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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

______________________________

FORM 10-Q

REGISTRATION STATEMENT

Under

The Securities Act of 1933

______________________________

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2021

OR

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For transition period from               to

Commission File Number   001-38847     

______________________________

SILK ROAD MEDICAL, INC.

(Exact name of registrant as specified in its charter)

______________________________

Delaware

3841

20-8777622

(State or other jurisdiction of
incorporation or organization)

(Primary Standard Industrial
Classification Code Number)

(I.R.S. Employer
Identification Number)

1213 Innsbruck Dr. Sunnyvale, CA 94089 (408) 720-9002

(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)

______________________________

Erica J. Rogers

Chief Executive Officer

1213 Innsbruck Dr. Sunnyvale, CA 94089 (408) 720-9002

(Name, address, including zip code, and telephone number, including area code, of agent for service)

______________________________

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, a 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 7(a)(2)(B) of the Securities Act.  ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule12b-2 of the Act).    Yes ☐    No 

Securities registered pursuant to Section 12(b) of the Act:

Title of each class

Trading Symbol(s)

Name of each exchange on which registered

Common Stock

SILK

Nasdaq Global Select Market

As of July 31, 2021, the number of outstanding shares of the registrant's common stock, par value $0.001 per share, was 34,683,795.


TABLE OF CONTENTS

Part I: Financial Information

Page

Item 1.

Unaudited Condensed Financial Statements

4

Condensed Balance Sheets

4

Condensed Statements of Operations and Comprehensive Loss

5

Condensed Statements of Stockholders' Equity

6

Condensed Statements of Cash Flows

7

Notes to Condensed Financial Statements

8

Item 2.

Management's Discussion and Analysis of Financial Condition and Results of Operations 

25

Item 3.

Quantitative and Qualitative Disclosure About Market Risk

32

Item 4.

Controls and Procedures

33

Part II: Other Information

Item 1.

Legal Proceedings

33

Item 1A.

Risk Factors

33

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

68

Item 3.

Defaults Upon Senior Securities

69

Item 4.

Mine Safety Disclosures

69

Item 5.

Other Information

69

Item 6.

Exhibits

70

Signatures

72

 

1


CAUTIONARY NOTES REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements concerning our business, operations and financial performance and condition, as well as our plans, objectives and expectations for our business, operations and financial performance and condition. Any statements contained herein that are not statements of historical facts may be deemed to be forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “anticipate,” “assume,” “believe,” “contemplate,” “continue,” “could,” “due,” “estimate,” “expect,” “goal,” “intend,” “may,” “objective,” “plan,” “predict,” “potential,” “positioned,” “seek,” “should,” “target,” “will,” “would” and other similar expressions that are predictions of or indicate future events and future trends, or the negative of these terms or other comparable terminology.

These forward-looking statements include, but are not limited to, statements about:

our plans to conduct further clinical trials;

our plans and expected timeline related to our products, or developing new products, to address additional indications or to obtain regulatory approvals or clearances or otherwise;

the expected use of our products by physicians;

our expectations regarding the number of procedures that will be performed with our products, the number of physicians we expect to train, and the number of our sales territories;

our ability to obtain, maintain and expand regulatory clearances for our current products and any new products we create;

the expected growth of our business and our organization;

our expectations regarding government and third-party payer coverage and reimbursement;

our ability to retain and recruit key personnel, including the continued expansion of our sales and marketing infrastructure;

our ability to obtain an adequate supply of materials and components for our products from our third-party suppliers, most of whom are single-source suppliers;

our ability to manufacture sufficient quantities of our products with sufficient quality;

our ability to obtain and maintain intellectual property protection for our products and our business;

our ability to expand our business into new geographic markets;

our compliance with extensive Nasdaq requirements and government laws, rules and regulations both in the United States and internationally;

our estimates of our expenses, ongoing losses, future revenue, capital requirements and our need for, or ability to obtain, additional financing;

our ability to identify and develop new and planned products and/or acquire new products; 

our expectations regarding the continued impact of the COVID-19 pandemic on our business;

developments and projections relating to our competitors or our industry; and

our intended use of net proceeds from our public offerings.

