What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2024-05-10 compared with 2023-10-31 · 85 added, 133 removed, 139 unchanged (61% of the section changed)

4 unchanged sentences

Barostim provides Baroreflex Activation Therapy by sending imperceptible and persistent electrical pulses to baroreceptors located in the wall of the carotid artery to signal the brain to modulate cardiovascular function.

Barostim is currently approved by the U.S.

Food and Drug Administration (“FDA”) to improve the symptoms of patients with HFrEF and is CE Marked for HFrEF and resistant hypertension.

Barostim is currently indicated by the U.S.

Food and Drug Administration (“FDA”) for patients who are NYHA Class III or II (who had a recent history of Class III) despite treatment with guideline-directed medical therapies (medications and devices), have a LVEF ≤ 35% and a NT-proBNP < 1600 pg/m and is CE Marked for HFrEF and resistant hypertension.

Since our inception, 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.

Our ability to generate significant revenue from product sales and become profitable will depend on our ability to continue to successfully commercialize Barostim and any product enhancements we may advance in the future.

We expect to derive future revenue by continuing to both expand our own dedicated salesforce and increase awareness of Barostim among payors, physicians, and patients.

We expect to derive future revenue by continuing to both expand our own dedicated salesforce and increase awareness of Barostim among payers, physicians, and patients.

Our sales and marketing efforts are directed at electrophysiologists, HF specialists, interventional and general cardiologists, and vascular surgeons because they are the primary users of our technology.

3 unchanged sentences

We have dedicated significant resources to educate physicians who treat HFrEF about the advantages of Barostim and train them on the implant procedure.

The costs for the device and implantation procedure are reimbursed through various third-party payors, such as government agencies and commercial payors.

The costs for the device and implantation procedure are reimbursed through various third-party payers, such as government agencies and commercial payers.

In the U.S., we estimate that 67% of our target patient population is Medicare-eligible based on the age demographic of the HFrEF patient population indicated for Barostim.

As a result, we have prioritized coverage by the Centers for Medicare and Medicaid Services while simultaneously developing processes to engage commercial payors.

All Medicare Administrative Contractors have retired their official automatic coverage denial policies for our Current Procedural Terminology codes, thereby allowing hospitals to submit payment requests for the Barostim procedure to be reviewed on a claim-

by-claim basis.

Our reimbursement strategy involves continuing to broaden our current coverage and build our in-house market access team to obtain appropriate prior authorization approvals in advance of treatment on a case-by-case basis where positive coverage policies currently do not exist.

As a result, we have prioritized coverage by the Centers for Medicare and Medicaid Services while simultaneously developing processes to engage commercial payers.

Our reimbursement strategy involves continuing to broaden our current coverage and

build our in-house market access team to obtain appropriate prior authorization approvals in advance of treatment on a case-by-case basis where positive coverage policies currently do not exist.

Outside the U.S., reimbursement levels vary by country and within some countries by region.

Barostim is eligible for reimbursement in certain countries in the European Economic Area (“EEA”), such as Germany, where annual healthcare budgets for the hospital generally determine the number of patients to be treated and the prices to be paid for the related devices that may be purchased.

Barostim is eligible for reimbursement in certain countries in the European Economic Area, such as Germany, where annual healthcare budgets for the hospital generally determine the number of patients to be treated and the prices to be paid for the related devices that may be purchased.

We manage all aspects of manufacturing operations and product supply of Barostim, which include final assembly, testing and packaging of our implantable pulse generator (“IPG”) and stimulation lead, at our headquarters in Minneapolis, Minnesota.

8 unchanged sentences

Longer term, we plan to explore Barostim’s potential to expand its indications for use to other cardiovascular diseases.

On October 31, 2022, we entered into a loan and security agreement under which we may borrow, subject to our achievement of certain milestones, up to a total of $50.0 million in a series of Term Loans described in Note 4 to our condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q, and we borrowed $7.5 million of such total on that date to fund our commercial and investment efforts.

