UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2019

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-38829

ShockWave Medical, Inc.

(Exact Name of Registrant as Specified in its Charter)

Delaware	27-0494101
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
5403 Betsy Ross Drive Santa Clara, California	95054
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (510) 279-4262

Securities registered pursuant to Section 12(b) of the Act:

Title of each class of securities	Trading symbol(s)	Name of each national exchange and principal U.S. market for the securities
ShockWave Medical Inc., common stock, par value $0.001 per share	SWAV	The Nasdaq Stock Market LLC (Nasdaq Global Select Market)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.     Yes  ☒    No  ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes  ☒    No  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☐
Emerging growth company	☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☒

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ☐    No ☒

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.     Yes  ☒    No  ☐

As of October 31, 2019, the registrant had 28,300,080 shares of common stock, $0.001 par value per share, outstanding.

Table of Contents

		Page
PART I.	FINANCIAL INFORMATION	3
Item 1.	Financial Statements (Unaudited)	3
	Condensed Consolidated Balance Sheets	3
	Condensed Consolidated Statements of Operations and Comprehensive Loss	4
	Condensed Consolidated Statements of Convertible Preferred Stock and Stockholders’ Equity (Deficit)	5
	Condensed Consolidated Statements of Cash Flows	7
	Notes to Unaudited Condensed Consolidated Financial Statements	8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	19
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	26
Item 4.	Controls and Procedures	27
PART II.	OTHER INFORMATION	28
Item 1.	Legal Proceedings	28
Item 1A.	Risk Factors	28
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	73
Item 3.	Defaults Upon Senior Securities	73
Item 4.	Mine Safety Disclosures	73
Item 5.	Other Information	73
Item 6.	Exhibits	74
Signatures		75

2

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

SHOCKWAVE MEDICAL, INC.

Condensed Consolidated Balance Sheets

(Unaudited)

(in thousands)

	September 30, 2019			December 31, 2018
				(1)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	39,452		$	39,643
Short-term investments		74,646			—
Accounts receivable, net		5,551			2,850
Inventory		9,227			5,131
Prepaid expenses and other current assets		2,199			1,112
Total current assets		131,075			48,736
Operating lease right-of-use assets		2,155			—
Property and equipment, net		4,111			2,619
Other assets		548			2,066
TOTAL ASSETS	$	137,889		$	53,421
LIABILITIES, CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’    EQUITY (DEFICIT)
CURRENT LIABILITIES:
Accounts payable	$	2,486		$	1,487
Term notes, current portion		6,667			1,667
Accrued liabilities		9,496			6,217
Lease liability, current portion		742			—
Total current liabilities		19,391			9,371
Lease liability, noncurrent portion		1,543			—
Term notes, noncurrent portion		8,705			13,383
Convertible preferred stock warrant liability		—			313
Other liabilities		—			136
TOTAL LIABILITIES		29,639			23,203
Commitments and contingencies (Note 6)
Convertible preferred stock		—			152,806
STOCKHOLDERS’ EQUITY (DEFICIT):
Preferred stock		—			—
Common stock	28				2
Additional paid-in capital		271,394			4,275
Accumulated other comprehensive income		57			—
Accumulated deficit		(163,229	)		(126,865	)
TOTAL STOCKHOLDERS’ EQUITY (DEFICIT)		108,250			(122,588	)
TOTAL LIABILITIES, CONVERTIBLE PREFERRED STOCK AND    STOCKHOLDERS’ EQUITY (DEFICIT)	$	137,889		$	53,421

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

(1) The consolidated balance sheet as of December 31, 2018 is derived from the audited consolidated financial statements as of that date.

3

SHOCKWAVE MEDICAL, INC.

Condensed Consolidated Statements of Operations and Comprehensive Loss

(Unaudited)

(in thousands, except share and per share data)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2019			2018			2019			2018
Revenue:
Product revenue	$	11,333		$	3,600		$	28,615		$	7,201
Operating expenses:
Cost of product revenue		4,401			1,973			11,606			3,946
Research and development		8,368			5,533			22,778			16,579
Sales and marketing		8,192			4,801			21,023			12,611
General and administrative		3,437			1,369			9,684			4,137
Total operating expenses		24,398			13,676			65,091			37,273
Loss from operations		(13,065	)		(10,076	)		(36,476	)		(30,072	)
Interest expense		(251	)		(158	)		(746	)		(216	)
Change in fair value of warrant liability		—			(104	)		(609	)		(53	)
Other income, net		385			166			1,518			489
Net loss before taxes		(12,931	)		(10,172	)		(36,313	)		(29,852	)
Income tax provision		26			6			51			27
Net loss	$	(12,957	)	$	(10,178	)	$	(36,364	)	$	(29,879	)
Unrealized gain (loss) on available-for-sale securities		(18	)		—			57			1
Total comprehensive loss	$	(12,975	)	$	(10,178	)	$	(36,307	)	$	(29,878	)
Net loss per share, basic and diluted	$	(0.46	)	$	(5.73	)	$	(1.66	)	$	(17.15	)
Shares used in computing net loss per share, basic and diluted		28,085,821			1,776,249			21,886,396			1,742,572

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

4

Shockwave Medical, Inc.