We believe that it is important to communicate our future expectations to our investors. However, there may be events in the future that we are not able to accurately predict or control and that may cause our actual results to differ materially from the expectations we describe in our forward-looking statements. These forward-looking statements are based on management’s current expectations, estimates, forecasts and projections about our business and the industry in which we operate and management’s beliefs and assumptions and are not guarantees of future performance or

2


development and involve known and unknown risks, uncertainties and other factors that are in some cases beyond our control. As a result, any or all of our forward-looking statements in this Quarterly Report on Form 10-Q may turn out to be inaccurate. Factors that may cause actual results to differ materially from current expectations include, among other things, those listed under “Risk Factors” and elsewhere in this Quarterly Report on Form 10-Q.

These forward-looking statements speak only as of the date of this Quarterly Report on Form 10-Q. We assume no obligation to update or revise these forward-looking statements for any reason, even if new information becomes available in the future. You should not rely upon forward-looking statements as predictions of future events. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee that the future results, levels of activity, performance or events and circumstances reflected in the forward-looking statements will be achieved or occur. We undertake no obligation to update publicly any forward-looking statements for any reason after the date of this Quarterly Report on Form 10-Q to conform these statements to actual results or to changes in our expectations.

You should read this Quarterly Report on Form 10-Q and the documents that we reference in this Quarterly Report on Form 10-Q and have filed with the SEC as exhibits to this Quarterly Report on Form 10-Q with the understanding that our actual future results, levels of activity, performance and events and circumstances may be materially different from what we expect.

 

3


Part I. Financial Information

Item 1: Unaudited Condensed Financial Statements

 

Silk Road Medical, Inc.

Condensed Balance Sheets

(unaudited)

(in thousands, except share and per share data)

June 30,

December 31,

2021

2020

Assets

Current assets:

Cash and cash equivalents

$

101,849

$

69,466 

Short-term investments

26,293

78,016 

Accounts receivable, net

11,747

9,070 

Inventories

12,771

9,989 

Prepaid expenses and other current assets

5,877

6,787 

Total current assets

158,537

173,328 

Property and equipment, net

3,428

2,844 

Restricted cash

310 

310 

Other non-current assets

5,931

2,832 

Total assets

$

168,206

$

179,314 

Liabilities and stockholders' equity

Current liabilities:

Accounts payable

$

1,958

$

2,598 

Accrued liabilities

14,705

16,957 

Total current liabilities

16,663

19,555 

Long-term debt

48,614

48,533 

Other liabilities

6,791

3,726 

Total liabilities

72,068

71,814 

Commitments and contingencies (Note 7)

 

 

Stockholders' equity:

Preferred stock, $0.001 par value

Shares authorized: 5,000,000 at June 30, 2021 and December 31, 2020

Shares issued and outstanding: none at June 30, 2021 and December 31, 2020

Common stock, $0.001 par value

Shares authorized: 100,000,000 at June 30, 2021 and December 31, 2020

Shares issued and outstanding: 34,623,409 and 34,249,649 at June 30, 2021 and December 31, 2020, respectively

35

34 

Additional paid-in capital

356,224

346,318 

Accumulated other comprehensive income

3

39 

Accumulated deficit

(260,124)

(238,891)

Total stockholders' equity

96,138

107,500 

Total liabilities and stockholders' equity

$

168,206

$

179,314 

 

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

4


Silk Road Medical, Inc.

Condensed Statements of Operations and Comprehensive Loss

(unaudited)

(in thousands, except share and per share data)

Three Months Ended

Six Months Ended

June 30,

June 30,

2021

2020

2021

2020

Revenue

$

26,456 

$

15,094 

$

48,509 

$

34,027 

Cost of goods sold

6,598 

5,336 

12,137 

10,586 

Gross profit

19,858 

9,758 

36,372 

23,441 

Operating expenses:

Research and development

7,261 

3,393 

12,744 

6,522 

Selling, general and administrative

22,549 

15,758 

43,743 

35,450 

Total operating expenses

29,810 

19,151 

56,487 

41,972 

Loss from operations

(9,952)

(9,393)

(20,115)

(18,531)

Interest income

47 

299 

142 

702 

Interest expense

(628)

(1,203)

(1,250)

(2,406)

Other income (expense), net

(6)

(56)

(10)

(59)

Net loss

(10,539)

(10,353)

(21,233)

(20,294)

Other comprehensive loss:

Unrealized gain (loss) on investments, net

(3)

(126)

(36)

314 

Net change in other comprehensive loss

(3)

(126)

(36)

314 

Net loss and comprehensive loss

$

(10,542)

$

(10,479)

$

(21,269)

$

(19,980)

Net loss per share, basic and diluted

$

(0.31)

$

(0.32)

$

(0.62)

$

(0.63)

Weighted average common shares used to compute net loss per share, basic and diluted

34,534,099 

32,682,360 

34,435,812 

32,010,335 

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

5


Silk Road Medical, Inc.

