What changed in this filing

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Item 1A. Risk Factors

2023-02-10 compared with 2022-02-22 · 126 added, 255 removed, 653 unchanged (37% of the section changed)

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We expect to continue to incur significant sales and marketing, research and development, regulatory and other expenses as we grow our U.S.

commercial sales force and expand our marketing efforts to increase adoption of Barostim, expand existing relationships with our customers, add new features to Barostim, obtain regulatory clearances or approvals for our planned or future products and conduct clinical trials on our existing and planned or future products.

In addition, we expect our general and administrative expenses to continue to increase following our initial public offering (“IPO”) due to the additional costs associated with being a public company.

Until our IPO, we financed our operations primarily through convertible preferred stock financings and amounts borrowed under our loan and security agreement (“Horizon loan agreement”) with Horizon Technology Finance Corporation.

commercial sales force and expand our marketing efforts to increase adoption of Barostim, add new features to Barostim, obtain regulatory clearances or approvals for our planned or future products and conduct clinical trials on our existing and planned or future products.

Until our IPO, we financed our operations primarily through convertible preferred stock financings and amounts borrowed under our previous loan and security agreement (“Horizon loan agreement”) with Horizon Technology Finance Corporation.

We have devoted substantially all of our financial resources to research and development activities as well as general and administrative expenses associated with our operations, including clinical and regulatory initiatives to obtain marketing approval.

We will need to generate significant additional revenue in order to achieve and sustain profitability.

Since our IPO, we have invested substantially in sales and marketing efforts to support commercialization of Barostim.

We will need to continue to generate significant additional revenue in order to achieve and sustain profitability.

Even if we achieve profitability in the future, we may not be able to sustain profitability in subsequent periods.

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We have a limited history operating as a commercial company and are highly dependent on a single product, Barostim.

The failure to obtain market acceptance in the U.S.

The failure to increase market acceptance in the U.S.

for Barostim would negatively impact our business, liquidity and results of operations.

Since our inception, we have generated minimal revenue as our activities have consisted primarily of developing Barostim Therapy, conducting our BeAT-HF pre-market and post-market pivotal studies in the U.S.

and filing for regulatory approvals.

We first commercialized Barostim in the EEA in 2012 and in the U.S.

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We expect substantially all of our revenue to continue to be derived from sales of Barostim for the foreseeable future, the majority of which will be generated in the U.S.

Because of its recent commercial introduction in the U.S., Barostim has limited product and brand recognition.

In addition, demand for Barostim may decline or may not increase as quickly as we expect.

Because of its relatively recent commercial introduction in the U.S., Barostim has limited product and brand recognition.

In addition, demand for Barostim may decline or may not continue to increase as quickly as we

If we are unable to achieve significant market acceptance in the U.S.

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Because we do not yet have other products currently in development, if we are unsuccessful in commercializing Barostim or are unable to market Barostim as a result of a quality problem, failure to maintain regulatory approvals, unexpected or serious complications or other unforeseen negative effects related to Barostim or the other factors discussed in these risk factors, we would lose our main source of revenue, and our business, reputation, liquidity and results of operations will be materially and adversely affected.

We have limited commercial sales experience marketing and selling Barostim, and if we are unable to establish and maintain sales and marketing capabilities, we will be unable to successfully commercialize Barostim or generate sustained and increasing product revenue.

We currently have a limited sales and marketing organization.

As a result, we have limited experience marketing and selling Barostim.

In order to generate future revenue growth, we plan to expand the size and geographic scope of our U.S.

We have limited commercial sales experience marketing and selling Barostim, and if we are unable to continue to maintain and grow sales and marketing capabilities, we will be unable to generate sustained and increasing product revenue.

In order to generate future revenue growth, we plan to continue to expand the size and geographic scope of our U.S.

direct sales and marketing organization.

In order to increase our sales and marketing efforts, we will need to retain, grow and develop a substantial number of direct sales personnel.

intend to make a significant investment in recruiting and training sales representatives for our commercialization effort in the U.S.

In order to increase our sales and marketing efforts, we will need to continue to retain, grow and develop a substantial number of direct sales personnel, which is a significant investment.

There is significant competition for sales personnel experienced in relevant medical device sales.

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Because the competition for direct medical sales personnel is high, we cannot be certain we will be able to hire and retain additional sales personnel on favorable or commercially reasonable terms, if at all.

Failure to hire or retain qualified sales representatives would prevent us from expanding our business and generating revenue.

Failure to hire or retain qualified sales representatives would prevent us from expanding our business and generating anticipated revenue.

Any of these risks may adversely affect our business.

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In such circumstances, our results of operations would be materially adversely affected.

Patients may not choose or be able to receive Barostim if, among other potential reasons, they are reluctant to receive an implantable device as opposed to an alternative, non-implantable treatment, they are worried about potential adverse effects of Barostim, or they are unable to obtain adequate third-party coverage or reimbursement.

If third-party payors do not provide adequate coverage and reimbursement for the use of Barostim, our revenue will be negatively impacted.

Our success in marketing Barostim depends and will continue to depend in large part on whether U.S.

and international government health administrative authorities, private health insurers and other organizations adequately cover and reimburse customers for the cost of our products.

In the U.S., we expect to derive nearly all our revenue from sales of Barostim to hospitals that typically bill various third-party payors, including Medicare, Medicaid, private commercial insurance companies, health maintenance organizations and other healthcare-related organizations, to cover all or a portion of the costs and fees associated with procedures using Barostim and bill patients for any applicable deductibles or co-payments.

Access to adequate coverage and reimbursement for procedures using Barostim by third-party payors is essential to the acceptance of our products by our customers.

Payors in the U.S.

generally require hospitals and physicians to identify the proper CPT codes for the service for which they are seeking reimbursement.

Procedures using Barostim are currently mapped to CPT code 0266T for the implantation of the device, which is a Category III CPT code.

While customers are currently being reimbursed for our procedure, this may not continue in the future, as payors may determine this Category III CPT code to be investigational.

This uncertainty could result in some of our target customers being unwilling to adopt Barostim over more established or lower cost therapeutic alternatives.

While we intend to request that our codes be promoted to Category I by the American Medical Association, there can be no assurance that such efforts will be successful.

Medicare reimbursement levels are important to increasing adoption of Barostim because nearly two-thirds of the target patient population for Barostim is over the age of 65.

Effective January 2021, CMS awarded Barostim a TPT payment for outpatient procedures that adds the device cost as a pass-through payment to the calculated procedure payment.

The calculated procedure payment depends on many factors, including the location of the hospitals and their billing practices, and may not adequately cover hospital costs associated with the procedure.

In addition, CMS awarded Barostim an NTAP for inpatient procedures, which took effect in October 2020.

The NTAP is for 65% of the device cost and is incremental to the standard payment provided for the implant procedure.

Hospitals are responsible for billing for the procedures to receive the additional payment, when such increase in payment is necessary and there can be no assurance that hospitals will accurately perform these billing procedures.

The TPT payment and the NTAP are only effective for up to three years.

While we intend to request that Barostim be reclassified into a higher Medicare reimbursement level, there can be no assurance that such efforts will be successful.

Any future decline in the amount Medicare is willing to reimburse our customers for procedures using Barostim could make it difficult for new customers to adopt Barostim and could create additional pricing pressure for us, which could adversely affect our ability to invest in and grow our business.

Third-party payors, whether foreign or domestic, or governmental or commercial, are developing increasingly sophisticated methods of controlling healthcare costs.

In addition, in the U.S., no uniform policy of coverage and reimbursement for medical device products and services exists among third-party payors.

Therefore, coverage and reimbursement for medical device products and services can differ significantly from payor to payor.

In addition, payors continually review new technologies for possible coverage and can, without notice, deny coverage for these new products and procedures.

As a result, the coverage determination process is often a time-consuming and costly process for physicians as well as hospitals that often requires us to provide scientific and clinical support for the use of our products to each payor separately, with no assurance that coverage and adequate reimbursement will be obtained, or maintained if obtained.

Accordingly, until such time as Barostim gains broader acceptance by third-party payors as a treatment for HFrEF, hospitals and physicians may encounter delays and additional administrative burdens, such as the submission of supporting documentation, in obtaining reimbursement.

Such delays and additional burdens may make it less likely for physicians and hospitals to adopt Barostim.

Any future decline in the amount third-party payors are willing to reimburse our customers for procedures using Barostim could make it difficult for new customers to adopt Barostim and could create additional pricing pressure for us, which could adversely affect our ability to invest in and grow our business.

