CVRx, Inc. 10-Q

Item 1. Financial Statements CVRx, INC. Condensed Consolidated Balance Sheets (In thousands, except share and per share data) (Unaudited) ​ ​ ​ ​ ​ ​ ​ ​ September 30, December 31, ​ ​ 2021 ​ 2020 Assets ​ ​ Current assets: ​ ​ Cash and cash equivalents ​ $ 170,913 ​ $ 59,112 Accounts receivable, net ​ 3,421 ​ 1,281 Inventory ​ 3,440 ​ 3,343 Prepaid expenses and other current assets ​ 2,923 ​ 605 Total current assets ​ 180,697 ​ 64,341 Property and equipment, net ​ 943 ​ 410 Other non-current assets ​ 67 ​ 26 Total assets ​ $ 181,707 ​ $ 64,777 Liabilities and Stockholders’ Equity (Deficit) ​ ​ Current liabilities: ​ ​ Accounts payable ​ $ 541 ​ $ 483 Accrued expenses ​ 4,977 ​ 3,583 Warrant liability ​ — ​ 3,911 Current portion of long-term debt ​ ​ 3,333 ​ ​ — Total current liabilities ​ 8,851 ​ 7,977 Long-term debt ​ 16,151 ​ 19,278 Other long-term liabilities ​ 941 ​ 777 Total liabilities ​ 25,943 ​ 28,032 Commitments and contingencies ​ ​ Convertible preferred stock, $ 0.01 par value, 10,000,000 and 237,370,645 authorized as of September 30, 2021 and December 31, 2020, respectively; 0 and 223,541,754 shares issued and outstanding as of September 30, 2021 and December 31, 2020, respectively ​ — ​ 329,983 Stockholders’ equity (deficit): ​ ​ Common stock, $ 0.01 par value, 200,000,000 and 625,217,795 authorized as of September 30, 2021 and December 31, 2020, respectively; 20,351,779 and 360,412 shares issued and outstanding as of September 30, 2021 and December 31, 2020, respectively ​ 204 ​ 4 Additional paid-in capital ​ 539,941 ​ 58,624 Accumulated deficit ​ ( 384,184 ) ​ ( 351,676 ) Accumulated other comprehensive loss ​ ( 197 ) ​ ( 190 ) Total stockholders’ equity (deficit) ​ 155,764 ​ ( 293,238 ) Total liabilities, convertible preferred stock, and stockholders’ equity (deficit) ​ $ 181,707 ​ $ 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 ​ Nine months ended ​ ​ September 30, ​ September 30, ​ ​ 2021 2020 2021 2020 Revenue ​ $ 3,395 ​ $ 997 ​ $ 9,378 ​ $ 3,965 Cost of goods sold ​ 876 ​ 212 ​ 2,656 ​ 989 Gross profit ​ 2,519 ​ 785 ​ 6,722 ​ 2,976 Operating expenses: ​ ​ ​ ​ Research and development ​ 1,699 ​ 1,500 ​ 5,704 ​ 5,900 Selling, general and administrative ​ 8,111 ​ 2,327 ​ 18,198 ​ 6,455 Total operating expenses ​ 9,810 ​ 3,827 ​ 23,902 ​ 12,355 Loss from operations ​ ( 7,291 ) ​ ( 3,042 ) ​ ( 17,180 ) ​ ( 9,379 ) Interest expense ​ ( 614 ) ​ ( 621 ) ​ ( 1,823 ) ​ ( 1,856 ) Other income (expense), net ​ 1,795 ​ 455 ​ ( 13,439 ) ​ 592 Loss before income taxes ​ ( 6,110 ) ​ ( 3,208 ) ​ ( 32,442 ) ​ ( 10,643 ) Provision for income taxes ​ ( 23 ) ​ ( 19 ) ​ ( 66 ) ​ ( 64 ) Net loss ​ ( 6,133 ) ​ ( 3,227 ) ​ ( 32,508 ) ​ ( 10,707 ) Cumulative translation adjustment ​ ( 3 ) ​ 14 ​ ( 8 ) ​ ( 7 ) Comprehensive loss ​ $ ( 6,136 ) ​ $ ( 3,213 ) ​ $ ( 32,516 ) ​ $ ( 10,714 ) Net loss per share, basic and diluted ​ $ ( 0.30 ) ​ $ ( 9.56 ) ​ $ ( 4.66 ) ​ $ ( 27.58 ) Weighted-average common shares used to compute net loss per share, basic and diluted ​ 20,126,672 ​ 360,356 ​ 6,975,386 ​ 396,071 ​ 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’ Equity (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 June 30, 2021 223,541,754 ​ $ 329,983 366,342 $ 4 ​ $ 59,311 ​ $ ( 378,051 ) ​ $ ( 195 ) ​ $ ( 318,931 ) Exercise of stock options — ​ — 5,853 — ​ 8 ​ — ​ — ​ 8 Employee stock compensation — ​ — — — ​ 474 ​ — ​ — ​ 474 Issuance of common stock, net of offering costs ​ — ​ ​ — ​ 8,050,000 ​ ​ 81 ​ ​ 133,080 ​ ​ — ​ ​ — ​ ​ 133,161 Reverse stock split ​ — ​ ​ — ​ — ​ ​ — ​ ​ ( 1 ) ​ ​ — ​ ​ — ​ ​ ( 1 ) Conversion of Series G preferred stock ​ ( 223,541,754 ) ​ ​ ( 329,983 ) ​ 11,929,584 ​ ​ 119 ​ ​ 347,069 ​ ​ — ​ ​ — ​ ​ 347,188 Net loss for the three months ended September 30, 2021 — ​ — — — ​ — ​ ( 6,133 ) ​ — ​ ( 6,133 ) Cumulative translation adjustment — ​ — — — ​ — ​ — ​ ( 2 ) ​ ( 2 ) Balances as of September 30, 2021 — ​ $ — 20,351,779 $ 204 ​ $ 539,941 ​ $ ( 384,184 ) ​ $ ( 197 ) ​ $ 155,764 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Balances as of June 30, 2020 161,041,754 ​ $ 279,983 360,237 $ 4 ​ $ 58,773 ​ $ ( 345,047 ) ​ $ ( 210 ) ​ $ ( 286,480 ) Exercise of stock options ​ — ​ ​ — ​ 175 ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — Employee stock compensation — ​ — — — ​ 31 ​ — ​ — ​ 31 Issuance of Series G preferred stock, net of costs ​ 62,500,000 ​ ​ 49,783 ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — Accretion of Series G issuance costs ​ — ​ ​ 217 ​ — ​ ​ — ​ ​ ( 217 ) ​ ​ — ​ ​ — ​ ​ ( 217 ) Net loss for the three months ended September 30, 2020 — ​ — — — ​ — ​ ( 3,227 ) ​ — ​ ( 3,227 ) Cumulative translation adjustment — ​ — — — ​ — ​ — ​ 14 ​ 14 Balances as of September 30, 2020 223,541,754 ​ $ 329,983 360,412 $ 4 ​ $ 58,587 ​ $ ( 348,274 ) ​ $ ( 196 ) ​ $ ( 289,879 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 7 Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 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 ​ — ​ — 11,783 — ​ 10 ​ — ​ — ​ 10 Employee stock compensation — ​ — — — ​ 1,159 ​ — ​ — ​ 1,159 Issuance of common stock, net of offering costs ​ — ​ ​ — ​ 8,050,000 ​ ​ 81 ​ ​ 133,080 ​ ​ — ​ ​ — ​ ​ 133,161 Reverse stock split ​ — ​ ​ — ​ — ​ ​ — ​ ​ ( 1 ) ​ ​ — ​ ​ — ​ ​ ( 1 ) Conversion of Series G preferred stock ​ ( 223,541,754 ) ​ ​ ( 329,983 ) ​ 11,929,584 ​ ​ 119 ​ ​ 347,069 ​ ​ — ​ ​ — ​ ​ 347,188 Net loss for the nine months ended September 30, 2021 — ​ — — — ​ — ​ ( 32,508 ) ​ — ​ ( 32,508 ) Cumulative translation adjustment — ​ — — — ​ — ​ — ​ ( 7 ) ​ ( 7 ) Balances as of September 30, 2021 — ​ $ — 20,351,779 $ 204 ​ $ 539,941 ​ $ ( 384,184 ) ​ $ ( 197 ) ​ $ 155,764 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Balances as of December 31, 2019 161,041,754 ​ $ 279,983 483,931 $ 5 ​ $ 58,708 ​ $ ( 337,567 ) ​ $ ( 189 ) ​ $ ( 279,043 ) Exercise of stock options ​ — ​ ​ — ​ 175 ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — Repurchase of common stock — ​ — ( 123,694 ) ( 1 ) ​ 1 ​ — ​ — ​ — Employee stock compensation — ​ — — — ​ 95 ​ — ​ — ​ 95 Issuance of Series G preferred stock, net of costs ​ 62,500,000 ​ ​ 49,783 ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — ​ ​ — Accretion of Series G issuance costs ​ — ​ ​ 217 ​ — ​ ​ — ​ ​ ( 217 ) ​ ​ — ​ ​ — ​ ​ ( 217 ) Net loss for the nine months ended September 30, 2020 — ​ — — — ​ ​ — ​ ( 10,707 ) ​ — ​ ( 10,707 ) Cumulative translation adjustment — ​ — — — ​ — ​ — ​ ( 7 ) ​ ( 7 ) Balances as of September 30, 2020 223,541,754 ​ $ 329,983 360,412 $ 4 ​ $ 58,587 ​ $ ( 348,274 ) ​ $ ( 196 ) ​ $ ( 289,879 ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ The accompanying notes are an integral part of these condensed consolidated financial statements. ​ 8 Table of Contents CVRx, INC. Condensed Consolidated Statements of Cash Flows (In thousands) (Unaudited) ​ ​ ​ ​ ​ ​ ​ ​ Nine months ended ​ ​ September 30, ​ ​ 2021 2020 Cash flows from operating activities: ​ ​ Net loss ​ $ ( 32,508 ) ​ $ ( 10,707 ) Adjustments to reconcile net loss to net cash used in operating activities: ​ ​ Stock-based compensation ​ 1,159 ​ 95 Depreciation of property and equipment ​ 112 ​ 52 Amortization of deferred financing costs and loan discount ​ 206 ​ 217 Changes in fair value of convertible preferred stock warrants ​ 13,294 ​ ( 387 ) Changes in operating assets and liabilities: ​ ​ Accounts receivable ​ ( 2,140 ) ​ 138 Inventory ​ ( 97 ) ​ ( 1,243 ) Prepaid expenses and other current assets ​ ( 2,359 ) ​ ( 241 ) Accounts payable ​ 58 ​ 228 Accrued expenses ​ 1,558 ​ ( 164 ) Net cash used in operating activities ​ ( 20,717 ) ​ ( 12,012 ) Cash flows from investing activities: ​ ​ Purchase of property and equipment ​ ( 645 ) ​ ( 210 ) Net cash used in investing activities ​ ( 645 ) ​ ( 210 ) Cash flows from financing activities: ​ ​ Proceeds from the exercise of common stock options ​ 10 ​ — Proceeds from issuance of Series G Preferred Stock, net of fees ​ ​ — ​ ​ 49,783 Payments related to reverse stock split ​ ​ ( 1 ) ​ ​ — Proceeds from the issuance of common stock, net of offering costs ​ ​ 133,161 ​ ​ — Net cash provided by financing activities ​ 133,170 ​ 49,783 Effect of currency exchange on cash and cash equivalents ​ ( 7 ) ​ ( 7 ) Net change in cash and cash equivalents ​ 111,801 ​ 37,554 Cash and cash equivalents at beginning of year ​ 59,112 ​ 25,741 Cash and cash equivalents at end of period ​ $ 170,913 ​ $ 63,295 Supplemental Information: ​ ​ Cash paid for interest ​ $ 1,522 ​ $ 1,528 Cash paid for income taxes ​ 1 ​ 10 ​ The accompanying notes are an integral part of these condensed consolidated financial statements. ​ 9 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. ​ 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. Cash and cash equivalents Cash and cash equivalents include highly liquid investments with an original maturity of three months or less. As of September 30, 2021 and December 31, 2020, cash equivalents consisted of money market funds, which are stated at cost and approximate fair value. 10 Table of Contents 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 performs 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. 3. Selected balance sheet information Inventory consists of the following at: ​ ​ ​ ​ ​ ​ ​ ​ ​ September 30, December 31, (in thousands) ​ 2021 ​ 2020 Raw material ​ $ 1,083 ​ $ 1,361 Work-in-process ​ 287 ​ 321 Finished goods ​ 2,070 ​ 1,661 ​ ​ $ 3,440 ​ $ 3,343 ​ 11 Table of Contents Property and equipment, net consists of the following at: ​ ​ ​ ​ ​ ​ ​ ​ ​ September 30, December 31, (in thousands) ​ 2021 ​ 2020 Office furniture and equipment ​ $ 271 ​ $ 189 Lab equipment ​ 1,440 ​ 1,272 Computer equipment and software ​ 516 ​ 516 Leasehold improvements ​ 45 ​ 44 Capital equipment in process ​ 483 ​ 89 ​ ​ 2,755 ​ 2,110 Less: Accumulated depreciation and amortization ​ 1,812 ​ 1,700 ​ ​ $ 943 ​ $ 410 ​ Depreciation expense was $ 42,000 and $ 17,000 for the three months ended September 30, 2021 and 2020, respectively, and $ 112,000 and $ 52,000 for the nine months ended September 30, 2021 and 2020, respectively. Accrued expenses consist of the following at: ​ ​ ​ ​ ​ ​ ​ ​ ​ September 30, December 31, (in thousands) ​ 2021 ​ 2020 Clinical trial and other professional fees ​ $ 1,638 ​ $ 1,690 Bonuses ​ 1,628 ​ 794 Paid time off ​ 723 ​ 552 Interest payable ​ ​ 451 ​ ​ 356 Other ​ 537 ​ 191 ​ ​ ​ ​ ​ ​ ​ ​ ​ $ 4,977 ​ $ 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. 