# BioCardia, Inc.: Form 10-Q for the period ended Mar 31, 2020

- Company: [BioCardia, Inc.](/companies/bcda.md) (CIK 925741)
- Form: 10-Q
- Filed: 2020-05-15
- Accepted by EDGAR: May 15, 2020, 07:26 ET
- Period: 2020-03-31
- Accession: 0001437749-20-010860
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/925741/000143774920010860/bcda20200331_10q.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/925741/000143774920010860/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2020-03-31.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2020-01-01 to 2020-03-31 | $38.0k | us-gaap:RevenueFromContractWithCustomerIncludingAssessedTax |
| Cost of revenue | 3 months, 2020-01-01 to 2020-03-31 | $4.0k | us-gaap:CostOfGoodsAndServicesSold |
| Research and development | 3 months, 2020-01-01 to 2020-03-31 | $2.8m | us-gaap:ResearchAndDevelopmentExpense |
| Selling, general and administrative | 3 months, 2020-01-01 to 2020-03-31 | $1.9m | us-gaap:SellingGeneralAndAdministrativeExpense |
| Operating income | 3 months, 2020-01-01 to 2020-03-31 | −$4.6m | us-gaap:OperatingIncomeLoss |
| Income tax | 3 months, 2020-01-01 to 2020-03-31 | $0 | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2020-01-01 to 2020-03-31 | −$4.6m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2020-01-01 to 2020-03-31 | −$0.67 | us-gaap:EarningsPerShareBasicAndDiluted |
| Operating cash flow | 3 months, 2020-01-01 to 2020-03-31 | −$3.0m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 3 months, 2020-01-01 to 2020-03-31 | $5.0k | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Cash and equivalents | at 2020-03-31 | $2.6m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2020-03-31 | $3.2m | us-gaap:AssetsCurrent |
| Total assets | at 2020-03-31 | $4.4m | us-gaap:Assets |
| Current liabilities | at 2020-03-31 | $4.5m | us-gaap:LiabilitiesCurrent |
| Total liabilities | at 2020-03-31 | $5.7m | us-gaap:Liabilities |
| Shareholders' equity | at 2020-03-31 | −$1.3m | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 33,402 characters.

*The following discussion of our financial condition and results of operations should be read in conjunction with our financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q. This discussion contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Any and all statements contained in this Annual Report that are not statements of historical fact may be deemed forward-looking statements. Terms such as “may,” “might,” “would,” “should,” “could,” “project,” “estimate,” “pro-forma,” “predict,” “potential,” “strategy,” “anticipate,” “attempt,” “develop,” “plan,” “help,” “believe,” “continue,” “intend,” “expect,” “future” and terms of similar import (including the negative of any of the foregoing) may be intended to identify forward-looking statements. However, not all forward-looking statements may contain one or more of these identifying terms. Forward-looking statements in this Quarterly Report may include, without limitation, statements regarding (i) the plans and objectives of management for future operations, including plans or objectives relating to the development of our cell therapy systems and our clinical trials, (ii) a projection of income (including income/loss), earnings (including earnings/loss) per share, capital expenditures, dividends, capital structure or other financial items, (iii) our ability to raise additional capital, (iv) our future financial performance, including any such statement contained in a discussion and analysis of financial condition by management or in the results of operations included pursuant to the rules and regulations of the SEC and (vi) the assumptions underlying or relating to any statement described in points (i) – (iv) above. Our actual results may differ materially from those discussed below. Factors that could cause or contribute to such differences include, but are not limited to, those identified below and elsewhere in this Quarterly Report on Form 10-Q and those listed in our Annual Report on Form 10-K for the year ended December 31, 2019. Historical results are not necessarily indicative of future results. Except as required by law, we undertake no obligation to update publicly any forward-looking statements for any reason after the date of this Quarterly Report on Form 10-Q to conform these statements to actual results or to changes in our expectations.*

### Overview

We are a clinical-stage regenerative medicine company developing novel therapeutics for cardiovascular and pulmonary diseases with large unmet medical needs. CardiAMP and CardiALLO cell therapies are the Company’s biotherapeutic product candidates in clinical development.

