Conference call to be held August 22, 2018 at
4:30 p.m. Eastern time
PAVmed Inc. (Nasdaq: PAVM, PAVMZ) (the “Company”
or “PAVmed”), a highly differentiated, multiproduct medical device
company, today reported financial results for the three and six
months ended June 30, 2018 and provided a business update.
Management Commentary
“I am delighted to report that the second
quarter of 2018 was very productive for PAVmed,” said Lishan
Aklog., M.D., PAVmed’s Chairman and Chief Executive Officer. “We
added the groundbreaking EsoCheck™ technology to our lead product
portfolio and saw steady progress towards all of our strategic
goals including, advancing our lead products to regulatory and
commercial milestones. Thanks to a successful oversubscribed equity
rights offering in June, PAVmed is now in its strongest financial
position since its inception. With more than $11 million in cash at
the end of the quarter, our runway now extends well past critical
value-inflection milestones, namely the projected commercial
launches of two of our lead products. In anticipation of these
milestones, we hired a talented industry veteran, Shaun O’Neil, as
Chief Commercial Officer to help us lay the foundation for our
transition from development-stage to commercial-stage company.
“CarpX™, our most important lead product, is a
groundbreaking minimally invasive device to treat carpal tunnel
syndrome that we believe will dramatically reduce recovery times
compared to traditional open surgery and target an estimated
immediately addressable domestic market opportunity of over $1
billion. We are seeking U.S. Food and Drug Administration (FDA)
510(k) clearance for CarpX and our most recent resubmission, three
weeks ago, incorporated extensive data which we believe provided
the FDA with a robust and complete response to its requests for
additional information. It included excellent results from an
animal study, which documented that the device’s bipolar electrode
design results in minimal spread of thermal energy – less than
one-millimeter thermal injury by pathologic analysis and no
increase in tissue temperatures except directly over the cutting
electrodes. Since the resubmission, we have been actively engaged
with the lead FDA branch reviewing our application as part of its
Interactive Review process. We expect a formal response on the
resubmission in the coming weeks. Under Shaun’s leadership, we have
begun to accelerate our clinician engagement and education
activities and look forward to participating in the American
Society for Surgery of the Hand meeting in September. We
remain on target for European CE Mark submission late this year and
a first-in-human clinical series in New Zealand this fall.
Discussions with entities in Asia, Europe and South America seeking
to commercially partner with us on CarpX in their regions remain
ongoing and active.
“Our newest lead product, EsoCheck, is a
revolutionary office-based alternative to endoscopy recently
licensed by our subsidiary Lucid Diagnostics from Case Western
Reserve University. We believe EsoCheck has the potential to save
many lives through the early detection of Barrett’s Esophagus, a
precursor to esophageal cancer that occurs in patients with chronic
heart burn or acid reflux, also known as gastroesophageal reflux
disease or GERD. EsoCheck is a five-minute office-based test which
combines a non-invasive targeted cell sampling device with a DNA
biomarker test. Together these have been shown to be highly
accurate in detecting Barrett’s Esophagus, which can be carefully
monitored and treated with non-surgical approaches if detected
before cancer develops. We believe EsoCheck screening to prevent
esophageal cancer has the potential to replicate the widespread
adoption and impact that routine Pap screening has had in
preventing cervical cancer. Such widespread screening will
eventually target the estimated 50 million at-risk Americans, with
and without heartburn, representing a domestic market of more than
$2 billion. We continue to target the first quarter of 2019 for the
U.S. launch of the first commercial EsoCheck product by seeking FDA
510(k) clearance of the EsoCheck cell-sampling device and
Laboratory Developed Test (LDT) designation, following CLIA
certification of the EsoCheck DNA biomarker test. Both of these
processes are well underway and on schedule. The ongoing
multicenter National Institutes of Health-funded clinical study,
which seeks to establish the definitive clinical evidence for
widespread EsoCheck screening of Barrett’s Esophagus, has enrolled
80 patients at eight leading medical centers. Lucid is working
closely with the investigators to provide all necessary support to
accelerate enrollment and ensure that the data is of the highest
quality for future subsequent regulatory submissions.