Reimbursement systems in international markets vary significantly by country and by region within some countries, and reimbursement approvals must be obtained on a country-by-country basis.

In many international markets, a product must be approved for reimbursement before it can be approved for sale in that country.

Further, many international markets have government-managed healthcare systems that control reimbursement for new devices and procedures.

In most markets, there are private insurance systems as well as government-managed systems.

If sufficient coverage and reimbursement is not available for our current or future products, in either the U.S.

or internationally, the demand for our products and our revenues will be adversely affected.

about potential adverse effects of Barostim, or they are unable to obtain adequate third-party coverage or reimbursement.

Our industry is highly competitive.

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Any product we develop that achieves regulatory clearance or approval, including Barostim, will have to compete for market acceptance and market share.

We believe that the primary competitive factors in the market are demonstrated clinical effectiveness, product safety, reliability and durability, ease of use, product support and service, minimal side effects and salesforce experience and relationships.

Many of our current and potential competitors that are addressing other HF indications are publicly traded, or are divisions of publicly-traded, established medical device companies that have substantially greater financial, technical, sales and marketing resources than we do, such as Medtronic plc, Boston Scientific Corporation, Abbott Laboratories and LivaNova PLC.

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Our competitors may develop and patent processes or products earlier than us, obtain patents that may apply to us at any time, obtain regulatory clearance or approvals for competing products more rapidly than us or develop more effective or less expensive products or technologies that render our technology or products obsolete or less competitive.

We also face fierce competition in recruiting and retaining qualified sales, scientific and management personnel, establishing clinical trial sites and enrolling patients in clinical studies.

We also face fierce competition, particularly in this tight labor market, in recruiting and retaining qualified sales, scientific and management personnel, establishing clinical trial sites and enrolling patients in clinical studies.

If our competitors are more successful than us in these matters, our business may be harmed.

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This process can be lengthy, time-consuming and require extensive negotiations and management time, which could include an approval by a customer’s value analysis committee.

In the EU, from time to time certain institutions require us to engage in a contract bidding process in the event that such institutions are considering making purchase commitments that exceed specified cost thresholds, which vary by jurisdiction.

In the EEA, from time to time certain institutions require us to engage in a contract bidding process in the event that such institutions are considering making purchase commitments that exceed specified cost thresholds, which vary by jurisdiction.

These processes are only open at certain periods of time, and we may not be successful in the bidding process.

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Furthermore, we may expend significant effort in these time-consuming processes and still may not obtain a purchase contract from such hospitals.

We are dependent upon third-party manufacturers and suppliers, and in some cases a limited number of suppliers, making us vulnerable to supply shortages, loss or degradation in performance of the suppliers and price fluctuations, which could harm our business.

We are dependent upon third-party manufacturers and suppliers, and in some cases a limited number of suppliers, making us vulnerable to supply shortages, loss or degradation in performance of the suppliers, price fluctuations and ongoing supply chain disruptions, which could harm our business.

We currently source certain components for Barostim from a limited number of suppliers.

Our ability to supply Barostim commercially depends, in part, on our ability to obtain a supply of these components that has been manufactured in accordance with regulatory requirements and in sufficient quantities for commercialization and clinical testing.

We have not entered into manufacturing, supply or quality agreements with any of our limited suppliers, some of which supply components critical to our products, such as modules, batteries and electrodes.

We currently have no plans to enter into any such contracts and we cannot guarantee that our suppliers will be able to meet our demand for their products and services, either because of the nature of our arrangements with those suppliers, our limited experience with those suppliers, or due to our relative importance as a customer to those suppliers.

We have not entered into manufacturing, supply or quality agreements with most of our limited suppliers, some of which supply components critical to our products, such as modules, batteries and electrodes.

We cannot guarantee that our suppliers will be able to meet our demand for their products and services, either because of the nature of our arrangements with those suppliers, our limited experience with those suppliers, or due to our relative importance as a customer to those suppliers.

Further, due to our limited operating history and expected future expansion, it may be difficult for us to assess their ability to timely meet our demand in the future based on past performance.

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one or more of our limited source suppliers may be unwilling or unable to supply components of Barostim;

• other customers may use fair or unfair negotiation tactics and/or pressures to impede our use of the supplier;

• other customers may use fair or unfair negotiation tactics and/or pressures to impede our use of the

• we do not conduct formal environmental, social or governance due diligence on our supply chain and thus may not be aware if our suppliers pose such risks;

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Our principal offices and our only manufacturing facility are located in Minneapolis, Minnesota.

Substantially all of our operations are conducted at this location, including our manufacturing processes, research,

development and engineering activities, customer and technical support and management and administrative functions.

Substantially all of our operations are conducted at this location, including our manufacturing processes, research, development and engineering activities, customer and technical support and management and administrative

In addition, substantially all of our inventory of component supplies and finished goods is held at the manufacturing facility.

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or worldwide, including the outbreak of the novel strain of coronavirus disease, COVID-19, could adversely affect our business.

If a pandemic, epidemic or outbreak of an infectious disease occurs in the U.S.

or worldwide, our business may be adversely affected.

In December 2019, a novel strain of coronavirus, SARS-CoV-2, was identified in Wuhan, China.

Since then, SARS-CoV-2, and the resulting disease, COVID-19, has spread to most countries and all 50 states within the U.S.

Pandemics, epidemics or outbreaks of an infectious disease may adversely affect our business.

The COVID-19 pandemic has negatively impacted our business, financial condition and results of operations by decreasing and delaying the number of procedures performed using Barostim and the pandemic may continue to negatively impact our business, financial condition and results of operations.

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prioritized the treatment of patients with COVID-19 or altered their operations to prepare for and respond to the pandemic.

We believe the COVID-19 pandemic has also negatively impacted the number of HFrEF diagnoses as hospitals focus on COVID-19 and as patients postpone healthcare visits and treatments.

Specifically, a significant number of procedures using our products were postponed or cancelled beginning in March 2020.

By the beginning of the fourth quarter of 2020, implant centers had resumed procedures in the U.S.

however, procedure volumes were again negatively impacted by the Delta and Omicron variants of COVID-19 in the third and fourth quarters of 2021 and continuing into 2022.

however, procedure volumes were again negatively impacted by the Delta and Omicron variants of COVID-19 in the third and fourth quarters of 2021 and continuing into the first quarter of 2022.

By March 2022 and continuing through the date of this Annual Report on Form 10-K, implant centers resumed procedures at more normal levels.

Numerous state and local jurisdictions have imposed, and others in the future may impose, “shelter-in-place” orders, quarantines, executive orders and similar government orders and restrictions for their residents to control the spread of COVID-19.

Such orders or restrictions have resulted in reduced operations at our headquarters, slowdowns and delays, travel restrictions and cancellation of events and have restricted the ability of our front-line sales representatives to attend procedures in which our products are used, among other effects, thereby negatively impacting our operations.

Such orders or restrictions previously resulted in reduced operations at our headquarters, slowdowns and delays, travel restrictions and cancellation of events and restricted the ability of our front-line sales representatives to attend procedures in which our products are used, among other effects, thereby negatively impacting our operations.

Other disruptions or potential disruptions include restrictions on the ability of our sales representatives and other personnel to travel and access customers for training and case support;

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delays in actions of regulatory bodies;

delays in clinical trials and studies;

diversion of or limitations on employee resources that would otherwise be focused on the operations of our business, including because of sickness of employees or their families or the desire of employees to avoid contact with groups of people;

delays in growing or reductions in our sales organization, including through delays in hiring, lay-offs, furloughs or other losses of sales representatives;

restrictions in our ability to ship our products to customers;

business adjustments or disruptions of certain third parties, including suppliers, medical institutions and clinical investigators with whom we conduct business;

and additional government requirements or other incremental mitigation efforts that may impact our or our suppliers’ capacity to manufacture our products.

variants and the durability of immunity offered by vaccines developed to prevent infection, as well as other actions to contain COVID-19 and its variants or treat its impact, among others.

and delays in clinical trials and studies, especially if study subjects are reluctant to present themselves at medical facilities.

The extent to which the COVID-19 pandemic impacts our business will depend on future developments, which are highly uncertain and cannot be predicted, including new information which may emerge concerning the severity and spread of COVID-19 and its variants and the durability of immunity offered by vaccines developed to prevent infection, as well as other actions to contain COVID-19 and its variants or treat its impact, among others.