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 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 ​ 12 Table of Contents The convertible preferred stock warrant liability related to warrants issued in connection with loan and security agreements entered into in September 2014, as amended in July 2015, in May 2016 and in September 2019. These warrants were originally issued to purchase shares of Series F-2 convertible preferred stock and Series G convertible preferred stock (“Series G Preferred Shares”). In connection with the closing of the initial public offering (“IPO”), these convertible preferred stock warrants became warrants to purchase 108,406 shares of common stock and were reclassified to equity. The convertible preferred stock warrant liability also related to a warrant issued to Biosense Webster, Inc. (“BWI”), an affiliate of Johnson & Johnson Innovation — JJDC, Inc., to purchase Series G Preferred Shares with an exercise price of $ 0.01 per share. In connection with the closing of the IPO, the BWI warrant to purchase Series G Preferred Shares became exercisable to purchase 607,725 shares of common stock at an exercise price of $ 0.16 per share . The Company’s recurring fair value measurements using significant unobservable inputs (Level 3) related solely to the Company’s convertible preferred stock warrant liability. The convertible preferred stock warrant liability was 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. In connection with the closing of the IPO, all of the outstanding convertible preferred stock warrants were converted to common stock warrants. The related liability was remeasured at the time of the IPO and reclassed to additional paid-in capital. 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 nine months ended: The following table sets forth a summary of changes in the estimated fair value of the Company’s convertible preferred stock warrants during the nine months ended: ​ ​ ​ ​ ​ ​ ​ ​ ​ September 30, (in thousands) 2021 2020 Beginning of the period ​ $ 3,911 ​ $ 3,540 Change in fair value ​ 13,294 ​ ( 17 ) Conversion to common stock warrants ​ ​ ( 17,205 ) ​ ​ — End of the period ​ $ — ​ $ 3,523 ​ There were no transfers in or out of Level 1, Level 2 or Level 3 fair value measurements during the periods ended September 30, 2021 and December 31, 2020. ​ 5. Debt Horizon loan agreement In September 2019, the Company entered into a loan and security agreement (“Horizon loan agreement”) with Horizon Technology Finance Corporation (“Horizon”) under which it could borrow up to a total of $ 20.0 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 of not less than $ 5.0 million in accounts over which Horizon maintained an account control agreement. 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 September 30, 2021. 13 Table of Contents 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 September 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 ​ ( 516 ) Less: current portion ​ ​ ( 3,333 ) Long-term debt ​ $ 16,151 ​ ​ 6. Stockholders’ equity Initial Public Offering 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 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.” 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 14 Table of Contents deducting the underwriting discount and other offering expenses payable by the Company totaling $ 1.6 million, of $ 133.2 million. Upon the closing of the IPO, all shares of convertible preferred stock were automatically converted into common stock. Series G Preferred Shares were converted into common stock on a 15.819 -for-1 basis, and all other shares of convertible preferred stock were automatically converted into common stock on a 39.548 -for-1 basis. The conversion of the outstanding preferred stock resulted in an aggregate of 11,929,584 shares of common stock. 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. Common Stock Warrants In connection with the IPO, the warrants to purchase shares of convertible preferred stock automatically converted into warrants to purchase common stock, resulting in the reclassification of the related convertible preferred stock warrant liability to additional paid-in capital. Upon the closing of the IPO these warrants to purchase convertible preferred stock became exercisable for 716,131 shares of common stock upon conversion at a weighted average exercise price of $ 2.39 per share. 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 September 30, 2021, there were 1,791,888 shares available for future issuance under the 2021 Plan. 15 Table of Contents 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 September 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 or the 2021 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 ​ $ 2.64 ​ ​ Granted 1,238,426 ​ 13.00 ​ ​ Cancelled / Forfeited ( 42,669 ) ​ 10.31 ​ ​ Exercised ( 11,783 ) ​ 0.88 ​ ​ Balance as of September 30, 2021 2,657,333 ​ $ 7.35 ​ ​ $ 25,475 Options exercisable as of September 30, 2021 1,009,785 ​ $ 2.36 ​ ​ $ 14,330 ​ As of September 30, 2021, stock options outstanding included 9,993 options that were not granted under the 2001 Plan or the 2021 Plan. For options outstanding as of September 30, 2021, the weighted average remaining contractual life was 8.4 years. For options exercisable as of September 30, 2021, the weighted average remaining contractual life was 7.3 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 September 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. 16 Table of Contents 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 nine months ended September 30, 2021. No options were issued during the nine months ended September 30, 2020. ​ ​ ​ ​ ​ ​ ​ September 30, ​ ​ ​ ​ 2021 Weighted average fair value of options granted $ 5.25 ​ Expected term (in years) — non-officer employees ​ 2.7 to 6.1 ​ Expected term (in years) — officer employees ​ 3.0 ​ Expected volatility ​ 56.1 % 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. We utilize the simplified method to develop the estimate of the expected term . 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. For the three and nine months ended September 30, 2021 and 2020, the Company recognized stock-based compensation expense as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended September 30, Nine Months Ended September 30, (in thousands) ​ 2021 ​ 2020 ​ 2021 ​ 2020 Selling, general & administrative ​ $ 353 ​ $ 20 ​ $ 830 ​ $ 62 Research & development ​ ​ 115 ​ 11 ​ ​ 319 ​ 32 Cost of goods sold ​ ​ 6 ​ — ​ ​ 10 ​ 1 ​ ​ $ 474 ​ $ 31 ​ $ 1,159 ​ $ 95 ​ As of September 30, 2021, unrecognized compensation expense related to unvested stock-based compensation arrangements was $ 6.3 million. As of September 30, 2021, the related weighted average period over which it is expected to be recognized is approximately 3.5 years. Performance-Based options As of September 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 September 30, 2021, the Company determined that the likelihood of achieving the milestones was not probable and therefore no stock-based compensation expense was recorded. 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 September 30, 2021 and 2020, there have been no early exercises and therefore there is no liability recorded for the early exercise of stock options. 