“With regard to our other lead products, our
implantable intraosseous vascular access device PortIO™ continues
to progress along the FDA de novo regulatory pathway. The FDA has
approved our GLP animal study protocol and we will be initiating
this study and preparing an IDE application for a small clinical
study in the coming weeks. We have also completed the design of the
second generation PortIO device, which greatly simplifies and
streamlines the insertion procedure, while continuing to engage in
strategic partnership discussions with larger companies. “Our
resorbable, antimicrobial pediatric ear tube product DisappEAR™
also continues to progress well. We are finalizing the protocol for
a three-month animal study to assess resorption rates of
antimicrobial coated or impregnated tubes machined from solid silk
rods. Finally, R&D activities for our fixed-rate infusion set,
based on a proprietary variable flow-resistor, NextFlo have
accelerated and we hope to have a design finalized and ready for
testing in the fourth quarter. We believe this exciting technology
will permit hospitals to return to gravity-driven infusions and
eliminate expensive and troublesome electronic pumps for most of
the over 1 million hospital infusions performed in the U.S. each
day.
“From a corporate perspective, in addition to
strengthening our balance sheet and expanding our management team,
we have solidified our capital markets position by regaining
compliance with Nasdaq’s shareholder equity, minimum market
capitalization and minimum share price continued-listing
requirements. We also continue to explore opportunities to
restructure or pay off debt and remain vigilant for additional
opportunities to enhance shareholder value, whether through M&A
activity or licensing of groundbreaking technologies like
EsoCheck.”
Second Quarter Financial
Results
For the three months ended June 30, 2018,
research and development expenses were $1,148,129 and general and
administrative expenses were $1,590,656. GAAP net loss attributable
to common stockholders was $5,128,963, or $(0.27) per common share.
As illustrated below and for the purpose of helping the reader
understand the effect of derivative accounting for non-cash income
and expenses on the Company’s financial results, the Company
reported a non-GAAP adjusted loss for the three months ended June
30, 2018 of $2,351,893, or $(0.12) per common share.
PAVmed had cash and cash equivalents of
$11,137,642 as of June 30, 2018, compared with $1,535,022 as of
December 31, 2017. In January 2018 the Company completed a public
offering of common stock for net proceeds of $4,274,661 and in June
2018 the Company completed a rights offering for net proceeds of
$9,208,326.
The unaudited financial results for the three
and six months ended June 30, 2018 as reported to the SEC on Form
10-Q can be obtained at www.pavmed.com or www.sec.gov.
Non-GAAP Measures
To supplement our unaudited financial results
presented in accordance with U.S. generally accepted accounting
principles (GAAP), management provides certain non-GAAP financial
measures of the Company's financial results. These non-GAAP
financial measures include net loss before interest, taxes,
depreciation and amortization (EBITDA) and non-GAAP adjusted loss,
which further adjusts EBITDA for stock-based compensation expense,
loss on the issuance of the Series A Preferred Stock Units, the
change in fair value of the Series A Warrant liability and the
change in fair value of the Series A Convertible Preferred Stock
conversion option embedded derivative liability. The foregoing
non-GAAP financial measures of EBITDA and non-GAAP adjusted loss
are not recognized terms under U.S. GAAP.
Non-GAAP financial measures are presented with
the intent of providing greater transparency to information used by
us in our financial performance analysis and operational
decision-making. We believe these non-GAAP financial measures
provide meaningful information to assist investors, shareholders
and others readers of our unaudited financial statements in making
comparisons to our historical financial results and analyzing the
underlying performance of our results of operations. These non-GAAP
financial measures are not intended to be, and should not be, a
substitute for, considered superior to, considered separately from
or as an alternative to, the most directly comparable GAAP
financial measures.
Non-GAAP financial measures are provided to
enhance readers’ overall understanding of our current financial
results and to provide further information for comparative
purposes. Management believes the non-GAAP financial measures
provide useful information to management and investors by isolating
certain expenses, gains and losses that may not be indicative of
our core operating results and business outlook. Specifically, the
non-GAAP financial measures include non-GAAP adjusted loss and its
presentation is intended to help the reader understand the effect
of the loss on the issuance of the Series A Preferred Stock Units
and the corresponding derivative accounting for non-cash charges on
financial performance. In addition, management believes non-GAAP
financial measures enhance the comparability of results against
prior periods.
