CVRx, Inc. 10-Q

Item 1. Financial Statements CVRx, INC. Condensed Consolidated Balance Sheets (In thousands, except share and per share data) (Unaudited) ​ ​ ​ ​ ​ ​ ​ ​ March 31, December 31, ​ ​ 2023 ​ 2022 Assets ​ ​ Current assets: ​ ​ Cash and cash equivalents ​ $ 103,276 ​ $ 106,194 Accounts receivable, net of allowances of $ 641 and $ 679 , respectively ​ 6,434 ​ 5,504 Inventory ​ 8,241 ​ 6,957 Prepaid expenses and other current assets ​ 2,631 ​ 4,223 Total current assets ​ 120,582 ​ 122,878 Property and equipment, net ​ 1,805 ​ 1,698 Operating lease right-of-use asset ​ ​ 277 ​ ​ 334 Other non-current assets ​ 27 ​ 27 Total assets ​ $ 122,691 ​ $ 124,937 Liabilities and Stockholders’ Equity ​ ​ Current liabilities: ​ ​ Accounts payable ​ $ 1,996 ​ $ 1,719 Accrued expenses ​ 5,961 ​ 6,369 Total current liabilities ​ 7,957 ​ 8,088 Long-term debt ​ ​ 14,218 ​ ​ 6,747 Operating lease liability, non-current portion ​ ​ 59 ​ ​ 117 Other long-term liabilities ​ 815 ​ 805 Total liabilities ​ 23,049 ​ 15,757 Commitments and contingencies (Note 10) ​ ​ Stockholders’ equity: ​ ​ Common stock, $ 0.01 par value, 200,000,000 authorized as of March 31, 2023 and December 31, 2022; 20,708,940 and 20,633,736 shares issued and outstanding as of March 31, 2023 and December 31, 2022, respectively ​ 207 ​ 207 Additional paid-in capital ​ 547,195 ​ 545,362 Accumulated deficit ​ ( 447,556 ) ​ ( 436,182 ) Accumulated other comprehensive loss ​ ( 204 ) ​ ( 207 ) Total stockholders’ equity ​ 99,642 ​ 109,180 Total liabilities and stockholders’ equity ​ $ 122,691 ​ $ 124,937 ​ The accompanying notes are an integral part of these condensed consolidated financial statements. ​ 5 Table of Contents CVRx, INC. Condensed Consolidated Statements of Operations and Comprehensive Loss (In thousands, except share and per share data) (Unaudited) ​ ​ ​ ​ ​ ​ ​ ​ Three months ended ​ ​ March 31, ​ ​ 2023 2022 Revenue ​ $ 7,979 ​ $ 4,076 Cost of goods sold ​ 1,328 ​ 949 Gross profit ​ 6,651 ​ 3,127 Operating expenses: ​ ​ Research and development ​ 3,416 ​ 2,258 Selling, general and administrative ​ 15,397 ​ 10,777 Total operating expenses ​ 18,813 ​ 13,035 Loss from operations ​ ( 12,162 ) ​ ( 9,908 ) Interest expense ​ ( 240 ) ​ — Other income (expense), net ​ 1,062 ​ ( 57 ) Loss before income taxes ​ ( 11,340 ) ​ ( 9,965 ) Provision for income taxes ​ ( 34 ) ​ ( 26 ) Net loss ​ ( 11,374 ) ​ ( 9,991 ) Cumulative translation adjustment ​ 3 ​ ( 6 ) Comprehensive loss ​ $ ( 11,371 ) ​ $ ( 9,997 ) Net loss per share, basic and diluted ​ $ ( 0.55 ) ​ $ ( 0.49 ) Weighted-average common shares used to compute net loss per share, basic and diluted ​ 20,693,224 ​ 20,453,341 ​ The accompanying notes are an integral part of these condensed consolidated financial statements. ​ 6 Table of Contents ​ CVRx, INC. Condensed Consolidated Statements of Stockholders’ Equity (In thousands, except share data) (Unaudited) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Accumulated ​ ​ ​ ​ ​ ​ ​ ​ ​ Additional ​ ​ ​ ​ other ​ Total ​ ​ Common stock ​ paid-in ​ Accumulated ​ comprehensive ​ stockholders’ ​ Shares ​ Amount capital deficit loss equity Balances as of December 31, 2022 20,663,736 $ 207 ​ $ 545,362 ​ $ ( 436,182 ) ​ $ ( 207 ) ​ $ 109,180 Exercise of stock options 45,204 — ​ 128 ​ — ​ — ​ 128 Employee stock compensation — — ​ 1,705 ​ — ​ — ​ 1,705 Net loss for the three months ended March 31, 2023 — — ​ — ​ ( 11,374 ) ​ — ​ ( 11,374 ) Cumulative translation adjustment — — ​ — ​ — ​ 3 ​ 3 Balances as of March 31, 2023 20,708,940 $ 207 ​ $ 547,195 ​ $ ( 447,556 ) ​ $ ( 204 ) ​ $ 99,642 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Balances as of December 31, 2021 20,399,337 $ 204 ​ $ 540,707 ​ $ ( 394,754 ) ​ $ ( 198 ) ​ $ 145,959 Exercise of stock options ​ 87,634 ​ ​ 1 ​ ​ 47 ​ ​ — ​ ​ — ​ ​ 48 Employee stock compensation — — ​ 793 ​ — ​ — ​ 793 Net loss for the three months ended March 31, 2022 — — ​ — ​ ( 9,991 ) ​ — ​ ( 9,991 ) Cumulative translation adjustment — — ​ — ​ — ​ ( 6 ) ​ ( 6 ) Balances as of March 31, 2022 20,486,971 $ 205 ​ $ 541,547 ​ $ ( 404,745 ) ​ $ ( 204 ) ​ $ 136,803 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ The accompanying notes are an integral part of these condensed consolidated financial statements. ​ 7 Table