6 unchanged sentences
We currently rely on our RNS System, which can only be marketed in the United States for use in adults with drug-resistant focal epilepsy, as our primary source of revenue.
−Removed: Our RNS System was historically recommended as well as implanted primarily at Level 4 CECs and has recently expanded outside of Level 4 CECs and into the community setting.
−Removed: If we are not successful in enhancing awareness of our RNS System, driving utilization and adoption across Level 4 CECs, growing utilization and adoption in the community setting, expanding referral pathways to increase referrals to Level 4 CECs, reaching beyond Level 4 CECs and expanding the population of eligible patients, our sales, business, financial condition and results of operations will be negatively affected.
+Added: If we fail to successfully market and sell our RNS System cost effectively and maintain and expand our market share, our sales, business, financial condition and results of operations will be negatively affected.
Our business currently depends primarily on our ability to successfully market our RNS System, which includes increasing the number of patients treated at CECs, increasing adoption of our RNS System across CECs and in the community setting, as well as driving utilization by clinicians within CECs and in the community setting.
24 unchanged sentences
If we fail to successfully market and sell our RNS System cost-effectively and maintain and expand our market share, our sales, business, financial condition and results of operations will be negatively affected.
−Removed: Our commercial success will continue to depend on attaining significant market acceptance of our RNS System among patients, clinicians and hospital facilities and increasing the number of patients treated.
−Removed: If we are unable to successfully achieve substantial market acceptance and adoption of our RNS System, our sales, business, financial condition and results of operations would be harmed.
+Added: Our commercial success will continue to depend on attaining significant market acceptance of our products and increasing the number of patients treated.
+Added: If we are unable to successfully achieve substantial market acceptance and drive adoption of our RNS System both within Level 4 CECs and in the community, our sales, business, financial condition and results of operations would be harmed.
Our commercial success will depend in large part on the further acceptance by clinicians, patients and hospital facilities of our RNS System as safe, useful, and cost-effective, and increasing the number of patients treated at Level 4 CECs and in the community setting.
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We source and rely upon materials, components, and sub-assemblies of our RNS System, as well as manufacturing services from approved suppliers, most of which are single-source suppliers.
−Removed: For example, Micro Systems Technologies Management AG and Greatbatch Ltd are single source suppliers of several key components of our products, including printed circuit assemblies and batteries.
+Added: For example, Micro Systems Technologies Management AG and Integer Holdings Corporation (formally known as Greatbatch Ltd) are single-source suppliers of several key components of our products, including printed circuit assemblies and batteries.
In addition, certain of our suppliers are not under long-term contracts with us.
15 unchanged sentences
To ensure adequate supply, we must forecast inventory needs and manufacture our products based on our estimates of future demand.
−Removed: Our ability to accurately forecast demand for our products, including our distributed DIXI Medical products, could be negatively affected by many factors, including our failure to accurately manage our expansion strategy, product introductions by competitors, our inability to forecast the lifecycle of our products, an increase or decrease in customer demand for our products or for competitor products, our failure to accurately forecast customer adoption of new products, unanticipated changes in general market conditions or regulatory matters and weakening of economic conditions or consumer confidence in future economic conditions.
+Added: Our ability to accurately forecast demand for our products, including our sales of DIXI Medical products, could be negatively affected by many factors, including our failure to accurately manage our expansion strategy, product introductions by competitors, our inability to forecast the lifecycle of our products, an increase or decrease in customer demand for our products or for competitor products, our failure to accurately forecast customer adoption of new products, unanticipated changes in general market conditions or regulatory matters and weakening of economic conditions or consumer confidence in future economic conditions.
Inventory levels in excess of customer demand may result in inventory write-downs or write-offs, which would cause our gross margin to be adversely affected and could impair the strength of our brand.
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Our success will depend on our ability to retain senior management and to attract and retain qualified personnel in the future, including sales and marketing professionals, engineers, scientists, clinical trial specialists and other highly skilled personnel and to integrate current and additional personnel in all departments.
−Removed: As part of our expense management initiatives, we recently implemented a pause on hiring for certain open positions and implemented or may implement additional cost saving measures that lead to reductions in force, furloughs, or altered job responsibilities across the entire organization.
−Removed: The pause on hiring, or turnover or reductions of members of our senior management, sales and marketing professionals, engineers, scientists and clinical trial specialists could impact decision-making as well as efficiency and could result in delays in product development and harm our business.
Competition for skilled personnel in our market is intense and may limit our ability to hire and retain highly qualified personnel on acceptable terms, or at all.
To induce valuable employees to remain at our company, in addition to salary and cash incentives, we have issued stock options that vest over time.
−Removed: The value to employees of stock options that vest over time may be significantly affected by fluctuations in our stock price that are beyond our
−Removed: control, and may at any time be insufficient to counteract more lucrative offers from other companies.
+Added: The value to employees of stock options that vest over time may be significantly affected by fluctuations in our stock price that are beyond our control, and may at any time be insufficient to counteract more lucrative offers from other companies.
Despite our efforts to retain valuable employees, members of our management and other key personnel may terminate their employment with us on short notice.
−Removed: Our employment arrangements with our employees provide for at-will employment, which means that any of our employees could leave our employment at any time, with or without notice.
+Added: Our employment arrangements with our employees provide for at-will employment, which means that any of our employees could leave our employment at any time, with or without
We also do not maintain “key man” insurance policies on the lives of these individuals or the lives of any of our other employees.
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A decline in the amount that third-party payors reimburse our customers for ongoing patient care could also make it difficult for programming centers to conduct ongoing patient support without a corresponding reduction in prices for our products.
−Removed: If we are forced to lower or are unable to increase the price we charge for our RNS System, our gross margins will decrease, which will harm our ability to invest in and
−Removed: grow our business.
+Added: If we are forced to lower or are unable to increase the price we charge for our RNS System, our gross margins will decrease, which will harm our ability to invest in and grow our business.
If we are unable to maintain our prices, or if our costs increase and we are unable to offset such increase with an increase in our prices, our margins could erode, which could harm our business and results of operations.
−Removed: We are seeking expanded FDA labeling for our RNS System to be able to treat patients with generalized drug-resistant epilepsy as well as patients between the age of 12 and 17 with drug-resistant focal epilepsy, but if we are unable to broaden the indications for our RNS System to include these patients, our growth potential could be harmed.
+Added: We are seeking expanded FDA labeling for our RNS System to be able to treat patients with generalized drug-resistant epilepsy as well as patients between the age of 12 and 17 with drug-resistant focal epilepsy, but if we are unable to broaden the indications for our RNS System to include these patients, or if the recent FDA staffing changes delay reviews of our applications for indication expansion, our growth potential could be harmed.
Our products are subject to extensive regulation by the FDA in the United States.
−Removed: Before a new medical device or a new intended use for an existing medical device can be marketed in the United States, we must first submit and receive either 510(k) clearance pursuant to Section 510(k) of the Food, Drug and Cosmetic Act, or the FDCA, or approval of a PMA application from the FDA, unless an exemption applies.
−Removed: If clinical studies do not produce results necessary to support regulatory clearance or approval to expand our indications to include patients with generalized drug-resistant epilepsy as well as patients age 12 to 17 with drug-resistant focal epilepsy, we will be unable to obtain and maintain necessary approvals to expand our indications to include these patients in accordance with our expected timelines, which could harm our growth potential.
+Added: Before a new medical device or a new intended use for an existing medical device can be marketed in the United States, we must first submit and receive either 510(k) clearance pursuant to Section 510(k) of the Food, Drug and Cosmetic Act, or the FDCA, or approval of a PMA application or PMA-S from the FDA, unless an exemption applies.
+Added: If our clinical studies and collaborations with the National Evaluation System for health Technology to pursue the use of real-world data from the Pediatric Epilepsy Research Consortium do not produce results necessary to support regulatory clearance or approval to expand our indications to include patients with generalized drug-resistant epilepsy as well as patients age 12 to 17 with drug-resistant focal epilepsy, we will be unable to obtain and maintain necessary approvals to expand our indications to include these patients in accordance with our expected timelines, which could harm our growth potential.
Furthermore, we could incur substantial costs and the attention of management could be diverted throughout this process.
+Added: Recent cuts and staffing changes at the FDA could further delay our efforts to expand indications by creating significant and costly delays in the review process for our regulatory submissions;
+Added: these delays would negatively impact our growth potential and ability to expand our market reach according to our financial plans.
+Added: Our growth prospects may be harmed if we are unable to successfully use our unique data asset and analysis capabilities, either internally or through collaboration, or if our expectations with respect to our ability to leverage our unique data asset prove to be incorrect.
+Added: In November 2023, we entered into a collaboration with Rapport to leverage our RNS System’s unique biomarker monitoring and data analysis capabilities.
+Added: We may seek to leverage our unique data asset or our data monitoring and analysis capabilities by entering into similar collaborations in the future.
+Added: If we are unable to continue to build our data asset and our monitoring and analysis capabilities, either internally or through further collaborations, or if our expectations with respect to our ability to leverage our unique data asset prove to be incorrect, our growth prospects may be harmed.
We may expand sales of our RNS System internationally in the future, but we may experience difficulties in obtaining regulatory clearance or approval or in successfully marketing our RNS System internationally even if approved.
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These and other risks associated with international operations may harm our ability to attain or maintain profitable operations internationally, which would harm our growth potential.
−Removed: In addition, there can be no guarantee that we will receive approval to sell our RNS System in every international market we target, nor can there be any guarantee that any sales would result even if such approval is received.
+Added: In addition, there can be no guarantee that we will receive approval to sell our RNS System in every international market we target, nor can there be any guarantee that any sales would result even if any such approval is received.
Approval in the United States, or in any other jurisdiction, does not ensure approval in other jurisdictions.
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Through our arrangements with healthcare professionals and hospital facilities, we are exposed to broadly applicable anti-fraud and abuse, anti-kickback, false claims and other healthcare laws and regulations that may constrain our business, our arrangements and relationships with customers, and how we market, sell and distribute our marketed medical devices.
−Removed: We have a compliance program, code of conduct and associated policies and procedures, but it is not always possible to identify and deter misconduct by our employees, contractors, and other third parties, including our customers, and the precautions we take to detect and prevent noncompliance may not be effective in protecting us from governmental investigations for failure to comply with applicable fraud and abuse or other healthcare laws and regulations.
+Added: We have a compliance program, code of conduct and associated policies, procedures, and ongoing training, but it is not always possible to identify and deter misconduct by our employees, contractors, and other third parties, including our customers, and the precautions we take to detect and prevent noncompliance may not be effective in protecting us from governmental investigations for failure to comply with applicable fraud and abuse or other healthcare laws and regulations.
In the United States, we are subject to various state and federal anti-fraud and abuse laws, including, without limitation, the federal Anti-Kickback Statute and federal civil False Claims Act, or the FCA.
