BioCardia, Inc. — Q3 2017 Form 10-Q
Reporting period: Three and nine months ended September 30, 2017; unaudited. BioCardia is a clinical-stage regenerative medicine company developing cardiovascular cell therapies. Its lead candidate, CardiAMP, was in a Phase III heart-failure trial; CardiALLO was in development. Unless noted otherwise, financial figures below are in millions of dollars.
Financial highlights
- Revenue: Q3 revenue was $0.130 million, versus $0.117 million in Q3 2016. Nine-month revenue was $0.379 million, down from $0.439 million. Product revenue declined; collaboration revenue increased.
- Losses and expenses: Q3 operating loss was $3.039 million and net loss was $3.001 million, compared with $1.682 million and $3.254 million, respectively, in Q3 2016. Nine-month operating loss widened to $8.882 million from $4.136 million; net loss widened to $8.822 million from $6.728 million. R&D and SG&A rose substantially, principally reflecting the CardiAMP Phase III trial and public-company infrastructure.
- Per-share results: Net loss per share was $0.08 for Q3 and $0.23 for nine months, versus $2.06 and $4.26 in 2016. Weighted-average shares differed sharply between periods following the 2016 merger, so per-share comparisons are not directly representative of changes in total losses.
- Margins: Cost of goods sold exceeded total revenue in both periods: $0.147 million versus $0.130 million in Q3, and $0.525 million versus $0.379 million year to date. The filing does not provide a separate product gross-margin figure.
- Cash flow: Nine-month operating cash use was $6.146 million, versus $3.007 million in 2016. Investing used $1.906 million, including $1.799 million for short-term investments; financing provided $0.026 million. Cash declined by $8.026 million to $13.326 million.
- Liquidity and debt: Cash and cash equivalents were $13.326 million and short-term investments were $1.799 million at September 30, 2017. Current assets were $15.643 million versus current liabilities of $2.000 million. Total liabilities were $2.075 million; no notes or other debt were outstanding. Accumulated deficit was $68.964 million.
Material changes and business developments
- Nine-month product revenue fell $0.108 million, primarily due to lower Morph sales; collaboration revenue increased by $0.048 million. Management expected modestly lower 2017 product revenue than in 2016.
- Nine-month R&D increased $2.406 million to $4.028 million, and SG&A increased $2.333 million to $4.708 million. Management expected both to rise as the CardiAMP trial progressed and CardiALLO development advanced, subject to funding.
- In September, the independent safety board reviewed the first 10 CardiAMP Phase III patients, reported no significant safety concerns, and recommended continuing the trial as planned. Five centers were actively enrolling.
- The company completed a 12-for-1 reverse stock split on November 3, 2017. The filing reports 38,220,141 common shares outstanding as of November 8; investors should verify the post-split share count and presentation.
Outlook, risks, and controls
- Management estimated existing cash and short-term investments would fund operations into Q3 2018. It said additional capital would be required to continue the trial and operations at the current level. The filing states there is substantial doubt about the company’s ability to continue as a going concern within one year after issuance of the financial statements.
- Management planned to seek additional financing, potentially through debt or equity, but gave no assurance funding would be available on acceptable terms. Failure to raise funds could lead to reduced or delayed development, relinquishment of rights, or cessation of operations; equity financing could dilute shareholders.
- Management anticipated an FDA filing for a second CardiAMP indication in chronic myocardial ischemia in 2017, an IDE supplement for an interim efficacy readout in Q4 2018, and CardiAMP top-line data in Q4 2019. It anticipated submitting a CardiALLO Phase II IND in 2018. These are forward-looking expectations, not guarantees.
- Disclosure controls were deemed ineffective at September 30, 2017 because a previously reported material weakness in internal control over financial reporting remained. Remediation efforts were underway, but management could not confirm the weakness would be remediated by year-end.
- The company reported no currently pending material legal proceedings and no off-balance-sheet arrangements.
Investor verification priorities
- Confirm financing plans, available runway, and whether capital was raised to support operations beyond Q3 2018.
- Track CardiAMP enrollment, trial milestones, regulatory filings, and safety and efficacy updates; assess the status of the proposed CardiALLO IND.
- Verify the post-reverse-split share count, potential dilution from options and future financing, and the effect of the merger on comparisons of per-share results.
- Monitor remediation and testing of the disclosed material weakness in internal controls.