BIOCARDIA, INC.

Condensed Consolidated Balance Sheets

(In thousands, except share and per share amounts)

See accompanying notes to the unaudited condensed consolidated financial statements.

BIOCARDIA, INC.

Condensed Consolidated Statements of Operations

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(unaudited)

See accompanying notes to the unaudited condensed consolidated financial statements.

BIOCARDIA, INC.

Condensed Consolidated Statements of Stockholders’ Equity (Deficit)

(In thousands, except share amounts)

(unaudited)

See accompanying notes to the unaudited condensed consolidated financial statements.

BIOCARDIA, INC.

Condensed Consolidated Statements of Cash Flows

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(unaudited)

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BioCardia, Inc.

Notes to Unaudited Condensed Consolidated Financial Statements

BioCardia, Inc. (we, us, our, BioCardia or the Company), is a clinical-stage company focused on developing cellular and cell-derived therapeutics for the treatment of cardiovascular and pulmonary diseases with significant unmet medical needs. We are advancing two cell therapy platforms derived from bone marrow in clinical trials today. Our CardiAMP® autologous mononuclear cell therapy platform is being advanced for two clinical indications: ischemic heart failure with reduced ejection fraction (HFrEF) and refractory angina resulting from chronic myocardial ischemia (CMI). Our neurokinin-1 receptor positive (NK1R+) allogeneic mesenchymal stem cell (MSC) therapy platform is being advanced as an “off the shelf” cell therapy for two clinical indications: the treatment of ischemic HFrEF and for acute respiratory distress syndrome (ARDS). Our autologous CardiAMP and our allogeneic NK1R+ cell therapies intended for cardiac indications of HFrEF and CMI are enabled by our Helix™ minimally invasive intramyocardial therapeutic delivery platform. We partner this therapeutic delivery platform selectively with others seeking to develop biotherapeutic interventions for local delivery to the heart. To date, we have devoted substantially all our resources to research and development efforts relating to our 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 our intellectual property.

BioCardia, Inc. (we, us, our, BioCardia or the Company), is a clinical-stage company focused on developing cellular and cell-derived therapeutics for the treatment of cardiovascular and pulmonary diseases with significant unmet medical needs. The Company’s lead therapeutic candidates are based on the CardiAMP Cell Therapy System, a platform which provides an autologous bone marrow derived cell therapy for treatment in two clinical indications: ischemic heart failure and refractory angina resulting from chronic myocardial ischemia. The Company’s second therapeutic platform is an investigational bone marrow derived allogeneic “off the shelf” Neurokinin-1 Receptor Positive mesenchymal stem cell therapy for the treatment of cardiac and pulmonary disease. To date, we have devoted substantially all our resources to research and development efforts relating to our 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 our 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. We manage our operations as a single segment for the purposes of assessing performance and making operating decisions.

The fair value of financial instruments reflects the amounts that we estimate 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). We follow a fair value hierarchy that prioritizes the use of inputs used in valuation techniques into the following three levels:

The following table sets forth the fair value of itsour financial assets measured on a recurring basis as of September 30, 2022 and December 31, 2021 and indicates the fair value hierarchy utilized to determine such fair value (in thousands):

Property and equipment, net consisted of the following (in thousands):

Depreciation expense totaled $21,000 and $64,000 for the three and nine months ended September 30, 2023, respectively. Depreciation expense totaled $29,000 and $61,000 for the three and nine months ended September 30, 2022, respectively. Depreciation expense totaled $15,000 and $45,000 for the three and nine months ended September 30, 2021, respectively.

Our operatingIn December 2021, we entered into a lease related to a property lease for our laboratory and corporate offices, expired in December 2021, and we entered into a new lease which expires in January 2027, with an option for us to extend a further 36 months after expiration. Our lease agreements do not contain any material residual guarantees or material restrictive covenants. We determine if an arrangement is a lease at inception by assessing whether it conveys the right to control the use of an identified asset for a period of time in exchange for consideration.

Right-of-use (ROU) assets and lease liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. The Company’sOur lease does not provide an implicit rate. We used an adjusted historical incremental borrowing rate, based on the information available at the approximate lease commencement date, to determine the present value of lease payments. Variable rent expense is made up of expenses for common area maintenance and shared utilities and were not included in the determination of the present value of lease payments. We have no finance leases.

Our lease expense was $121,000 and $362,000 for the three and nine months ended September 30, 2023, respectively. Our lease expense for the three and nine months ended September 30, 2022 was $121,000 and $362,000, respectively. OurThe cash paid under the operating lease expensefor base rent for the three and nine months ended September 30, 20212023 was $150,000$117,000 and $451,000,$353,000, respectively. The cash paid under the operating lease for base rent for the three and nine months ended September 30, 2022 was $114,000 and $287,000, respectively. The cash paid under the operating lease during the three and nine months ended September 30, 2021 was $162,000 and $486,000, respectively. On September 30, 2022,2023, the weighted average remaining lease term was 4.343.59 years, and the weighted average discount rate was 10.74%.

Future minimum lease payments under the operating lease as of September 30, 20222023 were as follows (in thousands):

Accrued expenses and other current liabilities consisted of the following (in thousands):             

Warrants - Set forth below is a table of activity of warrants for common stock and the related weighted average exercise price per warrant.

Lincoln Park Capital stock purchase agreementJune 2023 Financing -On March 29, 2021, the CompanyJune 21, 2023, we sold to certain existing investors and Lincoln Park Capital Fund, LLC (Lincoln Park) entered into a purchase agreement (the Purchase Agreement)other institutional investors, as well as certain of our directors and a registration rights agreement (the Registration Rights Agreement), pursuant to which the Company has the right to sell to Lincoln Parkofficers, 1,133,141 shares of the Company’sour common stock havingin a registered direct offering (the June 2023 Offering) at an offering price of $2.336 per share. Certain of our directors and executive officers purchased an aggregate value of up to $20203,337 of such shares. The gross proceeds of the June 2023 Offering were approximately $2.6 million, subject to certain limitations and conditions set forth in the Purchase Agreement (the Offering).

Pursuant to the Purchase Agreement, in March 2021, Lincoln Park purchased 373,832 shareswith associated issuance costs of common stock, at a price of $5.35 per share, for a total gross purchase price of $2 million (the Initial Purchase) and the Company issued 80,000 shares of common stock as commitment shares, which included 5,000 commitment shares issued on a pro rata basis for the initial $2 million purchase.

As of September 30, 2022, the Company had not sold any common stock to Lincoln Park under the Purchase Agreement other than the Initial Purchase.approximately $194,000.

Cantor Fitzgerald Sales agreement - On April 12, 2022, the Companywe entered into a sales agreement (the Sales(Sales Agreement) with Cantor Fitzgerald & Co. (Cantor) as the sales agent, pursuant to which the Companywe may offer and sell, from time to time, through Cantor, shares of its common stock having an aggregate offering price of up to $10.5 million (the ATM(ATM Offering). The Company isWe are not obligated to sell any common stock shares pursuant to the Sales Agreement. Under the terms of the Sales Agreement, the Company payswe pay Cantor a commission of 3% of the aggregate proceeds from the sale of shares and reimbursesreimburse certain legal fees. The prospectus supplement covering the offer and sale of up to $10.5 million of common stock under the ATM Program, of which approximately $8.3 million was still available for offer and sale as of September 30, 2023, expired in conjunction with the expiration of the corresponding registration statement on October 20, 2023.