4 unchanged sentences
• federal civil and criminal false claims laws, including the FCA, and civil monetary penalties laws, which prohibits, among other things, persons or entities from knowingly presenting, or causing to be presented, a false or fraudulent claim for payment of government funds and knowingly making, using or causing to be made or used, a false record or statement to get a false claim paid or to avoid, decrease or conceal an obligation to pay money to the federal government;
−Removed: • the Health Insurance Portability & Accountability Act of 1996, or HIPAA, which applies to our customers and some of their downstream vendors and contractors, imposes criminal and civil liability for, among other actions, knowingly and willfully executing, or attempting to execute, a scheme to defraud any healthcare benefit program, including private third-party payors, or knowingly and willfully falsifying, concealing or covering up a material fact or making a materially false, fictitious or fraudulent statement or
−Removed: representation, or making or using any false writing or document knowing the same to contain any materially false, fictitious or fraudulent statement or entry in connection with the delivery of or payment for healthcare benefits, items or services;
+Added: • the Health Insurance Portability & Accountability Act of 1996, or HIPAA, which applies to our customers and some of their downstream vendors and contractors, imposes criminal and civil liability for, among other actions, knowingly and willfully executing, or attempting to execute, a scheme to defraud any healthcare benefit program, including private third-party payors, or knowingly and willfully falsifying, concealing or covering up a material fact or making a materially false, fictitious or fraudulent statement or representation, or making or using any false writing or document knowing the same to contain any materially false, fictitious or fraudulent statement or entry in connection with the delivery of or payment for healthcare benefits, items or services;
• the federal Physician Payments Sunshine Act, also known as Open Payments, which requires manufacturers of drugs, devices, biologics and medical supplies for which payment is available under Medicare, Medicaid or the Children’s Health Insurance Program to report annually, with certain exceptions to the Centers for Medicare & Medicaid Services, or CMS, information related to payments or other “transfers of value” made to physicians, as defined by such law, other healthcare professionals (such as physician assistants and nurse practitioners), and teaching hospitals, and requires applicable manufacturers and group purchasing organizations to report annually to CMS ownership and investment interests held by physicians and their immediate family members.
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(iii) healthcare fraud and abuse laws in the United States and similar foreign fraudulent misconduct laws;
−Removed: or (iv) laws that require the true, complete and accurate
−Removed: reporting of financial information or data.
+Added: or (iv) laws that require the true, complete and accurate reporting of financial information or data.
These laws may impact, among other things, future sales, marketing and education programs.
2 unchanged sentences
Activities subject to these laws also involve the improper use of information obtained in the course of patient recruitment for clinical studies.
−Removed: We have adopted a code of conduct, employee handbook, and compliance policies, but it is not always possible to identify and deter misconduct by our employees and other third parties, and the precautions we take to detect and prevent these activities may not be effective in controlling unknown or unmanaged risks or losses or in protecting us from governmental investigations or other actions or lawsuits stemming from a failure to be in compliance with such laws or regulations.
+Added: We have adopted a code of conduct, employee handbook, compliance policies, and compliance training programs for all employees, but it is not always possible to identify and deter misconduct by our employees and other third parties, and the precautions we take to detect and prevent these activities may not be effective in controlling unknown or unmanaged risks or losses or in protecting us from governmental investigations or other actions or lawsuits stemming from a failure to be in compliance with such laws or regulations.
If any such actions are instituted against us and we are not successful in defending ourselves or asserting our rights, those actions could result in the imposition of significant fines or other sanctions, including the imposition of civil, criminal and administrative penalties, damages, monetary fines, disgorgement, imprisonment, reporting and oversight obligations, possible exclusion from participation in Medicare, Medicaid and other federal healthcare programs, contractual damages, diminished profits and future earnings and curtailment of operations, any of which could adversely affect our ability to operate our business and our results of operations.
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Although we have obtained PMA approval to market our RNS System, our approval can be revoked if safety or efficacy problems develop.
−Removed: Our operations are subject to pervasive and continuing FDA regulatory requirements, and failure to comply with these requirements could harm our business, financial condition and results of operations.
+Added: Our operations are subject to pervasive and continuing FDA regulatory requirements, and failure to comply with these requirements could harm our growth potential, and our business, financial condition and results of operations.
Before a new medical device or service, or a new intended use for an existing product or service, or a change to an existing product or service can be marketed in the United States, a company must first submit and receive either 510(k) clearance or PMA from the FDA, unless an exemption applies.
2 unchanged sentences
In the process of obtaining PMA approval, which was required for our RNS System, the FDA must determine that a proposed device is safe and effective for its intended use based, in part, on extensive data, including, but not limited to, technical, preclinical, clinical study, manufacturing and labeling data.
−Removed: The PMA process is typically required for devices that are deemed to pose the greatest risk, such as life-sustaining, life-supporting or implantable device.
+Added: The PMA process is typically
+Added: required for devices that are deemed to pose the greatest risk, such as life-sustaining, life-supporting or implantable device.
+Added: The FDA could decline to approve any supplemental application that we submit in the future to expand the indications for which our RNS System can be used, which would harm our growth potential.
The FDA and state and international authorities have broad enforcement powers.
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The FDA has the authority to require the recall of our products or products we sell because of any failure to comply with applicable laws and regulations, or defects in design or manufacture.
−Removed: A government mandated or voluntary product recall by us could occur because of, for example, component failures, device malfunctions or
−Removed: other adverse events, such as serious injuries or deaths, or quality-related issues, such as manufacturing errors or design or labeling defects.
+Added: A government mandated or voluntary product recall by us could occur because of, for example, component failures, device malfunctions or other adverse events, such as serious injuries or deaths, or quality-related issues, such as manufacturing errors or design or labeling defects.
Any future recalls of our products or products we distribute could divert managerial and financial resources, harm our reputation and negatively impact our business.
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We may face delays in completing our clinical studies if these parties do not perform their obligations in a timely, compliant or competent manner.
−Removed: If these third parties do not successfully carry out their duties or meet expected deadlines, or if the quality, completeness or accuracy of the data they obtain is compromised due to the failure to adhere to our clinical study protocols or for other reasons, our clinical studies or trials may need to be extended, delayed or terminated or may otherwise prove to be unsuccessful, and we may have to conduct additional studies, which would significantly increase our costs.
+Added: If these third parties do not successfully carry out their duties or meet expected deadlines, or if the quality, completeness or accuracy of the data they obtain is compromised due to the failure to adhere to our clinical study protocols or for
+Added: other reasons, our clinical studies or trials may need to be extended, delayed or terminated or may otherwise prove to be unsuccessful, and we may have to conduct additional studies, which would significantly increase our costs.
Healthcare reform initiatives and other administrative and legislative proposals may harm our business, financial condition, results of operations and cash flows in our key markets.
4 unchanged sentences
There likely will continue to be legislative and regulatory proposals at the federal and state levels directed at containing or lowering the cost of healthcare.
−Removed: We cannot predict the initiatives that may be adopted in the future or
−Removed: their full impact.
+Added: We cannot predict the initiatives that may be adopted in the future or their full impact.
The continuing efforts of the government, insurance companies, managed care organizations and other payors of healthcare services to contain or reduce costs of healthcare may harm:
9 unchanged sentences
Any new federal and state healthcare initiatives that may be adopted could limit the amounts that federal and state governments will pay for healthcare products and services, and could harm our business, financial condition and results of operations.
+Added: Compliance with environmental laws and regulations could be expensive, and the failure to comply with these laws and regulations could subject us to significant liability.
+Added: Our research, development and manufacturing operations involve the use of hazardous substances, and we are subject to a variety of federal, state and local environmental laws and regulations relating to the storage, use, handling, generation, manufacture, treatment, discharge and disposal of hazardous substances.
+Added: Our products may also contain hazardous substances, and they are subject laws and regulations relating to labeling requirements and to their sale, collection, recycling, treatment, storage and disposal.
+Added: Compliance with these laws and regulations may be expensive and noncompliance could result in substantial fines and penalties.
+Added: Environmental laws and regulations also impose liability for the remediation of releases of hazardous substances into the environment and for personal injuries resulting from exposure to hazardous substances, and they can give rise to substantial remediation costs and to third-party claims, including for property damage and personal injury.
+Added: Liability under environmental laws and regulations can be joint and several and without regard to fault or negligence, and they tend to become more stringent over time, imposing greater compliance costs and increased risks and penalties associated with violations.
+Added: We cannot be certain that violations of these laws and regulations, or releases of or exposure to hazardous substances, will not occur in the future or have not occurred in the past, including as a result of human error,
+Added: accidents, equipment failure or other causes.
+Added: The costs of complying with environmental laws and regulations, and liabilities that may be imposed for violating them, or for remediation obligations or responding to third-party claims, could negatively affect our business, financial condition and results of operations.
+Added: Clinical studies may be delayed, suspended or terminated for many reasons, which will increase our expenses and delay the time it takes to support label expansion for additional indications.
+Added: We plan to continue to develop and execute clinical studies to support label retention for our products and label expansion for our products into additional epilepsy populations.
+Added: We may also develop and execute clinical studies for new products or for label expansion for our current products into patient populations living with other neurologic conditions.
+Added: We do not know whether future clinical studies will begin on time, need to be redesigned, enroll an adequate number of patients or be completed on schedule, if at all.
+Added: The commencement and completion of clinical studies to support label retention and expansion for additional indications or for new products may be delayed, suspended or terminated as a result of many factors, including:
+Added: • the delay or refusal of regulators or Institutional Review Boards, or IRBs, to authorize us to commence a clinical study at a prospective trial site;
+Added: • changes in regulatory requirements, policies and guidelines;
+Added: • delays or failure to reach agreement on acceptable terms with prospective clinical research organizations, or CROs, and clinical study sites, the terms of which can be subject to extensive negotiation and may vary significantly among different CROs and trial sites;
+Added: • delays in patient enrollment and variability in the number and types of patients available for clinical studies and delays in or the inability to monitor enrolled patients;
+Added: • the inability to enroll a sufficient number of patients in studies to observe statistically significant treatment effects in the trial;
+Added: • having clinical sites deviate from the trial protocol or dropping out of a study;
+Added: • safety or tolerability concerns that could cause us to suspend or terminate a trial if we find that the participants are being exposed to unacceptable health risks;
+Added: • regulators or IRBs requiring that we or our investigators suspend or terminate clinical research for various reasons, including noncompliance with regulatory requirements or safety concerns, among others;
+Added: • lower than anticipated retention rates of patients and volunteers in clinical studies;
+Added: • our CROs or clinical studies sites failing to comply with regulatory requirements or meet their contractual obligations to us in a timely manner, or at all, deviating from the protocol or dropping out of a trial;
+Added: • delays relating to adding new clinical study sites;
+Added: • exceeding budgeted costs due to difficulty in accurately predicting costs associated with clinical studies.
+Added: We could also encounter delays if a clinical study is suspended or terminated by us, by the IRBs or the Ethics Committees of institutions at which such studies are being conducted, by the Data Safety Monitoring Board for such trial or by the FDA or other regulatory authorities.
+Added: Such authorities may suspend or terminate a clinical study due to a number of factors, including failure to conduct the clinical study in accordance with regulatory requirements, including GCP regulations, or our clinical protocols, inspection of the clinical study operations or trial site by the FDA resulting in the imposition of a clinical hold, unforeseen safety issues or adverse side effects, failure to demonstrate safety and effectiveness, changes in governmental regulations or administrative actions or lack of adequate funding to continue the clinical study.
+Added: In addition, we may 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
+Added: the data generated at the applicable clinical study site or the utility of the clinical study itself.
+Added: Principal investigators for our clinical studies may serve as scientific advisors or consultants to us from time to time and receive cash compensation and/or stock options in connection with such services.
+Added: 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 study site may be questioned and the utility of the clinical study itself may be jeopardized, which could result in the delay or rejection by the FDA.
+Added: Any such delay or rejection could prevent us from supporting label retention and expansion for our RNS System.
+Added: We may become subject to numerous laws and regulations related to anti-bribery and anti-corruption laws, such as the FCPA and the U.K.