Our CardiAMP cell therapy platform provides an autologous bone marrow derived cell therapy (using a patient’s own cells) for the treatment of two clinical indications: heart failure that develops after a heart attack (BCDA-01) and chronic myocardial ischemia (BCDA-02). Our allogenic cell therapy, derived from donor cells and provided “off the shelf” is also being advanced for two indications, heart failure as CardiALLO cell therapy (BCDA-03) and for the pulmonary indication of acute respiratory distress that has developed from COVID-19 (BCDA-04).

The Company's approved products include the Helix™ transendocardial delivery system and its steerable guide and sheath catheter portfolio. BioCardia partners with other biotherapeutic companies to provide its Helix System and clinical support.

To date, we have devoted substantially all our resources to research and development efforts relating to our therapeutic candidates and biotherapeutic delivery systems, including conducting clinical trials, developing manufacturing and sales capabilities, in-licensing related intellectual property, providing general and administrative support for these operations and protecting our intellectual property. We have also generated modest revenues from sales of our approved products. We have funded our operations primarily through the sales of equity and convertible debt securities, and certain government and private grants.

We have incurred net losses in each year since our inception. Our net losses were approximately $4.6 million and $3.7 million for the three months ended March 31, 2020 and 2019, respectively. As of March 31, 2020, we had an accumulated deficit of approximately $105.7 million. Substantially all our net losses have resulted from costs incurred in connection with our research and development programs, clinical trials, intellectual property matters, building our manufacturing and sales capabilities, and from general and administrative costs associated with our operations. As discussed in more detail under “Liquidity and Capital Resources”, there is substantial doubt about our ability to continue as a going concern within one year after the date this Quarterly Report on Form 10-Q is filed with the SEC, and we plan to raise additional capital, potentially including debt and equity arrangements, to finance our future operations. There can be no assurances as to the availability of capital or the terms on which capital will be available, if at all.

### CardiAMP Cell Therapy

The CardiAMP Heart Failure Trial is a Phase III, multi-center, randomized, double-blinded, sham-controlled study of up to 260 patients at 40 centers nationwide, which includes a 10-patient roll-in cohort. The Phase III pivotal trial is designed to provide the primary support for the safety and efficacy of the CardiAMP Cell Therapy System for this indication (BCDA-01).

The ongoing CardiAMP Heart Failure trial is active at 25 clinical sites and 74 patients have been enrolled to date. The independent Data Safety Monitoring Board (DSMB) completed a prespecified data review in March 2020, which included the safety follow-up results available for these patients. From this review, the DSMB indicated there were no safety concerns with the study results and recommended that the trial continue as planned.

We anticipate another prespecified DSMB interim readout from the trial in the fourth quarter of 2020 on all patients enrolled at that time point, which will include a futility analysis on the 60 patients that will have reached one-year follow-up. This fourth quarter of 2020 event is anticipated to be the first randomized data set including the primary efficacy endpoint reviewed by the DSMB.

We are currently assessing the impact of COVID-19 on the enrollment in the CardiAMP Heart Failure Trial. Our clinical centers have advised us that they will not be performing elective procedures until restrictions on elective procedures are lifted. Many centers are also delaying patient follow-up visits during this period out of concern for patient exposure to COVID-19. In alignment with recent FDA guidance on clinical trials, “FDA Guidance on Conduct of Clinical Trials of Medical Products during COVID-19 Pandemic Guidance for Industry, Investigators, and Institutional Review Boards”, we are taking steps to address unavoidable protocol deviations due to COVID-19 illness and/or COVID-19 control measures. The Company has already had exchanges with the FDA modifying the protocol to require documentation for patients whose follow-up visits may be outside the time window specified in the protocol due to patient protective measures. Clinical sites remain engaged, and although there are no patients actively being treated or returning for follow-up during the current “shelter in place” period, most clinical research teams at the twenty five sites are advancing paperwork and chart review through electronic records to further advance the trial.

