SEC Filing | Biocept Inc.

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bioc-10q_20220930.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒	QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2022

☐	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: 001-36284

Biocept, Inc.

(Exact name of registrant as specified in its charter)

Delaware

80-0943522

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)

9955 Mesa Rim Road, San Diego, California

(Address of principal executive offices)

92121

(Zip Code)

(858) 320-8200

(Registrant’s telephone number, including area code)

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)

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, par value $.0001 per share	BIOC	The Nasdaq Stock Market LLC

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.

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 by Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of November 17, 2022, there were 17,058,770 shares of the Registrant’s common stock outstanding.

BIOCEPT, INC.

FORM 10-Q

FOR THE QUARTERLY PERIOD ENDED

September 30, 2022

INDEX

		Page

IMPORTANT NOTE REGARDING FORWARD-LOOKING STATEMENTS		3

PART I.	FINANCIAL INFORMATION	6

Item 1.	Financial Statements	6

	Condensed Balance Sheets as of December 31, 2021 and September 30, 2022 (Unaudited)	6

	Condensed Statements of Operations for the three and nine months ended September 30, 2021 and 2022 (Unaudited)	7

	Condensed Statements of Stockholders’ Equity for the three and nine months ended September 30, 2021 and 2022 (Unaudited)	8

	Condensed Statements of Cash Flows for the three and nine months ended September 30, 2021 and 2022 (Unaudited)	9

	Notes to Condensed Financial Statements (Unaudited)	10

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	20

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	30

Item 4.	Controls and Procedures	30

PART II.	OTHER INFORMATION	32

Item 1.	Legal Proceedings	32

Item 1A.	Risk Factors	32

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	63

Item 3.	Defaults Upon Senior Securities	63

Item 4.	Mine Safety Disclosures	63

Item 5.	Other Information	63

Item 6.	Exhibits	64

IMPORTANT NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q, or Quarterly Report, contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements included or incorporated by reference in this Quarterly Report other than statements of historical fact, are forward-looking statements. You can identify these and other forward-looking statements by the use of words such as “may,” “will,” “could,” “anticipate,” “expect,” “intend,” “believe,” “continue,” “plan,” “estimate,” “potentially,” “predict,” “should” or the negative of such terms, or other comparable terminology. Forward-looking statements also include the assumptions underlying or relating to such statements.

Forward-looking statements may include, but are not limited to, statements about:

•

the performance of our products, assays and services;

•

the ability of our products, assays and services to become a key component of the standard of care for personalized cancer treatment;

•

our ability to generate revenue, grow our business and increase sales of our products, assays and services;

•

our ability to develop and commercialize new products, diagnostic assays, services and enhance our current products, assays and services and future products, assays, and services;

•

our plans to launch a series of cancer diagnostic assays for different predictive biomarkers;

•

our ability to effectively compete with other products, diagnostic assays, methods and services that now exist or may hereafter be developed;

•

our ability to expand our international business and commercialize our products and assays in other countries;

•

market adoption of our products and assays and our ability to successfully complete clinical utility studies;

•

the potential for CNSide to be included in NCCN guidelines;

•

our ability to obtain coverage and adequate reimbursement from governmental and other third-party payers for assays and services;

•

our expectations regarding our material cash requirements, contractual obligations and commitments and the use of our existing cash;

•

our ability to enter into and leverage agreements with commercialization partners for the sales, marketing and commercialization of our current products, assays and services, and our planned future products, assays and services;

•

our ability to satisfy any applicable United States and international regulatory requirements with respect to products, assays and services;

•

our ability to obtain or maintain patents or other appropriate protection for the intellectual property utilized in our current and planned products, assays and services;

•

potential effects of the COVID-19 pandemic on our business;

•

our estimates regarding the period of time for which our current capital resources will be sufficient to fund our continued operations;

•

our expectations and estimates regarding our future use of cash, expenses and costs and needs for additional financing; and

•

our ability to maintain a strong internal control environment and remediate internal control deficiencies.

