CVRx, Inc. 10-Q

Item 1. Financial Statements CVRx, INC. Condensed Consolidated Balance Sheets (In thousands, except share and per share data) (Unaudited) ​ ​ ​ ​ ​ ​ ​ ​ June 30, December 31, ​ ​ 2021 ​ 2020 Assets ​ ​ Current assets: ​ ​ Cash and cash equivalents ​ $ 47,128 ​ $ 59,112 Accounts receivable, net ​ 2,243 ​ 1,281 Inventory ​ 3,161 ​ 3,343 Prepaid expenses and other current assets ​ 1,684 ​ 605 Total current assets ​ 54,216 ​ 64,341 Property and equipment, net ​ 820 ​ 410 Other non-current assets ​ 26 ​ 26 Total assets ​ $ 55,062 ​ $ 64,777 Liabilities and Stockholders’ Equity (Deficit) ​ ​ Current liabilities: ​ ​ Accounts payable ​ $ 888 ​ $ 483 Accrued expenses ​ 3,772 ​ 3,583 Warrant liability ​ 19,051 ​ 3,911 Current portion of long-term debt ​ ​ 1,333 ​ ​ — Total current liabilities ​ 25,044 ​ 7,977 Long-term debt ​ 18,082 ​ 19,278 Other long-term liabilities ​ 884 ​ 777 Total liabilities ​ 44,010 ​ 28,032 Commitments and contingencies ​ ​ Convertible preferred stock, $ 0.01 par value, 237,370,645 authorized as of June 30, 2021 and December 31, 2020; 223,541,754 shares issued and outstanding as of June 30, 2021 and December 31, 2020 ​ 329,983 ​ 329,983 Stockholders’ equity (deficit): ​ ​ Common stock, $ 0.01 par value, 625,217,795 authorized as of June 30, 2021 and December 31, 2020; 366,342 and 360,412 shares issued and outstanding as of June 30, 2021 and December 31, 2020, respectively ​ 4 ​ 4 Additional paid-in capital, common stock ​ 59,311 ​ 58,624 Accumulated deficit ​ ( 378,051 ) ​ ( 351,676 ) Accumulated other comprehensive loss ​ ( 195 ) ​ ( 190 ) Total stockholders’ deficit ​ ( 318,931 ) ​ ( 293,238 ) Total liabilities, convertible preferred stock, and stockholders’ deficit ​ $ 55,062 ​ $ 64,777 ​ The accompanying notes are an integral part of these condensed consolidated financial statements. ​ 5 Table of Contents CVRx, INC. Condensed Consolidated Statements of Operations and Comprehensive Loss (In thousands, except share and per share data) (Unaudited) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three months ended ​ Six months ended ​ ​ June 30, ​ June 30, ​ ​ 2021 2020 2021 2020 Revenue ​ $ 3,123 ​ $ 1,250 ​ $ 5,983 ​ $ 2,968 Cost of goods sold ​ 913 ​ 345 ​ 1,780 ​ 777 Gross profit ​ 2,210 ​ 905 ​ 4,203 ​ 2,191 Operating expenses: ​ ​ ​ ​ Research and development ​ 2,255 ​ 2,131 ​ 4,005 ​ 4,400 Selling, general and administrative ​ 5,627 ​ 1,834 ​ 10,087 ​ 4,128 Total operating expenses ​ 7,882 ​ 3,965 ​ 14,092 ​ 8,528 Loss from operations ​ ( 5,672 ) ​ ( 3,060 ) ​ ( 9,889 ) ​ ( 6,337 ) Interest expense ​ ( 608 ) ​ ( 618 ) ​ ( 1,209 ) ​ ( 1,235 ) Other income (expense), net ​ ( 11,442 ) ​ 33 ​ ( 15,234 ) ​ 137 Loss before income taxes ​ ( 17,722 ) ​ ( 3,645 ) ​ ( 26,332 ) ​ ( 7,435 ) Provision for income taxes ​ ( 26 ) ​ ( 22 ) ​ ( 43 ) ​ ( 45 ) Net loss ​ ( 17,748 ) ​ ( 3,667 ) ​ ( 26,375 ) ​ ( 7,480 ) Cumulative translation adjustment ​ ( 1 ) ​ ( 11 ) ​ ( 5 ) ​ ( 21 ) Comprehensive loss ​ $ ( 17,749 ) ​ $ ( 3,678 ) ​ $ ( 26,380 ) ​ $ ( 7,501 ) Net loss per share, basic and diluted ​ $ ( 48.48 ) ​ $ ( 10.18 ) ​ $ ( 72.58 ) ​ $ ( 18.06 ) Weighted-average common shares used to compute net loss per share, basic and diluted ​ 366,066 ​ 360,238 ​ 363,397 ​ 414,225 ​ The accompanying notes are an integral part of these condensed consolidated financial statements. ​ 6 Table of Contents ​ CVRx, INC. Condensed Consolidated Statements of Convertible Preferred Stock and Stockholders’ Deficit (In thousands, except share data) (Unaudited) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Accumulated ​ Total ​ ​ Convertible ​ ​ ​ ​ ​ ​ Additional ​ ​ ​ ​ other ​ stockholders’ ​ ​ preferred stock ​ Common stock ​ paid-in ​ Accumulated ​ comprehensive ​ (deficit) ​ Shares ​ Amount Shares ​ Amount capital deficit loss equity Balances as of March 31, 2021 223,541,754 ​ $ 329,983 365,274 $ 4 ​ $ 58,687 ​ $ ( 360,303 ) ​ $ ( 194 ) ​ $ ( 301,806 ) Exercise of stock options — ​ — 1,068 — ​ — ​ — ​ — ​ — Employee stock compensation — ​ — — — ​ 624 ​ — ​ — ​ 624 Net loss for the three months ended June 30, 2021 — ​ — — — ​ — ​ ( 17,748 ) ​ — ​ ( 17,748 ) Cumulative translation adjustment — ​ — — — ​ — ​ — ​ ( 1 ) ​ ( 1 ) Balances as of June 30, 2021 223,541,754 ​ $ 329,983 366,342 $ 4 ​ $ 59,311 ​ $ ( 378,051 ) ​ $ ( 195 ) ​ $ ( 318,931 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Balances as of March 31, 2020 161,041,754 ​ $ 279,983 360,237 $ 4 ​ $ 58,741 ​ $ ( 341,380 ) ​ $ ( 199 ) ​ $ ( 282,834 ) Employee stock compensation — ​ — — — ​ 32 ​ — ​ — ​ 32 Net loss for the three months ended June 30, 2020 — ​ — — — ​ — ​ ( 3,667 ) ​ — ​ ( 3,667 ) Cumulative translation adjustment — ​ — — — ​ — ​ — ​ ( 11 ) ​ ( 11 ) Balances as of June 30, 2020 161,041,754 ​ $ 279,983 360,237 $ 4 ​ $ 58,773 ​ $ ( 345,047 ) ​ $ ( 210 ) ​ $ ( 286,480 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Accumulated ​ Total ​ ​ Convertible ​ ​ ​ ​ ​ ​ Additional ​ ​ ​ ​ other ​ stockholders’ ​ ​ preferred stock ​ Common stock ​ paid-in ​ Accumulated ​ comprehensive ​ (deficit) ​ Shares ​ Amount Shares ​ Amount capital deficit loss equity Balances as of December 31, 2020 223,541,754 ​ $ 329,983 360,412 $ 4 ​ $ 58,624 ​ $ ( 351,676 ) ​ $ ( 190 ) ​ $ ( 293,238 ) Exercise of stock options ​ — ​ — 5,930 — ​ 2 ​ — ​ — ​ 2 Employee stock compensation — ​ — — — ​ 685 ​ — ​ — ​ 685 Net loss for the six months ended June 30, 2021 — ​ — — — ​ — ​ ( 26,375 ) ​ — ​ ( 26,375 ) Cumulative translation adjustment — ​ — — — ​ — ​ — ​ ( 5 ) ​ ( 5 ) Balances as of June 30, 2021 223,541,754 ​ $ 329,983 366,342 $ 4 ​ $ 59,311 ​ $ ( 378,051 ) ​ $ ( 195 ) ​ $ ( 318,931 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Balances as of December 31, 2019 161,041,754 ​ $ 279,983 483,931 $ 5 ​ $ 58,708 ​ $ ( 337,567 ) ​ $ ( 189 ) ​ $ ( 279,043 ) Repurchase of common stock — ​ — ( 123,694 ) ( 1 ) ​ 1 ​ — ​ — ​ — Employee stock compensation — ​ — — — ​ 64 ​ — ​ — ​ 64 Net loss for the six months ended June 30, 2020 — ​ — — — ​ — ​ ( 7,480 ) ​ — ​ ( 7,480 ) Cumulative translation adjustment — ​ — — — ​ — ​ — ​ ( 21 ) ​ ( 21 ) Balances as of June 30, 2020 161,041,754 ​ $ 279,983 360,237 $ 4 ​ $ 58,773 ​ $ ( 345,047 ) ​ $ ( 210 ) ​ $ ( 286,480 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ The accompanying notes are an integral part of these condensed consolidated financial statements. ​ 7 Table of Contents CVRx, INC. Condensed Consolidated Statements of Cash Flows (In thousands) (Unaudited) ​ ​ ​ ​ ​ ​ ​ ​ Six months ended ​ ​ June 30, ​ ​ 2021 2020 Cash flows from operating activities: ​ ​ Net loss ​ $ ( 26,375 ) ​ $ ( 7,480 ) Adjustments to reconcile net loss to net cash used in operating activities: ​ ​ Stock-based compensation ​ 685 ​ 64 Depreciation of property and equipment ​ 70 ​ 35 Amortization of deferred financing costs and loan discount ​ 137 ​ 149 Changes in fair value of convertible preferred stock warrants ​ 15,140 ​ ( 17 ) Changes in operating assets and liabilities: ​ ​ Accounts receivable ​ ( 963 ) ​ ( 337 ) Inventory ​ 181 ​ ( 678 ) Prepaid expenses and other current assets ​ ( 1,080 ) ​ ( 378 ) Accounts payable ​ 405 ​ 413 Accrued expenses ​ 298 ​ 1,374 Net cash used in operating activities ​ ( 11,502 ) ​ ( 6,855 ) Cash flows from investing activities: ​ ​ Purchase of property and equipment ​ ( 480 ) ​ ( 92 ) Net cash used in investing activities ​ ( 480 ) ​ ( 92 ) Cash flows from financing activities: ​ ​ Proceeds from the exercise of common stock options ​ 2 ​ — Net cash provided by financing activities ​ 2 ​ — Effect of currency exchange on cash and cash equivalents ​ ( 4 ) ​ ( 21 ) Net change in cash and cash equivalents ​ ( 11,984 ) ​ ( 6,968 ) Cash and cash equivalents at beginning of year ​ 59,112 ​ 25,741 Cash and cash equivalents at end of period ​ $ 47,128 ​ $ 18,773 Supplemental Information: ​ ​ Cash paid for interest ​ $ 1,011 ​ $ 1,017 Cash paid for income taxes ​ 1 ​ 10 ​ The accompanying notes are an integral part of these condensed consolidated financial statements. ​ 8 Table of Contents CVRx, INC. Notes to Condensed Consolidated Financial Statements (Unaudited) 1. Business organization CVRx, Inc. (the “Company”) was incorporated in Delaware and is headquartered in Minneapolis, Minnesota. The Company has developed and is marketing a medical device, BAROSTIM NEO, for heart failure (“HF”) and resistant hypertension. The Company is focused on the sale of its product in the U.S. and Europe. Management expects that operating losses and negative cash flows from operations could continue in the foreseeable future. There is no assurance that the Company will generate sufficient product sales to produce positive earnings or cash flows. The Company anticipates that the existing cash balance together with cash generated from the collections of existing accounts receivable and revenue resulting from new and existing customers will be adequate to meet its working capital requirements for at least the next twelve months. The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary if the Company is unable to continue as a going concern. ​ 2. Summary of significant accounting policies Statement presentation and basis of consolidation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and with the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) applicable to interim financial statements. In the Company’s opinion, the accompanying unaudited condensed consolidated financial statements reflect all adjustments necessary for a fair presentation of the Company’s statements of financial position, results of operations and cash flows for the periods presented. The results of operations for the interim periods are not necessarily indicative of results that may be expected for the fiscal year as a whole or any other future period. The condensed consolidated financial statements include the accounts of CVRx, Inc., its wholly owned subsidiary, CVRx Switzerland LLC, and its sales branch in Italy. All intercompany balances and transactions have been eliminated in consolidation. JOBS Act accounting election The Company is an emerging growth company under the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”). As a result, the Company has elected to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies. Use of estimates Preparation of the condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and the accompanying notes. Actual results could differ from those estimates. 9 Table of Contents Cash and cash equivalents Cash and cash equivalents include highly liquid investments with an original maturity of three months or less. As of June 30, 2021 and 2020, cash equivalents consisted of money market funds, which are stated at cost and approximate fair value. Inventory Inventory is stated at the lower of cost or net realizable value, with cost determined on a first-in, first-out basis. The Company regularly reviews inventory quantities in consideration of actual loss experiences, projected future demand and remaining shelf life to record a provision for excess and obsolete inventory when appropriate. Revenue recognition The Company sells its products primarily through a direct sales force and to a lesser extent through a combination of sales agents and independent distributors. The Company’s revenue consists primarily of the sale of its BAROSTIM NEO, which consists of two implantable components: a pulse generator and a stimulation lead. Under Accounting Standards Codification Topic 606, Revenue from Contracts with Customers (“ASC 606”), revenue is recognized when a customer obtains control of promised goods or services, in an amount that reflects the consideration that the entity expects to receive in exchange for those goods or services. To determine revenue recognition for arrangements that an entity determines are within the scope of ASC 606, the Company performed