# BioCardia, Inc.: Form 10-Q for the period ended Sep 30, 2021

- Company: [BioCardia, Inc.](/companies/bcda.md) (CIK 925741)
- Form: 10-Q
- Filed: 2021-11-10
- Accepted by EDGAR: Nov 10, 2021, 16:05 ET
- Period: 2021-09-30
- Accession: 0001437749-21-026143
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/925741/000143774921026143/bcda20210930_10q.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/925741/000143774921026143/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2021-09-30.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2021-07-01 to 2021-09-30 | $821.0k | us-gaap:RevenueFromContractWithCustomerIncludingAssessedTax |
| Revenue | 9 months, 2021-01-01 to 2021-09-30 | $936.0k | us-gaap:RevenueFromContractWithCustomerIncludingAssessedTax |
| Cost of revenue | 3 months, 2021-07-01 to 2021-09-30 | $0 | us-gaap:CostOfGoodsAndServicesSold |
| Cost of revenue | 9 months, 2021-01-01 to 2021-09-30 | $0 | us-gaap:CostOfGoodsAndServicesSold |
| Research and development | 3 months, 2021-07-01 to 2021-09-30 | $2.2m | us-gaap:ResearchAndDevelopmentExpense |
| Research and development | 9 months, 2021-01-01 to 2021-09-30 | $6.4m | us-gaap:ResearchAndDevelopmentExpense |
| Selling, general and administrative | 3 months, 2021-07-01 to 2021-09-30 | $1.3m | us-gaap:SellingGeneralAndAdministrativeExpense |
| Selling, general and administrative | 9 months, 2021-01-01 to 2021-09-30 | $3.7m | us-gaap:SellingGeneralAndAdministrativeExpense |
| Operating income | 3 months, 2021-07-01 to 2021-09-30 | −$2.7m | us-gaap:OperatingIncomeLoss |
| Operating income | 9 months, 2021-01-01 to 2021-09-30 | −$9.2m | us-gaap:OperatingIncomeLoss |
| Income tax | 3 months, 2021-07-01 to 2021-09-30 | $0 | us-gaap:IncomeTaxExpenseBenefit |
| Income tax | 9 months, 2021-01-01 to 2021-09-30 | $0 | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2021-07-01 to 2021-09-30 | −$2.7m | us-gaap:NetIncomeLoss |
| Net income | 9 months, 2021-01-01 to 2021-09-30 | −$9.2m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2021-07-01 to 2021-09-30 | −$0.16 | us-gaap:EarningsPerShareBasicAndDiluted |
| Diluted EPS | 9 months, 2021-01-01 to 2021-09-30 | −$0.54 | us-gaap:EarningsPerShareBasicAndDiluted |
| Operating cash flow | 9 months, 2021-01-01 to 2021-09-30 | −$7.4m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 9 months, 2021-01-01 to 2021-09-30 | $75.0k | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Cash and equivalents | at 2021-09-30 | $15.9m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2021-09-30 | $17.0m | us-gaap:AssetsCurrent |
| Total assets | at 2021-09-30 | $17.3m | us-gaap:Assets |
| Total liabilities | at 2021-09-30 | $3.9m | us-gaap:Liabilities |
| Shareholders' equity | at 2021-09-30 | $13.4m | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 29,246 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 “Report”).*

#### Forward-looking Statements

*This Report 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 Report that are not statements of historical fact may be deemed forward-looking statements. Terms such as “may,” “might,” “will,” “would,” “should,” “could,” “project,” “estimate,” “pro-forma,” “predict,” “potential,” “strategy,” ”forecast,” “anticipate,” “attempt,” “develop,” “plan,” “help,” “believe,” “continue,” “intend,” “expect,” “future” and terms of similar import (including the negative of any of the foregoing) may identify forward-looking statements. However, not all forward-looking statements may contain one or more of these identifying terms. Forward-looking statements in this 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. Historical results are not necessarily indicative of future results. Our actual results may differ materially from those discussed in this Report. 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, 2020, filed with the SEC on March 30, 2021. You should carefully consider these risks, in addition to other information in this report and in our other filings with SEC. All forward-looking statements and reasons why results may differ included in this report are made as of the date of this report, and except as required by law, we undertake no obligation to update publicly any forward-looking statements for any reason after the date of this Report to conform these statements to actual results or to changes in our expectations.*

