensation.
| |||
| |||
The condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiary. All intercompany accounts and transactions have been eliminated during the consolidation process. |
| |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
9
(3) Fair Value Measurement
The fair value of financial instruments reflects the amounts that the Company estimates to receive in connection with the sale of an asset or paid in connection with the transfer of a liability in an orderly transaction between market participants at the measurement date (exit price). The Company follows a fair value hierarchy that prioritizes the use of inputs used in valuation techniques into the following three levels:
Level 1 – quoted prices in active markets for identical assets and
Level 2 – observable inputs other than quoted prices in active markets for identical assets and liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or
Level 3 – unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.
10
The following table sets forth the fair value of
Inventories are stated at the lower of cost or net realizable value using the average cost method. Inventories
Write downs for excess or expired inventory are based on
Property and equipment, net
Depreciation expense totaled approximately (6) Operating Lease Right-of-Use Asset, Net The Company’s operating lease is a property lease for its laboratory and ROU assets and The lease expense for the
Accrued expenses and other current liabilities consisted of the following (in thousands):
13
(8) Stockholders’ Equity
Public Offering on Form S-1 Registration Statement - In April 2019, the Company submitted a Form S-1 Registration Statement (S-1) to the Securities and Exchange Commission (SEC), which was subsequently amended. On August 2, 2019, the Company entered into an underwriting agreement with Maxim Group LLC, as representative of the several underwriters named therein, relating to a firm commitment underwritten public offering pursuant to the S-1, of 1,666,667 units consisting of one share of common stock, par value of $0.001 per share, and a warrant to purchase one share of common stock. The offering price to the public was $6.00 per unit. The warrants, which are equity classified, are immediately exercisable for shares of common stock at a price of $6.30 per share and expire five years from the date of issuance. In addition, the underwriters were granted 11,958 warrants exercisable at a per warrant exercise price of $6.60 as part of their compensation. The underwriters were granted a 45-day option to purchase up to 250,000 additional shares of common stock, and/or 250,000 additional warrants to cover over-allotments, if any. The closing of the offering occurred on August 6, 2019. After deducting underwriting discounts and commissions and estimated offering expenses payable by the Company, BioCardia realized net proceeds of approximately $8.84 million. On September Up List to Nasdaq - On August 2, 2019, the Company’s common stock and warrants to purchase common stock began trading on the Nasdaq Capital Market. Previously the common stock was quoted on the OTCQB Marketplace (OTCQB) under the symbol, “BCDA”. “BCDA” and “BCDAW” are
Upon the closing of the Reverse Stock Split - On June 6, 2019, the Company effected a 1-for-9 reverse stock split of the Company’s common stock. Neither the par value nor the authorized number of shares was adjusted as a result of the reverse stock split. All issued and outstanding common stock, warrants, stock options, restricted stock units and per share amounts contained in the accompanying consolidated financial statements and notes to the consolidated financial statements have been retroactively adjusted to give effect to the reverse stock split for all periods presented. Warrants - Set forth below is a table of activity of warrants for common stock and the related weighted average exercise price per warrant.
14 (9) Share-Based Compensation
The
On January 29, 2020 (the “repricing date”), the Company’s Board of Directors repriced certain previously granted and still outstanding vested and unvested stock option awards held by employees, executives and certain service providers of the Company; as a result, the exercise price was lowered to $5.32 per share. No other terms of the repriced stock options were modified, and the repriced stock options will continue to vest according to their original vesting schedules and will retain their original expiration dates. As a result of the repricing, 515,036 vested and unvested stock options outstanding with original exercise prices ranging from $10.05 to $97.21, were repriced. The repricing resulted in incremental stock-based compensation expense of $569,000, of which $412,000 related to vested employee stock option awards and was expensed on the repricing date, and $157,000 related to unvested stock option awards and is being amortized on a straight-line basis over the approximately three year remaining weighted average vesting period of those awards.
The following table summarizes the activity of stock options and related information:
15
Unrecognized share-based compensation for employee and nonemployee options granted through
The following summarizes the activity of non-vested RSUs:
(10) Net Loss per Share
Basic net loss per share is computed by dividing net loss by the weighted-average number of common shares outstanding for the period.