During the three and nine months ended September 30, 2023, we sold 33,282 and 168,122 shares of common stock under the ATM Offering at then-market prices for total gross proceeds of approximately $92,000 and $395,000, with net issuance costs of approximately $48,000 and $90,000, respectively. During the three months ended September 30, 2022, the Companywe sold 66,704 shares of common stock under the ATM Offering at then-market prices for total gross proceeds of $139,000, with a net refund of issuance costs of $1,000. During the nine months ended September 30, 2022, the Companywe sold 641,704 shares of common stock under the ATM Offering at then-market prices for total gross proceeds of approximately $1.7 million, with associated issuance costs of $231,000.

Lincoln Park Capital stock purchase agreement - On March 29, 2021, we entered into a purchase agreement with Lincoln Park Capital Fund, LLC (Lincoln Park) (Purchase Agreement) and a registration rights agreement (Registration Rights Agreement), pursuant to which we have the right to sell to Lincoln Park shares of our common stock having an aggregate value of up to $20 million, subject to certain limitations and conditions in the Purchase Agreement.

Pursuant to the Purchase Agreement in March 2021, Lincoln Park purchased 373,832 shares of common stock, at a price of $5.35 per share, for a total gross purchase price of $2 million (Initial Purchase) and we issued 80,000 shares of common stock as commitment shares, which included 5,000 commitment shares issued on a pro rata basis for the initial $2 million purchase.   

On June 30, 2023, we provided notice to Lincoln Park of our election to terminate the Purchase Agreement. Following such termination, which was effective July 3, 2023, we may not sell any further shares of our common stock under the Purchase Agreement. As of the effective date of termination of the Purchase Agreement, we had not sold any common stock to Lincoln Park under the Purchase Agreement other than the Initial Purchase.

The share-based compensation expense is recorded in research and development, and selling, general and administrative expenses based on the employee's or non-employee’s respective function. No share-based compensation was capitalized during the periods presented. Share-based compensation expense for the three and nine months ended September 30, 20222023 and 20212022 was recorded as follows (in thousands):

The following table summarizes the activity of stock options and related information:

Unrecognized share-based compensation for employee and nonemployee options granted through September 30, 20222023 is approximately $2.3$1.6 million to be recognized over a remaining weighted average service period of 2.62.5 years.

Share-Based Compensation (RSUs)

The following summarizes the activity of non-vested RSUs:

RSUs vested and settled are converted into the Company’sour common stock on a one-for-one basis. RSUs are generally subject to forfeiture if employment terminates prior to the release of vesting restrictions. Of the 52,799 RSUs outstanding on September 30, 2022, 50,065 RSUs are vested and have not been settled and 2,734 have not yet vested. The related compensation expense, which is based on the grant date fair value of the Company’sour common stock multiplied by the number of units granted, is recognized ratably over the period during which the vesting restrictions lapse. Unrecognized share-based compensation for employee and nonemployee RSUs granted through September 30, 2022 is approximately $7,000 to be recognized over a remaining weighted average service period of 0.6 years.

2023 was $0.

Basic net loss per share is calculated by dividing the net loss by the weighted average number of shares of common stock outstanding and fully vested restricted stock units. Diluted net loss per share is computed by dividing the net loss by the weighted-average number of common share equivalents outstanding for the period determined using the treasury-stock method. Common stock equivalents are comprised of unvested restricted stock units, warrants to purchase common stock and options outstanding under the stock option plans. For all periods presented, there is no difference in the number of shares used to calculate basic and diluted shares outstanding since the effects of potentially dilutive securities are antidilutive due to the net loss position.

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 three and nine months ended September 30, 20222023 and 2021,2022, there was no income tax expense or benefit for federal or state income taxes in the accompanying condensed consolidated statements of operations due to the Company’sour net loss and a full valuation allowance on the resulting deferred tax assets.

As of September 30, 2022, the Company retains2023, we retain a full valuation allowance on itsour deferred tax assets in all jurisdictions. The realization of itsour deferred tax assets depends primarily on itsour ability to generate future taxable income which is uncertain. The Company doesWe do not believe that itsour deferred tax assets are realizable on a more-likely-than-not basis; therefore, the net deferred tax assets have been fully offset by a valuation allowance.   

On April 9, 2020, the Companywe entered into a Litigation Funding Agreement (the Funding(Funding Agreement) with BSLF, L.L.C. (the Funder)(Funder), an entity owned and controlled by Andrew Blank, Chair of BioCardia’s board of directors, for the purpose of funding the Company’sour legal proceedings and any and all claims, actions and/or proceedings relating to or arising from 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). On April 12, 2021, all parties to the Litigation entered into a confidential settlement agreement and all claims were dismissed.

In March 2022, the Companywe entered into confidential settlement agreements with itsour litigation service providers and the Funder to terminate the Funding Agreement and conclude on all remaining matters thereunder (the Litigation Funding Settlement). Under the terms of the confidential agreements,Litigation Funding Settlement, litigation and corporate counsel provided credits and refunds of legal fees totaling $688,000,$688,000, which offset the amounts owed to the Companyus by the Funder under the Funding Agreement, and provided up to $300,000 in future discounts on legal services. As a result of the Litigation Funding Settlement, the Companywe will remit the discounts, as received, to the Funder on a quarterly basis. As a result ofDuring the settlement, accounts payable was reduced by $523,000, the $562,000 other receivable due from the related party was eliminated,three and a $156,000 related party payable was included in accrued expensesnine months ended September 30, 2023, we received discounts totaling $57,000 and other current liabilities as of December 31, 2021. The Company remitted the $156,000 related party payable to the Funder on March 17, 2022.$110,000, respectively. During the three and nine months ended September 30, 2022, the Companywe received discounts totaling $14,000 and $61,000, respectively, with $14,000respectively. As of September 30, 2023 and December 31, 2022, we recorded as a related party payable for discounts owed to the Funder in accrued expenses and other current liabilities asof $56,000 and $18,000, respectively. As of September 30, 2022.

2023, up to $112,000 of future potential discounts are due to the Funder.

Contingencies - The CompanyWe may be subject to various claims, complaints, and legal actions that arise from time to time in the normal course of business. Management is not aware of any current legal or administrative proceedings that are likely to have an adverse effect on the Company’sour business, financial position, results of operations, or cash flows.

Uncertainties - The results for the three and nine months ended September 30, 20222023 are not necessarily indicative of the results to be expected for the year ending December 31, 20222023 or for any other interim period or for any other future year, particularly in light of COVID-19 and its impact on domestic and global economies. Governmental and business reactions to the pandemic, and resulting economic disruptions, have the potential to materially impact our business and influence our business decisions. While the impact of COVID-19 did not have a material adverse effect on our financial position or results of operations for the periods presented, the Company’sour future assessment of the magnitude and duration of COVID-19 and related factors, could result in material impacts to the Company’sour financial statements in future reporting periods.

