10-Q 1 swav-10q_20200930.htm 10-Q swav-10q_20200930.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, 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