000032001712/312020Q3falseP5Y6MP5Y6M00003200172020-01-012020-09-30xbrli:shares00003200172020-11-03iso4217:USD00003200172020-09-3000003200172019-12-31iso4217:USDxbrli:shares00003200172020-07-012020-09-3000003200172019-07-012019-09-3000003200172019-01-012019-09-300000320017us-gaap:PreferredStockMember2019-12-310000320017us-gaap:CommonStockMember2019-12-310000320017us-gaap:AdditionalPaidInCapitalMember2019-12-310000320017us-gaap:AccumulatedOtherComprehensiveIncomeMember2019-12-310000320017us-gaap:RetainedEarningsMember2019-12-310000320017us-gaap:TreasuryStockMember2019-12-310000320017us-gaap:ParentMember2019-12-310000320017us-gaap:NoncontrollingInterestMember2019-12-310000320017us-gaap:RetainedEarningsMember2020-01-012020-09-300000320017us-gaap:ParentMember2020-01-012020-09-300000320017us-gaap:NoncontrollingInterestMember2020-01-012020-09-300000320017us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-01-012020-09-300000320017us-gaap:CommonStockMember2020-01-012020-09-300000320017us-gaap:AdditionalPaidInCapitalMember2020-01-012020-09-300000320017us-gaap:PreferredStockMember2020-09-300000320017us-gaap:CommonStockMember2020-09-300000320017us-gaap:AdditionalPaidInCapitalMember2020-09-300000320017us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-09-300000320017us-gaap:RetainedEarningsMember2020-09-300000320017us-gaap:TreasuryStockMember2020-09-300000320017us-gaap:ParentMember2020-09-300000320017us-gaap:NoncontrollingInterestMember2020-09-300000320017us-gaap:PreferredStockMember2018-12-310000320017us-gaap:CommonStockMember2018-12-310000320017us-gaap:AdditionalPaidInCapitalMember2018-12-310000320017us-gaap:AccumulatedOtherComprehensiveIncomeMember2018-12-310000320017us-gaap:RetainedEarningsMember2018-12-310000320017us-gaap:TreasuryStockMember2018-12-310000320017us-gaap:ParentMember2018-12-310000320017us-gaap:NoncontrollingInterestMember2018-12-3100003200172018-12-310000320017us-gaap:RetainedEarningsMembersrt:CumulativeEffectPeriodOfAdoptionAdjustmentMember2018-12-310000320017us-gaap:ParentMembersrt:CumulativeEffectPeriodOfAdoptionAdjustmentMember2018-12-310000320017srt:CumulativeEffectPeriodOfAdoptionAdjustmentMember2018-12-310000320017us-gaap:RetainedEarningsMember2019-01-012019-09-300000320017us-gaap:ParentMember2019-01-012019-09-300000320017us-gaap:NoncontrollingInterestMember2019-01-012019-09-300000320017us-gaap:AccumulatedOtherComprehensiveIncomeMember2019-01-012019-09-300000320017us-gaap:CommonStockMember2019-01-012019-09-300000320017us-gaap:AdditionalPaidInCapitalMember2019-01-012019-09-300000320017us-gaap:PreferredStockMember2019-09-300000320017us-gaap:CommonStockMember2019-09-300000320017us-gaap:AdditionalPaidInCapitalMember2019-09-300000320017us-gaap:AccumulatedOtherComprehensiveIncomeMember2019-09-300000320017us-gaap:RetainedEarningsMember2019-09-300000320017us-gaap:TreasuryStockMember2019-09-300000320017us-gaap:ParentMember2019-09-300000320017us-gaap:NoncontrollingInterestMember2019-09-3000003200172019-09-300000320017us-gaap:PreferredStockMember2020-06-300000320017us-gaap:CommonStockMember2020-06-300000320017us-gaap:AdditionalPaidInCapitalMember2020-06-300000320017us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-06-300000320017us-gaap:RetainedEarningsMember2020-06-300000320017us-gaap:TreasuryStockMember2020-06-300000320017us-gaap:ParentMember2020-06-300000320017us-gaap:NoncontrollingInterestMember2020-06-3000003200172020-06-300000320017us-gaap:RetainedEarningsMember2020-07-012020-09-300000320017us-gaap:ParentMember2020-07-012020-09-300000320017us-gaap:NoncontrollingInterestMember2020-07-012020-09-300000320017us-gaap:AccumulatedOtherComprehensiveIncomeMember2020-07-012020-09-300000320017us-gaap:CommonStockMember2020-07-012020-09-300000320017us-gaap:AdditionalPaidInCapitalMember2020-07-012020-09-300000320017us-gaap:PreferredStockMember2019-06-300000320017us-gaap:CommonStockMember2019-06-300000320017us-gaap:AdditionalPaidInCapitalMember2019-06-300000320017us-gaap:AccumulatedOtherComprehensiveIncomeMember2019-06-300000320017us-gaap:RetainedEarningsMember2019-06-300000320017us-gaap:TreasuryStockMember2019-06-300000320017us-gaap:ParentMember2019-06-300000320017us-gaap:NoncontrollingInterestMember2019-06-3000003200172019-06-300000320017us-gaap:RetainedEarningsMember2019-07-012019-09-300000320017us-gaap:ParentMember2019-07-012019-09-300000320017us-gaap:NoncontrollingInterestMember2019-07-012019-09-300000320017us-gaap:AccumulatedOtherComprehensiveIncomeMember2019-07-012019-09-300000320017us-gaap:CommonStockMember2019-07-012019-09-300000320017us-gaap:AdditionalPaidInCapitalMember2019-07-012019-09-300000320017clbs:IschemicRepairCD34CellTechnologyMember2017-12-310000320017us-gaap:CorporateDebtSecuritiesMember2020-09-300000320017us-gaap:CorporateDebtSecuritiesMember2019-12-310000320017us-gaap:MoneyMarketFundsMember2020-09-300000320017us-gaap:MoneyMarketFundsMember2019-12-310000320017us-gaap:USStatesAndPoliticalSubdivisionsMember2020-09-300000320017us-gaap:USStatesAndPoliticalSubdivisionsMember2019-12-310000320017us-gaap:SovereignDebtMember2020-09-300000320017us-gaap:SovereignDebtMember2019-12-310000320017us-gaap:EmployeeStockOptionMember2020-01-012020-09-300000320017us-gaap:EmployeeStockOptionMember2019-01-012019-09-300000320017us-gaap:WarrantMember2020-01-012020-09-300000320017us-gaap:WarrantMember2019-01-012019-09-300000320017us-gaap:RestrictedStockUnitsRSUMember2020-01-012020-09-300000320017us-gaap:RestrictedStockUnitsRSUMember2019-01-012019-09-300000320017us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel1Member2020-09-300000320017us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMember2020-09-300000320017us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel3Member2020-09-300000320017us-gaap:FairValueMeasurementsRecurringMember2020-09-300000320017us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel1Member2019-12-310000320017us-gaap:FairValueInputsLevel2Memberus-gaap:FairValueMeasurementsRecurringMember2019-12-310000320017us-gaap:FairValueMeasurementsRecurringMemberus-gaap:FairValueInputsLevel3Member2019-12-310000320017us-gaap:FairValueMeasurementsRecurringMember2019-12-31clbs:office0000320017us-gaap:OtherAssetsMember2020-09-300000320017us-gaap:OtherAssetsMember2019-12-310000320017us-gaap:AccruedLiabilitiesMember2020-09-300000320017us-gaap:AccruedLiabilitiesMember2019-12-310000320017us-gaap:OtherNoncurrentLiabilitiesMember2020-09-300000320017us-gaap:OtherNoncurrentLiabilitiesMember2019-12-31xbrli:pure0000320017clbs:LincolnParkAgreementMember2019-06-300000320017clbs:LincolnParkAgreementMember2019-03-012019-03-310000320017clbs:H.C.WainwrightSalesAmendedAgreementMember2018-08-310000320017clbs:H.C.WainwrightSalesAmendedAgreementMember2019-06-300000320017clbs:H.C.WainwrightSalesAmendedAgreementMember2018-02-012018-02-280000320017clbs:H.C.WainwrightSalesAmendedAgreementMember2020-01-012020-09-300000320017clbs:H.C.WainwrightSalesAmendedAgreementMember2018-02-012020-09-300000320017clbs:AprilPurchaseAgreementMember2020-04-012020-04-300000320017clbs:AprilPurchaseAgreementMember2020-04-300000320017clbs:MayPurchaseAgreementMember2020-05-012020-05-310000320017clbs:MayPurchaseAgreementMember2020-05-310000320017clbs:JulyPurchaseAgreementMember2020-07-102020-07-100000320017clbs:JulyPurchaseAgreementMember2020-07-100000320017clbs:UsEquityPlanMember2019-12-310000320017clbs:UsEquityPlanMember2020-01-012020-03-3100003200172020-01-012020-03-310000320017clbs:UsEquityPlanMember2020-01-012020-09-300000320017clbs:UsEquityPlanMember2020-09-300000320017us-gaap:RestrictedStockMember2020-01-012020-09-300000320017us-gaap:RestrictedStockMember2019-01-012019-09-300000320017us-gaap:RestrictedStockUnitsRSUMember2020-01-012020-09-300000320017us-gaap:RestrictedStockUnitsRSUMember2019-01-012019-09-300000320017us-gaap:ResearchAndDevelopmentExpenseMember2020-07-012020-09-300000320017us-gaap:ResearchAndDevelopmentExpenseMember2019-07-012019-09-300000320017us-gaap:ResearchAndDevelopmentExpenseMember2020-01-012020-09-300000320017us-gaap:ResearchAndDevelopmentExpenseMember2019-01-012019-09-300000320017us-gaap:SellingGeneralAndAdministrativeExpensesMember2020-07-012020-09-300000320017us-gaap:SellingGeneralAndAdministrativeExpensesMember2019-07-012019-09-300000320017us-gaap:SellingGeneralAndAdministrativeExpensesMember2020-01-012020-09-300000320017us-gaap:SellingGeneralAndAdministrativeExpensesMember2019-01-012019-09-300000320017us-gaap:EmployeeStockOptionMember2020-09-300000320017us-gaap:RestrictedStockUnitsRSUMember2020-09-300000320017us-gaap:RestrictedStockMember2020-09-300000320017us-gaap:EmployeeStockOptionMember2020-01-012020-09-300000320017us-gaap:EmployeeStockOptionMember2019-01-012019-09-300000320017us-gaap:EmployeeStockOptionMember2019-09-3000003200172017-02-2800003200172017-05-012020-09-3000003200172017-05-012017-05-3100003200172017-12-012017-12-3100003200172018-03-012018-03-3100003200172019-05-012019-05-3100003200172020-09-012020-09-300000320017us-gaap:DomesticCountryMember2019-12-3100003200172020-04-212020-04-21

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

 

Washington, D.C. 20549

 

FORM 10-Q

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

 

FOR THE QUARTERLY PERIOD ENDED September 30, 2020

 

OR

☐			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 001-33650

 

CALADRIUS BIOSCIENCES, INC.

(Exact name of registrant as specified in its charter)

Delaware			22-2343568
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)
110 Allen Road, 2nd Floor, Basking Ridge, New Jersey			07920
(Address of principal executive offices)			(zip code)

 

Registrant’s telephone number, including area code: 908-842-0100

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 $0.001 per share			CLBS			The Nasdaq Capital Market

Securities registered pursuant to Section 12(g) of the Act: None

 

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 and post 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 definition 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 13(a) of the Exchange Act.    ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐     No ☒

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.