The FDA has approved a second IDE for the randomized controlled pivotal trial of the CardiAMP Cell Therapy System in patients with refractory chronic myocardial ischemia (BCDA-02) for up to 343 patients at up to 40 clinical sites in the United States. This therapeutic approach uses many of the same novel aspects as the CardiAMP Heart Failure Trial and is expected to leverage our experience and investment in the heart failure trial. We anticipate that many of the investigators and sites will be the same for both the heart failure and chronic myocardial ischemia indications. We are actively working to activate first clinical sites for this study.

The Department of Health & Human Services Centers for Medicare & Medicaid Services, or CMS, has designated that both the CardiAMP Heart Failure Trial and the CardiAMP Chronic Myocardial Ischemia Trial qualify for Medicare national coverage. Covered costs include patient screening, the CardiAMP Cell Therapy System and procedure, and clinical follow-up at one and two years after the procedure. Private insurance plans covering 50 million insured Americans follow this CMS reimbursement policy and are similarly anticipated to cover these costs. This coverage significantly reduces our cost of conducting these pivotal trials.

### ALLOGENIC Cell Therapy for Cardiac and Pulmonary Disease

Our second therapeutic platform is our investigational culture expanded bone marrow derived allogenic or “off the shelf” mesenchymal cell therapy being advanced for cardiac and pulmonary disease. These are the Company’s Neurokinin 1 Receptor Positive Mesenchymal Stem Cells (NK1R+ MSC).

We are actively working to secure FDA acceptance of an Investigational New Drug (“IND”) application for a Phase I/II trial for CardiALLO Cell Therapy System for the treatment of ischemic systolic heart failure (BCDA-03). To date we have completed manufacturing validation runs of these cells at BioCardia to support future clinical studies as well as preclinical animal data and have received written input from the FDA on the protocol design and the chemistry manufacturing and controls. Our goal is to receive FDA acceptance of the IND in the second quarter of 2020.

The Company also intends to submit an IND for the use of its ALLO delivered via intravenous (IV) infusion for Acute Respiratory Distress Syndrome (ARDS) caused by COVID-19. Based on preliminary clinical reports on COVID-19, respiratory failure complicated by ARDs is the leading cause of death for COVID-19 patients. ARDS is a type of respiratory failure characterized by rapid onset of widespread inflammation in the lungs.

### Helix™ Biotherapeutic Delivery System

We believe our Helix Biotherapeutic Delivery System or “Helix” is the leading percutaneous catheter delivery system for cardiovascular regenerative medicine. It enables investigational studies of local delivery of cell and gene-based therapies, including CardiAMP and CardiALLO cell therapies to treat cardiovascular indications. Helix is in use or has potential to be used to treat many cardiac diseases including heart failure with reduced ejection fraction, heart failure with preserved ejection fraction, obstructive hypertrophic cardiomyopathy, myocardial infarction, chronic myocardial ischemia, and cardiac conduction disorders. The Helix’s small hollow, distal helical needle is advanced, similar to an angioplasty catheter, and is passed over the aortic arch and across the aortic valve through our Morph guide catheter or “Morph”. The Helix is then advanced from within the Morph, and its helical needle is rotated into the heart tissue to provide active fixation during therapeutic delivery, similar to the active fixation electrodes used in cardiac pacing. This fixation to the beating heart wall provides for stability and control during the delivery procedure. It uses simplified fluoroscopic imaging, crosses the aortic arch and valve over a guide wire, and provides the operator with three degrees of freedom to maximize operator control. The Helix is approved in Europe with CE Mark and is under investigational use in the United States and is being used in pre-clinical and clinical investigations of cell, gene, and protein therapies.

### Morph Deflectable Guide and Sheaths Product

Our Morph catheter is designed to enable physicians to navigate through tortuous anatomy, customize the shape of the catheter to the patient’s anatomy and their clinical needs during the procedure, and to have stellar back up support once positioned. Morph catheters enable all Helix procedures and have been commercially available to treat more than ten thousand patients. A number of Morph guides and sheaths are approved for commercial sale in the United States, including the AVANCE™ steerable introducer which received FDA clearance in May 2019 and was first used commercially in September 2019 and the Morph DNA guide, which received clearance in January 2020. Certain Morph catheter systems are approved in Europe with CE Mark.

