TriSalus Life Sciences(TLSI) - 2024 Q4 - Annual Report

Part I Business Overview TriSalus Life Sciences is an oncology-focused medical technology company leveraging its Pressure-Enabled Drug Delivery (PEDD™) technology and investigational immunotherapeutic nelitolimod, with its TriNav® system generating $29.4 million in 2024 revenue Overview and Business Strategy TriSalus is an oncology company focused on transforming solid tumor treatment through its PEDD™ technology and investigational immunotherapeutic nelitolimod, with TriNav® revenue reaching $29.4 million in 2024 - TriSalus is an oncology company focused on transforming solid tumor patient outcomes by integrating its innovative PEDD™ delivery technology with therapies, including its investigational immunotherapeutic, nelitolimod[22] - The company's strategy aims to overcome high intratumoral pressure and immunosuppressive tumor microenvironments, key barriers in solid tumor treatment[22] - The commercial TriNav® PEDD™ device generated $29.4 million in revenue in 2024, marking 59.0% year-over-year growth in interventional radiology procedures[24] - The company is developing nelitolimod, a class C TLR9 agonist, in Phase 1/1b trials for various cancers to reactivate the immune system within tumors[25][27] PEDD Delivery Technology and TriNav Device The PEDD™ technology and TriNav® device are designed to overcome intratumoral pressure, enhancing therapeutic delivery and improving patient outcomes in procedures like TARE and TACE - The Pressure-Enabled Drug Delivery (PEDD™) technology is designed to overcome high intratumoral pressure, increasing therapeutic delivery into tumors while minimizing systemic exposure[29] - The TriNav® device features a SmartValve™ that works with the cardiac cycle to intermittently occlude blood vessels, enhancing therapeutic perfusion into tumors and reducing reflux[30] - Clinical studies show PEDD devices improve tumor targeting, increase therapeutic dose delivery, and enhance patient response rates in Transarterial Radioembolization (TARE) and Transarterial Chemoembolization (TACE) procedures[31][33][35] - A Health Economic and Outcome Research (HEOR) study indicated TriNav use in complex patients resulted in comparable or better outcomes, including reduced post-procedure fatigue and fewer inpatient visits[34][36][42] Market Opportunity and Growth TriSalus estimates a current U.S. market opportunity of $494.0 million for TriNav in liver cancer, with potential expansion into new applications exceeding $1.6 billion annually - The current U.S. market opportunity for TriNav in liver cancer embolization procedures (TACE/TARE) is estimated at approximately 62,000 units annually, representing about $494.0 million[39] - The company expanded its portfolio with TriNav LV for larger vessels, targeting new applications like uterine fibroid embolizations (UFEs), potentially adding approximately $160.0 million to the market opportunity[40][41] - TriSalus is exploring additional PEDD technology applications, including multinodular goiters, pancreatic cancer, and prostate embolization, projecting a total U.S. addressable market exceeding $1.6 billion annually[43][44][46] Commercial Operations TriNav received a unique HCPCS code for 2025 with a $17,957 payment rate, and the company utilizes a direct sales model targeting high-volume medical centers - TriNav received a unique and permanent HCPCS code (C9797) from CMS, effective for 2025, with a payment rate of $17,957 for hospital outpatient and ambulatory surgery center settings[50][52] - The company utilizes a direct sales model targeting hospitals and major academic medical centers with high volumes of TACE and TARE procedures, with a sales and marketing team of 53 professionals as of December 31, 2024[56][57] - TriNav's primary competition is the standard microcatheter, which lacks pressure and flow modulation, with other competitors including Embolix's Sniper and Merit Medical's Swift NINJA[60][61] Nelitolimod Therapeutic Program TriSalus acquired nelitolimod, a TLR9 agonist, and is conducting three Phase 1/1b PERIO clinical trials to address immunosuppression in liver and pancreatic cancers - In July 2020, TriSalus acquired nelitolimod, a class C TLR9 agonist, from Dynavax to address immunosuppression in the tumor microenvironment of liver and pancreas cancers[70] - The company initiated three Phase 1/1b PERIO clinical trials to test nelitolimod delivered via PEDD in combination with systemic checkpoint inhibitors for uveal melanoma, ICC, HCC, and pancreatic carcinoma[74][79] - The addressable market for the nelitolimod/PEDD platform is estimated at over 80,000 patients annually in the U.S. across liver and pancreatic cancers[84] - A 5-year alliance with MD Anderson Cancer Center, initiated in March 2021, supports the PERIO clinical programs, with TriSalus committing $10.0 million in collaboration funding[92] Manufacturing and Intellectual Property TriNav devices are manufactured in-house, while