the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the entity satisfies a performance obligation. The Company only applies the five-step model to contracts when it is probable that the Company will collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer. The Company recognizes net revenue on product sales when the customer obtains control of the Company’s product, which generally occurs at a point in time upon delivery based on the contractual shipping terms of a contract. Recent accounting pronouncements In February 2016, the Financial Accounting Standards Board issued Accounting Standards Update 2016-02, Leases (“Topic 842”) . The purpose of Topic 842 is to increase the transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet, including those previously classified as operating leases under current U.S. GAAP and disclosing key information about leasing arrangements. Topic 842 is effective for private companies and smaller reporting companies for annual periods beginning after December 15, 2021 and interim periods within fiscal years beginning after December 15, 2022. Early adoption is permitted, and the Company must elect whether the date of initial application is the beginning of the earliest comparative period presented in the financial statements, or the beginning of the period of adoption. While the Company is still in the process of determining the effect that the new standard will have on its financial position and results of operations, the Company expects to recognize additional assets and corresponding liabilities on its condensed consolidated balance sheets, as a result of its operating lease portfolio as disclosed in Note 10 — Commitments and Contingencies. 10 Table of Contents 3. Selected balance sheet information Inventory consists of the following on: ​ ​ ​ ​ ​ ​ ​ ​ ​ June 30, December 31, (in thousands) ​ 2021 ​ 2020 Raw material ​ $ 925 ​ $ 1,361 Work-in-process ​ 345 ​ 321 Finished goods ​ 1,891 ​ 1,661 ​ ​ $ 3,161 ​ $ 3,343 ​ Property and equipment, net consists of the following on: ​ ​ ​ ​ ​ ​ ​ ​ ​ June 30, December 31, (in thousands) ​ 2021 ​ 2020 Office furniture and equipment ​ $ 189 ​ $ 189 Lab equipment ​ 1,440 ​ 1,272 Computer equipment and software ​ 516 ​ 516 Leasehold improvements ​ 45 ​ 44 Capital equipment in process ​ 400 ​ 89 ​ ​ 2,590 ​ 2,110 Less: Accumulated depreciation and amortization ​ 1,770 ​ 1,700 ​ ​ $ 820 ​ $ 410 ​ Depreciation expense was $ 37,000 and $ 18,000 for the three months ended June 30, 2021 and 2020, respectively, and $ 70,000 and $ 35,000 for the six months ended June 30, 2021 and 2020, respectively. Accrued expenses consist of the following on: ​ ​ ​ ​ ​ ​ ​ ​ ​ June 30, December 31, (in thousands) ​ 2021 ​ 2020 Clinical trial and other professional fees ​ $ 1,574 ​ $ 1,690 Bonuses ​ 847 ​ 794 Paid time off ​ 693 ​ 552 Other ​ 658 ​ 547 ​ ​ $ 3,772 ​ $ 3,583 ​ ​ 4. Fair value measurements Fair value is defined as the price that would be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value maximize the use of observable inputs and minimize the use of unobservable inputs. The fair value hierarchy defines a three-level valuation hierarchy for disclosure of fair value measurements as follows: ● Level 1 — Inputs are quoted prices in active markets for identical assets or liabilities. ● Level 2 — Inputs include quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, and inputs (other than quoted prices) that are observable for the asset or liability, either directly or indirectly. ● Level 3 — Inputs are unobservable for the asset or liability. 11 Table of Contents The following table sets forth the Company’s liabilities that were measured at fair value on a recurring basis by level within the fair value hierarchy: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (in thousands) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Balance as of June 30, 2021 Level 1 Level 2 Level 3 Total Liabilities: ​ ​ ​ ​ Convertible preferred stock warrant liability ​ $ — ​ $ — ​ $ 19,051 ​ $ 19,051 Total liabilities ​ $ — ​ $ — ​ $ 19,051 ​ $ 19,051 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Balance as of December 31, 2020 Level 1 Level 2 Level 3 Total Liabilities: ​ ​ ​ ​ Convertible preferred stock warrant liability ​ $ — ​ $ — ​ $ 3,911 ​ $ 3,911 Total liabilities ​ $ — ​ $ — ​ $ 3,911 ​ $ 3,911 ​ The Company’s recurring fair value measurements using significant unobservable inputs (Level 3) relate solely to the Company’s convertible preferred stock warrant liability. In connection with the loan and security agreement entered into by the Company in September 2014 and the amendment in July 2015, the Company issued a warrant to purchase shares of Series F-2 convertible preferred stock. In connection with the loan and security agreement entered into in May 2016, the Company issued a warrant to purchase shares of Series G convertible preferred stock (“Series G Preferred Shares”). The Company issued to Biosense Webster, Inc. (“BWI”), an affiliate of Johnson & Johnson Innovation — JJDC, Inc., a warrant to purchase shares of Series E-2 convertible preferred stock that only becomes exercisable in the event of an acquisition or asset transfer involving the Company and it expires on the earlier of (i) a qualifying public company transaction, as defined, and (ii) 180 days after receipt of the data from the post-market stage of the BeAT-HF pivotal trial. In September of 2018, the Company also issued to BWI a warrant to purchase up to 10,000,000 Series G Preferred Shares with an exercise price of $ 0.01 per share. The warrant to purchase Series G Preferred Shares shall become exercisable if and only if a qualifying public company transaction is consummated and expires on the earlier of (i) an acquisition or asset transfer involving the Company or (ii) 180 days after receipt of the data from the post-market stage of the BeAT-HF pivotal trial. Accordingly, under no event will the BWI