A reconciliation to the most directly comparable
GAAP measure of all non-GAAP financial measures included in this
press release for the three and six months ended June 30, 2018 and
2017 is as follows:
|
|
Three Months Ended June 30, |
|
|
Six Months Ended June 30, |
|
|
|
2018 |
|
|
2017 |
|
|
2018 |
|
|
2017 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) per common share, basic and
diluted |
|
$ |
(0.27 |
) |
|
$ |
(0.08 |
) |
|
$ |
(0.48 |
) |
|
$ |
(0.40 |
) |
Net loss attributable to common stockholders |
|
|
(5,128,963 |
) |
|
|
(1,040,978 |
) |
|
|
(8,543,663 |
) |
|
|
(5,337,506 |
) |
Preferred Stock dividends and deemed dividends |
|
|
63,623 |
|
|
|
51,271 |
|
|
|
852,195 |
|
|
|
77,711 |
|
Series B Preferred stock issued upon exchange of Series A and
Series A-1 Preferred stock |
|
|
- |
|
|
|
- |
|
|
|
(199,241 |
) |
|
|
- |
|
Net loss as reported |
|
|
(5,065,340 |
) |
|
|
(989,707 |
) |
|
|
(7,890,709 |
) |
|
|
(5,259,795 |
) |
Adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation expense1 |
|
|
1,802 |
|
|
|
1,803 |
|
|
|
3,605 |
|
|
|
3,505 |
|
Interest expense, net |
|
|
500,304 |
|
|
|
- |
|
|
|
1,000,608 |
|
|
|
- |
|
Income tax (benefit) expense |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
- |
|
EBITDA |
|
|
(4,563,234 |
) |
|
|
(987,904 |
) |
|
|
(6,886,496 |
) |
|
|
(5,256,290 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other non-cash expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock-based compensation expense2 |
|
|
303,890 |
|
|
|
254,300 |
|
|
|
575,176 |
|
|
|
526,980 |
|
Loss from issuance of Preferred Stock |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
3,124,285 |
|
Change in fair value of Series A Warrant Liability3 |
|
|
- |
|
|
|
(748,423 |
) |
|
|
96,480 |
|
|
|
(1,534,820 |
) |
Change in fair value of Series A Preferred Stock conversion option
embedded derivative liability3 |
|
|
- |
|
|
|
(283,302 |
) |
|
|
(64,913 |
) |
|
|
(507,367 |
) |
Modification of warrant agreement3 |
|
|
1,907,451 |
|
|
|
- |
|
|
|
2,257,247 |
|
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP adjusted (loss) |
|
|
(2,351,893 |
) |
|
|
(1,765,329 |
) |
|
|
(4,022,506 |
) |
|
|
(3,647,212 |
) |
Basic and Diluted shares outstanding at December 31 |
|
|
19,289,874 |
|
|
|
13,331,211 |
|
|
|
17,924,632 |
|
|
|
13,331,052 |
|
Non-GAAP adjusted (loss) income per share |
|
$ |
(0.12 |
) |
|
$ |
(0.13 |
) |
|
$ |
(0.22 |
) |
|
$ |
(0.27 |
) |
|
1 |
Included in general and administrative expenses in the financial
statements |
|
|
|
|
2 |
For
the three months ended June 30, 2018 includes $233,962 of stock
based compensation expense reported as general and administrative
expenses and $69,928 reported as research and development
expense. For the three months ended June 30, 2017 includes
$223,735 of stock based compensation expense reported as general
and administrative expenses and $30,565 reported as research and
development expense. For the six months ended June 30, 2018
includes $453,356 of stock based compensation expense reported as
general and administrative expenses and $121,820 reported as
research and development expense. For the six months ended June 30,
2017 includes $466,187 of stock based compensation expense reported
as general and administrative expenses and $60,793 reported as
research and development expense. |
|
|
|
|
3 |
Included in other income and expenses |
Conference Call and Webcast
The Company will hold a conference call and
webcast on August 22, 2018 beginning at 4:30 p.m. Eastern time.