nelitolimod production is outsourced, supported by a robust intellectual property portfolio of 79 registered patents - TriNav devices are manufactured at the company's facility in Westminster, Colorado, while nelitolimod manufacturing is outsourced to third-party contract manufacturers (CMOs)[101][102] - As of December 31, 2024, the company's intellectual property portfolio includes at least 79 registered patents expiring between 2030 and 2040, with an additional 86 pending patent applications[104] - For the TriNav device, the company owns five granted U.S. patents expiring between 2031 and 2038, along with foreign patents and pending applications[105] - For nelitolimod, the company jointly owns two granted U.S. patents and 14 granted foreign patents with Merck Sharp & Dohme LLC, expiring in 2036[107] Government Regulation and Healthcare Reform The company is subject to extensive FDA regulation for its medical devices and drug candidates, alongside U.S. healthcare reforms and fraud and abuse laws - The company is subject to extensive regulation by the FDA and other agencies, covering testing, manufacturing, labeling, and promotion of its medical device and drug products[112] - Medical devices like TriNav are regulated as Class II devices, requiring 510(k) clearance from the FDA to demonstrate substantial equivalence to a predicate device[115][116] - Drug candidates like nelitolimod require a more rigorous New Drug Application (NDA) approval process, involving extensive preclinical studies and multi-phase clinical trials to demonstrate safety and efficacy[129][139] - The company's business is affected by U.S. healthcare reforms, such as the Affordable Care Act (ACA) and the Inflation Reduction Act (IRA), which influence drug pricing, reimbursement, and market access[162][163][165] - The company is subject to federal and state healthcare fraud and abuse laws, including the Anti-Kickback Statute and the False Claims Act, regulating relationships with healthcare providers and payors[173][174] Risk Factors The company faces significant risks including a limited operating history with substantial losses, high dependence on TriNav revenue, early-stage drug development uncertainty, material weaknesses in internal controls, and intellectual property challenges - The company has a history of significant losses, with a net loss of $30.0 million in 2024 and an accumulated deficit of $279.5 million, raising substantial doubt about its ability to continue as a going concern without additional capital[183][184] - Revenue is primarily generated from sales of the TriNav device, making the company highly dependent on its continued market acceptance and favorable reimbursement[205] - The pharmaceutical candidate, nelitolimod, is in early-stage clinical development, a lengthy and expensive process with an uncertain outcome, and failure to advance it would materially harm business prospects[220][221] - Management has identified several material weaknesses in its internal control over financial reporting, which could affect its ability to accurately and timely report financial results[415][416] - The company faces risks related to intellectual property, including patent expiration, potential infringement claims, and challenges in protecting trade secrets globally[355][368][374] Unresolved Staff Comments The company reports that it has no unresolved staff comments from the Securities and Exchange Commission - None[451] Cybersecurity The company's cybersecurity risk management program, overseen by the Senior Director of Operations and the Audit Committee, has not materially affected business operations to date - The company's cybersecurity risk management is led by the Senior Director of Operations, with assistance from a third-party IT support firm, and is integrated into overall enterprise risk management[451][452] - The Audit Committee of the Board of Directors has primary oversight responsibility for cybersecurity risk, receiving comprehensive updates at least annually[457][458] - As of the report date, the company states that no cybersecurity threats have had a material effect, or are reasonably likely to have a material effect, on its business, operations, or financial condition[459] Properties The company's principal office, manufacturing, and warehouse facility is a leased 21,000 sq ft space in Westminster, Colorado, with additional leased office and laboratory spaces - The main facility is a 21,000 sq. ft. leased space in Westminster, CO, used for office, manufacturing, and warehousing, with the lease expiring on December 31, 2031[462] - Additional leased facilities include office space in Bannockburn, Illinois, and laboratory space at Rhode Island Hospital in Providence, Rhode Island[462] Legal Proceedings The company is not currently a party to any pending or threatened legal proceedings expected to have a material adverse effect on its business - The company is not currently involved in any material legal proceedings[463] Mine