While the potential economic impact brought by and the duration of any pandemic, epidemic or outbreak of an infectious disease, including COVID-19, may be difficult to assess or predict, the widespread COVID-19 pandemic has resulted in and may in the future result in, significant disruption of global financial markets, reducing our ability to access capital, which could in the future negatively affect our liquidity.

In addition, a recession or market correction resulting from the spread of an infectious disease, including COVID-19, could materially affect our business.

Such economic recession could have a material adverse effect on our long-term business as hospitals curtail and reduce capital and overall spending.

To the extent the COVID-19 pandemic adversely affects our business and financial results, it may also have the effect of heightening many of the other risks described in this “Risk Factors” section.

To the extent a pandemic adversely affects our business and financial results, it may also have the effect of heightening many of the other risks described in this “Risk Factors” section.

Our international operations subject us to certain operating risks, which could adversely impact our results of operations and financial condition.

Sales of Barostim outside the U.S.

represented a majority of our revenue from sales as recently as the year ended December 31, 2020.

In 2012, we began selling Barostim in the EEA directly to hospitals and through distributors.

The sale and shipment of Barostim across international borders, as well as the purchase of components from international sources, subjects us to U.S.

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Healthcare costs have risen significantly over the past decade, which has resulted in or led to numerous cost reform initiatives by legislators, regulators and third-party payors.

Cost reform has triggered a consolidation trend in the healthcare industry to aggregate purchasing power, which may create more requests for price concessions in the future.

Cost reform has triggered a consolidation

trend in the healthcare industry to aggregate purchasing power, which may create more requests for price concessions in the future.

Additionally, group purchasing organizations, independent delivery networks and large single accounts may continue to use their market power to consolidate purchasing decisions for hospitals.

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Any failure by us to manage our growth effectively could have an adverse effect on our ability to achieve our development and commercialization goals.

To achieve our revenue goals, we must successfully increase manufacturing output to meet expected customer demand.

To achieve our revenue goals, we must continue to successfully increase manufacturing output to meet expected customer demand.

We may experience difficulties with manufacturing yields, quality control, component supply and shortages of qualified personnel, among other problems.

Any of these problems could result in delays in product availability and increases in expenses.

Any such delay or increased expense could adversely affect our ability to generate our revenue.

Future growth will also impose significant added responsibilities on management, including the need to identify, recruit, train and integrate additional employees.

Any such delay or increased expense could adversely affect our ability to generate revenue.

Future growth will continue to impose significant added responsibilities on management, including the need to identify, recruit, train and integrate additional employees.

In addition, rapid and significant growth will place a strain on our administrative and operational infrastructure.

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For example, we are currently pursuing a morbidity and mortality indication for patients with HFrEF, which, if successful, could significantly expand our addressable patient population.

However, we cannot assure you that the morbidity and mortality data will be sufficient to allow us to achieve FDA approval for expansion of this indication.

In addition, if the morbidity and mortality data is perceived to be negative, such data may

impact the adoption of Barostim, notwithstanding our existing clinical data and FDA approval.

However, we cannot assure you that the morbidity and mortality data will be sufficient to allow us to achieve FDA approval for including a morbidity and mortality benefit in this indication.

In addition, if the morbidity and mortality data is perceived to be negative, such data may impact the adoption of Barostim, notwithstanding our existing clinical data and FDA approval.

Clinical testing takes many years, is expensive and carries uncertain outcomes.

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• patients do not return for post-treatment follow-up at the expected rate;

• patients experience serious or unexpected adverse side effects for a variety of reasons that may or may not be related to our products, such as the advanced stage of co-morbidities that may exist at the time of treatment, causing a clinical study to be put on hold;

• patients experience serious or unexpected adverse side effects for a variety of reasons that may or may

not be related to our products, such as the advanced stage of co-morbidities that may exist at the time of treatment, causing a clinical study to be put on hold;

• sites participating in an ongoing clinical study withdraw, requiring us to engage new sites;

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Our clinical studies, including the post-market stage of our BeAT-HF pivotal trial related to the morbidity and mortality indication for patients with HFrEF, may produce negative or inconclusive results and we may decide, or regulators may require us, to conduct additional clinical or non-clinical studies in addition to those we have planned.

The impacts of the COVID-19 pandemic, which may have afflicted certain participants in the post-market pivotal trial, are unknown, but they may exacerbate certain of the risks described above.

The impacts of the COVID-19 pandemic, which may have afflicted certain participants in the post-market pivotal trial, are unknown, but they may exacerbate certain risks described above.

In addition, if the FDA determines for any reason, including safety or their risk-benefit analysis, that the results of the post-market stage of our BeAT-HF pivotal trial or any other future trial are negative, the FDA may decide to modify or revoke our existing approval or such data may impact the adoption of Barostim.

Moreover, a negative perception of clinical results for one indication for use could impact the use of Barostim for other FDA approved and clinically supported indications for use.

We could also encounter delays if the FDA concludes that our financial relationships with investigators results in a perceived or actual conflict of interest that may have affected the interpretation of a study, the integrity of the data generated at the applicable clinical trial site or the utility of the clinical trial itself.

Principal investigators for our clinical trials may serve as scientific advisors or consultants to us from time to time and receive cash compensation and/or stock options in connection with such services.

We could also encounter delays if the FDA concludes that our financial relationships with investigators result in a perceived or actual conflict of interest that may have affected the interpretation of a study, the integrity of the data generated at the applicable clinical trial site or the utility of the clinical trial itself.

Principal investigators for our clinical trials may serve as scientific advisors or consultants to us from time to time and receive compensation in connection with such services.

If these relationships and any related compensation to or ownership interest by the clinical investigator carrying out the study result in perceived or actual conflicts of interest, or if the FDA concludes that the financial relationship may have affected interpretation of the study, the integrity of the data generated at the applicable clinical trial site may be questioned and the utility of the clinical trial itself may be jeopardized.

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Manufacturing and marketing of Barostim and clinical testing of Barostim Therapy may expose us to product liability claims.

Although we have, and intend to maintain, liability insurance, the coverage limits of our insurance policies may not be adequate and one or more successful claims brought against us may have a material adverse effect on our business and results of operations.

The coverage limits of our liability insurance policies may not be adequate and one or more successful claims brought against us may have a material adverse effect on our business and results of

Further, interpretation of product liability laws may change in the future due to court rulings.

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These product liability claims could, among other things, divert management’s attention from our primary business and negatively affect our reputation, continued product sales and our ability to obtain and maintain regulatory approval for our products.

We may in the future become involved in lawsuits to protect or enforce our intellectual property, which could be expensive, time consuming and ultimately unsuccessful, and could result in the diversion of significant resources, thereby hindering our ability to effectively commercialize our existing or future products.

If we are unable to obtain, maintain, protect and enforce our intellectual property, our business will be negatively affected.

The market for medical devices is subject to rapid technological change and frequent litigation regarding patent and other intellectual property rights.

It is possible that our patents or licenses may not withstand challenges made by others or protect our rights adequately.

Our success depends in large part on our ability to secure effective patent protection for our products and processes in the U.S.

and internationally.

We have filed and intend to continue to file patent applications for various aspects of our technology and trademark applications to protect our brand and business.

We seek to obtain and maintain patents and other intellectual property rights to restrict the ability of others to market products or services that misappropriate our technology and/or infringe our intellectual property to compete with our products.

However, we face the risks that:

• We may fail to secure necessary patents, potentially permitting competitors to market competing products and make, use or sell products that are substantially the same as ours without incurring the sizeable development costs that we have incurred, which would adversely affect our ability to compete.

• Our already-granted patents and any future patents may not survive legal challenges to their scope, validity or enforceability, or provide significant protection for us, and they may be re-examined or invalidated, and/or may be found to be unenforceable or not cover competing products.

• Though an issued patent is presumed valid and enforceable, it may not be drafted or interpreted sufficiently broadly to prevent others from marketing products and services similar to ours or designing around our patents.

For example, third parties may be able to make systems or devices that are similar to ours but that are not covered by the claims of our patents.

Third parties may assert that we or our licensors were not the first to make the inventions covered by our issued patents or pending patent applications.

The claims of our issued patents or patent applications when issued may not cover our commercial technology or the future products and services that we develop.

We may not have the

freedom to operate unimpeded by the patent rights of others.

Third parties may have dominating, blocking or other patents relevant to our technology of which we are not aware.

In addition, because patent applications in the U.S.

and many foreign jurisdictions are typically not published until 18 months after the filing of certain priority documents (or, in some cases, are not published until they issue as patents) and because publications in the scientific literature often lag behind actual discoveries, we cannot be certain that others have not filed patent applications for our technology or our contemplated technology.