### Financial Overview

### Revenue

We currently have a portfolio of enabling and delivery products, from which we have generated modest revenue. Net product revenues include commercial sales of our Morph vascular access system in the US and EU and collaboration agreement revenues include revenue from partnering agreements with corporate and academic institutions. Under these partnering agreements, we provide our Helix biotherapeutic delivery system and customer training and support for use in preclinical and clinical studies.

### Cost of Goods Sold

Cost of goods sold includes the costs of raw materials and components, manufacturing personnel and facility costs and other indirect and overhead costs associated with manufacturing our commercial enabling and delivery products, which generate net product revenue.

### Research and Development Expenses

Our research and development expenses consist primarily of:

- salaries and related overhead expenses, which include share-based compensation and benefits for personnel in research and development functions;
- fees paid to consultants and contract research organizations, or CROs, including in connection with our preclinical studies and clinical trials and other related clinical trial fees, such as for investigator grants, patient screening, laboratory work, clinical trial management and statistical compilation and analysis;
- costs related to acquiring and manufacturing clinical trial materials;
- costs related to compliance with regulatory requirements; and
- payments related to licensed products and technologies.

We expense all research and development costs in the periods in which they are incurred. Costs for certain development activities are recognized based on an evaluation of the progress of completion of specific tasks using information and data provided to us by our vendors and clinical sites. Nonrefundable advance payments for goods or services to be received in future periods for use in research and development activities are deferred and capitalized. The capitalized amounts are then expensed as the related goods are delivered and the services are received.

We plan to increase our research and development expenses for the foreseeable future as we continue the pivotal CardiAMP Heart Failure Trial, advance the pivotal CardiAMP Chronic Myocardial Ischemia Trial, further develop our autologous and allogenic cell therapy candidates. We typically use our employee and infrastructure resources across multiple research and development programs, and accordingly, we have not historically allocated resources specifically to our individual programs.

### Selling, General and Administrative Expenses

Selling, general and administrative expenses consist primarily of salaries and related costs for employees in executive, finance and administration, sales, corporate development and administrative support functions, including share-based compensation expenses and benefits. Other selling, general and administrative expenses include sales commissions, rent, accounting and legal services, obtaining and maintaining patents, the cost of consultants, occupancy costs, insurance premiums and information systems costs.

### Other Income (Expense)

Other income and expense consist primarily of interest income we earn on our cash, cash equivalents and investments, and interest charges we incurred in periods during 2019 when we had convertible debt outstanding.

### Critical Accounting Policies and Estimates

Our management’s discussion and analysis of our financial condition and results of operations is based on our financial statements, which we have prepared in accordance with generally accepted accounting principles in the United States. The preparation of our financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities. We evaluate these estimates and judgments on an ongoing basis. We base our estimates on historical experience and on various judgements that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not clear from other sources. Actual results may differ from these estimates under different assumptions or conditions.

We define our critical accounting policies as those that require us to make subjective estimates and judgments about matters that are uncertain and are likely to have a material impact on our financial condition and results of operations as well as the specific manner in which we apply those principles. Our critical accounting policies are described in Item 2 in our Annual Report on Form 10-K for the year ended December 31, 2019, filed April 9, 2020.

### Results of Operations

#### Comparison of Three Months Ended March 31, 2020 and 2019

The following table summarizes our results of operations for the three months ended March 31, 2020 and 2019 (in thousands):

| Revenue: | Three months ended March 31, 2020 | 2019 |
| --- | ---: | ---: |
| Net product revenue | $5 | $76 |
| Collaboration agreement revenue | 33 | 140 |
| Total revenue | 38 | 216 |
| Costs and expenses: |  |  |
| Cost of goods sold | 4 | 106 |
| Research and development | 2,786 | 2,166 |
| Selling, general and administrative | 1,857 | 1,631 |
| Total costs and expenses | 4,647 | 3,903 |
| Operating loss | (4,609) | (3,687) |
| Other income (expense): |  |  |
| Interest income | 16 | 23 |
| Other expense | (1) | (1) |
| Total other income (expense), net | 15 | 22 |
| Net loss | $(4,594) | $(3,665) |

22

*Revenue.* Revenue decreased to $38,000 in the first quarter of 2020 as compared to $216,000 in the first quarter of 2019, due to reduced volumes of commercial catheter sales as a part of the planned transition to the new AVANCE™ product family coupled with lower revenue generating partnering activities during the quarter. We expect collaboration agreement revenue to increase modestly in 2020, depending on the timing and progress of existing collaborative programs of our partners and the initiation of new partnering relationships anticipated later in the year. Net product revenue is expected to be limited in 2020 and will be subject to customer demand, production resource availability for the new product family, the timing of FDA clearance for market release of different models and sizes and the resumption of medical procedures by our health care provider customers that have been adversely impacted by the response to the COVID-19 pandemic.