warrant to purchase Series E-2 convertible preferred stock and the BWI warrant to purchase Series G Preferred Shares both become exercisable. In connection with the closing of the initial public offering (“IPO”), the BWI warrant to purchase Series G Preferred Shares became exercisable for 607,725 shares of common stock in connection with the automatic conversion of the Series G Preferred Shares into common stock, with an exercise price of $ 0.16 per share . In connection with the loan and security agreement entered into in September 2019, the Company issued a warrant to purchase Series G Preferred Shares. The convertible preferred stock warrant liability is remeasured at each financial reporting period with any changes in fair value being recognized as a component of other income (expense), net in the condensed consolidated statements of operations and comprehensive loss. The fair value of the convertible preferred stock warrant liability was determined using the Black-Scholes option pricing model with the following inputs during the six months ended: ​ ​ ​ ​ ​ ​ ​ June 30, ​ 2021 2020 Expected life in years 0.0  –  8.3 1.5  –  9.3 Expected volatility 00.0 % –  57.9 % 46.2 %  –  60.7 % Expected dividend yield 0 % 0 % Risk-free interest rate 0.00 % –  1.21 % 0.16 % –  0.66 % ​ 12 Table of Contents The following table sets forth a summary of changes in the estimated fair value of the Company’s convertible preferred stock warrants during the six months ended: ​ ​ ​ ​ ​ ​ ​ ​ ​ June 30, (in thousands) 2021 2020 Beginning of the period ​ $ 3,911 ​ $ 3,540 Issued ​ — ​ — Change in fair value ​ 15,140 ​ ( 16 ) End of the period ​ $ 19,051 ​ $ 3,524 ​ There were no transfers in or out of Level 1, Level 2 or Level 3 fair value measurements during the periods ended June 30, 2021 and December 31, 2020. ​ 5. Debt Horizon loan agreement In September 2019, the Company entered into a loan and security agreement with Horizon Technology Finance Corporation (“Horizon loan agreement”) under which it could borrow up to a total of $ 20 million at a floating per annum rate equal to 10 % plus the amount by which the 30-day U.S. dollar LIBOR rate on the first business day of the month exceeds 2.2 %. The Horizon loan agreement initially required interest only payments through October 2021 and then 36 monthly principal and interest payments beginning in November 2021. A final payment of $ 0.7 million, equal to 3.5 % of the original principal, is due in October 2024. The Horizon loan agreement initially required the Company to maintain cash on deposit in accounts in which Horizon maintains an account control agreement of not less than $ 5.0 million. This minimum cash on deposit requirement was released in July 2020, following the satisfaction of a financing milestone. The borrowings are collateralized by all or substantially all of the assets of the Company. The Horizon loan agreement requires the payment of certain penalties if the loan is paid off prior to maturity for any reason, including pursuant to a subjective acceleration clause, and includes various restrictive covenants, including a restriction on the payment of dividends. The Company was in compliance with these covenants as of June 30, 2021. In August 2020, the Company entered into an amended agreement with Horizon to extend the interest only period through April 2022, followed by 30 monthly principal and interest payments beginning in May 2022. In connection with the Horizon loan agreement, the Company recorded $ 1.1 million of debt issuance costs and discounts as a reduction of long-term debt. Of this total, $ 0.5 million related to legal fees and an investment bank fee and $ 0.6 million related to the warrants to purchase Series G Preferred Shares issued by the Company. These warrants were exercisable on the grant date at a price of $ 0.80 per share and expire in September 2029. The Company used the Black-Scholes option pricing model to determine the grant date fair value of these warrants. The annual principal maturities of debt as of June 30, 2021 are as follows (in thousands): ​ ​ ​ ​ 2021 $ — 2022 ​ 5,333 2023 ​ 8,000 2024 ​ 6,667 ​ ​ 20,000 Less: Unamortized debt costs and discounts ​ ( 585 ) Long-term debt ​ $ 19,415 ​ ​ 13 Table of Contents 6. Stockholders’ equity Reverse Stock Split In connection with the IPO, the Company’s Board of Directors and stockholders approved a 1-for- 39.548 reverse stock split of the Company’s common stock. The reverse stock split became effective on June 22, 2021. The par value of the common stock was not adjusted as a result of the reverse stock split. Adjustments corresponding to the reverse stock split were made to the ratio at which the convertible preferred stock will convert into common stock in connection with the closing of the IPO. Accordingly, all share and per-share amounts for all periods presented in these financial statements and notes thereto have been adjusted retroactively, where applicable, to reflect the reverse stock split and the adjustment of the conversion ratio of the convertible preferred stock. Series G Preferred stock issuance During 2016, the Company issued 72,125,000 shares of Series G Preferred Shares at a price of $ 0.80 per share, for net proceeds to the Company of approximately $ 57.4 million after deducting offering expenses payable by the Company. The same Series G investors have agreed to purchase an additional $ 35.3 million of Series G Preferred Shares upon the Company’s achievement of a certain operational milestone, subject to limited closing conditions. In January 2019, May 2019, and August 2019 , the Series G investors purchased additional Series G Preferred Shares, resulting in net proceeds to the Company of $ 24.7 million. In July of 2020, the Company issued 62,500,000 additional Series G Preferred Shares, at a price of $ 0.80 per share, for net proceeds to the Company of $ 49.8 million after deducting offering expenses