BioCardia, Inc. — Q2 2018 Form 10-Q
Reporting period: Three and six months ended June 30, 2018. Unaudited U.S. GAAP condensed consolidated financial statements. BioCardia is a clinical-stage regenerative medicine company developing cardiovascular cell therapies; revenue remains modest and primarily comes from enabling and delivery products and collaboration programs. Financial figures below are in millions of dollars unless otherwise indicated.
Financial performance and position
| Metric | Q2 2018 | Q2 2017 | First half 2018 | First half 2017 |
|---|---|---|---|---|
| Revenue | $0.239 | $0.112 | $0.438 | $0.249 |
| Operating loss | $(3.252) | $(2.968) | $(6.872) | $(5.843) |
| Net loss | $(3.217) | $(2.945) | $(6.801) | $(5.821) |
| Net loss per share, basic and diluted | $(0.08) | $(0.08) | $(0.18) | $(0.15) |
| Operating cash flow | Not presented separately | Not presented separately | $(5.814) | $(4.369) |
- Q2 gross profit was approximately $0.104 million (43% of revenue), compared with a gross loss of $0.091 million in Q2 2017. First-half gross profit was $0.146 million (33% of revenue), versus a gross loss of $0.129 million in the prior-year period.
- First-half R&D expense rose to $3.986 million from $2.328 million, mainly reflecting the CardiAMP Heart Failure trial and CardiALLO development. SG&A fell to $3.032 million from $3.386 million, primarily due to lower share-based compensation.
- Cash and cash equivalents were $6.834 million at June 30, 2018, down from $12.689 million at December 31, 2017. Total assets were $7.661 million; total liabilities were $1.903 million; stockholders’ equity was $5.758 million. No debt balance is reported on the presented balance sheet.
- First-half investing cash use was $0.046 million and financing cash provided was $0.005 million. Net cash decreased $5.855 million. Accumulated deficit was $79.175 million.
Changes and accounting items
- First-half revenue increased $0.189 million year over year, largely from collaboration revenue, while net product revenue declined to $0.171 million from $0.210 million. The company attributed higher collaboration revenue in part to adopting ASC Topic 606; prior periods were not restated, so reported comparisons are not fully on the same accounting basis.
- BioCardia adopted Topic 606 on January 1, 2018 using the cumulative-effect method, reducing opening accumulated deficit by $76,000. It reported no material impact from adopting the other accounting standards noted in the filing.
- Operating cash use increased $1.445 million year over year. The company said spending reflected clinical-trial and development activity and public-company infrastructure.
Outlook, risks, and notable developments
- Management estimated that June 30 cash would fund operations into December 2018. The filing states there is substantial doubt about the company’s ability to continue as a going concern beyond one year from issuance; additional capital is required to continue development. Planned financing could include debt or equity, but availability and acceptable terms are not assured. Without funding, the company may cut or delay programs, relinquish rights, or cease operations.
- Management expects losses and negative operating cash flows to continue for several years. It expects R&D spending to increase as trials and development advance, and SG&A and product costs to rise moderately in the latter half of 2018. No numerical earnings or revenue guidance is provided.
- The CardiAMP Heart Failure pivotal trial was enrolling at 17 centers; enrollment was anticipated to finish in Q3 2019. Roll-in cohort efficacy results were anticipated in Q4 2018. A core-lab staffing issue temporarily prevented sample acceptance for two months in Q2; the company said staffing had been resolved and additional lab capacity established.
- The FDA approved a second IDE for the CardiAMP Chronic Myocardial Ischemia pivotal trial in January 2018; first patient dosing was anticipated in Q1 2019. BioCardia expected to submit a CardiALLO Phase II IND in Q4 2018. These are management expectations, not assured outcomes.
- CMS designated both CardiAMP trials eligible for Medicare national coverage; the filing anticipates certain trial-related costs will be covered. Private plans covering an estimated 50 million people were also expected to follow the CMS policy.
- No material change in market risk was reported; the company does not hedge interest-rate or foreign-currency exposure. Management reported effective disclosure controls as of June 30, 2018 and no material pending legal proceedings.
Important facts for investors to verify
- Whether BioCardia raised sufficient capital after the filing to extend its stated December 2018 cash runway, and the terms and dilution or covenants associated with any financing.
- Subsequent cash burn and actual operating expenses compared with the company’s expectations, including the effect of trial enrollment and development costs.
- Progress, enrollment, timing, safety and efficacy data for the CardiAMP trials, and progress on the CardiALLO IND and trial plans.
- Whether collaboration revenue trends persist, distinguishing product revenue from collaboration revenue and accounting effects of Topic 606.
- Whether the clinical sample-processing capacity and trial schedules remained on track after the reported core-lab interruption.