Class			Outstanding as of November 5th, 2020
Common stock, $0.001 par value per share			19,395,977			shares

---

Index

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This quarterly report (this "Quarterly Report") contains “forward-looking” statements within the meaning of the Private Securities Litigation Reform Act of 1995, as well as historical information. When used in this Quarterly Report, statements that are not statements of current or historical fact may be deemed to be forward-looking statements, including, without limitation, all statements related to any expectations of revenues, expenses, cash flows, earnings or losses from operations, cash required to maintain current and planned operations, capital or other financial items; any statements of the plans, strategies and objectives of management for future operations; any plans or expectations with respect to product research, development and commercialization, including regulatory approvals; any other statements of expectations, plans, intentions or beliefs; and any statements of assumptions underlying any of the foregoing. Without limiting the foregoing, the words “plan,” “project,” “forecast,” “outlook,” “intend,” “may,” “will,” “expect,” “likely,” “believe,” “could,” “anticipate,” “estimate,” “continue” or similar expressions or other variations or comparable terminology are intended to identify such forward-looking statements, although some forward-looking statements are expressed differently. We remind readers that forward-looking statements are merely predictions and therefore inherently subject to uncertainties and other factors and involve known and unknown risks that could cause the actual results, performance, levels of activity or our achievements or industry results, to be materially different from any future results, performance, levels of activity or our achievements or industry results expressed or implied by such forward-looking statements. Factors that could cause our actual results to differ materially from anticipated results expressed or implied by forward-looking statements include, among others:

•our ability to obtain sufficient capital or strategic business arrangements to fund our operations and expansion plans, including meeting our financial obligations under various licensing and other strategic arrangements, the funding of our clinical trials for product candidates, and the commercialization of the relevant technology;

•our ability to build and maintain the management and human resources infrastructure necessary to support the growth of our business;

•whether a market is established for our cell-based products and services and our ability to capture a meaningful share of this market;

•scientific, regulatory and medical developments beyond our control;

•our ability to obtain and maintain, as applicable, appropriate governmental licenses, accreditations or certifications or to comply with healthcare laws and regulations or any other adverse effect or limitations caused by government regulation of our business;

•whether any of our current or future patent applications result in issued patents, the scope of those patents and our ability to obtain and maintain other rights to technology required or desirable for the conduct of our business; and our ability to commercialize products without infringing upon the claims of third-party patents;

•whether any potential strategic or financial benefits of various licensing agreements will be realized;

•the results of our development activities;

•our ability to complete our other planned clinical trials (or initiate other trials) in accordance with our estimated timelines due to delays associated with enrolling patients due to the novelty of the treatment, the size of the patient population and the need of patients to meet the inclusion criteria of the trial or otherwise;

•the extent to which the COVID-19 coronavirus may impact our business, including our clinical trials and financial condition; and

•other factors discussed in "Risk Factors" in our Annual Report on Form 10-K filed with the Securities and Exchange Commission (the "SEC") on March 5, 2020 (our "2019 Form 10-K").

The factors discussed herein, including those risks described in "Item 1A. Risk Factors" and elsewhere in our 2019 Form 10-K and in our other periodic filings with the SEC, which are available for review at www.sec.gov, could cause actual results and developments to be materially different from those expressed or implied by such statements. All forward-looking statements attributable to us are expressly qualified in their entirety by these and other factors. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date they were made. Except as required by law, we undertake no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise.

2

---

Index

TABLE OF CONTENTS

			PART I- FINANCIAL INFORMATION			Page No.
Item 1.			Financial Statements:			5
			Consolidated Balance Sheets at September 30, 2020 (unaudited) and December 31, 2019			5
			Consolidated Statements of Operations for the three and nine months ended September 30, 2020 and 2019 (unaudited)			6
			Consolidated Statements of Comprehensive Loss for the three and nine months ended September 30, 2020 and 2019 (unaudited)			7
			Consolidated Statements of Equity for the three and nine months ended September 30, 2020 and 2019 (unaudited)			8
			Consolidated Statements of Cash Flows for the nine months ended September 30, 2020 and 2019 (unaudited)			10
			Notes to Unaudited Consolidated Financial Statements			11
Item 2.			Management’s Discussion and Analysis of Financial Condition and Results of Operations			21
Item 3.			Quantitative and Qualitative Disclosures About Market Risk			27
Item 4.			Controls and Procedures			27
			PART II- OTHER INFORMATION
Item 1.			Legal Proceedings			29
Item 1A.			Risk Factors			29
Item 2.			Unregistered Sales of Equity Securities and Use of Proceeds			29
Item 3.			Defaults Upon Senior Securities			29
Item 4.			Mine Safety Disclosures			29
Item 5.			Other Information			30
Item 6.			Exhibits			30
			Signatures			31

3

---

Index

PART I. FINANCIAL INFORMATION

ITEM I. FINANCIAL STATEMENTS

Item 1. CONSOLIDATED FINANCIAL STATEMENTS

CALADRIUS BIOSCIENCES, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In thousands, except share data)

			September 30, 2020						December 31, 2019
ASSETS			(Unaudited)
Cash and cash equivalents			$	21,156					$	14,032
Marketable securities			19,113						11,125
Prepaid and other current assets			989						815
Total current assets			41,258						25,972
Property and equipment, net			67						100
Other assets			694						1,081
Total assets			$	42,019					$	27,153
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Accounts payable			$	1,105					$	1,490
Accrued liabilities			3,076						4,486
Total current liabilities			4,181						5,976
Other long-term liabilities			351						624
Total liabilities			4,532						6,600
Commitments and Contingencies
Stockholders' Equity
Preferred stock, authorized, 20,000,000 shares Series B convertible redeemable preferred stock liquidation value, 0.001 share of common stock, $0.01 par value; 825,000 shares designated; issued and outstanding, 10,000 shares at September 30, 2020 and December 31, 2019, respectively			—						—
Common stock, $0.001 par value, authorized 500,000,000 shares; issued and outstanding, 19,407,057 and 10,528,689 shares at September 30, 2020 and December 31, 2019, respectively			19						11
Additional paid-in capital			458,560						438,911
Treasury stock, at cost; 11,080 shares at September 30, 2020 and December 31, 2019			(708)						(708)
Accumulated deficit			(420,119)						(417,400)
Accumulated other comprehensive (loss) income			(12)						2
Total Caladrius Biosciences, Inc. stockholders' equity			37,740						20,816
Noncontrolling interests			(253)						(263)
Total stockholders' equity			37,487						20,553
Total liabilities and stockholders' equity			$	42,019					$	27,153

See accompanying notes to consolidated financial statements.

4

---

Index

CALADRIUS BIOSCIENCES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

 (Unaudited)

(In thousands, except per share data)

			Three Months Ended September 30,												Nine Months Ended September 30,
			2020						2019						2020						2019
Operating Expenses:
Research and development			$	3,029					$	3,004					$	6,346					$	8,030
General and administrative			2,321						2,068						7,353						6,980
Total operating expenses			5,350						5,072						13,699						15,010
Operating loss			(5,350)						(5,072)						(13,699)						(15,010)
Other income:
Investment income, net			25						175						118						611
Total other income			25						175						118						611
Net loss before benefit from income taxes and noncontrolling interests			(5,325)						(4,897)						(13,581)						(14,399)
Benefit from income taxes			—						—						(10,872)						—
Net loss			$	(5,325)					$	(4,897)					$	(2,709)					$	(14,399)
Less - net income attributable to noncontrolling interests			2						1						10						6
Net loss attributable to Caladrius Biosciences, Inc. common stockholders			$	(5,327)					$	(4,898)					$	(2,719)					$	(14,405)
Basic and diluted loss per share
Caladrius Biosciences, Inc. common stockholders			$	(0.29)					$	(0.47)					$	(0.19)					$	(1.40)
Weighted average common shares outstanding
Basic and diluted shares			18,597						10,411						14,116						10,279

See accompanying notes to consolidated financial statements.

5

---

Index

CALADRIUS BIOSCIENCES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(Unaudited) 

(In thousands)

			Three Months Ended September 30,												Nine Months Ended September 30,
			2020						2019						2020						2019
Net loss			$	(5,325)					$	(4,897)					$	(2,709)					$	(14,399)
Other comprehensive (loss) income:
Available for sale securities - net unrealized (loss) income			(14)						2						(14)						34
Total other comprehensive (loss) income			(14)						2						(14)						34
Comprehensive loss			(5,339)						(4,895)						(2,723)						(14,365)
Comprehensive income attributable to noncontrolling interests			2						1						10						6
Comprehensive loss attributable to Caladrius Biosciences, Inc. common stockholders			$	(5,341)					$	(4,896)					$	(2,733)					$	(14,371)

 

See accompanying notes to consolidated financial statements.

6

---

Index

CALADRIUS BIOSCIENCES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF EQUITY

(Unaudited) 

(In thousands)

			Series B Convertible Preferred Stock												Common Stock												Additional Paid in Capital						Accumulated Other Comprehensive Income (Loss)						Accumulated Deficit						Treasury Stock						Total Caladrius Biosciences, Inc. Stockholders' Equity						Non- Controlling Interest in Subsidiary						Total Equity
			Shares						Amount						Shares						Amount
Balance at December 31, 2019			10						$	—					10,529						$	11					$	438,911					$	2					$	(417,400)					$	(708)					$	20,816					$	(263)					$	20,553
Net loss			—						—						—						—						—						—						(2,719)						—						(2,719)						10						(2,709)
Unrealized loss on marketable securities			—						—						—						—						—						(14)						—						—						(14)						—						(14)
Share-based compensation			—						—						81						—						942						—						—						—						942						—						942
Net proceeds from issuance of common stock and warrants			—						—						8,797						8						18,707						—						—						—						18,715						—						18,715
Balance at September 30, 2020			10						$	—					19,407						$	19					$	458,560					$	(12)					$	(420,119)					$	(708)					$	37,740					$	(253)					$	37,487

			Series B Convertible Preferred Stock												Common Stock												Additional Paid in Capital						Accumulated Other Comprehensive Loss						Accumulated Deficit						Treasury Stock						Total Caladrius Biosciences, Inc. Stockholders' Equity						Non- Controlling Interest in Subsidiary						Total Equity
			Shares						Amount						Shares						Amount
Balance at December 31, 2018			10						$	—					9,866						$	10					$	436,433					$	(32)					$	(397,977)					$	(708)					$	37,726					$	(272)					$	37,454
Adoption of accounting standard			—						—						—						—						—						—						(62)						—						(62)						—						(62)
Net loss			—						—						—						—						—						—						(14,405)						—						(14,405)						6						(14,399)
Unrealized gain on marketable securities			—						—						—						—						—						34						—						—						34						—						34
Share-based compensation			—						—						94						—						917						—						—						—						917						—						917
Net proceeds from issuance of common stock			—						—						451						—						1,038						—						—						—						1,038						—						1,038
Balance at September 30, 2019			10						$	—					10,411						$	10					$	438,388					$	2					$	(412,444)					$	(708)					$	25,248					$	(266)					$	24,982

 