of Contents CVRx, INC. Condensed Consolidated Statements of Cash Flows (In thousands) (Unaudited) ​ ​ ​ ​ ​ ​ ​ ​ Three months ended ​ ​ March 31, ​ ​ 2023 2022 Cash flows from operating activities: ​ ​ Net loss ​ $ ( 11,374 ) ​ $ ( 9,991 ) Adjustments to reconcile net loss to net cash used in operating activities: ​ ​ Stock-based compensation ​ 1,705 ​ 793 Depreciation of property and equipment ​ 129 ​ 62 Loss on disposal of equipment ​ ​ 4 ​ ​ — Amortization of deferred financing costs and loan discount ​ 31 ​ — Changes in operating assets and liabilities: ​ ​ Accounts receivable ​ ( 930 ) ​ ( 1,113 ) Inventory ​ ( 1,284 ) ​ ( 1,381 ) Prepaid expenses and other current assets ​ 1,591 ​ 485 Accounts payable ​ 277 ​ 1,097 Accrued expenses ​ ( 398 ) ​ ( 596 ) Net cash used in operating activities ​ ( 10,249 ) ​ ( 10,644 ) Cash flows from investing activities: ​ ​ Purchase of property and equipment ​ ( 240 ) ​ ( 293 ) Net cash used in investing activities ​ ( 240 ) ​ ( 293 ) Cash flows from financing activities: ​ ​ Proceeds from the exercise of common stock options ​ 128 ​ 48 Proceeds from debt financing ​ ​ 7,500 ​ ​ — Debt financing costs ​ ​ ( 60 ) ​ ​ — Net cash provided by financing activities ​ 7,568 ​ 48 Effect of currency exchange on cash and cash equivalents ​ 3 ​ ( 6 ) Net change in cash and cash equivalents ​ ( 2,918 ) ​ ( 10,895 ) Cash and cash equivalents at beginning of period ​ 106,194 ​ 142,072 Cash and cash equivalents at end of period ​ $ 103,276 ​ $ 131,177 Supplemental Information: ​ ​ Cash paid for interest ​ $ 188 ​ $ — ​ The accompanying notes are an integral part of these condensed consolidated financial statements. ​ 8 Table of Contents CVRx, INC. Notes to Condensed Consolidated Financial Statements (Unaudited) 1. Business organization CVRx, Inc. (the “Company”) was incorporated in Delaware and is headquartered in Minneapolis, Minnesota. The Company has developed and is marketing a medical device, Barostim, for heart failure (“HF”) and resistant hypertension. The Company is focused on the sale of its product in the U.S. and Europe. Management expects that operating losses and negative cash flows from operations could continue in the foreseeable future. There is no assurance that the Company will generate sufficient product sales to produce positive earnings or cash flows. 2. Summary of significant accounting policies Statement presentation and basis of consolidation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and with the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) applicable to interim financial statements. In the Company’s opinion, the accompanying unaudited condensed consolidated financial statements reflect all adjustments necessary for a fair presentation of the Company’s statements of financial position, results of operations and cash flows for the periods presented. The results of operations for the interim periods are not necessarily indicative of results that may be expected for the fiscal year as a whole or any other future period. The condensed consolidated financial statements include the accounts of CVRx, Inc., its wholly owned subsidiary, CVRx Switzerland LLC, and its sales branch in Italy. All intercompany balances and transactions have been eliminated in consolidation. JOBS Act accounting election The Company is an emerging growth company under the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”). As a result, the Company has elected to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies. Use of estimates Preparation of the condensed consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts reported in the condensed consolidated financial statements and the accompanying notes. Actual results could differ from those estimates. Cash and cash equivalents Cash and cash equivalents include highly liquid investments with an original maturity of three months or less. As of March 31, 2023 and December 31, 2022, cash equivalents consisted of money market funds, which are stated at cost and approximate fair value. Additionally, as of March 31, 2023 and December 31, 2022, our cash and cash equivalents were maintained with two financial institutions in the U.S., and our current deposits are likely in excess of insured limits. 