What changed in this filing

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Item 2. Management’s Discussion and Analysis

2021-05-13 compared with 2020-11-13 · 83 added, 138 removed, 113 unchanged (66% of the section changed)

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The words “anticipates,” “believes,” “estimates,” “expects,” “intends,” “may,” “plans,” “projects,” “will,” “would” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words.

We may not actually achieve the plans, intentions, or expectations disclosed in our forward-looking statements and you should not place undue reliance on our forward-looking statements.

We may not actually achieve the plans, intentions, or expectations disclosed in our forward-looking statements and you should not place undue reliance on our forward-looking

Actual results or events could differ materially from the plans, intentions and expectations disclosed in the forward-looking statements that we make.

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The forward-looking statements are applicable only as of the date on which they are made, and we do not assume any obligation to update any forward-looking statements.

We are a life sciences instrumentation company in the genome analysis space that provides tools and services based on its Saphyr system to scientists and clinicians conducting genetic research and patient testing, and provides diagnostic testing for those with autism spectrum disorder (“ASD”) and other neurodevelopmental disabilities through Lineagen, Inc., our wholly owned subsidiary (“Lineagen”).

We are a life sciences instrumentation company in the genome analysis space that provides tools and services based on our Saphyr system to scientists and clinicians conducting genetic research and patient testing, and provides diagnostic testing for those with autism spectrum disorder (“ASD”) and other neurodevelopmental disabilities through Lineagen, Inc., our wholly owned subsidiary (“Lineagen”).

We develop and market the Saphyr system, a platform for ultra-sensitive and ultra-specific structural variation detection that enables researchers and clinicians to accelerate the search for new diagnostics and therapeutic targets and to streamline the study of changes in chromosomes, which is known as cytogenetics.

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We have incurred losses in each year since our inception.

Our net losses were $10.8 million and $6.4 million for the three months ended September 30, 2020 and 2019, respectively, and $29.4 million and $21.9 million for the nine months ended September 30, 2020 and 2019, respectively.

As of September 30, 2020, we had an accumulated deficit of $132.0 million.

Our net loss was $9.9 million for the three months ended March 31, 2021.

As of March 31, 2021, we had an accumulated deficit of $153.6 million.

We expect to continue to incur significant expenses and operating losses as we:

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• incur increased costs as a result of operating as a public company.

Recent Highlights

We shipped 11 Saphyr systems during the quarter ended March 31, 2021, compared to 5 systems shipped in the same quarter in 2020.

The installed base of Saphyr systems was 107 at the end of the quarter.

We sold 2,603 nanochannel array flow cells during the quarter ended March 31, 2021, which represents an increase of 275% over the same period in 2020.

We analyzed 227 samples in our Saphyr service lab.

COVID-19 Overview

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For example, to comply with applicable regulations and to safeguard the health and safety of our employees and customers, we temporarily reduced our on-site business operations, implemented work-from-home practices, and modified other business practices, including those related to employee travel and physical participation in meetings, events, and conferences.

In addition, the quarantine of our personnel and the inability to access our facilities or customer sites adversely affected, and is expected to continue to adversely affect, our operations.

During the nine months ended September 30, 2020, we experienced a $2.8 million decrease in revenue, as compared to the same period of the prior year, which is largely due to the COVID-19 pandemic.

While the COVID-19 pandemic did not prevent us from operating our business during the nine months ended September 30, 2020, we had to take steps to reduce our cash used in operations in order to offset the decrease in cash generated from sales.

For example, we implemented salary reductions for most of our salaried employees and reduced the number of working hours of most of our hourly employees by 25% from April through June of 2020.

Limited access to our facilities or customer sites has adversely affected, and is expected to continue to adversely affect, our operations.

Disruptions resulting from the COVID-19 pandemic may continue to impact our operations and overall business.

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As a result of such uncertainties, the duration of the disruption and the related impact on our business, operating results and financial condition cannot be reasonably estimated at this time.

We are continuing to closely monitor the impact of the COVID-19 pandemic on our business and are taking proactive efforts designed to protect the health and safety of our workforce, continue our business operations and advance our corporate objectives.

We are continuing to closely monitor the impact of the COVID-19 pandemic on our business and are taking proactive

efforts designed to protect the health and safety of our workforce, continue our business operations and advance our corporate objectives.

