PAVmed(PAVM) - 2021 Q2 - Quarterly Report

PART I FINANCIAL INFORMATION Unaudited Condensed Consolidated Financial Statements Despite no revenue and increased net loss from higher operating expenses, the company significantly strengthened its balance sheet with cash increasing to $43.2 million and equity turning positive to $42.0 million through financing and debt repayment Condensed Consolidated Balance Sheets Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2021 | December 31, 2020 | | :--- | :--- | :--- | | Assets | | | | Cash | $43,210 | $17,256 | | Total current assets | $46,336 | $18,941 | | Total assets | $47,371 | $19,778 | | Liabilities & Equity | | | | Total liabilities | $5,331 | $20,251 | | Total Stockholders' Equity (Deficit) | $42,040 | $(473) | | Total Liabilities and Stockholders' Equity | $47,371 | $19,778 | - The company's financial position improved significantly, with cash increasing by 150% and total liabilities decreasing by 74% from Dec 31, 2020 to June 30, 2021, primarily driven by the repayment of all senior convertible notes[10] Condensed Consolidated Statements of Operations - The company generated no revenue in the three and six months ended June 30, 2021 and 2020[13] Operating Results Highlights (in thousands, except per share data) | Metric | Q2 2021 | Q2 2020 | 6 Months 2021 | 6 Months 2020 | | :--- | :--- | :--- | :--- | :--- | | Total operating expenses | $12,970 | $5,014 | $21,046 | $10,268 | | Loss from operations | $(12,970) | $(5,014) | $(21,046) | $(10,268) | | Net loss attributable to PAVmed Inc. | $(11,471) | $(5,578) | $(20,902) | $(20,053) | | Net loss per share (basic and diluted) | $(0.14) | $(0.12) | $(0.27) | $(0.45) | - Operating expenses more than doubled in Q2 2021 compared to Q2 2020, driven by increases in commercial operations, general and administrative, and research and development activities[13] Condensed Consolidated Statements of Cash Flows Cash Flow Highlights for the Six Months Ended June 30 (in thousands) | Cash Flow Activity | 2021 | 2020 | | :--- | :--- | :--- | | Net cash used in operating activities | $(15,796) | $(9,346) | | Net cash used in investing activities | $(204) | $(44) | | Net cash provided by financing activities | $41,954 | $10,251 | | Net increase in cash | $25,954 | $861 | | Cash, end of period | $43,210 | $7,080 | - Financing activities in the first six months of 2021 provided $42.0 million in net cash, primarily from registered common stock offerings ($55.0 million) and warrant exercises ($2.8 million), which was partially offset by the repayment of convertible notes ($14.8 million)[23] Notes to Unaudited Condensed Consolidated Financial Statements - On May 28, 2021, the company's subsidiary Veris Health Inc. acquired Oncodisc Inc. for total consideration of approximately $261k, accounted for as an asset acquisition with $133k allocated to in-process R&D and expensed immediately[44] - All outstanding convertible notes were fully repaid during Q1 2021, with the November 2019 note settled with stock and the April 2020 and August 2020 notes repaid with cash totaling $14.8 million[57][58][62] - A $300k PPP loan received in April 2020 was fully forgiven in June 2021, resulting in a gain of $300k[66] - Consolidated stock-based compensation expense increased significantly to $6.6 million for the six months ended June 30, 2021, up from $0.9 million in the same period of 2020, largely due to new restricted stock awards granted under the Lucid Diagnostics Inc. 2018 Equity Plan[80][75] Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's transition to a commercial-stage entity with a multi-product pipeline, noting sharply increased operating expenses, and significantly improved liquidity to $43.2 million in cash, sufficient for at least one year Overview of Business and Products - PAVmed operates as a multi-product, commercial-stage medical device company with five lines of business: GI Health, Minimally Invasive Interventions, Infusion Therapy, Digital Health, and Emerging Innovations[109][117] - Key commercial products include EsoGuard/EsoCheck for esophageal cancer screening and CarpX for carpal tunnel syndrome, both receiving European CE Mark certification in May 2021, expanding market access[112][129] - The company is expanding its commercialization strategy for EsoGuard by targeting primary care physicians (PCPs) and establishing Lucid Test Centers, with the first three opened in Phoenix, AZ[120] - In May 2021, the company formed a new majority-owned subsidiary, Veris Health Inc., which acquired Oncodisc Inc. to enter the digital health market with an intelligent implantable vascular access port for remote patient monitoring in cancer care[112][136] Results of Operations Comparison Comparison of Operating Expenses (in millions) | Expense Category | Q2 2021 | Q2 2020 | 6 Months 2021 | 6 Months 2020 | | :--- | :--- | :--- | :--- | :--- | | Commercial operations | $2.0 | $0.5 | $3.4 | $0.8 | | General and administrative | $6.7 | $2.4 | $10.1 | $4.7 | | Research and development | $4.3 | $2.1 | $7.6 | $4.7 | - The increase in Commercial operations expenses was driven by higher staffing for sales and marketing and increased consulting fees[157][163] - General and administrative expenses rose primarily due to increased staffing levels and higher stock-based compensation[158][164] - Research and development costs increased due to higher development and consulting fees for key projects including CarpX, NextFlo, PortIO, EsoCure, and digital health initiatives[158][164] - In H1 2021, the company recognized a $3.7 million loss from debt extinguishment related to the full repayment of its convertible notes and a $0.3 million gain from the forgiveness of its PPP loan[168][165] Liquidity and Capital Resources - The company had $43.2 million in cash as of June 30, 2021, and expects this to be sufficient to fund operations for at least one year[172] - In the first six months of 2021, the company raised approximately $57.8 million in gross proceeds from two registered direct offerings of common stock and the exercise of Series Z Warrants[173][174][175] - During H1 2021, the company used a portion of its cash to repay in-full all outstanding principal balances of its convertible notes[173][176] Controls and Procedures Management concluded the company's disclosure controls and procedures were effective as of June 30, 2021, with no material changes to internal control over financial reporting during the quarter - Management concluded that disclosure controls and procedures were effective as of June 30, 2021[179] - No changes occurred during the fiscal period ended June 30, 2021, that materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting[180] PART II OTHER INFORMATION Legal Proceedings The company is involved in two legal proceedings: a stockholder complaint pending non-monetary settlement and a $1.3 million damages claim from Benchmark Investments, Inc. which it plans to contest - A stockholder complaint filed in November 2020 regarding the counting of broker non-votes at the July 2020 Annual Meeting is pending settlement, subject to court approval and not contemplating monetary damages[46][182] - Benchmark Investments, Inc. filed a complaint in December 2020 seeking up to $1.3 million in damages related to registered direct offerings, which the company disagrees with and plans to contest vigorously[47][182] Other Information This section reports no other information - None[184] Exhibits This section lists the exhibits filed as part of the Quarterly Report on Form 10-Q, including certifications by the Principal Executive Officer and Principal Financial Officer - The exhibits filed with this Form 10-Q are listed in the Exhibit Index[184]