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 Quarterly Report that are not statements of historical fact may be deemed forward-looking statements. Terms such as “may,” “might,” “would,” “should,” “could,” “project,” “estimate,” “pro-forma,” “predict,” “potential,” “strategy,” “anticipate,” “attempt,” “develop,” “plan,” “help,” “believe,” “continue,” “intend,” “expect,” “future” and terms of similar import (including the negative of any of the foregoing) may be intended to identify forward-looking statements. However, not all forward-looking statements may contain one or more of these identifying terms. Forward-looking statements in this Quarterly Report may include, without limitation, statements regarding (i) the plans and objectives of management for future operations, including plans or objectives relating to the development of our cell therapy systems and our clinical trials, (ii) a projection of income (including income/loss), earnings (including earnings/loss) per share, capital expenditures, dividends, capital structure or other financial items, (iii) our ability to raise additional capital, (iv) our future financial performance, including any such statement contained in a discussion and analysis of financial condition by management or in the results of operations included pursuant to the rules and regulations of the SEC and (vi)(v) the assumptions underlying or relating to any statement described in points (i) – (iv) above. Our actual results may differ materially from those discussed below. Factors that could cause or contribute to such differences include, but are not limited to, those identified below and elsewhere in this Quarterly Report on Form 10-Q, and those listed in our Annual Report on Form 10-K for the year ended December 31, 2021.2022, which is incorporated by reference herein. Historical results are not necessarily indicative of future results. Except as required by law, we undertake no obligation to update publicly any forward-looking statements for any reason after the date of this Quarterly Report on Form 10-Q to conform these statements to actual results or to changes in our expectations.    

Overview

We are a clinical-stage company focused on developing cellular and cell-derived therapeutics for the treatment of cardiovascular and pulmonary diseases with largesignificant unmet medical needs. We are committed to applying our expertiseadvancing two cell therapy platforms derived from bone marrow in the fields ofclinical trials today. Our CardiAMP® autologous and allogeneic cell-based therapies to improve the lives of patients with cardiovascular and pulmonary conditions. Our CardiAMPmononuclear cell therapy platform provides an autologous bone marrow derived cell therapy (using a patient’s own cells)is being advanced for the treatment of two clinical indications: ischemic heart failure that develops after a heart attack (BCDA-01)with reduced ejection fraction (HFrEF) and refractory angina resulting from chronic myocardial ischemia (BCDA-02)(CMI). Our neurokinin-1 receptor positive (NK1R+) allogeneic mesenchymal stem cell (MSC) therapy platform derived from donor cells and intended to be providedis being advanced as an “off the shelf,” is also being advancedshelf” cell therapy for two indications, heart failure (BCDA-03)clinical indications: the treatment of ischemic HFrEF and for the pulmonary indication of acute respiratory distress that has developed from COVID-19 (BCDA-04)syndrome (ARDS).

Our Helix™ Biotherapeutic Delivery System platform, or Helix, delivers therapeutics into the heart muscle with a helical needle from within the heart. It enables local delivery of cell, geneautologous CardiAMP and protein-based therapies, including our ownallogeneic NK1R+ cell therapies to treatintended for cardiac indications. The Helix system is CE marked in Europeindications of HFrEF and under investigational use in the United States.CMI are enabled by our Helix™ minimally invasive intramyocardial therapeutic delivery platform. We selectively partner this therapeutic delivery platform with firms developing other cell, geneothers seeking to develop biotherapeutic interventions for local delivery to the heart.

To date, we have devoted substantially all of our resources to research and protein therapies utilizing the Helixdevelopment efforts relating to our therapeutic candidates and other biotherapeutic delivery systems, that weincluding conducting clinical trials, developing manufacturing and sales capabilities, in-licensing related intellectual property, providing general and administrative support for these operations and protecting our intellectual property. We have developed.  also generated modest revenues from sales of our approved products. We have funded our operations primarily through the sales of equity and convertible debt securities, and certain government and private grants.

CardiAMP Cell Therapy for Heart Failure and Chronic Myocardial Ischemia

The Company’s lead platform, CardiAMP cell therapy, is an autologous cell therapy being advanced for two indications in pivotal clinical trials: heart failure and chronic myocardial ischemia.

BCDA-01 CardiAMP Autologous Cell Therapy for Ischemic Heart Failure (BCDA-01) and for Chronic Myocardial Ischemia (BCDA-02)

The CardiAMP Heart Failure Trial is a Phase III, multi-center,an ongoing randomized, double-blinded, sham-controlled study ofcontrolled clinical trial in the United States that was approved for up to 260 patients at up to 40 centers nationwide, which includes a 10-patient roll-in cohort. The Phase III pivotalclinical centers. On July 21, 2023, the study’s Data Safety Monitoring Board (DSMB) recommended that enrollment in the trial is designed to providebe paused “based on an analysis of trial data and the primary supportFS composite endpoint assessment, unrelated to any emergent safety events, and pending an outcome analysis of patients currently completing one year follow-up as well as the interim results of newly enrolled patients completing their imminently scheduled treatment.”  Further, the DSMB recommended “the blind not be broken to protect the integrity of the outcomes yet to be collected and to ensure the study may be restarted without compromise after completion of the one-year data analysis.”

The Company has determined that it would be difficult, if not impossible, to re-start the trial as currently designed after pausing and completing the one-year data analysis in the fourth quarter of 2024. The DSMB interim review was based on available data for 132 procedures involving 111 randomized patients and included a review of the first interim statistical analysis as described in the adaptive design statistical analysis plan.  During the third quarter of 2023, BioCardia worked with the study’s DSMB to unblind a small committee within the Company to review the closed session DSMB meeting report of interim study results to better understand the rationale behind their recommendation. After reviewing the interim dataset as presented to the DSMB, along with the finding that the primary endpoint at one year was unlikely to be met with the current study design, management agrees with the DSMB’s recommendation to follow patients through one-year follow-up, while maintaining the study double-blind in order to protect the integrity of the outcomes yet to be collected for the safety and efficacy of the CardiAMP Cell Therapy System for heart failure which develops after a patient has a heart attack (BCDA-01). The trial is active at 20 clinical sites and 115 patients have been enrolled.  

In January 2022, the U.S. Food and Drug Administration (FDA) granted Breakthrough Device Designation for the CardiAMP Cell Therapy System for the treatment of heart failure. This Breakthrough Device Program is designed to expedite FDA approval of certain novel devices or device-led combination products (i.e., products that combine drugs, devices or biological products) that have the potential to provide more effective treatment or diagnosis of life-threatening or irreversibly debilitating diseases or conditions. It is believed that the CardiAMP Cell Therapy System is the first cardiac cell therapy to receive an FDA Breakthrough designation.   

In February 2022, Health Canada, the country’s health services agency, sent BioCardia a No Objection Letter, allowing the CardiAMP Heart Failure Trial to expand into Canada. Four world-class Canadian clinical sites are currently working through the activation process to begin enrolling patients in the near future. The first of these four new Canadian sites, the Ottawa Heart Institute is now actively enrolling in the trial. Three additional Canadian centers are expected to be activated in the coming months.one-year data analysis anticipated late next year.