*Cost of Goods Sold.* Cost of goods sold decreased $102,000 in the first quarter of 2020 as compared to the first quarter of 2019, due primarily to the decrease in net product sales volumes. We expect cost of goods sold to be limited in 2020 depending on the timing and demand for the new product family introductions.

*Research and Development Expenses.* Research and development expenses increased by approximately $620,000 during the first quarter of 2020 as compared to the first quarter of 2019, primarily due to expenses incurred in the execution of the pivotal CardiAMP Heart Failure Trial, development of the CardiALLO Cell Therapy System and our other therapeutic programs, including fees paid to consultants, contract research organizations, additional personnel costs and increased stock compensation expense including the January 29, 2020 option repricing. We expect research and development expenses to increase modestly year over year in 2020 as we advance the CardiAMP Heart Failure Trial and we further develop the BioCardia autologous and allogenic cell therapies.

*Selling, General and Administrative Expenses.* Selling, general and administrative expenses for the first quarter of 2020 increased by approximately $226,000 compared to the first quarter of 2019, primarily due to increased stock compensation, including the January 29, 2020 repricing, coupled with increased insurance premiums and professional service fees. We expect selling, general and administrative expenses to decrease modestly year over year for the remainder of 2020.

### Liquidity and Capital Resources

We have incurred net losses each year since our inception and as of March 31, 2020, we had an accumulated deficit of approximately $105.7 million. We anticipate that we will continue to incur net losses for the next several years.

We have funded our operations principally through the sales of equity and convertible debt and equity securities as well as the cash acquired through our reverse merger transaction that was completed on October 24, 2016, $3.8 million raised from the sale of unregistered securities on December 24, 2018, the $625,000 raised from convertible notes that converted in July 2019 and the $9.27 million in net proceeds raised from the sale of common stock and warrants in August and September 2019. As of March 31, 2020, we had cash and cash equivalents of approximately $2.6 million.

The following table shows a summary of our cash flows for the periods indicated (in thousands):

| Net cash used in: | Three months ending March 31, 2020 | 2019 |
| --- | ---: | ---: |
| Operating activities | $(2,993) | $(2,465) |
| Investing activities | (5) | (55) |
| Financing activities | - | - |
| Net decrease in cash and cash equivalents | $(2,998) | $(2,520) |

23

*Cash Flows from Operating Activities*. The increase in overall spending for operating activities of $0.5 million in the first quarter of 2020 compared to the first quarter of 2019 related primarily to increases in payments to third parties involved in clinical trial treatments and increased professional fees and insurance premiums. We expect spending to increase modestly as we advance the CardiAMP Heart Failure Trial, further develop our cell therapy systems and continue to strengthen and enhance the supporting organization.

*Cash Flows from Investing Activities*. Net cash used in investing activities of $5,000 during the first quarter of 2020 consisted primarily of purchases of office equipment. Net cash used in investing activities of $55,000 during the first quarter of 2019 consisted primarily of purchases of lab equipment.

*Cash Flows from Financing Activities*. There was no net cash provided by financing activities during the first quarter of either 2020 or 2019.

#### PPP Loan

On May 1, 2020, BioCardia Lifesciences, Inc., our wholly owned subsidiary, entered into a promissory note (the “Note”) with Silicon Valley Bank (the “Lender”) evidencing an unsecured loan in the aggregate principal amount of $506,413 pursuant to the Paycheck Protection Program (the “PPP”) of the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) administered by the U.S. Small Business Administration. All the funds under the Note were disbursed to us on May 1, 2020.