Condensed Statements of Stockholders' Equity

(unaudited)

(in thousands, except share data)

Common Stock

Additional
Paid-in

Accumulated

Accumulated
Other Comprehensive

Shares

Amount

Capital

Deficit

Income

Total

Balances at December 31, 2020

34,249,649 

$

34 

$

346,318 

$

(238,891)

$

39 

$

107,500 

Exercise of stock options

163,151 

— 

848 

— 

— 

848 

Issuance of common stock upon release of restricted stock units

25,490 

— 

— 

— 

Stock-based compensation

— 

— 

3,533 

— 

— 

3,533 

Net loss

— 

— 

— 

(10,694)

— 

(10,694)

Unrealized loss on investments, net

— 

— 

— 

— 

(33)

(33)

Balances at March 31, 2021

34,438,290 

34 

350,699 

(249,585)

6 

101,154 

Exercise of stock options

155,443 

1 

1,030 

— 

— 

1,031 

Issuance of common stock upon release of restricted stock units

2,792 

— 

— 

— 

Issuance of common stock under employee stock purchase plan

26,884 

— 

1,086 

— 

— 

1,086 

Stock-based compensation

— 

— 

3,409 

— 

— 

3,409 

Net loss

— 

— 

(10,539)

— 

(10,539)

Unrealized loss on investments, net

— 

— 

— 

— 

(3)

(3)

Balances at June 30, 2021

34,623,409 

$

35 

$

356,224 

$

(260,124)

$

3 

$

96,138 

(in thousands, except share data)

Common Stock

Additional
Paid-in

Accumulated

Accumulated
Other Comprehensive

Shares

Amount

Capital

Deficit

Income

Total

Balances at December 31, 2019

31,255,267 

$

31 

$

263,384 

$

(191,526)

$

2 

$

71,891 

Exercise of stock options

140,370 

— 

274 

— 

— 

274 

Stock-based compensation

— 

— 

1,293 

— 

— 

1,293 

Net loss

— 

— 

— 

(9,941)

— 

(9,941)

Unrealized gains on investments, net

— 

— 

— 

— 

440 

440 

Balances at March 31, 2020

31,395,637 

31 

264,951 

(201,467)

442 

63,957 

Issuance of common stock in connection with public offering, net of underwriting discount, commissions and offering costs of $4,457

1,923,076 

2 

70,541 

— 

— 

70,543 

Exercise of stock options

265,467 

1 

603 

— 

— 

604 

Issuance of common stock under employee stock purchase plan

25,919 

— 

801 

— 

— 

801 

Stock-based compensation

— 

— 

1,654 

— 

— 

1,654 

Net loss

— 

— 

— 

(10,353)

— 

(10,353)

Unrealized loss on investments, net

— 

— 

— 

— 

(126)

(126)

Balances at June 30, 2020

33,610,099 

$

34 

$

338,550 

$

(211,820)

$

316 

$

127,080 

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

6


Silk Road Medical, Inc.

Condensed Statements of Cash Flows

(unaudited)

(in thousands)

Six Months Ended

June 30,

2021

2020

Cash flows from operating activities

Net loss

$

(21,233)

$

(20,294)

Adjustments to reconcile net loss to net cash used in operating activities:

Depreciation and amortization expense

482 

368 

Stock-based compensation expense

6,942 

2,947 

Amortization of premiums on investments, net

387 

57 

Amortization of debt discount and debt issuance costs

80 

23 

Amortization of right-of-use asset

373 

295 

Non-cash interest expense

(7)

167 

Loss on disposal of property and equipment

51 

Change in provision for doubtful accounts receivable

(9)

Provision for excess and obsolete inventories

50 

105 

Changes in assets and liabilities:

Accounts receivable

(2,677)

857 

Inventories

(456)

(1,404)

Prepaid expenses and other current assets

(3,227)

(986)

Other assets

(74)

117 

Accounts payable

(833)

262 

Accrued liabilities

(482)

(5,925)

Other liabilities

(333)

(7)

Net cash used in operating activities

(21,008)

(23,376)

Cash flows from investing activities

Purchases of property and equipment

(