9 Table of Contents Accounts Receivable Trade accounts receivable are recorded at the invoiced amount and do not bear interest. Customer credit terms are established prior to shipment with the standard generally being net 30 days. We evaluate the collectability of our accounts receivable based on known collection risks and historical experience. In circumstances where we are aware of a specific customer's inability to meet its financial obligations to us, we record a specific allowance for bad debts against amounts due to reduce the carrying amount of accounts receivable to the amount we reasonably believe will be collected. ​ Inventory Inventory is stated at the lower of cost or net realizable value, with cost determined on a first-in, first-out basis. The Company regularly reviews inventory quantities in consideration of actual loss experiences, projected future demand and remaining shelf life to record a provision for excess and obsolete inventory when appropriate. Leases Operating leases are included in operating lease right-of-use (“ROU”) asset, accrued expenses, and operating lease liability – non-current portion in our balance sheets. ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. We used the incremental borrowing rate based on information readily available at the time of recognition to determine the present value of the lease payments. The determination of our incremental borrowing rate requires management judgement based on information available at lease commencement. Revenue recognition The Company sells its products primarily through a direct sales force and to a lesser extent through a combination of sales agents and independent distributors. The Company’s revenue consists primarily of the sale of its Barostim, which consists of two implantable components: a pulse generator and a stimulation lead. Under Accounting Standards Codification (“ASC”) Topic 606, Revenue from Contracts with Customers (“ASC 606”), revenue is recognized when a customer obtains control of promised goods or services, in an amount that reflects the consideration that the entity expects to receive in exchange for those goods or services. To determine revenue recognition for arrangements that an entity determines are within the scope of ASC 606, the Company performs the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the entity satisfies a performance obligation. The Company only applies the five-step model to contracts when it is probable that the Company will collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer. The Company recognizes net revenue on product sales when the customer obtains control of the Company’s product, which generally occurs at a point in time upon delivery based on the contractual shipping terms of a contract. Stock-Based Compensation We recognize equity-based compensation expense for awards of equity instruments to employees and non-employees based on the grant date fair value of those awards in accordance with Financial Accounting Standards Board (“FASB”) ASC Topic 718, Compensation—Stock Compensation (“ASC 718”). ASC 718 requires all equity-based compensation awards to employees and non-employee directors, including grants of restricted shares and stock options, to be recognized as expense in the statements of operations and comprehensive loss based on their grant date fair values. We estimate the grant date fair value of stock options using the Black-Scholes option pricing model. We account for forfeitures as they occur. We expense 10 Table of Contents the fair value of our equity-based compensation awards granted to employees on a straight-line basis over the associated service period, which is generally the period in which the related services are received. ​ Recent accounting pronouncements In June 2016, the FASB issued Accounting Standards Update (“ASU”) 2016-13, Financial Instruments - Credit Losses ("ASU 2016-13"), to require the measurement of expected credit losses for financial instruments held at the reporting date to be based on historical experience, current conditions, and reasonable forecasts. ASU 2016-13 became effective for us for interim and annual periods beginning January 1, 2023. The adoption of ASU 2016-13 did not have a material impact on our results of operations, cash flows, or financial