payable by the Company. On May 31, 2016, holders of the requisite number of the Company’s then-outstanding convertible preferred stock approved the conversion of all preferred stock into shares of the Company’s common stock in connection with a new equity financing. Accordingly, all of the Company’s then-outstanding preferred stock was converted on a one -for-one basis into shares of the Company’s common stock. Under the terms of the equity financing, each prior holder of preferred stock who purchased a required amount of securities in the new financing was entitled to exchange certain of the shares of common stock received in the conversion described above into new prime series of preferred stock corresponding to the series of preferred stock from which the common stock was previously converted. All of the previously held Series A-1, B-1, C-1, D-1, E-1 and F preferred stock had similar features as the Series A-2 preferred stock (“Series A-2 Preferred Shares”), Series B-2 preferred stock (“Series B-2 Preferred Shares”), Series C-2 preferred stock (“Series C-2 Preferred Shares”), Series D-2 preferred stock (“Series D-2 Preferred Shares”), Series E-2 preferred stock (“Series E-2 Preferred Shares”), and Series F-2 preferred stock (“Series F-2 Preferred Shares”) described below. The Series A-2, Series B-2, Series C-2, Series D-2, Series E-2, Series F-2 and Series G Preferred Shares are referred to collectively as the “Preferred Shares.” As of June 30, 2021, convertible preferred stock consists of the following (in thousands, except share data): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Aggregate ​ ​ ​ ​ Issued and ​ ​ ​ Liquidation ​ ​ Authorized ​ Outstanding ​ Carrying Value ​ Preference Series A‑2 2,454,686 2,454,686 ​ $ 4,909 ​ $ 4,909 Series B‑2 2,963,069 2,963,069 ​ 7,526 ​ 7,526 Series C‑2 4,308,394 4,308,394 ​ 13,141 ​ 13,141 Series D‑2 8,631,967 8,631,967 ​ 53,518 ​ 53,518 Series E‑2 12,114,211 10,135,320 ​ 76,826 ​ 91,806 Series F‑2 29,773,318 29,548,318 ​ 41,663 ​ 104,783 Series G 177,125,000 165,500,000 ​ 132,400 ​ 494,550 ​ 237,370,645 223,541,754 ​ $ 329,983 ​ $ 770,233 ​ 14 Table of Contents Conversion All Preferred Shares were automatically converted into common stock upon the closing of the IPO on July 2, 2021. Series G Preferred Shares were converted into common stock on a 15.819 -for-1 basis, and all other Preferred Shares were automatically converted into common stock on a 39.548 -for-1 basis. As of June 30, 2021, the Company had reserved 12,670,154 shares of unissued common stock for the purpose of effecting the conversion of the Preferred Shares. Voting rights The holders of Preferred Shares were entitled to a number of votes equal to the number of shares of common stock into which such shares of Preferred Shares are convertible. In addition, an affirmative vote of the holders of a majority of the outstanding Preferred Shares, on an as-converted basis, is required to, among other things, sell the Company and approve certain amendments to the Company’s Certificate of Incorporation. Furthermore, each series of Preferred Shares has certain series voting rights on matters affecting that series. Dividends The holders of Preferred Shares were entitled to receive noncumulative dividends in preference to any dividend on the common stock. The dividend rate for the Preferred Shares is 8 % of the applicable respective liquidation price per share. Dividends shall be payable on the Preferred Shares from funds legally available for declaration of dividends, only if and when declared by the Company’s Board of Directors. No such dividends have been declared. Liquidation preference In the event of any liquidation, dissolution or winding up of the Company, including a merger, acquisition or reorganization, where the beneficial owners of the Company’s common stock and Preferred Shares do not own a majority of the outstanding shares of the surviving, purchasing or newly resulting corporation, or where a sale occurs of all or substantially all of the assets of the Company, holders of Series G Preferred Shares are entitled to a per share distribution in preference to other holders of Preferred Shares and the common stockholders equal to $ 2.80 , plus declared but unpaid dividends. After payment of these amounts to the holders of Series G Preferred Shares, Series F-2 stockholders are entitled to a per share distribution in preference to other holders of Preferred Shares and the common stockholders equal to $ 3.53 , plus declared but unpaid dividends. After payment of these amounts to the holders of Series F-2 Preferred Shares, Series E-2 stockholders are entitled to a per share distribution in preference to other holders of Preferred Shares and the common stockholders equal to the original issue price per share of $ 7.58 , plus declared but unpaid dividends. After payment of these amounts to the holders of Series E-2 Preferred Shares, Series D-2 stockholders are entitled to a per share distribution in preference to other holders of Preferred Shares and the common stockholders equal to the original issue price per share of $ 6.20 , plus any declared but unpaid dividends. After payment of these amounts to the holders of Series D-2 Preferred Shares, holders of Series A-2 Preferred Shares, Series B-2 Preferred Shares and Series C-2 Preferred Shares are entitled to a per share distribution in preference to common stockholders equal to the original issue price per share of $ 2.00 , $ 2.54 and $ 3.05 , respectively, plus any declared but unpaid dividends. In the event that the remaining assets are insufficient to make a complete liquidation distribution to holders of the Series A-2 Preferred Shares, Series B-2 Preferred Shares and Series C-2 Preferred Shares, the holders shall share ratably in proportion to the applicable liquidation amount each holder is otherwise entitled to receive. After these distributions, the remaining assets, if any, shall be distributed pro rata among the holders of the common stock, Series F-2 Preferred Shares and Series G Preferred Shares (treating such Series F-2 Preferred Shares and Series G Preferred Shares on an as-converted basis). 