Any such patent applications may have priority over our patent applications or issued patents, which could further require us to obtain rights to issued patents covering such technologies.

If another party has filed a U.S.

patent application on inventions similar to ours, depending on when the timing of the filing date falls under certain patent laws, we may have to participate in a priority contest (such as an interference proceeding) declared by the U.S.

Patent and Trademark Office (the “USPTO”), to determine priority of invention in the U.S.

There may be prior public disclosures that could invalidate our inventions or parts of our inventions of which we are not aware.

Further, we may not develop additional proprietary technologies and, even if we do, they may not be patentable.

• Patent law is constantly evolving, can be highly uncertain and involve complex legal and factual questions for which important principles remain unresolved.

and in many foreign jurisdictions, policies regarding the breadth of claims allowed in patents can be inconsistent.

We cannot predict future changes in the interpretation of patent laws or changes to patent laws that might be enacted into law by U.S.

and foreign legislative bodies.

Any changes may materially affect our patents or patent applications, our ability to obtain patents or the patents and patent applications of our licensors.

Future protection for our proprietary rights is uncertain because legal means afford only limited protection and may not adequately protect our rights or permit us to gain or keep our competitive advantage, which could adversely affect our financial condition and results of operations.

• Monitoring unauthorized uses of our intellectual property is difficult and costly.

From time to time, we seek to analyze our competitors’ products and services, and may in the future seek to enforce our patents or other proprietary rights against potential infringement.

However, the steps we have taken to protect our proprietary rights may not be adequate to prevent misappropriation of our intellectual property.

We may not be able to detect unauthorized use of, or take appropriate steps to enforce, our intellectual property rights.

Our competitors may also independently develop similar technology.

Any inability to meaningfully protect our intellectual property could result in competitors offering products that incorporate our product features, which could reduce demand for our products.

In addition, we may need to defend our patents from third-party challenges, or we may need to initiate infringement claims or litigation.

In an infringement proceeding, a court may decide that the patent we seek to enforce is invalid or unenforceable or that the patent in question does not cover the technology at issue.

Such an adverse result could place one or more of our patents at risk of being invalidated or interpreted narrowly.

Our competitors may be able to devote significantly more resources to intellectual property litigation, and may have significantly broader patent portfolios to assert against us.

Further, litigation risks exposure of or compromising our confidential information.

• Any litigation or claim can be costly and time consuming and could place a significant strain on our financial resources, divert the attention of management and harm our reputation, which could have an adverse effect on our financial condition and results of operations.

• We may be forced to enter into cross-license agreements with competitors in order to manufacture, use, sell, import and export products or services that are covered by our competitors’ intellectual property rights.

If our intellectual property is required to enter such cross-license agreements, it may compromise the value of our intellectual property due to the fact that our competitors may be able to manufacture, use, sell, import and export our patented technology.

For additional information regarding risks related to our intellectual property, see “Risks Related to Intellectual Property.”

If we fail to retain our key executives or recruit and hire new employees, our operations and financial results may be adversely affected while we attract other highly qualified personnel.

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In particular, we are highly dependent upon our management team, especially our President and Chief Executive Officer and the rest of our senior management.

The replacement of any of our key personnel likely would involve significant time and costs, may significantly delay or prevent the achievement of our business objectives and may harm our business.

The replacement of key personnel involves significant time and costs, may significantly delay or prevent the achievement of our business objectives and may harm our business.

In addition, we do not carry any “key person” insurance policies that could offset potential loss of service under applicable circumstances.

In addition, many of our employees have become or will soon become vested in a substantial amount of stock or number of stock options.

In addition, many of our employees have become vested in a substantial amount of stock or number of stock options.

Our employees may be more likely to leave us if the shares they own or the shares underlying their vested options have significantly appreciated in value relative to the original purchase prices of the shares or the exercise prices of the options, or if the exercise prices of the options that they hold are significantly below the market price of our common stock.

Our future success also depends on our ability to retain executive officers and other key employees and attract new key employees.

Many executive officers and employees in the medical device industry are subject to strict non-compete or confidentiality agreements with their employers.

In addition, some of our existing and future employees are or may be subject to confidentiality agreements with previous employers.

In addition, some of our existing and future employees are subject to confidentiality agreements with previous employers.

Our competitors may allege breaches of and seek to enforce such non-compete agreements or initiate litigation based on such confidentiality agreements.

Such litigation, whether or not meritorious, may impede our ability to attract or use executive officers and other key employees who have been employed by our competitors and may result in intellectual property claims against us.

Failure to protect our information technology infrastructure against cyber-based attacks, network security breaches, service interruptions, or data corruption could significantly disrupt our operations and adversely affect our business and operating results.

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Despite our review of studies reporting on the trends of HF incidence in the U.S., the actual incidence of HF and the actual demand for our product or competitive products could differ materially from our expectations.

In addition, our strategy of focusing exclusively on patients with HFrEF who are looking for an improvement in the symptoms associated with HFrEF may limit our ability to increase sales or achieve profitability, especially if there are any significant clinical breakthroughs or product or drug introductions that significantly delay or

reduce the need for heart disease therapy.

Moreover, a percentage of our indicated patients may be ineligible to undergo a Barostim procedure if they have certain co-morbidities or other disqualifying factors as determined by their physicians.

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If the actual number of patients who would benefit from our product, the price at which we can sell our product, or the annual total addressable market for our product is smaller than we have estimated, it may impair our sales growth and have an adverse impact on our business.

Unfavorable global economic conditions could adversely affect our business, financial condition or results of operations.

Our results of operations could be adversely affected by general conditions in the global economy and in the global financial markets.

For example, the global financial crisis caused extreme volatility and disruptions in the capital and credit markets and, more recently, the global COVID-19 pandemic caused, and in some cases is continuing to cause, disruptions in the capital and credit markets, severe supply shortages and reduced hospital and clinical visits, including due to temporary shutdowns under federal, state and local mandates.

A severe or prolonged economic downturn, such as the global financial crisis and COVID-19 pandemic, has resulted in and could in the future result in a variety of risks to our business, including weakened demand for Barostim, a delayed time to meet clinical endpoints and our ability to raise additional capital when needed on acceptable terms, if at all.

A weak or declining economy has strained and could in the future strain our manufacturers or suppliers, resulting in supply disruption, or causing our customers to delay making payments for our services.

Unfavorable economic conditions could adversely affect our business, financial condition or results of operations.

Our results of operations could be adversely affected by general conditions in the economy and the financial markets.

Concerns over economic and political stability, inflation levels and related efforts to mitigate inflation, a potential recession, the level of U.S.

national debt, currency fluctuations and volatility, the rate of growth of Japan, China and other Asian economies, unemployment, the availability and cost of credit, trade relations, including the imposition of various sanctions and tariffs, the recovery from the COVID-19 pandemic, energy costs and geopolitical uncertainty and conflict have contributed to increased volatility and diminished expectations for the economy and markets in general.

An economic downturn could result in a variety of risks to our business, including weakened demand for Barostim, a delayed time to meet clinical endpoints and our ability to raise additional capital when needed on acceptable terms, if at all.

A weak or declining economy could also strain our manufacturers or suppliers, resulting in supply disruption, or causing our customers to delay making payments for our services.

Certain of the foregoing have harmed and could in the future harm our business, and we cannot anticipate all of the ways in which the economic climate and financial market conditions may further affect our business.

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Disputes between us and our collaborators may result in litigation or arbitration which would increase our expenses and divert the attention of our management.

Further, these transactions and arrangements are contractual in nature and may be terminated or dissolved under the terms of the applicable agreements and, in such event, we may not continue to have rights to the products relating to such transaction or arrangement or may need to purchase such rights at a premium.

Further, these transactions and arrangements are contractual in nature and

may be terminated or dissolved under the terms of the applicable agreements and, in such event, we may not continue to have rights to the products relating to such transaction or arrangement or may need to purchase such rights at a premium.

We may seek to grow our business through acquisitions of complementary products or technologies, and the failure to manage acquisitions, or the failure to integrate them with our existing business, could impair our ability to execute our business strategies.

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Medicare reimbursement levels are important to increasing adoption of Barostim because nearly two-thirds of the target patient population for Barostim is over the age of 65.

Effective January 2021, CMS awarded Barostim a TPT payment for outpatient procedures that adds the device cost as a pass-through payment to the calculated procedure payment.