During the call, Dr. Aklog will provide a business update including
an overview of the Company’s near-term milestones and growth
strategy. In addition, Dennis McGrath, the Company’s Chief
Financial Officer, will discuss second quarter 2018 financial
results.
To access the conference call, U.S.-based
listeners should dial (888) 803-5993 and international listeners
should dial (706) 634-5454. All listeners should provide the
operator with the following passcode: 8188784. Individuals
interested in listening to the live conference call via the
internet may do so by visiting the Company’s website at
www.pavmed.com.
Following the conclusion of the conference call,
a replay will be available through August 28, 2018 and can be
accessed by dialing (855) 859-2056 from within the U.S. or (404)
537-3406 from outside the U.S. To access the replay, all listeners
should provide the following passcode: 8188784. The webcast will be
available for a period of time on the Company’s website at
www.pavmed.com.
About PAVmed
PAVmed Inc. is a highly differentiated,
multiproduct medical device company employing a unique business
model designed to advance innovative products to commercialization
much more rapidly and with significantly less capital than the
typical medical device company. This proprietary model enables
PAVmed to pursue an expanding pipeline strategy with a view to
enhancing and accelerating value creation. PAVmed’s diversified
pipeline of products address unmet clinical needs encompassing a
broad spectrum of clinical areas with attractive regulatory
pathways and market opportunities. Its four lead products provide
groundbreaking approaches to carpal tunnel syndrome (CarpX™),
precancerous conditions of the esophagus (EsoCheck™), vascular
access (PortIO™) and pediatric ear infections (DisappEAR™). The
company is also developing innovative products in other areas, such
as medical infusions and tissue ablation, while seeking to further
expand its pipeline through engagements with clinician innovators
and leading academic medical centers. For further information,
please visit www.pavmed.com.
Forward-Looking Statements
This press release includes forward-looking
statements that involve risks and uncertainties. Forward-looking
statements are statements that are not historical facts. Such
forward-looking statements, based upon the current beliefs and
expectations of PAVmed’s management, are subject to risks and
uncertainties, which could cause actual results to differ from the
forward-looking statements. Risks and uncertainties that may cause
such differences include, among other things, factors affecting the
timing and effectiveness of the registration statement for our
proposed rights offering; volatility in the price of PAVmed’s
common stock, Series W Warrants and Series Z Warrants; general
economic and market conditions; the uncertainties inherent in
research and development, including the cost and time required
advance PAVmed’s products to regulatory submission; whether
regulatory authorities will be satisfied with the design of and
results from PAVmed’s preclinical studies; whether and when
PAVmed’s products are cleared by regulatory authorities; market
acceptance of PAVmed’s products once cleared and commercialized;
our ability to raise additional funding and other competitive
developments. PAVmed has not yet received clearance from the FDA or
other regulatory body to market any of its products. New risks and
uncertainties may arise from time to time and are difficult to
predict. All of these factors are difficult or impossible to
predict accurately and many of them are beyond PAVmed’s control.
For a further list and description of these and other important
risks and uncertainties that may affect PAVmed’s future operations,
see Part I, Item IA, “Risk Factors,” in PAVmed’s most recent Annual
Report on Form 10-K filed with the Securities and Exchange
Commission, as the same may be updated in Part II, Item 1A, “Risk
Factors” in any Quarterly Reports on Form 10-Q filed by PAVmed
after its most recent Annual Report. PAVmed disclaims any intention
or obligation to publicly update or revise any forward-looking
statement to reflect any change in its expectations or in events,
conditions, or circumstances on which those expectations may be
based, or that may affect the likelihood that actual results will
differ from those contained in the forward-looking statements.
# # #
Contacts:
Investors
LHA Investor Relations
Kim Sutton Golodetz
(212) 838-3777
kgolodetz@lhai.com
Media
PAVmed Inc.
(212) 949-4319
info@pavmed.com
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