7

---

Index

			Series B Convertible Preferred Stock												Common Stock												Additional Paid in Capital						Accumulated Other Comprehensive Loss						Accumulated Deficit						Treasury Stock						Total Caladrius Biosciences, Inc. Stockholders' Equity						Non- Controlling Interest in Subsidiary						Total Equity
			Shares						Amount						Shares						Amount
Balance at June 30, 2020			10						$	—					15,585						$	16					$	449,302					$	(7)					$	(414,792)					(708)						$	33,811					$	(255)					$	33,556
Net loss			—						—						—						—						—						—						(5,327)						—						(5,327)						2						(5,325)
Unrealized loss on marketable securities			—						—						—						—						—						(5)						—						—						(5)						—						(5)
Share-based compensation			—						—						(25)						—						229						—						—						—						229						—						229
Net proceeds from issuance of common stock and warrants			—						—						3,847						3						9,029						—						—						—						9,032						—						9,032
Balance at September 30, 2020			10						$	—					19,407						$	19					$	458,560					$	(12)					$	(420,119)					(708)						$	37,740					$	(253)					$	37,487

			Series B Convertible Preferred Stock												Common Stock												Additional Paid in Capital						Accumulated Other Comprehensive Loss						Accumulated Deficit						Treasury Stock						Total Caladrius Biosciences, Inc. Stockholders' Equity						Non- Controlling Interest in Subsidiary						Total Equity
			Shares						Amount						Shares						Amount
Balance at June 30, 2019			10						$	—					10,413						$	10					$	438,133					$	—					$	(407,546)					$	(708)					$	29,889					$	(267)					$	29,622
Net loss			—						—						—						—						—						—						(4,898)						—						(4,898)						1						(4,897)
Unrealized gain on marketable securities			—						—						—						—						—						2						—						—						2						—						2
Share-based compensation			—						—						(2)						—						254						—						—						—						254						—						254
Net proceeds from issuance of common stock			—						—						—						—						1						—						—						—						1						—						1
Balance at September 30, 2019			10						$	—					10,411						$	10					$	438,388					$	2					$	(412,444)					$	(708)					$	25,248					$	(266)					$	24,982

See accompanying notes to consolidated financial statements.

 

8

---

Index

CALADRIUS BIOSCIENCES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

(In thousands)

 

			Nine Months Ended September 30,
			2020						2019
Cash flows from operating activities:
Net loss			$	(2,709)					$	(14,399)
Adjustments to reconcile net loss to net cash used in operating activities:
Share-based compensation			1,090						1,047
Depreciation and amortization			46						50
Accretion on marketable securities			172						172
Changes in operating assets and liabilities:
Prepaid and other current assets			(174)						(30)
Other assets			387						272
Accounts payable, accrued liabilities and other liabilities			(2,068)						(1,774)
Net cash used in operating activities			(3,256)						(14,662)
Cash flows from investing activities:
Purchase of marketable securities			(21,819)						(32,312)
Sale of marketable securities			13,646						48,441
Purchase of property and equipment			(14)						—
Net cash provided by (used in) investing activities			(8,187)						16,129
Cash flows from financing activities:
Tax withholding payments on net share settlement equity awards			(148)						(130)
Net proceeds from issuance of common stock			18,715						1,038
Net cash provided by financing activities			18,567						908
Net increase in cash and cash equivalents			7,124						2,375
Cash and cash equivalents at beginning of period			14,032						10,299
Cash and cash equivalents at end of period			$	21,156					$	12,674

See accompanying notes to consolidated financial statements.

9

---

Index

CALADRIUS BIOSCIENCES, INC. AND SUBSIDIARIES

 

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

Note 1 – The Business

    

Overview

    Caladrius Biosciences, Inc. (“we,” “us,” "our," “Caladrius” or the “Company”) is a clinical-stage biopharmaceutical company dedicated to the development and commercialization of cellular therapies designed to reverse disease and/or promote the regeneration of damaged tissue. The Company is developing first-in-class therapeutics based on the characteristics of naturally occurring CD34+ cells and their ability to stimulate the growth of new microvasculature. The Company's technology leverages these cells to enable the body's natural repair mechanisms using formulations unique to each medical indication.

    The Company's leadership team has decades of collective biopharmaceutical development experience and world-recognized scientific achievement in the field of cardiovascular disease, among other therapeutic areas. Its goal is to develop and commercialize products that address important unmet medical needs based on a broad and versatile portfolio of candidates. The Company's current product candidates include HONEDRA ® (formerly known as CLBS12), recipient of SAKIGAKE designation and eligible for early conditional approval in Japan for the treatment of critical limb ischemia ("CLI") based on the results of an ongoing clinical trial; CLBS14, a Regenerative Medicine Advanced Therapy ("RMAT") designated therapy for which the Company has finalized with the U.S. Food and Drug Administration (the "FDA") a protocol for a Phase 3 confirmatory trial in subjects with no-option refractory disabling angina ("NORDA"); CLBS16, the subject of a recently completed positive Phase 2 clinical trial in the U.S. for the treatment of coronary microvascular dysfunction ("CMD") and CLBS119, an emergent CD34+ stem cell therapy responding to the COVID-19 pandemic and the potentially permanent damage the virus inflicts on the lungs of many patients.

Ischemic Repair (CD34 Cell Technology)

The CD34+ cell was discovered as a result of the deliberate search for a stem cell capable of stimulating the development and/or repair of blood vessels. All tissues in the body maintain their function by replacing cells over time. In addition to the maintenance function, the body must also be capable of building new blood vessels after injury. A CD34+ cell is a stem cell that has the ability to stimulate new blood vessel formation. No other native cell discovered to date has demonstrated this same capability.

The Company’s proprietary CD34+ cell technology has led to the development of therapeutic product candidates designed to address diseases and conditions caused by ischemia. Ischemia occurs when the supply of oxygenated blood to healthy tissue is restricted. Through the administration of CD34+ cells, the Company seeks to promote the development and formation of new microvasculature and thereby increase blood flow to the impacted area. Caladrius believes that a number of conditions caused by underlying ischemic injury can be improved through its CD34+ cell technology, including but not limited to, CLI, CMD, NORDA and COVID-19 induced lung damage.

HONEDRA ® for Treatment of Critical Limb Ischemia

The Company's open-label, registration-eligible study of HONEDRA ® in Japan for the treatment of critical limb ischemia ("CLI"), a disease with no currently available approved therapy and a higher combined incidence and mortality rate than all cancers but lung cancer, has shown strong results to date. The initial responses observed in the subjects who have reached an endpoint in this open label study are consistent with a positive therapeutic effect and safety profile as reported by previously published clinical trials in Japan. Although the study's enrollment, which is targeted for completion this year, has been slowed by the pandemic's impact in Japan, the Company is encouraged by the patient pre-screening pipeline that has been identified and hopes to conclude trial enrollment during the first quarter of 2021. While the final outcome of the trial will depend on all data from all subjects, data, to date, are very encouraging.

CLBS14 for Treatment of No Option Refractory Disabling Angina (NORDA)

The Company acquired the rights to data and regulatory filings for a CD34+ cell therapy program for refractory angina that had been advanced to Phase 3 by a previous sponsor.

Based on the clinical evidence from the completed studies that a single administration of CLBS14 reduces mortality, improves angina and increases exercise capacity in patients with otherwise untreatable angina, this product received

10

---

Index

Regenerative Medicine Advanced Therapy (“RMAT”) designation from the FDA. The Company, working closely with the FDA, has finalized the design of a confirmatory Phase 3 trial which, in combination with previously filed Phase 1, 2 and 3 data, will be considered for the registration of CLBS14. Notably, this study design includes a 6-month primary endpoint and, with the benefit of the RMAT designation, the biologics license application ("BLA"), once submitted, is expected to receive a 6-month review. The Company has substantially completed the preparatory work for initiation of this trial. Caladrius will not, however, commence enrollment of patients until sufficient capital is acquired and dedicated to this program such that the Company has confidence that it can fund the trial uninterrupted through completion.

CLBS16 for Treatment of Coronary Microvascular Dysfunction

In 2017, with the assistance of a $1.9 million grant from the National Institutes of Health (Award Number R44HL135889), Caladrius initiated its program for CLBS16 for the treatment of coronary microvascular dysfunction ("CMD"), a disease that potentially afflicts millions of patients with no current targeted treatment options. That study, titled ESCaPE-CMD, was a Phase 2 proof-of-concept study that enrolled patients at the Mayo Clinic in Rochester, MN and Cedars-Sinai Medical Center in Los Angeles, CA. In June 2019, the Company announced the completion of enrollment in this study. Results of the first 17 of 20 patients enrolled in this trial who reached 6-month follow-up were presented as a rapid fire oral presentation on November 16, 2019 at the annual meeting of the American Heart Association in Philadelphia, PA by one of the principal investigators, Dr. Noel Bairey Merz, FACC, FAHA, FESC, the director of the Barbra Streisand Women's Heart Center at Cedars-Sinai in Los Angeles, CA. That data set showed a positive therapeutic effect with a statistically significant improvement in angina frequency, coronary flow reserve, Canadian Cardiovascular Society Angina Class and Seattle Questionnaire score, as well as an acceptable safety profile. The full data from that study was presented at the SCAI 2020 Scientific Sessions Virtual Conference on May 14, 2020 and the Company currently expects to initiate the next CMD trial, a Phase 2b study, by December 2020.

CLBS119 for Treatment of COVID -19 Induced Lung Damage

COVID-19 appears to damage the vasculature of the lungs and Caladrius believes that repair of that vasculature will prove necessary for patients to achieve a full recovery. Survivors of COVID-19 often remain debilitated even after leaving the hospital due to the damage caused to their lungs, and while many developmental therapies responding to the COVID-19 pandemic are appropriately targeting the SARS-CoV-2 virus itself or the manifestations of the acute phase of the illness, Caladrius is aware of no therapy that has demonstrated the ability to repair COVID-19 induced lung damage. With consistent clinical and pre-clinical evidence that CD34+ cells can repair multiple organs, including models of severe lung inflammation, the Company sought and received FDA authorization for its investigational new drug (“IND”) application for the study of CLBS119, a CD34+ cell therapy for repair of COVID-19 induced lung damage. The study began screening prospective patients for inclusion at NYU Langone Health. The planned 12-patient open-label clinical trial is designed to evaluate the safety and efficacy of a single administration of CLBS119 for the treatment and repair of COVID-19-induced lung damage in adults. The study will target patients who are experiencing hypoxia due to prior infection with SARS-CoV-2 and who require supplemental oxygen.

Additional Out-licensing Opportunities

The Company's broad intellectual property portfolio of cell therapy assets includes notable programs available for out-licensing in order to continue their clinical development. Its current long-term strategy focuses on advancing its therapies through development with the ultimate objective of obtaining market authorizations and entering commercialization, either alone or with partners, to provide treatment options to patients suffering from life-threatening medical conditions. The Company believes that it is well-positioned to realize potentially meaningful value increases within its own proprietary pipeline if the Company is successful in advancing its product candidates to their next significant development milestones.

Coronavirus Considerations

In December 2019, a novel strain of coronavirus (SARS-CoV-2), which causes COVID-19, was reported to have surfaced in China. In March 2020, the World Health Organization declared the outbreak of COVID-19 to be a pandemic, and the world's economies began to experience pronounced effects. While the disruption currently is expected to be temporary, there is uncertainty around the extent and duration of disruption, and any future related financial impact cannot be reasonably estimated at this time.

Basis of Presentation

The accompanying unaudited Consolidated Financial Statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X of the SEC for interim financial information. Accordingly, they do

11

---

Index

not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, the accompanying Consolidated Financial Statements of the Company and its subsidiaries, which are unaudited, include all normal and recurring adjustments considered necessary to present fairly the Company’s financial position as of September 30, 2020, and the results of its operations and its cash flows for the periods presented. The unaudited consolidated financial statements herein should be read together with the historical consolidated financial statements of the Company for the years ended December 31, 2019 and 2018 included in our 2019 Form 10-K. Operating results for the three and nine months ended September 30, 2020 are not necessarily indicative of the results that may be expected for the year ending December 31, 2020.

    

Use of Estimates

 

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements. Estimates also affect the reported amount of expenses during the reporting period. The Company bases its estimates on historical experience and other assumptions believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. The Company makes critical estimates and assumptions in determining stock-based awards values. Accordingly, actual results could differ from those estimates and assumptions.

 

Principles of Consolidation

 

The Consolidated Financial Statements include the accounts of Caladrius Biosciences, Inc. and its wholly owned and majority owned subsidiaries and affiliates. All intercompany activities have been eliminated in consolidation.

Note 2 – Summary of Significant Accounting Policies

 

In addition to the policies below, the Company's significant accounting policies are described in Note 2 of the Notes to Consolidated Financial Statements included in its 2019 Form 10-K. There were no changes to these policies during the three and nine months ended September 30, 2020.

Concentration of Risks

    The Company is subject to credit risk from its portfolio of cash, cash equivalents and marketable securities. Under its investment policy, the Company limits amounts invested in such securities by credit rating, maturity, industry group, investment type and issuer, except for securities issued by the U.S. government. Cash is held at major banks in the United States. Therefore, the Company is not exposed to any significant concentrations of credit risk from these financial instruments. The goals of the Company's investment policy, in order of priority, are as follows: safety and preservation of principal and diversification of risk, liquidity of investments sufficient to meet cash flow requirements, and a competitive after-tax rate of return.

Share-Based Compensation  

The Company expenses all share-based payment awards to employees, directors, and consultants, including grants of stock options, warrants, and restricted stock, over the requisite service period based on the grant date fair value of the awards. Consultant awards are remeasured each reporting period through vesting. For awards with performance-based vesting criteria, the Company estimates the probability of achievement of the performance criteria and recognizes compensation expense related to those awards expected to vest. The Company determines the fair value of option awards using the Black-Scholes option-pricing model which uses both historical and current market data to estimate the fair value. This method incorporates various assumptions such as the risk-free interest rate, expected volatility, expected dividend yield and expected life of the options or warrants. The fair value of the Company’s restricted stock and restricted stock units is based on the closing market price of the Company’s common stock on the date of grant.

New Accounting Pronouncements

12

---

Index

In June 2016, the FASB issued ASU 2016-13, Financial Instruments—Credit Losses, which will require companies to present assets held at amortized cost and available for sale debt securities net of the amount expected to be collected. The guidance requires the measurement of expected credit losses to be based on relevant information from past events, including historical experiences, current conditions and reasonable and supportable forecasts that affect collectability. The guidance was effective for fiscal years and interim periods beginning after December 15, 2019 and early adoption was permitted. The adoption of this guidance did not have a material impact on the Company's consolidated financial statements.

In July 2019, the FASB issued ASU 2019-07, "Codification Updates to SEC Sections", to codify the SEC releases that clarify and improve the disclosure and presentation requirements of a variety of codification topics, thereby eliminating certain disclosure requirements that were redundant, duplicative, overlapping, outdated, or superseded. For public companies, the amendments are effective upon issuance. The Company determined that the adoption of this new accounting guidance did not have a material impact on its consolidated financial statements and footnote disclosures.

In October 2019, the FASB issued ASU 2019-12, which affects general principles within Topic 740, Income Taxes. The amendments of ASU 2019-12 are meant to simplify and reduce the cost of accounting for income taxes. For public business entities, the amendments in this Update are effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020. The Company believes that the adoption of this new accounting guidance will not have a material impact on its financial statements and footnote disclosures.

Note 3 – Available-for-Sale-Securities

 

The following table is a summary of available-for-sale securities recorded in cash and cash equivalents or marketable securities in our Consolidated Balance Sheets (in thousands):

			September 30, 2020																								December 31, 2019
			Cost						Gross Unrealized Gains						Gross Unrealized Losses						Estimated Fair Value						Cost						Gross Unrealized Gains						Gross Unrealized Losses						Estimated Fair Value
Corporate debt securities			$	13,506					$	—					$	(11)					$	13,495					$	11,673					$	3					$	(1)					$	11,675
Money market funds			15,481						—						—						15,481						11,093						—						—						11,093
Municipal debt securities			8,613						—						(1)						8,612						—						—						—						—
Sovereign government securities			196						—						—						196						—						—						—						—
Total			$	37,796					$	—					$	(12)					$	37,784					$	22,766					$	3					$	(1)					$	22,768

Estimated fair values of available-for-sale securities are generally based on prices obtained from commercial pricing services. The following table summarizes the classification of the available-for-sale securities in our Consolidated Balance Sheets (in thousands):

			September 30, 2020						December 31, 2019
Cash and cash equivalents			$	18,671					$	11,643
Marketable securities			19,113						11,125
Total			$	37,784					$	22,768

The following table summarizes our portfolio of available-for-sale securities by contractual maturity (in thousands):

 

			September 30, 2020
			Amortized Cost						Estimated Fair Value
Less than one year			$	37,796					$	37,784
Greater than one year			—						—
Total			$	37,796					$	37,784

Note 4 – Income (Loss) Per Share

 

13

---

Index

For the three and nine months ended September 30, 2020 and 2019, the Company incurred net losses and therefore no common stock equivalents were utilized in the calculation of diluted loss per share as they are anti-dilutive. At September 30, 2020 and 2019, the Company excluded the following potentially dilutive securities (in thousands):

			September 30,
			2020						2019
Stock Options			1,105						1,095
Warrants			2,638						30
Restricted Stock Units			348						118

 

Note 5 – Fair Value Measurements

 

The fair value of financial assets and liabilities that are being measured and reported are defined as the exchange price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants in the principal market at the measurement date (exit price). The Company is required to classify fair value measurements in one of the following categories:

 

Level 1 inputs are defined as quoted prices (unadjusted) in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date.

 

Level 2 inputs are defined as inputs other than quoted prices included within Level 1 that are observable for the assets or liabilities, either directly or indirectly.

 

Level 3 inputs are defined as unobservable inputs for the assets or liabilities. Financial assets and liabilities are classified based on the lowest level of input that is significant to the fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement requires judgment and may affect the valuation of the fair value of assets and liabilities and their placement within the fair value hierarchy levels.

 

The following table sets forth by level within the fair value hierarchy the Company's financial assets that were accounted for at fair value on a recurring basis as of September 30, 2020, and December 31, 2019 (in thousands).

						September 30, 2020																								December 31, 2019
						Level 1						Level 2						Level 3						Total						Level 1						Level 2						Level 3						Total
Assets:
Marketable securities - available for sale						$	—					$	19,113					$	—					$	19,113					$	—					$	11,125					$	—					$	11,125
						$	—					$	19,113					$	—					$	19,113					$	—					$	11,125					$	—					$	11,125

Note 6 – Accrued Liabilities

Accrued liabilities as of September 30, 2020 and December 31, 2019 were as follows (in thousands):

			September 30, 2020						December 31, 2019
Salaries, employee benefits and related taxes			$	1,784					$	1,834
Operating lease liabilities -- current			359						354
CIRM upfront funding -- current			—						1,600
Other			933						698
Total			$	3,076					$	4,486

Note 7 – Operating Leases

    The Company has operating leases for two offices with terms that expire in 2022 and 2023. The Company estimates its incremental borrowing rate, at lease commencement, to determine the present value of lease payments, since most of the Company's leases do not provide an implicit rate of return. The Company recognizes lease expense on a straight-line basis over the lease term. For lease agreements entered into or reassessed after the adoption of Topic 842, the Company elected to account

14

---

Index

for non-lease components associated with its leases and lease components as a single lease component. Each of the Company's leases include options for the Company to extend the lease term and/or sub-lease space in whole or in part.

    

    Operating lease liabilities and right-of-use assets were recorded in the following captions of our balance sheet were as follows (in thousands):

			September 30, 2020						December 31, 2019
Right-of Use Assets:
Other assets			$	653					$	906
Total Right-of-Use Asset			$	653					$	906
Operating Lease Liabilities:
Accrued liabilities			$	359					$	353
Other long-term liabilities			351						624
Total Operating Lease Liabilities			$	710					$	977

    

    As of September 30, 2020, the weighted average remaining lease term for our operating leases was 2.1 years, and the weighted average discount rate for our operating leases was 9.625%. Future minimum lease payments under the lease agreements as of September 30, 2020 were as follows (in thousands):

Years ended			Operating Leases
2020			103
2021			414
2022			239
2023			27
Total lease payments			783
Less: Amounts representing interest			(73)
Present value of lease liabilities			$	710

Note 8 – Stockholders' Equity

Equity Issuances

Purchase Agreement

    In March 2019, the Company and Lincoln Park Capital Fund, LLC (“Lincoln Park”) entered into a purchase agreement (the “Purchase Agreement”) and a registration rights agreement (the “Registration Rights Agreement”), pursuant to which the Company has the right to sell to Lincoln Park shares of the Company’s common stock having an aggregate value of up to $26.0 million, subject to certain limitations and conditions set forth in the Purchase Agreement (the “Offering”). As consideration for entering into the Purchase Agreement, the Company issued to Lincoln Park an additional 181,510 shares of common stock as commitment shares.

    Pursuant to the Purchase Agreement, Lincoln Park purchased 250,000 shares of common stock, at a price of $4.00 per share, for a total gross purchase price of $1.0 million (the “Initial Purchase”) upon commencement. Thereafter, as often as every business day from and after one business day following the date of the Initial Purchase and over the 36-month term of the Purchase Agreement the Company has the right, from time to time, at its sole discretion and subject to certain conditions, to direct Lincoln Park to purchase up to 100,000 shares of common stock, with such amount increasing as the closing sale price of the common stock increases; provided Lincoln Park’s obligation under any single such purchase will not exceed $2.5 million, unless the Company and Lincoln Park mutually agree to increase the maximum amount of such single purchase (each, a “Regular Purchase”). If the Company directs Lincoln Park to purchase the maximum number of shares of common stock it then may sell in a Regular Purchase, then in addition to such Regular Purchase, and subject to certain conditions and limitations in the Purchase Agreement, the Company may direct Lincoln Park in an “accelerated purchase” to purchase an additional amount of common stock that may not exceed the lesser of (i) 300% the number of shares purchased pursuant to the corresponding Regular Purchase or (ii) 30% of the total number of shares of the Company’s common stock traded during a specified period on the applicable purchase date as set forth in the Purchase Agreement. Under certain circumstances and in accordance with the

15

---

Index

Purchase Agreement, the Company may direct Lincoln Park to purchase shares in multiple accelerated purchases on the same trading day.

    The Company controls the timing and amount of any sales of its common stock to Lincoln Park. There is no upper limit on the price per share that Lincoln Park must pay for its common stock under the Purchase Agreement, but in no event will shares be sold to Lincoln Park on a day the closing price is less than the floor price specified in the Purchase Agreement. In all instances, the Company may not sell shares of its common stock to Lincoln Park under the purchase agreement if it would result in Lincoln Park beneficially owning more than 9.99% of its common stock.

    The Purchase Agreement does not limit the Company’s ability to raise capital from other sources at the Company’s sole discretion, except that (subject to certain exceptions) the Company may not enter into any Variable Rate Transaction (as defined in the Purchase Agreement, including the issuance of any floating conversion rate or variable priced equity-like securities) during the 36 months after the date of the Purchase Agreement. The Company has the right to terminate the Purchase Agreement at any time, at no cost to the Company.

    As of September 30, 2020, the Company had not made any sales of common stock to Lincoln Park under the Purchase Agreement other than the Initial Purchase.

Common Stock Sales Agreement

    In February 2018, the Company entered into a common stock sales agreement with H.C. Wainwright & Co., LLC ("HCW") as sales agent, which was subsequently amended in August 2018 (the "Sales Agreement"), in connection with an “at the market offering” under which the Company from time to time may offer and sell shares of its common stock having an aggregate offering price of not more than $25.0 million. In March 2019, subsequent to the filing of our Annual Report on Form 10-K for the fiscal year ended December 31, 2018 (the "2018 Form 10-K"), the aggregate market value of our outstanding common stock held by non-affiliates was approximately $52.8 million. Pursuant to General Instruction I.B.6 of Form S-3, since the aggregate market value of our outstanding common stock held by non-affiliates was below $75.0 million at the time of our 2018 Form 10-K filing, the aggregate amount of securities that we were permitted to offer and sell at such time was reduced to $17.6 million, which was equal to one-third of the aggregate market value of our common stock held by non-affiliates at such time.

    Subject to the terms and conditions of the Sales Agreement, HCW will use its commercially reasonable efforts consistent with its normal trading and sales practices to sell the shares from time to time, based upon the Company's instructions, including any price, time or size limits specified by the Company. The Company has provided HCW with customary indemnification rights, and HCW will be entitled to a commission at a fixed commission rate equal to 3.0% of the gross proceeds per share sold. The Company has no obligation to sell any of the shares and may at any time suspend sales under the Sales Agreement or terminate the Sales Agreement. The Sales Agreement will terminate upon the sale of all of the shares under the Sales Agreement unless terminated earlier by either party as permitted under the Sales Agreement.

    During the nine months ended September 30, 2020, the Company issued 3,558,778 shares of common stock under the Sales Agreement for net proceeds of $8.5 million. As of September 30, 2020, the Company has issued 3,784,912 shares of common stock under the Sales Agreement for net proceeds of $9.5 million since inception.

Registered Direct Offerings

    In April 2020, the Company entered into a securities purchase agreement (the “April Purchase Agreement”) with certain investors (the “April Purchasers”). Pursuant to the terms of the April Purchase Agreement, the Company agreed to sell to the Purchasers an aggregate of 2,162,166 shares of its common stock at a purchase price equal to $2.3125 per share. In a concurrent private placement, the Company issued to the April Purchasers warrants to purchase an aggregate of 1,081,083 shares of its common stock. In connection with the registered direct offering and concurrent private placement, the Company received gross proceeds of $5.0 million. Each warrant is exercisable for one share of common stock and features an exercise price equal to $2.2500 per share. The warrants are exercisable immediately upon issuance and will expire five and one-half years from the issuance date.

    In May 2020, the Company entered into a securities purchase agreement (the “May Purchase Agreement”) with certain investors (the “May Purchasers”). Pursuant to the terms of the May Purchase Agreement, the Company agreed to sell to the May Purchasers an aggregate of 2,084,850 shares of its common stock at a purchase price equal to $2.0625 per share. In a concurrent private placement, the Company issued to the Purchasers warrants to purchase an aggregate of 1,042,425 shares of its common stock. In connection with the registered direct offering and concurrent private placement, the Company received

16

---

Index

gross proceeds of $4.3 million. Each warrant is exercisable for one share of common stock and features an exercise price equal to $2.0625 per share. The warrants are exercisable immediately upon issuance and will expire five and one-half years from the issuance date.

Private Placement

On July 10, 2020, the Company entered into a securities purchase agreement (the “Private Placement”) with certain investors (the “Private Placement Purchasers”). Pursuant to the terms of the Private Placement, the Company agreed to sell to the Private Placement Purchasers an aggregate of 969,694 shares of its common stock at a purchase price equal to $2.0625 per share, along with warrants to purchase an aggregate of 484,847 shares of its common stock. In connection with the Private Placement, the Company received gross proceeds of $2.0 million. Each warrant is exercisable for one share of common stock and features an exercise price equal to $2.0625 per share. The warrants are exercisable immediately upon issuance and will expire five and one-half years from the issuance date.

Stock Options and Warrants

    The following table summarizes the activity for stock options and warrants for the nine months ended September 30, 2020:

						Stock Options																								Warrants
						Shares						Weighted Average Exercise Price						Weighted Average Remaining Contractual Term (Years)						Aggregate Intrinsic Value (In Thousands)						Shares						Weighted Average Exercise Price						Weighted Average Remaining Contractual Term (Years)						Aggregate Intrinsic Value (In Thousands)
Outstanding at December 31, 2019						1,044,417						$	18.31					6.06						$	—					30,000						$	5.89					3.19						$	—
Changes during the period:
Granted						245,776						3.22																		2,608,355						2.14
Exercised						—						—																		—						—
Forfeited						(44,150)						3.79																		—						—
Expired						(140,635)						27.33																		—						—
Outstanding at September 30, 2020						1,105,408						$	14.39					6.24						$	—					2,638,355						$	2.18					4.98						$	—
Vested at September 30, 2020 or expected to vest in the future						1,083,355						$	14.61					6.18						$	—					2,638,355						$	2.18					4.98						$	—
Vested at September 30, 2020						816,133						$	18.13					5.34						$	—					2,638,355						$	2.18					4.98						$	—

Restricted Stock

During the nine months ended September 30, 2020 and 2019, the Company issued restricted stock for services as follows ($ in thousands):

						Nine Months Ended September 30,
						2020						2019
Number of restricted stock issued						156,184						123,564
Value of restricted stock issued						$	512					$	612

Restricted Stock Units

During the nine months ended September 30, 2020 and 2019, the Company issued restricted stock units for services as follows ($ in thousands, except share data):

			Nine Months Ended September 30,
			2020						2019
Number of restricted stock units issued			246,383						184,454
Value of restricted stock units issued			$	743					$	909

17

---

Index

The weighted average estimated fair value of restricted stock issued for services in the nine months ended September 30, 2020 and 2019 was $3.02 and $4.93 per share, respectively. The fair value of the restricted stock units was determined using the Company’s closing stock price on the date of issuance. The vesting terms of restricted stock unit issuances are generally one year, or upon the achievement of performance-based milestones.

Note 9 – Share-Based Compensation

Share-Based Compensation

We utilize share-based compensation in the form of stock options, restricted stock, and restricted stock units. The following table summarizes the components of share-based compensation expense for the three and nine months ended September 30, 2020 and 2019 (in thousands):

			Three Months Ended September 30,												Nine Months Ended September 30,
			2020						2019						2020						2019
Research and development			$	58					$	54					$	240					$	229
General and administrative			171						200						850						818
Total share-based compensation expense			$	229					$	254					$	1,090					$	1,047

Total compensation cost related to non-vested awards not yet recognized and the weighted-average periods over which the awards were expected to be recognized at September 30, 2020 were as follows (in thousands):

			Stock Options						Restricted Stock Units						Restricted Stock
Unrecognized compensation cost			$	530					$	221					$	76
Expected weighted-average period in years of compensation cost to be recognized			1.69						1.67						0.25

Total fair value of shares vested and the weighted average estimated fair values of shares granted for the nine months ended September 30, 2020 and 2019 were as follows (in thousands):

			Stock Options
			Nine Months Ended September 30,
			2020						2019
Total fair value of shares vested			$	535					$	398
Weighted average estimated fair value of shares granted			$	2.12					$	3.18

Valuation Assumptions

The fair value of stock options and warrants at the date of grant was estimated using the Black-Scholes option pricing model. The expected volatility is based upon historical volatility of the Company’s stock. The expected term for the options is based upon observation of actual time elapsed between date of grant and exercise of options for all employees. The expected term for the warrants is based upon the contractual term of the warrants.

Note 10– Research Funding

California Institute of Regenerative Medicine Grant Award

In February 2017, the California Institute for Regenerative Medicine ("CIRM") awarded the Company funds of up to $12.2 million to support the T-Rex Study. The funding is based upon the achievement of certain milestones related to the proportion of subjects enrolled in California, as well as manufacturing and development costs incurred in California. Based on the actual number of subjects enrolled in California, the total amount of funding was revised to $8.6 million, of which $8.2 million has been received through the grant project period completion. The Company received $5.7 million in initial funding in May 2017, a $1.9 million milestone payment in December 2017, a $0.3 million progress payment in March 2018, and a $0.2 million progress payment in May 2019, of which the total was amortized over the estimated award period through July 2020 as a reduction to the related research and development expenses, with the final true up payment of $46 thousand received in September 2020 and recorded as a reduction to the related research and development expenses. During the three and nine

18

---

Index

months ended September 30, 2020, the Company amortized and recognized $0.3 million and $1.6 million in credits, respectively, to research and development related to CIRM funds received. During the three and nine months ended September 30, 2019, the Company amortized and recognized $0.7 million and $2.0 million in credits, respectively, to research and development related to CIRM funds received.

Note 11 – Income Taxes

 

In assessing the realizability of deferred tax assets, including the net operating loss carryforwards ("NOLs"), the Company assesses the available positive and negative evidence to estimate if sufficient future taxable income will be generated to utilize its existing deferred tax assets.  Based on its assessment, the Company has provided a full valuation allowance against its net deferred tax assets as their future utilization remains uncertain at this time.

As of December 31, 2019, the Company had approximately $246 million of federal NOLs available to offset future taxable income expiring from 2030 through 2036. In accordance with Section 382 of the Internal Revenue code, the usage of the Company’s NOLs could be limited in the event of a change in ownership. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the period when those temporary differences become deductible. 

The Company performed an analysis and determined that it has had ownership changes of greater than 50% over a 3-year testing period. The last ownership change was determined to be in 2015. Based on a market capitalization of $124.5 million and using an applicable federal rate of 2.5%, the annual limitation would be approximately $3.0 million. Post change losses generated after June 2, 2015 would not be subject to 382 limitations.

The Company applies the FASB’s provisions for uncertain tax positions. The Company utilizes the two-step process to determine the amount of recognized tax benefit. For tax positions meeting the more-likely-than-not threshold, the amount recognized in the consolidated financial statements is the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement with the relevant tax authority. The Company recognizes interest and penalties associated with certain tax positions as a component of income tax expense.

As of September 30, 2020, management does not believe the Company has any material uncertain tax positions that would require it to measure and reflect the potential lack of sustainability of a position on audit in its financial statements. The Company will continue to evaluate its uncertain tax positions in future periods to determine if measurement and recognition in its financial statements is necessary. The Company does not believe there will be any material changes in its unrecognized tax positions over the next year.

For years prior to 2016, the federal statute of limitations is closed for assessing tax. The Company’s state tax returns remain open to examination for a period of three to four years from date of filing.

    In December 2019, the Company received preliminary approval from the New Jersey Economic Development Authority ("NJEDA") to participate in the Technology Business Tax Certificate Transfer Program (the "Program"). The Program permits qualified companies to sell a percentage of their New Jersey net operating losses ("NJ NOLs") to unrelated profitable corporations. On April 21, 2020, the Company received final approval from NJEDA to sell $11.5 million of its NJ NOLs, which was subsequently sold to a qualifying and approved buyer pursuant to the Program for net proceeds of $10.9 million. The net proceeds have been recorded as a benefit from income taxes in the consolidated financial statements.

Note 12 – Contingencies

 

Contingencies

 

From time to time, the Company is subject to legal proceedings and claims, either asserted or unasserted, that arise in the ordinary course of business. While the outcome of pending claims cannot be predicted with certainty, the Company does not believe that the outcome of any pending claims will have a material adverse effect on the Company's financial condition or operating results.

Note 13 – Subsequent Events

On November 1, 2020 Anne Whitaker became a member of the Company’s Board of Directors.

19

---

Index

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

    The following Management’s Discussion and Analysis of Financial Condition and Results of Operations contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth under “Cautionary Note Regarding Forward-Looking Statements” herein and under “Risk Factors” in our 2019 Form 10-K. The following discussion should be read in conjunction with our consolidated financial statements and related notes thereto included elsewhere in this Quarterly Report and in our 2019 Form 10-K.

 

Overview

 

    Caladrius Biosciences, Inc. (“we,” “us,” "our," “Caladrius” or the “Company”) is a clinical-stage biopharmaceutical company dedicated to the development and commercialization of cellular therapies designed to reverse disease and/or promote the regeneration of damaged tissue. We are developing first-in-class therapeutics based on the characteristics of naturally occurring CD34+ cells and their ability to stimulate the growth of new microvasculature. Our technology leverages these cells to enable the body's natural repair mechanisms using formulations unique to each medical indication.

    Our leadership team has decades of collective biopharmaceutical development experience and world-recognized scientific achievement in the field of cardiovascular disease, among other therapeutic areas. Our goal is to develop and commercialize products that address important unmet medical needs based on a broad and versatile portfolio of candidates. Our current product candidates include HONEDRA ® (formerly known as CLBS12), recipient of SAKIGAKE designation and eligible for early conditional approval in Japan for the treatment of critical limb ischemia ("CLI") based on the results of an ongoing clinical trial; CLBS14, a Regenerative Medicine Advanced Therapy ("RMAT") designated therapy for which we have finalized with the U.S. Food and Drug Administration (the "FDA") a protocol for a Phase 3 confirmatory trial in subjects with no-option refractory disabling angina ("NORDA"); CLBS16, the subject of a recently completed positive Phase 2 clinical trial in the U.S. for the treatment of coronary microvascular dysfunction ("CMD") and CLBS119, an emergent CD34+ stem cell therapy responding to the COVID-19 pandemic and the potentially permanent damage the virus inflicts on the lungs of many patients.

Ischemic Repair (CD34 Cell Technology)

The CD34+ cell was discovered as a result of the deliberate search for a stem cell capable of stimulating the development and/or repair of blood vessels. All tissues in the body maintain their function by replacing cells over time. In addition to the maintenance function, the body must also be capable of building new blood vessels after injury. A CD34+ cell is a stem cell that has the ability to stimulate new blood vessel formation. No other native cell discovered to date has demonstrated this same capability.

Our proprietary CD34+ cell technology has led to the development of therapeutic product candidates designed to address diseases and conditions caused by ischemia. Ischemia occurs when the supply of oxygenated blood to healthy tissue is restricted. Through the administration of CD34+ cells, we seek to promote the development and formation of new microvasculature and thereby increase blood flow to the impacted area. We believe that a number of conditions caused by underlying ischemic injury can be improved through our CD34+ cell technology, including but not limited to, CLI, CMD, NORDA and COVID-19 induced lung damage.

HONEDRA ® for Treatment of Critical Limb Ischemia

Our open-label, registration-eligible study of HONEDRA ® in Japan for the treatment of critical limb ischemia ("CLI"), a disease with no currently available approved therapy and a higher combined incidence and mortality rate than all cancers but lung cancer, has shown strong results to date. The initial responses observed in the subjects who have reached an endpoint in this open label study are consistent with a positive therapeutic effect and safety profile as reported by previously published clinical trials in Japan. Although the study's enrollment, which is targeted for completion this year, has been slowed by the pandemic's impact in Japan, we are encouraged by the patient pre-screening pipeline that has been identified and hope to conclude trial enrollment during the first quarter of 2021. While the final outcome of the trial will depend on all data from all subjects, data, to date, remain very encouraging.

CLBS14 for Treatment of No Option Refractory Disabling Angina (NORDA)

We acquired the rights to data and regulatory filings for a CD34+ cell therapy program for refractory angina that had been advanced to Phase 3 by a previous sponsor.

20

---

Index

Based on the clinical evidence from the completed studies that a single administration of CLBS14 reduces mortality, improves angina and increases exercise capacity in patients with otherwise untreatable angina, this product received Regenerative Medicine Advanced Therapy (“RMAT”) designation from the FDA. We, working closely with the FDA, have finalized the design of a confirmatory Phase 3 trial which, in combination with previously filed Phase 1, 2 and 3 data, will be considered for the registration of CLBS14. Notably, this study design includes a 6-month primary endpoint and, with the benefit of the RMAT designation, the biologics license application ("BLA"), once submitted, is expected to receive a 6-month review. We have substantially completed the preparatory work for initiation of this trial. We will not, however, commence enrollment of patients until sufficient capital is acquired and dedicated to this program such that we have confidence that we can fund the trial uninterrupted through completion.

CLBS16 for Treatment of Coronary Microvascular Dysfunction

In 2017, with the assistance of a $1.9 million grant from the National Institutes of Health (Award Number R44HL135889), we initiated our program for CLBS16 for the treatment of coronary microvascular dysfunction ("CMD"), a disease that potentially afflicts millions of patients with no current targeted treatment options. That study, titled ESCaPE-CMD, was a Phase 2 proof-of-concept study that enrolled patients at the Mayo Clinic in Rochester, MN and Cedars-Sinai Medical Center in Los Angeles, CA. In June 2019, we announced the completion of enrollment in this study. Results of the first 17 of 20 patients enrolled in this trial who reached 6-month follow-up were presented as a rapid fire oral presentation on November 16, 2019 at the annual meeting of the American Heart Association in Philadelphia, PA by one of the principal investigators, Dr. Noel Bairey Merz, FACC, FAHA, FESC, the director of the Barbra Streisand Women's Heart Center at Cedars-Sinai in Los Angeles, CA. That data set showed a positive therapeutic effect with a statistically significant improvement in angina frequency, coronary flow reserve, Canadian Cardiovascular Society Angina Class and Seattle Questionnaire score, as well as an acceptable safety profile. The full data from that study was presented at the SCAI 2020 Scientific Sessions Virtual Conference on May 14, 2020 and we now expect to initiate the next CMD trial, a Phase 2b study, by the end of 2020.

CLBS119 for Treatment of COVID -19 Induced Lung Damage

COVID-19 appears to damage the vasculature of the lungs and Caladrius believes that repair of that vasculature will prove necessary for patients to achieve a full recovery. Survivors of COVID-19 often remain debilitated even after leaving the hospital due to the damage caused to their lungs, and while many developmental therapies responding to the COVID-19 pandemic are appropriately targeting the SARS-CoV-2 virus itself or the manifestations of the acute phase of the illness, we are aware of no therapy that has demonstrated the ability to repair COVID-19 induced lung damage. With consistent clinical and pre-clinical evidence that CD34+ cells can repair multiple organs, including models of severe lung inflammation, we sought and received FDA authorization for its investigational new drug (“IND”) application for the study of CLBS119, a CD34+ cell therapy for repair of COVID-19 induced lung damage. The study began screening prospective patients for inclusion at NYU Langone Health. The planned 12-patient open-label clinical trial is designed to evaluate the safety and efficacy of a single administration of CLBS119 for the treatment and repair of COVID-19-induced lung damage in adults. The study will target patients who are experiencing hypoxia due to prior infection with SARS-CoV-2 and who require supplemental oxygen.

Additional Out-licensing Opportunities

Our broad intellectual property portfolio of cell therapy assets includes notable programs available for out-licensing in order to continue their clinical development. Our current long-term strategy focuses on advancing our therapies through development with the ultimate objective of obtaining market authorizations and entering commercialization, either alone or with partners, to provide treatment options to patients suffering from life-threatening medical conditions. We believe that we are well-positioned to realize potentially meaningful value increases within our own proprietary pipeline if we are successful in advancing our product candidates to their next significant development milestones.

Coronavirus Considerations

In December 2019, a novel strain of coronavirus (SARS-CoV-2), which causes COVID-19, was reported to have surfaced in China. In March 2020, the World Health Organization declared the outbreak of COVID-19 to be a pandemic, and the world's economies began to experience pronounced effects. There is uncertainty around the extent and duration of disruption, and any future related financial impact cannot be reasonably estimated at this time.

Results of Operations

 

21

---

Index

Three Months Ended September 30, 2020 Compared to Three Months Ended September 30, 2019

 

    Overall, net losses were $5.3 million for the three months ended September 30, 2020, compared to $4.9 million for the three months ended September 30, 2019.

    

Operating Expenses

For the three months ended September 30, 2020, operating expenses totaled $5.4 million compared to $5.1 million for the three months ended September 30, 2019, representing an increase of 5%. Operating expenses comprised the following:

 

•Research and development expenses were approximately $3.0 million for both the three months ended September 30, 2020 and the three months ended September 30, 2019. Research and development in both periods focused on the advancement of our ischemic repair platform and related to:

◦expenses associated with investigational new drug application and planning for commencement in the third quarter of 2020 of a pilot study of CLBS119, a CD34+ cell therapy for repair of COVID-19 induced lung damage targeting patients with severe SARS-CoV-2 infection that required ventilatory support due to respiratory failure;

◦ongoing registration-eligible study expenses for HONEDRA ® in critical limb ischemia in Japan, whereby we continue to focus spending on our patient enrollment and anticipate completing enrollment during the first quarter of 2021;

◦expenses associated with the proof-of-concept study for CLBS16 in coronary microvascular dysfunction, whereby study enrollment was completed in the second quarter of 2019 and full results reported in May 2020 and continuing efforts to advance CLBS16 into a Phase 2b study in the third quarter of 2020; and

◦expenses associated with the preparation of our confirmatory Phase 3 study of CLBS14 in NORDA in the second quarter of 2019. In late 2019, we projected that the Phase 3 study would cost approximately $70 million in external expenses over the next several years, and as a result, we elected to postpone the initiation of the study until we have confidence that we can access sufficient capital to allow us to complete the study uninterrupted.

•General and administrative expenses were approximately $2.3 million for the three months ended September 30, 2020, compared to $2.1 million for the three months ended September 30, 2019, representing an increase of 12%. Our general and administrative expenses focus on general corporate-related activities.

Historically, to minimize our use of cash, we have used a variety of equity and equity-linked instruments to compensate employees, consultants and other service providers. The use of these instruments has resulted in charges to the results of operations, which have been significant in the past.

Other Income

Total other income is primarily comprised of investment income on cash, cash equivalents and marketable securities.

 

Nine Months Ended September 30, 2020 Compared to Nine Months Ended September 30, 2019

 

    Overall, net losses were $2.7 million for the nine months ended September 30, 2020, which included a $10.9 million income tax benefit from the sale of New Jersey net operating losses, compared to net loss of $14.4 million for the nine months ended September 30, 2019.