### Overview

We are a clinical-stage company focused on developing cellular and cell derived therapeutics for cardiovascular and pulmonary diseases with large unmet medical needs. We are committed to applying our expertise in the fields of autologous and allogeneic cell-based therapies to improve the lives of patients with cardiovascular and pulmonary conditions. 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 allogeneic mesenchymal stem cell therapy platform, derived from donor cells and intended to be provided “off the shelf,” is also being advanced for two indications, heart failure (BCDA-03) and for the pulmonary indication of acute respiratory distress that has developed from COVID-19 (BCDA-04).

Our Helix™ Biotherapeutic Delivery System platform, or Helix, delivers therapeutics into the heart muscle with a helical needle from within the heart. It enables local delivery of cell, gene and protein-based therapies, including our own cell therapies to treat cardiac indications. The Helix system is CE marked in Europe and under investigational use in the United States. We selectively partner with firms developing other cell, gene and protein therapies utilizing the Helix and other biotherapeutic delivery systems that we have developed.

Our AVANCE™ product offering for transseptal cardiac procedures has begun early commercialization activities in the United States through commission-only 1099 sales representatives.

### Coronavirus Considerations

The novel coronavirus (COVID-19) pandemic has resulted in significant disruption to the Company’s business and in delays in the Company’s development programs and regulatory and commercialization timelines, including adversely impacting operations at certain clinical sites involved in our ongoing clinical studies. It is possible that the COVID-19 pandemic could continue to adversely affect our business, results of operations, financial condition and/or liquidity in the future. These adverse impacts could include delayed or slowed enrollment of our, or our collaborators’, planned or ongoing clinical trials, delayed or cancelled clinical site initiations, delayed regulatory review for regulatory approvals, delayed commercialization of one or more of our product candidates, if approved, and workforce shortages. Our production capabilities, or those of our partners or suppliers, and our supply chains could also be adversely impacted.

Additionally, while the potential economic impact brought by, and the duration of, the COVID-19 pandemic is difficult to assess or predict, the impact of COVID-19 on the global financial markets may reduce the Company’s ability to access capital, which could negatively impact the Company’s liquidity and ability to raise the capital to complete its preclinical and clinical studies on a timely basis, or at all.

The impact of the COVID-19 pandemic remains fluid and continues to evolve. The extent to which the COVID-19 pandemic continues to impact the Company’s results will depend on future developments, which are highly uncertain and cannot be predicted, including the severity of COVID-19 and its mutations, the progress made on administering the vaccines or other emerging treatments, the continuing impact on local and global economic conditions, workforce capacity and the ongoing government responses, including stay-at-home orders and other restrictions and mandates that may be imposed.

### CardiAMP Cell Therapy for Heart Failure and Chronic Myocardial Ischemia

The Company’s lead platform, CardiAMP cell therapy, is an autologous cell therapy being advanced for two indications in pivotal clinical trials: heart failure and chronic myocardial ischemia. The therapy uses a patient’s own cells in a minimally invasive, catheter-procedure to potentially stimulate the body’s natural healing response. The therapy incorporates a pre-procedural screening assay to identify those patients who are likely responders to the therapy. Patients eligible to undergo the cell therapy procedure receive cells delivered using our Helix Biotherapeutic Delivery System platform and are usually able to be discharged from the hospital the morning after the study procedure.