On March 10, 2023, we 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 .

Following this draw, we have $15.0 million in outstanding Term Loans under the Loan Agreement.

The Loan Agreement provides for up to two additional tranches of loans totaling up to an additional $35.0 million based on timing, the achievement of certain trailing three months revenue targets and other conditions set forth in the Loan Agreement.

On October 31, 2022, we entered into the Loan Agreement under which we may borrow, subject to our achievement of certain milestones, up to a total of $50.0 million in a series of Term Loans described in Note 4 to our condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q, and we borrowed $7.5 million of such total on that date to fund our commercial and investment efforts.

On March 10, 2023, we borrowed the $7.5 million remaining under the first tranche of the Loan Agreement.

On December 15, 2023, we borrowed $15.0 million under the second tranche of the Loan Agreement.

W e had $30.0 million in outstanding Term Loans under the Loan Agreement as of March 31, 2024.

The Loan Agreement provides for an additional tranche of up to $20.0 million, based on the timing and other conditions set forth in the Loan Agreement.

As a result of these investments and our commercialization efforts, we expect to continue to incur net losses for the next several years, which may require additional funding and could include future equity and debt financing.

Recent developments

In February 2023, we were unblinded to the morbidity and mortality data from the BeAT-HF pivotal trial.

The totality of the evidence from the trial shows long-term benefits for patients with HF.

While the trial did not reach statistical significance on the primary endpoint, it did contain additional clinically meaningful prespecified analyses favoring Barostim.

We filed a regulatory submission to the FDA for expanded labeling in early June 2023.

If successful, this label expansion could expand our addressable patient population.

In August 2023, we delivered a presentation before the Centers for Medicare & Medicaid Services (“CMS”) Advisory Panel on Hospital Outpatient Payment, resulting in a unanimous non-binding vote in favor of mapping Barostim to the higher paying code, New Technology APC1580, which would offer an average reimbursement of $45,000 to hospitals in 2024.

If CMS instead decides to map Barostim to APC5465 without the transitional passthrough payment for 2024, which is the basis for our plans, then the average

reimbursement to hospitals will be approximately $30,000.

The final outpatient payment rule is expected to be published in late November.

In December 2023, the FDA approved expanded labeling for Barostim based on the BeAT-HF trial data, resulting in simplification and clarification of the indications for use as well as inclusion of the primary endpoint results, the 6, 12 and 24 month symptomatic data, the Win Ratio and the all-cause mortality data in the “Clinical Summary” discussion included in Barostim’s instructions for use.

This data was published in the European Journal of Heart Failure in April 2024.

We believe our annual market opportunity in the U.S.

increased to an estimated $2.2 billion, or 76,000 patients, based on this new long-term safety and effectiveness data as well as our commercial experience and, as discussed below, the new reimbursement assignment for Barostim in 2024.

In the 2024 OPPS final rule issued in November 2023, Barostim was reassigned to New Technology APC 1580, which carries an average payment amount of $45,000.

The new payment took effect January 1, 2024.

On January 31, 2024, we announced that our Board of Directors appointed Kevin Hykes as President and Chief Executive Officer, effective February 12, 2024.

Hykes succeeded Nadim Yared, who previously announced his plan to retire upon the appointment of his successor.

Hykes has served as a member of the Board of Directors since December 2022 and remained on the Board of Directors.

Yared retired from the Board at the time of his retirement as Chief Executive Officer.

In April 2024, we announced the termination of the employment of our Senior Vice President of U.S.

Sales, effective April 29, 2024.

Pursuant to his employment agreements, he is eligible for severance benefits provided that he signs a release of claims in favor of the Company and complies with certain covenants, including non-competition and non-solicitation restrictions.

In April 2024, we announced that we were suspending enrollment in the BATwire clinical trial due to slow enrollment, given that many patient candidates elected the commercially approved procedure, as opposed to participating in the trial.

We intend to continue following the patients enrolled in the BATwire trial until the study is completed.

