Bluejay Diagnostics, Inc. — 2021 Form 10-K
Reporting period: Fiscal year ended December 31, 2021. This 10-K reports annual results; standalone fourth-quarter financial results are not provided in the filing text. Bluejay is a pre-revenue diagnostics company developing the Symphony near-patient testing platform. Its business plan centers on instrument sales and recurring single-use cartridge sales.
Financial performance and position
| Metric | 2021 | 2020 |
|---|---|---|
| Revenue | No operating revenue reported; company describes itself as pre-revenue | No operating revenue reported |
| Operating expenses | $3.23 million | $1.20 million |
| Operating loss | $3.23 million | $1.20 million |
| Net loss | $3.49 million | $1.16 million |
| Net cash used in operating activities | $4.37 million | $0.51 million |
- Gross margin and profit margin are not meaningful for the reported periods because the company had no operating revenue.
- Cash and cash equivalents were $19.05 million at December 31, 2021, compared with $0.91 million a year earlier; cash was approximately $18.0 million at February 28, 2022.
- Total assets were $21.02 million, total liabilities $0.64 million, and stockholders’ equity $20.38 million at year-end. No notes payable were reported on the year-end balance sheet.
- Operating cash burn increased substantially year over year. Financing activities provided $22.53 million in 2021, including $18.86 million of net IPO proceeds and $4.50 million of convertible debenture proceeds. The debentures converted to preferred stock at the IPO and then to common shares.
Material changes versus 2020
- Net loss nearly tripled, while operating expenses increased about 170%. R&D expense rose 118% to $1.15 million, largely due to clinical-trial and analyzer manufacturing costs. General and administrative expense rose 201% to $1.79 million, including higher public-company costs, compensation, and an $85,000 inventory-expiration expense.
- Marketing and business-development expense increased to $290,000 from $73,000 as commercialization efforts expanded.
- Interest expense increased to $367,000 from $27,000, primarily reflecting discount amortization and accrued interest on 2021 convertible debentures.
- The November 2021 IPO raised $21.6 million gross. The company also converted its outstanding preferred stock and certain debt into common stock. A June 2021 stock dividend was accounted for as a 1-for-3.15 stock split, with share and per-share data restated accordingly.
Outlook, risks and notable items
- Management said available cash was expected to fund planned operations and capital requirements for at least 12 months from the filing date. It also expects continued losses and says substantial additional capital may be needed over the next several years; future financing is not committed.
- Symphony is not FDA-cleared for diagnostic use. The company planned to submit a 510(k) application for IL-6 by the end of the third quarter of 2022; timing and clearance are uncertain. Symphony is being distributed in the U.S. as a research-use-only product, which carries regulatory risk if FDA considers its distribution or promotion inconsistent with that status.
- The IL-6 clinical program and planned additional cardiac tests remain development-stage. The filing describes possible applications and market opportunities, not established commercial demand or assured regulatory outcomes. The company also discussed a possible COVID-19 EUA, with no assurance of success.
- Bluejay depends on Toray-licensed technology and contract manufacturers in Japan. The Toray agreement includes a 15% royalty on net sales after first sale, minimum royalties thereafter, and a requirement to obtain U.S. and EU market approval by October 2023 or risk termination; Toray may also terminate or make the license non-exclusive if commercial sales do not begin within five years of the license date.
- Year-end purchase commitments were approximately $1.5 million, primarily for inventory and advisory services. Estimated future lease payments totaled approximately $695,000. Adoption of the lease accounting standard in January 2022 added approximately $200,000 of right-of-use assets and lease liabilities.
- Potential dilution includes outstanding IPO warrants, other warrants and stock options. The filing reported 2.484 million Class A warrants and 115,500 Class B warrants outstanding at year-end, among other warrants and options.
- Disclosure controls were assessed as effective at December 31, 2021. The filing did not include management’s internal-control effectiveness assessment or an auditor attestation, citing the newly public company transition period. The independent auditor gave an unqualified opinion on the financial statements.
- The company reported no pending legal actions and no material legal proceedings. It reported nine full-time employees at year-end.
Important facts for investors to verify
- Whether clinical studies support the planned 510(k) submission and whether FDA clearance is obtained on the expected timetable.
- Actual cash burn, committed spending, and financing needs relative to management’s stated 12-month cash runway.
- Whether Symphony obtains paying customers and meaningful cartridge utilization after any required regulatory authorization.
- The status and terms of the Toray license, including approval deadlines, commercial-sales conditions, royalties and supply obligations.
- Potential share dilution from warrants, options and future capital raises, and the terms and exercise activity of outstanding warrants.