Effective January 2021, CMS awarded Barostim a TPT payment for outpatient procedures that adds the device cost as a pass-through payment to the calculated procedure payment, which will remain in place through 2023.

In addition, CMS awarded Barostim an NTAP for inpatient procedures, which took effect in October 2020.

The NTAP is for 65% of the device cost and is incremental to the standard payment provided for the implant procedure.

Hospitals are responsible for billing for the procedures to receive the additional payment when such increase in payment is necessary and there can be no assurance that hospitals will accurately perform these billing procedures.

The TPT payment and the NTAP are only effective for up to three years.

While we intend to request that Barostim be reclassified into a higher Medicare reimbursement level, there can be no assurance that such efforts will be successful.

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Risks related to intellectual property

We may in the future become involved in lawsuits to defend ourselves against intellectual property disputes, which could be expensive, time consuming and ultimately unsuccessful, and could result in the diversion of significant resources, and hinder our ability to commercialize our existing or future products.

Our success depends in part on not infringing the patents or violating the other proprietary rights of others.

We may in the future become involved in lawsuits to protect or enforce our intellectual property or defend ourselves against intellectual property disputes, which could be expensive, time consuming and ultimately unsuccessful, and could result in the diversion of significant resources, thereby hindering our ability to effectively commercialize our existing or future products.

Our success depends in part on obtaining, maintaining and enforcing patents and other intellectual property rights and not infringing the patents or violating the other proprietary rights of others.

Intellectual property disputes can be costly to defend and may cause our business, operating results and financial condition to suffer.

Significant litigation regarding patent rights occurs in the medical device industry.

Whether merited or not, it is possible that third parties controlling U.S.

and foreign patents allege such patents cover our products.

Whether merited or

not, it is possible that third parties controlling U.S.

and foreign patents allege such patents cover our products, or we may decide to initiate infringement claims or litigation to protect our patents or other intellectual property rights.

We may also face allegations that our employees have misappropriated the intellectual property rights of their former employers or other third parties.

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Further, if such patents are successfully asserted against us, this may result in an adverse impact on our business, including injunctions, damages or attorneys’ fees.

Moreover, if we initiate an infringement proceeding, a court may decide that the patent we seek to enforce is invalid or unenforceable or that the patent in question does not cover the technology at issue.

From time to time and in the ordinary course of business, we may develop noninfringement or invalidity positions with respect to third-party patents, which may or may not be ultimately adjudicated as successful by a judge or jury if such patents were asserted against us.

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• redesign those products or processes that infringe any third-party intellectual property, which could be costly, disruptive or infeasible.

From time to time, we may be subject to legal proceedings and claims in the ordinary course of business with respect to intellectual property.

If a court determines that we failed to secure necessary patents, competitors may be able to market competing products and make, use or sell products that are substantially the same as ours without incurring the sizeable development costs that we have incurred, which would adversely affect our ability to compete.

Even if resolved in our favor, litigation or other legal proceedings relating to intellectual property claims may cause us to incur significant expenses and could distract our technical and management personnel from their normal responsibilities.

In addition, there could be public announcements of the results of hearings, motions or other interim proceedings or developments, and if securities analysts or investors perceive these results to be negative, it could have a material adverse effect on the price of our common stock.

In addition, there could be public announcements of the results of hearings, motions

or other interim proceedings or developments, and if securities analysts or investors perceive these results to be negative, it could have a material adverse effect on the price of our common stock.

Finally, any uncertainties resulting from the initiation and continuation of any litigation could have a material adverse effect on our ability to raise the funds necessary to continue our operations.

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Any litigation or claim against us, even those without merit, may cause us to incur substantial costs and could place a significant strain on our financial resources, divert the attention of management from our core business and harm our reputation.

Further, as the number of participants in our industry grows, the possibility of intellectual property infringement claims against us increases.

Further, as the number of participants in our industry grows, the possibility of intellectual property infringement disputes increases.

In addition, we may indemnify our customers, suppliers and international distributors against claims relating to the infringement of the intellectual property rights of third parties relating to our products, methods and/or manufacturing processes.

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We may be subject to damages resulting from claims that we or our employees have wrongfully used or disclosed alleged trade secrets of our competitors or are in breach of non-disclosure or confidentiality agreements with our competitors.

We could in the future be subject to claims that we or our employees have inadvertently or otherwise used or disclosed alleged trade secrets or other proprietary information of former employers or competitors.

Although we have procedures in place that seek to prevent our employees and consultants from using the intellectual property, proprietary information, know-how or trade secrets of others in their work for us, we may in the future be subject to claims that we caused an employee to breach the terms of his or her non-disclosure or confidentiality agreement, or that we or these individuals have, inadvertently or otherwise, used or disclosed the alleged trade secrets or other proprietary information of a former employer or competitor, resulting in litigation.

Even if we are successful in defending against these claims, the litigation could be costly and a

distraction to management.

We could in the future be subject to claims that we or our employees have inadvertently or otherwise used or disclosed alleged trade secrets or other proprietary information about former employers or competitors.

disclosure or confidentiality agreement, or that we or these individuals have, inadvertently or otherwise, used or disclosed the alleged trade secrets or other proprietary information of a former employer or competitor, resulting in litigation.

Even if we are successful in defending against these claims, the litigation could be costly and a distraction to management.

If we are unsuccessful in defending against these claims, in addition to paying monetary damages, a court could prohibit us from using technologies or features that are essential to our products, if such technologies or features are found to incorporate or be derived from the trade secrets or other proprietary information of the former employers.

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We may be required to obtain additional funds in the future, and these funds may not be available on acceptable terms or at all.

Our operations have consumed substantial amounts of cash since inception, and we anticipate our expenses will increase as we build a commercial sales force in the U.S., investigate the potential use of Barostim for the treatment of other HF conditions, continue to grow our business and transition to operating as a public company.

Our operations have consumed substantial amounts of cash since inception, and we anticipate our expenses will increase as we continue to build our commercial sales force in the U.S., investigate the potential use of Barostim for the treatment of other HF conditions, continue to grow our business and operate as a public company.

We believe that our growth will depend, in part, on our ability to fund our commercialization and research and development efforts.

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Our cash requirements in the future may be significantly different from our current estimates and depend on many factors, including, among others:

• the scope and timing of our investment in our U.S.

• the scope and timing of our continued investment in our U.S.

commercial infrastructure and sales force;

• the costs of commercialization activities, including product sales, marketing, manufacturing and distribution and hiring a direct sales and marketing team in the U.S.;

• the costs of commercialization activities, including product sales, marketing, manufacturing and distribution and hiring additional members for our direct sales and marketing team in the U.S.;

• the degree and rate of market acceptance of Barostim;

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If we borrow additional funds or issue debt securities, these securities could have rights superior to holders of our common stock and could contain covenants that will restrict our operations, including limitations on our ability to incur liens or additional debt, pay dividends, repurchase our common stock, make certain investments and engage in certain merger, consolidation or asset sale transactions.

For example, our Loan and Security Agreement (the “Loan Agreement”) with Innovatus Life Sciences Fund I, LP (“Innovatus”) restricts us from paying dividends or making other distributions or payments on our capital stock, subject to limited exceptions.

We might have to obtain funds through arrangements with collaborative partners or others that may require us to relinquish rights to our technologies, product candidates or products that we otherwise would not relinquish.

If we do not obtain additional resources, our ability to capitalize on business opportunities will be limited, we may be unable to compete effectively and the growth of our business will be adversely affected.

Our operating results may vary significantly annually or from quarter to quarter, which may negatively impact our stock price in the future.

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While historically seasonality has been minimal, we anticipate increased seasonality due to our increased focus on sales within the U.S.

These seasonal variations are difficult to predict accurately, may vary amongst different markets and at times may be entirely unpredictable, which introduces additional risk into our business as we rely upon forecasts of customer demand to build inventory in advance of anticipated sales.

These seasonal variations are difficult to predict accurately, may vary among different markets and at times may be entirely unpredictable, which introduces additional risk into our business as we rely upon forecasts of customer demand to build inventory in advance of anticipated sales.

In addition, we believe our limited history commercializing our products has, in part, made our seasonal patterns more difficult to discern and therefore predict.

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dollar, a majority of which is denominated in Euros.

In 2019 and 2020, a majority of our total revenue was denominated in foreign currencies.

As a result, changes in the exchange rates between such foreign currencies, particularly the Euro and the U.S.

could materially impact our reported results of operations and distort period to period comparisons.

dollar, could materially impact our reported results of operations and distort period to period comparisons.