In May 2022,The pre-specified statistical analysis plan provided that the CenterDSMB would utilize a composite endpoint that considered heart death equivalents, major adverse cardiac and cerebrovascular events (MACCE), and six-minute walk distance at 12 months. The pre-specified interim analysis did not impute data for Medicare and Medicaid Services issued code C9782 for: “Blinded procedure forpatients who had not performed the six-minute walk, either because they were not yet at the one-year follow-up date or because of orthopedic or other health issues as will be done in the final statistical analysis per plan.  The pre-specified interim statistical analysis also did not include other endpoints that are part of the trial, including assessment of patient status using the New York Heart Association (NYHA) Class II or IIIclassification, quality of life as measured using the Minnesota Living with Heart Failure questionnaire, and heart failure, or Canadian Cardiovascular Society (CCS) Class III or IV chronic refractory angina; transcatheter intramyocardial transplantation of autologous bone marrow cells (e.g., mononuclear) or placebo control, autologous bone marrow harvesting and preparation for transplantation,function assessments such as left heart catheterization including ventriculography, all laboratory services, and all imaging with or without guidance (e.g., transthoracic echocardiography, ultrasound, fluoroscopy), all device(s), performedventricular ejection fraction.

In the interim data from the July DSMB review, 102 randomized patients in an approved Investigational Device Exemption (IDE) study.” This reimbursement isthe CardiAMP Cell Therapy trial followed for up to $20,000 effective from April 1, 202224 months showed a 37% relative risk reduction of cardiac death equivalents and is applicable to bothan 18% relative risk reduction in major adverse cardiac and cerebrovascular events (MACCE). In addition, the CardiAMP autologous cell therapy program in ischemicavailable interim data showed that for an important subset of patients who presented at the screening/baseline visit with higher levels of NT-proBNP, a well-established biomarker of increased heart failure and stress to the heart, the reduction in heart death equivalent and MACCE were even greater. In patients with NT-pro BNP levels greater than 500 pg/ml at baseline, an analysis of all available data up to two years shows improvements over controls including a 59% relative risk reduction in mortality and a 54% relative risk reduction of MACCE.  Further, all clinical outcomes included in this subset analysis favored cell therapy including: improved quality-of-life as measured using the Minnesota Living with Heart Failure Questionnaire, reduction of NT-proBNP levels, greater Six Minute Walk distance, and improved left ventricular ejection fraction, left ventricular end systolic volume and left ventricular end diastolic volume. Both the reduced heart death equivalents (p=.028) and improved quality of life as measured using the Minnesota Living with Heart Failure Questionnaire (p=0.016) demonstrated statistical significance favoring therapy.

On October 11, 2023, after an additional four patients were randomized subsequent to the DSMB review, the Company announced completion of enrollment in the CardiAMP Cell Therapy Heart Failure Trial and initiation of a discussion with the FDA on a second pivotal study protocol adapted for the responders in the initial trial with the objective of gaining FDA marketing approval. In the completed trial, 115 patients were randomized, with an additional 10 patients treated in chronic myocardial ischemia.the roll-in phase and 11 more crossed-over to receive therapy after completing two-year follow-up.

BioCardia has submitted a proposed CardiAMP Heart Failure II study protocol for FDA review, which includes an eligibility requirement that enrolled patients have an NT-proBNP at baseline greater than 500 pg/ml. The proposed primary endpoint is also modified from the primary endpoint in the currently ongoing study. The new endpoint proposed is a similar hierarchical composite endpoint consisting of all-cause death, the cardiac death equivalents of heart transplant and left ventricular assist device (LVAD) implantation, heart failure hospitalizations, worsening heart failure events treated as an outpatient, and change in quality-of-life with a follow-up duration ranging from a minimum of 12 to a maximum of 24 months. This new endpoint is similar to ongoing clinical studies of other therapies for this indication that also utilize NT-proBNP threshold study eligibility criterion. Statistical calculations for this clinical study design support that a modestly sized clinical trial of 150 patients, based on the interim results, would achieve 90% power (probability of success) if the data is representative of the population. Additional proposed modifications from the CardiAMP Cell Therapy Heart Failure Trial design include elements to simplify clinical site execution logistics and reduce the cost of performing the study. Should this study protocol be approved by the FDA and advanced by BioCardia, it may be possible to significantly offset clinical costs with the Medicare reimbursement of up to $20,000 now in place for both the control and treatment arms of this investigational therapeutic study.

In July 2022,June 2023, we completed our submission of the Company had its second consultation withCardiAMP Cell Therapy System to Japan’s Pharmaceutical and Medical Device Agency regarding potential(PMDA) towards approval for the indication of ischemic heart failure with reduced ejection fraction (HFrEF) based on existing safety and efficacy data. In July, the formal consultation was reviewed and accepted by the PMDA for the consultation with some clarifying questions which have been addressed. In October, the Company provided an update at PMDA’s requests on the current Phase III study status in the United States, and our formal consultation is scheduled for November 21, 2023. Subsequent interactions and consultations with the PMDA are expected. The CardiAMP Cell Therapy System for the treatment of ischemic heart failure based on existing data. Throughout the third quarter, efforts developing the submission to PMDA for a third formal consultation continued and are substantially complete. BioCardia is requesting a Japanese cardiovascular society petition the Ministry of Health Labor and Welfare that this device is a much needed medical device, which may convey certain benefits to the approval and reimbursement of the CardiAMP System in Japan. This petition must be done in advance of BioCardia’s submission for approval.

On August 30, 2022, the independent Data Safety Monitoring Board (DSMB) completed a prespecified data review, including a risk-benefit assessment. Following the review, the DSMB indicated that it had no significant safety concerns and recommended that the study continue as designed. The DSMB also recommended that the Company consider implementing an adaptive statistical analysis plan, which could enable an early readout for study treatment efficacy.

An adaptive statistical analysis plan is one which attempts to determine the appropriate number of patients needed in a clinical study based on the data within the trial itself as opposed to data from a previous trial. This has the significant advantage of de-risking the trial from changes that have occurred in the current trial relative to previous trials. Subsequent trials have potential to have better results as they are informed by previous trials, but there may also be more variation in the data as trials are expanded to many clinical centers. Both of these can impact the success of a clinical trial in meeting its primary endpoint. In reviewing the data during a DSMB meeting under an adaptive statistical analysis plan, the DSMB may be able to assess at certain points in the clinical trial how many patients should be enrolled in the trial to meet the primary endpoint in the trial. If a trial has already enrolled the number of patients expected to be required to show efficacy, then there is potential that the DSMB informs the sponsor that the trial enrollment might be stopped for expected success.

Efforts are underway to complete an adaptive statistical analysis plan for the CardiAMP Heart Failure Trial Executive Steering Committee and the FDA to review and comment on. In parallel, our clinical operations team is working to ensure that clinical data that the DSMB would use in such an adaptive review of the study statistics is correct through extensive monitoring of the clinical data in collaboration with our clinical partners. This is often referred to as cleaning the data and is a significant effort. The next prespecified formal DSMB review is anticipated in March 2023 and based on conversations the Company has had with the intended developers of the adaptive Statistical Analysis Plan and its respected regulatory consultants, and our own efforts cleaning the data, the Company believes it is likely to be able to have the adaptive statistical analysis plan in place for the next DSMB meeting. The specific details of any potential adaptive statistical analysis plan in combination with any modifications to the DSMB Charter will dictate what happens at this next and subsequent DSMB reviews.