Our actual results could differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth in this report under the “Management’s Discussion and Analysis” and “Risk Factors” headings, which include but are not limited to the following factors:

•

we may be unable to increase sales of our current products, assays and services or successfully develop and commercialize other products, assays and services;

•

we may be unable to execute our sales and marketing strategy for our products and diagnostic assays and may be unable to gain acceptance in the market and generate sufficient revenue;

•

we may be unable to develop products, assays and services to keep pace with rapid advances in technology, medicine and science;

•

our current products, assays and services and our planned future products, assays and services may not continue to perform as expected;

•

our sole laboratory facility may become damaged or inoperable, or we may be required to vacate the facility;

•

the impact of the COVID-19 pandemic on our business;

•

the decline of our RT-PCR COVID-19 testing business revenues;

•

we may be unable to compete successfully with our competitors and increase or sustain our revenues;

•

medical oncologists, neuro-oncologists, surgical oncologists, urologists, pulmonologists, pathologists and other physicians may decide not to order our current or planned future assays, and laboratory supply distributors and their customers may decide not to order our current or planned future products;

•

we may be unable to identify collaborators willing to work with us to conduct clinical utility studies, or the results of those studies may not demonstrate that an assay provides clinically meaningful information and value;

•

we may lose key members of our executive management team;

•

we may be unable to retain and recruit personnel with the requisite technical skills;

•

we may fail to continue to attract, hire and retain a sufficient number of qualified sales professionals;

•

we may experience delays in transmitting claims to payers;

•

we may encounter manufacturing delays;

•

we may become exposed to business, regulatory, political, operational, financial and economic risks associated with doing business outside of the United States;

•

general economic and business conditions may have a negative impact on our business;

•

our business may be effected by healthcare policy changes;

•

hospitals or other clients may not pay our invoices or third-party payers may not provide coverage and reimbursement or may breach, rescind or modify their contracts or reimbursement policies or delay payments;

•

our products and assays may not receive favorable treatment, clearance or marketing authorization from the U.S. Food and Drug Administration, or FDA;

•

the FDA may begin requiring approval or clearance for our current products and assays and our planned future products and assays;

•

we may become required to conduct additional clinical studies or trials before continuing to offer assays that we have developed or may develop as laboratory developed tests;

•

we may be unable to obtain and maintain effective patent and proprietary rights for our products and services;

•

we may be unable to protect our intellectual property throughout the world; and

•

we may fail to maintain proper and effective internal control over financial reporting.

Moreover, we operate in an evolving environment. New risk factors and uncertainties emerge from time to time, and it is not possible for us to predict all risk factors and uncertainties, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. Readers are cautioned not to place undue reliance on forward-looking statements. The forward-looking statements speak only as of the date on which they are made, and we undertake no obligation to update such statements to reflect events that occur or circumstances that exist after the date on which they are made except as required by law. Readers should, however, review the factors and risks we describe in the reports we file from time to time with the SEC. In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based upon information available to us as of the date the statement is made, and while we believe such information forms a reasonable basis for such statements, such information may be limited or incomplete, and our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all potentially available relevant information. These statements are inherently uncertain, and you are cautioned not to unduly rely upon these statements.

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

Biocept, Inc.
Condensed Balance Sheets
(In thousands, except share and per share data)

	December 31,			September 30,
	2021			2022
Assets				(unaudited)
Current assets:
Cash	$	28,864		$	18,021
Accounts receivable		13,786			15,768
Inventories, net		2,651			1,897
Prepaid expenses and other current assets		391			949
Total current assets		45,692			36,635
Fixed assets, net		2,401			2,853
Lease right-of-use assets - operating		9,026			8,624
Lease right-of-use assets - finance		2,842			2,598
Other non-current assets		456			392
Total assets	$	60,417		$	51,102

Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable	$	7,246		$	3,040
Accrued liabilities		3,018			2,177
Current portion of lease liabilities - operating		426			494
Current portion of lease liabilities - finance		1,083			1,053
Supplier financing		-			384
Total current liabilities		11,773			7,148
Non-current portion of lease liabilities - operating		9,736			9,322
Non-current portion of lease liabilities - finance		1,428			1,009
Payor liability		-			6,105
Total liabilities		22,937			23,584
Commitments and contingencies (see Note 10)
Shareholders’ equity:
Preferred stock, $0.0001 par value, 5,000,000 shares authorized; 2,106 shares and 2,090 shares issued and outstanding at December 31, 2021 and September 30, 2022, respectively.		—			—
Common stock, $0.0001 par value, 150,000,000 shares authorized; 16,849,805 shares and 17,058,770 shares issued and outstanding at December 31, 2021 and September 30, 2022, respectively.		2			2
Additional paid-in capital		303,829			307,432
Accumulated deficit		(266,351	)		(279,916	)
Total shareholders’ equity		37,480			27,518
Total liabilities and shareholders’ equity	$	60,417		$	51,102

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

Biocept, Inc.
Condensed Statements of Operations
(In thousands, except shares and per share data)
(Unaudited)