15 Table of Contents The Company’s Board of Directors approved a Sale Bonus Plan (the “Plan”). Pursuant to the terms of the Plan, in certain circumstances constituting a change in control and/or partial sale or license of assets of the Company, the Company’s employees may be entitled to the payment of a bonus. This Plan is terminated upon the completion of an initial public offering. The payments under the Plan shall be made prior to the determination of any liquidation preferences payable to the holders of Preferred Shares. In connection with the IPO, which took place on July 2, 2021, this Plan was terminated. 7. Stock-Based compensation Summary of plans and activity In June 2001, the Company’s Board of Directors and stockholders established the 2001 Stock Incentive Award Plan (“2001 Plan”). Under the 2001 Plan, as amended, 2,674,749 shares of common stock had been reserved for the issuance of incentive stock options granted to employees, nonemployee directors, consultants or independent contractors. Options granted under the 2001 Plan have vesting terms that range from the day of grant to four years and expire within a maximum term of 10 years from the grant date. In connection with the IPO in 2021, the Company’s Board of Directors and stockholders established the 2021 Equity Incentive Plan (“2021 Plan”). The number of shares of common stock initially reserved for issuance under the 2021 Plan was 1,854,490 newly reserved shares in addition to the 600,373 shares that remained available for issuance under the 2001 Plan. The shares available for issuance under the 2021 Plan will automatically increase on the first day of each year, commencing January 1, 2022 and ending on (and including) January 1, 2031, in an amount equal to 5% of the total number of shares of the Company’s common stock outstanding on the last day of the calendar month before the date of each automatic increase, or such lesser number of shares as determined by the Board of Directors. The 2021 Plan provides for the issuance of stock options, stock appreciation rights, restricted stock awards, stock unit awards and other stock-based awards and cash incentive awards to employees, consultants and non-employee directors of the Company and its subsidiaries. Awards granted under the 2021 Plan will have such vesting schedules and other terms as determined by the Compensation Committee and stock options and stock appreciation rights have a maximum term of 10 years from the grant date. No further awards can be made under the 2001 Plan following the adoption of the 2021 Plan. As of June 30, 2021, there were 1,801,032 shares available for future issuance under the 2021 Plan. Options are granted at exercise prices not less than the fair market value (as determined by the Board of Directors) of the Company’s common stock on the date of grant. During the years 2008 through June 30, 2021, the Board of Directors authorized the grant of stock options for the purchase of shares of common stock to the employers of certain nonemployee directors. The options were not granted under the 2001 Plan, but terms are substantially the same as the Company’s standard form of option agreement for nonemployee directors as they have an exercise price not less than the fair market value on the grant date and vest over 48 months from the date of grant. The following is a summary of stock option activity: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted ​ ​ ​ ​ Number ​ Average ​ Aggregate ​ ​ of ​ Exercise ​ Intrinsic ​ ​ Options ​ Price ​ Value ​ ​ ​ ​ ​ ​ (in thousands) Balance as of December 31, 2020 1,473,359 ​ $ 2.77 ​ ​ Granted 1,205,236 ​ 12.80 ​ ​ Cancelled / Forfeited ( 18,623 ) ​ 5.65 ​ ​ Exercised ( 5,930 ) ​ 0.24 ​ ​ Balance as of June 30, 2021 2,654,042 ​ $ 7.24 ​ ​ $ 55,107 Options exercisable as of June 30, 2021 541,614 ​ $ 1.18 ​ ​ $ 14,525 16 Table of Contents ​ As of June 30, 2021, stock options outstanding included 9,993 options that were not granted under the 2001 Plan. For options outstanding as of June 30, 2021, the weighted average remaining contractual life was 8.5 years. For options exercisable as of June 30, 2021, the weighted average remaining contractual life was 5.4 years. In connection with the IPO, the Company’s Board of Directors and stockholders also established an Employee Stock Purchase Plan (the “ESPP”). The number of shares of common stock initially reserved for issuance under the ESPP was 278,170 . The shares available for issuance under the ESPP will automatically increase on the first day of each year, commencing January 1, 2022 and ending on (and including) January 1, 2031, in an amount equal to 1 % of the total number of shares of the Company’s common stock outstanding on the last day of the calendar month before the date of each automatic increase, or such lesser number of shares as determined by the Board of Directors. The ESPP will permit certain of the Company’s U.S. employees to purchase shares of the Company’s common stock at a price per share not less than 85 % of the l ower of (i) the closing market price per share of the Company’s common stock on the first day of the applicable purchase period or (ii) the closing market price per share of the Company’s common stock on the purchase date at the end of the applicable six-month purchase period. The Company expects the first purchase period to commence in 2022. Accordingly, as of June 30, 2021 no shares of common stock have been purchased under the ESPP. Stock-Based compensation expense The Company uses the Black-Scholes option pricing model to determine the fair value of stock options on the grant date. The Company measures stock-based compensation expense based on the