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, 2020

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 ☒

As of November 3, 2020, the registrant had 34,259,784 shares of common stock, $0.001 par value per share, outstanding.

Table of Contents

		Page
PART I.	FINANCIAL INFORMATION	4
Item 1.	Financial Statements (Unaudited)	4
	Condensed Consolidated Balance Sheets	4
	Condensed Consolidated Statements of Operations and Comprehensive Loss	5
	Condensed Consolidated Statements of Stockholders’ Equity	6
	Condensed Consolidated Statements of Cash Flows	8
	Notes to Unaudited Condensed Consolidated Financial Statements	9
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	19
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	28
Item 4.	Controls and Procedures	29
PART II.	OTHER INFORMATION	30
Item 1.	Legal Proceedings	30
Item 1A.	Risk Factors	30
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	30
Item 3.	Defaults Upon Senior Securities	31
Item 4.	Mine Safety Disclosures	31
Item 5.	Other Information	31
Item 6.	Exhibits	32
Signatures		33

2

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. In some cases, you can identify these statements by forward-looking words such as “may,” “might,” “will,” “should,” “expects,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “potential” or “continue,” the negative of these terms and other comparable terminology. These forward-looking statements, which are subject to risks, uncertainties and assumptions about us, may include projections of our future financial performance, our anticipated growth strategies and anticipated trends in our business. Forward-looking statements contained in this Quarterly Report on Form 10-Q include, but are not limited to statements about:

• the impact of the COVID-19 pandemic on our operations, financial results, and liquidity and capital resources, including on sales, expenses, supply chain, manufacturing, research and development activities, clinical trials and employees;

• our ability to design, develop, manufacture and market innovative products to treat patients with challenging medical conditions, particularly in peripheral artery disease, coronary artery disease and aortic stenosis;

• our expected future growth, including growth in international sales;

• the size and growth potential of the markets for our products, and our ability to serve those markets;

• the rate and degree of market acceptance of our products;

• coverage and reimbursement for procedures performed using our products;

• the performance of third parties in connection with the development of our products, including third-party suppliers;

• regulatory developments in the United States and foreign countries;

• our ability to obtain and maintain regulatory approval or clearance of our products on expected timelines;

• our plans to research, develop and commercialize our products and any other approved or cleared product;

• our ability to scale our organizational culture of cooperative product development and commercial execution;

• the development, regulatory approval, efficacy and commercialization of competing products;

• the loss of key scientific or management personnel;

• our expectations regarding the period during which we qualify as an emerging growth company under the JOBS Act;

• our ability to develop and maintain our corporate infrastructure, including our internal controls;

• our financial performance and capital requirements; and

• our expectations regarding our ability to obtain and maintain intellectual property protection for our products, as well as our ability to operate our business without infringing the intellectual property rights of others.

These statements are only predictions based on our current expectations and projections about future events. There are important factors that could cause our actual results, level of activity, performance or achievements to differ materially from the results, level of activity, performance or achievements expressed or implied by the forward-looking statements, including those factors discussed in the section entitled “Risk Factors” of our Annual Report on Form 10-K for the year ended December 31, 2019, as updated in the section entitled “Risk Factors” of our Quarterly Reports on Form 10-Q for the quarters ended March 31, 2020 and June 30, 2020 and in this Quarterly Report on Form 10-Q. Although we believe the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, level of activity, performance or achievements. We undertake no obligation to update any of these forward-looking statements for any reason, even if new information becomes available in the future, except as may be required by law.

3

PART I—FINANCIAL INFORMATION

Item 1. Financial Statements.

SHOCKWAVE MEDICAL, INC.

Condensed Consolidated Balance Sheets

(Unaudited)

(in thousands)

	September 30, 2020			December 31, 2019
				(1)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	215,256		$	139,045
Short-term investments		—			56,304
Accounts receivable, net		10,711			7,377
Inventory		28,868			12,074
Prepaid expenses and other current assets		3,033			1,897
Total current assets		257,868			216,697
Operating lease right-of-use assets		7,841			8,825
Property and equipment, net		13,282			4,910
Other assets		1,667			1,506
TOTAL ASSETS	$	280,658		$	231,938
LIABILITIES AND STOCKHOLDERS’ EQUITY
CURRENT LIABILITIES:
Accounts payable	$	1,972		$	2,790
Term notes, current portion		1,650			6,667
Accrued liabilities		16,662			13,777
Lease liability, current portion		841			774
Total current liabilities		21,125			24,008
Lease liability, noncurrent portion		7,685			8,125
Term notes, noncurrent portion		14,801			7,152
TOTAL LIABILITIES		43,611			39,285
STOCKHOLDERS’ EQUITY:
Preferred stock		—			—
Common stock		34			31
Additional paid-in capital		464,812			370,561
Accumulated other comprehensive income		—			35
Accumulated deficit		(227,799	)		(177,974	)
TOTAL STOCKHOLDERS’ EQUITY		237,047			192,653
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	280,658		$	231,938

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

(1) The consolidated balance sheet as of December 31, 2019 is derived from the audited consolidated financial statements as of that date.