position. ​ 3. Selected balance sheet information Inventory consists of the following at: ​ ​ ​ ​ ​ ​ ​ ​ ​ March 31, December 31, (in thousands) ​ 2023 ​ 2022 Raw material ​ $ 3,037 ​ $ 2,390 Work-in-process ​ 519 ​ 1,033 Finished goods ​ 4,685 ​ 3,534 ​ ​ $ 8,241 ​ $ 6,957 ​ Property and equipment, net consists of the following at: ​ ​ ​ ​ ​ ​ ​ ​ ​ March 31, December 31, (in thousands) ​ 2023 ​ 2022 Office furniture and equipment ​ $ 350 ​ $ 350 Lab equipment ​ 2,685 ​ 2,684 Computer equipment and software ​ 640 ​ 618 Leasehold improvements ​ 95 ​ 95 Capital equipment in process ​ 430 ​ 231 ​ ​ 4,200 ​ 3,978 Less: Accumulated depreciation and amortization ​ 2,395 ​ 2,280 ​ ​ $ 1,805 ​ $ 1,698 ​ Depreciation is determined using the straight-line method over the estimated useful lives of the respective assets, generally three to five years . Leasehold improvements are amortized on a straight-line basis over the shorter of their estimated useful lives or the term of the lease. Depreciation expense was $ 129,000 and $ 62,000 for the three months ended March 31, 2023 and 2022, respectively. ​ 11 Table of Contents Accrued expenses consist of the following at: ​ ​ ​ ​ ​ ​ ​ ​ ​ March 31, December 31, (in thousands) ​ 2023 ​ 2022 Bonuses ​ $ 1,813 ​ $ 2,303 Clinical trial and other professional fees ​ ​ 1,384 ​ ​ 1,733 Paid time off ​ 1,112 ​ 960 Customer rebates ​ ​ 334 ​ ​ 256 Operating lease liability, current portion ​ ​ 227 ​ ​ 222 Taxes ​ ​ 114 ​ ​ 120 Other ​ 977 ​ 775 ​ ​ $ 5,961 ​ $ 6,369 ​ ​ 4. Debt Innovatus Loan Agreement On October 31, 2022, the Company entered into a Loan and Security Agreement (the “Loan Agreement”) with Innovatus Life Sciences Fund I, LP, as the collateral agent and a lender, under which the Company may borrow, subject to the Company’s achievement of certain milestones, up to a total of $ 50.0 million in a series of term loans. On the closing date, the Company borrowed the minimum amount of $ 7.5 million under the Loan Agreement. On March 10, 2023, the Company borrowed the $ 7.5 million remaining under the first tranche of the Loan Agreement , with $ 4.0 million received on March 13, 2023 and $ 3.5 million received on March 15, 2023 . The Loan Agreement initially requires interest only payments through November 2027, followed by three monthly principal and interest payments. A final payment of $ 0.7 million, equal to 4.5 % of the original borrowed principal, is due in January 2028. The terms loans advanced pursuant to the Loan Agreement (collectively, the “Term Loans”) bear interest at a floating rate per annum equal to the sum of (a) the greater of (i) the prime rate and (ii) 5.50 % plus (b) 2.65 %. The Term Loans are secured by substantially all of the personal property of the Company. The Company has the option to draw down (i) up to $ 30.0 million less the amount funded from the first tranche between September 1, 2023 and December 15, 2023 if the Company achieves trailing three months revenue of $ 5.75 million prior to June 30, 2023, and (ii) up to $ 20.0 million between September 1, 2024 and December 15, 2024 if the Company achieves trailing three months revenue of $ 9.0 million prior to June 30, 2024. A performance covenant takes effect at the earlier of September 30, 2025 or the third tranche funding requiring that the Company achieve 50 % of the trailing twelve months revenue target set in the Board-approved revenue plan in effect for such period. The Loan Agreement requires the payment of certain penalties if the Term Loans are paid off prior to maturity for any reason, including pursuant to an acceleration clause, and includes various restrictive covenants, including a restriction on the payment of dividends or making other distributions or payments on the Company’s capital stock, subject to limited exceptions. The Company was in compliance with these covenants as of March 31, 2023. ​ In connection with the Loan Agreement, the Company recorded $ 0.8 million of debt issuance costs and discounts as a reduction of long-term debt. ​ 12 Table of Contents The annual principal maturities of debt under the Loan Agreement are as follows: ​ ​ ​ ​ ​ ​ March 31, (in thousands) ​ 2023 2023 $ — 2024 ​ — 2025 ​ — 2026 ​ — 2027 ​ ​ 10,000 2028 ​ ​ 5,000 ​ ​ 15,000 Less: Unamortized debt