Condensed Consolidated Statements of Convertible Preferred Stock and Stockholders’ Equity (Deficit)

(Unaudited)

(in thousands, except share data)

	Convertible Preferred Stock						Common Stock					Additional Paid-In			Accumulated Other Comprehensive			Accumulated			Total Stockholders' Equity
	Shares			Amount			Shares			Amount		Capital			Income			Deficit			(Deficit)
Balance — December 31, 2018		18,670,328		$	152,806			1,824,852		$	2	$	4,275		$	—		$	(126,865	)	$	(122,588	)
Exercise of common stock warrants for cash		—			—			50,331			—		110			—			—			110
Issuance of common stock upon net exercise of warrants		—			—			101,744			—		133			—			—			133
Conversion of preferred stock to common stock upon    initial public offering		(18,670,328	)		(152,806	)		18,670,328		18			152,788			—			—			152,806
Conversion of Series A-1 warrants to common stock    warrants upon initial public offering		—			—			—			—		789			—			—			789
Issuance of common stock in connection with initial    public offering, net of issuance costs of $11.3 million		—			—			6,555,000		7			100,132			—			—			100,139
Issuance of common stock in connection with private    placement		—			—			588,235		1			9,999			—			—			10,000
Exercise of stock options		—			—			80,515			—		169			—			—			169
Vesting of early exercised options		—			—			—			—		18			—			—			18
Stock-based compensation		—			—			—			—		412			—			—			412
Adjustment for fractional shares resulting from reverse    stock split		—			—			(114	)		—		(3	)		—			—			(3	)
Net loss		—			—			—			—		—			—			(12,799	)		(12,799	)
Balance — March 31, 2019		—			—			27,870,891			28		268,822			—			(139,664	)		129,186
Issuance of common stock upon net exercise of warrants		—			—			79,208			—		—			—			—			—
Exercise of stock options		—			—			73,608			—		148			—			—			148
Vesting of early exercised options		—			—			—			—		9			—			—			9
Stock-based compensation		—			—			—			—		818			—			—			818
Offering costs related to the initial public offering		—			—			—			—		(215	)		—			—			(215	)
Unrealized gain on available-for-sale securities		—			—			—			—		—			75			—			75
Net loss		—			—			—			—		—			—			(10,608	)		(10,608	)
Balance — June 30, 2019		—			—			28,023,707			28		269,582			75			(150,272	)		119,413
Exercise of stock options		—			—			232,186			—		706			—			—			706
Stock-based compensation		—			—			—			—		1,106			—			—			1,106
Unrealized loss on available-for-sale securities		—			—			—			—		—			(18	)		—			(18	)
Net loss		—			—			—			—		—			—			(12,957	)		(12,957	)
Balance — September 30, 2019		—		$	—			28,255,893		$	28	$	271,394		$	57		$	(163,229	)	$	108,250

5

	Convertible Preferred Stock				Common Stock				Additional Paid-In		Accumulated Other Comprehensive			Accumulated			Total Stockholders' Equity
	Shares		Amount		Shares		Amount		Capital		Loss			Deficit			(Deficit)
Balance — December 31, 2017		17,510,045	$	137,469		1,627,032	$	2	$	2,470	$	(1	)	$	(85,763	)	$	(83,292	)
Exercise of Series A-1 warrants		52,169		312		—		—		—		—			—			—
Issuance of common stock warrants		—		—		—		—		104		—			—			104
Exercise of stock options		—		—		143,422		—		215		—			—			215
Unrealized gain on available-for-sale securities		—		—		—		—		—		1			—			1
Vesting of early exercised options		—		—		—		—		22		—			—			22
Stock-based compensation		—		—		—		—		273		—			—			273
Net loss		—		—		—		—		—		—			(9,594	)		(9,594	)
Balance — March 31, 2018		17,562,214		137,781		1,770,454		2		3,084		—			(95,357	)		(92,271	)
Exercise of Series A-1 warrants		17,506		105		—		—		—		—			—			—
Exercise of stock options		—		—		27,067		—		60		—			—			60
Vesting of early exercised options		—		—		—		—		20		—			—			20
Stock-based compensation		—		—		—		—		312		—			—			312
Net loss		—		—		—		—		—		—			(10,107	)		(10,107	)
Balance — June 30, 2018		17,579,720		137,886		1,797,521		2		3,476		—			(105,464	)		(101,986	)
Exercise of stock options		—		—		12,982		—		25		—			—			25
Vesting of early exercised options		—		—		—		—		18		—			—			18
Stock-based compensation		—		—		—		—		289		—			—			289
Net loss		—		—		—		—		—		—			(10,178	)		(10,178	)
Balance — September 30, 2018		17,579,720	$	137,886		1,810,503	$	2	$	3,808	$	—		$	(115,642	)	$	(111,832	)

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

6

SHOCKWAVE MEDICAL, INC.

Condensed Consolidated Statements of Cash Flows

(Unaudited)

(in thousands)

	Nine Months Ended September 30,
	2019			2018
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$	(36,364	)	$	(29,879	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		854			466
Stock-based compensation		2,336			874
Amortization of right-of-use assets		739			—
Accretion of discount on available-for-sale securities		(542	)		—
Loss on write down of fixed assets		90			25
Change in fair value of warrant liability		609			53
Amortization of debt issuance costs		322			107
Changes in operating assets and liabilities:
Accounts receivable		(2,701	)		(2,016	)
Inventory		(4,096	)		(2,687	)
Prepaid expenses and other current assets		(1,087	)		(143	)
Other assets		(1	)		(9	)
Accounts payable		884			(187	)
Accrued and other current liabilities		4,169			1,720
Lease liabilities		(749	)		—
Other liabilities