Financial Overview

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Other revenue consists of warranty and other service-based revenue.

The following table presents our revenue for the periods presented:

Three Months Ended September 30, Nine Months Ended September 30,

2020 2019 2020 2019

The following table presents our revenue for the periods indicated:

Three Months Ended March 31,

Product revenue $ 2,049,000 $ 983,000

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Total $ 3,168,000 $ 1,136,000

1 Includes 100% of the $445,000 revenue generated from Lineagen during the three and nine months ended September 30, 2020.

1 Includes $851,000 of revenue generated from Lineagen during the three months ended March 31, 2021.

The following table reflects total revenue by geography and as a percentage of total revenue, based on the billing address of our customers.

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Asia Pacific includes China, Japan, South Korea, Singapore and Australia.

Three Months Ended September 30, Nine Months Ended September 30,

2020 2019 2020 2019

$ % $ % $ % $ %

Three Months Ended March 31,

North America 2

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Total $ 3,168,000 100 % $ 1,136,000 100 %

2 Includes 100% of the $445,000 revenue generated from Lineagen during the three and nine months ended September 30, 2020 from August 21, 2020 onward.

2 Includes $851,000 of revenue generated from Lineagen during the three months ended March 31, 2021.

Cost of Revenue

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Results of Operations

Comparison of the Three Months Ended September 30, 2020 and 2019

The following table sets forth our results of operations for the three months ended September 30, 2020 and 2019:

Three Months Ended September 30, Period-to-Period Change

2020 2019 $ %

Comparison of the Three Months Ended March 31, 2021 and 2020

The following table sets forth our results of operations for the three months ended March 31, 2021 and 2020:

Three Months Ended March 31, Period-to-Period Change

Product revenue $ 2,049,000 $ 983,000 $ 1,066,000 108.4 %

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Interest expense (538,000) (761,000) 223,000 (29.3) %

Gain on forgiveness of Paycheck Protection Program loan 1,775,000 — 1,775,000 — %

Other income (expenses) (15,000) 18,000 (33,000) (183.3) %

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Net loss $ (9,947,000) $ (10,510,000) $ 563,000 (5.4) %

Total revenue decreased by $1.1 million, or 33.7%, to $2.2 million for the three months ended September 30, 2020 compared to $3.3 million for the same period in 2019.

The decrease was driven by a change in the mix of revenue between instrument sales and our reagent rental program.

Below is a summary of changes for the three months ended September 30, 2020 as compared to the same period in 2019, by region:

• North America revenue decreased by $1.0 million, or 52%;

Total revenue increased by $2.0 million, or 178.9%, to $3.2 million for the three months ended March 31, 2021 compared to $1.1 million for the same period in 2020.

The increase impacted all regions.

The increase in product sales was driven by increased demand of our reagent rental program and consumables, while the increase in service and other revenue was mostly driven by sales generated by our Lineagen subsidiary.

Furthermore, below is a summary of changes for the three months ended March 31, 2021 as compared to the same period in 2020:

• North America revenue increased by $0.8 million, or 106%;

• EMEIA revenue increased by $1.2 million, or 307%;

• Asia Pacific revenue decreased by $0.4 million, or 78%.

Revenue for the three months ended September 30, 2020 includes service revenue of $0.4 million from our recently acquired subsidiary, Lineagen, from the date of the acquisition of August 21, 2020 to September 30, 2020.

Cost of Revenue

Total cost of revenue decreased by $0.9 million, or 38.5%, to $1.5 million for the three months ended September 30, 2020 compared to $2.4 million for the same period in 2019.

The decrease was driven by a change in the mix of revenue between instrument sales and our reagent rental program.

In addition, This was partially offset by an increase in consumable units sold of 34% and cost of service revenue of $0.2 million from our recently acquired subsidiary, Lineagen, from the date of the acquisition of August 21, 2020 to September 30, 2020.

Selling, General and Administrative Expenses

Selling, general and administrative expenses increased by $4.2 million, or 94.6%, to $8.7 million for the three months ended September 30, 2020 compared to $4.4 million for the same period in 2019.

This is primarily due to an increase in wage expenses and transaction expenses related to our acquisition of Lineagen.