The following outstanding common stock equivalents were excluded from the computation of diluted net loss per share for the periods presented because including them would have been antidilutive:
During the
As of
In
17
Subject to any forgiveness under the PPP, the Note mature two years following the date of issuance of the Note and includes a period for the first six months during which time required payments of interest and principal are deferred. Beginning on the seventh month following the date of the Note, the Borrower is required to make 18 monthly payments of principal and interest. The Note may be prepaid at any time prior to maturity with no prepayment penalties. The Note provides for customary events of default, including, among others, those relating to breaches of the Borrower’s obligations under the Note, including a failure to make payments, any bankruptcy or similar proceedings involving the Borrower, and certain material effects on the Borrower’s ability to repay the Note. ITEM 2.
The following discussion of our financial condition and results of operations should be read in conjunction with our financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q. This discussion contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Any and all statements contained in this Annual Report that
18
Overview
We are a clinical-stage regenerative medicine company developing novel therapeutics for cardiovascular and pulmonary diseases with large unmet medical needs. CardiAMP and CardiALLO cell therapies are the Company’s biotherapeutic product candidates in clinical development. Our
To date, we have devoted substantially all
We have incurred net losses in each year since our inception. Our net losses were approximately CardiAMP Cell Therapy The CardiAMP Heart Failure Trial is a Phase III, multi-center, randomized, double-blinded, sham-controlled study of up to 260 patients at 40 centers nationwide, which includes a 10-patient roll-in cohort. The Phase III pivotal trial is designed to provide the primary support for the safety and efficacy of the CardiAMP Cell Therapy System for this indication (BCDA-01). The ongoing CardiAMP Heart Failure trial is active at 25 clinical sites and 74 patients have been enrolled to date. The independent Data Safety Monitoring Board (DSMB) completed a prespecified data review in March 2020, which included the safety follow-up results available for these patients. From this review, the DSMB indicated there were no safety concerns with the study results and recommended that the trial continue as planned. We anticipate another prespecified DSMB interim readout from the trial in the fourth quarter of 2020 on all patients enrolled at that time point, which will include a futility analysis on the 60 patients that will have reached one-year follow-up. This fourth quarter of 2020 event is anticipated to be the first randomized data set including the primary efficacy endpoint reviewed by the DSMB. We are currently assessing the impact of COVID-19 on the enrollment in the CardiAMP Heart Failure Trial. Our clinical centers have advised us that they will not be performing elective procedures until restrictions on elective procedures are lifted. Many centers are also delaying patient follow-up visits during this period out of concern for patient exposure to COVID-19. In alignment with recent FDA guidance on clinical trials, “FDA Guidance on Conduct of Clinical Trials of Medical Products during COVID-19 Pandemic Guidance for Industry, Investigators, and Institutional Review Boards”, we are taking steps to address unavoidable protocol deviations due to COVID-19 illness and/or COVID-19 control measures. The Company has already had exchanges with the FDA modifying the protocol to require documentation for patients whose follow-up visits may be outside the time window specified in the protocol due to patient protective measures. Clinical sites remain engaged, and although there are no patients actively being treated or returning for follow-up during the current “shelter in place” period, most clinical research teams at the twenty five sites are advancing paperwork and chart review through electronic records to further advance the trial. The FDA has approved a second IDE for the randomized controlled pivotal trial of the CardiAMP Cell Therapy System in patients with refractory chronic myocardial ischemia (BCDA-02) for up to 343 patients at up to 40 clinical sites in the United States. This therapeutic approach uses many of the same novel aspects as the CardiAMP Heart Failure Trial and is expected to leverage our experience and investment in the heart failure trial. We anticipate that many of the investigators and sites will be the same for both the heart failure and chronic myocardial ischemia indications. We are actively working to activate first clinical sites for this study.
