BioCardia, Inc. — FY2019 Form 10-K
Reporting period: Fiscal year ended December 31, 2019. This is an annual report, not a standalone Q4 filing; separate Q4 financial results are not provided in the supplied text. BioCardia is a clinical-stage cardiovascular regenerative-medicine company. Its lead candidate, autologous CardiAMP, is in Phase III development; CardiALLO is an investigational off-the-shelf cell therapy. Morph catheter products are commercial, while Helix is commercially available in Europe and investigational in the United States.
Financial performance and liquidity
| Metric | 2019 | 2018 |
|---|---|---|
| Total revenue | $0.710 million | $0.625 million |
| Net product revenue | $0.182 million | $0.282 million |
| Collaboration revenue | $0.528 million | $0.343 million |
| Cost of goods sold | $0.358 million | $0.517 million |
| Research and development | $8.562 million | $8.453 million |
| Selling, general and administrative | $6.003 million | $5.757 million |
| Operating loss | $(14.213) million | $(14.102) million |
| Net loss | $(14.709) million | $(13.987) million |
| Basic and diluted loss per share | $(2.61) | $(3.28) |
- Revenue rose 14% year over year, as higher collaboration revenue more than offset lower product sales. Gross profit was approximately $0.352 million, or 49.6% of revenue, compared with $0.108 million, or 17.3%, in 2018.
- Operating cash outflow was $9.445 million, versus $11.069 million in 2018. Financing provided $9.818 million; cash increased $0.227 million to $5.585 million.
- At year-end, current assets were $6.378 million and current liabilities were $4.003 million, including $0.528 million of current operating lease liabilities. Total liabilities were $5.308 million; total stockholders’ equity was $2.370 million. The balance sheet reports no convertible notes payable at year-end; the 2019 notes converted into stock and warrants in August.
- Accumulated deficit was $101.070 million. The company reported a $0.521 million loss on extinguishment of convertible notes and $0.112 million interest expense in 2019. Operating lease liabilities totaled $1.142 million, current and noncurrent combined.
Material changes and operating developments
- CardiAMP heart-failure Phase III trial: 74 patients enrolled at 25 sites as of the filing; the target is up to 260 patients at 40 centers. A September 2019 safety review found no safety concerns and recommended continuing. The filing reports no randomized efficacy result; a DSMB efficacy/non-futility review was anticipated for Q4 2020.
- FDA-approved trial changes were intended to ease enrollment: eligible control-arm participants could cross over after specified follow-up, and BioCardia would cover insured patients’ copays. COVID-19 disruptions delayed enrollment and could affect procedures and follow-up.
- The separate CardiAMP chronic-myocardial-ischemia Phase III trial was approved for up to 343 patients, but initiation timing depended on the COVID-19 situation. CardiALLO manufacturing validation runs were completed; the company targeted FDA acceptance of a Phase I/II IND in Q2 2020.
- In August 2019, BioCardia completed a public offering and underwriters’ over-allotment, reporting net proceeds of approximately $9.26 million in aggregate. The offering and note conversion increased shares outstanding; year-end common shares were 6.825 million, versus 4.846 million a year earlier.
- Revenue concentration increased: two customers accounted for 43% and 25% of 2019 revenue. Collaboration revenue is expected to grow modestly depending on program progress and new partnerships; product revenue was expected to remain limited.
Outlook, risks and unusual items
- Funding and going concern: Management said $5.6 million of year-end cash was insufficient to fund operations beyond Q2 2020 and that additional capital was required. The risk-factor discussion separately states cash was insufficient through Q3 2020 at the expected activity level. The auditor’s report highlights substantial doubt about the company’s ability to continue as a going concern. Financing was not assured; potential responses included reducing or delaying programs, partnering or licensing rights, or ceasing operations.
- Management expected continued losses and negative cash flows for at least several years, with R&D spending expected to rise as CardiAMP trials and CardiALLO development advanced. No product-sales guidance or specific financial forecast is provided.
- COVID-19 was identified as a material uncertainty affecting trial enrollment, site activity, follow-up, operations, supply chains and access to financing. The company said the financial effect could not yet be estimated.
- Internal control over financial reporting was ineffective at December 31, 2019 due to insufficient technical accounting resources to review complex, non-routine transactions and new accounting standards. Disclosure controls were also deemed ineffective. Management was using external consultants and enhanced review processes to remediate the weakness; the auditor did not attest to internal-control effectiveness.
- BioCardia is litigating against former employee Surbhi Sarna and Boston Scientific-related parties over alleged assignment of patents and applications and related sale proceeds. The company seeks, among other remedies, constructive trusts and damages; outcome and potential financial effect are not clear from the filing.
- The company reported a net loss each year since inception. Its products remain largely developmental, and CardiAMP and CardiALLO have not received U.S. marketing approval. The filing emphasizes clinical, regulatory, enrollment, reimbursement, manufacturing, competition, intellectual-property and dilution risks.
Important facts for investors to verify
- Current cash runway, subsequent financing and the company’s ability to fund both pivotal CardiAMP programs and ongoing operations.
- Updated CardiAMP enrollment, site participation, COVID-related protocol deviations, and any DSMB safety or efficacy findings; verify whether the planned interim review occurred.
- Status and timing of the chronic-ischemia trial launch and CardiALLO IND submission, and any changes to trial design or regulatory requirements.
- Progress remediating the material weakness in financial controls, and any subsequent restatement, audit or reporting issues.
- Developments in the patent litigation, customer concentration, and the terms or dilution associated with subsequent equity, warrant or debt financing.