The CardiAMP Cell Therapy 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 heart failure which develops after a patient has a heart attack (BCDA-01). A protocol amendment approved by the FDA allows patients in the trial who were initially randomly assigned to the control arm and who did not receive therapy to elect to cross-over and receive the investigational autologous CardiAMP Cell Therapy after completing two-year follow-up. The trial is active at 24 clinical sites and 106 patients have been enrolled to date, with 3 additional control patients having crossed over to receive therapy. The independent Data Safety Monitoring Board (DSMB) completed a prespecified data review in June 2021, including all data for the 97 patients enrolled that had reached their one-year follow-up at that date. The DSMB performed a risk-benefit review, indicated it had no safety concerns, and recommended in writing that the study continue as planned. The next DSMB review is anticipated in early February 2022.

The CardiAMP Cell Therapy Chronic Myocardial Ischemia Trial is a Phase III, multi-center, randomized, double-blinded, controlled study of up to 343 patients at up to 40 clinical sites. The Phase III pivotal trial is designed to provide the primary support for the safety and efficacy of the CardiAMP Cell Therapy System for patients with no option chronic myocardial ischemia with refractory angina (BCDA-02). These patients experience frequent angina (chest pain) attacks that are uncontrolled by optimal drug therapy but are not suitable candidates for stent placement or bypass surgery, leaving them few therapeutic options. Our therapeutic approach uses many of the same novel aspects used in the CardiAMP Heart Failure Trial and is expected to leverage our experience and investment in the heart failure trial. The Company intends to introduce an adaptive statistical analysis plan with an initial assessment for efficacy when 100 patients reach their primary endpoint, although aspects of this statistical analysis plan remain the subject of study considerations with the FDA. In Q3 2021, the FDA approved a supplement to this study, which harmonizes the protocol with that of the CardiAMP Cell Therapy Heart Failure Study to incorporate the extensive experience in this parallel trial. The trial has been activated and one patient has been treated.

The Department of Health & Human Services Centers for Medicare & Medicaid Services, or CMS, has designated that both CardiAMP Cell Therapy pivotal trials 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 CMS reimbursement policy and are similarly anticipated to cover these costs. This coverage significantly reduces our cost of conducting these pivotal trials.

### ALLOGENEIC Cell Therapy for Cardiac and Pulmonary Disease

Our second therapeutic platform is our investigational culture expanded bone marrow derived allogeneic, Neurokinin-1 Receptor Positive Mesenchymal Stem Cells (NK1R+ MSC). This “off the shelf” therapy is being advanced for cardiac and pulmonary disease.

We are actively working to secure FDA acceptance of an Investigational New Drug (IND) application for a Phase I/II trial to deliver these allogeneic cells for the treatment of ischemic systolic heart failure (BCDA-03). We have completed the manufacturing validation runs and stability testing for the Chemistry Manufacturing and Controls section of the BCDA-03 IND and are working to complete the preclinical pharmacology toxicology animal testing. Animal studies are being initiated. Should the results be in line with our previous work, we expect IND submission will follow soon after the results are obtained.

The Company also intends to submit an IND for the use of its allogeneic cell therapy for Acute Respiratory Distress Syndrome (ARDS) caused by COVID-19 (BCDA-04). Based on clinical reports on COVID-19, pulmonary complications lead to long term respiratory inflammatory problems. We have completed the manufacturing validation runs and stability testing for the Chemistry Manufacturing and Controls section of the BCDA-04 IND. We are working to complete the preclinical pharmacology toxicology animal testing for the IND submission. For BCDA-04, all animals have reached their endpoints and results are expected soon. Should the results be as anticipated, we expect IND submission will follow soon afterwards.

### 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.

### Research and Development Expenses

Our research and development expenses consist primarily of:

- salaries and related overhead expenses, which include, but are not limited to 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, and further develop our autologous and allogeneic 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.

### 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 U.S. GAAP. 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.