19 The Department of Health & Human Services Centers for Medicare & Medicaid Services, or CMS, has designated that both the CardiAMP Heart Failure Trial and the CardiAMP Chronic Myocardial Ischemia Trial qualify for Medicare national coverage. Covered costs include patient screening, the CardiAMP Cell Therapy System and procedure, and clinical follow-up at one and two years after the procedure. Private insurance plans covering 50 million insured Americans follow this CMS reimbursement policy and are similarly anticipated to cover these costs. This coverage significantly reduces our cost of conducting these pivotal trials. ALLOGENIC Cell Therapy for Cardiac and Pulmonary Disease Our second therapeutic platform is our investigational culture expanded bone marrow derived allogenic or “off the shelf” mesenchymal cell therapy being advanced for cardiac and pulmonary disease. These are the Company’s Neurokinin 1 Receptor Positive Mesenchymal Stem Cells (NK1R+ MSC). We are actively working to secure FDA acceptance of an Investigational New Drug (“IND”) application for a Phase I/II trial for CardiALLO Cell Therapy System for the treatment of ischemic systolic heart failure (BCDA-03). To date we have completed manufacturing validation runs of these cells at BioCardia to support future clinical studies as well as preclinical animal data and have received written input from the FDA on the protocol design and the chemistry manufacturing and controls. Our goal is to receive FDA acceptance of the IND in the second quarter of 2020. The Company also intends to submit an IND for the use of its ALLO delivered via intravenous (IV) infusion for Acute Respiratory Distress Syndrome (ARDS) caused by COVID-19. Based on preliminary clinical reports on COVID-19, respiratory failure complicated by ARDs is the leading cause of death for COVID-19 patients. ARDS is a type of respiratory failure characterized by rapid onset of widespread inflammation in the lungs. Helix™ Biotherapeutic Delivery System We believe our Helix Biotherapeutic Delivery System or “Helix” is the leading percutaneous catheter delivery system for cardiovascular regenerative medicine. It enables investigational studies of local delivery of cell and gene-based therapies, including CardiAMP and CardiALLO cell therapies to treat cardiovascular indications. Helix is in use or has potential to be used to treat many cardiac diseases including heart failure with reduced ejection fraction, heart failure with preserved ejection fraction, obstructive hypertrophic cardiomyopathy, myocardial infarction, chronic myocardial ischemia, and cardiac conduction disorders. The Helix’s small hollow, distal helical needle is advanced, similar to an angioplasty catheter, and is passed over the aortic arch and across the aortic valve through our Morph guide catheter or “Morph”. The Helix is then advanced from within the Morph, and its helical needle is rotated into the heart tissue to provide active fixation during therapeutic delivery, similar to the active fixation electrodes used in cardiac pacing. This fixation to the beating heart wall provides for stability and control during the delivery procedure. It uses simplified fluoroscopic imaging, crosses the aortic arch and valve over a guide wire, and provides the operator with three degrees of freedom to maximize operator control. The Helix is approved in Europe with CE Mark and is under investigational use in the United States and is being used in pre-clinical and clinical investigations of cell, gene, and protein therapies. 20 Morph Deflectable Guide and Sheaths Product Our Morph catheter is designed to enable physicians to navigate through tortuous anatomy, customize the shape of the catheter to the patient’s anatomy and their clinical needs during the procedure, and to have stellar back up support once positioned. Morph catheters enable all Helix procedures and have been commercially available to treat more than ten thousand patients. A number of Morph guides and sheaths are approved for commercial sale in the United States, including the AVANCE™ steerable introducer which received FDA clearance in May 2019 and was first used commercially in September 2019 and the Morph DNA guide, which received clearance in January 2020. Certain Morph catheter systems are approved in Europe with CE Mark.
Financial Overview
Revenue
We currently have a portfolio of enabling and delivery products, from which we have generated modest revenue. Net product revenues include commercial sales of our Morph vascular access system in the US and EU and collaboration agreement revenues include revenue from partnering agreements with corporate and academic institutions. Under these partnering agreements, we provide our Helix biotherapeutic delivery system and customer training and support for use in preclinical and clinical studies.
Cost of Goods Sold
Cost of goods sold includes the costs of raw materials and components, manufacturing personnel and facility costs and other indirect and overhead costs associated with manufacturing our commercial enabling and delivery
Research and Development Expenses
Our research and development expenses consist primarily of:
We expense all research and development costs in the periods in which they are incurred. Costs for certain development activities are recognized based on an evaluation of the progress
We plan to increase our research and development expenses for the foreseeable future as we continue
Selling, General and Administrative Expenses
Selling, general and administrative expenses consist primarily of salaries and related costs for employees in executive, finance and administration, sales, corporate development and administrative support functions, including share-based compensation expenses and benefits. Other
21
Other Income (Expense)
Other income and expense
Critical Accounting Policies and Estimates
Our
December 31, 2019, filed April 9, 2020.