Factors affecting our performance

4 unchanged sentences

● Seeking expanded labeling for Barostim and promoting awareness among physicians, hospitals and patients to accelerate adoption of Barostim;

● Raising awareness among payors to build upon reimbursement for Barostim;

● Investing in research and development to foster innovation and further simplify the Barostim procedure;

● Raising awareness among payers to build upon reimbursement for Barostim;

● Investing in research and development to foster innovation;

● Leveraging our manufacturing capacity to further improve our gross margins.

1 unchanged sentence

sales have steadily increased since the pre-market approval of Barostim by the FDA in August 2019, and the subsequent reimbursement changes.

We expect to continue to drive increases in revenue through our efforts to increase awareness of Barostim among physicians, patients, and payors and by the expansion of our U.S.

We expect to continue to drive increases in revenue through our efforts to increase awareness of Barostim among physicians, patients and payers, and by the expansion of our U.S.

sales force, as well as by seeking expanded labeling for Barostim.

5 unchanged sentences

Cost of goods sold and gross margin

Cost of goods sold consists primarily of acquisition costs of the components and subassemblies of Barostim, allocated manufacturing overhead and scrap and inventory obsolescence, as well as distribution-related expenses such as logistics and shipping costs.

expenses such as logistics and shipping costs.

We expect cost of goods sold to increase in absolute dollars primarily as, and to the extent, our revenue grows.

5 unchanged sentences

The manufacturing overhead costs of Barostim are directly aligned to our production volume and therefore the cost per product is reduced if production levels increase.

expect our gross margin to be positively affected over time to the extent we are successful in selling more product through our direct sales force and by increasing our production volumes, it will likely fluctuate from period to period as we continue to introduce new products and adopt new manufacturing processes and technologies.

While we expect our gross margin to be positively affected over time to the extent we are successful in selling more product through our direct sales force and by increasing our production volumes, it will likely fluctuate from period to period as we continue to introduce new products and adopt new manufacturing processes and technologies.

Research and development expenses

19 unchanged sentences

Results of operations

Consolidated results of operations for the three months ended September 30, 2023, compared to the three months ended September 30, 2022

Consolidated results of operations for the three months ended March 31, 2024, compared to the three months ended March 31, 2023

Three months ended

September 30,

(unaudited and in thousands)

9 unchanged sentences

Provision for income taxes

NM – Not meaningful

The following table provides revenue by geography:

Three months ended

September 30,

(unaudited and in thousands)

1 unchanged sentence

Total Revenue

Revenue was $10.5 million for the three months ended September 30, 2023, an increase of $4.3 million, or 70%, over the three months ended September 30, 2022.

Revenue generated in the U.S.

was $9.6 million for the three months ended September 30, 2023, an increase of $4.5 million, or 90%, over the three months ended September 30, 2022.

HF revenue units in the U.S.

totaled 303 and 167 for the three months ended September 30, 2023 and 2022, respectively.

HF revenue in the U.S.

totaled $9.4 million and $4.9 million for the three months ended September 30, 2023 and 2022, respectively.

The increases were primarily driven by continued growth in the U.S.

HF business as a result of the expansion into new sales territories, new accounts, and increased physician and patient awareness of Barostim.

As of September 30, 2023, we had a total of 159 active implanting centers, as compared to 91 as of September 30, 2022.

Active implanting centers are customers that have completed at least one commercial HF implant in the last 12 months.

As of September 30, 2023, we had a total of 35 sales territories as compared to 23 as of September 30, 2022.

Revenue generated in Europe was $0.9 million for the three months ended September 30, 2023, a decrease of $0.2 million, or 19%, over the three months ended September 30, 2022.

Total revenue units in Europe decreased to 47 for the three months ended September 30, 2023, as compared to 61 in the prior year period.

As of both September 30, 2023 and 2022, we had six sales territories in Europe.

Cost of goods sold and gross margin

Cost of goods sold increased $0.4 million, or 26%, to $1.7 million for the three months ended September 30, 2023, compared to the three months ended September 30, 2022.