+Added: Bribery Act, in which violations of these laws could result in substantial penalties and prosecution.
+Added: We currently do not market and sell our products outside the United States.
+Added: However, if we choose to conduct business outside the United States, our business will be subject to various heavily-enforced anti-bribery and anti-corruption laws, such as the FCPA and similar laws around the world.
+Added: These laws generally prohibit U.S.
+Added: companies and their employees and intermediaries from offering, promising, authorizing or making improper payments to foreign government officials for the purpose of obtaining or retaining business or gaining any advantage.
+Added: We face significant risks if we, which includes our third-party business partners and intermediaries, fail to comply with the FCPA or other anti-corruption and anti-bribery laws.
+Added: In many foreign countries, particularly in countries with developing economies, it may be a local custom that businesses engage in practices that are prohibited by the FCPA or other applicable laws and regulations.
+Added: To that end, we may have to incur substantial costs to enhance our controls if we begin doing business outside the United States, and even so, such compliance measures ultimately may not be effective in prohibiting our employees, contractors, business partners, intermediaries or agents from violating or circumventing our policies and/or the law.
+Added: Responding to any enforcement action or related investigation may result in a significant diversion of management’s attention and resources and significant defense costs and other professional fees.
+Added: Any violation of the FCPA or other applicable anti-bribery, anti-corruption or anti-money laundering laws to which we become subject could result in whistleblower complaints, adverse media coverage, investigations, loss of export privileges, severe criminal or civil sanctions and, in the case of the FCPA, suspension or debarment from U.S.
+Added: government contracts, which could harm our business, financial condition and results of operations.
+Added: Risks related to privacy, information technology and cybersecurity
Our collection, use, storage, disclosure, transfer and other processing of sensitive and personal information may subject us to stringent and evolving U.S.
2 unchanged sentences
In the course of our operations, we receive, collect, use, generate, store, disclose, transfer, make accessible, protect, secure, dispose of, transmit, share and otherwise process (collectively, process) an increasing volume of sensitive and personal information, including proprietary and confidential business data, trade secrets, intellectual property, data we collect about trial participants in connection with clinical trials, and detailed recordings of iEEGs from patients as well as information from our employees and third parties with whom we conduct business.
−Removed: Our data processing activities may subject us to numerous data privacy and security obligations, such as various laws, rules, regulations, guidance and industry standards, external and internal privacy and security policies, contractual requirements, and other obligations relating to data privacy and security.
−Removed: We are subject to many diverse laws and regulations relating to data privacy and security.
+Added: Our data processing activities subject us to numerous data privacy and security obligations, such as various laws, rules, regulations, guidance and industry standards, external and internal privacy and security policies, contractual requirements, and other obligations relating to data privacy and security.
In the United States, various federal and state regulators have adopted, or are considering adopting, laws and regulations concerning personal information and data security, including data breach notification laws.
−Removed: In the past few years, numerous U.S.
−Removed: states—including California, Virginia, Colorado, Connecticut, and Utah—have enacted comprehensive privacy laws that impose certain obligations on covered businesses, including providing specific disclosures in privacy notices and affording residents with certain rights concerning their personal information.
+Added: states have enacted comprehensive privacy laws that impose certain obligations on covered businesses, including providing specific disclosures in privacy notices and affording residents with certain rights concerning their personal information.
As applicable, such rights may include the right to access, correct, or delete certain personal information, and to opt-out of certain data processing activities, such as targeted advertising, profiling, and automated decision-making.
2 unchanged sentences
These state laws allow for statutory fines for noncompliance.
−Removed: Additionally, our customers may be subject to additional federal and state privacy and security laws, rules, regulations and standards, including HIPAA, that they may require us to comply with through contractual obligations.
−Removed: This patchwork of legislation and
−Removed: regulation may give rise to conflicts or differing views of personal privacy rights.
For example, the CCPA applies to personal information of consumers, business representatives, and employees, and requires businesses to provide specific disclosures in privacy notices and honor requests of California residents to exercise certain privacy rights.
−Removed: The CCPA provides for fines of up to $7,500 per intentional violation and allows private litigants affected by certain data breaches to recover significant statutory damages.
+Added: The CCPA provides for fines per intentional violation and allows private litigants affected by certain data breaches to recover significant statutory damages.
Although the CCPA exempts some data processed in the context of clinical trials, the CCPA increases compliance costs and potential liability with respect to other personal information we maintain about California residents.
In addition, the California Privacy Rights Act of 2020, or CPRA, expands the CCPA’s requirements, including by adding a new right for individuals to correct their personal information and establishing a new regulatory agency to implement and enforce the law.
−Removed: While the laws and regulations of other states also exempt some data processed in the context of clinical trials, these developments further complicate compliance efforts, and increase legal risk and compliance costs for us, and the third parties upon whom we rely.
+Added: While the laws and regulations of other states also exempt some data processed in the context of clinical trials, these developments further complicate compliance efforts, and increase legal risk and compliance costs for us, and the third parties with whom we work.
+Added: Additionally, our customers may be subject to additional federal and state privacy and security laws, rules, regulations and standards, including HIPAA, that they require us to comply with through contractual obligations.
+Added: This patchwork of obligations may give rise to conflicts or differing views of personal privacy rights.
Outside the United States, an increasing number of laws, regulations, and industry standards may govern data privacy and security.
3 unchanged sentences
or private litigation related to processing of personal information brought by classes of data subjects or consumer protection organizations authorized at law to represent their interests.
+Added: We use artificial intelligence, or AI, including generative AI, and machine learning, or ML, technologies in our products and services (collectively, AI/ML).
+Added: The development and use of AI/ML present various privacy and security risks that may impact our business.
+Added: AI/ML are subject to privacy and data security laws, as well as increasing regulation and scrutiny.
+Added: Several jurisdictions around the globe, including Europe and certain U.S.
+Added: states, have proposed, enacted, or are considering laws governing the development and use of AI/ML, such as the EU’s AI Act and Colorado’s AI Act.
+Added: We expect other jurisdictions will adopt similar laws.
+Added: Additionally, certain privacy laws extend rights to consumers (such as the right to delete certain personal data) and regulate automated decision making, which may be incompatible with our use of AI/ML.
+Added: These obligations may make it harder for us to conduct our business using AI/ML, lead to regulatory fines or penalties, require us to change our business practices, retrain our AI/ML, or prevent or limit our use of AI/ML.
+Added: For example, the FTC has required other companies to turn over (or disgorge) valuable insights or trainings generated through the use of AI/ML where they allege the company has violated privacy and consumer protection laws.
+Added: If we cannot use AI/ML or that use is restricted, our business may be less efficient, or we may be at a competitive disadvantage.
We are also bound by contractual obligations related to data privacy and security, and our efforts to comply with such obligations may not be successful.
1 unchanged sentence
We publish privacy policies, marketing materials, and other statements regarding data privacy and security.
−Removed: If these policies, materials or statements are found to be deficient, lacking in transparency, deceptive, unfair, or misrepresentative of our practices, we may be subject to investigation, enforcement actions by regulators, or other adverse consequences.
+Added: If these policies, materials or statements are found to be deficient, lacking in transparency, deceptive, unfair, misleading, or misrepresentative of our practices, we may be subject to investigation, enforcement actions by regulators, or other adverse consequences.
In addition to data privacy and security laws, we are contractually subject to industry standards adopted by industry groups and, we are or may become subject to such obligations in the future.
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Preparing for and complying with these obligations requires us to devote significant resources and may necessitate changes to our services, information technologies, systems, and practices and to those of any third parties that process personal information on our behalf.
−Removed: We or the third parties upon which we rely may at times fail (or be perceived to have failed) in our efforts to comply with our data privacy and security obligations.
−Removed: Moreover, despite our efforts, our personnel or third parties on whom we rely may fail to comply with such obligations, which could negatively impact our business operations.
−Removed: If we or the third parties on which we rely fail, or are perceived to have failed, to address or comply with applicable data privacy and security obligations, we could face significant consequences, including but not limited to:
+Added: We or the third parties with whom we work may at times fail (or be perceived to have failed) in our efforts to comply with our data privacy and security obligations.
+Added: Moreover, despite our efforts, our personnel or third parties with whom we work may fail to comply with such obligations, which could negatively impact our business operations.
+Added: If we or the third parties with whom we work fail, or are perceived to have failed, to address or comply with applicable data privacy and security obligations, we could face significant consequences, including but not limited to:
government enforcement actions (e.g., investigations, fines, penalties, audits, inspections, and similar);
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and orders to destroy or not use personal information.
+Added: For example, one of our primary competitors has been subject to class action lawsuits and government investigations in connection with their alleged failure to comply with their privacy and security obligations.
In particular, plaintiffs have become increasingly more active in bringing privacy-related claims against companies, including class claims and mass arbitration demands.
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or substantial changes to our business model or operations.
−Removed: Disruptions in our information technology systems or data or those of third parties upon which we rely, whether through breaches or failures of our systems, ransomware, unauthorized access or otherwise, may result in both an adverse impact to our products, as well as the unauthorized use, disclosure, modification or misappropriation of patient or other personal or sensitive information, the occurrence of fraudulent activity, or other information security-related incidents, all of which could result in adverse consequences, including but not limited to regulatory investigations or actions;
+Added: Disruptions in our information technology systems or data or those of third parties with whom we work, whether through breaches or failures of our systems, ransomware, unauthorized access or otherwise, may result in both an adverse impact to our products, as well as the unauthorized use, disclosure, modification or misappropriation of patient or other personal or sensitive information, the occurrence of fraudulent activity, or other information security-related incidents, all of which could result in adverse consequences, including but not limited to regulatory investigations or actions;
fines and penalties;
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These data are recorded by our RNS System and can be viewed by the physician during regular patient visits using the Physician Tablet or on demand through a secure website.
−Removed: Further, in the ordinary course of our business, we and the third parties upon which we rely process a growing volume of personal information and confidential, proprietary and sensitive information, which may include procedure-based information and sensitive healthcare data, credit card and other financial information, and insurance information.
−Removed: Cyber-attacks, malicious internet-based activity, online and offline fraud, and other similar activities threaten the confidentiality, integrity, and availability of our sensitive information and information technology systems, and those of the third parties upon which we rely.
−Removed: Such threats are prevalent and continue to rise, are increasingly difficult to detect, and come from a variety of sources, including traditional computer “hackers,” threat actors, “hacktivists,” organized criminal threat actors, personnel (such as through theft or misuse), sophisticated nation states, and nation-state-supported actors.
+Added: Further, in addition to clinical trial and patient data, we and the third parties with whom we work process a growing volume of personal information and confidential, proprietary and sensitive information, which include procedure-based information and sensitive healthcare data, credit card and other financial information, and insurance information (collectively, sensitive information).
+Added: Cyber-attacks, malicious internet-based activity, online and offline fraud, and other similar activities threaten the confidentiality, integrity, and availability of our sensitive information and information technology systems, and those of the third parties with whom we work.
+Added: Such threats are prevalent and continue to rise, are increasingly difficult to detect, and originate from a variety of sources, including traditional computer “hackers,” threat actors, “hacktivists,” organized criminal threat actors, cyber criminals, personnel (such as through theft or misuse), sophisticated nation states, and nation-state-supported actors.
Some actors now engage and are expected to continue to engage in cyber-attacks, including without limitation nation-state actors for geopolitical reasons and in conjunction with military conflicts and defense activities.
