What changed in this filing

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Item 1. Financial Statements

2024-11-01 compared with 2024-08-02 · 82 added, 59 removed, 330 unchanged (30% of the section changed)

2 unchanged sentences

(In thousands, except share and per share data)

September 30,

Current assets:

17 unchanged sentences

Stockholders’ equity:

Common stock, $ 0.01 par value, 200,000,000 authorized as of June 30, 2024 and December 31, 2023;

21,712,357 and 20,879,199 shares issued and outstanding as of June 30, 2024 and December 31, 2023, respectively

Common stock, $ 0.01 par value, 200,000,000 authorized as of September 30, 2024 and December 31, 2023;

24,203,658 and 20,879,199 shares issued and outstanding as of September 30, 2024 and December 31, 2023, respectively

Additional paid-in capital

7 unchanged sentences

Three months ended

Six months ended

Nine months ended

September 30,

Cost of goods sold

17 unchanged sentences

stockholders’

Balances as of March 31, 2024

Balances as of June 30, 2024

Exercise of stock options

Proceeds from Employee Stock Purchase Plan

Employee stock compensation

Issuance of common stock

Net loss for the three months ended June 30, 2024

Net loss for the three months ended September 30, 2024

Cumulative translation adjustment

Balances as of September 30, 2024

Balances as of June 30, 2023

Balances as of March 31, 2023

Exercise of stock options

Proceeds from Employee Stock Purchase Plan

Employee stock compensation

Net loss for the three months ended June 30, 2023

Net loss for the three months ended September 30, 2023

Cumulative translation adjustment

Balances as of June 30, 2023

Balances as of September 30, 2023

comprehensive

6 unchanged sentences

Issuance of common stock upon net exercise of common warrants

Net loss for the six months ended June 30, 2024

Net loss for the nine months ended September 30, 2024

Cumulative translation adjustment

Balances as of June 30, 2024

Balances as of September 30, 2024

Balances as of December 31, 2022

2 unchanged sentences

Employee stock compensation

Net loss for the six months ended June 30, 2023

Net loss for the nine months ended September 30, 2023

Cumulative translation adjustment

Balances as of June 30, 2023

Balances as of September 30, 2023

The accompanying notes are an integral part of these condensed consolidated financial statements.

1 unchanged sentence

(In thousands)

Six months ended

Nine months ended

September 30,

Cash flows from operating activities:

53 unchanged sentences

Cash and cash equivalents include highly liquid investments with an original maturity of three months or less.

As of June 30, 2024 and December 31, 2023, cash equivalents consisted of money market funds, which are stated at cost and approximate fair value.

Additionally, as of June 30, 2024 and December 31, 2023, a majority of 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.

As of September 30, 2024 and December 31, 2023, cash equivalents consisted of money market funds, which are stated at cost and approximate fair value.

Additionally, as of September 30, 2024 and December 31, 2023, a majority of 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.

Accounts Receivable

33 unchanged sentences

In November 2023, the FASB issued Accounting Standards Update (“ASU”) 2023-07, Improvements to Reportable Segment Disclosures (“ASU 2023-07”), which requires public companies to disclose for each reportable segment the significant expense categories and amounts for such expenses.

ASU 2023-07 is effective for annual periods beginning December 15, 2023, and for interim periods within fiscal years beginning after December 15, 2024.

ASU 2023-07 is effective for annual periods beginning after December 15, 2023, and for interim periods within fiscal years beginning after December 15, 2024.

This ASU will be effective for our annual period ended December 31, 2024.

6 unchanged sentences

Inventory consists of the following at:

September 30,

(in thousands)

2 unchanged sentences

Property and equipment, net consists of the following at:

September 30,

(in thousands)

7 unchanged sentences

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 $ 141,000 and $ 127,000 for the three months ended June 30, 2024 and 2023, respectively, and $ 272,000 and $ 256,000 for the six months ended June 30, 2024 and 2023, respectively.

Depreciation expense was $ 169,000 and $ 137,000 for the three months ended September 30, 2024 and 2023, respectively, and $ 441,000 and $ 393,000 for the nine months ended September 30, 2024 and 2023, respectively.

Accrued expenses consist of the following at:

September 30,

(in thousands)

3 unchanged sentences

Operating lease liability, current portion

Employee stock purchase plan

Clinical trial and other professional fees

Innovatus Loan Agreement

On October 31, 2022, we 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 we may borrow, subject to our achievement of certain milestones, up to a total of $ 50.0 million in a series of term loans.

On October 31, 2022, we entered into a Loan and Security Agreement (the “Loan Agreement”) with Innovatus Life Sciences Fund I, LP, as the collateral agent and a lender, allowing us to borrow, subject to our achievement of certain milestones, up to a total of $ 50.0 million in a series of term loans.

On the closing date, we borrowed the minimum amount of $ 7.5 million under the Loan Agreement.

1 unchanged sentence

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

On September 30, 2024, we borrowed the remaining $ 20.0 million under the third and final tranche of the Loan Agreement.