This increase was primarily due to higher sales of Barostim.

Gross profit was $8.8 million for the three months ended September 30, 2023, an increase of $4.0 million, or 82%, over the three months ended September 30, 2022.

Gross margin increased to 84% for the three months ended September 30, 2023, compared to 78% for the three months ended September 30, 2022.

This increase was due primarily to a decrease in the cost per unit driven by an increase in the production volume.

Research and development expenses

R&D expenses increased $0.4 million, or 18%, to $2.7 million for the three months ended September 30, 2023, compared to the three months ended September 30, 2022.

This change was driven by a $0.3 million increase in compensation expenses as a result of increased headcount and a $0.1 million increase in non-cash stock-based compensation expense.

Selling, general and administrative expenses

SG&A expenses increased $3.0 million, or 23%, to $15.7 million for the three months ended September 30, 2023, compared to the three months ended September 30, 2022.

This change was primarily driven by a $1.9 million increase in compensation expenses, mainly as a result of increased headcount, a $0.5 million increase in non-cash stock-based compensation expense, a $0.3 million increase in marketing and advertising expenses associated with the commercialization of Barostim in the U.S.

and a $0.1 million increase in travel expenses.

Interest expense

Interest expense increased $0.5 million for the three months ended September 30, 2023, compared to the three months ended September 30, 2022.

This increase was driven by the interest expense on borrowings under the Loan Agreement entered into on October 31, 2022.

Other income, net

Other income, net increased $0.7 million for the three months ended September 30, 2023, compared to the three months ended September 30, 2022.

This increase was primarily driven by higher interest rates on interest-bearing accounts partially offset by a lower cash balance.

Provision for income taxes

Provision for income taxes was nominal for each of the three months ended September 30, 2023 and September 30, 2022.

Consolidated results of operations for the nine months ended September 30, 2023, compared to the nine months ended September 30, 2022

Nine months ended

September 30,

(unaudited and in thousands)

Cost of goods sold

Operating expenses:

Research and development

Selling, general and administrative

Total operating expenses

Loss from operations

Interest expense

Other income, net

Loss before income taxes

Provision for income taxes

NM – Not meaningful

The following table provides revenue by geography:

Nine months ended

September 30,

(unaudited and in thousands)

United States

Total Revenue

Revenue was $28.0 million for the nine months ended September 30, 2023, an increase of $12.7 million, or 83%, over the nine months ended September 30, 2022.

Revenue was $10.8 million for the three months ended March 31, 2024, an increase of $2.8 million, or 35%, over the three months ended March 31, 2023.

Revenue generated in the U.S.

was $24.8 million for the nine months ended September 30, 2023, an increase of $12.8 million, or 106%, over the nine months ended September 30, 2022.

was $9.8 million for the three months ended March 31, 2024, an increase of $2.9 million, or 42%, over the three months ended March 31, 2023.

HF revenue units in the U.S.

totaled 793 and 394 for the nine months ended September 30, 2023 and 2022, respectively.

totaled 319 and 225 for the three months ended March 31, 2024 and 2023, respectively.

HF revenue in the U.S.

totaled $24.5 million and $11.6 million for the nine months ended September 30, 2023 and 2022, respectively.

totaled $9.7 million and $6.8 million for the three months ended March 31, 2024 and 2023, respectively.

The increases were primarily driven by continued growth in the U.S.

HF business as a result of the expansion into new sales territories, new accounts, and increased physician and patient awareness of Barostim.

As of September 30, 2023, we had a total of 159 active implanting centers, as compared to 91 as of September 30, 2022.

Active implanting centers are customers that have completed at least one commercial HF implant in the last 12 months.

As of September 30, 2023, we had a total of 35 sales territories as compared to 23 as of September 30, 2022.

Revenue generated in Europe was $3.2 million for the nine months ended September 30, 2023, a decrease of $0.1 million, or 3%, over the nine months ended September 30, 2022.

Total revenue units in Europe decreased to 155 for the nine months ended September 30, 2023, as compared to 163 in the prior year period.