grant date fair value of the award and recognizes compensation expense over the requisite service period, which is generally the vesting period. The amount of stock-based compensation expense recognized during a period is based on the portion of the awards that are ultimately expected to vest. The Company estimates pre-vesting forfeitures at the time of grant by analyzing historical data and revises those estimates in subsequent periods if actual forfeitures differ from those estimates. The following table provides the weighted average fair value of options granted to employees and the related assumptions used in the Black-Scholes option pricing model for the six months ended June 30, 2021. ​ ​ ​ ​ ​ ​ ​ June 30, ​ ​ ​ 2021 Weighted average fair value of options granted $ 5.16 ​ Expected term (in years) — non-officer employees ​ 2.7 ​ Expected term (in years) — officer employees ​ 3.0 ​ Expected volatility ​ 61.6 % to 63.4 % Expected dividend yield ​ — % Risk-free interest rate ​ 0.17 % to 0.47 % ​ The Company reviews these assumptions on a periodic basis and adjusts them, as necessary. The expected term of an award was determined based on the Company’s analysis of historical exercise behavior while taking into consideration various participant demographics and option characteristics. The expected volatility is based upon observed volatility of comparable public companies. The expected dividend yield is assumed to be zero , as the Company has never paid dividends and has no current plans to do so. The risk-free interest rate is based on the yield on U.S. Treasury securities for a period approximating the expected term of the options being valued. ​ 17 Table of Contents For the three and six months ended June 30, 2021 and 2020, the Company recognized stock-based compensation expense as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended June 30, Six Months Ended June 30, (in thousands) ​ 2021 ​ 2020 ​ 2021 ​ 2020 Selling, general & administrative ​ $ 431 ​ $ 21 ​ $ 477 ​ $ 42 Research & development ​ ​ 190 ​ 11 ​ ​ 204 ​ 21 Cost of goods sold ​ ​ 3 ​ — ​ ​ 4 ​ 1 ​ ​ $ 624 ​ $ 32 ​ $ 685 ​ $ 64 ​ As of June 30, 2021, unrecognized compensation expense related to unvested stock-based compensation arrangements was $ 7.2 million. As of June 30, 2021, the related weighted average period over which it is expected to be recognized is approximately 3.7 years. Performance-Based options As of June 30, 2021, the Company had 10,493 stock options outstanding that contained vesting conditions contingent on the achievement of certain milestones. Assuming continued service by the employees, the options would start vesting over a 48-month period upon achievement of the performance criteria. As of June 30, 2021, the Company determined that the likelihood of achieving the milestones was not probable and therefore no stock-based compensation expense was recorded. As of June 30, 2021, the Company had 1,000,590 stock options outstanding that contained restrictions on vesting and exercisability contingent on the achievement of certain financing milestones. These stock options would have been cancelled at the completion of a change in control event if completed before an initial public offering. As of June 30, 2021, the Company determined that the likelihood of achieving the milestones was probable and therefore the Company has recorded the associated stock-based compensation expense. Early exercise of stock options Under the 2001 Plan, the Company has issued options to certain executive officers with early-exercise provisions. The options may be exercised by the holder any time after they are granted. The Company has the right to repurchase, at the original option exercise price, shares issued pursuant to such early-exercise provisions, upon the termination of employment or death of the stockholder. This repurchase right expires based upon the original option vesting schedule. As of June 30, 2021 and 2020, there have been no early exercises and therefore there is no liability recorded for the early exercise of stock options. ​ 8. Income taxes As of both June 30, 2021 and 2020, a valuation allowance was recorded against all deferred tax assets due to the Company’s cumulative net loss position. Income tax expense for the three months ended June 30, 2021 and 2020 was $ 26,000 and $ 22,000 , respectively. Income tax expense for the six months ended June 30, 2021 and 2020 was $ 43,000 and $ 45,000 , respectively. As of December 31, 2020, the Company had federal and state net operating loss carryforwards, or NOLs, of approximately $ 296.1 million and $ 88.0 million, respectively. The federal NOLs begin to expire in 2021 and the state NOLs began expiring in 2020. The Company has federal and state tax credit carryforwards of approximately $ 8.6 million and $ 1.5 million, respectively. The federal and state tax credit carryforwards begin to expire in 2021 and 2028, respectively. Utilization of the net operating loss carryforward may be subject to an annual limitation due to the ownership change limitations provided by Section 382 of the Internal Revenue Code of 1986 and similar state provisions. The Company has not performed a detailed analysis to determine whether an ownership change has occurred. Such a change of ownership would limit the Company’s utilization of the net operating losses and could be triggered by subsequent sales of securities by the Company or its stockholders. 