10-Q 1 swav-10q_20190930.htm 10-Q swav-10q_20190930.htm

 

 

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