In addition to the 33 employees added as a result of the Lineagen acquisition, we increased headcount in our global sales and marketing teams and back-office support teams to assist with the growth of our world-wide product distribution.

Also, we incurred increased legal and accounting fees to support business operations and our international presence.

A total of $1.5 million in transaction-related expenses were recorded for the Lineagen acquisition.

Reduced travel and trade show expenses, in response to COVID travel protocols, have partially offset the increases in wages and professional services.

Comparison of the Nine Months Ended September 30, 2020 and 2019

The following table sets forth our results of operations for the nine months ended September 30, 2020 and 2019:

Nine Months Ended September 30, Period-to-Period Change

2020 2019 $ %

Product revenue $ 3,503,000 $ 6,870,000 $ (3,367,000) (49.0) %

Service and other revenue 1,010,000 470,000 540,000 114.9 %

Total revenue 4,513,000 7,340,000 (2,827,000) (38.5) %

Cost of revenue:

Cost of product revenue 2,426,000 4,883,000 (2,457,000) (50.3) %

Cost of other revenue 493,000 194,000 299,000 154.1 %

Total cost of revenue 2,919,000 5,077,000 (2,158,000) (42.5) %

Operating expenses:

Research and development 7,379,000 6,682,000 697,000 10.4 %

Selling, general and administrative 21,640,000 14,295,000 7,345,000 51.4 %

Total operating expenses 29,019,000 20,977,000 8,042,000 38.3 %

Loss from operations (27,425,000) (18,714,000) (8,711,000) 46.5 %

Other income (expenses):

Interest expense (1,911,000) (1,613,000) (298,000) 18.5 %

Loss on debt extinguishment — (1,333,000) 1,333,000 — %

Other income (expenses) — (241,000) 241,000 (100.0) %

Total other income (expenses) (1,911,000) (3,187,000) 1,276,000 (40.0) %

Loss before income taxes (29,336,000) (21,901,000) (7,435,000) 33.9 %

Provision for income taxes (40,000) (13,000) (27,000) 207.7 %

Net loss $ (29,376,000) $ (21,914,000) $ (7,462,000) 34.1 %

Total revenue decreased by $2.8 million, or 38.5%, to $4.5 million for the nine months ended September 30, 2020 compared to $7.3 million for the same period in 2019.

The decrease impacted all regions, largely driven by customers temporarily shutting down their lab operations in response to COVID-19 shelter-at-home orders and related restrictions to address the pandemic.

Below is a summary of changes for the nine months ended September 30, 2020 as compared to the same period in 2019:

• North America revenue decreased by $1.7 million, or 41%;

• EMEIA revenue decreased by $0.5 million, or 19%;

• Asia Pacific revenue decreased by $0.7 million, or 76%.

Revenue for the nine months ended September 30, 2020 includes service revenue of $0.4 million from our recently acquired subsidiary, Lineagen, from the date of the acquisition of August 21, 2020 to September 30, 2020.

• Asia Pacific revenue increased by $0.1 million, or 315%.

Revenue for the three months ended March 31, 2021, includes service revenue of $0.9 million generated from our Lineagen subsidiary.

Cost of Revenue

Total cost of revenue decreased by $2.2 million, or 42.5%, to $2.9 million for the nine months ended September 30, 2020 compared to $5.1 million for the same period in 2019.

The decrease was driven by a change in the mix of revenue between instrument sales and our reagent rental program.

This was partially offset by an increase in consumable units sold of 70% and cost of service revenue of $0.2 million from our recently acquired subsidiary, Lineagen, from the date of the acquisition of August 21, 2020 to September 30, 2020.

Research and Development Expenses

Research and development expenses increased $0.7 million, or 10.4%, to $7.4 million for the nine months ended September 30, 2020 compared to $6.7 million for the same period in 2019.

This is due to headcount additions to our development teams, but slightly offset by the salary reductions implemented in April 2020.

In addition, our materials and supply expense increased during the nine months ended September 30, 2020 due to continued efforts to innovate our product.

Total cost of revenue increased by $1.3 million, or 148.2%, to $2.1 million for the three months ended March 31, 2021 compared to $0.9 million for the same period in 2020.