Fluctuations in foreign currency exchange rates also impact the reporting of our receivables and payables in non-U.S.

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As of December 31, 2022, we had federal and state tax credit carryforwards of approximately $9.3 million and $1.8 million, respectively.

The federal and state tax credit carryforwards began expiring in 2021 and 2028, respectively.

The federal and state tax credit carryforwards began expiring in 2021 and begin expiring in 2028, respectively.

These NOL and tax credit carryforwards could expire unused and be unavailable to offset future income tax liabilities.

Under the legislation enacted on December 22, 2017 commonly referred to as the “Tax Cuts and Jobs Act” (the “TCJA”), as modified by the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”), federal NOLs incurred in taxable years beginning after December 31, 2017 may be carried forward indefinitely, but the deductibility of such federal NOLs incurred in taxable years beginning after December 31, 2020 is limited.

Under the legislation enacted on December 22, 2017 commonly referred to as the “Tax Cuts and Jobs Act,” as modified by the Coronavirus Aid, Relief, and Economic Security Act, federal NOLs incurred in taxable years beginning after December 31, 2017 may be carried forward indefinitely, but the deductibility of such federal NOLs incurred in taxable years beginning after December 31, 2020 is limited.

In addition, under Sections 382 and 383 of the U.S.

Internal Revenue Code of 1986, as amended (the “Code”), a corporation that undergoes an “ownership change” is subject to limitations on its ability to utilize its pre-change NOL and specified other tax credit carryforwards, such as research and development tax credits, to offset future taxable income and taxes.

Internal Revenue Code of 1986, as amended (the “Code”), a corporation that undergoes an “ownership change” is subject to limitations on its ability to utilize its pre-change NOLs and specified other tax credit carryforwards, such as research and development tax credits, to offset future taxable income and taxes.

We may have previously experienced, and may in the future experience, one or more “ownership changes” for purposes of the rules under Section 382 and 383 of the Code, including in connection with our IPO.

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In addition, the Internal Revenue Service or other taxing authorities may disagree with our positions.

If the Internal Revenue Service or any other tax authorities were successful in challenging our positions, we may be liable for additional tax and penalties and interest related

thereto or other taxes, as applicable, in excess of any reserves established therefor, which may have a significant impact on our results, operations and future cash flow.

If the Internal Revenue Service or any other tax authorities were successful in challenging our positions, we may be liable for additional tax and penalties and interest related thereto or other taxes, as applicable, in excess of any reserves established therefor, which may have a significant impact on our results, operations and future cash flow.

Changes in U.S.

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federal and state regulations or EEA or other foreign regulations applicable in the countries where we operate could lead to the issuance of warning letters or untitled letters, fines, injunctions, suspensions or loss of regulatory clearance or approvals, recalls or seizures of products, termination of distribution, or civil penalties.

In the most extreme cases, criminal sanctions or closure of our

manufacturing facilities are possible.

In the most extreme cases, criminal sanctions or closure of our manufacturing facilities are possible.

If any of these risks materialize, our business would be adversely affected.

Barostim is also subject to extensive governmental regulation in foreign jurisdictions, such as Europe, and our failure to comply with applicable requirements could cause our business to suffer.

In the EEA, Barostim must comply with the Essential Requirements laid down in Annex I to the EU Active Implantable Medical Devices Directive.

Compliance with these requirements is a prerequisite to be able to affix the CE mark to Barostim, without which they cannot be marketed or sold in the EEA.

To demonstrate compliance with the Essential Requirements and obtain the right to affix the CE Mark to Barostim, we must undergo a conformity assessment procedure, which varies according to the type of medical device and its classification.

Except for low-risk medical devices (Class I with no measuring function and which are not sterile), where the manufacturer can issue an EU Declaration of Conformity based on a self-assessment of the conformity of its products with the Essential Requirements, a conformity assessment procedure requires the intervention of a Notified Body, which is an organization designated by a competent authority of an EEA country to conduct conformity assessments.

Depending on the relevant conformity assessment procedure, the Notified Body would audit and examine the Technical File and the quality system for the manufacture, design and final inspection of our devices.

The Notified Body issues a CE Certificate of Conformity following successful completion of a conformity assessment procedure conducted in relation to the medical device and its manufacturer and their conformity with the Essential Requirements.

This Certificate entitles the manufacturer to affix the CE mark to its medical devices after having prepared and signed a related EU Declaration of Conformity.

In the EEA, Barostim was required to comply with the Essential Requirements laid down in Annex I to the EU Active Implantable Medical Devices Directive.

Compliance with these requirements was a prerequisite to affixing the CE mark to Barostim.

To demonstrate compliance with the Essential Requirements and obtain the right to affix the CE Mark to Barostim, we underwent a conformity assessment procedure, which varied according to the type of medical device and its classification.

Except for low-risk medical devices (Class I with no measuring function and which are not sterile), where the manufacturer could issue an EU Declaration of Conformity based on a self-assessment of the conformity of its products with the Essential Requirements, a conformity assessment procedure required the intervention of a Notified Body, which is an organization designated by a competent authority of an EEA country to conduct conformity assessments.

Depending on the relevant conformity assessment procedure, the Notified Body would audit the QMS and examine the Technical File for the manufacture, design and final inspection of our devices.

The Notified Body would issue a CE Certificate of Conformity following successful completion of this conformity assessment procedure conducted in relation to the medical device and its manufacturer and their conformity with the Essential Requirements.

This Certificate would entitle the manufacturer to affix the CE mark to its medical devices after having prepared and signed a related EU Declaration of Conformity.

As a general rule, demonstration of conformity of medical devices and their manufacturers with the Essential Requirements must be based on, among other things, the evaluation of clinical data supporting the safety and performance of the products during normal conditions of use.

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This process can be expensive and time-consuming.

In order to continue to sell Barostim in Europe, we must maintain our CE Mark and continue to comply with certain EU Directives and in the future EU MDR.

Our failure to continue to comply with applicable foreign regulatory requirements, including those administered by authorities of the EEA countries, could result in enforcement actions against us, including refusal, suspension or withdrawal of our CE Certificates of Conformity by our Notified Body (the National Standards Authority of Ireland, or NSAI), which could impair our ability to market products in the EEA in the future.

Our business is subject to extensive governmental regulation that could make it more expensive and time consuming for us to bring Barostim to market in the U.S.

In order to continue to sell Barostim in Europe, we must comply with the MDR and its evolving transition requirements.

We have submitted our application for Barostim to comply with the general safety and performance requirements of the EU MDR (which are similar to the Essential Requirements of the AIMDD);

however, there is no guarantee that Barostim will be approved by the end of 2023.

If approved, the proposal to extend the expiration of AIMDD CE certificates until May 31, 2027 would mitigate the risk of compliance with the MDR by the end of 2023.

Failing to continue to comply with applicable foreign regulatory requirements, including those administered by authorities of the EEA countries, could result in enforcement actions against us, including refusal, suspension or withdrawal of our CE Certificates of Conformity by our Notified Body (the National Standards Authority of Ireland, or NSAI), which could impair our ability to market products in the EEA in the future.

Our business is subject to extensive governmental regulation that could make it more expensive and time consuming for us to market Barostim in the U.S.

and introduce new or improved products.

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It often takes several years to satisfy these requirements, depending on the complexity and novelty of the product.

We also are subject to numerous additional licensing and regulatory requirements

relating to safe working conditions, manufacturing practices, environmental protection, fire hazard control and disposal of hazardous or potentially hazardous substances.

We also are subject to numerous additional licensing and regulatory requirements relating to safe working conditions, manufacturing practices, environmental protection, fire hazard control and disposal of hazardous or potentially hazardous substances.

Some of the most important requirements we must comply with include:

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In addition, if the FDA determines that our promotional materials or training constitute promotion of an off-label use, it could request that we modify our training or promotional materials or subject us to regulatory or enforcement actions, including the issuance of an untitled letter, a warning letter, injunction, seizure, civil fine or criminal penalties.

It is also possible that other federal, state or foreign enforcement authorities might take action if they consider our business activities to constitute inappropriate promotion, including promotion of an off-label use, which could result in significant penalties, including, but not limited to, criminal, civil and/or administrative penalties, damages, fines, disgorgement, exclusion from participation in government healthcare programs and the curtailment of our operations.

use, which could result in significant penalties, including, but not limited to, criminal, civil and/or administrative penalties, damages, fines, disgorgement, exclusion from participation in government healthcare programs and the curtailment of our operations.

Any of these events could significantly harm our business and results of operations and cause our stock price to decline.

