BioCardia, Inc. — Q2 2020 Form 10-Q
Reporting period: Quarter and six months ended June 30, 2020. Financial statements are unaudited. BioCardia is a clinical-stage regenerative medicine company developing CardiAMP and CardiALLO cell therapies for cardiovascular and pulmonary conditions; it also sells catheter and delivery products and earns collaboration revenue.
Financial results and liquidity
| Metric | Q2 2020 | Q2 2019 | Six months 2020 | Six months 2019 |
|---|---|---|---|---|
| Total revenue | $27,000 | $86,000 | $65,000 | $302,000 |
| Research and development | $2.224 million | $2.219 million | $5.010 million | $4.385 million |
| Selling, general and administrative | $1.377 million | $1.438 million | $3.234 million | $3.070 million |
| Operating loss | $3.574 million | $3.762 million | $8.183 million | $7.450 million |
| Net loss | $3.573 million | $3.750 million | $8.167 million | $7.415 million |
| Net loss per share, basic and diluted | $0.46 | $0.77 | $1.07 | $1.53 |
- At June 30, cash and cash equivalents were $11.086 million, versus $5.585 million at December 31, 2019. Total assets were $13.128 million; total liabilities were $5.837 million; stockholders’ equity was $7.291 million. Accumulated deficit was $109.237 million.
- Six-month operating cash use was $5.336 million, compared with $4.717 million in 2019; investing cash use was $9,000. Financing provided $10.846 million, primarily from the June stock offering and a PPP loan.
- Debt included a $506,413 unsecured PPP note at 1% interest, with $226,000 current and $281,000 noncurrent reported at quarter-end. The company intended to use qualifying expenses to seek forgiveness; forgiveness was not assured.
- Gross margin is not meaningfully comparable: Q2 2020 had no product revenue or cost of goods sold, while Q2 2019 had $62,000 of product revenue and $191,000 of cost of goods sold.
Changes versus prior comparable periods
- Q2 revenue fell to $27,000 from $86,000; six-month revenue fell to $65,000 from $302,000. Management attributed the decline to lower catheter sales during a product-family transition and, for the six-month period, lower collaboration activity.
- Q2 net loss narrowed to $3.573 million from $3.750 million, while six-month net loss widened to $8.167 million from $7.415 million, reflecting higher year-to-date R&D and SG&A spending.
- Cash increased following a public offering that raised approximately $10.3 million net. The offering and related stock issuance increased shares outstanding from 6,825,183 at year-end 2019 to 12,425,794 at June 30, 2020.
- Operating cash use increased by $619,000 year over year for the first six months, which management attributed mainly to clinical-trial payments, professional fees and insurance premiums.
Outlook, risks and notable items
- Going concern: Management said $11.1 million of cash at June 30 was insufficient to fund operations beyond Q2 2021 and disclosed substantial doubt about the company’s ability to continue as a going concern within one year after issuance of the financial statements. Additional financing is required; management’s plans were not considered probable of occurring. Failure to obtain funding could require spending cuts, delayed or reduced programs, licensing or other arrangements that surrender rights, or cessation of operations.
- Development outlook: Management expected R&D expense to increase modestly year over year in 2020 as it advanced the CardiAMP heart-failure and chronic-myocardial-ischemia programs and developed CardiALLO. It expected SG&A to decrease modestly during the rest of 2020. Product revenue was expected to remain limited; collaboration revenue was expected to increase modestly, subject to partner activity.
- Clinical milestones: The Phase III CardiAMP Heart Failure trial had 77 patients enrolled at 24 sites. The DSMB recommended continuing after a March 2020 safety review; another interim review, including a futility analysis, was anticipated in Q4 2020. COVID-19-related site closures and delayed follow-ups disrupted enrollment and timelines. The first site for the CardiAMP chronic myocardial ischemia trial had been activated. FDA acceptance of the CardiALLO heart-failure IND remained pending; BioCardia also intended to submit an IND for COVID-19-related ARDS.
- COVID-19: The pandemic delayed development programs and regulatory and commercialization timelines. Management said the ultimate effects depended on the duration and severity of restrictions and could affect trial costs, timing and access to capital.
- Capital and listing: In June, BioCardia sold 5,476,190 shares at $2.10 per share, including full exercise of the over-allotment, for approximately $10.3 million net. The company believed the offering restored compliance with Nasdaq’s $2.5 million minimum-equity requirement after an April deficiency notice.
- Controls: Disclosure controls were assessed as not effective due to an unremediated material weakness involving insufficient technical resources to review complex, non-routine accounting and disclosures. Management expected remediation before December 31, 2020, subject to effective operation and testing of controls.
- Legal and related-party matters: Litigation involving Boston Scientific, nVision and a former employee remained pending, with no settlement as of filing. A board-member-controlled funder agreed to finance litigation costs on a non-recourse basis in exchange for repayment and a share of proceeds. The related-party receivable was approximately $519,000 at June 30; approximately $299,000 was collected July 14.
- The company also repriced 515,036 outstanding options to $5.32 per share, recording $569,000 of incremental share-based compensation expense.
Important facts for investors to verify
- Whether BioCardia raised sufficient additional capital after the filing to address the disclosed runway and going-concern uncertainty.
- Progress and results from the anticipated Q4 2020 CardiAMP DSMB review, enrollment, and effects of COVID-19 on trial timelines.
- Whether the PPP loan was forgiven and whether the company maintained Nasdaq listing compliance.
- Remediation and testing of the material weakness in internal control over financial reporting.
- Developments in the pending litigation and the terms, funding, collections and potential proceeds under the related-party litigation funding agreement.