Results of Operations
Comparison of Three Months Ended
The following table summarizes our results of operations for the three months ended
22
Revenue. Revenue
Cost of Goods Sold. Cost of goods sold decreased
Research and Development Expenses. Research and development expenses increased by approximately
Selling, General and Administrative Expenses. Selling, general and administrative expenses for the first quarter of 2020 increased by approximately
Liquidity and Capital Resources
We have incurred net losses each year since our inception and as of
We have funded our operations principally through the sales of equity and convertible debt and equity securities as well as the cash acquired through our reverse merger transaction that was completed on October 24, 2016, $3.8 million raised from the
The following table shows a summary of our cash flows for the periods indicated (in thousands):
23
Cash Flows from Operating Activities. The increase in overall spending for operating activities of
Cash Flows from Investing Activities. Net cash used in investing activities of office equipment. Net cash used in investing activities of $55,000 during the first quarter of 2019 consisted primarily of purchases of lab equipment.
Cash Flows from Financing Activities. PPP Loan On May 1, 2020, BioCardia Lifesciences, Inc., our wholly owned subsidiary, entered into a promissory note (the “Note”) with Silicon Valley Bank (the “Lender”) evidencing an unsecured loan in the aggregate principal amount of $506,413 pursuant to the Paycheck Protection Program (the “PPP”) of the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) administered by the U.S. Small Business Administration. All the funds under the Note were disbursed to us on May 1, 2020. In accordance with the requirements of the CARES Act, we intend to use the proceeds from the Subject to any forgiveness under the PPP, the Note mature two years following the date of issuance of the Note and includes a period for the first six months during which time required payments of interest and principal are deferred. Beginning on the seventh month following the date of the Note, the Borrower is required to make 18 monthly payments of principal and interest. The Note may be prepaid at any time prior to maturity with no prepayment penalties. 24
Future Funding Requirements
To date, we have generated modest revenue from sales of our approved products. We do not know when, or if, we will generate any revenue from our development stage biotherapeutic programs. We do not expect to generate any revenue from sales of our
Based upon our current operating plan, we believe that the cash and cash equivalents of
Our future capital requirements will depend on many factors, including:
the progress, costs, results, and timing of our
FDA acceptance of our
the outcome, costs, and timing of seeking and obtaining FDA and any other regulatory approvals;
the costs associated with securing, establishing, and maintaining commercialization and manufacturing capabilities;
the number and characteristics of product candidates that we pursue, including our product candidates in preclinical development;
the ability of our product candidates to progress through clinical development successfully;
our need to expand our research and development activities;
the costs of acquiring, licensing, or investing in businesses, products, product candidates and technologies;
our ability to maintain, expand and defend the scope of our intellectual property portfolio, including the amount and timing of any payments we may be required to make, or that we may receive, in connection with the licensing, filing, prosecution, defense and enforcement of any patents or other intellectual property rights;
the general and administrative expenses related to being a public company;
our need and ability to hire additional management and scientific, medical and sales personnel;
the effect of competing technological and market developments; and
our need to implement additional internal systems and infrastructure, including financial and reporting systems. 25
Until such time that we can generate meaningful revenue from the sales of approved therapies and products, if ever, we expect to finance our operating activities through public or private equity or debt financings, government or other third-party funding, marketing and distribution arrangements, and other collaborations, strategic alliances and licensing arrangements or a combination of these approaches. To the extent that we raise additional capital through the sale of equity or convertible debt securities, the ownership interests of our
Our condensed consolidated financial statements as of and for the three
The financial statements do not include any adjustments that might result from the outcome of this
Nasdaq Delisting Notice On April 15, 2020, we received written notice (the “Notice”) from The Nasdaq Stock Market LLC (“Nasdaq”) notifying us that, based on our stockholders’ equity of $2.37 million as of December 31, 2019, we are no longer in compliance with the minimum stockholders’ equity requirement of $2.5 million for continued listing on the Nasdaq Capital Market under Nasdaq Listing Rule 5550(b)(1). We have until June 1, 2020 to provide Nasdaq with a specific plan to achieve and sustain compliance with the foregoing listing requirement. If our plan to regain compliance is accepted, Nasdaq may grant an extension of up to 180 calendar days from April 15, 2020 for the Company to evidence compliance. The Notice has no immediate effect on the listing or trading of our common stock or listed warrants to purchase common stock and the common stock and such warrants will continue to trade on the Nasdaq Capital Market under the symbol “BCDA” and “BCDAW,” respectively. We intend to timely submit a plan to Nasdaq to regain compliance with the Nasdaq Listing Rules. In determining whether to accept the plan, Nasdaq will consider such things as the likelihood that the plan will result in compliance with Nasdaq’s continued listing criteria, the Company’s past compliance history, the reasons for our current non-compliance, other corporate events that may occur within Nasdaq’s review period, our overall financial condition and our public disclosures. If Nasdaq does not accept our plan, we may request a hearing, at which hearing we would present our plan to a Nasdaq Hearings Panel.