As the CardiAMP Cell Therapy Trial in Heart Failure was over 90% powered for success based on the Phase II data, there is potential that the trial could meet its primary efficacy endpoint on the patients that have been enrolled to date. However, when the DSMB next meets, they may also share that the trial continue per plan, be stopped for safety, or be stopped for futility if the data does not support that achieving the primary endpoint is possible.

In October 2022, at the Heart Failure Society of America annual meeting, two-year data on the ten patient roll-in cohort was presented. In this clinical trial cohort, patient demographics at study start demonstrated characteristics typical of the target population of NYHA class II and III ischemic heart failure patients with reduced ejection fraction. No serious adverse events were observed related to any of the procedures performed. Two-year survival was 100%, and all patients completed 24 months of follow-up. The changes in guideline-directed medical therapy experienced by these patients were presented as minimal during the two-year study period. Improvement in median functional capacity as measured by six-minute walk distance was observed by six months (28.5 m, P=0.01); with six-minute walk distance maintained through 24 months (31.0 m, p >0.05). In the study, 70% of patients reported improved or stable quality of life over 24 months in the standardized self- assessment questionnaire used. At 24 months, 50% of patients were improved by at least one NYHA class (n=4 at class I), 20% had unchanged NYHA class, and 30% deteriorated by one class, from class II to III. Median left ventricular ejection fraction (LVEF) as measured by the echocardiography core laboratory at Yale School of Medicine was improved at month 24 over baseline, six months, and over 12-month follow-up. Echocardiography evaluated by the core lab also showed recruitment of previously akinetic (reduced movement) left ventricular wall segments at month 24 compared to baseline, consistent with the improvements in six-minute walk distance, quality of life, and LVEF through two years follow-up. These outcomes support the potential efficacy of this autologousfirst minimally invasive catheter-based cell therapy currently under investigationavailable in an ongoing multicenter controlled trial.

In October 2022, an update to www.CardiAMP.com, a website to educate patients and physicians about the clinical trial went live and was approved by a central independent Institutional Review Board. For the first time, the Company has patients who can share their experiences with other patients, which we feel has promise to enhance enrollment and awareness in the CardiAMP Heart Failure trial.

In October 2022, we also held a national clinical study site coordinators meeting to work through enrollment and clinical issues and build a best practices approach to efficient performance of the clinical trial which is ongoing.

BCDA-02 CardiAMP Autologous Cell Therapy for Chronic Myocardial IschemiaJapan.

The CardiAMP Chronic Myocardial Ischemia Trial is a Phase III, multi-center, randomized, double-blinded, controlled study of up to 343 patients at up to 40 clinical sites. The Phase III pivotal trial is designed to provide the primary support for the safety and efficacy of the CardiAMP Cell Therapy System for the indication of chronic myocardial ischemia (BCDA-02). 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. This program benefits from the 2022 CMS reimbursement at up to $20,000. The trial has been activated at two centersclinical sites and the Company isfour patients have been treated. We are working to activate additional centers and deliver safety results fromcomplete the roll-in cohort.cohort of five patients in the fourth quarter of 2023 and begin the randomized phase of the trial.

The Department of Health and Human Services Centers for Medicare and Medicaid Services (CMS) has designated that both of our CardiAMP pivotal trials qualify for Medicare national coverage at up to $20,000 per patient. The covered costs under Medicare 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 the CMS reimbursement policy and are similarly anticipated to cover these costs. This coverage significantly reduces our cost of conducting our trials.

Allogeneic MSC Cell Therapy for Cardiac and Pulmonary Disease (BCDA-03 and BCDA-04)Platform

Our second therapeutic platform is our investigational culture expanded bone marrow derived allogeneic, Neurokinin-1 Receptor Positive mesenchymal stem cellsMesenchymal Stem Cells (NK1R+ MSC). for which the FDA approved two INDs in 2022. This “off the shelf” mesenchymal cell therapy is being advanced for cardiacischemic heart failure of HFrEF (BCDA-03) and pulmonary disease. BioCardia’s established andacute respiratory distress (BCDA-04). Variations of this allogeneic therapy may have the potential for numerous other therapeutic applications. We manufacture these cells for clinical studies at our manufacturing facility in Sunnyvale which was certified ISO 7 cleanroom has been developed to manufacture its allogeneic NK1R+MSC investigational cell therapy products.for manufacturing in 2022. Clinical grade cells are available for both indications being pursued today.

BCDA-03CardiALLO Allogeneic MSC for Heart Failure

We are workingIn December 2022, the FDA approved our Investigational New Drug (IND) application to secure FDA acceptance of an IND application forinitiate a first-in-human Phase I/II 69 patient clinical trial to deliver these allogeneic cells for the treatment of HFrEF (BCDA-03). The trial is designed for patients with New York Heart Association Class II and III ischemic systolic heart failure. We have completed the manufacturing validation runs and stability testingfailure with ischemic HFrEF whose own cell composition makes them ineligible for the Chemistry ManufacturingCompany’s Phase III CardiAMP® Heart Failure Trial studying autologous cell therapy. Efficiencies are expected in conducting this trial as patients who have been screened but are ineligible for enrollment in the CardiAMP Heart Failure trial would likely be eligible for this allogeneic trial. Clinical grade allogeneic cells have been manufactured and Controls sectionare ready for use and the cells will be delivered by our proprietary delivery system. Our first clinical center has finalized its clinical study agreement and received conditional IRB approval. Cellular preparation test runs at the clinical site and the site activation visit have been completed and we expect to begin enrolling patients in the fourth quarter of 2023.

We intend to fund later development through nondilutive grant applications and partnering.  We are preparing a grant application with the California Institute of Regenerative Medicine (CIRM) to support this Phase I/II clinical program based on the combination product candidate of the IND. We have completedCardiALLO hMSC, developed and manufactured in our California facility and delivered with our Helix transendocardial biotherapeutic delivery system, also developed and manufactured in our California facility.  Success in this grant application has the preclinical pharmacology toxicology animal testing with no safety issues and with trends towards therapeutic benefit. The IND application for this program was filed with FDA CBER in early November 2022.  The Company anticipates FDA approvalpotential to offset 70% of the INDcosts of this therapeutic development program.

This study follows our three previous cosponsored clinical trials with MSCs in ischemic heart failure: the Transendocardial Autologous Cells (hMSC or hBMC) in Ischemic Heart Failure Trial (TAC-HFT, NCT00768066), the Percutaneous Stem Cell Injection Delivery Effects on Neomyogenesis Pilot Study (POSEIDON, NCT01087996), and the Transendocardial Stem Cell Injection Delivery Effects on Neomyogenesis Study (TRIDENT, NCT 02013674). In all three of these trials, with 93 patients treated with culture expanded MSCs using the Helix delivery system, there were no treatment emergent serious adverse events. Results showed compelling early December.signals for benefit that the CardiALLO trial is expected to build upon.