costs and discounts ​ ( 782 ) Long-term debt ​ $ 14,218 ​ ​ 5. Leases We lease 23,890 square feet of office space in Minneapolis, Minnesota, which houses our principal executive offices and our manufacturing facility. We lease this space under an operating lease agreement that commenced December 1, 2008 and expires July 31, 2024. We intend to add new facilities as we grow, and we believe that suitable additional or substitute space will be available as needed to accommodate any such expansion of our operations. Our operating lease agreement includes an option to renew for one additional period of five years . The exercise of the lease renewal option is at our sole discretion and was not included in the lease term for the calculation of the ROU asset and lease liability, as it is not reasonably certain of exercise. In addition to base rent, we also pay our proportionate share of operating expenses, as defined in the lease. These payments are made monthly and are adjusted annually to reflect actual charges incurred for operating expenses, such as common area maintenance, taxes and insurance. The following table presents the lease balances within the condensed consolidated balance sheets: ​ ​ ​ ​ ​ ​ ​ ​ March 31, ​ December 31, (in thousands) ​ 2023 ​ 2022 Right-of-use assets: ​ ​ ​ ​ ​ ​ Operating lease right-of-use asset ​ $ 277 ​ $ 334 Operating lease liabilities: ​ ​ ​ ​ ​ ​ Accrued expenses ​ ​ 227 ​ ​ 222 Operating lease liability, non-current portion ​ ​ 59 ​ ​ 117 Total operating lease liabilities ​ $ 286 ​ $ 339 ​ Maturities of our lease liability for our operating lease are as follows as of March 31, 2023: ​ ​ ​ ​ ​ ​ ​ March 31, (in thousands) ​ 2023 2023 ​ ​ 177 2024 ​ ​ 119 Total undiscounted lease payments ​ ​ 296 Less: imputed interest ​ ​ ( 10 ) Present value of lease liability ​ $ 286 ​ ​ As of March 31, 2023, the remaining lease term was 1.3 years and the discount rate was 5.0 %. The operating cash outflows from our operating lease were $ 0.1 million and $ 0.2 million for the three months ended March 31, 2023 and 2022, respectively. 13 Table of Contents ​ 6 . Stockholders’ equity Common Stock Warrants In connection with the initial public offering (the “IPO”), the warrants to purchase shares of convertible preferred stock automatically converted into warrants to purchase common stock, resulting in the reclassification of the related convertible preferred stock warrant liability to additional paid-in capital. Upon the closing of the IPO, these warrants to purchase convertible preferred stock became exercisable for 716,131 shares of common stock upon conversion at a weighted average exercise price of $ 2.39 per share. 7. Stock-based compensation Summary of plans and activity In June 2001, the Company’s Board of Directors and stockholders established the 2001 Stock Incentive Award Plan (“2001 Plan”). Under the 2001 Plan, as amended, 2,674,749 shares of common stock had been reserved for the issuance of incentive stock options granted to employees, non-employee directors, consultants or independent contractors. Options granted under the 2001 Plan have vesting terms that range from the date of grant to four years and expire within a maximum term of 10 years from the grant date. In 2021, the Company’s Board of Directors and stockholders established the 2021 Equity Incentive Plan (“2021 Plan”). The number of shares of common stock initially reserved for issuance under the 2021 Plan was 1,854,490 newly reserved shares in addition to the 600,737 shares that remained available for issuance under the 2001 Plan. The shares available for issuance under the 2021 Plan automatically increase on the first day of each year, commencing January 1, 2022, and ending on (and including) January 1, 2031, in an amount equal to 5 % of the total number of shares of the Company’s common stock outstanding on the last day of the calendar month before the date of each automatic increase, or such lesser number of shares as determined by the Board of Directors. The annual increase resulted in an additional 1,033,186 shares being reserved for issuance under the 2021 Plan as of January 1, 2023. The 2021 Plan provides for the issuance of stock options, stock appreciation rights, restricted stock awards, stock unit awards and other