Safety Disclosures This item is not applicable to the company - Not Applicable[464] Part II Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities The company's common stock and public warrants trade on Nasdaq, with 113 holders of record as of March 31, 2025, and no cash dividends paid to date - Common stock trades under the symbol "TLSI" and public warrants trade under "TLSIW" on the Nasdaq exchange[466] - As of March 31, 2025, there were 113 holders of record of common stock[467] - The company has never declared or paid cash dividends and does not anticipate doing so, intending to retain earnings for business growth[468] Management's Discussion and Analysis of Financial Condition and Results of Operations For FY2024, TriSalus reported $29.4 million revenue (59.0% growth), a narrowed net loss of $30.0 million, and addressed going concern doubts with new financing agreements Results of Operations In 2024, revenue increased by 59.0% to $29.4 million, gross profit grew by 59.2% to $25.3 million, and net loss narrowed to $30.0 million Consolidated Statements of Operations Summary (in thousands) | | 2024 | 2023 | $ Change | % Change | |:---|---:|---:|---:|---:| | Revenue | $29,431 | $18,511 | $10,920 | 59.0% | | Cost of goods sold | 4,103 | 2,605 | 1,498 | 57.5% | | Gross profit | 25,328 | 15,906 | 9,422 | 59.2% | | Research and development | 17,688 | 29,835 | (12,147) | (40.7)% | | Sales and marketing | 25,839 | 17,034 | 8,805 | 51.7% | | General and administrative | 17,966 | 23,512 | (5,546) | (23.6)% | | Loss from operations | (36,165) | (54,475) | 18,310 | 33.6% | | Net loss available to common stockholders | $(30,045) | $(59,363) | $29,318 | 49.4% | - Revenue increased by 59.0% to $29.4 million in 2024, driven by higher sales volumes of the TriNav device[512] - Research and development expenses decreased by 40.7% to $17.7 million in 2024, primarily due to the completion of certain clinical studies for nelitolimod[515] - Sales and marketing expenses increased by 51.7% to $25.8 million in 2024, mainly from increased headcount and professional services to support TriNav growth[516] Liquidity and Capital Resources The company's cash position of $8.5 million raises going concern doubts, addressed by a $50.0 million credit agreement with OrbiMed and a $30.0 million equity purchase agreement - The company had cash and cash equivalents of $8.5 million as of December 31, 2024, down from $11.8 million at the end of 2023[527] - Management concluded there is substantial doubt about the company's ability to continue as a going concern, as existing cash is insufficient to fund operations for the next 12 months[529][544] - To fund operations, the company entered into a credit agreement with OrbiMed for up to $50.0 million in debt and a Standby Equity Purchase Agreement (SEPA) with Yorkville for up to $30.0 million in equity[528] Cash Flow Summary (in thousands) | | Year Ended Dec 31, 2024 | Year Ended Dec 31, 2023 | |:---|---:|---:| | Net cash used in operating activities | $(40,843) | $(50,578) | | Net cash used in investing activities | (345) | (1,588) | | Net cash provided by financing activities | 37,936 | 54,629 | Critical Accounting Policies and Estimates Key accounting policies involve revenue recognition upon shipment, fair value measurement of warrant and contingent earnout liabilities, and expensing research and development costs as incurred - Revenue is recognized when control of products transfers to the customer, typically upon shipment, with reserves established for variable consideration like rebates[549][550][553] - Warrant liabilities are measured at fair value each reporting period, with changes recognized in the statement of operations[556][557][558] - The contingent earnout liability related to sponsor shares is measured at fair value using a Monte Carlo simulation, with changes recorded in earnings[559][560] - Research and development costs are expensed as incurred, with estimates used for obligations under vendor and contract research organization agreements based on work progress[563][564] Quantitative and Qualitative Disclosures About Market Risk This item is not applicable as the company qualifies as a "smaller reporting company" - Not Applicable for a "smaller reporting company"[571] Financial Statements and Supplementary Data The consolidated financial statements for 2024 and 2023 are presented, with the auditor's report highlighting a going concern uncertainty due to recurring losses and an accumulated deficit Report of Independent Registered Public Accounting Firm The auditor's report for 2024 expresses substantial doubt about the company's ability to continue as a going concern due to a $33.2 million loss and a $279.5 million accumulated deficit - The auditor's report for the 2024 financial statements includes a paragraph expressing substantial doubt about the company's ability to continue as a going concern, citing its loss of $33.2 million for the year and an accumulated deficit of $279.5 