4

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,
	2020			2019			2020			2019
Revenue:
Product revenue	$	19,590		$	11,333		$	45,073		$	28,615
Cost of revenue:
Cost of product revenue		5,277			4,401			14,520			11,606
Gross profit		14,313			6,932			30,553			17,009
Operating expenses:
Research and development		7,891			8,368			27,882			22,778
Sales and marketing		13,619			8,192			35,236			21,023
General and administrative		5,610			3,437			17,232			9,684
Total operating expenses		27,120			19,997			80,350			53,485
Loss from operations		(12,807	)		(13,065	)		(49,797	)		(36,476	)
Interest expense		(314	)		(251	)		(897	)		(746	)
Change in fair value of warrant liability		—			—			—			(609	)
Other income, net		218			385			942			1,518
Net loss before taxes		(12,903	)		(12,931	)		(49,752	)		(36,313	)
Income tax provision		29			26			73			51
Net loss	$	(12,932	)	$	(12,957	)	$	(49,825	)	$	(36,364	)
Other comprehensive income (loss):
Unrealized gain/(loss) on available-for-sale securities		—			(18	)		(14	)		57
Adjustment for net gain realized and included in other income, net		(21	)		—			(21	)		—
Total other comprehensive income (loss)		(21	)		(18	)		(35	)		57
Total comprehensive loss	$	(12,953	)	$	(12,975	)	$	(49,860	)	$	(36,307	)
Net loss per share, basic and diluted	$	(0.38	)	$	(0.46	)	$	(1.53	)	$	(1.66	)
Shares used in computing net loss per share, basic and diluted		34,078,726			28,085,821			32,631,715			21,886,396

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

5

Shockwave Medical, Inc.

Condensed Consolidated Statements of Stockholders’ Equity

(Unaudited)

(in thousands, except share data)

	Convertible Preferred Stock				Common Stock					Additional Paid-In			Accumulated Other Comprehensive			Accumulated			Total Stockholders'
	Shares		Amount		Shares			Amount		Capital			Income			Deficit			Equity
Balance — December 31, 2019		—	$	—		31,446,787		$	31	$	370,561		$	35		$	(177,974	)	$	192,653
Exercise of stock options		—		—		356,128			1		1,112			—			—			1,113
Issuance of common stock under employee stock purchase plan		—		—		24,691			—		842			—			—			842
Unrealized gain on available-for-sale securities		—		—		—			—		—			68			—			68
Stock-based compensation		—		—		—			—		1,871			—			—			1,871
Net loss		—		—		—			—		—			—			(18,775	)		(18,775	)
Balance — March 31, 2020		—		—		31,827,606			32		374,386			103			(196,749	)		177,772
Exercise of stock options		—		—		137,178			—		480			—			—			480
Issuance of common stock in connection with public offering, net of issuance costs of $6.1 million		—		—		1,955,000			2		83,380			—			—			83,382
Issuance of common stock in connection with vesting of restricted stock units		—		—		41,229			—		—			—			—			—
Restricted stock units withheld in net settlement for tax		—		—		(15,456	)		—		(616	)		—			—			(616	)
Unrealized loss on available-for-sale securities		—		—		—			—		—			(82	)		—			(82	)
Stock-based compensation		—		—		—			—		2,605			—			—			2,605
Net loss		—		—		—			—		—			—			(18,118	)		(18,118	)
Balance — June 30, 2020		—		—		33,945,557			34		460,235			21			(214,867	)		245,423
Exercise of stock options		—		—		254,523			—		993			—			—			993
Issuance of common stock under employee stock purchase plan		—		—		27,921			—		953			—			—			953
Offering cost related to the public offering		—		—		—			—		(14	)		—			—			(14	)
Issuance of common stock in connection with vesting of restricted stock units		—		—		12,775			—		—			—			—			—
Restricted stock units withheld in net settlement for tax		—		—		(4,611	)		—		(246	)		—			—			(246	)
Stock-based compensation		—		—		—			—		2,891			—			—			2,891
Net gain reclassified from accumulated other comprehensive income		—		—		—			—		—			(21	)		—			(21	)
Net loss		—		—		—			—		—			—			(12,932	)		(12,932	)
Balance — September 30, 2020		—	$	—		34,236,165		$	34	$	464,812		$	—		$	(227,799	)	$	237,047

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

6

Shockwave Medical, Inc.

Condensed Consolidated Statements of Stockholders’ Equity

(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
Settlement of 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
Offering cost related to the initial public offering		—			—			—			—		(215	)		—		—			(215	)
Stock-based compensation		—			—			—			—		818			—		—			818
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			—