The Loan Agreement initially requires interest only payments through November 2027, followed by three monthly principal and interest payments.

2 unchanged sentences

The Term Loans are secured by substantially all of our personal property.

We have the option to draw down up to $ 20.0 million between September 1, 2024 and December 15, 2024 if we achieve trailing three months revenue of $ 9.0 million prior to June 30, 2024, which was achieved.

A performance covenant takes effect at the earlier of September 30, 2025, or the third tranche funding, requiring that we achieve 50 % of the trailing twelve months revenue target set in the Board-approved revenue plan in effect for such period.

A performance covenant took effect upon the third tranche funding, requiring that we 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 our capital stock, subject to limited exceptions.

We were in compliance with these covenants as of June 30, 2024.

We were in compliance with these covenants as of September 30, 2024.

In connection with the Loan Agreement, we recorded $ 1.1 million of debt issuance costs and discounts as a reduction of long-term debt.

The annual principal maturities of debt under the Loan Agreement are as follows:

September 30,

(in thousands)

12 unchanged sentences

The following table presents the lease balances within the condensed consolidated balance sheets:

September 30,

(in thousands)

5 unchanged sentences

Total operating lease liabilities

Maturities of our lease liability for our operating lease are as follows as of June 30, 2024:

Maturities of our lease liability for our operating lease are as follows as of September 30, 2024:

September 30,

(in thousands)

2 unchanged sentences

Present value of lease liability

As of June 30, 2024, the remaining lease term was 4.2 years and the weighted average discount rate was 6.7 %.

The operating cash outflows from our operating lease were $ 0.3 million and $ 0.2 million for the six months ended June 30, 2024 and 2023, respectively.

As of September 30, 2024, the remaining lease term was 3.9 years and the weighted average discount rate was 6.7 %.

The operating cash outflows from our operating lease were $ 0.4 million and $ 0.3 million for the nine months ended September 30, 2024 and 2023, respectively.

Stockholders’ equity

Common Stock Warrants

We have common stock warrants exercisable for 108,406 shares of common stock upon conversion at a weighted average exercise price of $ 14.92 per share outstanding at June 30, 2024.

We had common stock warrants exercisable for 103,349 shares of common stock upon conversion at a weighted average exercise price of $ 12.92 per share and 716,131 shares of common stock upon conversion at a weighted average exercise price of $ 2.39 per share outstanding at September 30, 2024 and December 31, 2023, respectively.

Johnson & Johnson Innovation – JJDC, Inc.

had common stock warrants exercisable for 607,725 shares of our common stock with an exercise price of $ 0.16 per share that were all exercised through a net exercise transaction for 604,000 shares of common stock during the six months ended June 30, 2024.

At-the-Market (“ATM”) Offering

In January 2024, we commenced an ATM offering, which allows us to issue and sell shares of our common stock having an aggregate offering price of up to $ 50.0 million .

We issued 23,364 shares of common stock for gross proceeds of $ 0.6 million under the ATM offering during the six months ended June 30, 2024.

We issued 2,382,139 shares of common stock for gross proceeds of $ 21.0 million under the ATM offering during the nine months ended September 30, 2024.

We have remaining capacity to issue and sell up to approximately $ 29.0 million of additional shares of common stock under this ATM offering.

7 unchanged sentences

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 1,043,959 shares being reserved for issuance under the 2021 Plan as of January 1, 2024.

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.

The annual increase resulted in an additional 1,043,959 shares being reserved for

issuance under the 2021 Plan as of January 1, 2024.

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 June 30, 2024, there were 1,289,889 shares available for future issuance under the 2021 Plan.

As of September 30, 2024, there were 1,059,116 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 our common stock on the date of grant.

6 unchanged sentences

( 1,514,153 )

Balance as of June 30, 2024

Options exercisable as of June 30, 2024

As of June 30, 2024, stock options outstanding included 4,520 options that were not granted under the 2001 Plan or the 2021 Plan.

For options outstanding as of June 30, 2024, the weighted average remaining contractual life was 7.1 years.

For options exercisable as of June 30, 2024, the weighted average remaining contractual life was 5.6 years.

Balance as of September 30, 2024

Options exercisable as of September 30, 2024

As of September 30, 2024, stock options outstanding included 4,520 options that were not granted under the 2001 Plan or the 2021 Plan.

For options outstanding as of September 30, 2024, the weighted average remaining contractual life was 6.9 years.

For options exercisable as of September 30, 2024, the weighted average remaining contractual life was 5.2 years.

Our Board of Directors and stockholders also established an Employee Stock Purchase Plan (the “ESPP”).

4 unchanged sentences

employees to purchase shares of our common stock at a price per share not less than 85 % of the lower of (i) the closing market price per share of our common stock on the first day of the applicable purchase period or (ii) the closing market price per share of our common stock on the purchase date at the end of the applicable six-month purchase period.

For the six months ended June 30, 2024, 39,807 shares of common stock were purchased under the ESPP for $ 0.4 million of employee contributions.

As of June 30, 2024, there were 672,618 shares available for issuance under the ESPP.