The increase was primarily due to a shift in our product mix towards higher margin consumables and services.

Selling, General and Administrative Expenses

Selling, general and administrative expenses increased by $7.3 million, or 51.4%, to $21.6 million for the nine months ended September 30, 2020 compared to $14.3 million for the same period in 2019.

This is primarily due to headcount additions to our global sales and marketing teams as well as back-office support teams to assist with the growth of our world-wide product distribution.

Also, we incurred increased legal and accounting fees to support business operations and our international presence.

A total of $1.5 million in transaction-related expenses were recorded for the Lineagen acquisition.

Lastly, we recognized bad debt expense of $1.3 million during the nine months ended September 30, 2020.

Selling, general and administrative expenses increased by $2.2 million, or 29.3%, to $9.5 million for the three months ended March 31, 2021 compared to $7.4 million for the same period in 2020.

This is primarily due to additional headcount-related costs resulting from the acquisition of Lineagen, completed in August 2020.

These were offset by a decrease in bad debt expense by $1.0M when compared to the same period last year.

Interest Expense

Interest expense increased $0.3 million, or 18.5%, to $1.9 million for the nine months ended September 30, 2020 compared to $1.6 million for the same period in 2019, driven by changes in our term-loan debt.

In March 2019, the Company retired its $10 million Credit and Security Agreement with MidCap Financial (the “CSA”) and replaced it with a $20 million facility under our Loan and Security Agreement with Innovatus Life Sciences Lending Fund I, LP, as further discussed below.

Loss on Debt Extinguishment

A loss on debt extinguishment of $1.3 million was recognized during the nine months ended September 30, 2019 in association with retiring the MidCap Financial CSA prior to maturity.

Interest expense decreased by $0.2 million, or 29.3%, to $0.5 million for the three months ended March 31, 2021 compared to $0.8 million for the same period in 2020, driven by changes in our term-loan debt.

In April 2020, we paid down $5 million of the $20 million outstanding under the Innovatus LSA (as defined below), resulting in a decrease to our quarterly interest expense.

Gain on forgiveness of Paycheck Protection Program loan

A gain on forgiveness of Paycheck Protection Program loan of $1.8 million was recognized during the three months ended March 31, 2021 in connection with the forgiveness of our PPP Loan (as defined below), including all accrued interest in full.

Liquidity and Capital Resources

Since our inception, we have incurred net losses and negative cash flows from operations.

We incurred net losses of $10.8 million and $6.4 million for the three months ended September 30, 2020 and 2019, respectively, and $29.4 million and $21.9 million for the nine months ended September 30, 2020 and 2019, respectively.

As of September 30, 2020, we had an accumulated deficit of $132.0 million and cash and cash equivalents of $18.9 million.

Sources of Liquidity

Prior to our initial public offering ("IPO") in August 2018, we financed our operations principally through private placements of convertible preferred stock, convertible notes, borrowings from credit facilities, and revenue from our commercial operations.

Since our IPO, we have generated cash flows from sales of common stock and other equity instruments instead of convertible preferred stock.

Since our inception, we have incurred net losses and negative cash flows from operations.

We have primarily generated cash flows from sales of equity securities and debt financing.

We anticipate that future sources of liquidity will principally come from sales of common stock and other equity instruments, borrowings from credit facilities and revenue from our commercial operations.

See Note 6 to our condensed consolidated financial statements for a discussion of our recent equity activity and Note 5 to our condensed consolidated financial statements for a discussion of terms and provisions of our debt included elsewhere in this Quarterly Report on Form 10-Q for more information.

Follow-On Offering

In April 2020, we completed an underwritten public offering of 16,896,000 shares of its common stock and, to certain investors, pre-funded warrants to purchase 37,650,000 shares of its common stock, and accompanying common warrants to purchase up to an aggregate of 54,546,000 shares of its common stock.

Each share of common stock and pre-funded warrant to purchase one share of common stock was sold together with a common warrant to purchase one share of common stock.

public offering price of each share of common stock and accompanying common warrant was $0.33 and $0.329 for each pre-funded warrant.

The pre-funded warrants are immediately exercisable at a price of $0.001 per share of common stock.

The common warrants are immediately exercisable at a price of $0.33 per share of common stock and will expire five years from the date of issuance.