	For the Three Months Ended September 30,						For the Nine Months Ended September 30,
	2021			2022			2021			2022
Net revenues	$	17,470		$	5,587		$	47,273		$	36,143
Costs and expenses:
Cost of revenues		11,265			5,776			27,733			24,133
Research and development expenses		1,303			1,366			3,483			4,945
General and administrative expenses		3,514			3,047			9,884			14,153
Sales and marketing expenses		1,938			975			5,806			6,292
Total costs and expenses		18,020			11,164			46,906			49,523
(Loss) income from operations		(550	)		(5,577	)		367			(13,380	)
Other (expense):
Interest expense, net		(75	)		(52	)		(220	)		(269	)
Other income, net		-			84			-			84
Total other (expense) income:		(75	)		32			(220	)		(185	)
(Loss) income before income taxes		(625	)		(5,545	)		147			(13,565	)
Income tax expense		—			—			—			—
Net (loss) income		(625	)		(5,545	)		147			(13,565	)
Net (loss) income attributable to common shareholders	$	(625	)	$	(5,545	)	$	147		$	(13,565	)
Weighted-average shares outstanding used in computing net (loss) income per share attributable to common shareholders:
Basic		15,384,469			16,998,031			14,089,537			16,917,412
Diluted		15,384,469			16,998,031			14,330,477			16,917,412
Net (loss) income per common share:
Basic	$	(0.04	)	$	(0.33	)	$	0.01		$	(0.80	)
Diluted	$	(0.04	)	$	(0.33	)	$	0.01		$	(0.80	)

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

Biocept, Inc.
Condensed Statements of Stockholders' Equity
(In thousands, except for shares)
(Unaudited)
	Common Stock				Series A Convertible Preferred Stock
	Shares		Amount		Shares			Amount		Additional Paid-in Capital		Accumulated Deficit			Total
Balance at December 31, 2021		16,849,805	$	2		2,106		$	—	$	303,829	$	(266,351	)	$	37,480
Stock-based compensation expense		—		—		—			—		2,317		—			2,317
Shares issued upon conversion of preferred stock		356		—		(16	)		—		—		—			—
Net loss		—		—		—			—		—		(2,768	)		(2,768	)
Balance at March 31, 2022		16,850,161	$	2		2,090		$	—	$	306,146	$	(269,119	)	$	37,029
Stock-based compensation expense		—		—		—			—		585		—			585
Shares issued for ATM transaction, net of issuance costs		72,707		—		—			—		94		—			94
Net loss		—		—		—			—		—		(5,252	)		(5,252	)
Balance at June 30, 2022		16,922,868	$	2		2,090		$	—	$	306,825	$	(274,371	)	$	32,456
Stock-based compensation expense		—		—		—			—		462		—			462
Shares issued for ATM transaction, net of issuance costs		135,902		—		—			—		145		—			145
Net loss		—		—		—			—		—		(5,545	)		(5,545	)
Balance at September 30, 2022		17,058,770	$	2		2,090		$	—	$	307,432	$	(279,916	)	$	27,518

	Common Stock				Series A Convertible Preferred Stock
	Shares		Amount		Shares		Amount		Additional Paid-in Capital		Accumulated Deficit			Total
Balance at December 31, 2020		13,397,041	$	1		2,111	$	—	$	287,218	$	(263,527	)	$	23,692
Stock-based compensation expense		—		—		—		—		460		—			460
Shares issued upon exercise of common stock warrants		5,304		—		—		—		19		—			19
Shares issued upon conversion of preferred stock		23		—		—		—		—		—			—
Shares issued upon exercise of options		194		—		—		—		1		—			1
Net income		—		—		—		—		—		2,599			2,599
Balance at March 31, 2021		13,402,562	$	1		2,111	$	—	$	287,698	$	(260,928	)	$	26,771
Stock-based compensation expense		—		—		—		—		494		—			494
Shares issued for ATM transaction, net of issuance costs		908,044		—		—		—		3,914		—			3,914
Net loss		—		—		—		—		—		(1,827	)		(1,827	)
Balance at June 30, 2021		14,310,606	$	1		2,111	$	—	$	292,106	$	(262,755	)	$	29,352
Stock-based compensation expense		—		—		—		—		700		—			700
Shares issued for ATM transaction, net of issuance costs		2,357,988		1		—		—		9,575		—			9,576
Shares issued upon exercise of options		343		—		—		—		1		—			1
Net loss		—		—		—		—		—		(625	)		(625	)
Balance at September 30, 2021		16,668,937	$	2		2,111	$	—	$	302,382	$	(263,380	)	$	39,004

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

Biocept, Inc.
Condensed Statements of Cash Flows
(in thousands)
(Unaudited)
	For the Nine Months Ended September 30,
	2021	2022
Cash Flows from O