As of both September 30, 2023 and 2022, we had six sales territories in Europe.

These increases were partially offset by decreased productivity in February due primarily to turnover within the sales organization.

We implemented actions to address these challenges in our U.S.

Heart Failure business to rebuild these territories, resulting in stronger performance in March.

As of March 31, 2024, we had a total of 190 active implanting centers, as compared to 122 as of March 31, 2023.

Active implanting centers are customers that have completed at least one commercial HF implant in the

last 12 months.

As of March 31, 2024, we had a total of 39 sales territories as compared to 29 as of March 31, 2023.

Revenue generated in Europe was $0.9 million for the three months ended March 31, 2024, a decrease of $0.1 million, or 10%, over the three months ended March 31, 2023.

Total revenue units in Europe decreased to 44 for the three months ended March 31, 2024, as compared to 52 in the prior year period.

As of both March 31, 2024 and 2023, we had six sales territories in Europe.

Cost of goods sold and gross margin

Cost of goods sold increased $1.0 million, or 30%, to $4.5 million for the nine months ended September 30, 2023, compared to the nine months ended September 30, 2022.

This increase was primarily due to higher sales of Barostim.

Gross profit was $23.5 million for the nine months ended September 30, 2023, an increase of $11.7 million, or 99%, over the nine months ended September 30, 2022.

Gross margin increased to 84% for the nine months ended September 30, 2023, compared to 77% for the nine months ended September 30, 2022.

Cost of goods sold increased $0.3 million, or 22%, to $1.6 million for the three months ended March 31, 2024, compared to the three months ended March 31, 2023.

This increase was driven by higher sales of Barostim.

Gross profit was $9.2 million for the three months ended March 31, 2024, an increase of $2.5 million, or 38%, over the three months ended March 31, 2023.

Gross margin increased to 85% for the three months ended March 31, 2024, compared to 83% for the three months ended March 31, 2023.

This increase was due primarily to a decrease in the cost per unit driven by an increase in the production volume.

Research and development expenses

R&D expenses increased $2.5 million, or 36%, to $9.4 million for the nine months ended September 30, 2023, compared to the nine months ended September 30, 2022.

This change was driven by a $1.4 million increase in compensation expenses as a result of increased headcount, a $0.6 million increase in non-cash stock-based compensation expense and a $0.4 million increase in consulting fees.

R&D expenses decreased $0.4 million, or 11%, to $3.1 million for the three months ended March 31, 2024, compared to the three months ended March 31, 2023.

This change was driven by a $0.2 million decrease in non-cash stock-based compensation expense, and a $0.2 million decrease in consulting expenses.

Selling, general and administrative expenses

SG&A expenses increased $11.6 million, or 32%, to $47.5 million for the nine months ended September 30, 2023, compared to the nine months ended September 30, 2022.

This change was primarily driven by a $6.9 million increase in compensation expenses, mainly as a result of increased headcount, a $1.6 million increase in marketing and advertising expenses associated with the commercialization of Barostim in the U.S, a $1.3 million increase in travel expenses, a $1.3 million increase in non-cash stock-based compensation expense and a $0.6 million increase in consulting fees.

SG&A expenses increased $12.9 million, or 84%, to $28.3 million for the three months ended March 31, 2024, compared to the three months ended March 31, 2023.

This change was primarily driven by a $9.6 million increase in non-cash stock-based compensation expense, a $2.0 million increase in compensation expenses, mainly as a result of increased headcount, and a $0.6 million increase in travel expenses.

Approximately $8.4 million of the increase in non-cash stock-based compensation expense is related to the modification of stock options held by the former CEO in connection with his retirement in the first quarter of 2024 described in Note 7 to our condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.

Interest expense

Interest expense increased $1.2 million for the nine months ended September 30, 2023, compared to the nine months ended September 30, 2022.

Interest expense increased $0.7 million for the three months ended March 31, 2024, compared to the three months ended March 31, 2023.