stock-based awards and cash incentive awards to employees, consultants and non-employee directors of the Company and its subsidiaries. Awards granted under the 2021 Plan will have such vesting schedules and other terms as determined by the Compensation Committee and stock options and stock appreciation rights have a maximum term of 10 years from the grant date. No further awards can be made under the 2001 Plan following the adoption of the 2021 Plan. As of March 31, 2023, there were 1,832,425 shares available for future issuance under the 2021 Plan. Options are granted at exercise prices not less than the fair market value (as determined by the Board of Directors) of the Company’s common stock on the date of grant. During the years 2008 through the IPO, the Board of Directors authorized the grant of stock options for the purchase of shares of common stock to the employers of certain non-employee directors. The options were not granted under the 2001 Plan or the 2021 Plan, but terms are substantially the same as the Company’s standard form of option agreement for non-employee directors as they have an exercise price not less than the fair market value on the grant date and vest over 48 months from the date of grant. 14 Table of Contents The following is a summary of stock option activity: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted ​ ​ ​ ​ Number ​ Average ​ Aggregate ​ ​ of ​ Exercise ​ Intrinsic ​ ​ Options ​ Price ​ Value ​ ​ ​ ​ ​ ​ (in thousands) Balance as of December 31, 2022 3,756,835 ​ $ 8.28 ​ $ 36,616 Granted 847,479 ​ 13.92 ​ ​ Cancelled / Forfeited ( 132,505 ) ​ 7.55 ​ ​ Exercised ( 45,204 ) ​ 2.83 ​ ​ Balance as of March 31, 2023 4,426,605 ​ $ 9.44 ​ ​ $ 10,105 Options exercisable as of March 31, 2023 1,877,891 ​ $ 6.74 ​ ​ $ 7,846 ​ As of March 31, 2023, stock options outstanding included 8,796 options that were not granted under the 2001 Plan or the 2021 Plan. For options outstanding as of March 31, 2023, the weighted average remaining contractual life was 7.9 years. For options exercisable as of March 31, 2023, the weighted average remaining contractual life was 6.5 years. The Company’s Board of Directors and stockholders also established an Employee Stock Purchase Plan (the “ESPP”). The number of shares of common stock initially reserved for issuance under the ESPP was 278,170 . The shares available for issuance under the ESPP automatically increase on the first day of each year, commencing January 1, 2022, and ending on (and including) January 1, 2031, in an amount equal to 1 % of the total number of shares of the Company’s common stock outstanding on the last day of the calendar month before the date of each automatic increase, or such lesser number of shares as determined by the Board of Directors. The annual increase resulted in an additional 206,637 shares being reserved for issuance under the ESPP as of January 1, 2023. The ESPP permits certain of the Company’s U.S. employees to purchase shares of the Company’s common stock at a price per share not less than 85 % of the l ower of (i) the closing market price per share of the Company’s common stock on the first day of the applicable purchase period or (ii) the closing market price per share of the Company’s common stock on the purchase date at the end of the applicable six-month purchase period. The first purchase date under the ESPP was June 30, 2022. As of March 31, 2023, there were 574,910 shares available for issuance under the ESPP. Stock-based compensation expense The Company uses the Black-Scholes option pricing model to determine the fair value of stock options and ESPP purchase rights on the grant date. The Company measures stock-based compensation expense based on the grant date fair value of the award and recognizes compensation expense over the requisite service period, which is generally the vesting period for stock options and the offering period for ESPP purchase rights. The amount of stock-based compensation expense recognized for stock option awards during a period is based on the portion of the awards that are ultimately expected to vest. The amount of stock-based compensation expense recognized for ESPP purchase rights during a period is based on the estimated purchase rights as of the grant date. The Company accounts for forfeitures as they occur. 