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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, 2022

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

20-8777622

(State or other jurisdiction of
incorporation or organization)

(I.R.S. Employer
Identification Number)

1213 Innsbruck Dr.

Sunnyvale, CA

94089

(Address of principal executive offices)

(Zip Code)

(408) 720-9002

(Registrant’s telephone number, including area code)

_______________________________

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

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 

As of July 31, 2022, the number of outstanding shares of the registrant's common stock, par value $0.001 per share, was 35,240,040.


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 

23

Item 3.

Quantitative and Qualitative Disclosure About Market Risk

30

Item 4.

Controls and Procedures

31

Part II: Other Information

Item 1.

Legal Proceedings

32

Item 1A.

Risk Factors

32

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

67

Item 3.

Defaults Upon Senior Securities

67

Item 4.

Mine Safety Disclosures

67

Item 5.

Other Information

67

Item 6.

Exhibits

68

Signatures

70

 

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,

2022

2021

Assets

Current assets:

Cash and cash equivalents

$

87,637 

$

110,231 

Short-term investments

21,234 

Accounts receivable, net

15,779 

11,832 

Inventories

17,616 

17,851 

Prepaid expenses and other current assets

4,653 

3,412 

Total current assets

146,919 

143,326 

Property and equipment, net

9,755 

7,697 

Restricted cash

232 

232 

Other non-current assets

5,815 

5,370 

Total assets

$

162,721 

$

156,625 

Liabilities and stockholders' equity

Current liabilities:

Accounts payable

$

3,666 

$

2,379 

Accrued liabilities

17,575 

19,802 

Short-term debt

3,905 

Total current liabilities

21,241 

26,086 

Long-term debt

74,033 

44,786 

Other liabilities

7,418 

6,513 

Total liabilities

102,692 

77,385 

Commitments and contingencies (Note 7)

 

 

Stockholders' equity:

Preferred stock, $0.001 par value

Shares authorized: 5,000,000 at June 30, 2022 and December 31, 2021

Shares issued and outstanding: none at June 30, 2022 and December 31, 2021

Common stock, $0.001 par value

Shares authorized: 100,000,000 at June 30, 2022 and December 31, 2021

Shares issued and outstanding: 35,193,169 and 34,980,896 at June 30, 2022 and December 31, 2021, respectively

35 

35 

Additional paid-in capital

380,775 

367,907 

Accumulated other comprehensive income (loss)

(2)

Accumulated deficit

(320,779)

(288,702)

Total stockholders' equity

60,029 

79,240 

Total liabilities and stockholders' equity

$

162,721 

$

156,625 

 

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,

2022

2021

2022

2021

Revenue

$

33,173 

$

26,456 

$

61,193 

$

48,509 

Cost of goods sold

9,012 

6,598 

17,588 

12,137 

Gross profit

24,161 

19,858 

43,605 

36,372 

Operating expenses:

Research and development

10,655 

7,261 

18,778 

12,744 

Selling, general and administrative

27,700 

22,549 

54,975 

43,743 

Total operating expenses

38,355 

29,810 

73,753 

56,487 

Loss from operations

(14,194)

(9,952)

(30,148)

(20,115)

Interest income

122 

47 

134 

142 

Interest expense

(1,031)

(628)

(1,652)

(1,250)

Loss on debt extinguishment

(245)

(245)

Other income (expense), net

(50)

(6)

(166)

(10)

Net loss

(15,398)

(10,539)

(32,077)

(21,233)

Other comprehensive loss:

Change in unrealized gain (loss) on investments, net

(2)

(3)

(2)

(36)

Net change in other comprehensive loss

(2)

(3)

(2)

(36)

Net loss and comprehensive loss

$

(15,400)

$

(10,542)

$

(32,079)

$

(21,269)

Net loss per share, basic and diluted

$

(0.44)

$

(0.31)

$

(0.91)

$

(0.62)

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

35,143,178 

34,534,099 

35,083,569 

34,435,812 

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 (Loss)

Total

Balances at December 31, 2021

34,980,896 

$

35 

$

367,907 

$

(288,702)

$

$

79,240 

Exercise of stock options

35,453 

— 

168 

— 

— 

168 

Issuance of common stock upon release of restricted stock units

57,253 

— 

— 

— 

Stock-based compensation

— 

— 

4,978 

— 

— 

4,978 

Net loss

— 

— 

— 

(16,679)

— 

(16,679)

Balances at March 31, 2022

35,073,602 

35 

373,053 

(305,381)

67,707 

Exercise of stock options

55,941 

322 

— 

— 

322 

Issuance of common stock upon release of restricted stock units

13,075 

— 

— 

— 

Issuance of common stock under employee stock purchase plan

50,551 

— 

1,239 

— 

— 

1,239 

Stock-based compensation

— 

— 

6,161 

— 

— 

6,161 

Net loss

— 

— 

(15,398)

— 

(15,398)

Unrealized loss on investments, net

— 

— 

— 

— 

(2)

(2)

Balances at June 30, 2022

35,193,169 

$

35 

$

380,775 

$

(320,779)

$

(2)

$

60,029 

(in thousands, except share data)

Common Stock

Additional
Paid-in

Accumulated

Accumulated
Other Comprehensive

Shares

Amount

Capital

Deficit

Income (Loss)

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 

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,

2022

2021

Cash flows from operating activities

Net loss

$

(32,077)

$

(21,233)

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

Depreciation and amortization expense

922 

482 

Stock-based compensation expense

11,139 

6,942 

Amortization of premiums (accretion of discounts) on investments, net

(64)

387 

Amortization of debt discount and debt issuance costs

91 

80 

Amortization of right-of-use asset

496 

373 

Non-cash interest expense

474 

(7)

Loss on extinguishment of debt

245 

Loss on disposal of property and equipment

175 

Change in provision for doubtful accounts receivable

(3)

Provision for excess and obsolete inventories

(3)

50 

Changes in assets and liabilities:

Accounts receivable

(3,944)

(2,677)

Inventories

239 

(456)

Prepaid expenses and other current assets

(1,242)

(3,227)

Other assets

(37)

(74)

Accounts payable

1,076 

(833)

Accrued liabilities

(2,620)

(482)

Other liabilities

2 

(333)

Net cash used in operating activities

(25,131)

(21,008)

Cash flows from investing activities