This increase was driven by the interest expense on borrowings under the Loan Agreement entered into on October 31, 2022.

Other income, net

Other income, net increased $2.5 million for the nine months ended September 30, 2023, compared to the nine months ended September 30, 2022.

This increase was primarily driven by higher interest rates on interest-bearing accounts partially offset by a lower cash balance.

Other income, net decreased $18,000 for the three months ended March 31, 2024, compared to the three months ended March 31, 2023.

This decrease was primarily driven a lower cash balance in our interest-bearing accounts.

Provision for income taxes

Provision for income taxes was nominal for each of the nine months ended September 30, 2023 and September 30, 2022.

Provision for income taxes was nominal for each of the three months ended March 31, 2024 and March 31, 2023.

Liquidity, capital resources and plan of operations

We have incurred significant operating losses and negative cash flows from operations since our inception, and we anticipate that we will incur significant losses for at least the next several years.

As of September 30, 2023 and December 31, 2022, we had cash and cash equivalents of $83.0 million and $106.2 million, respectively.

For the three months ended September 30, 2023 and 2022, our net losses were $9.0 million and $9.8 million, respectively.

For the nine months ended September 30, 2023 and 2022, our net losses were $32.0 million and $30.9 million, respectively.

Our net cash used in operating activities for the nine months ended September 30, 2023 and 2022 was $31.2 million and $31.8 million, respectively.

As of March 31, 2024 and December 31, 2023, we had cash and cash equivalents of $80.1 million and $90.6 million, respectively.

For the three months ended March 31, 2024 and 2023, our net losses were $22.2 million and $11.4 million, respectively.

Our net cash used in operating activities for the three months ended March 31, 2024 and 2023 was $10.9 million and $10.2 million, respectively.

On March 10, 2023, we 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 .

Following this draw, we have $15.0 million in outstanding Term Loans under the Loan Agreement.

The Loan Agreement provides for up to two additional tranches of loans totaling up to an additional $35.0 million, based on timing, the achievement of certain trailing three months revenue targets and other conditions set forth in the Loan Agreement.

On March 10, 2023, we borrowed the $7.5 million remaining under the first tranche of the Loan Agreement.

On December 15, 2023, we borrowed $15.0 million under the second tranche of the Loan Agreement.

We had $30.0 million in outstanding Term Loans under the Loan Agreement as of March 31, 2024.

The Loan Agreement provides for an additional tranche of up to $20.0 million, based on the timing and other conditions set forth in the Loan Agreement.

On November 4, 2022, we entered into an Equity Distribution Agreement with Piper Sandler & Co., as agent, under which we may offer and sell, from time to time at our sole discretion, shares of our common stock having an aggregate offering price of up to $50.0 million in an “at-the-market” or ATM offering, to or through the agent.

As of September 30, 2023, no shares have been sold.

In January 2024, we commenced this ATM offering and issued 23,364 shares of common stock for gross proceeds of $0.6 million under the ATM offering during the three months ended March 31, 2024.

We have remaining capacity to issue and sell up to approximately $49.4 million of additional shares of common stock under this ATM offering.

Our future liquidity and capital funding requirements will depend on numerous factors, including:

10 unchanged sentences

If these sources are insufficient to satisfy our liquidity requirements, or provide funding to execute or accelerate our growth strategies, however, we may seek to sell additional equity or enter into an additional loan agreement.

If we were to raise additional funds by issuing equity securities, our stockholders would experience dilution.

Additional debt financing, if available, may involve covenants further restricting our operations or our ability to incur additional debt.

If we raise additional funds by issuing equity securities, our stockholders would experience dilution.

Additional debt financing, if available, may involve covenants further

restricting our operations or our ability to incur additional debt.

Any such debt financing or additional equity that we raise may contain terms that are not favorable to us or our stockholders.

1 unchanged sentence

If we are unable to obtain additional financing when needed to satisfy our liquidity requirements, we may be required to delay the commercialization and marketing of Barostim.