−Removed: During times of war and other major conflicts, we and the third parties upon which we rely may be vulnerable to a heightened risk of these attacks, including retaliatory cyber-attacks, that could materially disrupt our systems and operations, supply chain, and ability to produce, sell and distribute our services.
−Removed: We and the third parties upon which we rely are subject to a variety of evolving threats, including but not limited to social-engineering attacks (including through deep fakes, which may be increasingly more difficult to identify as fake, and phishing attacks), malicious code (such as viruses and worms), malware (including as a result of advanced persistent threat intrusions), denial-of-service attacks (such as credential stuffing), credential harvesting, personnel misconduct or error, ransomware attacks, supply-chain attacks, software bugs, server malfunctions, software or hardware failures, loss of data or other information technology assets, adware, telecommunications failures, earthquakes, fires, floods, and other similar threats.
+Added: During times of war and other major conflicts, we and the third parties with whom we work are vulnerable to a heightened
+Added: risk of these attacks, including retaliatory cyber-attacks, that could materially disrupt our systems and operations, supply chain, and ability to produce, sell and distribute our services.
+Added: We and the third parties with whom we work are subject to a variety of evolving threats, including but not limited to social-engineering attacks (including through deep fakes, which are increasingly more difficult to identify as fake, and phishing attacks), malicious code (such as viruses and worms), malware (including as a result of advanced persistent threat intrusions), denial-of-service attacks (such as credential stuffing), credential harvesting, personnel misconduct or error, ransomware attacks, supply-chain attacks, software and zero-day vulnerabilities, server malfunctions, software or hardware failures, loss of data or other information technology assets, adware, telecommunications failures, earthquakes, fires, floods, and other similar threats.
In particular, severe ransomware attacks are becoming increasingly prevalent and can lead to significant interruptions in our operations, loss of sensitive data and income, reputational harm, and diversion of funds.
Extortion payments may alleviate the negative impact of a ransomware attack, but we may be unwilling or unable to make such payments due to, for example, applicable laws or regulations prohibiting such payments.
−Removed: Remote work has become more common and has increased risks to our information technology systems and data, as more of our employees utilize network connections, computers and devices outside our premises or network, including working at home, while in transit and in public locations.
+Added: Remote work has increased risks to our information technology systems and data, as our employees utilize network connections, computers and devices outside our premises or network, including working at home, while in transit and in public locations.
Additionally, future or past business transactions (such as acquisitions or integrations) could expose us to additional cybersecurity risks and vulnerabilities, as our systems could be negatively affected by vulnerabilities present in acquired or integrated entities’ systems and technologies.
Furthermore, we may discover security issues that were not found during due diligence of such acquired or integrated entities, and it may be difficult to integrate companies into our information technology environment and security program.
−Removed: In addition, our reliance on third-party service providers could introduce new cybersecurity risks and vulnerabilities, including supply-chain attacks, and other threats to our business operations.
−Removed: We rely on third-party service providers and technologies to operate critical business systems to process sensitive information in a variety of contexts, such as and without limitation, cloud-based infrastructure, data center facilities, encryption and authentication technology, employee email, content delivery to customers, and other functions.
−Removed: We also rely on third-party service providers to provide other products, services, parts, or otherwise to operate our business.
+Added: In addition, our reliance on third parties could introduce new cybersecurity risks and vulnerabilities, including supply-chain attacks, and other threats to our business operations.
+Added: We rely on third parties and third-party technologies to operate critical business systems to process sensitive information in a variety of contexts, such as and without limitation, cloud-based infrastructure, data center facilities, encryption and authentication technology, employee email, content delivery to customers, and other functions.
+Added: We also rely on third parties to provide other products, services, parts, or otherwise to operate our business.
Our ability to monitor these third parties’ information security practices is limited, and these third parties may not have adequate information security measures in place.
−Removed: If our third-party service providers experience a security incident or other interruption, we could experience adverse consequences.
−Removed: While we may be entitled to damages if our third-party service providers fail to satisfy their privacy or security-related obligations to us, any award may be insufficient to cover our damages, or we may be unable to recover such award.
+Added: If the third parties with whom we work experience a security incident or other interruption, we could experience adverse consequences.
+Added: While we may be entitled to damages if these third parties fail to satisfy their privacy or security-related obligations to us, any award may be insufficient to cover our damages, or we may be unable to recover such award.
In addition, supply-chain attacks have increased in frequency and severity, and we cannot guarantee that third parties’ infrastructure in our supply chain or our third-party partners’ supply chains have not been compromised.
−Removed: We may expend significant resources or modify our business activities (including our clinical trial activities) to try to protect against security incidents.
−Removed: Additionally, certain data privacy and security obligations may require us to implement and maintain specific security measures or industry-standard or reasonable security measures to protect our information technology systems and sensitive information.
+Added: We expend resources or may have to modify our business activities (including our clinical trial activities) to try to protect against security incidents.
+Added: Additionally, certain data privacy and security obligations require us to implement and maintain specific security measures or industry-standard or reasonable security measures to protect our information technology systems and sensitive information.
While we have implemented security measures designed to protect against security incidents, there can be no assurance that these measures will be effective.
−Removed: We take steps designed to detect, mitigate and remediate vulnerabilities in our information systems (such as our hardware and/or software, including that of third parties upon which we rely).
−Removed: We may not, however, detect and remediate all such vulnerabilities on a timely basis.
−Removed: Further, we may experience delays in deploying remedial measures designed to address any such identified vulnerabilities.
−Removed: Any of the previously identified or similar threats could cause a security incident or other interruption that could result in unauthorized, unlawful, or accidental acquisition, modification, destruction, loss, alteration, encryption, disclosure of, or access to our sensitive information or our information technology systems, or those of the third parties upon whom we rely.
−Removed: A security incident or other interruption could disrupt our ability (and that of third parties upon whom we rely) to provide our services.
−Removed: Applicable data privacy and security obligations may require us to notify relevant stakeholders of security incidents.
−Removed: Such disclosures are costly, and the disclosure or the failure to comply with such requirements could lead to adverse consequences.
−Removed: If we (or a third party upon whom we rely) experience a security incident or are perceived to have experienced a security incident, we may experience adverse consequences, such as government enforcement actions (for example, investigations, fines, penalties, audits, and inspections);
+Added: We take steps designed to detect, mitigate and remediate vulnerabilities in our information systems (such as our hardware and/or software, including that of third parties with whom we work).
+Added: We have not and may not in the future, however, detect and remediate all such vulnerabilities on a timely basis.
+Added: Further, we have (and may in the future) experienced delays in deploying remedial measures designed to address any such identified vulnerabilities.
+Added: Vulnerabilities could be exploited and result in a security incident.
+Added: Certain of the previously identified or similar threats may in the future cause a security incident or other interruption that may in the future result in unauthorized, unlawful, or accidental acquisition, modification, destruction, loss, alteration, encryption, disclosure of, or access to our sensitive information or our information technology systems, or those of the third parties with whom we work.
+Added: For example, we have been the target of
+Added: unsuccessful phishing attempts in the past and expect such attempts will continue in the future.
+Added: A security incident or other interruption could disrupt our ability (and that of third parties with whom we work) to provide our services.
+Added: It may be difficult and/or costly to detect, investigate, mitigate, contain, and remediate a security incident.
+Added: Our efforts to do so may not be successful.
+Added: Actions taken by us or the third parties with whom we work to detect, investigate, mitigate, contain, and remediate a security incident could result in outages, data losses, and disruptions of our business.
+Added: Threat actors may also gain access to other networks and systems after a compromise of our networks and systems.
+Added: Applicable data privacy and security obligations require us, or we may voluntarily choose, to notify relevant stakeholders of certain security incidents, or to take other actions, such as providing credit monitoring and identity theft protection services.
+Added: Such disclosures and related actions are costly, and the disclosure or the failure to comply with such requirements could lead to adverse consequences.
+Added: If we (or a third party with whom we work) experience a security incident or are perceived to have experienced a security incident, we may experience adverse consequences, such as government enforcement actions (for example, investigations, fines, penalties, audits, and inspections);
additional reporting requirements and/or oversight;
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Security incidents and attendant consequences may cause customers to stop using our products and services, deter new customers from using our products and services, and negatively impact our ability to grow and operate our business.
−Removed: Our contracts may not contain limitations of liability, and even where they do, there can be no assurance that limitations of liability in our contracts are sufficient to protect us from liabilities, damages, or claims related to our data privacy and security obligations.
+Added: Some of our contracts do not contain limitations of liability, and even where they do, there can be no assurance that limitations of liability in our contracts are sufficient to protect us from liabilities, damages, or claims related to our data privacy and security obligations.
We currently maintain a cybersecurity insurance policy and business interruption coverage to mitigate certain potential losses but this insurance is limited in amount, and we cannot be certain that such potential losses will not exceed our policy limits, or will cover all potential claims to which we are exposed and may not be adequate or sufficient to protect us from or to mitigate liabilities arising out of our privacy and security practices, that such coverage will continue to be available on commercially reasonable terms or at all, or that such coverage will pay future claims.
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In addition to experiencing a security incident, third parties may gather, collect, or infer sensitive information about us from public sources, data brokers, or other means that reveals competitively sensitive details about our organization and could be used to undermine our competitive advantage or market position.
+Added: Additionally, sensitive information of the Company could be leaked, disclosed, or revealed as a result of or in connection with our employees’, personnel’s, or vendors’ use of generative AI technologies.
+Added: Any sensitive information that we input into a third-party generative AI/ML platform could be leaked or disclosed to others, including if sensitive information is used to train the third parties’ AI/ML model.
+Added: Additionally, where an AI/ML model ingests personal data and makes connections using such data, those technologies may reveal other sensitive information generated by the model.
+Added: Moreover, AI/ML models may create flawed, incomplete, or inaccurate outputs, some of which may appear correct.
+Added: This may happen if the inputs that the model relied on were inaccurate, incomplete or flawed (including if a bad actor “poisons” the AI/ML with bad inputs or logic), or if the logic of the AI/ML is flawed (a so-called “hallucination”).
+Added: We may use AI/ML outputs to make certain decisions.
+Added: Due to these potential inaccuracies or flaws, the model could be biased and could lead us to make decisions that could bias certain individuals (or classes of individuals), and adversely impact their rights, employment, and ability to obtain certain pricing, products, services, or benefits.
We face potential liability related to the privacy of health information we obtain.
We may maintain, use, and share sensitive health information that we receive directly from patients that use our products, throughout the clinical study process, in the course of our research collaborations, and from healthcare providers in the course of using our products and systems.
−Removed: Most healthcare providers, including hospitals from which we obtain patient health information, are subject to privacy and security regulations promulgated under HIPAA, as amended by the Health Information Technology for Economic and Clinical Health, or HITECH.
+Added: Most healthcare providers, including hospitals from which we obtain patient health information, are subject to privacy and security regulations promulgated under
+Added: HIPAA, as amended by the Health Information Technology for Economic and Clinical Health, or HITECH.
We are not currently classified as a covered entity or business associate under HIPAA and thus are not subject to its requirements or penalties.
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Consequently, depending on the facts and circumstances, we could face substantial criminal penalties if we knowingly receive, maintain, use, or transfer individually identifiable health information from a HIPAA-covered healthcare provider or research institution that has not satisfied HIPAA’s requirements for disclosure of individually identifiable health information.
