Biodesix, Inc. (NASDAQ: BDSX) — 2023 Form 10-K
Reporting period: Fiscal year ended December 31, 2023; filed March 1, 2024. The filing also reports fourth-quarter 2023 results. Biodesix is a single-segment diagnostics company focused on lung disease, with five blood-based lung tests and biopharmaceutical research and testing services. Commercial COVID-19 testing ended after the public health emergency expired on May 11, 2023.
Financial performance
| Metric | FY 2023 | FY 2022 | Change |
|---|---|---|---|
| Total revenue | $49.1 million | $38.2 million | Up 28% |
| Gross profit and margin | $36.1 million; 73% | Margin 63% | Margin up 10 percentage points |
| Total operating expenses | $90.4 million | $88.8 million | Up 2% |
| Loss from operations | $41.3 million | $50.6 million | Loss narrowed 18% |
| Net loss | $52.1 million | $65.4 million | Loss narrowed 20% |
| Basic and diluted loss per share | $0.64 | $1.55 | Improved |
| Cash used in operating activities | $22.9 million | $45.0 million | Use decreased |
| Cash and cash equivalents at year-end | $26.3 million | $43.1 million | Down $16.8 million |
Lung diagnostic revenue was $45.1 million, up 54%, primarily reflecting increased Nodify XL2 and CDT testing. Biopharma Services and other revenue was $3.9 million, up 6%. COVID-19 revenue fell to $0.1 million from $5.2 million. Diagnostic testing represented 92% of total revenue, compared with 90% in 2022. Gross-margin improvement reflected a higher mix of lung testing, workflow efficiencies, recovery in biopharma services, and discontinuation of lower-margin COVID testing.
Fourth-quarter revenue was $14.7 million, up 53% year over year including COVID revenue (52% excluding it). Lung diagnostic revenue was $12.8 million, up 55%; Biopharma Services and other revenue was $1.9 million, up 38%. Gross margin was 77%, versus 66% in the prior-year quarter. Net loss was $9.1 million, an improvement of 55%. Fourth-quarter operating expenses excluding direct costs were $18.2 million, down 10%.
Liquidity, debt and capital resources
- At December 31, 2023, cash and cash equivalents were $26.3 million and outstanding Perceptive term-loan principal was $40.0 million. The loan is senior secured, bears a floating rate of one-month term SOFR subject to a 3% floor plus 9% (approximately 14.4% at year-end), and matures November 21, 2027, with principal due at maturity.
- Biodesix reported a $52.1 million net loss and an accumulated deficit of $419.6 million. Its auditor and management cited substantial doubt about the company’s ability to continue as a going concern for at least one year after the financial statements were issued. Management said additional debt or equity financing is needed; it had not secured that funding as of the filing.
- Perceptive waived the December 31, 2023 minimum-revenue covenant and the provision barring a going-concern qualification in the 10-K, then amended revenue thresholds on February 29, 2024 through the quarter ending December 31, 2025. Management nevertheless said its operating plan, absent further capital, was expected to result in covenant noncompliance within the next 12 months and could trigger acceleration of the loan.
- The company raised approximately $27.5 million in a 2023 private placement, including $12.2 million received in the fourth quarter, and drew the $10 million Tranche B loan in December. It also reported about $28.9 million of remaining ATM capacity and up to $46.9 million under its Lincoln Park facility, subject to contractual, market and regulatory limits. Further equity financing could dilute shareholders.
- Reported contractual obligations totaled $134.0 million, including $62.9 million of borrowings and estimated interest, $23.4 million of contingent consideration, and $46.9 million of operating lease obligations. The lease obligations include the Louisville facility lease, which extends to 2035.
- Cash used in investing activities rose to $23.1 million, mainly due to Louisville facility and leasehold-improvement spending. The company received $18.3 million in tenant-improvement reimbursements in 2023, which affected reported operating cash flow.
Material changes, outlook and risks
- Commercial momentum: Management said lung-test volumes reached company highs for four consecutive quarters. The ORACLE study met its primary endpoint; patients with benign nodules managed using Nodify XL2 were 74% less likely to undergo an unnecessary invasive procedure than the control group. Enrollment in the 5,000-patient INSIGHT study was completed; final analysis with three-year follow-up is estimated for 2026. The ALTITUDE randomized study remains underway.
- Development pipeline: Biodesix is further validating blood-based tests for early-stage NSCLC recurrence risk and advanced-stage immunotherapy guidance. The filing provides no specific launch timing or numerical revenue guidance for these candidates.
- Reimbursement: All five lung tests have Medicare coverage. CMS designated Nodify CDT an Advanced Diagnostic Laboratory Test effective June 30, 2023; Nodify XL2 had previously received that designation. Medicare accounted for 43% of diagnostic test revenue in 2023, versus 37% in 2022. One customer accounted for 10% of total revenue in 2023.
- Regulatory and operating risks: The FDA proposed phasing out enforcement discretion for laboratory-developed tests in September 2023. If finalized, the rule could require additional quality, reporting and premarket-review compliance, with potential costs or delays. The company also identifies payer coverage and pricing, competition, clinical adoption, reliance on suppliers (including single-source components), data security, and continuing capital needs as material risks.
- Unusual items and obligations: The 2023 net loss included a $1.3 million loss from remeasurement of warrant liabilities; 2022 included a $7.0 million loss on extinguishment of liabilities. Contingent consideration from the Indi acquisition remains payable, with scheduled payments and an exit fee extending into 2024. No material pending legal proceedings were reported.
Most important facts for investors to verify
- Available cash, cash burn and financing needs, and whether subsequent funding is sufficient to maintain operations and avoid a going-concern failure.
- Compliance with Perceptive’s minimum-revenue and other covenants, the precise terms of the February 2024 waiver and amendment, and any further lender consents or amendments.
- The amount, timing and funding source for remaining Indi contingent-consideration payments and other near-term contractual obligations.
- Whether lung-test volume growth converts into durable collections and margins, given Medicare’s share of diagnostic revenue and payer reimbursement uncertainty.
- Potential dilution from future equity issuance, outstanding warrants and equity facilities; common shares outstanding were 96.2 million at year-end 2023 and 96.9 million as of February 23, 2024.
- The final scope and timing of FDA requirements for laboratory-developed tests and their effect on marketed tests and pipeline development.