The shares of common stock and pre-funded warrants, and the accompanying common warrants, were issued separately and were immediately separable upon issuance.

The gross proceeds to us were approximately $18.0 million, before deducting underwriting discounts and commissions and other offering expenses of $1.6 million.

Shelf Registration Statement and At-the-Market Facility

In August 2020, we filed a shelf registration statement on Form S-3 with the SEC covering the offering, issuance and sale of up to $125.0 million of our securities, including up to $40.0 million of common stock pursuant to an at-the-market facility (“ATM”) with Ladenburg Thalmann & Co.

acting as sales agent.

As of September 30, 2020, we had not sold any shares of common stock under the ATM.

We incurred net losses of $9.9 million and $10.5 million for the three months ended March 31, 2021 and 2020, respectively.

As of March 31, 2021, we had an accumulated deficit of $153.6 million and cash and cash equivalents of $362.1 million.

The following table sets forth the cash flow from operating, investing and financing activities for the periods presented:

Net cash provided by (used in):

Nine Months Ended September 30,

Three Months Ended March 31,

Operating activities $ (13,904,000) $ (8,032,000)

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We have historically experienced negative cash flows from operating activities as we have developed our technology, expanded our business and built our infrastructure and this may continue in the future.

Net cash used in operating activities was $26.2 million during the nine months ended September 30, 2020 as compared to $20.1 million during the same period in 2019.

The increase in cash used in operating activities of $6.1 million is attributed to increased headcount across the business, increased professional fees to support ongoing business operations and increase our international presence, increased spending on materials and supplies, as well as $1.5 million in acquisition-related costs.

Net cash used in operating activities was $13.9 million during the three months ended March 31, 2021 as compared to $8.0 million during the same period in 2020.

The increase in cash used in operating activities of $5.9 million is primarily attributed to increased headcount-related costs resulting from the acquisition of Lineagen.

Investing Activities

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We expect to continue to incur additional costs for capital expenditures related to these efforts in future periods.

During the nine months ended September 30, 2020, cash used in investing activities related to the acquisition of Lineagen, our new wholly owned subsidiary.

During the three months ended March 31, 2021, cash used in investing activities was negligible.

Financing Activities

Net cash provided by financing activities was $30.2 million during the nine months ended September 30, 2020 as compared to the same period in 2019 where we had net proceeds from financing activities of $11.9 million, an increase of $18.3 million.

During the nine months ended September 30, 2020, we raised approximately $16.4 million in net proceeds from a follow-on offering, and $18.6 million from warrant exercises.

In addition, we received approximately $1.8 million pursuant to the PPP Loan (as defined below).

Offsets included payments of $2.3 million on our revolving line of credit and $5.0 million in term-loan principal prepayments in accordance with the Second Amendment.

During the nine months ended September 30, 2019, we had net proceeds from the issuance of the Innovatus LSA of $8.3 million as well as aggregate proceeds from Innovatus and Aspire Purchase Agreements of approximately $2.4 million.

Net cash provided by financing activities was $337.5 million during the three months ended March 31, 2021 as compared to the same period in 2020 where we had net cash used in financing activities of $1.1 million, an increase of $338.7 million.

During the three months ended March 31, 2021, we raised approximately $328.6 million in net proceeds from executing two follow-on offerings and sales under our at-the-market facility with Ladenburg Thalmann.

In addition, we raised approximately $9.7 million from warrant and option exercises.

Paycheck Protection Program

In April 2020, we received loan proceeds of approximately $1.8 million (the “PPP Loan”) pursuant to the Paycheck Protection Program (the “PPP”) under the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) administered by the

In April 2020, we received loan proceeds of approximately $1.8 million (the “PPP Loan”) pursuant to the Paycheck Protection Program (“the PPP”) under the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) administered by the U.S.

Small Business Administration (the “SBA”).

The PPP Loan is scheduled to mature in April 2022 (the “Maturity Date”), bears interest at a rate of 1.00% per annum, and is subject to the standard terms and conditions applicable to loans administered by the SBA under the CARES Act.

The PPP Loan is evidenced by a promissory note issued by East West Bank (the “Lender”).

The PPP note contains customary events of default relating to, among other things, payment defaults and breaches of representations and warranties.