−Removed: Furthermore, certain health privacy laws, data breach notification laws, consumer protection laws and genetic testing laws may apply directly to our operations or those of our collaborators and may impose restrictions on our collection, use and dissemination of individuals’ health information As such, we may be subject to state laws requiring notification of affected individuals and state regulators in the event of a breach of personal information, including certain health information, which is a broader class of information than the health information protected by HIPAA.
+Added: Furthermore, certain health privacy laws, data breach notification laws, consumer protection laws and genetic testing laws may apply directly to our operations or those of our collaborators and may impose restrictions on our collection, use and dissemination of individuals’ health information.
+Added: As such, we may be subject to state laws requiring notification of affected individuals and state regulators in the event of a breach of personal information, including certain health information, which is a broader class of information than the health information protected by HIPAA.
Moreover, patients about whom we or our contractors or collaborators obtain or share health information, as well as the providers who share this information with us or whom we share this data with, may have statutory or contractual rights that limit our ability to use and disclose the information.
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If patients choose not to consent to the collection of their health information as a result of these concerns, or our consent practices are found to be unlawful, this could negatively impact the growth potential for our business.
−Removed: Compliance with environmental laws and regulations could be expensive, and the failure to comply with these laws and regulations could subject us to significant liability.
−Removed: Our research, development and manufacturing operations involve the use of hazardous substances, and we are subject to a variety of federal, state and local environmental laws and regulations relating to the storage, use, handling, generation, manufacture, treatment, discharge and disposal of hazardous substances.
−Removed: Our products may also contain hazardous substances, and they are subject laws and regulations relating to labeling requirements and to their sale, collection, recycling, treatment, storage and disposal.
−Removed: Compliance with these laws and regulations may be
−Removed: expensive and noncompliance could result in substantial fines and penalties.
−Removed: Environmental laws and regulations also impose liability for the remediation of releases of hazardous substances into the environment and for personal injuries resulting from exposure to hazardous substances, and they can give rise to substantial remediation costs and to third-party claims, including for property damage and personal injury.
−Removed: Liability under environmental laws and regulations can be joint and several and without regard to fault or negligence, and they tend to become more stringent over time, imposing greater compliance costs and increased risks and penalties associated with violations.
−Removed: We cannot be certain that violations of these laws and regulations, or releases of or exposure to hazardous substances, will not occur in the future or have not occurred in the past, including as a result of human error, accidents, equipment failure or other causes.
−Removed: The costs of complying with environmental laws and regulations, and liabilities that may be imposed for violating them, or for remediation obligations or responding to third-party claims, could negatively affect our business, financial condition and results of operations.
−Removed: Clinical studies may be delayed, suspended or terminated for many reasons, which will increase our expenses and delay the time it takes to support label expansion for additional indications.
−Removed: We plan to continue to develop and execute clinical studies to support label retention for our products and label expansion for our products into additional epilepsy populations.
−Removed: We may also develop and execute clinical studies for new products or for label expansion for our current products into patient populations living with other neurologic conditions.
−Removed: We do not know whether future clinical studies will begin on time, need to be redesigned, enroll an adequate number of patients or be completed on schedule, if at all.
−Removed: The commencement and completion of clinical studies to support label retention and expansion for additional indications or for new products may be delayed, suspended or terminated as a result of many factors, including:
−Removed: • the delay or refusal of regulators or Institutional Review Boards, or IRBs, to authorize us to commence a clinical study at a prospective trial site;
−Removed: • changes in regulatory requirements, policies and guidelines;
−Removed: • delays or failure to reach agreement on acceptable terms with prospective clinical research organizations, or CROs, and clinical study sites, the terms of which can be subject to extensive negotiation and may vary significantly among different CROs and trial sites;
−Removed: • delays in patient enrollment and variability in the number and types of patients available for clinical studies and delays in or the inability to monitor enrolled patients;
−Removed: • the inability to enroll a sufficient number of patients in studies to observe statistically significant treatment effects in the trial;
−Removed: • having clinical sites deviate from the trial protocol or dropping out of a study;
−Removed: • safety or tolerability concerns that could cause us to suspend or terminate a trial if we find that the participants are being exposed to unacceptable health risks;
−Removed: • regulators or IRBs requiring that we or our investigators suspend or terminate clinical research for various reasons, including noncompliance with regulatory requirements or safety concerns, among others;
−Removed: • lower than anticipated retention rates of patients and volunteers in clinical studies;
−Removed: • our CROs or clinical studies sites failing to comply with regulatory requirements or meet their contractual obligations to us in a timely manner, or at all, deviating from the protocol or dropping out of a trial;
−Removed: • delays relating to adding new clinical study sites;
−Removed: • exceeding budgeted costs due to difficulty in accurately predicting costs associated with clinical studies.
−Removed: We could also encounter delays if a clinical study is suspended or terminated by us, by the IRBs or the Ethics Committees of institutions at which such studies are being conducted, by the Data Safety Monitoring Board for such
−Removed: trial or by the FDA or other regulatory authorities.
−Removed: Such authorities may suspend or terminate a clinical study due to a number of factors, including failure to conduct the clinical study in accordance with regulatory requirements, including GCP regulations, or our clinical protocols, inspection of the clinical study operations or trial site by the FDA resulting in the imposition of a clinical hold, unforeseen safety issues or adverse side effects, failure to demonstrate safety and effectiveness, changes in governmental regulations or administrative actions or lack of adequate funding to continue the clinical study.
−Removed: In addition, we may 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 study site or the utility of the clinical study itself.
−Removed: Principal investigators for our clinical studies may serve as scientific advisors or consultants to us from time to time and receive cash compensation and/or stock options in connection with such services.
−Removed: 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 study site may be questioned and the utility of the clinical study itself may be jeopardized, which could result in the delay or rejection by the FDA.
−Removed: Any such delay or rejection could prevent us from supporting label retention and expansion for our RNS System.
Risks related to our intellectual property
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In some cases, we may not be able to obtain patents covering our products which are sufficient to prevent third parties, such as our competitors, from utilizing our products, or our competitors may have rights under current or future out-licenses of our intellectual property, which could result in our competitors developing and commercializing products similar to or competitive with our products.
−Removed: Any failure to obtain, maintain, protect, enforce or defend patent and other intellectual property protection with respect to our RNS System or other aspects of our business could harm our business, competitive position, financial condition and results of operations.
+Added: Any failure to obtain, maintain, protect, enforce or defend patent and other intellectual property
+Added: protection with respect to our RNS System or other aspects of our business could harm our business, competitive position, financial condition and results of operations.
Changes in either the patent laws or their interpretation in the United States and other countries may diminish our ability to protect our inventions, obtain, maintain, protect, enforce, and defend our intellectual property rights and, more generally, could affect the value of our intellectual property or narrow the scope of our patents.
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Although we enter into non-disclosure and confidentiality agreements with parties who have access to confidential or patentable aspects of our research and development output, such as our employees, corporate collaborators, outside scientific collaborators, suppliers, consultants, advisors and other third parties, any of these parties may breach the agreements and disclose such output before a patent application is filed, thereby jeopardizing our ability to seek patent protection.
−Removed: In addition, our ability to obtain and maintain valid and enforceable patents depends on whether the differences between our
−Removed: inventions and the prior art allow our inventions to be patentable over the prior art.
+Added: In addition, our ability to obtain and maintain valid and enforceable patents depends on whether the differences between our inventions and the prior art allow our inventions to be patentable over the prior art.
Furthermore, the publication of discoveries in scientific literature often lags behind the actual discoveries, and patent applications in the United States and other jurisdictions are typically not published until 18 months after filing, or in some cases not at all.
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If the scope of any patent protection we obtain is not sufficiently broad, or if we lose any of our patent protection, our ability to prevent our competitors from commercializing similar or identical products could be adversely affected.
−Removed: If the breadth or strength of protection provided by the patents we hold or pursue with respect to our products is challenged, it could dissuade companies from collaborating with us to develop, or threaten our ability to commercialize, our products.
+Added: If the breadth or strength of protection provided by the patents we hold or
+Added: pursue with respect to our products is challenged, it could dissuade companies from collaborating with us to develop, or threaten our ability to commercialize, our products.
Patents have a limited lifespan.
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Even if we were able to obtain a license, it could be non-exclusive, thereby giving our competitors access to the same technologies licensed to us, and could require us to pay significant royalties and other fees.
−Removed: We could be forced, including by court order, to cease commercializing the infringing product.
+Added: forced, including by court order, to cease commercializing the infringing product.
In addition, we could be found liable for monetary damages, which may be significant.
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These and other claims that we have misappropriated the confidential information or trade secrets of third parties can have a similar negative impact on our business to the infringement claims discussed above.
−Removed: Even if we are successful in defending against intellectual property claims, litigation or other legal proceedings relating to such claims may cause us to incur significant expenses, cause reputational harm, and could distract our
−Removed: technical and management personnel from their normal responsibilities.
+Added: Even if we are successful in defending against intellectual property claims, litigation or other legal proceedings relating to such claims may cause us to incur significant expenses, cause reputational harm, and could distract our technical and management personnel from their normal responsibilities.
If we fail in defending any such claims, in addition to paying monetary damages or other settlements, we may lose valuable intellectual property rights or personnel, which could harm our business, financial condition and results of operations.
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If we fail to comply with our obligations in any current or future agreements under which we license intellectual property rights from third parties or otherwise experience disruptions to our business relationships with our licensors, we could lose license rights that are important to our business.
−Removed: We are and may become party to license or collaboration agreements with third parties, such as our collaboration agreement with Rapport Therapeutics, Inc., or Rapport, to advance our research or allow commercialization of our products.
+Added: We are and may become party to license or collaboration agreements with third parties to advance our research or allow commercialization of our products.
Such agreements may impose numerous obligations, such as development, diligence, payment, commercialization, funding, milestone, royalty, sublicensing, insurance, patent prosecution, enforcement and other obligations on us and may require us to meet development timelines, or to exercise certain efforts to develop and commercialize licensed products, in order to maintain the licenses.
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Many countries have compulsory licensing laws under which a patent owner may be compelled to grant licenses to third parties.
−Removed: In addition, many countries limit the enforceability of patents against government agencies or
−Removed: government contractors.
+Added: In addition, many countries limit the enforceability of patents against government agencies or government contractors.
In these countries, the patent owner may have limited remedies, which could materially diminish the value of such patent.
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As the number of competitors in our market grows and the number of patents issued in this area increases, the possibility of patent infringement claims against us escalates.
−Removed: Moreover, we may face claims from non-practicing entities, or NPEs, which have no relevant product revenue and against whom our own patent
−Removed: portfolio may have no deterrent effect.
+Added: Moreover, we may face claims from non-practicing entities, or NPEs, which have no relevant product revenue and against whom our own patent portfolio may have no deterrent effect.
Third parties, including NPEs, may in the future claim, that our products infringe or violate their patents or other intellectual property rights.
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Defense of infringement claims, regardless of their merit or outcome, would involve substantial litigation expense and would be a substantial diversion of management and other employee resources from our business, and may impact our reputation.
−Removed: In the event of a successful claim of infringement against us, we may be enjoined from further developing or commercializing the infringing products and/or have to pay substantial damages for use of the asserted intellectual property, including treble damages and attorneys’ fees were we found to willfully infringe such intellectual property.
+Added: In the event of a successful claim of infringement against us, we may be enjoined from further developing or commercializing the infringing products and/or have to pay substantial damages for use of the asserted intellectual property, including treble damages and attorneys’ fees were we found to willfully infringe such
+Added: intellectual property.