In accordance with the requirements of the CARES Act, we intend to use the proceeds from the Note in accordance with the requirements of the PPP to cover certain qualified expenses, including payroll costs, rent and utility costs. Interest accrues on the Note at the rate of 1.00% per annum. We may apply for forgiveness of amount due under the Note, in an amount equal to the sum of qualified expenses under the PPP, which include payroll costs, rent obligations, and covered utility payments incurred during the eight weeks following disbursement under the Note. We intend to use the entire proceeds under the Note for such qualifying expenses.

Subject to any forgiveness under the PPP, the Note mature two years following the date of issuance of the Note and includes a period for the first six months during which time required payments of interest and principal are deferred. Beginning on the seventh month following the date of the Note, the Borrower is required to make 18 monthly payments of principal and interest. The Note may be prepaid at any time prior to maturity with no prepayment penalties.

### Future Funding Requirements

To date, we have generated modest revenue from sales of our approved products. We do not know when, or if, we will generate any revenue from our development stage biotherapeutic programs. We do not expect to generate any revenue from sales of our cell therapy candidates unless and until we obtain regulatory approval. At the same time, we expect our expenses to increase in connection with our ongoing development activities, particularly as we continue the research, development and clinical trials of, and seek regulatory approval for, our therapeutic candidates. In addition, subject to obtaining regulatory approval for any of our therapeutic candidates and companion diagnostic, we expect to incur significant commercialization expenses for product sales, marketing, manufacturing and distribution. We anticipate that we will need additional funding in connection with our continuing operations.

Based upon our current operating plan, we believe that the cash and cash equivalents of $2.6 million as of March 31, 2020 is not sufficient to fund our operations beyond the second quarter of 2020. In order to continue to further the development of our lead therapeutic candidates beyond the second quarter of 2020, we will need to raise additional capital. We plan to raise additional capital, potentially including debt and equity arrangements, to finance our future operations. We have based our estimates on assumptions that may prove to be wrong, and we may use our available capital resources sooner than we currently expect. Because of the numerous risks and uncertainties associated with the development and commercialization of our therapeutic candidates, we are unable to estimate the amounts of increased capital outlays and operating expenditures necessary to complete the development of our therapeutic candidates.

Our future capital requirements will depend on many factors, including:

- the progress, costs, results, and timing of our clinical trials and related development programs;
- FDA acceptance of our autologous and allogenic therapies for heart failure and other indications;
- the outcome, costs, and timing of seeking and obtaining FDA and any other regulatory approvals;
- the costs associated with securing, establishing, and maintaining commercialization and manufacturing capabilities;
- the number and characteristics of product candidates that we pursue, including our product candidates in preclinical development;
- the ability of our product candidates to progress through clinical development successfully;
- our need to expand our research and development activities;
- the costs of acquiring, licensing, or investing in businesses, products, product candidates and technologies;
- our ability to maintain, expand and defend the scope of our intellectual property portfolio, including the amount and timing of any payments we may be required to make, or that we may receive, in connection with the licensing, filing, prosecution, defense and enforcement of any patents or other intellectual property rights;
- the general and administrative expenses related to being a public company;
- our need and ability to hire additional management and scientific, medical and sales personnel;
- the effect of competing technological and market developments; and
- our need to implement additional internal systems and infrastructure, including financial and reporting systems.

Until such time that we can generate meaningful revenue from the sales of approved therapies and products, if ever, we expect to finance our operating activities through public or private equity or debt financings, government or other third-party funding, marketing and distribution arrangements, and other collaborations, strategic alliances and licensing arrangements or a combination of these approaches. To the extent that we raise additional capital through the sale of equity or convertible debt securities, the ownership interests of our common stock holders will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of our common stock holders. Debt financing, if available, may involve agreements that include conversion discounts or covenants limiting or restricting our ability to take specific actions, such as incurring debt, making capital expenditures or declaring dividends. If we raise additional funds through government or other third-party funding, marketing and distribution arrangements or other collaborations, or strategic alliances or licensing arrangements with third parties, we may have to relinquish valuable rights to our technologies, future revenue streams, research programs, products or therapeutic candidates or to grant licenses on terms that may not be favorable to us.

Our condensed consolidated financial statements as of and for the three months ended March 31, 2020 have been prepared on the basis that we will continue as a going concern, which contemplates the realization of assets and satisfaction of liabilities in the ordinary course of business. Due to the factors described above, there is substantial doubt about our ability to continue as a going concern within one year after the date these financial statements are issued. Our ability to continue as a going concern will depend in a large part, on our ability to raise additional capital. BioCardia’s ability to raise additional funds may be adversely impacted by potential worsening global economic conditions and the recent disruptions to, and volatility in, the credit and financial markets in the United States and worldwide resulting from the ongoing COVID-19 pandemic. If adequate funds are not available, we may be required to reduce operating expenses, delay or reduce the scope of our product development programs, obtain funds through arrangements with others that may require us to relinquish rights to certain of our technologies or products that we would otherwise seek to develop or commercialize ourselves, or cease operations. While we believe we have a viable strategy to raise additional funds, there can be no assurances that we will be able to obtain additional capital on acceptable terms and in the amounts necessary to fully fund our operating needs.

The financial statements do not include any adjustments that might result from the outcome of this uncertainty. If we are unable to continue as a going concern, we may be forced to liquidate assets. In such a scenario, the values received for assets in liquidation or dissolution could be significantly lower than the values reflected in our financial statements.

### Nasdaq Delisting Notice

On April 15, 2020, we received written notice (the “Notice”) from The Nasdaq Stock Market LLC (“Nasdaq”) notifying us that, based on our stockholders’ equity of $2.37 million as of December 31, 2019, we are no longer in compliance with the minimum stockholders’ equity requirement of $2.5 million for continued listing on the Nasdaq Capital Market under Nasdaq Listing Rule 5550(b)(1).

We have until June 1, 2020 to provide Nasdaq with a specific plan to achieve and sustain compliance with the foregoing listing requirement. If our plan to regain compliance is accepted, Nasdaq may grant an extension of up to 180 calendar days from April 15, 2020 for the Company to evidence compliance.

The Notice has no immediate effect on the listing or trading of our common stock or listed warrants to purchase common stock and the common stock and such warrants will continue to trade on the Nasdaq Capital Market under the symbol “BCDA” and “BCDAW,” respectively.

We intend to timely submit a plan to Nasdaq to regain compliance with the Nasdaq Listing Rules. In determining whether to accept the plan, Nasdaq will consider such things as the likelihood that the plan will result in compliance with Nasdaq’s continued listing criteria, the Company’s past compliance history, the reasons for our current non-compliance, other corporate events that may occur within Nasdaq’s review period, our overall financial condition and our public disclosures. If Nasdaq does not accept our plan, we may request a hearing, at which hearing we would present our plan to a Nasdaq Hearings Panel.

### Off-Balance Sheet Arrangements

During the periods presented, we did not have, nor do we currently have, any off-balance sheet arrangements as defined under the rules of the Securities and Exchange Commission.

### Recent Accounting Pronouncements

See Note 2 of our notes to condensed consolidated financial statements for information regarding recent accounting pronouncements that are of significance or potential significance to us.

## Market risk

As filed, 1,604 characters.

There have been no material changes in our market risks during the quarter ended March 31, 2020.

Our exposure to market risk is currently limited to our cash and cash equivalents, all of which have maturities of less than three months. The goals of our investment policy are preservation of capital, maintenance of liquidity needs, and fiduciary control of cash and investments. We also seek to maximize income from our investments without assuming significant risk or departing from our investment policy. We currently do not hedge interest rate exposure. Because of the short-term nature of our cash equivalents, we do not believe that an increase in market rates would have a material negative impact on the value of our portfolio.

### Interest Rate Risk

As of March 31, 2020, based on current interest rates and total borrowings outstanding, a hypothetical 100 basis point increase or decrease in interest rates would have an immaterial pre-tax impact on our results of operations.

### Foreign Currency Exchange Risks

We are a U.S. entity and our functional currency is the U.S. dollar. The vast majority of our revenues were derived from sales in the United States. We have business transactions in foreign currencies; however, we believe we do not have significant exposure to risk from changes in foreign currency exchange rates at this time. We do not currently engage in hedging or similar transactions to reduce our foreign currency risks. We will continue to monitor and evaluate our internal processes relating to foreign currency exchange, including the potential use of hedging strategies.

