Conference call to be held May 30, 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 reports financial results for the three months ended
March 31, 2018 and provides a business update.
Management Commentary
“During the first quarter of 2018 and in recent weeks, PAVmed
has added the groundbreaking EsoCheck technology to its lead
product portfolio, continued to advance its other lead products,
CarpX™, PortIO™, and DisappEAR™, toward important regulatory and
commercial milestones and took concrete steps to strengthen its
financial position and streamline its capital structure,” said
Lishan Aklog, M.D., PAVmed’s Chairman and Chief Executive Officer.
“We look forward to achieving several important regulatory and
development milestones during the upcoming weeks and months.
“CarpX, our minimally invasive device to treat carpal tunnel
syndrome, remains our most important lead product and near-term
commercial opportunity. Since receiving the U.S. Food and Drug
Administration’s (FDA) initial response to our 510(k) submission
earlier this year, we have been working closely with the agency to
satisfy their request for additional non-clinical data to support
our submission. We have completed the requested animal study
documenting that the device’s bipolar electrode design results in
minimal spread of thermal energy. The requested additional
physician usability testing in cadavers will be completed this
week. We remain on target to file our resubmission incorporating
these data to the agency by the end of this month and look forward
to an expeditious review and final positive response from the FDA
soon thereafter.
“As a result of intense international interest in this product,
we have decided to accelerate our CarpX activities outside the
United States. We have targeted next month to have a leading hand
surgeon in New Zealand perform a first-in-man clinical series using
CarpX. In addition, we have identified an EU notified body and are
taking the additional requisite steps to submit our application for
CE mark in Europe, targeted for the late third quarter of this
year. Finally, we have received multiple inquiries from entities in
Europe, Asia and South America seeking to commercially partner with
us on CarpX in their regions and have initiated dialogues to
explore possible partnerships. We continue to believe that CarpX
represents a significant global commercial opportunity exceeding $1
billion and look forward to achieving these many catalysts in the
coming quarters.
“Our newest lead product, EsoCheck, a revolutionary technology
that we believe will save many lives through the early detection of
pre-cancerous conditions of the esophagus, has immediately joined
CarpX as one of our most important products in terms of near-term
commercial opportunity and potential blockbuster status,” Dr. Aklog
continued. “Newly-formed PAVmed subsidiary Lucid Diagnostics Inc.
recently entered into a definitive licensing agreement with Case
Western Reserve University to commercialize and develop EsoCheck.
The fact that PAVmed was selected to be the exclusive commercial
partner over much larger medical device and diagnostic companies is
a testament to our business model and the team’s commercialization
track record. Pursuant to the definitive licensing agreement, Lucid
Diagnostics Inc. now holds an exclusive worldwide license of the
intellectual property rights for the EsoCheck cell sampling device
and DNA biomarker test and all improvements. The licensed portfolio
includes additional biomarkers under a broad field of use. PAVmed
retains an 82% equity stake in Lucid and three of its four board
seats are held by PAVmed designees.
“EsoCheck is a five-minute office-based alternative to
diagnostic endoscopy that 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, the
primary precursor to the most common and lethal form of esophageal
cancer caused by Gastroesophageal Reflux Disease (GERD), commonly
known as heart burn or acid reflux. Barrett’s Esophagus can be
successfully treated, usually with non-surgical approaches, if
detected before cancer develops. However, endoscopy, the standard
diagnostic test, is neither practical nor cost effective as a
widespread screening tool. We believe widespread EsoCheck screening
has the potential to have as great an impact on esophageal cancer
as widespread Pap screening has had in preventing cervical cancer.
Such widespread screening will eventually target the estimated 50
million Americans, with and without heartburn, who are at risk,
representing an estimated immediately addressable domestic market
of several billion dollars.
“There are several reasons we believe EsoCheck represents an
extremely valuable addition to PAVmed’s portfolio. The existing
human clinical data, published in a landmark Science Translational
Medicine paper, is very powerful, showing that the EsoCheck
cell-sampling device and DNA biomarker test is highly accurate in
detecting Barrett’s Esophagus. The clinical evidence will grow
substantially as a result of a large multicenter National
Institutes of Health (NIH) study of EsoCheck which is actively
enrolling patients at Case Western Reserve University Hospital,
along with other leading academic medical centers including the
Cleveland Clinic, Johns Hopkins, Mayo Clinic, Washington University
St. Louis and the University of North Carolina. Finally, the
EsoCheck device is already being manufactured for human use in
clinical trials and the EsoCheck DNA biomarker test is already
being performed at a reference laboratory, which expects to receive
CLIA certification later this year. As such, we will be able to
aggressively pursue EsoCheck commercialization by seeking U.S. Food
and Drug Administration (FDA) 510(k) clearance of the cell sampling
device and a Laboratory Developed Test designation of the DNA
biomarker test. We are targeting the first quarter of 2019 for the
launch of the first commercial product in the U.S.