Claims that we have misappropriated the confidential information or trade secrets of third parties could harm our business, financial condition and results of operations.
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Over the long term, if we are unable to establish name recognition based on our trademarks, trade names, domain names or other intellectual property, then we may not be able to compete effectively and our business may be adversely affected.
−Removed: Our efforts to enforce or protect our proprietary rights related to trademarks, trade secrets, domain names or other intellectual property may be ineffective, could result in
−Removed: substantial costs, diversion of resources, or adverse impact to our brand and could harm our business, financial condition and results of operations.
+Added: Our efforts to enforce or protect our proprietary rights related to trademarks, trade secrets, domain names or other intellectual property may be ineffective, could result in substantial costs, diversion of resources, or adverse impact to our brand and could harm our business, financial condition and results of operations.
Intellectual property rights do not necessarily address all potential threats, and limitations in intellectual property rights could harm our business, financial condition and results of operations.
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These contracts may not provide meaningful protection or equitable remedies for our trade secrets, know-how, or other proprietary information in the event of any unauthorized use, misappropriation, or disclosure of such trade secrets, know-how, or other proprietary information.
−Removed: There can be no assurance that such third parties will not breach their agreements with us, that we will have adequate remedies for any breach, or that our trade secrets will not otherwise become known or independently developed by competitors.
+Added: There can be no assurance that such
+Added: third parties will not breach their agreements with us, that we will have adequate remedies for any breach, or that our trade secrets will not otherwise become known or independently developed by competitors.
Despite the protections we do place on our intellectual property or other proprietary rights, monitoring unauthorized use and disclosure of our intellectual property is difficult, and we do not know whether the steps we have taken to protect our intellectual property or other proprietary rights have or will be adequate.
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Our failure to secure, protect and enforce our intellectual property rights could substantially harm the value of our products, brand and business.
−Removed: theft or unauthorized use or publication of our trade secrets and other confidential business information could reduce the differentiation of our products, substantially and adversely impact our sales and commercial operations and harm our business.
+Added: The theft or unauthorized use or publication of our trade secrets and other confidential business information could reduce the differentiation of our products, substantially and adversely impact our sales and commercial operations and harm our business.
Additionally, the value of our investment in development or business acquisitions could be reduced and third parties might make claims against us related to losses of their confidential or proprietary information.
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In addition, some courts are less willing or unwilling to protect trade secrets and agreement terms that address non-competition are difficult to enforce in many jurisdictions and might not be enforceable in certain cases.
−Removed: We also seek to preserve the integrity and confidentiality of our data and other confidential information by maintaining physical security of our premises and physical and electronic security of our information technology systems.
−Removed: While we have confidence in these individuals, organizations, systems and tools, agreements or security measures may be breached, whereby detecting the disclosure or misappropriation of confidential information and enforcing a claim that a party illegally disclosed or misappropriated confidential information is difficult, expensive and time-consuming, and the outcome is unpredictable.
−Removed: Further, we may not be able to obtain adequate remedies for any breach.
Our inability to use software licensed from third parties, or our use of open-source software under license terms that interfere with our proprietary rights, could disrupt our business.
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In the future, we could be required to seek licenses from third parties in order to continue offering our solutions, which licenses may not be available on terms that are acceptable to us, or at all.
−Removed: Claims related to our use of open source software could also result in litigation, require us to purchase costly licenses or require us to devote additional research and development resources to change the software underlying our technology, any of which would have a negative effect on our business, financial condition and operating results and may not be possible in a timely manner.
+Added: Claims related to our use of open-source software could also result in litigation, require us to purchase costly licenses or require us to devote additional research and development resources to change the software underlying our technology, any of which
+Added: would have a negative effect on our business, financial condition and operating results and may not be possible in a timely manner.
We and our customers may also be subject to suits by parties claiming infringement due to the reliance by our products on certain open-source software, and such litigation could be costly for us to defend or subject us to injunctions enjoining us from the sale of our products that contain open-source software.
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We are party to an existing Term Loan Agreement, which contains restrictive covenants as well as financial maintenance covenants, and if we are unable to comply with these covenants then the lenders could declare an event of default and we may need to immediately repay the amounts due under the Term Loan Agreement.
−Removed: In September 2020, we entered into a Term Loan Agreement, or the Term Loan, pursuant to which the lender has made available to us an aggregate principal amount not to exceed $60.0 million, of which, as of December 31, 2023, we have drawn $50.0 million and the remainder was available to be drawn only if we met certain financial thresholds, which we did not meet.
−Removed: The Term Loan contains customary affirmative and restrictive covenants, including with respect to our ability to enter into fundamental transactions, incur additional indebtedness, grant liens, pay any dividend or make any distributions to our holders, make investments, merge or consolidate with any other person or engage in transactions with our affiliates, as well as financial maintenance covenants, including minimum liquidity and annual revenue covenants.
−Removed: In February 2023, the Term Loan was amended to reduce the minimum annual revenue covenant and increase the annual interest rate from 12.5% to 13.5%, effective March 1, 2023.
−Removed: If we fail to comply with the covenants or payments specified in the Term Loan, the lenders could declare an event of default, which would give it the right to terminate its commitment to provide additional loans and declare all borrowings outstanding, together with accrued and unpaid interest and fees, to be immediately due and payable.
+Added: In September 2020, we entered into a Term Loan Agreement, or the Term Loan, pursuant to which we borrowed $50.0 million.
+Added: The Term Loan contains customary affirmative and restrictive covenants, including with respect to our ability to enter into fundamental transactions, incur additional indebtedness, grant liens, pay any dividend or make any distributions to our holders, make investments, merge or consolidate with any other person or engage in transactions with our affiliates, as well as minimum liquidity and annual revenue covenants.
+Added: If we fail to
+Added: comply with the covenants or payments specified in the Term Loan, the lenders could declare an event of default, which would give it the right to declare all borrowings outstanding, together with accrued and unpaid interest and fees, to be immediately due and payable.
In addition, borrowings under the Term Loan are secured by substantially all of our properties, rights and assets, including intellectual property.
−Removed: To support our continued operations and the growth of our business, we may need access to our existing capital or to seek additional capital through new equity or debt financings, which sources of existing or additional capital may not be available to us on acceptable terms or at all.
+Added: Any declaration by our lender of an event of default could significantly harm our business and could cause the price of our common stock to decline.
+Added: If our distribution agreement with DIXI Medical is not renewed or we fail to negotiate a new agreement, our revenue growth, financial condition and results of operations may be materially affected.
+Added: In August 2022, we entered into a distribution agreement with DIXI Medical, pursuant to which we became the exclusive U.S.
+Added: distributor of DIXI Medical’s stereo electroencephalography product line.
+Added: The distribution agreement has an initial term of three years, which expires September 30, 2025, and which will be automatically renewed for additional one-year terms, unless either party provides written notice to the other party of its intention to not renew at least 180 days prior to the expiration of the then-current term.
+Added: If either party provides notice of intent not to renew by April 3, 2025 or otherwise fail to negotiate a new agreement, we may not be able to continue to generate and grow revenue from the sales of DIXI medical products, which may materially affect our financial condition and our results of operations, and our stock price may decline.
+Added: Our actual operating results may differ significantly from any guidance provided.
+Added: Our guidance, including forward-looking statements, is prepared by management and is qualified by, and subject to, a number of assumptions and estimates that, while presented with numerical specificity, are inherently subject to significant business, economic and competitive uncertainties and contingencies.
+Added: Many of these uncertainties and contingencies are beyond our control and are based upon specific assumptions with respect to future business decisions, some of which will change.
+Added: We generally state possible outcomes as high and low ranges, which are intended to provide a sensitivity analysis as variables are changed but are not intended to represent that actual results could not fall outside of the suggested ranges.
+Added: Guidance is necessarily speculative in nature, and it can be expected that some or all of the assumptions of the guidance furnished by us will not materialize or will vary significantly from actual results.
+Added: In particular, guidance offered in periods of extreme uncertainty, such as the uncertainty caused by macroeconomic conditions, is inherently more speculative in nature than guidance offered in periods of relative stability.
+Added: Accordingly, any guidance with respect to our projected financial performance is necessarily only an estimate of what management believes is realizable as of the date the guidance is given.
+Added: Actual results will vary from the guidance and the variations may be material.
+Added: Investors should also recognize that the reliability of any forecasted financial data will diminish the farther in the future that the data is forecasted.
+Added: Actual operating results may be different from our guidance, and such differences may be adverse and material.
+Added: In light of the foregoing, investors are urged to put the guidance in context and not to place undue reliance on it.
+Added: In addition, the market price of our common stock may reflect various market assumptions as to the accuracy of our guidance.
+Added: If our actual results of operations fall below the expectations of investors or securities analysts, the price of our common stock could decline substantially.
+Added: Our operating results may fluctuate across periods, which makes our future operating results difficult to predict and could cause our operating results to fall below expectations.
+Added: Our quarterly and annual operating results may fluctuate across periods, which makes it difficult for us to predict our future operating results.
+Added: Accordingly, the results of any one quarter or period should not be relied upon as an indication of future performance.
+Added: Our quarterly and annual operating results may fluctuate due to a variety of factors, many of which are outside of our control, including, but not limited to:
+Added: • the level of demand for our products and any future products, which may vary significantly from period to period;
+Added: • expenditures that we may incur to acquire, develop or commercialize additional products and technologies;
+Added: • the timing and cost of obtaining regulatory approvals or clearances to expand our indications and get future approvals of any future products or features;
+Added: • pricing pressures;
+Added: • our ability to expand the geographic reach of our commercial efforts;
+Added: • the degree of competition in our industry and any change in the competitive landscape of our industry, including consolidation among our competitors or future partners;
+Added: • coverage and reimbursement policies with respect to our products, and potential future products that compete with our products;
+Added: • the timing and success or failure of preclinical or clinical studies for expanding the indications of our RNS System or any future products we develop or competing products;
+Added: • positive or negative coverage in the media or clinical publications of our products or products of our competitors or our industry;
+Added: • the timing of customer orders, scheduling or cancelling of implant procedures using our products and the number of available selling days in any quarterly period, which can be impacted by holidays, vacations, the mix of products sold and the geographic mix of where products are sold, including any related foreign currency impact;
+Added: • the impact of hospital accessibility and staffing shortages on procedure volume or otherwise;
+Added: • the timing and cost of, and level of investment in, research, development, licenses, regulatory approval, commercialization activities, acquisitions and other strategic transactions, or other significant events relating to our products, which may change from time to time;
+Added: • the cost of manufacturing our products, which may vary depending on the quantity of production and the terms of our agreements with third-party suppliers;
+Added: • future accounting pronouncements or changes in our accounting policies.
+Added: The cumulative effects of these factors could result in fluctuations and unpredictability in our quarterly and annual operating results.
+Added: As a result, comparing our operating results on a period-to-period basis may not be meaningful.
+Added: Further, our historical results are not necessarily indicative of results expected for any future period, and quarterly results are not necessarily indicative of the results to be expected for the full year or any other period.
+Added: Investors should not rely on our past results as an indication of our future performance.
+Added: This variability and unpredictability could also result in our failing to meet the expectations of industry or financial analysts or investors for any period.
+Added: If our revenue or operating results fall below the expectations of analysts or investors or below any forecasts we may provide to the market, it could harm our business, financial condition, and results or operations.
+Added: To support our continued operations and the growth of our business, we may need to seek additional capital through new equity or debt financings, which sources of additional capital may not be available to us on acceptable terms or at all.
If we are unable to obtain, if needed, adequate financing or financing on terms satisfactory to us, it could harm our business and growth prospects.
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As of December 31, 2024, we had $52.8 million of cash, cash equivalents and short-term investments and $15.2 million in current liabilities.
−Removed: Our cash is invested in major financial institutions in the United States and cash equivalents are invested in money market funds.
−Removed: Deposits in these financial institutions may exceed federally insured limits, and we may be exposed to credit risk on deposits in the event of default of the financial institutions to the extent account balances exceed the amount insured by the Federal Deposit Insurance Corporation.
Our future capital requirements may be significantly different from our current estimates and will depend on many factors, including our growth rate, the growth of sales and marketing teams and activities, our expense management initiatives, the expansion of the population of eligible patients, geographies we may choose to enter and commercialize in, updates to our products, potential introduction of new products, either developed internally or acquired, the continued oversight of regulatory agencies, and the continuing market acceptance of our products.
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As of December 31, 2024, we had $152.5 million of federal net operating loss carryforwards and $162.7 million of state net operating loss carryforwards.
−Removed: The federal and state NOL carryforwards began expiring in 2023 and 2028, for federal and state purposes, respectively.
+Added: The federal and state NOL carryforwards began expiring in 2026 and 2029, respectively.
As of December 31, 2024, the amount of federal NOL carryforwards that does not expire is $114.0 million (subject to certain utilization limitations).
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In addition, future changes in our stock ownership, some of which are outside of our control, could result in an additional ownership change under Section 382 of the Code, further limiting our ability to utilize NOLs arising prior to such ownership change in the future.
−Removed: There is also a risk that due to statutory or regulatory changes, such as suspensions on the use of NOLs (including California legislation enacted in June 2020 that limited the ability to use California net operating losses to offset California income for tax years beginning after 2019 and before 2023), or other unforeseen reasons, our existing NOLs could expire or otherwise be unavailable to offset future income tax liabilities.
+Added: There is also a risk that due to statutory or regulatory changes, such as suspensions on the use of NOLs (including California legislation enacted in June 2020 that limited the ability to use California NOLs to offset California income for tax years beginning after 2019 and before 2023), or other unforeseen reasons, our existing NOLs could expire or otherwise be unavailable to offset future income tax liabilities.
If we identify any material weaknesses or otherwise fail to maintain an effective system of internal control over financial reporting, we may not be able to accurately or timely report our financial condition or results of operations.
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Additionally, our obligations under the Term Loan Agreement are collateralized by substantially all of our assets, including our material intellectual property, and we are subject to customary financial and operating covenants limiting our ability to engage in various activities, which management may deem important for the business.
−Removed: The covenants related to the Term Loan Agreement, as well as any future financing agreements into which we may enter, may restrict our ability to finance our operations and engage in, expand or otherwise pursue our business activities and strategies.
+Added: The covenants related to
+Added: the Term Loan Agreement, as well as any future financing agreements into which we may enter, may restrict our ability to finance our operations and engage in, expand or otherwise pursue our business activities and strategies.
While we have not previously breached and are not currently in breach of these or any other covenants contained in our Term Loan Agreement, there can be no guarantee that we will not breach these covenants in the future.
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the patients receiving neuromodulation therapy outside in the community setting;
−Removed: and the potential growth of our market opportunity with the expansion of treatment to patients in the community setting, as well as those suffering from generalized epilepsy or are under age 18.
−Removed: In addition, our projections related to becoming the exclusive U.S.
−Removed: distributor of DIXI Medical products are based on a number of estimates and assumptions, including, without limitation, information obtained from DIXI Medical related to historical performance and future projections.
+Added: and the potential growth of our market opportunity with the expansion of treatment to patients in the community setting, as well as to those suffering from generalized epilepsy or who are under age 18.
+Added: In addition, our projections related to being the exclusive U.S.
+Added: distributor of DIXI Medical products have been based on a number of estimates and assumptions, including, without limitation, information obtained from DIXI Medical related to historical performance and future projections, and annual extensions of the current distribution agreement, which occur automatically unless one of the parties notifies the other of its intention to not renew the agreement or otherwise negotiate a new agreement.
While we believe our assumptions and the data underlying our estimates are reasonable, these assumptions and estimates may not be correct and the conditions supporting our assumptions or estimates may change at any time, thereby reducing the predictive accuracy of these underlying factors.
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Alternatively, if the actual annual total addressable market for our RNS System is bigger than we have estimated, we may not be ready to manage such growth, which may impair our sales and have an adverse impact on our business.
−Removed: Additionally, if our projections regarding the revenue we anticipate receiving from our collaboration
−Removed: with Rapport are inaccurate, we may not attain our revenue projections, which could harm our business, result in investors losing confidence in our financial reporting, and our stock price may decline.
+Added: Additionally, if our projections regarding the revenue we anticipate receiving from our collaboration with Rapport are inaccurate, we may not attain our revenue projections, which could harm our business, result in investors losing confidence in our financial reporting, and our stock price may decline.
+Added: If our distribution agreement with DIXI Medical is not renewed, it may have an adverse effect on our financial condition.
+Added: In August 2022, we entered into the distribution agreement with DIXI Medical, pursuant to which we became the exclusive U.S.
+Added: distributor of DIXI Medical’s stereo electroencephalography product line.
+Added: The distribution agreement has an initial term of three years, which expires September 30, 2025, and which may be automatically renewed for additional one-year terms, unless either party provides written notice to the other party of its intention to not renew at least 180 days prior to the expiration of the then-current term.
+Added: If we and DIXI Medical do not agree to extend our exclusive distribution relationship or otherwise negotiate a new agreement, it will negatively impact our overall revenue growth, financial condition and results of operations, and our stock price may decline
If product liability lawsuits are brought against us, we may incur substantial liabilities and may be required to limit or halt the marketing and sale of our products.
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Insurance coverage is increasingly expensive.
−Removed: We currently carry product liability insurance in the amount of $7.0 million in the aggregate.
+Added: We currently carry product liability
+Added: insurance in the amount of $7.0 million in the aggregate.
In the future, we may not be able to maintain or obtain insurance at a reasonable cost or in an amount adequate to satisfy any liability that may arise.
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Using these third parties poses a number of risks, such as:
+Added: • they may not extend or renew their agreement with us;
• they may not perform to our standards or legal requirements;
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Failure of third parties to meet their contractual, regulatory and other obligations may materially affect our business.
−Removed: Future legislation, potential changes in federal regulatory agency leadership, and new policies and priorities under the Biden Administration may adversely impact our company.
−Removed: Congress devoted substantial attention in 2021 to healthcare matters, through greater oversight of the FDA.
−Removed: Although the prospects for the imminent enactment of major legislation are not certain at this time, the enactment of more targeted measures may be more likely due to the increased possibility of bipartisan support for consideration of such measures.
−Removed: In addition, the Biden administration may propose additional fiscal or tax measures, or additional regulatory requirements that would apply to us or our customers, thereby impacting our business, operations and
−Removed: profitability.
−Removed: Moreover, changes in the leadership and senior staffs of the FDA could impact the rulemaking, supervision, examination and enforcement priorities and policies of the agency.
+Added: Future legislation, potential changes in federal regulatory agency leadership, and new policies and priorities under the current Administration may adversely impact our company.
+Added: In light of the recent U.S.
+Added: Presidential and Congressional elections, we expect additional state and federal health reform measures may be adopted in the future, and of which could adversely affect our business.
+Added: Although the prospects for the imminent enactment of major legislation are not certain at this time, the enactment of more targeted measures may be more likely due to the increased possibility of federal executive and legislative branch support for consideration of such measures.
+Added: Moreover, changes in the leadership and senior staffs of the FDA could impact the
+Added: rulemaking, supervision, examination and enforcement priorities and policies of the agency.
The potential impact of changes in agency personnel, policies and priorities on the medical device sector, including us, cannot be predicted at this time.
−Removed: In addition, the Biden administration has indicated an increased focus on enforcement of federal consumer protection laws and appoint consumer-oriented regulators.
−Removed: It is possible that regulators in the administration could promulgate rulemakings and bring enforcement actions that materially impact our business and the business of our customers.
−Removed: These regulators may, for example, augment requirements that apply to the medical device approval process, impose additional clinical studies requirements, or change privacy rules that impact how we maintain, use, and share sensitive healthcare data, and could otherwise revise or create new regulatory requirements that apply to us.
We may not be able to respond quickly or effectively to regulatory, legislative, and other developments, and these changes may in turn impair our ability to offer our current or planned products, or increase our cost of doing business.
+Added: Disruption to federal funding during the current administration may disrupt our access to federal funding for research into expanded indications for our product.
In addition, if our practices are not consistent or viewed as not consistent with legal and regulatory requirements, we may become subject to audits, inquiries, whistleblower complaints, adverse media coverage, investigations, or criminal or civil sanctions, all of which may have an adverse effect on our reputation, business, financial condition and results of operations.
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We are unable to predict the effect that such sales may have on the prevailing market price of our common stock.
−Removed: As of December 31, 2023, we had a total of approximately 27.8 million shares outstanding of common stock, of which 11.1 million shares are held by directors, executive officers and other affiliates.
−Removed: These shares will be subject to volume limitations under Rule 144 under the Securities Act, and may also be subject to vesting requirements.
−Removed: As of December 31, 2023, the re were approximatel y 6.7 million shares of common stock reserved for future i ssuance under our equity incentive plans.
−Removed: All of the shares of common stock issuable upon exercise of outstanding stock options, vesting and settlement of restricted stock units, or RSUs, and exercise or settlement of any other equity incentives are registered for public resale under the Securities Act.
−Removed: Accordingly, these shares will be able to be freely sold in the public market upon issuance as permitted by any applicable vesting requirements, subject to the lock-up agreements and, for our affiliates, volume limitations described above.
+Added: As of December 31, 2024, there were 3.8 million shares of common stock issuable upon the exercise of outstanding stock options or subject to vesting of outstanding restricted stock units, or RSU, awards.
+Added: We have registered all of the shares of common stock issuable upon exercise of outstanding stock options and upon the settlement of RSU awards for public resale under the Securities Act.
+Added: Accordingly, these shares will be able to be freely sold in the public market upon issuance subject to compliance with applicable securities laws.
+Added: Including the aforementioned outstanding equity awards, as of December 31, 2024, there were approximately 6.5 million shares of common stock reserved for future issuance under our equity incentive plans which may become available for public resale to the extent we issue future equity incentive awards pursuant to these plans.
In addition, certain of our stockholders have registration rights that would require us to file registration statements for the public resale of the common stock issuable upon conversion of such shares or to include such shares in registration statements that we may file on our behalf or for other stockholders.
Concentration of ownership of our common stock among our executive officers, directors and principal stockholders may prevent new investors from influencing significant corporate decisions.
−Removed: Based on the number of shares of common stock outstanding as of December 31, 2023, our executive officers, directors and current beneficial owners of 5% or more of our common stock, in the aggregate, beneficially own, approximately 73.0% of our common stock.
+Added: Based on the number of shares of common stock outstanding as of February 28, 2025, our executive officers, directors and current beneficial owners of 5% or more of our common stock, in the aggregate, beneficially own, approximately 57.9% of our common stock.
These stockholders, acting together, will be able to significantly influence all matters requiring stockholder approval, including the election and removal of directors and any merger or other significant corporate transactions.
The interests of this group of stockholders may not coincide with the interests of other stockholders and they may want us to pursue strategies that deviate from the interests of other stockholders.
