BioCardia, Inc. — Q1 2019 Form 10-Q
Reporting period: Three months ended March 31, 2019; filed May 15, 2019. BioCardia is a clinical-stage regenerative medicine company developing cardiovascular therapies, including CardiAMP and CardiALLO, and sells enabling medical devices. Financial amounts below are in millions of dollars unless otherwise noted.
Financial performance
| Metric | Q1 2019 | Q1 2018 | Change |
|---|---|---|---|
| Total revenue | $0.216 | $0.199 | +$0.017 |
| Net product revenue | $0.076 | $0.082 | -$0.006 |
| Collaboration revenue | $0.140 | $0.117 | +$0.023 |
| Cost of goods sold | $0.106 | $0.157 | -$0.051 |
| Gross profit / margin | $0.110 / 50.9% | $0.042 / 21.1% | Margin improved |
| Research and development | $2.166 | $1.955 | +$0.211 |
| Selling, general and administrative | $1.631 | $1.707 | -$0.076 |
| Operating loss | $(3.687) | $(3.620) | Loss widened $0.067 |
| Net loss | $(3.665) | $(3.584) | Loss widened $0.081 |
| Net loss per share, basic and diluted | $(0.08) | $(0.09) | |
| Operating cash used | $(2.465) | $(3.036) | Use decreased $0.571 |
Management attributed higher collaboration revenue to partner programs. Lower cost of goods sold reflected lower product sales volumes; R&D rose with CardiAMP trial activity and CardiALLO development. SG&A declined 4.5%. Q1 2019 interest income was $0.023 million, compared with $0.036 million.
Balance sheet and liquidity
- Cash and cash equivalents were $2.838 million at March 31, 2019, down from $5.358 million at December 31, 2018. The company reported $2.520 million of total cash decrease in the quarter, including $0.055 million used for investing and no financing cash inflow.
- Total assets were $5.157 million; total liabilities were $4.339 million; stockholders’ equity was $0.818 million. Accumulated deficit was $90.026 million.
- The filing reports no financial borrowings on the balance sheet. Operating lease liabilities totaled $1.485 million, of which $0.469 million was current and $1.016 million noncurrent.
- Management said available cash was not expected to fund operations beyond Q2 2019. The filing states substantial doubt about the company’s ability to continue as a going concern within one year after issuance of the financial statements.
Business developments, outlook and risks
- CardiAMP: The Phase III heart failure trial was enrolling at 21 sites, with 37 patients enrolled. Management anticipated a first interim readout in Q3 2019, a second in Q3 2020, completion of enrollment in Q3 2020, and topline data in Q3 2021. The trial roll-in cohort showed a 46.4-meter average improvement in six-minute walk distance at 12 months, but it was not statistically significant (p=0.06); the filing describes results from a small, uncontrolled cohort.
- CardiALLO: Management was working toward FDA acceptance of an IND for a Phase I/II heart failure study in Q2 2019. Manufacturing validation runs had been completed.
- Devices: The Morph AVANCE steerable introducer received FDA 510(k) clearance in May 2019, after quarter-end. Management expected collaboration revenue to rise modestly in 2019 and product revenue to be flat or increase modestly in the second half, depending on demand for AVANCE and available funding. It also expected R&D spending to rise with trial enrollment and development activity.
- Funding: In April 2019, BioCardia submitted an S-1 for a proposed offering of up to approximately $18 million of units comprising common stock and/or warrants. At the filing date, the registration statement was not effective; net proceeds would be below the proposed maximum after expenses and discounts. The company said additional capital was required, with no assurance it could be raised on acceptable terms. Failure to obtain funding could force spending cuts, delayed or reduced development, relinquishment of rights, or cessation of operations.
- Other risks and items: The company expects continuing losses and negative operating cash flow. Equity or convertible financing may dilute shareholders; debt could impose covenants, while collaboration or licensing arrangements could require concessions. No material pending legal proceedings, defaults on senior securities, or off-balance-sheet arrangements were reported. Disclosure controls were considered effective. Adoption of the new lease standard placed operating lease assets and liabilities on the balance sheet; management said it did not materially affect results or cash flows.
Important facts for investors to verify
- Whether the proposed financing was completed, its net proceeds and terms, and the resulting dilution and cash runway.
- Actual cash use, operating expenses and liquidity relative to management’s stated expectation that funds would not last beyond Q2 2019.
- CardiAMP enrollment, interim analyses, trial timing and results; the stated milestones are forward-looking estimates.
- FDA and clinical progress for CardiALLO, and commercial demand and funding available for Morph AVANCE.
- Whether product and collaboration revenue, trial costs and other financing sources develop as management anticipated.