“With respect to our third lead product PortIO™, our implantable
intraosseous vascular access device, we are pursuing FDA clearance
for a seven-day implant indication through the de novo pathway and
are following detailed guidance from the agency received during a
pre-submission review meeting earlier this year. We completed a
successful pilot animal study that showed excellent device function
over the seven-day implant period and complete healing upon
explant. We have submitted the protocol for the definitive animal
study based on this pilot study and expect to receive the agency’s
feedback and initiate the definitive animal study in the coming
weeks. In anticipation of having to follow-up the animal study with
a human clinical safety trial, we accelerated our strategic
partnership efforts to include support of the expected clinical
study as part of a broader distribution, licensing or acquisition
agreement. We are preparing an IDE application in anticipation of a
formal request for this small clinical study and plan to use an
improved second-generation device. We are also pursuing a
first-in-man human clinical series in New Zealand and European CE
Mark submission along the same timeline as CarpX.
“With respect to our final lead product DisappEAR™, our
resorbable, antimicrobial pediatric ear tube, we have recently
identified a corporate partner who will provide us with
commercially applicable silk monoblocks from which to manufacture
the ear tube. This important step will significantly shorten the
development timeline for this product since sourcing commercial
silk has been the major obstacle to date. We are now able to
proceed with optimizing the manufacturing process for the ear tubes
and initiate a small animal study to document resorption rates. We
are targeting 510(k) submission before the end of this calendar
year.”
Dr. Aklog concluded, “Finally, during the first quarter of 2018,
we took important steps to streamline our capital structure by
consolidating several classes of preferred securities, eliminating
burdensome anti-dilution provisions and decreasing our warrant
overhang through a successful tender offer whereby more than 96% of
the warrants issued in our IPO were exchanged for half as many
six-year Series Z Warrants which now trade on Nasdaq under the
ticker symbol PAVMZ. Also, during the first quarter and in recent
weeks we have been raising capital to strengthen our balance sheet
and extend our cash runway. We raised approximately $4.3 million in
net proceeds from an underwritten shelf offering of common stock,
providing us with adequate capital into the first quarter of 2019.
We also took the necessary steps to initiate a rights offering
which we expect to launch this week. Pursuant to the rights
offering, holders of common stock as of yesterday, the record date,
will be granted one right to purchase a new unit consisting of a
share of common stock and a Series Z Warrant for $2.25. In
anticipation of the rights offering, we lowered the exercise price
of these warrants to $1.60. Anticipated proceeds from the exercise
of these rights will be used to extend our working capital runway,
accelerate the commercialization of CarpX once cleared and
potentially retire debt.”
Financial Results
For the three months ended March 31, 2018, research and
development expenses were $562,535 and general and administrative
expenses were $1,381,167. GAAP net loss attributable to common
stockholders was $3,414,700, or $(0.21) 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 March
31, 2018 of $1,670,613, or $(0.10) per common share.
PAVmed had cash and cash equivalents of $3,630,692 as of March
31, 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 approximately $4.3 million.
The unaudited financial results for the three months ended March
31, 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) in our Quarterly Report on Form 10-Q, 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 other 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 months ended March 31, 2018 and 2017 is as follows:
Three Months Ended March 31,
2018
2017 Net income (loss) per common
share, basic and diluted $ (0.21) $ (0.32)
Net loss
attributable to common stockholders (3,414,700) (4,296,528)
Preferred Stock dividends and deemed dividends 788,572 26,440
Series B Preferred stock issued upon exchange of Series A and
Series A-1 Preferred stock (199,241) -
Net loss as
reported (2,825,369) (4,270,088) Adjustments: Depreciation
expense1 1,803 1,702 Interest expense, net 500,304 - Income tax
(benefit) expense - -
EBITDA (2,323,262)
(4,268,386)
Other non-cash expenses: Stock-based
compensation expense2 271,286 272,680 Loss from issuance of
Preferred Stock - 3,124,285 Change in fair value of Series A
Warrant Liabiity3 96,480 (786,397) Change in fair value of Series A
Preferred Stock conversion option embedded derivative liabiity3
(64,913) (224,065) Modification of Series A and A-1 warrant
agreement for Z warrants3 349,796 -
Non-GAAP
adjusted (loss) (1,670,613) (1,881,883) Basic and
Diluted shares outstanding at December 31 16,544,221 13,330,891
Non-GAAP adjusted (loss) income per share ($0.10) ($0.14) 1
Included in general and administrative
expenses in the financial statements 2
For the three months ended March 31, 2018
includes $238,029 of stock based compensation expense reported as
general and administrative expenses and $33,257 reported as
research and development expense. For the three months ended March
31, 2017 includes $242,451 of stock based compensation expense
reported as general and administrative expenses and $30,228
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 May 30,
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
first 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: 9098516. 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 June 6,
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: 9098516. 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 three 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.
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InvestorsLHA Investor RelationsKim
Sutton Golodetz, 212-838-3777kgolodetz@lhai.comorMediaPAVmed Inc.212-949-4319info@pavmed.com
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