Trisalus Life Sciences, Inc. current report, 10 August 2023

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Business Context and Reporting Period

TriSalus Life Sciences, Inc. filed this Form 8-K on August 10, 2023, with a signature date of August 16, 2023. The filing reports the closing of the business combination between MedTech Acquisition Corporation (MTAC) and Legacy TriSalus Life Sciences. MTAC changed its name to TriSalus Life Sciences, Inc., while Legacy TriSalus became TriSalus Operating Life Sciences, Inc. The transaction converted the former shell company into the operating public company.

The common stock and public warrants began trading on Nasdaq under the symbols TLSI and TLSIW, respectively, on August 10, 2023.

Key Financial Metrics and Capitalization

  • Gross closing proceeds were approximately $42.9 million, consisting of approximately $2.7 million from the MTAC trust account and $40.15 million from the PIPE financing.
  • Holders of 890,499 MTAC Class A shares redeemed their shares for approximately $9.4 million, or approximately $10.58 per share.
  • The PIPE financing issued 4,015,002 Series A Convertible Preferred Stock shares at $10.00 per share.
  • As of the business day following closing, 26,316,681 common shares were issued and outstanding.
  • The company had 8,333,272 public warrants and 5,933,333 private warrants outstanding, generally exercisable at $11.50 per share. The sponsor also received 1,000,000 warrants upon conversion of a $1.5 million sponsor note.
  • Series A Preferred Stock ranks senior to common stock in liquidation and distributions, carries an accumulating annual dividend of 8.0% of the $10.00 liquidation preference, and has voting rights equal to 1.07 votes per share.
  • The filing does not provide a clear consolidated revenue, net income or loss, operating cash flow, cash balance, debt balance, liquidity runway, or margin figure in the supplied text. Historical and pro forma financial statements are incorporated by reference or included in Exhibits 99.1 through 99.3.
  • Withum’s prior audit report included substantial doubt about Legacy TriSalus’s ability to continue as a going concern.

Material Changes Versus the Prior Comparable Period

  • The business combination resulted in a change of control and ended MTAC’s shell-company status. Former MTAC stockholders held approximately 9.7% of the combined company immediately after closing.
  • The company adopted a new certificate of incorporation, amended and restated bylaws, and a Certificate of Designations for the Series A Convertible Preferred Stock.
  • KPMG LLP replaced WithumSmith+Brown, PC as the independent registered public accounting firm. The filing reports no disagreements or reportable events involving Withum and no prior consultations with KPMG on accounting or reporting issues.
  • The company established a nine-member board, new board committees, a new executive leadership structure, a 2023 Equity Incentive Plan covering an initial maximum of 5,585,008 shares, and a 2023 Employee Stock Purchase Plan covering an initial maximum of 1,396,252 shares.
  • Aggregate bonuses of approximately $2.8 million were approved for executive officers and other employees. Annual base salaries for Mary Szela, Steven Katz and Jennifer Stevens were set at $600,000, $515,000 and $412,000, respectively, with additional option grants.

Guidance, Outlook, Risks and Unusual Items

  • Following FDA feedback on the PERIO-01 program, management planned a 40- to 50-patient study to further evaluate efficacy and determine the optimal SD-101 dose.
  • The company expected to report more mature Phase 1 efficacy data in the second half of 2023 and planned to initiate a Phase 2 trial in 2023, subject to regulatory interactions, enrollment and clinical-site conditions.
  • The filing states that a potential new drug application for SD-101 in uveal melanoma with liver metastases was likely to occur beyond 2025, pending Phase 2 efficacy and dose-optimization data.
  • The company was considering a separate study of SD-101 with Y90 radioembolization for advanced hepatocellular carcinoma, with prioritization dependent on data expected in the second half of 2023.
  • Key risks include continued operating losses and significant future expenses, the need for additional financing, clinical-trial and regulatory uncertainty, commercialization risk, intellectual-property protection, Nasdaq listing and trading liquidity, business-combination integration costs, legal proceedings, and broader economic, supply-chain and geopolitical conditions.
  • Under the sponsor earnout arrangement, 3,125,000 sponsor-held common shares are subject to vesting based on five-year stock-price thresholds of $15, $20, $25 and $30. Unvested shares are subject to forfeiture after the fifth anniversary of closing.
  • The company does not anticipate paying cash dividends on common stock in the foreseeable future.

Most Important Facts for Investors to Verify

  1. Review Exhibits 99.1 through 99.3 for actual revenue, operating loss, cash flow, cash, debt, going-concern disclosures and pro forma capitalization.
  2. Confirm the conversion, dividend accrual and voting terms of the Series A Convertible Preferred Stock and assess potential dilution from preferred conversion, warrants, options and equity plans.
  3. Assess whether approximately $42.9 million of gross transaction proceeds provides sufficient funding given the company’s reported operating losses and clinical-development plans.
  4. Verify the timing, enrollment status and regulatory implications of the PERIO-01 Phase 2 program and the revised expectation for any potential application beyond 2025.
  5. Review the sponsor earnout, lock-up and registration-rights provisions for their potential effect on future share supply and trading volatility.
  6. Monitor the replacement of Withum by KPMG and the prior substantial-doubt going-concern language.