TriSalus Life Sciences, Inc. — Q1 2024 Form 10-Q
Reporting period: Three months ended March 31, 2024. TriSalus develops and sells PEDD drug-delivery devices, principally TriNav, and is developing nelitolimod, an investigational oncology drug. The company is transitioning from a device-focused business toward a therapeutics company. Financial amounts below are in millions of dollars unless otherwise noted.
Financial performance and position
| Metric | Q1 2024 | Q1 2023 |
|---|---|---|
| Revenue | $6.46 | $2.98 |
| Gross profit / margin | $5.49 / 85.0% | $2.32 / 77.8% |
| Research and development | $5.86 | $5.64 |
| Sales and marketing | $6.69 | $3.25 |
| General and administrative | $4.63 | $3.55 |
| Loss from operations | $(11.69) | $(10.12) |
| Net loss available to common stockholders | $(13.22) | $(8.27) |
| Net loss attributable to common stockholders, including preferred dividends and, where applicable, deemed dividends | $(14.02) | $(9.23) |
| Basic and diluted loss per share | $(0.60) | $(0.57) |
| Cash used in operating activities | $(10.87) | $(10.50) |
At March 31, 2024, cash and cash equivalents were $3.97 million ($4.32 million including restricted cash), down from $11.78 million at December 31, 2023. Current assets were $13.19 million and current liabilities $14.39 million. Total liabilities were $52.81 million, including a $22.62 million contingent earnout liability and $14.58 million of warrant and SEPA liabilities. Stockholders’ deficit was $34.92 million. The balance sheet at quarter-end does not show the OrbiMed loan, which was entered into after the reporting date.
Changes and drivers
- Revenue rose 116.4%, primarily from increased TriNav unit sales as sales recovered from pandemic impacts. The filing attributes the increase to sales volume.
- Gross margin improved to 85.0% from 77.8%, which management attributed mainly to improved production yields and higher volume absorbing fixed overhead.
- Operating expenses increased, particularly sales and marketing, which more than doubled as the company expanded its commercial team. R&D increased modestly; management cited higher headcount and patent costs, partly offset by lower clinical-trial expenses.
- Operating loss widened to $11.69 million. The reported net loss also increased, including a $3.99 million non-cash loss from remeasuring the contingent earnout liability, partly offset by a $2.52 million gain from changes in fair value of SEPA and warrant liabilities.
- Financing cash inflow was $3.13 million, principally from issuing 350,000 shares under the Yorkville SEPA for $3.14 million. Cash decreased by $7.81 million during the quarter.
Outlook, liquidity, risks, and unusual items
- Going concern: Management states that substantial doubt exists about the company’s ability to continue as a going concern, and that its plans do not alleviate that doubt. It expects existing cash and the initial OrbiMed loan proceeds to be insufficient for at least the next 12 months from the financial statements’ issuance date. If it can meet loan draw conditions and sell additional shares under the SEPA, management believes funding could extend through the end of 2025.
- Subsequent financing: In April 2024, TriSalus sold another 400,000 SEPA shares for $3.60 million. On April 30, it entered into a senior secured credit facility of up to $50 million and drew $25 million gross. Up to $25 million in additional delayed-draw commitments is subject to revenue requirements. The loan matures in April 2029 and is secured by substantially all assets; the filing also describes restrictive covenants and minimum-cash requirements.
- Business and product outlook: TriNav is the principal revenue source. CMS’s new HCPCS code for TriNav procedures became effective January 1, 2024, after the prior transitional pass-through approval expired at year-end 2023. Management cautions that reimbursement at similar rates—or any continued reimbursement—is not assured. Nelitolimod is in early clinical development; if trials succeed, the company anticipates filing an NDA no sooner than 2025, with possible commercial sales thereafter, potentially in 2027. These are expectations, not guarantees.
- Funding and dilution: Continued operations and development are expected to require substantial additional capital. The company may need to reduce operations, defer clinical trials or cut costs if financing is unavailable. SEPA share sales and equity awards may dilute existing holders; the preferred stock has cumulative 8% annual dividends and conversion-price reset provisions.
- Commitments: The Dynavax nelitolimod agreement may require up to $158 million in additional development and regulatory milestone payments, up to $80 million in commercial milestones, and royalties on future sales. Lease obligations were $1.6 million at quarter-end.
- Controls and reporting: Management concluded disclosure controls and procedures were not effective as of March 31, 2024, and reported material weaknesses in financial reporting controls. The company said it had hired two of four planned additional finance resources by quarter-end; remediation remains in progress and is not yet complete.
- Other risks and contingencies: The filing highlights clinical, regulatory, reimbursement, competition, supply-chain, financing, intellectual-property, and public-company control risks. It reports no material pending legal proceedings and no known claims expected to have a material adverse effect.
Important facts for investors to verify
- Cash runway and whether the company can meet the OrbiMed facility’s cash, revenue, and other covenant requirements and qualify for delayed draws.
- Actual TriNav sales, unit growth, gross margins, and reimbursement and adoption under the new CMS code.
- Progress and results in nelitolimod trials, including timelines, funding needs, and any required Dynavax milestone payments.
- Further SEPA usage, loan balances and terms, preferred-stock conversion and dividend effects, and potential dilution from equity compensation and warrants.
- Whether internal-control material weaknesses are remediated and disclosure controls improve.