Under the terms of the CARES Act, recipients of loans under the PPP can apply for and be granted forgiveness for all or a portion of loan granted under the PPP, with such forgiveness to be determined, subject to limitations, based on the use of loan proceeds for payment of payroll costs and certain other eligible costs (the “Eligible Costs”).

Pursuant to the Paycheck Protection Program Flexibility Act (the “PPPFA”), enacted on June 5, 2020, we were permitted to use loan proceeds on Eligible Costs through October 2, 2020, or the date that is 24 weeks from the PPP Loan origination date (the “Covered Period”).

However, no assurance is provided that forgiveness for any portion of the PPP Loan will be obtained.

Pursuant to the PPPFA, payments of principal and interest due under the PPP Loan are deferred until the date on which the SBA remits the forgiveness amount, if any, back to the PPP Lender, or if forgiveness isn't sought within 10 months after the last day of the Covered Period, until the date that is 10 months from the last day of the Covered Period.

The amounts outstanding under the PPP Loan may be prepaid by us at any time prior to maturity without penalty.

The PPP Loan accrued interest at a rate of 1.00% per annum, and is subject to the standard terms and conditions applicable to loans administered by the SBA under the CARES Act.

In February 2021, we applied for forgiveness of the PPP Loan, and in March 2021, the PPP Loan, including all accrued interest, was forgiven in full.

Under the terms of the CARES Act, recipients of loans under the PPP can apply for and be granted forgiveness for all or a portion of such loan granted under the PPP.

Such forgiveness will be determined, subject to limitations, based on the use of loan proceeds for payment of payroll costs and certain other eligible costs (the “Eligible Costs”).

Pursuant to the Paycheck Protection Program Flexibility Act (the “PPPFA”), enacted on June 5, 2020, we were permitted to use loan proceeds on Eligible Costs through October 2, 2020, or the date that was 24 weeks from the PPP Loan origination date (the “Covered Period”).

In order to apply for the PPP Loan, we were required to certify, among other things, that the current economic uncertainty made the PPP Loan request necessary to support our ongoing operations.

This certification further required us to take into account the maintenance of our workforce, our need for additional funding to continue operations, and our ability to access alternative forms of capital in the current market environment to offset the effects of the COVID-19 pandemic.

The PPP Loan is also described in Note 5 to our condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.

Capital Resources

We performed an analysis of our ability to continue as a going concern.

We believe, based on our current business plan, that our existing cash and cash equivalents as of September 30, 2020, plus proceeds from the recent warrant exercises described above, will be sufficient to fund our operations and obligations into the first quarter of 2021.

We plan to continue to fund our operations through cash and cash equivalents on hand, as well as through public or private equity or debt financings, strategic collaborations, licensing arrangements, asset sales, or other arrangements.

Additional funds may not be available when needed from any source or, if available, may not be available on terms that are acceptable to us.

In addition, as a result of the COVID-19 pandemic and actions taken to slow its spread, the global credit and financial markets have experienced extreme volatility, including diminished liquidity and credit availability, declines in consumer confidence, declines in economic growth, increases in unemployment rates and uncertainty about economic stability.

It is possible that further deterioration in credit and financial markets and confidence in economic conditions will occur.

If equity and credit markets deteriorate, it may affect our ability to raise equity capital, borrow on our existing facilities or make any additional necessary debt or equity financing more difficult to obtain, more costly and/or more dilutive.

In addition, the COVID-19 pandemic may compromise our ability to comply with the terms of our loan agreement and could result in an event of default.

If an event of default were to occur, our lender could accelerate our repayment obligations or enforce other rights under our loan agreements.

Any such default may also require us to seek additional or alternative financing, which may not be available on commercially reasonable terms or at all.

For example, for the three months ended September 30, 2020, we were not in compliance with our revenue covenant under the Innovatus LSA.

As a result, our lender could accelerate our repayment obligations, enforce other rights under the Innovatus LSA or require the payment of cash fees or penalties in order for us to obtain a waiver, and any of these actions could have a material adverse impact on our current business plan and our anticipated cash runway.

Even if we raise additional capital, we may also be required to modify, delay or abandon some of our plans which could have a material adverse effect on our business, operating results and financial condition and our ability to achieve our intended business objectives.

