PAVmed Inc. — Q2 2019 Form 10-Q
Reporting period: Quarter and six months ended June 30, 2019. Unaudited consolidated results include majority-owned subsidiary Lucid Diagnostics. PAVmed is a development-stage medical-device company and reported no product revenue.
Financial results and liquidity
| Metric | Q2 2019 | Q2 2018 | Six months 2019 | Six months 2018 |
|---|---|---|---|---|
| Revenue | $0 | $0 | $0 | $0 |
| Operating expenses | $3.32 million | $2.74 million | $6.46 million | $4.68 million |
| Operating loss | $3.32 million | $2.74 million | $6.46 million | $4.68 million |
| Net loss attributable to PAVmed common stockholders | $3.66 million | $5.13 million | $7.26 million | $8.54 million |
| Basic and diluted loss per common share | $0.13 | $0.27 | $0.27 | $0.48 |
| Cash used in operating activities | Not separately stated | Not separately stated | $6.39 million | $3.90 million |
- At June 30, cash was $6.91 million, down from $8.22 million at December 31, 2018. Total assets were $7.06 million.
- Working capital was negative $1.9 million. Current liabilities included the convertible note at its $6.79 million estimated fair value; its face principal was $6.219 million.
- Six-month financing cash flow was $5.10 million, primarily reflecting $5.38 million net proceeds from common-stock offerings, less $279,002 of cash note payments. Investing cash use was $25,058.
- No operating margin is meaningful because the company had no revenue. Stockholders’ deficit totaled $1.88 million at June 30.
Changes versus the prior comparable period
- Q2 operating expenses rose 21% to $3.32 million; six-month expenses rose 38% to $6.46 million. Six-month R&D increased 67% to $2.86 million, principally from personnel, outside services and stock-based compensation, partly offset by a prior-year license fee that did not recur.
- Q2 common-stockholder loss narrowed to $3.66 million from $5.13 million, and the six-month loss narrowed to $7.26 million from $8.54 million. Prior-year periods included substantial warrant-exchange and modification expenses; 2019 included convertible-note fair-value and extinguishment losses.
- Operating cash use increased to $6.39 million from $3.90 million for the first six months, despite the lower reported net loss.
- Common shares outstanding increased to 34.14 million from 27.14 million at year-end, reflecting registered offerings and note conversions. The filing reported 35.06 million shares outstanding as of August 12, 2019.
Business developments, outlook and risks
- In June, the FDA granted 510(k) marketing clearance for Lucid’s EsoCheck cell-collection device. EsoGuard’s laboratory-developed test validation was completed; the company was progressing through reimbursement-code and payment processes and planning further FDA work for a broader screening indication. No product revenue had yet been generated.
- For CarpX, nine patients had undergone procedures in a first-in-human safety study, with no device-related adverse events reported at the time. Follow-up and completion of the study remained pending before a planned FDA 510(k) resubmission.
- Management expects continued operating losses and does not expect positive operating cash flow in the near future. The filing states that these conditions raise substantial doubt about the company’s ability to continue as a going concern within one year after issuance of the financial statements. Management’s plans include raising additional capital, refinancing debt at maturity, obtaining regulatory approvals, commercializing products and controlling expenses; success is not assured.
- The senior secured convertible note was issued with $7.75 million face principal, a 7.875% stated interest rate and December 31, 2020 maturity. It is subject to bi-monthly payments and holder conversion into common shares. At June 30, $6.219 million face principal remained; conversions and payments after quarter-end resulted in further share issuance. The note’s fair-value changes and conversions produced six-month expenses of $720,059 and $259,812, respectively.
- Other pipeline programs include PortIO, DisappEAR and NextFlo. Management described ongoing animal, engineering and regulatory work; NextFlo was subject to a formal M&A process. Timelines and commercial outcomes remain uncertain.
- Principal risks include reliance on additional financing, note repayment and dilution, regulatory approval, market acceptance, product development and manufacturing execution, and intellectual-property protection. The company reported no other pending legal proceedings it believed material; it noted potential legal and product-liability exposure as commercialization advances.
Most important facts for investors to verify
- Cash, operating cash burn and financing availability relative to the going-concern warning and near-term obligations.
- Convertible-note balance, payment and conversion terms, subsequent share issuance, and resulting dilution.
- Progress and timing of EsoGuard reimbursement and FDA pathway, CarpX clinical follow-up and resubmission, and commercialization of cleared EsoCheck.
- Whether rising R&D and administrative costs translate into regulatory, commercial or revenue milestones; no quantitative revenue or profitability guidance was provided.