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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)
Delaware22-2343568
(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 classTrading Symbol(s)Name of each exchange on which registered
Common Stock, par value $0.001 per shareCLBS
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 filerAccelerated filer
Non-accelerated filerSmaller 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.
ClassOutstanding as of November 5th, 2020
Common stock, $0.001 par value per share19,395,977 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.
 
 
 
 
 
Notes to Unaudited Consolidated Financial Statements
Item 2.
Management’s Discussion and Analysis of Financial Condition and Results of Operations
Item 3.
Quantitative and Qualitative Disclosures About Market Risk
Item 4.
Controls and Procedures
PART II- OTHER INFORMATION
Item 1.
Legal Proceedings
Item 1A.
Risk Factors
Item 2.
Unregistered Sales of Equity Securities and Use of Proceeds
Item 3.
Defaults Upon Senior Securities
Item 4.
Mine Safety Disclosures
Item 5.
Other Information
Item 6.
Exhibits
 
Signatures
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 assets989 815 
Total current assets41,258 25,972 
Property and equipment, net67 100 
Other assets694 1,081 
Total assets$42,019 $27,153 
LIABILITIES AND STOCKHOLDERS' EQUITY  
Liabilities  
Accounts payable$1,105 $1,490 
Accrued liabilities3,076 4,486 
Total current liabilities4,181 5,976 
Other long-term liabilities351 624 
Total liabilities4,532 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 capital458,560 438,911 
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' equity37,740 20,816 
Noncontrolling interests(253)(263)
Total stockholders' equity37,487 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,
 2020201920202019
Operating Expenses:
Research and development$3,029 $3,004 $6,346 $8,030 
General and administrative2,321 2,068 7,353 6,980 
Total operating expenses5,350 5,072 13,699 15,010 
Operating loss(5,350)(5,072)(13,699)(15,010)
Other income:
Investment income, net25 175 118 611 
Total other income25 175 118 611 
Net loss before benefit from income taxes and noncontrolling interests(5,325)(4,897)(13,581)(14,399)
Benefit from income taxes  (10,872) 
Net loss$(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,
 2020201920202019
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 interests2 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 StockAdditional
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
 SharesAmountSharesAmount
Balance at December 31, 201910 $ 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, 202010 $ 19,407 $19 $458,560 $(12)$(420,119)$(708)$37,740 $(253)$37,487 
 Series B Convertible
Preferred Stock
Common StockAdditional
Paid in
Capital
Accumulated
Other
Comprehensive
Loss
Accumulated
Deficit
Treasury
Stock
Total
Caladrius Biosciences,
Inc.
Stockholders'
Equity
Non-
Controlling
Interest in
Subsidiary
Total
Equity
 SharesAmountSharesAmount
Balance at December 31, 201810 $ 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, 201910 $ 10,411 $10 $438,388 $2 $(412,444)$(708)$25,248 $(266)$24,982 
 



7

Index
 Series B Convertible
Preferred Stock
Common StockAdditional
Paid in
Capital
Accumulated
Other
Comprehensive
Loss
Accumulated
Deficit
Treasury
Stock
Total
Caladrius Biosciences,
Inc.
Stockholders'
Equity
Non-
Controlling
Interest in
Subsidiary
Total
Equity
 SharesAmountSharesAmount
Balance at June 30, 202010 $ 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, 202010 $ 19,407 $19 $458,560 $(12)$(420,119)(708)$37,740 $(253)$37,487 
 Series B Convertible
Preferred Stock
Common StockAdditional
Paid in
Capital
Accumulated
Other
Comprehensive
Loss
Accumulated
Deficit
Treasury
Stock
Total
Caladrius Biosciences,
Inc.
Stockholders'
Equity
Non-
Controlling
Interest in
Subsidiary
Total
Equity
 SharesAmountSharesAmount
Balance at June 30, 201910 $ 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, 201910 $ 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,
 20202019
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 amortization46 50 
Accretion on marketable securities172 172 
Changes in operating assets and liabilities:  
Prepaid and other current assets(174)(30)
Other assets387 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 securities13,646 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 stock18,715 1,038 
Net cash provided by financing activities18,567 908 
Net increase in cash and cash equivalents7,124 2,375 
Cash and cash equivalents at beginning of period14,032 10,299 
Cash and cash equivalents at end of period$21,156 $12,674 
See accompanying notes to consolidated financial statements.
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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
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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
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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

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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, 2020December 31, 2019
CostGross Unrealized GainsGross Unrealized LossesEstimated Fair ValueCostGross Unrealized GainsGross Unrealized LossesEstimated Fair Value
Corporate debt securities$13,506 $ $(11)$13,495 $11,673 $3 $(1)$11,675 
Money market funds15,481   15,481 11,093   11,093 
Municipal debt securities8,613  (1)8,612     
Sovereign government securities196   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, 2020December 31, 2019
Cash and cash equivalents$18,671 $11,643 
Marketable securities19,113 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 CostEstimated 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
 
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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,
 20202019
Stock Options1,105 1,095 
Warrants2,638 30 
Restricted Stock Units348 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, 2020December 31, 2019
Level 1Level 2Level 3TotalLevel 1Level 2Level 3Total
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, 2020December 31, 2019
Salaries, employee benefits and related taxes$1,784 $1,834 
Operating lease liabilities -- current359 354 
CIRM upfront funding -- current 1,600 
Other933 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
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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, 2020December 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 liabilities351 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 endedOperating Leases
2020103 
2021414 
2022239 
202327 
Total lease payments783 
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
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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
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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 OptionsWarrants
SharesWeighted Average Exercise PriceWeighted Average Remaining Contractual Term (Years)Aggregate Intrinsic Value (In Thousands)SharesWeighted Average Exercise PriceWeighted Average Remaining Contractual Term (Years)Aggregate Intrinsic Value (In Thousands)
Outstanding at December 31, 20191,044,417 $18.31 6.06$ 30,000 $5.89 3.19$ 
Changes during the period:
Granted245,776 3.22 2,608,355 2.14 
Exercised    
Forfeited(44,150)3.79   
Expired(140,635)27.33   
Outstanding at September 30, 20201,105,408 $14.39 6.24$ 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, 2020816,133 $18.13 5.34$ 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,
  20202019
Number of restricted stock issued156,184 123,564 
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,
20202019
Number of restricted stock units issued246,383 184,454 
Value of restricted stock units issued $743 $909 

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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,
2020201920202019
Research and development$58 $54 $240 $229 
General and administrative171 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 OptionsRestricted Stock UnitsRestricted Stock
Unrecognized compensation cost$530 $221 $76 
Expected weighted-average period in years of compensation cost to be recognized1.691.670.25

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,
20202019
Total fair value of shares vested$535 $398 
Weighted average estimated fair value of shares granted$