Any of these actions could materially harm our business, results of operations and future prospects.

As of March 31, 2021, we had approximately $362.1 million in cash and cash equivalents, and working capital of $363.1 million.

We have a $5.0 million revolving line of credit with Innovatus Life Sciences Lending Fund I, LP (the “Innovatus LSA”), under which no borrowings were outstanding as of March 31, 2021.

This facility is scheduled to expire in March 2024.

In addition, the carrying value of our outstanding debt as of March 31, 2021 was $14.9 million.

acting as sales agent.

During October through December 2020, we sold 27,025,384 shares of common stock under the ATM at an average share price of $0.82, and received gross proceeds of approximately $22.1 million before deducting offering costs of $573,263.

In January 2021, we sold an additional 6,298,152 shares of common stock under the ATM at an average share price of $2.68, and received gross proceeds of approximately $16.9 million before deducting offering costs of $422,034.

The Ladenburg ATM was terminated effective March 22, 2021.

On January 12, 2021, we completed an underwritten public offering of 33,368,851 shares of common stock, including 4,352,458 shares of common stock sold pursuant to the underwriters’ exercise in full of their option to purchase additional shares.

The price to the public in the offering was $3.05 per share and the underwriters purchased the shares from us pursuant to

the underwriting agreement at a price of $2.867 per share.

The gross proceeds were approximately $101.8 million before deducting underwriting discounts and commissions and other offering expenses.

On January 19, 2021, we filed an automatically effective shelf registration statement on Form S-3 (File No.

333-252216) with the SEC as a “well-known seasoned issuer.” The registration statement allows us to issue an indeterminate number or amount of common stock, preferred stock, debt securities and warrants from time to time in one or more offerings.

However, there can be no assurance that we will complete any such offerings of securities.

Any future offerings under this registration statement will be dependent upon, among other factors, market conditions, available pricing, our financial condition, investor perception of our prospects, our capital needs and our ability to maintain status as a well-known seasoned issuer.

On January 25, 2021, we completed an underwritten public offering of 38,333,352 shares of common stock, including 5,000,002 shares of common stock sold pursuant to the underwriters’ exercise in full of their option to purchase additional shares.

The price to the public in the offering was $6.00 per share and the underwriters purchased the shares from us pursuant to the underwriting agreement at a price of $5.64 per share.

The gross proceeds were approximately $230.0 million before deducting underwriting discounts and commissions and other offering expenses.

On March 23, 2021, we entered into a Sales Agreement with Cowen and Company, LLC (“Cowen”), pursuant to which we may offer and sell, from time to time at our sole discretion, shares of our common stock having an aggregate offering price of up to $350.0 million, through or to Cowen, acting as sales agent or principal.

As of the date of this filing, no shares have been issued pursuant to this Sales Agreement.

Management believes the available cash balance will be sufficient to fund operations, obligations as they become due and capital investments for at least the next twelve months.

See Note 1 to our condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for more information.

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Our management’s discussion and analysis of our financial condition and results of operations is based on our consolidated financial statements, which have been prepared in accordance with generally accepted accounting principles in the United States.

The preparation of our consolidated financial statements requires us to make estimates and assumptions that materially

affect the reported amounts of assets, liabilities, revenues and expenses and the disclosure of contingent assets and liabilities in our consolidated financial statements and accompanying notes.

The preparation of our consolidated financial statements requires us to make estimates and assumptions that materially affect the reported amounts of assets, liabilities, revenues and expenses and the disclosure of contingent assets and liabilities in our consolidated financial statements and accompanying notes.

We evaluate these estimates and judgments on an ongoing basis.

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Actual results may materially differ from these estimates under different assumptions or conditions.

There were no material changes in our critical accounting policies and estimates during the nine months ended September 30, 2020, except for the changes discussed in Note 1 to the condensed consolidated financial statements.

There were no material changes in our critical accounting policies and estimates during the three months ended March 31, 2021.

See Note 2 to the condensed consolidated financial statements in our Annual Report.

Recent Accounting Pronouncements

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QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

As a smaller reporting company, we are not required to provide the information required by this Item.

As a smaller reporting company, we are not required to provide information typically disclosed under this Item.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis