CVRx, Inc. 10-K

Item 8. Financial Statements and Supplementary Data Report of Independent Registered Public Accounting Firm Board of Directors and Shareholders CVRx, Inc. ​ Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of CVRx, Inc. (a Delaware corporation) and subsidiary (the “Company”) as of December 31, 2021 and 2020, the related consolidated statements of operations and comprehensive loss, convertible preferred stock and stockholders’ equity (deficit), and cash flows for the years then ended, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2021 and 2020, and the results of its operations and its cash flows for the years then ended, in conformity with accounting principles generally accepted in the United States of America. Basis for Opinion These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. ​ /s/ GRANT THORNTON LLP ​ We have served as the Company’s auditor since 2016. ​ Minneapolis, Minnesota February 22, 2022 ​ 93 Table of Contents CVRx, INC. Consolidated Balance Sheets (In thousands, except share and per share data) ​ ​ ​ ​ ​ ​ ​ ​ December 31, December 31, ​ ​ 2021 ​ 2020 Assets ​ ​ Current assets: ​ ​ Cash and cash equivalents ​ $ 142,072 ​ $ 59,112 Accounts receivable, net ​ 2,560 ​ 1,281 Inventory ​ 3,880 ​ 3,343 Prepaid expenses and other current assets ​ 2,585 ​ 605 Total current assets ​ 151,097 ​ 64,341 Property and equipment, net ​ 1,425 ​ 410 Other non-current assets ​ 26 ​ 26 Total assets ​ $ 152,548 ​ $ 64,777 Liabilities and Stockholders’ Equity (Deficit) ​ ​ Current liabilities: ​ ​ Accounts payable ​ $ 510 ​ $ 483 Accrued expenses ​ 5,398 ​ 3,583 Warrant liability ​ — ​ 3,911 Total current liabilities ​ 5,908 ​ 7,977 Long-term debt ​ — ​ 19,278 Other long-term liabilities ​ 681 ​ 777 Total liabilities ​ 6,589 ​ 28,032 Commitments and contingencies (Note 10) ​ ​ Convertible preferred stock, $ 0.01 par value, 10,000,000 and 237,370,645 authorized as of December 31, 2021 and December 31, 2020, respectively; 0 and 223,541,754 shares issued and outstanding as of December 31, 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 December 31, 2021 and December 31, 2020, respectively; 20,399,337 and 360,412 shares issued and outstanding as of December 31, 2021 and December 31, 2020, respectively ​ 204 ​ 4 Additional paid-in capital ​ 540,707 ​ 58,624 Accumulated deficit ​ ( 394,754 ) ​ ( 351,676 ) Accumulated other comprehensive loss ​ ( 198 ) ​ ( 190 ) Total stockholders’ equity (deficit) ​ 145,959 ​ ( 293,238 ) Total liabilities, convertible preferred stock, and stockholders’ equity (deficit) ​ $ 152,548 ​ $ 64,777 ​ The accompanying notes are an integral part of these consolidated financial statements. ​ 94 Table of Contents CVRx, INC. Consolidated Statements of Operations and Comprehensive Loss (In thousands, except share and per share data) ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended ​ ​ December 31, ​ 2021 2020 Revenue ​ $ 13,036 ​ $ 6,053 Cost of goods sold ​ 3,640 ​ 1,440 Gross profit ​ 9,396 ​ 4,613 Operating expenses: ​ ​ Research and development ​ 7,501 ​ 6,410 Selling, general and administrative ​ 27,863 ​ 9,717 Total operating expenses ​ 35,364 ​ 16,127 Loss from operations ​ ( 25,968 ) ​ ( 11,514 ) Interest expense ​ ( 2,219 ) ​ ( 2,470 ) Other expense, net ​ ( 14,800 ) ​ ( 40 ) Loss before income taxes ​ ( 42,987 ) ​ ( 14,024 ) Provision for income taxes ​ ( 91 ) ​ ( 85 ) Net loss ​ ( 43,078 ) ​ ( 14,109 ) Cumulative translation adjustment ​ ( 8 ) ​ ( 1 ) Comprehensive loss ​ $ ( 43,086 ) ​ $ ( 14,110 ) Net loss per share, basic and diluted ​ $ ( 4.16 ) ​ $ ( 37.01 ) Weighted-average common shares used to compute net loss per share, basic and diluted ​ 10,360,054 ​ 387,083 ​ The accompanying notes are an integral part of these consolidated financial statements. ​ 95 Table of Contents ​ CVRx, INC. Consolidated Statements of Convertible Preferred Stock and Stockholders’ Equity (Deficit) (In thousands, except share data) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 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, 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 — ​ — — — ​ 132 ​ — ​ — ​ 132 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 year ended December 31, 2020 — ​ — — — ​ ​ — ​ ( 14,109 ) ​ — ​ ( 14,109 ) Cumulative translation adjustment — ​ — — — ​ — ​ — ​ ( 1 ) ​ ( 1 ) 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 ​ — ​ — 59,341 ​ ​ 23 ​ — ​ — ​ 23 Employee stock compensation — ​ — — — ​ 1,912 ​ — ​ — ​ 1,912 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 year ended December 31, 2021 — ​ — — — ​ — ​ ( 43,078 ) ​ — ​ ( 43,078 ) Cumulative translation adjustment — ​ — — — ​ — ​ — ​ ( 8 ) ​ ( 8 ) Balances as of December 31, 2021 — ​ $ — 20,399,337 $ 204 ​ $ 540,707 ​ $ ( 394,754 ) ​ $ ( 198 ) ​ $ 145,959 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ The accompanying notes are an integral part of these consolidated financial statements. ​ 96 Table of Contents CVRx, INC. Consolidated Statements of Cash Flows (In thousands) ​ ​ ​ ​ ​ ​ ​ ​ Year ended ​ ​ December 31, ​ ​ 2021 2020 Cash flows from operating activities: ​ ​ Net loss ​ $ ( 43,078 ) ​ $ ( 14,109 ) Adjustments to reconcile net loss to net cash used in operating activities: ​ ​ Stock-based compensation ​ 1,912 ​ 132 Depreciation of property and equipment ​ 168 ​ 75 Amortization of deferred financing costs and loan discount ​ 229 ​ 286 Loss on debt extinguishment ​ ​ 1,325 ​ ​ — Changes in fair value of convertible preferred stock warrants ​ 13,294 ​ 371 Changes in operating assets and liabilities: ​ ​ Accounts receivable ​ ( 1,279 ) ​ ( 562 ) Inventory ​ ( 537 ) ​ ( 1,271 ) Prepaid expenses and other current assets ​ ( 1,980 ) ​ ( 226 ) Accounts payable ​ 27 ​ 46 Accrued expenses ​ 2,187 ​ ( 838 ) Net cash used in operating activities ​ ( 27,732 ) ​ ( 16,096 ) Cash flows from investing activities: ​ ​ Purchase of property and equipment ​ ( 1,183 ) ​ ( 311 ) Net cash used in investing activities ​ ( 1,183 ) ​ ( 311 ) Cash flows from financing activities: ​ ​ Proceeds from the exercise of common stock options ​ 23 ​ — 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 ​ ​ — Repayment on debt financing ​ ​ ( 21,300 ) ​ ​ — Net cash provided by financing activities ​ 111,883 ​ 49,783 Effect of currency exchange on cash and cash equivalents ​ ( 8 ) ​ ( 5 ) Net change in cash and cash equivalents ​ 82,960 ​ 33,371 Cash and cash equivalents at beginning of year ​ 59,112 ​ 25,741 Cash and cash equivalents at end of period ​ $ 142,072 ​ $ 59,112 Supplemental Information: ​ ​ Cash paid for interest ​ $ 1,706 ​ $ 2,033 Cash paid for income taxes ​ 2 ​ 10 ​ The accompanying notes are an integral part of these consolidated financial statements. ​ 97 Table of Contents CVRx, INC. Notes to Consolidated Financial Statements ​ 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, 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 consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and with the applicable rules and regulations of the U.S. Securities and Exchange Commission (“SEC”). The 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 consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the 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 December 31, 2021 and 2020, cash equivalents consisted of money market funds, which are stated at cost and approximate fair value. Accounts Receivable Trade accounts receivable are recorded at the invoiced amount and do not bear interest. Customer credit terms are established prior to shipment with the standard generally being net 30 days. We do not record an allowance on our trade accounts receivable but monitor the collectability of individual customer accounts on an ongoing basis. 98 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, 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. Stock-Based Compensation We recognize equity-based compensation expense for awards of equity instruments to employees and non- employees based on the grant date fair value of those awards in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718, Compensation—Stock Compensation (“ASC 718”). ASC 718 requires all equity-based compensation awards to employees and nonemployee directors, including grants of restricted shares and stock options, to be recognized as expense in the statements of operations and comprehensive loss based on their grant date fair values. We estimate the grant date fair value of stock options using the Black-Scholes option pricing model. We use an estimate of the value of our common stock, with the assistance of an independent appraiser, to determine the fair value of options. We account for forfeitures as they occur. We expense the fair value of our equity-based compensation awards granted to employees on a straight-line basis over the associated service period, which is generally the period in which the related services are received. Recently 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. Under the alternative modified retrospective transition approach, the reported results for 2022 reflect the application of Topic 842 guidance, whereas comparative periods and their respective disclosures prior to the adoption of Topic 842 are presented using the legacy guidance of Accounting Standards Classification (“ASC”) 840. As a result of adopting the new standard, the Company will recognize right-of-use assets of $ 579,000 and lease liabilities of $ 561,000 million as of January 1, 2022. The 99 Table of Contents difference between the amount of right-of-use assets and lease liabilities recognized includes adjustments to prepaid rent. There will be no change to net deferred tax balances as a result of the Company’s adoption of Topic 842. The adoption of Topic 842 did not impact the Company’s results of operations or cash flows. 3. Selected balance sheet information Inventory consists of the following at: ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, December 31, (in thousands) ​ 2021 ​ 2020 Raw material ​ $ 1,593 ​ $ 1,361 Work-in-process ​ 482 ​ 321 Finished goods ​ 1,805 ​ 1,661 ​ ​ $ 3,880 ​ $ 3,343 ​ Property and equipment, net consists of the following at: ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, December 31, (in thousands) ​ 2021 ​ 2020 Office furniture and equipment ​ $ 271 ​ $ 189 Lab equipment ​ 1,565 ​ 1,272 Computer equipment and software ​ 556 ​ 516 Leasehold improvements ​ 88 ​ 44 Capital equipment in process ​ 813 ​ 89 ​ ​ 3,293 ​ 2,110 Less: Accumulated depreciation and amortization ​ 1,868 ​ 1,700 ​ ​ $ 1,425 ​ $ 410 ​ Depreciation expense was $ 0.2 million and $ 0.1 million for the years ended December 31, 2021 and 2020, respectively. Accrued expenses consist of the following at: ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, December 31, (in thousands) ​ 2021 ​ 2020 Clinical trial and other professional fees ​ $ 1,607 ​ $ 1,690 Bonuses ​ 2,028 ​ 794 Paid time off ​ 699 ​ 552 Customer rebates ​ ​ 380 ​ ​ — Taxes ​ ​ 351 ​ ​ 42 Interest payable ​ ​ — ​ ​ 356 Other ​ 333 ​ 149 ​ ​ $ 5,398 ​ $ 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. 100 Table of Contents ● 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. There was no convertible preferred stock warrant liability as of December 31, 2021. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (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 ​ 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 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 following table sets forth a summary of changes in the estimated fair value of the Company’s convertible preferred stock warrants during the years ended: ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, (in thousands) 2021 2020 Beginning of the period ​ $ 3,911 ​ $ 3,540 Change in fair value ​ 13,294 ​ 371 Conversion to common stock warrants ​ ​ ( 17,205 ) ​ ​ — End of the period ​ $ — ​ $ 3,911 ​ There were no transfers in or out of Level 1, Level 2 or Level 3 fair value measurements during the periods ended December 31, 2021 and 2020. 101 Table of Contents ​ 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, was 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 were collateralized by all or substantially all of the assets of the Company. The Horizon loan agreement required the payment of certain penalties if the loan was paid off prior to maturity for any reason, including pursuant to a subjective acceleration clause, and included various restrictive covenants, including a restriction on the payment of dividends. 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. On November 3, 2021 the Company fully repaid all amounts outstanding under the Horizon loan agreement. The total repayment amount was $ 21.3 million, inclusive of $ 1.3 million of prepayment and other fees, which represent a loss on extinguishment of debt and are included in Other expense, net on the consolidated statements of operations. The Company was in compliance with all related covenants at the time the principal balance was fully repaid. There was no debt outstanding in relation to the Horizon loan agreement as of December 31, 2021. ​ 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. 102 Table of Contents 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 December 31, 2020, convertible preferred stock consisted of the following: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Aggregate ​ ​ ​ ​ ​ ​ ​ ​ ​ Liquidation ​ ​ ​ ​ Issued and ​ Carrying Value ​ Preference ​ ​ Authorized ​ Outstanding ​ (in thousands) ​ (in thousands) 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 ​ 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 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. As of December 31, 2021, no preferred stock is outstanding. 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. 103 Table of Contents Preferred Stock Warrants and Common Stock Warrants 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 Series G Preferred Shares. The Company issued to BWI a warrant to purchase shares of Series E-2 convertible preferred stock that only would have become exercisable in the event of an acquisition or asset transfer involving the Company and it expired upon our IPO. 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 became exercisable upon our IPO and would have expired 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. 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. Warrants to purchase shares of our common stock are summarized below: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted Average ​ ​ Common Stock Warrants ​ Exercise Price Outstanding at December 31, 2020 — ​ $ — Preferred stock warrants converted to common stock warrants at IPO 716,131 ​ 2.39 Exercised — ​ — Outstanding at December 31, 2021 716,131 ​ $ 2.39 ​ ​ 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 104 Table of Contents 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 December 31, 2021, there were 1,789,453 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 December 31, 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, 2019 ​ 966,146 ​ $ 1.58 ​ ​ $ 2,256 Granted ​ 517,566 ​ $ 4.35 ​ ​ ​ ​ Cancelled / Forfeited ​ ( 10,178 ) ​ $ 4.35 ​ ​ ​ ​ Exercised ​ ( 175 ) ​ $ 0.40 ​ ​ ​ ​ Balance as of December 31, 2020 1,473,359 ​ $ 2.77 ​ $ 3,745 Granted 1,411,717 ​ $ 13.31 ​ ​ Cancelled / Forfeited ( 76,294 ) ​ $ 11.25 ​ ​ Exercised ( 59,341 ) ​ $ 0.39 ​ ​ Balance as of December 31, 2021 2,749,441 ​ $ 7.93 ​ ​ $ 16,262 Options exercisable as of December 31, 2021 1,060,820 ​ $ 2.53 ​ ​ $ 10,303 ​ As of December 31, 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 December 31, 2021, the weighted average remaining contractual life was 8.1 years. For options exercisable as of December 31, 2021, the weighted average remaining contractual life was 6.6 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 first purchase period commenced January 1, 2022. Accordingly, as of December 31, 2021, no shares of common stock have been purchased under the ESPP. 105 Table of Contents 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 accounts for forfeitures as they occur. 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 years ended December 31, 2021 and 2020. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended December 31, ​ ​ ​ 2021 ​ 2020 ​ Weighted average fair value of options granted $ 5.64 ​ ​ $ 1.98 ​ Expected term (in years) — non-officer employees ​ 2.7 to 6.1 ​ ​ ​ 2.7 ​ Expected term (in years) — officer employees ​ 3.0 ​ ​ ​ 3.0 ​ Expected volatility ​ 56.1 % to 63.4 % ​ ​ 62.6 % Expected dividend yield ​ — % ​ ​ — % Risk-free interest rate ​ 0.17 % to 1.44 % ​ ​ 0.16 % to 0.18 % ​ 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 years ended December 31, 2021 and 2020, the Company recognized stock-based compensation expense as follows: ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, (in thousands) ​ 2021 ​ 2020 Selling, general & administrative ​ $ 1,468 ​ $ 88 Research & development ​ ​ 420 ​ 43 Cost of goods sold ​ ​ 24 ​ 1 ​ ​ $ 1,912 ​ $ 132 ​ As of December 31, 2021, unrecognized compensation expense related to unvested stock-based compensation arrangements was $ 6.9 million. As of December 31, 2021, the related weighted average period over which it is expected to be recognized is approximately 3.3 years. 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 December 31, 2021 and 2020, there have been no early exercises and therefore there is no liability recorded for the early exercise of stock options. 106 Table of Contents 8. Income taxes As of December 31, 2021 and 2020, a valuation allowance was recorded against all deferred tax assets due to the Company’s cumulative net loss position. The components of our provision for income taxes are as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, (in thousands) ​ ​ 2021 ​ 2020 Current ​ ​ ​ ​ ​ ​ Federal and state ​ $ — ​ $ — Foreign ​ 91 ​ 85 Total current ​ 91 ​ 85 Total provision for income taxes ​ $ 91 ​ $ 85 ​ ​ ​ ​ ​ ​ ​ ​ Provision for income taxes for the years ended December 31, 2021 and 2020 was $ 91,000 and $ 85,000 , respectively. The reconciliation of taxes at the federal statutory rate to our provision for income taxes are as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ ​ 2021 ​ 2020 Tax at federal statutory rate ​ ​ 21.0 % ​ 21.0 % Permanent differences ​ ​ ( 9.0 ) ​ ​ ( 0.5 ) ​ Research and development ("R&D") tax credit ​ ​ 0.9 ​ ​ 2.6 ​ Uncertain tax position ​ ​ ( 0.2 ) ​ ​ ( 0.5 ) ​ State, net of federal benefit ​ ​ ( 0.7 ) ​ ​ 0.3 ​ Deferred rate change ​ ​ 2.5 ​ ​ ( 0.3 ) ​ Change in valuation allowance ​ ( 14.7 ) ​ ( 23.2 ) ​ Total ​ ​ ( 0.2 ) % ​ ( 0.6 ) % ​ ​ ​ ​ ​ ​ ​ ​ ​ Significant components of net deferred tax assets were as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, (in thousands) ​ ​ 2021 ​ 2020 Deferred tax assets ​ ​ ​ ​ ​ ​ Net operating loss carryforwards ​ $ 74,716 ​ $ 68,957 R&D tax credits ​ ​ 8,711 ​ ​ 8,318 IRC Section 59e election ​ ​ 8,577 ​ ​ 7,955 Start-up costs ​ ​ 1,104 ​ ​ 1,198 Non-qualified stock options ​ ​ 350 ​ ​ 136 Property and equipment ​ ​ 91 ​ ​ 90 Accrued vacation ​ ​ 151 ​ ​ 106 Preferred stock warrants ​ ​ - ​ ​ 607 Other ​ ​ 59 ​ ​ 67 Total deferred tax assets ​ ​ 93,759 ​ ​ 87,434 Valuation allowance ​ ​ ( 93,759 ) ​ ​ ( 87,434 ) Net deferred tax assets ​ $ — ​ $ — ​ ​ ​ ​ ​ ​ ​ ​ As of December 31, 2021, the Company had federal and state net operating loss carryforwards (“NOLs”) of approximately $ 324.8 million and $ 6.5 million, respectively. The federal NOLs began expiring in 2021 and the state NOLs began expiring in 2020. As of December 31, 2021, the Company had federal and state tax credit carryforwards of approximately $ 8.9 million and $ 1.6 million, respectively. The federal tax credit carryforwards began expiring in 2021 and the state tax credits began expiring in 2028. 