What changed in this filing

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Item 1A. Risk Factors

2024-05-10 compared with 2023-10-31 · 21 added, 70 removed, 6 unchanged (94% of the section changed)

2 unchanged sentences

Other than the risk factors set forth below, there have been no material changes to the risk factors disclosed in our Annual Report on Form 10-K.

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

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, which will remain in place through 2023.

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.

CMS recently released the proposed Outpatient Prospective Payment System (or “OPPS”), for 2024, which did not address our March 2023 submission requesting assignment to one of the New Technology APC payment codes for 2024.

We submitted formal comments on the proposed OPPS package to advocate for inclusion in the 2024 final rule to be released later this year.

In August 2023, we delivered a presentation before the 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.

There can be no assurance that our efforts to request the higher paying code or the CMS Advisory Panel’s vote will be successful in securing the higher paying code.

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.

From time to time, physicians and hospitals have in the past experienced, and others may experience, delays in Medicare reimbursement, which have delayed or may delay their willingness to schedule additional Barostim procedures.

If clinical studies for future indications do not produce results necessary to support regulatory clearance or approval in the U.S.

or elsewhere, we will be unable to commercialize our products for these indications.

We will likely need to conduct additional clinical studies in the future to support approval for new indications.

For example, in February of 2023, we were unblinded to the morbidity and mortality data from the BeAT-HF pivotal trial that began in 2016.

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;

however, the timing and scope of any such expansion is currently uncertain.

More generally, clinical testing takes many years, is expensive and carries uncertain outcomes.

The initiation and completion of studies may be prevented, delayed, or halted for numerous reasons, including, but not limited to, the following:

• the FDA, institutional review boards (“IRBs”), ethics committees, European Union (“EU”) competent authorities or other regulatory authorities do not approve a clinical study protocol, force us to modify a previously approved protocol, or place a clinical study on hold;

• patients do not enroll in, or enroll at a lower rate than we expect, or do not complete a clinical study;

• patients or investigators do not comply with study protocols;

• 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;

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

• difficulties or delays associated with establishing additional clinical sites;

• third-party clinical investigators decline to participate in our clinical studies, do not perform the clinical studies on the anticipated schedule, or perform in a manner inconsistent with the investigator agreement, clinical study protocol, good clinical practices, other FDA, IRB or ethics committee requirements and EEA member state or other foreign regulations governing clinical trials;

• third-party organizations do not perform data collection and analysis in a timely or accurate manner;

• regulatory inspections of our clinical studies or manufacturing facilities require us to undertake corrective action or suspend or terminate our clinical studies;

• changes in federal, state, or foreign governmental statutes, regulations or policies;

• interim results are inconclusive or unfavorable as to immediate and long-term safety or efficacy;

• the study design is inadequate to demonstrate safety and efficacy;

• the statistical endpoints are not met.

Clinical trials can fail at any stage.

Our clinical studies 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 affected certain participants in the post-market pivotal trial, are being analyzed, and 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 a 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 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.

Even if our products are approved in the U.S.

and the EEA, comparable regulatory authorities of additional foreign countries must also approve the manufacturing and marketing of our products in those countries.

Approval procedures vary among jurisdictions and can involve requirements and administrative review

periods different from, and greater than, those in the U.S.

or the EEA, including additional preclinical studies or clinical trials.

Any of these occurrences may harm our business, financial condition, and prospects significantly.

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 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 Quality Management System 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.

Specifically, a manufacturer must demonstrate that the device achieves its intended performance during normal conditions of use and that the known and foreseeable risks, and any adverse events, are minimized and acceptable when weighed against the benefits of its intended performance, and that any claims made about the performance and safety of the device (e.g., product labeling and instructions for use) are supported by suitable evidence.

This assessment must be based on clinical data, which can be obtained from (1) clinical studies conducted on the devices being assessed, (2) scientific literature from similar devices whose equivalence with the assessed device can be demonstrated or (3) both clinical studies and scientific literature.

With respect to active implantable medical devices or Class III devices, the manufacturer must conduct clinical studies to obtain the required clinical data, unless reliance on existing clinical data from equivalent devices can be justified.

The conduct of clinical studies in the EEA is governed by detailed regulatory obligations.

These may include the requirement of prior authorization by the competent authorities of the country in which the study takes place and the requirement to obtain a positive opinion from a competent Ethics Committee.

This process can be expensive and time-consuming.

In order to continue to sell Barostim in Europe, we must comply with the Medical Devices Regulation (Regulation (EU) 2017/745 — “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 Active Implantable Medical Device Directive (“AIMDD”)), and it is currently under review.

Additionally, the EU did approve an amendment to the MDR which allows qualifying AIMDD CE certificates to be accepted through December of 2027.

We have already met the qualifications identified within this amendment to allow continued distribution of Barostim through this time.

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.

Unregistered Sales of Equity Securities, Use of Proceeds , and Issuer Purchases of Equity Securities

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.

Our future success depends, in part, on our ability to continue to retain our executive officers and other key employees and recruit and hire new employees.

All of our executive officers and other employees are at-will employees, and therefore may terminate employment with us at any time with no advance notice.

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 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.

Transitions in executive leadership can adversely affect relationships with our customers, suppliers, and employees, make it difficult to attract and retain talent, and disrupt execution of our strategy, sales growth, and our efforts to enhance our operations.

Additionally, such transitions can require significant payments to recruit and attract qualified payments to join our company and may involve severance payments to certain departing employees.

Changes in key management positions may temporarily affect our financial performance and results of operations as the new management becomes familiar with our business and establishes their team dynamic.

For example, in February 2024, we appointed a new Chief Executive Officer who replaced our prior Chief Executive Officer, who had been in the role for 17 years.

We experienced some disruption within the sales organization at the time of the Chief Executive Officer transition, which led to decreased productivity and higher salesforce turnover, as well as the termination of employment of our Senior Vice President of U.S.

We have also announced plans to hire additional leadership in medical affairs, clinical, reimbursement and sales.

Accordingly, our future financial performance will depend on our ability to attract, motivate, integrate and retain our senior management and employees.

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.

Although non-compete agreements are becoming more disfavored and, in some cases, banned, many executive officers and employees in the medical device industry are still subject to strict non-compete or confidentiality agreements with their 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 claims against us.

Unregistered Sales of Equity Securities and Use of Proceeds

Defaults Upon Senior Securities

2 unchanged sentences

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What changed 10-Q

Item 1A. Risk Factors