## Controls and procedures

As filed, 2,878 characters.

### Evaluation of Disclosure Controls and Procedures

In connection with the preparation of this Quarterly Report on Form 10-Q, as of March 31, 2020, an evaluation was performed under the supervision and with the participation of our management, including the Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act). Based on that evaluation, our Chief Executive Officer and our Chief Financial Officer have concluded that, as of March 31, 2020, our disclosure controls and procedures were, in design and operation, not effective at a reasonable assurance level as a result of the material weakness described below.

### Material Weakness

We identified the following material weakness in our internal control over financial reporting during the year ended December 31, 2019:

- The material weakness resulted from a lack of sufficient technical resources to appropriately perform effective and timely review of the accounting for and disclosure of complex non-routine transactions, including the adoption of new accounting standards; and
- The material weakness remains unremediated as of March 31, 2020.

We are implementing measures designed to improve our internal control over financial reporting and remediate the material weakness, including the following:

- We are enhancing our control processes for identifying and reviewing non-routine transactions, including formalized reviews of these transactions by senior accounting management and more robust documentation of the related conclusions, and required accounting; and
- We are engaging external consultants to provide expertise and assistance sufficient to evaluate, resolve and document the accounting for complex non-routine transactions.

However, our efforts to remediate this material weakness may not be effective or prevent any future material weakness or significant deficiency in our internal control over financial reporting. If our efforts are not successful, or other material weaknesses or control deficiencies occur in the future, we may be unable to report our financial results accurately on a timely basis, which could cause our reported financial results to be materially misstated and result in the loss of investor confidence and cause the market price of our common stock to decline.

### Changes in Internal Control over Financial Reporting

Other than the material weakness described in this Item 4, there were no changes to our internal control over financial reporting identified in connection with the evaluation required by rule 13a-15(d) and 15d-15(d) of the Exchange Act that occurred during the quarter ended March 31, 2020 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

## Risk factors

As filed, 2,569 characters.

In addition to the other information set forth in this report, you should carefully consider the factors discussed in Part I, “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2019, which could materially affect our business, financial condition, or future results. The risks described in this report and our Annual Report on Form 10-K for the year ended December 31, 2019 are not the only risks facing our Company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition or future results.

***If we fail to satisfy all applicable Nasdaq continued listing requirements, including the minimum stockholders’ equity requirement of $2.5 million, our common stock and warrants may be delisted from Nasdaq, which could have an adverse impact on the liquidity and market price of our securities.***

Our common stock is currently listed on the Nasdaq Capital Market, which has qualitative and quantitative continued listing requirements, including corporate governance requirements, public float requirements and a minimum stockholders’ equity requirement of $2.5 million under Nasdaq Listing Rule 5550(b)(1). On April 15, 2020, we received written notice (the “Notice”) from Nasdaq notifying us that, based on our stockholders’ equity of $2.37 million as of December 31, 2019, we are no longer in compliance with such minimum stockholders’ equity requirement. We have until June 1, 2020 to provide Nasdaq with a specific plan to achieve and sustain compliance with the foregoing listing requirement. If our plan to regain compliance is accepted, Nasdaq may grant an extension of up to 180 calendar days from April 15, 2020 for the Company to evidence compliance. If Nasdaq does not accept our plan, we may request a hearing, at which hearing we would present our plan to a Nasdaq Hearings Panel.

If we are unable to obtain Nasdaq acceptance of our plan to have a minimum stockholders’ equity requirement of $2.5 million or satisfy any of the other continued listing requirements, Nasdaq may take steps to delist our common stock and warrants. Such a delisting would likely have an adverse effect on the market liquidity of our securities, decrease the market price of our securities, result in the potential loss of confidence by investors, suppliers, customers and employees and fewer business development opportunities, and adversely affect our ability to obtain financing for the continuation of our operations.

Filed May 15, 2020.
Source: SEC EDGAR, the filing index for accession 0001437749-20-010860. Last ingested by Listed: Nov 10, 2026, 21:12 ET. No prices; not investment advice.