Recently reported large studies using MSC in heart failure by other groups have shown compelling benefits in patients who have evidence of inflammation before receiving treatment. There are active considerations of testing this hypothesis prospectively in the randomized stage of the CardiALLO study ahead.

BCDA-04Allogeneic MSC for Respiratory Disease

In April 2022, the FDA approved the Company’s Investigational New Drug (IND) for a Phase I/II trial for the use of this allogeneic cell therapy for Acute Respiratory Distress Syndrome (ARDS) caused by COVID-19 (BCDA-04). This allowsallogeneic cell therapy trial has been deprioritized to focus current financial resources on other programs. This decision was based on the Companygreatly reduced population of patients with acute respiratory distress secondary to initiate its First-in-HumanCOVID. When resources permit, we intend to expand the current indication to a broader ARDS population not requiring COVID as well as pursue other pulmonary indications.

Helix™ Biotherapeutic Delivery System

BioCardia’s Helix Biotherapeutic Delivery System (Helix) delivers therapeutics into the heart muscle with a penetrating helical needle from within the heart. It enables local delivery of cell and gene-based therapies, including BioCardia’s own cell therapies. It remains the safest, easiest to use, and most efficient means for the delivery of cells, genes, and proteins to the heart muscle. The delivery platform includes proprietary approved steerable guide systems, approved delivery catheters, and investigational imaging navigation.

Our Helix team has active discussions with current and prospective partners regarding programs utilizing the Helix platform. We expect to finalize up to two licensing and development relationships during the fourth quarter of this year. These relationships are intended to share the costs of ongoing maintenance of and advances in the valuable enabling platform, and for BioCardia shareholders to benefit from the future success of these partnered programs.

In September, CellProthera announced completion of enrollment in their Phase I/II trial in adult patients recovering from ARDS due to COVID-19, with trial initiation expected in 2022. The first part of the clinical trial will evaluate increasing dosages of the NK1R+ MSCs and the optimal dose will be taken to Phase II in a randomizedcell therapy study in adult patients recovering from ARDS duepost-myocardial infarction.   We look forward to COVID-19. This therapy is intended to address the enormous unmet need of sustained local and systemic inflammation after a patient is taken off respirator support with goals of accelerating recovery, enhancing survival and reducing both relapse and rehospitalization. A first clinical study manufacturing run from our Sunnyvale facility has been completed with cells cryopreserved, awaiting final longer lead time test data for lot release before they are able to be shipped to centers for patients in the clinical study. This manufacturing run has potential to have sufficient cells to complete the entire Phase I portion of the Phase I/II trial as we achieve many doses with each batch. We are also in late-stage contracting, budgeting and institutional review board discussions with world class clinical centers to perform the clinical trial.

Recent Developmentstheir results ahead.

COVID-19 Considerations

As a result of the COVID-19 pandemic, we have experienced significant disruption to the Company’sour business and delays in the Company’sour development programs and regulatory and commercialization timelines, including adverse impact to our operations at certain clinical sites involved in our ongoing clinical studies. The COVID-19 pandemic could continue to adversely affect our business, results of operations, financial condition and/or liquidity in the future. These adverse impacts could include delayed or slowed enrollment of our, or our collaborators’, planned or ongoing clinical trials, delayed or cancelled clinical site initiations, delayed regulatory review for regulatory approvals, delayed commercialization of one or more of our product candidates, if approved, and workforce shortages. Our production capabilities, or those of our partners or suppliers, and our supply chains could also be adversely impacted.

Additionally, while the potential continuing economic impact brought by, and the duration of, the COVID-19 pandemic is difficult to assess or predict, the impact of COVID-19 and related responses of governments, business and other institutions on the global financial markets may reduce the Company’s ability to access capital, which could negatively impact the Company’sour liquidity and ability to raise the capital to complete itsour preclinical and clinical studies on a timely basis, or at all. In addition, a recession, market correction or depression resulting from the COVID-19 pandemic or the response to it could materially affect our business and the value of our common stock.

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 EUAVANCE steerable introducer 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.

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 of completion of specific tasks using information and data provided to us by our vendors and clinical sites. Nonrefundable advance payments for goods or services to be received in future periods for use in research and development activities are deferred and capitalized. The capitalized amounts are then expensed as the related goods are delivered and the services are received. 

We plan to increase our research and development expenses for the foreseeable future as we continue the pivotal CardiAMP autologous cell therapy trials in heart failure and chronic myocardial ischemia, and begin our allogeneic cell therapy trials in heart failure and acute respiratory distress syndrome. We typically use our employee and infrastructure resources across multiple research and development programs, and accordingly, we have not historically allocated resources specifically to our individual programs. There are also significant synergies between these programs.

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 selling, general and administrative expenses include sales commissions, rent, accounting and legal services, obtaining and maintaining patents, the cost of consultants, occupancy costs, insurance premiums and information systems costs.

Other Income (Expense)

Other income and expense consist primarily of interest income we earn on our cash and cash equivalents. 

Critical Accounting Policies and Estimates

Our management’s discussion and analysis of our financial condition and results of operations is based on our financial statements, which we have prepared in accordance with U.S. GAAP. The preparation of our financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities. We evaluate these estimates and judgments on an ongoing basis. We base our estimates on historical experience and on various judgements that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not clear from other sources. Actual results may differ from these estimates under different assumptions or conditions. 

The full extent to which the ongoing COVID-19 pandemic will directly or indirectly impact our business, results of operations and financial condition, including revenues, expenses, reserves and allowances, manufacturing, clinical trials and research and development will depend on future developments that continue to remain highly uncertain at this time. As events continue to evolve and additional information becomes available, our estimates may change materially in future periods.

We define our critical accounting policies as those that require us to make subjective estimates and judgments about matters that are uncertain and are likely to have a material impact on our financial condition and results of operations as well as the specific manner in which we apply those principles. Our critical accounting policies are described in Item 7 in our Annual Report on Form 10-K for the year ended December 31, 2021.2022, filed with the SEC on March 29, 2023, which is incorporated by reference herein. 

Results of Operations

Comparison of Three and Nine Months Ended September 30, 20222023 and 20212022

The following table summarizesshows our results of operations for the three and nine months ended September 30, 20222023 and 20212022 (in thousands): 

Revenue.Revenue decreasedincreased to $357,000 in the three months ended September 30, 2023 as compared to $212,000 in the third quarter ofthree months ended September 30, 2022, as comparedand decreased to $821,000$464,000 in the third quarter of 2021, and increasednine months ended September 30, 2023 as compared to $1,246,000 in the nine months ended September 30, 2022 as compared to $936,000 in the nine months ended September 30, 2021, primarily due to the timing of revenue from new and existing collaborative partners coupled with the fulfilment of deliverables and completion of collaborative agreements. The amount and timing of collaboration revenues is largely dependent on our partners’ development activities and may be inconsistent and create significant quarter-to-quarter variation in our revenues.