15 Table of Contents The following table provides the weighted average fair value of options granted to employees and the related assumptions used in the Black-Scholes option pricing model for the three months ended March 31, 2023 and 2022: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ March 31, ​ ​ ​ ​ 2023 ​ ​ 2022 Weighted average fair value of options granted $ 10.72 ​ ​ $ 4.77 ​ Expected term (in years) — non-officer employees ​ 6.1 ​ ​ ​ 6.1 ​ Expected term (in years) — officer employees ​ 2.5 to 6.1 ​ ​ ​ 6.1 ​ Expected volatility ​ 77.6 % to 79.2 % ​ ​ 56.3 % to 56.8 % Expected dividend yield ​ — % ​ ​ — % Risk-free interest rate ​ 3.40 % to 4.18 % ​ ​ 1.75 % to 2.40 % ​ ​ The following table provides the weighted average fair value of ESPP purchase rights and the related assumptions used in the Black-Scholes option pricing model for the three months ended March 31, 2023 and 2022: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ March 31, ​ ​ ​ ​ 2023 ​ ​ 2022 ​ Weighted average fair value per ESPP purchase right $ — ​ ​ $ — ​ Expected term (in years)  ​ 0.5 ​ ​ ​ 0.5 ​ Expected volatility ​ 84.6 % ​ ​ 51.3 % Expected dividend yield ​ — % ​ ​ — % Risk-free interest rate ​ 4.77 % ​ ​ 0.22 % ​ The Company reviews these assumptions on a periodic basis and adjusts them, as necessary. The expected term of a stock option award was determined based on the Company’s analysis of historical exercise behavior while taking into consideration various participant demographics and option characteristics. The expected term of an ESPP purchase right is based on the offering period. We utilize the simplified method to develop the estimate of the expected term. The expected volatility is based upon observed volatility of comparable public companies. The expected dividend yield is assumed to be zero , as the Company has never paid dividends and has no current plans to do so. The risk-free interest rate is based on the yield on U.S. Treasury securities for a period approximating the expected term of the options being valued. The following table presents the components and classification of stock-based compensation expense for the periods indicated: ​ ​ ​ ​ ​ ​ ​ ​ ​ Three months ended ​ March 31, (in thousands) ​ 2023 ​ 2022 Stock options ​ $ 1,584 ​ $ 793 Employee Stock Purchase Plan ​ ​ 121 ​ ​ — Total stock-based compensation expense ​ $ 1,705 ​ $ 793 ​ ​ ​ ​ ​ ​ ​ Selling, general & administrative ​ $ 1,180 ​ $ 674 Research & development ​ ​ 508 ​ 102 Cost of goods sold ​ ​ 17 ​ 17 ​ ​ $ 1,705 ​ $ 793 ​ 16 Table of Contents As of March 31, 2023, unrecognized compensation expense related to unvested stock-based compensation arrangements was $ 15.1 million. As of March 31, 2023, the related weighted average period over which the expense is expected to be recognized is approximately 2.7 years. ​ 8. Income taxes As of March 31, 2023 and December 31, 2022, a valuation allowance was recorded against all deferred tax assets due to the Company’s cumulative net loss position. Provision for income taxes for the three months ended March 31, 2023 and 2022 was $ 34,000 and $ 26,000 , respectively. As of December 31, 2022, the Company had federal and state net operating loss carryforwards (“NOLs”) of approximately $ 361.0 million and $ 6.2 million, respectively. The federal NOLs began expiring in 2021 and the state NOLs began expiring in 2020. As of December 31, 2022, the Company had federal and state tax credit carryforwards of approximately $ 9.3 million and $ 1.8 million, respectively. The federal tax credit carryforwards began expiring in 2021 and the state tax credit carryforwards will begin expiring in 2028. Utilization of NOLs may be subject to an annual limitation due to the ownership change limitations provided by Section 382 of the Internal Revenue Code of 1986 and similar state provisions. The Company has not performed a detailed analysis to determine whether an ownership change has occurred. Such a change of ownership would limit the Company’s utilization of the NOLs and could be triggered by subsequent sales of securities by the Company or its stockholders. 