17 Table of Contents ​ 8. Income taxes As of both September 30, 2021 and 2020, a valuation allowance was recorded against all deferred tax assets due to the Company’s cumulative net loss position. Provision for income taxes for the three months ended September 30, 2021 and 2020 was $ 23,000 and $ 19,000 , respectively. Provision for income taxes for the nine months ended September 30, 2021 and 2020 was $ 66,000 and $ 64,000 , respectively. As of December 31, 2020, the Company had federal and state net operating loss carryforwards (“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. As of December 31, 2020, the Company had 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 net operating loss carryforwards 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. 9. (Loss) 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 September 30, Nine Months Ended September 30, ​ ​ 2021 ​ 2020 ​ 2021 ​ 2020 Numerator: ​ ​ ​ ​ ​ ​ Net loss ​ $ ( 6,133 ) ​ $ ( 3,227 ) ​ $ ( 32,508 ) ​ $ ( 10,707 ) Accretion of preferred stock to redemption value ​ — ​ ( 217 ) ​ — ​ ( 217 ) Net loss attributable to common stockholders ​ $ ( 6,133 ) ​ $ ( 3,444 ) ​ $ ( 32,508 ) ​ $ ( 10,924 ) Denominator: ​ ​ ​ ​ Weighted average common shares outstanding — basic and diluted ​ 20,126,672 ​ 360,356 ​ 6,975,386 ​ 396,071 Net loss per share attributable to common stockholders — basic and diluted ​ $ ( 0.30 ) ​ $ ( 9.56 ) ​ $ ( 4.66 ) ​ $ ( 27.58 ) ​ The Company’s potentially dilutive securities, which include stock options, shares of convertible preferred stock, warrants to purchase shares of convertible preferred stock and warrants to purchase shares of common 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: ​ 18 Table of Contents ​ ​ ​ ​ ​ ​ Nine Months Ended September 30, ​ ​ 2021 2020 Options to purchase common stock 2,657,333 961,885 Warrants to purchase redeemable convertible preferred stock (as converted to common stock) — 108,406 Warrants to purchase common stock ​ 716,131 ​ — Redeemable convertible preferred stock (as converted to common stock) — 11,929,584 ​ 3,373,464 12,999,875 ​ ​ 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 September 30, 2021 and 2020 was $ 91,000 and $ 90,000 , respectively. Rent expense for the nine months ended September 30, 2021 and 2020 was $ 279,000 and $ 276,000 , respectively. Future minimum lease payments under all operating leases as of September 30, 2021, are as follows for the years ending (in thousands): ​ ​ ​ ​ December 31, 2021 $ 56 December 31, 2022 ​ 227 December 31, 2023 ​ 234 December 31, 2024 ​ 138 ​ ​ $ 655 ​ 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 September 30, 2021 or December 31, 2020. ​ 11. Employee benefit plans The Company sponsors a voluntary defined-contribution employee retirement plan (the “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. 19 Table of Contents 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 nine months ended (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Three months ended ​ Nine months ended ​ September 30, ​ September 30, ​ ​ 2021 2020 ​ 2021 2020 U.S. ​ $ 2,572 ​ $ 296 ​ $ 6,289 ​ $ 902 Germany ​ 682 ​ 579 ​ 2,589 ​ 2,657 Other countries ​ 141 ​ 122 ​ 500 ​ 406 ​ ​ $ 3,395 ​ $ 997 ​ $ 9,378 ​ $ 3,965 ​ As September 30, 2021 and 2020, long-lived assets were located primarily in the U.S. ​ 13. Subsequent events ​ On November 3, 2021 the Company fully repaid all amounts outstanding under the $ 20.0 million principal amount Horizon loan agreement. The total repayment amount was $ 21.3 million, inclusive of prepayment and other fees, and will be reflected within the Company’s financial statements for the fiscal year ended December 31, 2021. ​