Research and Development Expenses. Research and development expenses decreased to $1,872,000 in the three months ended September 30, 2023 as compared to $2,144,000 in the third quarter ofthree months ended September 30, 2022, as compared to $2,240,000 in the third quarter of 2021, primarily due to lower stock-based compensation and expenses incurred in the executionrecent pause of the pivotal CardiAMP Cell Therapy Heart Failure trial.Trial and its subsequent completion of enrollment coupled with reduced personnel expenses in clinical and related supporting functions. Research and development expenses increaseddecreased moderately to $6,570,000 in the nine months ended September 30, 2023 as compared to $6,634,000 in the nine months ended September 30, 2022, as compareddue primarily to $6,443,000 in the nine months ended September 30, 2021 primarily due to increasing expenses in support of the CardiAMP Heart Failure Trial.changes discussed above.  

Selling, General and Administrative Expenses. Selling, general and administrative expenses decreased moderately to $1,083,000 in the three months ended September 30, 2023 as compared to $1,128,000 in three months ended September 30, 2022, and to $3,454,000 in the third quarter of 2022nine months ended September 30, 2023 as compared to $1,289,000 in the third quarter of 2021, primarily due to lower stock-based compensation and lower service provider expenses. Selling, general and administrative expenses decreased to $3,495,000 in the nine months ended September 30, 2022 as compared to $3,662,000 in the nine months ended September 30, 2021, primarily due to lower stock-based compensation.2022.

Liquidity and Capital Resources

We have incurred net losses each year since our inception and as of September 30, 2022,2023, we had an accumulated deficit of approximately $137.6$150.1 million. We anticipate that we will continue to incur net losses for the next several years.

We have funded our operations principally through the sales of equity and convertible debt securities. As of September 30, 2022,2023, we had cash and cash equivalents of approximately $6.7$1.8 million. 

The following table shows a summary of our cash flows for the periods indicated (in thousands): 

Cash Flows from Operating Activities. The increase in overall spending forCash flow from operating activities of approximately $173,000 in the nine months ended September 30, 2022 comparedfor any period is subject to the nine months ended September 30, 2021 related primarily tomany variables including the timing of cash receipts, payments from collaboration partners.to suppliers, and vendor payment terms, and was relatively consistent during the periods presented.

Cash Flows from Investing Activities. Net cash used in investing activities of $68,000$12,000 and $75,000$68,000 during the nine months ended September 30, 20222023 and 2021,2022 respectively, consisted of purchases of property and equipment, primarily lab and office equipment.

Cash Flows from Financing Activities. Net cash provided by financing activities of $2,607,000 and $1,427,000 during the nine months ended September 30, 2023 and 2022, respectively, related primarily to net proceeds from the sale of common stock. Net cash provided by financing activities of $1,947,000 during the nine months ended September 30, 2021 related primarily to net proceeds from the sale of common stock in March 2021. 

Lincoln Park Capital Stock Purchase AgreementJune 2023 Financing -

In March 2021,On June 21, 2023, we sold to certain existing investors and Lincoln Park Capital Fund, LLC (Lincoln Park) entered into a purchase agreement (the Purchase Agreement)other institutional investors, as well as certain of our directors and a registration rights agreement (the Registration Rights Agreement), pursuant to which we have the right to sell to Lincoln Parkofficers 1,133,141 shares of our common stock havingin a registered direct offering (the Offering) at an offering price of $2.336 per share. Certain of our directors and executive officers purchased an aggregate value of up to $20 million, subject to certain limitations and conditions set forth in the Purchase Agreement. Pursuant to the terms203,337 of the Purchase Agreement, at the time we signed the Purchase Agreement, we sold 373,832 shares of our common stock at a price of $5.35 per share pursuant to the Purchase Agreement forsuch shares. The gross proceeds of $2the June 2023 Offering were approximately $2.6 million, (and issued 80,000 shareswith associated issuance costs of common stock to Lincoln Park as consideration for its commitment to purchase shares of our common stock, which consisted of 75,000 shares for Lincoln Park’s initial commitment and 5,000 shares issued on a pro rata basis in respect of Lincoln Park’s initial purchase of 373,832 shares). Thereafter, as often as every business day from and after one business day following the date of the Initial Purchase and over the 36-month term of the Purchase Agreement, we have the right, from time to time, at our sole discretion and subject to certain conditions, to direct Lincoln Park to purchase up to 100,000 shares of common stock, with such amount increasing as the closing sale price of the common stock increases; provided Lincoln Park’s obligation under any single such purchase will not exceed $2 million, unless we and Lincoln Park mutually agree to increase the maximum amount of such single purchase (each, a Regular Purchase). If we direct Lincoln Park to purchase the maximum number of shares of common stock it then may sell in a Regular Purchase, then in addition to such Regular Purchase, and subject to certain conditions and limitations in the Purchase Agreement, we may direct Lincoln Park in an Accelerated Purchase to purchase an additional amount of common stock that may not exceed the lesser of (i) 300% of the number of shares purchased pursuant to the corresponding Regular Purchase or (ii) 30% of the total number of shares of our common stock traded during a specified period on the applicable purchase date as set forth in the Purchase Agreement. Under certain circumstances and in accordance with the Purchase Agreement, we may direct Lincoln Park to purchase shares in multiple Accelerated Purchases on the same trading day. We expect to use the proceeds from this agreement for general corporate purposes and working capital. As of September 30, 2022, the Company had not made any sales of common stock to Lincoln Park under the Purchase Agreement other than the Initial Purchase.approximately $194,000.

Cantor Fitzgerald ATM Offering

On April 12, 2022, we entered into a sales agreement (the Sales Agreement) with Cantor Fitzgerald & Co. (Cantor) as the sales agent, pursuant to which we may offer and sell, from time to time, through Cantor, shares of our common stock having an aggregate offering price of up to $10.5 million (the ATM Offering). We are not obligated to sell any common stock shares pursuant to the Sales Agreement. Under the terms of the Sales Agreement, we will pay Cantor a commission of 3% of the aggregate proceeds from the sale of shares and reimburse certain legal fees. The prospectus supplement covering the ATM Offering expired in conjunction with the expiration of the corresponding registration statement on October 20, 2023. We may file a new prospectus supplement covering certain sales under the ATM Offering under our replacement registration statement on Form S-3, once effective, subject to applicable securities laws.

During the three and nine months ended September 30, 2023, we sold 33,282 and 168,122 shares of common stock under the ATM Offering at then-market prices for total gross proceeds of approximately $92,000 and $395,000, with net issuance costs of approximately $48,000 and $90,000, respectively. During the three months ended September 30, 2022, we sold 66,704 shares of common stock under the ATM Offering at then-market prices for total gross proceeds of $139,000, with a net refund of issuance costs of $1,000. During the nine months ended September 30, 2022, we sold 641,704 shares of common stock under the ATM Offering at then-market prices for total gross proceeds of approximately $1.7 million, with associated issuance costs of $231,000.

Lincoln Park Capital Stock Purchase Agreement

On March 29, 2021, we entered into a purchase agreement with Lincoln Park Capital Fund, LLC (Lincoln Park) (Purchase Agreement) and a registration rights agreement (Registration Rights Agreement), pursuant to which we have the right to sell to Lincoln Park shares of our common stock having an aggregate value of up to $20 million, subject to certain limitations and conditions in the Purchase Agreement.