million[578] Consolidated Financial Statements Key consolidated financial data for 2024 includes total assets of $24.0 million, total liabilities of $49.9 million, a stockholders' deficit of $25.9 million, and a net loss of $30.0 million Consolidated Balance Sheet Data (in thousands) | | Dec 31, 2024 | Dec 31, 2023 | |:---|---:|---:| | Cash and cash equivalents | $8,525 | $11,777 | | Total current assets | $20,669 | $20,862 | | Total assets | $23,971 | $24,598 | | Total current liabilities | $10,228 | $14,687 | | Long-term debt, net | $22,084 | $— | | Total liabilities | $49,865 | $51,663 | | Total stockholders' deficit | $(25,894) | $(27,065) | Consolidated Statement of Operations Data (in thousands) | | Year Ended Dec 31, 2024 | Year Ended Dec 31, 2023 | |:---|---:|---:| | Revenue | $29,431 | $18,511 | | Gross profit | $25,328 | $15,906 | | Loss from operations | $(36,165) | $(54,475) | | Net loss available to common stockholders | $(30,045) | $(59,363) | Consolidated Statement of Cash Flows Data (in thousands) | | Year Ended Dec 31, 2024 | Year Ended Dec 31, 2023 | |:---|---:|---:| | Net cash used in operating activities | $(40,843) | $(50,578) | | Net cash used in investing activities | $(345) | $(1,588) | | Net cash provided by financing activities | $37,936 | $54,629 | Changes in and Disagreements with Accountants on Accounting and Financial Disclosures On April 12, 2024, the company dismissed KPMG LLP, with no disagreements on accounting principles, though KPMG's reports included a going concern paragraph - On April 12, 2024, the Audit Committee dismissed KPMG LLP as the company's independent registered public accounting firm[812] - There were no disagreements with KPMG on any matter of accounting principles or practices, though KPMG's audit reports for 2022 and 2023 included a paragraph about the company's ability to continue as a going concern[813] Controls and Procedures Management concluded that disclosure controls were ineffective as of December 31, 2024, due to material weaknesses in internal control over financial reporting, with a remediation plan underway - Management concluded that disclosure controls and procedures were not effective as of December 31, 2024, due to material weaknesses in internal control over financial reporting[814][816] - Material weaknesses were identified in areas including insufficient trained resources for complex accounting, controls over the Business Combination, valuation of derivative liabilities, stock-based compensation, and IT security[819] - A remediation plan is in progress, involving hiring additional experienced personnel and engaging external experts to address identified control deficiencies[820] Other Information The company reports no other information for this item - None[823] Part III Directors, Executive Officers and Corporate Governance Information for this item will be incorporated by reference from the company's definitive proxy statement for its 2025 annual meeting of shareholders - Information regarding directors, executive officers, and corporate governance is incorporated by reference from the forthcoming 2025 Proxy Statement[825] Executive Compensation Information for this item will be incorporated by reference from the company's definitive proxy statement for its 2025 annual meeting of shareholders - Information regarding executive compensation is incorporated by reference from the forthcoming 2025 Proxy Statement[827] Security Ownership of Certain Beneficial Owner and Management and Related Stockholder Matters Information for this item will be incorporated by reference from the company's definitive proxy statement for its 2025 annual meeting of shareholders - Information regarding security ownership is incorporated by reference from the forthcoming 2025 Proxy Statement[828] Certain Relationships and Related Transactions, and Director Independence Information for this item will be incorporated by reference from the company's definitive proxy statement for its 2025 annual meeting of shareholders - Information regarding related transactions and director independence is incorporated by reference from the forthcoming 2025 Proxy Statement[829] Principal Accounting Fees and Services Information regarding principal accounting fees and services will be incorporated by reference from the company's definitive proxy statement for its 2025 annual meeting of shareholders - Information regarding principal accounting fees and services is incorporated by reference from the forthcoming 2025 Proxy Statement[830] Part IV Exhibits, Financial Statement Schedules This section lists the financial statements and exhibits filed as part of the Form 10-K, with audited consolidated financial statements included in Item 8 and no financial statement schedules filed - The audited Consolidated Financial Statements are filed under Part II, Item 8 of the report[832] - No financial statement schedules are filed with this report[832] Form 10-K Summary No Form 10-K summary is provided - None[838]