Off-Balance Sheet Arrangements
During the periods presented, we did not have, nor do we currently have, any off-balance sheet arrangements as defined under the rules of the
Recent Accounting Pronouncements
See Note 2 of our notes to condensed consolidated financial statements for information regarding recent accounting pronouncements that are of significance or potential significance to us.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Our exposure to market risk is currently limited to our cash and cash equivalents, all of which have maturities of less than three months. The goals of our investment policy are preservation of capital, maintenance of liquidity needs, and fiduciary control of cash and investments. We also seek to maximize income from our investments without assuming significant risk or departing from our investment policy. We currently do not hedge interest rate exposure. Because of the short-term nature of our cash equivalents, we do not believe that an increase in market rates would have a material negative impact on the value of our portfolio. 26 Interest Rate Risk As of March 31, 2020, based on current interest rates and total borrowings outstanding, a hypothetical 100 basis point increase or decrease in interest rates would have an immaterial pre-tax impact on our results of operations. Foreign Currency Exchange Risks We are a U.S. entity and our functional currency is the U.S. dollar. The vast majority of our revenues were derived from sales in the United States. We have business transactions in foreign currencies; however, we believe we do not have significant exposure to risk from changes in foreign currency exchange rates at this time. We do not currently engage in hedging or similar transactions to reduce our foreign currency risks. We will continue to monitor and evaluate our internal processes relating to foreign currency exchange, including the potential use of hedging strategies.
ITEM 4. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
In connection with the preparation of this Quarterly Report on Form 10-Q, as of Material Weakness We identified the following material weakness in our internal control over financial reporting
We
However, our efforts to remediate this material weakness
Changes in Internal Control over Financial Reporting
27
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
We have a legal proceeding currently pending under the case captioned Boston Scientific Corp., et al., v. BioCardia Inc., Case No. 3:19-05645-VC, U.S.D.C., N. D. Cal (the “Litigation”). The Litigation relates to matters we raised in a letter to Ms. Surbhi Sarna, nVision Medical and Boston Scientific based on BioCardia’s discovery in January 2019 that Ms. Sarna had assigned to a company she founded, nVision Medical, a patent and patent applications she had filed while a BioCardia employee. nVision subsequently was acquired by Boston Scientific. BioCardia made various claims, including that the patent and patent application rightfully belonged to BioCardia pursuant to Ms. Sarna’s invention assignment agreement, that the proceeds from the sale of nVision to Boston Scientific rightfully belonged to BioCardia because they were the direct result of Ms. Sarna’s breach of her obligation to assign to BioCardia the patent and patent applications and the use of misappropriated BioCardia trade secrets. On September 6, 2019, Boston Scientific Corporation, Boston Scientific Scimed Inc, and Fortis Advisors LLC (the “Boston Scientific Parties”) filed a complaint against BioCardia in the United States District Court Northern District of California, Case no. 3:19-05645-VC, seeking declarations that the claims made in BioCardia’s correspondence were without basis. On October 31, 2019, BioCardia filed a counterclaim against the Boston Scientific Parties and Ms. Sarna for breach of contract, misappropriation of trade secrets and correction of inventorship on the patents naming Ms. Sarna as an inventor. BioCardia seeks imposition of constructive trusts both on the patents naming Ms. Sarna as an inventor and the proceeds received from the sale of nVision to Boston Scientific, as well as damages, including unjust enrichment damages measured by the proceeds received from the sale of nVision to Boston Scientific. On April 9, 2020, we entered into a Litigation Funding Agreement with BSLF, L.L.C., an entity owned and controlled by Andrew Blank, a member of our board of directors, for the purpose of funding the Litigation. On April 23, 2020, the Company filed a complaint against nVision Medical Corporation arising out of the same transaction as its counterclaims in the case filed by Boston Scientific. An April 29, 2020 Judge Vincent Chhabria, the Judge who is presiding over the Boston Scientific case, determined that the nVision case is “related to” the case filed by Boston Scientific and accordingly reassigned the nVision case to himself. 28
ITEM 1A. RISK FACTORS
In addition to
If we are unable to obtain Nasdaq acceptance of our plan to have a minimum stockholders’ equity requirement of $2.5 million or satisfy any of the 29
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. MINE SAFETY DISCLOSURES
Not applicable.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBIT INDEX
30
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
31
|