Pursuant to the Purchase Agreement in March, 2021, Lincoln Park purchased 373,832 shares of common stock, at a price of $5.35 per share, for a total gross purchase price of $2 million (Initial Purchase) and we issued 80,000 shares of common stock as commitment shares, which included 5,000 commitment shares issued on a pro rata basis for the initial $2 million purchase.

On June 30, 2023, we provided notice to Lincoln Park of our election to terminate the Purchase Agreement. Following such termination, which was effective July 3, 2023, we may not sell any further shares of our common stock under the Purchase Agreement. As of the effective date of termination of the Purchase Agreement, we had not sold any common stock to Lincoln Park under the Purchase Agreement other than the Initial Purchase.

Future Funding Requirements

To date, we have generated modest revenues. 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 autologous and allogeneic cell therapy candidates unless and until we obtain regulatory approval. At the same time, we expect our expenses to increase in connection with our ongoing development activities, particularly as we continue the research, development and clinical trials of, and seek regulatory approval for, our therapeutic candidates. In addition, subject to obtaining regulatory approval for any of our therapeutic candidates and companion diagnostic, we expect to incur significant commercialization expenses for product sales, marketing, manufacturing and distribution. We anticipate that we will need additional funding in connection with our continuing operations.      

Based upon our current operating plan, we believe that the cash and cash equivalents of approximately $6.7$1.8 million as of September 30, 20222023 are not sufficient to fund our planned expenditures and meet our obligations beyond April 2023.January 2024. In order to continue development of our therapeutic candidates beyond April 2023,January 2024, we plan to raise additional capital, potentially including non-dilutive collaboration and licensing arrangements, debt or equity financing, or a combination from these sources. We have based our estimates on assumptions that may prove to be wrong, and we may use our available capital resources sooner than we currently expect. Because of the numerous risks and uncertainties associated with the development and commercialization of our therapeutic candidates, including the recent determination by the DSMB to pause our CardiAMP Cell Therapy Heart Failure Trial pending the one-year follow-up outcomes analysis for patients that have been treated and those that have been enrolled but not yet treated, we are unable to estimate the amounts of increased capital outlays and operating expenditures necessary to complete the development of our therapeutic candidates.

Our future capital requirements will depend on many factors, including:

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 common stockholders will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of our common stockholders. Debt financing, if available, may involve agreements that include conversion discounts or covenants limiting or restricting our ability to take specific actions, such as incurring debt, making capital expenditures or declaring dividends. If we raise additional funds through government or other third-party funding, marketing and distribution arrangements or other collaborations, or strategic alliances or licensing arrangements with third parties, we may have to relinquish valuable rights to our technologies, future revenue streams, research programs, products, or therapeutic candidates or to grant licenses on terms that may not be favorable to us.

OurWe have prepared our condensed consolidated financial statements as of September 30, 2022 have been prepared2023 on the basis that the Companywe will continue as a going concern, which contemplates the realization of assets and satisfaction of liabilities in the ordinary course of business. Due to the factors described above, there is substantial doubt about the Company’sour ability to continue as a going concern within one year after the date these financial statements are issued. Our ability to continue as a going concern will depend, in a large part, on our ability to raise additional capital. If adequate funds are not available, we may be required to further reduce operating expenses, delay or reduce the scope of our product development programs, obtain funds through arrangements with others that may require us to relinquish rights to certain of our technologies or products that we would otherwise seek to develop or commercialize ourselves, or cease operations. While we believe in the viability of our strategy to raise additional funds, there can be no assurances that we will be able to obtain additional capital on acceptable terms and in the amounts necessary to fully fund our operating needs.

The condensed consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. If we are unable to continue as a going concern, we may be forced to liquidate assets. In such a scenario, the values received for assets in liquidation or dissolution could be significantly lower than the values reflected in our condensed consolidated financial statements. 

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 Securities and Exchange Commission.

Recent Accounting Pronouncements

See Note 2 of our notes to the condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for information regarding recent accounting pronouncements that are of significance or potential significance to us.

There have been no material changes in our market risks during the three months ended September 30, 2022.2023.

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.

Interest Rate Risk

As of September 30, 2022,2023, 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.

Evaluation of Disclosure Controls and Procedures

In connection with the preparation of this Quarterly Report on Form 10-Q, as of September 30, 2022,2023, an evaluation was performed under the supervision and with the participation of our management, including the Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act). Based on that evaluation, our Chief Executive Officer and our Chief Financial Officer have concluded that, as of September 30, 2022,2023, our disclosure controls and procedures were, in design and operation, effective at a reasonable assurance level.

Changes in Internal Control over Financial Reporting

There were no changes to our internal control over financial reporting identified in connection with the evaluation required by rule 13a-15(d) and 15d-15(d) of the Exchange Act that occurred during the three months ended September 30, 20222023 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

The Company may be subject to various claims, complaints, and legal actions that arise from time to time in the normal course of business. Management does not believe that the Company is party to any current pending legal proceedings. There can be no assurance that existing or future legal proceedings arising in the ordinary course of business or otherwise will not have a material adverse effect on the Company’s business, financial position, results of operations, or cash flows.

In addition to the other information set forth in this report, you should carefully consider the factors discussed below and in Part I, Item 1A. Risk Factors in our Annual Report on Form 10-K for the year ended December 31, 2021,2022 and in Part II, Item 1A. Risk Factors on our other subsequent Quarterly Reports on Form 10-Q, which could materially affect our business, financial condition, or future results.results, are incorporated by reference herein. The risks described in this report, our Annual Report on Form 10-K for the year ended December 31, 2021,2022, and our Quarterly Reports on Form 10-Q filed periodically with the SEC are not the only risks facing our Company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial may also may materially adversely affect our business, financial condition or future results.  

If we do not regain compliance with or continue to satisfy the Nasdaq continued listing requirements, our common stock could be delisted from the Nasdaq.

The listing of our common stock on the Nasdaq Global Market (“Nasdaq”) is contingent on our compliance with the Nasdaq’s conditions for continued listing. We are currently not in compliance with Nasdaq listing requirements, specifically those that require us to maintain a minimum market value of listed securities of at least $35.0 million and a minimum $1.00 per share closing bid price for our common stock, and must regain compliance with such requirements on or prior to March 4, 2024 and March 11, 2024, respectively. If we are unable to regain such compliance, we will cease to be eligible to trade on Nasdaq and will likely be delisted by Nasdaq.

If we were to fail to meet a Nasdaq listing requirement, we may be subject to delisting by the Nasdaq. In the event our common stock is no longer listed for trading on Nasdaq, our trading volume and share price may decrease and we may experience further difficulties in raising capital, which could materially affect our operations and financial results. Further, delisting from the Nasdaq could also have other negative effects, including potential loss of confidence by partners, lenders, suppliers and employees and could also trigger various defaults under our financing arrangements and other outstanding agreements. Finally, delisting could make it harder for us to raise capital and sell securities. You may experience future dilution as a result of future equity offerings. In order to raise additional capital, we may in the future offer additional shares of our common stock or other securities convertible into or exchangeable for our common stock.

None.