Further, the advertising and promotion of our products is subject to EEA member state laws implementing the MDD, Directive 2006/114/EC concerning misleading and comparative advertising and Directive 2005/29/EC on unfair commercial practices, as well as other EEA member state legislation governing the advertising and

promotion of medical devices.

EEA member state legislation may also restrict or impose limitations on our ability to advertise our products directly to the general public.

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Seeking such approvals may delay our ability to replace the recalled devices in a timely manner.

Moreover, if we do not adequately address problems associated with our devices, we may face additional regulatory enforcement action, including FDA warning letters, product seizure, injunctions, administrative penalties or civil or criminal fines.

Moreover, if we do not adequately address problems associated with our devices, we may face additional regulatory enforcement actions, including FDA warning letters, product seizure, injunctions, administrative penalties or civil or criminal fines.

Companies are required to maintain certain records of recalls and corrections, even if they are not reportable to the FDA.

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A future recall announcement could harm our reputation with customers, potentially lead to product liability claims against us and negatively affect our sales.

Any corrective action, whether voluntary or involuntary, as well as defending ourselves in a lawsuit, will require the dedication of our time and capital, distract management from operating our business and may harm our reputation and financial results.

Any corrective action, whether voluntary or involuntary, as well as defending

ourselves in a lawsuit, will require the dedication of our time and capital, distract management from operating our business and may harm our reputation and financial results.

Our products may cause or contribute to adverse medical events or be subject to failures or malfunctions that we are required to report to the FDA and European regulators, and if we fail to do so, we would be subject to sanctions that could harm our reputation, business, financial condition and results of operations.

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Our business practices and relationships with providers are subject to scrutiny under these laws.

We may also be subject to privacy and security regulation related to patient, customer, employee and other third-party information by both the federal government and the states and foreign jurisdictions in which we conduct our business.

We are subject to privacy and security regulation related to patient, customer, employee and other third-party information by both the federal government and the states and foreign jurisdictions in which we conduct our business.

In the U.S., the laws that may affect our ability to operate include, but are not limited to:

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• federal civil and criminal false claims laws and civil monetary penalty laws, including civil whistleblower or qui tam actions, that prohibit, among other things, knowingly presenting, or causing to be presented, claims for payment or approval to the federal government that are false or fraudulent, knowingly making a false statement material to an obligation to pay or transmit money or property to the federal government or knowingly concealing or knowingly and improperly avoiding or decreasing an obligation to pay or transmit money or property to the federal government;

• the federal Civil Monetary Penalties Law, which prohibits, among other things, offering or transferring remuneration to a federal healthcare beneficiary that a person knows or should know is likely to influence the beneficiary’s decision to order or receive items or services reimbursable by the government from a particular provider or supplier;

• the federal HIPAA, which created federal criminal laws that prohibit executing a scheme to defraud any

healthcare benefit program or making false statements relating to healthcare matters.

the beneficiary’s decision to order or receive items or services reimbursable by the government from a particular provider or supplier;

• the federal HIPAA, which created federal criminal laws that prohibit executing a scheme to defraud any healthcare benefit program or making false statements relating to healthcare matters.

Similar to the Anti-Kickback Statute, a person or entity does not need to have actual knowledge of these statutes or specific intent to violate them;

• HIPAA, as amended by HITECH, and their respective implementing regulations, which impose requirements on certain covered healthcare providers, health plans and healthcare clearinghouses as well as their business associates that perform services for them that involve individually identifiable health information, relating to the privacy, security and transmission of individually identifiable health information without appropriate authorization, including mandatory contractual terms as well as directly applicable privacy and security standards and requirements;

• the federal physician sunshine requirements under the Affordable Care Act, which require certain manufacturers of drugs, devices, biologics and medical supplies to report annually to HHS information related to payments and other transfers of value to physicians (defined to include doctors, dentists, optometrists, podiatrists and chiropractors) and teaching hospitals, and ownership and investment interests held by physicians and their immediate family members;

• the federal physician payments sunshine requirements under the Affordable Care Act, which require certain manufacturers of drugs, devices, biologics and medical supplies to report annually to HHS information related to payments and other transfers of value to certain healthcare providers and teaching hospitals;

• state and foreign law equivalents of each of the above federal laws, such as state anti-kickback and false claims laws that may apply to items or services reimbursed by any third-party payor, including commercial insurers;

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Due to the breadth of these laws, the narrowness of statutory exceptions and regulatory safe harbors available, and the range of interpretations to which they are subject, it is possible that some of our current or future practices might be challenged under one or more of these laws.

The scope and enforcement of each of these laws is uncertain and subject to rapid change in the current environment of healthcare reform, especially in light of the lack of applicable precedent and regulations.

The scope and enforcement of each of these laws is uncertain and subject to rapid change, especially in light of the lack of applicable precedent and regulations.

Federal and state enforcement bodies continue to increase their scrutiny of interactions between healthcare companies and healthcare providers.

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In the U.S., there have been and continue to be a number of legislative initiatives to contain healthcare costs.

In March 2010, the Affordable Care Act was enacted in the U.S., which made a number of substantial

changes in the way healthcare is financed by both governmental and private insurers.

In March 2010, the Affordable Care Act was enacted in the U.S., which made a number of substantial changes in the way healthcare is financed by both governmental and private insurers.

Among other ways in which it may affect our business, the Affordable Care Act:

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We expect that additional state and federal healthcare reform measures will be adopted in the future, any of which could limit the amounts that federal and state governments will pay for healthcare products and services.

Additionally, on April 5, 2017, the European Parliament passed the MDR, which repeals and replaces the MDD and the Active Implantable Medical Devices Directive.

Unlike directives, which must be implemented into the national laws of the EEA member states, the regulations would be directly applicable (i.e., without the need for adoption of the EEA member state laws implementing them), in all EEA member states and are intended to eliminate current differences in the regulation of medical devices among the EEA member states.

Additionally, on April 5, 2017, the European Parliament passed the MDR, which repeals and replaces the MDD and the AIMDD.

Unlike directives, which must be implemented into the national laws of the EEA member states, the regulations are directly applicable (i.e., without the need for adoption of the EEA member state laws implementing them), in all EEA member states and are intended to eliminate differences in the regulation of medical devices among the EEA member states.

The MDR, among other things, is intended to establish a uniform, transparent, predictable and sustainable regulatory framework across the EEA for medical devices and ensure a high level of safety and health while supporting innovation.

The MDR became fully effective in May 2021 and, among other things:

• strengthened the rules on placing devices on the market and reinforced surveillance once they are available;

• established explicit provisions on manufacturers’ responsibilities for the follow-up of the quality, performance and safety of devices placed on the market;

• improved the traceability of medical devices throughout the supply chain to the end-user or patient through a unique identification number;

The MDR became effective in May 2021 and, among other things is designed to:

• strengthen the rules on placing devices on the market and reinforce surveillance once they are available;

• establish explicit provisions on manufacturers’ responsibilities for the follow-up of the quality, performance and safety of devices placed on the market;

• improve the traceability of medical devices throughout the supply chain to the end-user or patient through a unique identification number;

• set up a central database to provide patients, healthcare professionals and the public with comprehensive information on products available in the EU;

• strengthened rules for the assessment of certain high-risk devices, such as implants, which may have to undergo an additional check by experts before they are placed on the market.

• strengthen rules for the assessment of certain high-risk devices, such as implants, which may have to undergo an additional check by experts before they are placed on the market.

This regulation has not yet had a material effect on the way we conduct our business in the EEA.

However, it is possible the regulation will change in the future, and we cannot be certain that future changes will not have an adverse effect on our business operations.

In December 2021 we began the process of filing the Barostim device under the EU MDR and must go through a successful technical file conformity assessment and quality system audit before being certified for CE mark under the EU MDR.

Risks related to our common stock

We are incurring and will incur significantly increased costs as a result of being a public company, and our management is required to devote substantial time to compliance with our public company responsibilities, which may adversely affect our business, financial condition and results of operations.

As a public company, we have incurred and expect to continue to incur significant legal, accounting and other expenses that we did not incur as a private company.

For example, we are now subject to the reporting requirements of the Exchange Act and must comply with the applicable requirements of the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”), and the Dodd-Frank Wall Street Reform and Consumer Protection Act, as well as rules and regulations subsequently implemented by the SEC and The Nasdaq Stock Market LLC (“Nasdaq”), including the establishment and maintenance of effective disclosure and financial controls and changes in corporate governance practices.