18 Table of Contents 9. Earnings Per Share Basic and diluted net loss per share attributable to common stockholders was calculated as follows (in thousands, except share and per share data): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended June 30, Six Months Ended June 30, ​ ​ 2021 ​ 2020 ​ 2021 ​ 2020 Numerator: ​ ​ ​ ​ ​ ​ Net loss ​ $ ( 17,748 ) ​ $ ( 3,667 ) ​ $ ( 26,375 ) ​ $ ( 7,480 ) Accretion of preferred stock to redemption value ​ — ​ — ​ — ​ — Net loss attributable to common stockholders ​ $ ( 17,748 ) ​ $ ( 3,667 ) ​ $ ( 26,375 ) ​ $ ( 7,480 ) Denominator: ​ ​ ​ ​ Weighted average common shares outstanding — basic and diluted ​ 366,066 ​ 360,238 ​ 363,397 ​ 414,225 Net loss per share attributable to common stockholders — basic and diluted ​ $ ( 48.48 ) ​ $ ( 10.18 ) ​ $ ( 72.58 ) ​ $ ( 18.06 ) ​ The Company’s potentially dilutive securities, which include stock options, shares of convertible preferred stock and warrants to purchase shares of convertible preferred stock, have been excluded from the computation of diluted net loss per share attributable to common stockholders as the effect would be to reduce the net loss per share attributable to common stockholders. Therefore, the weighted average number of common shares outstanding used to calculate both basic and diluted net loss per share attributable to common stockholders is the same. The Company excluded the following potential common shares, presented based on amounts outstanding at each period end, from the computation of diluted net loss per share attributable to common stockholders for the periods indicated because including them would have had an anti-dilutive effect: ​ ​ ​ ​ ​ ​ ​ Six Months Ended June 30, ​ ​ 2021 2020 Options to purchase common stock 2,654,042 2,017,766 Warrants to purchase redeemable convertible preferred stock (as converted to common stock) 108,406 108,406 Redeemable convertible preferred stock (as converted to common stock) 11,929,584 11,929,584 ​ 14,692,032 14,055,756 ​ ​ 10. Commitments and contingencies Commitments Operating Leases The Company has entered into an operating lease agreement for its office, manufacturing and research facility, which expires in 2024. Rent expense for the three months ended June 30, 2021 and 2020 was $ 93,000 and $ 94,000 , respectively. Rent expense for the six months ended June 30, 2021 and 2020 was $ 187,000 and $ 184,000 , respectively. Future minimum lease payments under all operating leases as of June 30, 2021, are as follows for the years ending (in thousands): ​ ​ ​ ​ December 31, 2021 $ 112 December 31, 2022 ​ 227 December 31, 2023 ​ 234 December 31, 2024 ​ 138 ​ ​ $ 711 19 Table of Contents ​ Contingencies From time to time, the Company may have certain contingent liabilities that arise in the ordinary course of business. The Company accrues a liability for such matters when it is probable that future expenditures will be made, and such expenditures can be reasonably estimated. There have been no contingent liabilities requiring accrual or disclosure as of June 30, 2021 or 2020. ​ 11. Employee benefit plans The Company sponsors a voluntary defined-contribution employee retirement plan, or 401(k) plan, for its U.S. employees. The 401(k) plan provides that each participant may contribute pre-tax or post-tax compensation up to the statutory limit allowable. Under the 401(k) plan, each participant is fully vested in his or her deferred salary contributions when contributed. The Company does not provide matching contributions to employees. ​ 12. Segment, Geographic information and revenue disaggregation The chief operating decision maker for the Company is the Chief Executive Officer. The Chief Executive Officer reviews financial information presented on a consolidated basis, accompanied by information about revenue by geographic region, for purposes of allocating resources and evaluating financial performance. The Company has one business activity and there are no segment managers who are held accountable for operations, operating results or plans for levels or components below the consolidated unit level. Accordingly, the Company has determined that it has a single reportable and operating segment structure. The Company and its Chief Executive Officer evaluate performance based primarily on revenue in the geographic locations in which the Company operates. The Company derives all its revenues from sales to customers in Europe and the U.S. The following table provides revenue by country for each location accounting for more than 10% of the total revenue for the three and six months ended (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three months ended ​ Six months ended ​ June 30, ​ June 30, ​ ​ 2021 2020 ​ 2021 2020 U.S. ​ $ 2,105 ​ $ 197 ​ $ 3,717 ​ $ 606 Germany ​ 799 ​ 911 ​ 1,907 ​ 2,078 Other countries ​ 219 ​ 142 ​ 359 ​ 284 ​ ​ $ 3,123 ​ $ 1,250 ​ $ 5,983 ​ $ 2,968 ​ As June 30, 2021 and 2020, long-lived assets were located primarily in the U.S. ​ 20 Table of Contents 13. Subsequent events On July 2, 2021, the Company closed its IPO of 8,050,000 shares of its common stock at a public offering price of $ 18.00 per share, which included 1,050,000 shares of common stock issued upon the exercise in full by the underwriters of their option to purchase additional shares, for net proceeds from the IPO, after deducting the underwriting discount and other offering expenses payable by the Company, of approximately $ 133.3 million. The table below presents the Company’s balance sheet data as of June 30, 2021 on an actual basis and on a pro forma as adjusted basis to give effect to: ● the conversion of all outstanding shares of the Company’s convertible preferred stock into an aggregate of 11,929,584 shares of common stock upon the closing of the IPO; and ● the sale of 8,050,000 shares of common stock in the IPO, after deducting the underwriting discount and estimated offering expenses payable by the Company. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ As of June 30, 2021 ​ ​ ​ Pro Forma ​ ​ Actual ​ as adjusted ​ ​ (in thousands, except share data) Cash and cash equivalents ​ $ 47,128 ​ $ 180,385 Convertible preferred stock warrant liability ​ 19,051 ​ — Redeemable convertible preferred stock ​ 329,983 ​ — Total stockholders’ (deficit) equity ​ $ ( 318,931 ) ​ $ 163,360 Shares of common stock outstanding ​ ​ 366,342 ​ ​ 20,345,926 ​ ​ ​ ​ ​ 21 Table of Contents