The full extent to which the ongoing COVID-19 pandemic will directly or indirectly impact our business, results of operations and financial condition, including revenues, expenses, reserves and allowances, manufacturing, clinical trials and research and development will depend on future developments that remain uncertain at this time. As events continue to evolve and additional information becomes available, our estimates may change materially in future periods.

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, 2020.

### Results of Operations

#### Comparison of Three and Nine Months Ended September 30, 2021 and 2020

The following table summarizes our results of operations for the three and nine months ended September 30, 2021 and 2020 (in thousands):

| Revenue: | Three months ended September 30, 2021 | 2020 | Nine months ended September 30, 2021 | 2020 |
| --- | ---: | ---: | ---: | ---: |
| Net product revenue | $1 | $8 | $1 | $13 |
| Collaboration agreement revenue | 820 | 26 | 935 | 86 |
| Total revenue | 821 | 34 | 936 | 99 |
| Costs and expenses: |  |  |  |  |
| Cost of goods sold | — | — | — | 4 |
| Research and development | 2,240 | 2,474 | 6,443 | 7,484 |
| Selling, general and administrative | 1,289 | 1,408 | 3,662 | 4,642 |
| Total costs and expenses | 3,529 | 3,882 | 10,105 | 12,130 |
| Operating loss | (2,708) | (3,848) | (9,169) | (12,031) |
| Other income (expense): |  |  |  |  |
| Interest income | 2 | 1 | 8 | 19 |
| Other expense | — | (1) | (1) | (3) |
| Total other income (expense) | 2 | — | 7 | 16 |
| Net loss | $(2,706) | $(3,848) | $(9,162) | $(12,015) |

*Revenue.* Revenue increased to $821,000 in the three months ended September 30, 2021 as compared to $34,000 in the three months ended September 30, 2020, and to $936,000 in the nine months ended September 30, 2021 as compared to $99,000 in the nine months ended September 30, 2020, primarily due to increased collaboration activity with corporate partners. The amount and timing of collaboration revenues largely depends on our partners activities and may be inconsistent and create significant quarter-to-quarter variation.

*Research and Development Expenses.* Research and development expenses decreased by $234,000 during the three months ended September 30, 2021 compared to the three months ended September 30, 2020, and by $1,041,000 during the nine months ended September 30, 2021 compared to the nine months ended September 30, 2020, primarily due to reduced clinical service provider costs as we staff more work with internal personnel, coupled with lower stock compensation expense.

*Selling, General and Administrative Expenses.* Selling, general and administrative expenses for the three months ended September 30, 2021 decreased by $119,000 compared to the three months ended September 30, 2020, and by $980,000 during the nine months ended September 30, 2021 compared to the nine months ended September 30, 2020, primarily due to lower compensation expense, including stock compensation, coupled with reduced professional service fees.

### Liquidity and Capital Resources

We have incurred net losses each year since our inception and as of September 30, 2021, we had an accumulated deficit of approximately $125.2 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 securities. As of September 30, 2021, we had cash and cash equivalents of approximately $15.9 million.

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

| Net cash provided by (used in): | Nine months ended September 30, 2021 | 2020 |
| --- | ---: | ---: |
| Operating activities | $(7,391) | $(8,940) |
| Investing activities | (75) | (32) |
| Financing activities | 1,947 | 10,779 |
| Net increase (decrease) in cash and cash equivalents | $(5,519) | $1,807 |

*Cash Flows from Operating Activities*. The decrease in overall spending for operating activities of approximately $1.5 million through the nine months ended September 30, 2021 compared to the nine months ended September 30, 2020 related primarily to the timing of advance payments from collaboration partners coupled with decreases in payments to third parties for professional fees. We expect net cash used in operating activities to decrease year over year in 2021 as compared to 2020 as a result of these factors.

*Cash Flows from Investing Activities*. Net cash used in investing activities of $75,000 and $32,000 during the nine months ended September 30, 2021 and 2020, respectively consists of purchases of property and equipment, primarily lab and office equipment.

*Cash Flows from Financing Activities*. Net cash provided by financing activities of $1.9 million during the nine months ended September 30, 2021 consisted of gross proceeds from the sale of common stock in March 2021 less issuance costs. Net cash provided by financing activities of approximately $10.8 million during the nine months ended September 30, 2020 consisted of $11.5 million in gross proceeds from the sale of common stock in June 2020 less issuance costs of $1.2 million and $506,000 proceeds from a Note under 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.

#### Lincoln Park Capital Stock Purchase Agreement

In March 2021, we and Lincoln Park Capital Fund, LLC (Lincoln Park) entered into a purchase agreement (the Purchase Agreement) and a registration rights agreement (the Registration Rights Agreement), pursuant to which we have the right to sell to Lincoln Park shares of our common stock having an aggregate value of up to $20 million, subject to certain limitations and conditions set forth in the Purchase Agreement. Pursuant to the terms of the Purchase Agreement, at the time we signed the Purchase Agreement, we sold 373,832 shares of our common stock at a price of $5.35 per share pursuant to the Purchase Agreement for gross proceeds of $2 million (and issued 80,000 shares of common stock to Lincoln Park as consideration for its commitment to purchase shares of our common stock, which consisted of 75,000 shares for Lincoln Park’s initial commitment and 5,000 shares issued on a pro rata basis in respect of Lincoln Park’s initial purchase of 373,832 shares). Thereafter, as often as every business day from and after one business day following the date of the Initial Purchase and over the 36-month term of the Purchase Agreement, we have the right, from time to time, at our sole discretion and subject to certain conditions, to direct Lincoln Park to purchase up to 100,000 shares of common stock, with such amount increasing as the closing sale price of the common stock increases; provided Lincoln Park’s obligation under any single such purchase will not exceed $2 million, unless we and Lincoln Park mutually agree to increase the maximum amount of such single purchase (each, a Regular Purchase). If we direct Lincoln Park to purchase the maximum number of shares of common stock it then may sell in a Regular Purchase, then in addition to such Regular Purchase, and subject to certain conditions and limitations in the Purchase Agreement, we may direct Lincoln Park in an Accelerated Purchase to purchase an additional amount of common stock that may not exceed the lesser of (i) 300% of the number of shares purchased pursuant to the corresponding Regular Purchase or (ii) 30% of the total number of shares of our common stock traded during a specified period on the applicable purchase date as set forth in the Purchase Agreement. Under certain circumstances and in accordance with the Purchase Agreement, we may direct Lincoln Park to purchase shares in multiple Accelerated Purchases on the same trading day. As of September 30, 2021, the Company had not made any sales of common stock to Lincoln Park under the Purchase Agreement other than the Initial Purchase.

### 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 autologous and allogeneic 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 approximately $15.9 million as of September 30, 2021 are sufficient to fund our operations for at least the next 12 months from the date of this filing. 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 allogeneic 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 stockholders will be diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of our common stockholders. 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.

### 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, 1,617 characters.

There have been no material changes in our market risks during the three months ended September 30, 2021.

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 September 30, 2021, 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, 1,105 characters.

### Evaluation of Disclosure Controls and Procedures

In connection with the preparation of this Report, as of September 30, 2021, 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 September 30, 2021, our disclosure controls and procedures were, in design and operation, effective at a reasonable assurance level.

### Changes in Internal Control over Financial Reporting

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 three months ended September 30, 2021 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

## Risk factors

As filed, 739 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, 2020, which could materially affect our business, financial condition, or future results. The risks described in this Quarterly Report on Form 10-Q, our Annual Report on Form 10-K for the year ended December 31, 2020, and our Quarterly Reports on Form 10-Q filed periodically with the SEC 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.

Filed Nov 10, 2021.
Source: SEC EDGAR, the filing index for accession 0001437749-21-026143. Last ingested by Listed: Nov 10, 2026, 21:12 ET. No prices; not investment advice.