Compliance with these requirements has and will continue to increase our legal and financial compliance costs and make some activities more time consuming and costly, which may adversely affect our business, financial condition and results of operations.

In addition, our management and other personnel must now divert attention from operational and other business matters to devote substantial time to these public company requirements.

In particular, we have incurred and expect to continue to incur significant expenses and devote substantial management effort toward ensuring compliance with the requirements of Section 404 of the Sarbanes-Oxley Act, which will increase when we are no longer an emerging growth company, as defined by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), and are not a non-accelerated filer.

We have hired, and will need to continue to hire additional accounting and financial staff with appropriate public company experience and technical accounting knowledge and have established an internal audit function.

We cannot predict or estimate the amount of additional costs we may incur as a result of becoming a public company or the timing of such costs.

Additional compensation costs and any future equity awards will increase our compensation expense, which would increase our general and administrative expense and could adversely affect our profitability.

As a public company, it is more difficult and expensive for us to obtain director and officer liability insurance on reasonable terms.

As a result, it may be more difficult for us to attract and retain qualified people to serve on our Board of Directors, our board committees, or as executive officers.

We expect that the price of our common stock will fluctuate substantially, and you may not be able to resell shares of our common stock at or above the price you paid.

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Any adverse determination in litigation could also subject us to significant liabilities.

We have broad discretion to determine how to use the funds raised in the IPO and may use them in ways that may not enhance our operating results or the price of our common stock.

Our management has broad discretion over the use of proceeds from the IPO, and we could spend them in ways our stockholders may not agree with or that do not yield a favorable return, if at all.

We currently expect to use the net proceeds from the IPO to continue funding the expansion of our direct sales force and commercial organization related to Barostim in the U.S., research and development activities related to Barostim Therapy and working capital and general corporate purposes.

If we do not invest or apply the proceeds of the IPO in ways that improve our operating results, we may fail to achieve expected financial results, which could cause our stock price to decline.

An active trading market for our shares of common stock may not be sustained.

Our common stock began trading on June 30, 2021 and has a limited trading history upon which to assess whether an active public market for our shares may be sustained.

The lack of an active market may impair the value of your shares or your ability to sell your shares at the time you wish to sell them or at a price that you consider reasonable.

An inactive market may also impair our ability to raise capital by selling shares and may impair our ability to acquire other businesses or technologies or in-license new product candidates using our shares as consideration.

Furthermore, there can be no guarantee that we will continue to satisfy the continued listing standards of Nasdaq.

If we fail to satisfy these listing standards, we could be de-listed, which would have a negative effect on the price of our common stock.

Securities analysts may not publish favorable research or reports about our business or may publish no information at all, which could cause our stock price and trading volume to decline.

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If no or few securities or industry analysts cover us, the trading price for our stock would be negatively impacted.

If any of the analysts who cover us issues an adverse or misleading opinion regarding us, our business model, our intellectual property or our stock performance, or if our clinical trials and operating results fail to meet the expectations of analysts, our stock price would likely

If one or more of these analysts cease coverage of us or fail to publish reports on us regularly, we could lose visibility in the financial markets, which in turn could cause our stock price or trading volume to decline.

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The Sarbanes-Oxley Act requires that we maintain effective disclosure controls and procedures and internal control over financial reporting.

We have developed and expect to continue to refine our disclosure controls and other procedures that are designed to ensure that information required to be disclosed by us in the reports that we file with the SEC is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and that information required to be disclosed in reports under the Exchange Act is accumulated and communicated to our principal executive and financial officers.

Section 404 of the Sarbanes-Oxley Act requires that we evaluate and determine the effectiveness of our internal control over financial reporting and, beginning with our second annual report following the IPO, which will be for our fiscal year ending December 31, 2022, provide a management report on internal control over financial reporting.

The Sarbanes-Oxley Act also requires that our management report on internal control over financial reporting be attested to by our independent registered public accounting firm, to the extent we are no longer an “emerging growth company,” as defined by the JOBS Act, and are not a

non-accelerated filer.

and reported within the time periods specified in SEC rules and forms, and that information required to be disclosed in reports under the Exchange Act is accumulated and communicated to our principal executive and financial officers.

Section 404 of the Sarbanes-Oxley Act requires that we evaluate and determine the effectiveness of our internal control over financial reporting and provide a management report on internal control over financial reporting.

We do not expect to have our independent registered public accounting firm attest to our management report on internal control over financial reporting for so long as we are an emerging growth company.

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If we identify material weaknesses in our internal control over financial reporting, if we are unable to comply with the requirements of Section 404 of the Sarbanes-Oxley Act in a timely manner, if we are unable to assert that our internal control over financial reporting is effective, or, when required in the future, if our independent registered public accounting firm is unable to express an opinion as to the effectiveness of our internal control over financial reporting, or if our internal control over financial reporting is perceived as inadequate or we are unable to produce timely or accurate financial statements, investors may lose confidence in the accuracy and completeness of our financial reports and the market price of our common stock could decline and we could become subject to investigations or removal by the stock exchange on which our securities are listed, the SEC, or other regulatory authorities, which could require additional financial and management resources.

If we sell shares of our common stock in future financings, stockholders may experience immediate dilution and, as a result, our stock price may decline.

We may from time to time issue additional shares of common stock at a discount from the current trading price of our common stock.

As a result, our stockholders would experience immediate dilution upon the purchase of any shares of our common stock sold at such discount.

In addition, as opportunities present themselves, we may enter into financing or similar arrangements in the future, including the issuance of debt securities, preferred stock or common stock.

If we issue common stock or securities convertible into common stock, our common stockholders would experience additional dilution and, as a result, our stock price may decline.

Our principal stockholders, management and directors (four of whom are affiliated with our principal stockholders) own a significant percentage of our stock and will be able to exert significant control over matters subject to stockholder approval.

Our principal stockholders, management and directors (three of whom are affiliated with our principal stockholders) own a significant percentage of our stock and will be able to exert significant control over matters subject to stockholder approval.

As of December 31, 2022, our executive officers, directors, holders of 5% or more of our capital stock and their respective affiliates beneficially owned approximately 59% of our outstanding voting stock.

Four of our non-employee directors are also affiliated with certain of our principal stockholders.

Three of our non-employee directors are also affiliated with certain of our principal stockholders.

Therefore, if they act together, these stockholders will have the ability to influence us through this ownership position and matters requiring stockholder approval.

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Our amended and restated certificate of incorporation provides that the Court of Chancery of the State of Delaware is the exclusive forum for substantially all disputes between us and our stockholders, which could limit our stockholders' ability to obtain a favorable judicial forum for disputes with us or our directors, officers or employees.

brought on our behalf, any action asserting a breach of fiduciary duty, any action asserting a claim against us arising pursuant to the Delaware General Corporation Law (the “DGCL”) or any action asserting a claim against us that is governed by the internal affairs doctrine.

The exclusive forum provision does not apply to suits brought to enforce any liability or duty created by the Exchange Act or any other claim for which the federal courts have exclusive jurisdiction.

Our amended and restated certificate of incorporation provides that, to the fullest extent permitted by law, the Court of Chancery of the State of Delaware is the exclusive forum for any derivative action or proceeding brought on our behalf, any action asserting a breach of fiduciary duty, any action asserting a claim against us arising pursuant to the Delaware General Corporation Law (the “DGCL”) or any action asserting a claim against us that is governed by the internal affairs doctrine.

The exclusive forum provision does not apply to suits brought to enforce any liability or duty created by the Exchange Act or any other claim for which the

federal courts have exclusive jurisdiction.

Our amended and restated certificate of incorporation also provides that the U.S.

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• provide that our amended and restated bylaws may only be altered, amended or repealed by our stockholders upon the affirmative vote of a two-thirds majority of the voting power of all of our outstanding voting stock, voting together as a single class;

timely manner and also specify requirements as to the form and content of a stockholder’s notice, which may discourage or deter a potential acquiror from conducting a solicitation of proxies to elect the acquiror’s own slate of directors or otherwise attempting to obtain control of our company;

• provide that stockholders seeking to present proposals before a meeting of stockholders or to nominate candidates for election as directors at a meeting of stockholders must provide notice in writing in a timely manner and also specify requirements as to the form and content of a stockholder’s notice, which may discourage or deter a potential acquiror from conducting a solicitation of proxies to elect the acquiror’s own slate of directors or otherwise attempting to obtain control of our company;

• prohibit cumulative voting in the election of directors, which limits the ability of minority stockholders to elect director candidates;

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

What changed 10-K

Item 1A. Risk Factors