9. Loss Per Share Basic and diluted net loss per share attributable to common stockholders was calculated for the periods indicated (in thousands, except share and per share data): ​ ​ ​ ​ ​ ​ ​ ​ Three Months Ended ​ ​ ​ March 31, ​ ​ 2023 ​ 2022 Numerator: ​ ​ ​ Net loss ​ $ ( 11,374 ) ​ $ ( 9,991 ) Denominator: ​ ​ Weighted average common shares outstanding — basic and diluted ​ 20,693,224 ​ 20,453,341 Net loss per share attributable to common stockholders — basic and diluted ​ $ ( 0.55 ) ​ $ ( 0.49 ) ​ The Company’s potentially dilutive securities, which include stock options, shares of convertible preferred stock, warrants to purchase shares of convertible preferred stock and warrants to purchase shares of common stock, have been excluded from the computation of diluted net loss per share attributable to common stockholders, as the effect would be to reduce the net loss per share attributable to common stockholders. Therefore, the weighted average number of common shares outstanding used to calculate both basic and diluted net loss per share attributable to common stockholders is the same. The Company excluded the following potential common shares, presented based on amounts outstanding at each period end, from the computation of diluted net loss per share attributable to common stockholders for the periods indicated because including them would have had an anti-dilutive effect: ​ ​ ​ ​ ​ ​ ​ Three months ended ​ ​ March 31, ​ ​ 2023 2022 Options to purchase common stock 4,426,605 3,290,959 Warrants to purchase common stock ​ 716,131 ​ 716,131 ​ 5,142,736 4,007,090 ​ ​ ​ 17 Table of Contents 10. Commitments and contingencies From time to time, the Company may have certain contingent liabilities that arise in the ordinary course of business. The Company accrues a liability for such matters when it is probable that future expenditures will be made, and such expenditures can be reasonably estimated. There have been no contingent liabilities requiring accrual or disclosure as of March 31, 2023 or December 31, 2022. ​ 11. Employee benefit plans The Company sponsors a voluntary defined-contribution employee retirement plan (the “401(k) plan”) for its U.S. employees. The 401(k) plan provides that each participant may contribute pre-tax or post-tax compensation up to the statutory limit allowable. Under the 401(k) plan, each participant is fully vested in his or her deferred salary contributions when contributed. The Company does not provide matching contributions to employees. ​ 12. Segment, geographic information and revenue disaggregation The chief operating decision maker for the Company is the Chief Executive Officer. The Chief Executive Officer reviews financial information presented on a consolidated basis, accompanied by information about revenue by geographic region, for purposes of allocating resources and evaluating financial performance. The Company has one business activity and there are no segment managers who are held accountable for operations, operating results or plans for levels or components below the consolidated unit level. Accordingly, the Company has determined that it has a single reportable and operating segment structure. The Company and its Chief Executive Officer evaluate performance based primarily on revenue in the geographic locations in which the Company operates. The Company derives all its revenues from sales to customers in Europe and the U.S. The following table provides revenue by country for each location accounting for more than 10% of the total revenue for the periods indicated (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ Three months ended ​ March 31, ​ ​ 2023 2022 U.S. ​ $ 6,942 ​ $ 3,058 Germany ​ 891 ​ 803 Other countries ​ 146 ​ 215 ​ ​ $ 7,979 ​ $ 4,076 ​ As of March 31, 2023 and December 31, 2022, long-lived assets were located primarily in the U.S. ​ 13. Subsequent events On April 21, 2023, we extended our operating lease for our office space in Minneapolis, Minnesota for an additional 49 consecutive months, commencing August 1, 2024 through August 31, 2028. This amendment to our operating lease agreement includes an option to renew for one additional period of three years . The amendment also requires the landlord to provide us with a cash allowance not to exceed $ 50,000 for the construction of standard tenant improvements to be mutually agreed upon. 18 Table of Contents