    

Operating Expenses

For the nine months ended September 30, 2020, operating expenses totaled $13.7 million compared to $15.0 million for the nine months ended September 30, 2019, representing a decrease of 9%. Operating expenses comprised the following:

 

•Research and development expenses were approximately $6.3 million for the nine months ended September 30, 2020, compared to $8.0 million for the nine months ended September 30, 2019, representing a decrease of 21%. Research and development in both periods focused on the advancement of our ischemic repair platform and related to:

22

---

Index

◦expenses associated with investigational new drug application and planning for commencement in the third quarter of 2020 of a pilot study of CLBS119, a CD34+ cell therapy for repair of COVID-19 induced lung damage targeting patients with severe SARS-CoV-2 infection that required ventilatory support due to respiratory failure;

◦ongoing registration-eligible study expenses for HONEDRA ® in critical limb ischemia in Japan, whereby we continue to focus spending on our patient enrollment and anticipate completing enrollment during the first quarter of 2021;

◦expenses associated with the proof-of-concept study for CLBS16 in coronary microvascular dysfunction, whereby study enrollment was completed in the second quarter of 2019 and full results reported in May 2020 and continuing efforts to advance CLBS16 into a Phase 2b study in the third quarter of 2020; and

◦expenses associated with the preparation of our confirmatory Phase 3 study of CLBS14 in NORDA in the second quarter of 2019. In late 2019, we projected that the Phase 3 study would cost approximately $70 million in external expenses over the next several years, and as a result, we elected to postpone the initiation of the study until we have confidence that we can access sufficient capital to allow us to complete the study uninterrupted.

•General and administrative expenses were approximately $7.4 million for the nine months ended September 30, 2020, compared to $7.0 million for the nine months ended September 30, 2019, representing an increase of 5%. Our general and administrative expenses focus on general corporate-related activities.

Historically, to minimize our use of cash, we have used a variety of equity and equity-linked instruments to compensate employees, consultants and other service providers. The use of these instruments has resulted in charges to the results of operations, which have been significant in the past.

Other Income

Total other income is primarily comprised of investment income on cash, cash equivalents and marketable securities.

Income Tax Benefit

In April 2020, we received approval from the NJEDA to participate in the Program, whereby we qualified to sell a percentage of our NJ NOLs. We subsequently sold a portion of our NJ NOLs to a qualifying and approved buyer pursuant to the Program for net proceeds of $10.9 million.

23

---

Index

Analysis of Liquidity and Capital Resources

 

At September 30, 2020, we had cash, cash equivalents and marketable securities of approximately $40.3 million, working capital of approximately $37.1 million, and stockholders’ equity of approximately $37.7 million.

 

During the nine months ended September 30, 2020, we met our immediate cash requirements through existing cash balances. Additionally, we used equity and equity-linked instruments to pay for services and compensation.

Net cash provided by or used in operating, investing and financing activities were as follows (in thousands): 

			Nine Months Ended September 30,
			2020						2019
Net cash used in operating activities			$	(3,256)					$	(14,662)
Net cash provided by (used in) investing activities			(8,187)						16,129
Net cash provided by financing activities			18,567						908

 

Operating Activities

 

Our cash used in operating activities during the nine months ended September 30, 2020 was $3.3 million, which is comprised of (i) our net income of $2.7 million, adjusted for non-cash expenses totaling $1.3 million (which includes adjustments for equity-based compensation, depreciation and amortization, and amortization/accretion of marketable securities), and (ii) changes in operating assets and liabilities using approximately $1.9 million.

Our cash used in operating activities during the nine months ended September 30, 2019 was $14.7 million, which is comprised of (i) our net loss of $14.4 million, adjusted for non-cash expenses totaling $1.3 million (which includes adjustments for equity-based compensation, depreciation and amortization, and amortization/accretion of marketable securities), and (ii) changes in operating assets and liabilities using approximately $1.5 million.

 Investing Activities

 

Our cash used in investing activities during the nine months ended September 30, 2020 totaled $8.2 million and was primarily due to net purchases of marketable securities (net of sales of marketable securities).

Our cash provided by investing activities during the nine months ended September 30, 2019 totaled $16.1 million and was primarily due to net proceeds from sales of marketable securities (net of purchases of marketable securities).

 

Financing Activities

Our cash provided by financing activities during the nine months ended September 30, 2020 primarily consisted of (i) net proceeds of $4.5 million through the issuance of common shares and warrants in our April 2020 registered direct offering, (ii) net proceeds of $3.8 million through the issuance of common shares and warrants in our May 2020 registered direct offering, (iii) net proceeds of $1.9 million through the issuance of common shares and warrants in our July 2020 private placement offering, and (iii) net proceeds of $8.4 million through the issuance of common shares under our common stock sales agreement with H.C. Wainwright, which was partially offset by tax withholding-related payments on net share settlement equity awards to employees.

Our cash provided by financing activities during the nine months ended September 30, 2019 consisted of proceeds of $1.0 million through the issuance of 250,000 shares of our common stock under the provisions of our common stock purchase agreement with Lincoln Park Capital, which was partially offset by tax withholding-related payments on net share settlement equity awards to employees.

Liquidity and Capital Requirements Outlook

    To meet our short and long-term liquidity needs, we expect to use existing cash balances and a variety of other means. Other sources of liquidity could include additional potential issuances of debt or equity securities in public or private financings, partnerships and/or collaborations and/or sale of assets. Our history of operating losses and liquidity challenges may make it difficult for us to raise capital on acceptable terms or at all. The demand for the equity and debt of biopharmaceutical companies like ours is dependent upon many factors, including the general state of the financial markets. During times of

24

---

Index

extreme market volatility, capital may not be available on favorable terms, if at all. Our inability to obtain such additional capital could materially and adversely affect our business operations. We will also continue to seek, as appropriate, grants for scientific and clinical studies from various governmental agencies and foundations, and other sources of non-dilutive funding. We believe that our cash on hand will enable us to fund operating expenses for at least the next 12 months following the issuance of our financial statements considering the assumption that any initiation of a CLBS14 Phase 3 study is contingent on our acquisition of additional capital to fund such a study.

    In July 2020, we entered into a securities purchase agreement (the “Private Placement”) with certain investors (the “Private Placement Purchasers”). Pursuant to the terms of the Private Placement, we sold to the Private Placement Purchasers an aggregate of 969,694 shares of our common stock at a purchase price equal to $2.0625 per share, along with warrants to purchase an aggregate of 484,847 shares of our common stock. In connection with the Private Placement, we received gross proceeds of $2.0 million. Each warrant is exercisable for one share of common stock and features an exercise price equal to $2.0625 per share. The warrants are exercisable immediately upon issuance and will expire five and one-half years from the issuance date.

    In May 2020, we entered into a securities purchase agreement (the “May Purchase Agreement”) with certain investors (the “May Purchasers”). Pursuant to the terms of the May Purchase Agreement, we sold to the May Purchasers an aggregate of 2,084,850 shares of our common stock at a purchase price equal to $2.0625 per share. In a concurrent private placement, we issued to the Purchasers warrants to purchase an aggregate of 1,042,425 shares of our common stock. In connection with the registered direct offering and concurrent private placement, we received gross proceeds of $4.3 million. Each warrant is exercisable for one share of common stock and features an exercise price equal to $2.0625 per share. The warrants are exercisable immediately upon issuance and will expire five and one-half years from the issuance date.

    In April 2020, we entered into a securities purchase agreement (the “April Purchase Agreement”) with certain investors (the “April Purchasers”). Pursuant to the terms of the April Purchase Agreement, we sold to the Purchasers an aggregate of 2,162,166 shares of our common stock at a purchase price equal to $2.3125 per share. In a concurrent private placement, we issued to the April Purchasers warrants to purchase an aggregate of 1,081,083 shares of our common stock. In connection with the registered direct offering and concurrent private placement, we received gross proceeds of $5.0 million. Each warrant is exercisable for one share of common stock and features an exercise price equal to $2.2500 per share. The warrants are exercisable immediately upon issuance and will expire five and one-half years from the issuance date.

    In December 2019, we received preliminary approval from the New Jersey Economic Development Authority ("NJEDA") to participate in the Technology Business Tax Certificate Transfer Program (the "Program"). The Program permits qualified companies to sell a percentage of their New Jersey net operating losses ("NJ NOLs") to unrelated profitable corporations. On April 21, 2020, we received final approval from NJEDA, and it subsequently sold a portion of its NJ NOLs to a qualifying and approved buyer pursuant to the Program for net proceeds of $10.9 million.

In March 2019, we and Lincoln Park Capital Fund, LLC (“Lincoln Park”) entered into a purchase agreement (the “Purchase Agreement”) and a registration rights agreement (the “Registration Rights Agreement”), pursuant to which we have the right to sell to Lincoln Park shares of our common stock having an aggregate value of up to $26 million, subject to certain limitations and conditions set forth in the Purchase Agreement (the “Offering”). As consideration for entering into the Purchase Agreement, we issued to Lincoln Park an additional 181,510 shares of common stock as commitment shares. Pursuant to the Purchase Agreement, Lincoln Park purchased 250,000 shares of common stock, at a price of $4.00 per share, for a total gross purchase price of $1.0 million (the “Initial Purchase”) upon commencement. Thereafter, as often as every business day from and after one business day following the date of the Initial Purchase and over the 36-month term of the Purchase Agreement, we have the right, from time to time, at our sole discretion and subject to certain conditions, to direct Lincoln Park to purchase up to 100,000 shares of common stock, with such amount increasing as the closing sale price of the common stock increases; provided Lincoln Park’s obligation under any single such purchase will not exceed $2,500,000, unless we and Lincoln Park mutually agree to increase the maximum amount of such single purchase (each, a “Regular Purchase”). If we direct Lincoln Park to purchase the maximum number of shares of common stock it then may sell in a Regular Purchase, then in addition to such Regular Purchase, and subject to certain conditions and limitations in the Purchase Agreement, we may direct Lincoln Park in an “accelerated purchase” to purchase an additional amount of common stock that may not exceed the lesser of (i) 300% the number of shares purchased pursuant to the corresponding Regular Purchase or (ii) 30% of the total number of shares of our common stock traded during a specified period on the applicable purchase date as set forth in the Purchase Agreement. Under certain circumstances and in accordance with the Purchase Agreement, we may direct Lincoln Park to purchase shares in multiple accelerated purchases on the same trading day. As of September 30, 2020, we had not made any sales of common stock to Lincoln Park under the Purchase Agreement other than the Initial Purchase.

25

---

Index

    In February 2018, we entered into a common stock sales agreement (the "Sales Agreement") with H.C. Wainwright & Co., LLC ("HCW"), as sales agent, in connection with an “at the market offering” under which we from time to time may offer and sell shares of our common stock, which was further amended in August 2018, having an aggregate offering price of up to $25 million. In March 2019, subsequent to the filing of our 2018 Form 10-K, the aggregate market value of our outstanding common stock held by non-affiliates was approximately $52.8 million. Pursuant to General Instruction I.B.6 of Form S-3, since the aggregate market value of our outstanding common stock held by non-affiliates was below $75.0 million at the time of our 2018 Form 10-K filing, the aggregate amount of securities that we were permitted to offer and sell at such time was reduced to $17.6 million (or a maximum of 4.8 million shares), which was equal to one-third of the aggregate market value of our common stock held by non-affiliates at such time. Subject to the terms and conditions of the Sales Agreement, HCW will use its commercially reasonable efforts consistent with its normal trading and sales practices to sell the shares from time to time, based upon our instructions, including any price, time or size limits specified by us. We have provided HCW with customary indemnification rights, and HCW will be entitled to a commission at a fixed commission rate equal to 3.0% of the gross proceeds per share sold. We have no obligation to sell any of the shares and may at any time suspend sales under the Sales Agreement or terminate the Sales Agreement. The Sales Agreement will terminate upon the sale of all of the shares under the Sales Agreement unless terminated earlier by either party as permitted under the Sales Agreement. During the nine months ended September 30, 2020, the Company issued 3,558,778 shares of common stock under the Sales Agreement for net proceeds of $8.5 million. As of September 30, 2020, we issued 3,784,912 shares of common stock under the Sales Agreement for net proceeds of $9.5 million.