107 Table of Contents Utilization of NOLs may be subject to an annual limitation due to the ownership change limitations provided by Section 382 of the Internal Revenue Code of 1986, as amended, 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 NOLs and could be triggered by subsequent sales of securities by the Company or its stockholders. The changes to our gross unrecognized tax benefits were as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, (in thousands) ​ ​ 2021 ​ 2020 Gross unrecognized tax benefits at beginning of year ​ $ 1,840 ​ $ 1,757 Gross increases: ​ ​ ​ ​ ​ ​ Prior year tax positions ​ ​ 10 ​ ​ — Current year tax positions ​ ​ 91 ​ ​ 83 Gross decreases: ​ ​ ​ ​ ​ ​ Prior year tax positions ​ ​ ( 2 ) ​ ​ — Gross unrecognized tax benefits at end of year ​ $ 1,939 ​ $ 1,840 ​ All of these unrecognized tax benefits, if recognized, would impact the effective tax rate before taking consideration of the valuation allowance. The Company recognized approximately $ 61,000 and $ 56,000 of interest or penalties for the years ended December 31, 2021 and 2020, respectively. As of December 31, 2021 and 2020, total accrued interest and penalties are $ 0.3 million and $ 0.3 million, respectively. The Company recognizes accrued interest and penalties related to unrecognized tax positions as a component of income tax expense. The Company does not expect a significant change in the amount of unrecognized tax benefits in the next year. ​ The Company is subject to U.S. federal income tax as well as income tax of multiple state and foreign jurisdictions. Tax years from 2001 through present remain open for audit under the applicable statute of limitations due to the carryover of the unused NOLs and tax credit carryforwards. The Company does not have any tax audits or other proceedings pending. 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): ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, (in thousands) ​ ​ 2021 ​ 2020 Numerator: ​ ​ ​ ​ Net loss ​ ​ $ ( 43,078 ) ​ $ ( 14,109 ) Accretion of preferred stock to redemption value ​ ​ — ​ ( 217 ) Net loss attributable to common stockholders ​ ​ $ ( 43,078 ) ​ $ ( 14,326 ) Denominator: ​ ​ ​ Weighted average common shares outstanding — basic and diluted ​ ​ 10,360,054 ​ 387,083 Net loss per share attributable to common stockholders — basic and diluted ​ ​ $ ( 4.16 ) ​ $ ( 37.01 ) ​ 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 108 Table of Contents 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: ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ 2021 2020 Options to purchase common stock 2,749,441 1,473,359 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 ​ 3,465,572 13,511,349 ​ ​ 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 years ended December 31, 2021 and 2020 was $ 0.4 million and $ 0.4 million, respectively. Future minimum lease payments under all operating leases as of December 31, 2021 are as follows for the years ending: ​ ​ ​ ​ (in thousands) ​ ​ ​ December 31, 2022 ​ $ 227 December 31, 2023 ​ 234 December 31, 2024 ​ 138 ​ ​ $ 599 ​ 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 December 31, 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 109 Table of Contents 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 years ended: ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended ​ ​ December 31, (in thousands) ​ 2021 2020 U.S. ​ $ 9,147 ​ $ 1,733 Germany ​ 3,250 ​ 3,790 Other countries ​ 639 ​ 530 ​ ​ $ 13,036 ​ $ 6,053 ​ As of December 31, 2021 and 2020, long-lived assets were located primarily in the U.S. 110 Table of Contents Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure None.