The following table sets forth the primary sources and uses of cash for each of the periods indicated below:

Nine months ended

September 30,

The following table sets forth the primary sources and uses of cash for each of the periods presented below:

Three months ended

(in thousands)

6 unchanged sentences

Cash used in operating activities

Net cash used in operating activities for the nine months ended September 30, 2023 was $31.2 million and consisted primarily of a net loss of $32.0 million and a change in net operating assets of $4.4 million, partially offset by a non-cash charge of $4.7 million related to stock-based compensation expense.

Net cash used in operating activities for the three months ended March 31, 2024 was $10.9 million and consisted primarily of a net loss of $22.2 million, partially offset by a non-cash charge of $11.1 million related to stock-based compensation expense.

Net cash used in operating activities for the three months ended March 31, 2023 was $10.2 million and consisted primarily of a net loss of $11.4 million and a decrease in net operating assets of $0.7 million, partially offset by a non-cash charge of $1.7 million related to stock-based compensation expense.

Net operating assets consisted primarily of accounts receivable, inventory, prepaid expenses and other current assets, accounts payable and accrued expenses to support the growth of our operations.

Net cash used in operating activities for the nine months ended September 30, 2022 was $31.8 million and consisted primarily of a net loss of $30.9 million and a change in net operating assets of $4.1 million, partially offset by a non-cash charge of $2.8 million related to stock-based compensation expense.

Net operating assets consisted primarily of inventory, accounts receivable, prepaid expenses and other current assets, accounts payable and accrued expenses to support the growth of our operations.

Cash used in investing activities:

Cash used in investing activities was $0.4 million and $0.6 million for each of the nine months ended September 30, 2023 and 2022, respectively, and consisted of purchases of property and equipment.

Cash used in investing activities was $0.9 million and $0.2 million for the three months ended March 31, 2024 and 2023, respectively, and consisted of purchases of property and equipment.

Cash provided by financing activities:

Net cash provided by financing activities for the nine months ended September 30, 2023 was $8.4 million and consisted of $7.5 million related to proceeds under the Loan Agreement, $0.5 million related to proceeds from the ESPP and $0.5 million related to proceeds from the exercise of common stock options, partially offset by $0.1 million related to debt financing costs.

Net cash provided by financing activities for the nine months ended September 30, 2022 was $0.4 million and consisted of $0.3 million related to proceeds from the ESPP and $0.1 million related to proceeds from the exercise of common stock options.

Net cash provided by financing activities for the three months ended March 31, 2024 was $1.4 million and consisted of $0.8 million related to proceeds from the exercise of common stock options and $0.5 million related to proceeds from the issuance of common stock through the ATM offering.

Net cash provided by financing activities for the three months ended March 31, 2023 was $7.6 million and consisted of $7.5 million related to the proceeds under the Loan Agreement and $0.1 million related to proceeds from the exercise of common stock options, partially offset by $0.1 million related to debt financing costs.

Contractual obligations and commitments

There have been no material changes to our contractual obligations as of September 30, 2023, as compared to those disclosed in our Annual Report on Form 10-K for the year ended December 31, 2022.

There have been no material changes to our contractual obligations as of March 31, 2024, as compared to those disclosed in our Annual Report on Form 10-K for the year ended December 31, 2023.

Critical accounting policies and estimates

For a discussion of our potential risks and uncertainties, see the information in Part II, Item 7.

“Management's Discussion and Analysis of Financial Condition and Results of Operations—Critical accounting policies and estimates"

in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022.

reviewed and determined that those critical accounting policies and estimates remain our critical accounting policies and estimates as of and for the nine months ended September 30, 2023.

“Management's Discussion and Analysis of Financial Condition and Results of Operations—Critical accounting policies and estimates" in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023.

We have reviewed and determined that those critical accounting policies and estimates remain our critical accounting policies and estimates as of and for the three months ended March 31, 2024.

JOBS Act accounting election

5 unchanged sentences

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-Q

Item 2. Management’s Discussion and Analysis