    While we continue to seek capital through a number of means, there can be no assurance that additional financing will be available on acceptable terms, if at all, and our negotiating position in capital generating efforts may worsen as existing resources are used. Additional equity financing may be dilutive to our stockholders; debt financing, if available, may involve significant cash payment obligations and covenants that restrict our ability to operate as a business; our stock price may not reach levels necessary to induce option or warrant exercises; and asset sales may not be possible on terms we consider acceptable. If we are unable to access capital necessary to meet our long-term liquidity needs, we may have to delay the expansion of our business or raise funds on terms that we currently consider unfavorable.

Seasonality

 

We do not believe that our operations are seasonal in nature.

 

Off-Balance Sheet Arrangements

 

We do not have any off-balance sheet arrangements.

 

Critical Accounting Policies and Estimates

There have been no material changes in our critical accounting policies and estimates during the three and nine months ended September 30, 2020, compared to those reported in our 2019 Form 10-K.

ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable.

ITEM 4.  CONTROLS AND PROCEDURES

(a)  Disclosure Controls and Procedures

Disclosure controls and procedures are the controls and other procedures we have designed to ensure that information required to be disclosed in the reports that we file or submit under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in the reports that we file under the Exchange Act is accumulated and communicated to management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well-designed and operated, can provide only reasonable assurance of achieving the desired control objectives. Due to the inherent limitations of control systems, not all misstatements may be detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of a simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by

26

---

Index

collusion of two or more people, or by management override of the control. Controls and procedures can only provide reasonable, not absolute, assurance that the above objectives have been met.

As of September 30, 2020, we carried out an evaluation, with the participation of our management, including our principal executive officer and principal financial officer, of the effectiveness of our disclosure controls and procedures pursuant to Rule 13a-15(e) and 15d-15(e) of the Exchange Act. Based on that evaluation, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures were effective, at the reasonable assurance level, in ensuring that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms and is accumulated and communicated to management, including the principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure.

(b)  Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting, as such term is defined in Exchange Act Rule 13a-15, that occurred during our last quarter to which this Quarterly Report relates that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

27

---

Index

PART II

OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

There are no material changes to the disclosures previously reported in our 2019 Form 10-K.

ITEM 1A. RISK FACTORS

Other than as set forth below, there have been no material changes to the risk factors previously reported in our 2019 Form 10-K. See the risk factors set forth in our 2019 Annual Report on Form 10-K under the caption "Item 1 A - Risk Factors."

Pandemics such as the coronavirus (COVID-19) could have an adverse impact on our developmental programs and our financial condition.

In December 2019, a novel strain of coronavirus (COVID-19) was first identified in Wuhan, Hubei Province, China, which has since spread throughout the world and has become a formal pandemic. The COVID-19 pandemic has affected our operations and may materially affect our business. In response to the pandemic, we have limited operations, including implemented work from home and social distancing policies. For instance, our clinical trials may suffer from lower than anticipated patient recruitment or enrollment and we may be forced to temporarily delay ongoing trials. In addition, we risk a delay, default and/or nonperformance under our existing agreements arising from force majeure. The extent to which COVID-19 impacts our results will depend on future developments, which are highly uncertain and cannot be predicted, including new information which may emerge concerning the severity of COVID-19 and the actions to contain it or treat its impact, among others. In addition, COVID-19 has resulted in significant governmental measures being implemented to control the spread of the virus, including quarantines, travel restrictions, social distancing and business shutdowns. We have taken temporary precautionary measures intended to help minimize the risk of the virus to our employees, including temporarily requiring all employees to work remotely. We suspended non-essential travel worldwide for our employees and are discouraging employee attendance at other gatherings. These measures could negatively affect our business. For instance, temporarily requiring all employees to work remotely may induce absenteeism, disrupt our operations or increase the risk of a cybersecurity incident. COVID-19 has also caused volatility in the global financial markets and threatened a slowdown in the global economy, which may negatively affect our ability to raise additional capital on attractive terms or at all. The extent to which COVID-19 may impact our business will depend on future developments, which are highly uncertain and cannot be predicted with confidence, such as the duration of the pandemic, the severity of COVID-19 or the effectiveness of actions to contain and treat COVID-19, particularly in the geographies where we or our third party suppliers, contract manufacturers, or contract research organizations operate. We cannot presently predict the scope and severity of any potential business shutdowns or disruptions. If we or any of the third parties with whom we engage, however, were to experience shutdowns or other business disruptions, our ability to conduct our business in the manner and on the timelines presently planned could be materially and negatively affected, which could have a material adverse impact on our business and our results of operations and financial condition.

ITEM 2.  UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

In July 2020, we entered into a securities purchase agreement (the “Private Placement”) with certain investors (the “Private Placement Purchasers”). Pursuant to the terms of the Private Placement, we sold to the Private Placement Purchasers an aggregate of 969,694 unregistered shares of our common stock at a purchase price equal to $2.0625 per share, along with unregistered warrants to purchase an aggregate of 484,847 shares of our common stock. In connection with the Private Placement, we received gross proceeds of $2.0 million. Each warrant is exercisable for one share of common stock and features an exercise price equal to $2.0625 per share. The warrants are exercisable immediately upon issuance and will expire five and one-half years from the issuance date. Those shares and warrant shares were subsequently registered with the SEC pursuant to a resale registration statement made effective on August 27, 2020.

ITEM 3.  DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.

28

---

Index

ITEM 5. OTHER INFORMATION

As previously disclosed, on July 31, 2020, Mr. Joseph Talamo, the Company’s Senior Vice President and Chief Financial Officer, notified the Company of his intent to resign to pursue other career opportunities. Mr. Talamo provided transitional assistance through August 21, 2020, the effective date of his resignation. The Board of Directors of the Company appointed Dr. David J. Mazzo, Ph.D., who currently serves as the Company’s President and Chief Executive Officer, as the Company’s Principal Financial Officer, effective as of November 4, 2020. The Company expects that Dr. Mazzo will serve as the Company’s Principal Financial Officer until such time as the Company appoints a permanent Chief Financial Officer to replace Mr. Talamo.

Dr. Mazzo was appointed as the Company’s President and Chief Executive Officer on March 28, 2017. Dr. Mazzo was previously appointed as the Company’s Chief Executive Officer and as a member of the Company’s Board of Directors on January 5, 2015. Dr. Mazzo brings to the Company over 35 years of experience in the pharmaceutical industry. Prior to joining the Company, Dr. Mazzo served from August 2008 to October 2014 as Chief Executive Officer and as a member of the Board of Directors of Regado Biosciences, Inc. (Nasdaq: RGDO), a biopharmaceutical company focused on the development of novel antithrombotic drug systems for acute and sub-acute cardiovascular indications. Prior to his leading Regado, from March 2007 to April 2008, Dr. Mazzo was President, Chief Executive Officer and a director of Æterna Zentaris, Inc. (Nasdaq: AEZS), a publicly held international biopharmaceutical company. From 2003 until 2007, Dr. Mazzo served as President, Chief Executive Officer and a director of Chugai Pharma USA, LLC, a biopharmaceutical company which was the U.S. subsidiary of Chugai Pharmaceutical Co., Ltd. of Japan. Dr. Mazzo has also held senior management and executive positions in research and development and was a director of the Essex Chimie European subsidiary at Schering-Plough Corporation, a publicly held pharmaceutical company that was subsequently acquired by Merck & Co., Inc.; Hoechst Marion Roussel, Inc., the US subsidiary of Hoechst AG, which was subsequently acquired by Sanofi, a multinational pharmaceuticals company; and Rhone-Poulenc Rorer, Inc., a subsidiary of Rhone-Poulenc SA, a French pharmaceuticals company, which was subsequently acquired by Hoechst AG. He also previously served on the board of directors of Avanir Pharmaceuticals, Inc., from October 2005 through January 2015, a biotechnology company which was sold to Otsuka Holdings in 2015. He currently serves on the board of directors of VTI, Inc., a developer and seller of therapeutic contact lenses, where he has served as Chairman of the Board since February 2020, and Seneca Biopharmaceuticals, Inc., a therapeutics development company focused on CNS applications, where he has served on the board since April 2019. Dr. Mazzo served on the board ofEyePoint Pharmaceuticals, Inc. (formerly known as pSivida Corp.), a publicly held biopharmaceutical company, from October 2005 until his recent retirement from that board in June 2020. Dr. Mazzo earned a B.A. in the Honors Program (Interdisciplinary Humanities) and a B.S. in Chemistry from Villanova University. In addition, Dr. Mazzo received his M.S. in chemistry and his Ph.D. degree in Analytical Chemistry from the University of Massachusetts, Amherst. He was also a research fellow at the Ecole Polytechnique Federale de Lausanne, Switzerland.

Aside from the employment agreement pursuant to which Dr. Mazzo serves as Chief Executive Officer of the Company, there are no arrangements or understandings between Dr. Mazzo and any other persons pursuant to which he was selected as a director or officer of the Company, he has no direct or indirect material interest in any transaction required to be disclosed pursuant to Item 404(a) of Regulation S-K and there are no family relationships between Dr. Mazzo and any director or executive officer of the Company.

ITEM 6. EXHIBITS

    The Exhibit Index appearing immediately after the signature page to this Form 10-Q is incorporated herein by reference.

29

---

Index

SIGNATURES

    Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

						CALADRIUS BIOSCIENCES, INC.
November 5, 2020						By: /s/ David J. Mazzo, PhD Name: David J. Mazzo, PhD Title: President and Chief Executive Officer (Principal Executive Officer and Principal Financial Officer)

30

---

Index

CALADRIUS BIOSCIENCES, INC.

FORM 10-Q

Exhibit Index

10.1						Form of Securities Purchase Agreement, dated as of July 10, 2020, by and between Caladrius Biosciences, Inc. and each purchaser identified on the signature pages thereto (incorporated by reference to Exhibit 10.1 of the Registrant’s Form 8-K filed on July 10, 2020).
10.2						Form of Registration Rights Agreement, dated as of July 10, 2020, by and between Caladrius Biosciences, Inc. and each purchaser identified on the signature pages thereto (incorporated by reference to Exhibit 10.2 of the Registrant’s Form 8-K filed on July 10, 2020).
31.1			*			Certification of Principal Executive Officer and Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1			**			Certification of Principal Executive Officer and Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS						XBRL Instance Document
101.SCH						XBRL Taxonomy Extension Schema
101.CAL						XBRL Taxonomy Extension Calculation Linkbase
101.DEF						XBRL Taxonomy Extension Definition Linkbase
101.LAB						XBRL Taxonomy Extension Label Linkbase
101.PRE						XBRL Taxonomy Extension Presentation Linkbase

_______________

*			Filed herewith.
**			Furnished herewith.

31