For the nine months ended September 30, 2024, 39,807 shares of common stock were purchased under the ESPP for $ 0.4 million of employee contributions.

As of September 30, 2024, there were 672,618 shares available for issuance under the ESPP.

Stock-based compensation expense

We use the Black-Scholes option pricing model to determine the fair value of stock options and ESPP purchase rights on the grant date.

We measure stock-based compensation expense based on the grant date fair value of the award and recognize compensation expense over the requisite service period, which is

generally the vesting period for stock options and the offering period for ESPP purchase rights.

We measure stock-based compensation expense based on the grant date fair value of the award and recognize 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.

1 unchanged sentence

We account for forfeitures as they occur.

The following table provides the weighted average fair value of options granted to employees and the related assumptions used in the Black-Scholes option pricing model for the six months ended June 30, 2024 and 2023:

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 nine months ended September 30, 2024 and 2023:

September 30,

Weighted average fair value of options granted

8 unchanged sentences

3.40 % to 4.61

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 six months ended June 30, 2024 and 2023:

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 nine months ended September 30, 2024 and 2023:

September 30,

Weighted average fair value per ESPP purchase right

1 unchanged sentence

Expected volatility

74.0 % to 96.9

76.2% to 84.6

Expected dividend yield

Risk-free interest rate

5.24% to 5.37

4.77% to 5.53

We review these assumptions on a periodic basis and adjust them, as necessary.

6 unchanged sentences

Three months ended

Six months ended

Nine months ended

September 30,

(in thousands)

5 unchanged sentences

Cost of goods sold

As of June 30, 2024, unrecognized compensation expense related to unvested stock-based compensation arrangements was $ 24.9 million.

As of June 30, 2024, the related weighted average period over which the expense is expected to be recognized is approximately 2.8 years.

As of September 30, 2024, unrecognized compensation expense related to unvested stock-based compensation arrangements was $ 24.1 million.

As of September 30, 2024, the related weighted average period over which the expense is expected to be recognized is approximately 2.8 years.

On January 30, 2024, we amended the terms and conditions of certain stock option award agreements granted under the 2001 Plan and 2021 Plan between us and our former CEO in connection with his retirement, which occurred on February 11, 2024.

1 unchanged sentence

Additionally, the option agreements were modified so that the options may be exercised, to the extent vested, by our former CEO until the earlier of (a) five years following his retirement date, or (b) the applicable option expiration date.

The modification of these option awards resulted in an additional $ 8.4 million of non-cash stock-based compensation expense recognized during the six months ended June 30, 2024.

As of June 30, 2024 and December 31, 2023, a valuation allowance was recorded against all deferred tax assets due to our cumulative net loss position.

Provision for income taxes for the three months ended June 30, 2024 and 2023 was $ 41,000 and $ 34,000 , respectively.

Provision for income taxes for the six months ended June 30, 2024 and 2023 was $ 79,000 and $ 68,000 , respectively.

The modification of these option awards resulted in an additional $ 8.4 million of non-cash stock-based compensation expense recognized during the nine months ended September 30, 2024.

As of September 30, 2024 and December 31, 2023, a valuation allowance was recorded against all deferred tax assets due to our cumulative net loss position.

Provision for income taxes for the three months ended September 30, 2024 and 2023 was $ 47,000 and $ 40,000 , respectively.

Provision for income taxes for the nine months ended September 30, 2024 and 2023 was $ 126,000 and $ 108,000 , respectively.

As of December 31, 2023, we had federal and state net operating loss carryforwards (“NOLs”) of approximately $ 389.9 million and $ 7.3 million, respectively.

8 unchanged sentences

Three months ended

Six months ended

Nine months ended

September 30,

Weighted average common shares outstanding — basic and diluted

3 unchanged sentences

We 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:

Six months ended

Nine months ended

September 30,

Options to purchase common stock

3 unchanged sentences

We accrue 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 June 30, 2024 or December 31, 2023.

There have been no contingent liabilities requiring accrual or disclosure as of September 30, 2024 or December 31, 2023.

Employee benefit plans

3 unchanged sentences

Beginning January 1, 2024, we adopted a policy to match a portion of employee contributions for all qualified employees participating in the 401(k) plan.

We recorded an expense for matching contributions of $ 0.3 million and $ 0 for the three months ended June 30, 2024 and 2023, respectively.

We recorded an expense for matching contributions of $ 0.6 million and $ 0 for the six months ended June 30, 2024 and 2023, respectively.

We recorded an expense for matching contributions of $ 0.3 million and $ 0 for the three months ended September 30, 2024 and 2023, respectively.

We recorded an expense for matching contributions of $ 0.9 million and $ 0 for the nine months ended September 30, 2024 and 2023, respectively.

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 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.

We have 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.

4 unchanged sentences

Three months ended

Six months ended

Nine months ended

September 30,

Other countries

As of June 30, 2024 and December 31, 2023, long-lived assets were located primarily in the U.S.

As of September 30, 2024 and December 31, 2023, long-lived assets were located primarily in the U.S.

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 1. Financial Statements