+Added: Our stock price has been volatile, an active or liquid market in our common stock may not be sustainable and the value of our common stock may decline.
+Added: Historically, our stock price has been volatile.
+Added: During the year ended December 31, 2024, our stock traded as high as $18.15 per share and as low as $5.45 per share.
+Added: An active or liquid market in our common stock may not be sustainable and the market price of our common stock may continue to be highly volatile and may fluctuate or decline substantially as a result of a variety of factors, some of which are beyond our control or are related in complex ways, including:
+Added: • actual or anticipated fluctuations in our financial condition and results of operations;
+Added: • variance in our financial performance from expectations of securities analysts or investors;
+Added: • changes in the coverage decisions, reimbursement or pricing of our products;
+Added: • changes in our projected operating and financial results;
+Added: • changes in laws or regulations applicable to our products;
+Added: • announcements by us or our competitors of significant business developments, acquisitions, or new offerings;
+Added: • publicity associated with issues related to our products;
+Added: • our involvement in regulatory investigations or litigation;
+Added: • future sales of our common stock or other securities, by us or our stockholders, as well as the anticipation of lock-up releases;
+Added: • changes in senior management or key personnel;
+Added: • the trading volume of our common stock;
+Added: • changes in the anticipated future size and growth rate of our market;
+Added: • general economic, regulatory, and market conditions, including economic recessions or slowdowns;
+Added: • changes in the structure of healthcare payment systems;
+Added: • developments or disputes concerning our intellectual property or other proprietary rights.
+Added: Broad market and industry fluctuations, as well as general economic, political, regulatory, and market conditions, may negatively impact the market price of our common stock.
+Added: In addition, given the relatively small public float of shares of our common stock on the Nasdaq Global Market, the trading market for our shares may be subject to increased volatility.
+Added: In the past, securities class action litigation has often been brought against a company following a decline in the market price of its securities.
+Added: This risk is especially relevant for us, because medical device companies have experienced significant stock price volatility in recent years.
+Added: If we face such litigation, it could result in substantial costs and a diversion of management’s attention and resources, which could harm our reputation and our business.
We are an emerging growth company and a smaller reporting company, and our compliance with the reduced reporting and disclosure requirements applicable to emerging growth companies and smaller reporting companies could make our common stock less attractive to investors.
−Removed: We are an emerging growth company, as defined in the JOBS Act, and we expect to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies, including the auditor attestation requirements of Section 404, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved and extended adoption period for accounting pronouncements.
+Added: We are an emerging growth company, as defined in the JOBS Act, and we expect to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies, including the auditor attestation requirements of Section 404, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, exemptions from the requirements
+Added: of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved and extended adoption period for accounting pronouncements.
Even after we no longer qualify as an emerging growth company, we may still qualify as a “smaller reporting company,” which would allow us to continue to take advantage of many of the same exemptions from disclosure requirements, including not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act and reduced disclosure obligations regarding executive compensation in this Annual Report on Form 10-K and our periodic reports and proxy statements.
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• require the approval of our board of directors or the holders of at least 66 2/3% of our outstanding shares of common stock entitled to vote at an election of directors to adopt, to amend our bylaws and certain provisions of our certificate of incorporation.
−Removed: These provisions may frustrate or prevent any attempts by our stockholders to replace or remove our current management by making it more difficult for stockholders to replace members of our board of directors, which is responsible for appointing the members of our management.
+Added: These provisions may frustrate or prevent any attempts by our stockholders to replace or remove our current management by making it more difficult for stockholders to replace members of our board of directors, which is
+Added: responsible for appointing the members of our management.
In addition, because we are incorporated in Delaware, we are governed by the provisions of Section 203 of the Delaware General Corporation Law, which generally, subject to certain exceptions, prohibits a Delaware corporation from engaging in any of a broad range of business combinations with any “interested” stockholder for a period of three years following the date on which the stockholder became an “interested” stockholder.
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If a court were to find either exclusive forum provision in our amended and restated certificate of incorporation to be inapplicable or unenforceable in an action, we may incur further significant additional costs associated with litigating Securities Act claims in state court, or both state and federal court, which could harm our business, financial condition, results of operations, and prospects.
−Removed: These exclusive forum provisions may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or our directors, officers, or other employees, which may discourage lawsuits against us and our directors, officers and other employees.
+Added: These exclusive forum provisions may limit a stockholder’s ability to bring a claim in a judicial forum that it finds favorable for disputes with us or our directors, officers, or other employees, which may discourage lawsuits
+Added: against us and our directors, officers and other employees.
If a court were to find either exclusive-forum provision in our amended and restated certificate of incorporation to be inapplicable or unenforceable in an action, we may incur further significant additional costs associated with resolving the dispute in other jurisdictions, all of which could harm our business and financial condition.
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For example, the Russia-Ukraine war and the conflict in the Middle East has created extreme volatility in the global capital markets and is expected to have further global economic consequences, including disruptions of the global supply chain and energy markets.
+Added: Trade tensions or restrictions on free trade, including the tariffs that have been proposed by the current administration, could exacerbate these effects.
Any such volatility and disruptions may have adverse consequences on us or the third parties on whom we rely.
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A severe or prolonged global economic downturn could result in a variety of risks to our business.
−Removed: For example, inflation rates, particularly in the United States, have increased recently to levels not seen in years, and increased inflation may result in increases in our operating costs (including our labor costs), reduced liquidity and limits on our ability to access credit or otherwise raise capital on acceptable terms, if at all.
+Added: For example, increased inflation may result in increases in our operating costs (including our labor costs), reduced liquidity and limits on our ability to access credit or otherwise raise capital on acceptable terms, if at all.
In addition, the U.S.
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Our operations could be subject to earthquakes, power shortages, telecommunications failures, water shortages, floods, hurricanes, typhoons, fires, extreme weather conditions, public health crises, and other natural or man-made disasters or business interruptions, for which we are predominantly self-insured.
−Removed: Our ability to obtain components
−Removed: for our products could be disrupted if the operations of our suppliers were affected by a man-made or natural disaster or other business interruption.
+Added: Our ability to obtain components for our products could be disrupted if the operations of our suppliers were affected by a man-made or natural disaster or other business interruption.
In addition, our corporate headquarters and manufacturing facility is located in Mountain View, California, near major earthquake faults and fire zones.
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Adverse publicity about regulatory or legal action against us, irrespective of outcome, could damage our reputation and brand image, undermine our customers’ confidence and reduce long-term demand for our products, even if the regulatory or legal action is unfounded or not material to our operations.
−Removed: Our stock price has been volatile, an active or liquid market in our common stock may not be sustainable and the value of our common stock may decline.
−Removed: Historically, our stock price has been volatile.
−Removed: During the year ended December 31, 2023, our stock traded as high as $10.31 per share and as low as $1.44 per share.
−Removed: An active or liquid market in our common stock may not be sustainable and the market price of our common stock may continue to be highly volatile and may fluctuate or decline substantially as a result of a variety of factors, some of which are beyond our control or are related in complex ways, including:
−Removed: • actual or anticipated fluctuations in our financial condition and results of operations;
−Removed: • variance in our financial performance from expectations of securities analysts or investors;
−Removed: • changes in the coverage decisions, reimbursement or pricing of our products;
−Removed: • changes in our projected operating and financial results;
−Removed: • changes in laws or regulations applicable to our products;
−Removed: • announcements by us or our competitors of significant business developments, acquisitions, or new offerings;
−Removed: • publicity associated with issues related to our products;
−Removed: • our involvement in regulatory investigations or litigation;
−Removed: • future sales of our common stock or other securities, by us or our stockholders, as well as the anticipation of lock-up releases;
−Removed: • changes in senior management or key personnel;
−Removed: • the trading volume of our common stock;
−Removed: • changes in the anticipated future size and growth rate of our market;
−Removed: • general economic, regulatory, and market conditions, including economic recessions or slowdowns;
−Removed: • changes in the structure of healthcare payment systems;
−Removed: • developments or disputes concerning our intellectual property or other proprietary rights.
−Removed: Broad market and industry fluctuations, as well as general economic, political, regulatory, and market conditions, may negatively impact the market price of our common stock.
−Removed: In addition, given the relatively small public float of shares of our common stock on the Nasdaq Global Market, the trading market for our shares may be subject to increased volatility.
−Removed: In the past, securities class action litigation has often been brought against a company following a decline in the market price of its securities.
−Removed: This risk is especially relevant for us, because medical device companies have experienced significant stock price volatility in recent years.
−Removed: If we face such litigation, it could result in substantial costs and a diversion of management’s attention and resources, which could harm our reputation and our business.
If securities or industry analysts do not continue to publish research or publish unfavorable or inaccurate research about our business, our common stock price and trading volume could decline.
10 unchanged sentences
We are required pursuant to Section 404 of the Sarbanes-Oxley Act to include in our annual reports a report by management on, among other things, the effectiveness of our internal control over financial reporting.
−Removed: This assessment needs to include disclosure of any material weaknesses identified by our management in our internal
−Removed: control over financial reporting.
−Removed: In addition, our independent registered public accounting firm is required to attest to the effectiveness of our internal control over financial reporting in our first annual report required to be filed with the Securities and Exchange Commission, or the SEC, following the date we are no longer an emerging growth company.
−Removed: We have not yet commenced the costly and challenging process of compiling the system and process documentation necessary to perform the evaluation required under Section 404.
−Removed: We currently do not have an internal audit group, and we will need to hire additional accounting and financial staff with appropriate public company experience and technical accounting knowledge and compile the system and process documentation necessary to perform the evaluation needed to comply with Section 404.
+Added: This assessment needs to include disclosure of any material weaknesses identified by our management in our internal control over financial reporting.
+Added: In addition, our independent registered public accounting firm will be required to attest to the effectiveness of our internal control over financial reporting in our first annual report required to be filed with the Securities and Exchange Commission, or the SEC, following the date we are no longer an emerging growth company, and no longer qualify for certain scaled disclosure requirements as a smaller reporting company.
+Added: We have not yet commenced the costly and challenging process of compiling the system and process documentation necessary to perform such evaluation required by our auditors under Section 404.
+Added: We currently do not have an internal audit group, and we will need to hire additional accounting and financial staff with appropriate public
+Added: company experience and technical accounting knowledge and compile the system and process documentation necessary to perform the evaluation needed to comply with Section 404.
Any failure to maintain effective internal control over financial reporting could severely inhibit our ability to accurately report our financial condition or results of operations.
−Removed: If we are unable to conclude that our internal control over financial reporting is effective, or if we identify additional material weaknesses in our internal control over financial reporting, our reputation could be negatively impacted, we could lose investor confidence in the accuracy and completeness of our financial reports, the market price of our common stock could decline, we could be subject to sanctions or investigations by the Nasdaq Global Market, the SEC or other regulatory authorities and our access to the capital markets could be restricted in the future.
−Removed: Our operating results may fluctuate across periods, which makes our future operating results difficult to predict and could cause our operating results to fall below expectations.
−Removed: Our quarterly and annual operating results may fluctuate across periods, which makes it difficult for us to predict our future operating results.
−Removed: Accordingly, the results of any one quarter or period should not be relied upon as an indication of future performance.
−Removed: Our quarterly and annual operating results may fluctuate due to a variety of factors, many of which are outside of our control, including, but not limited to:
−Removed: • the level of demand for our products and any future products, which may vary significantly from period to period;
−Removed: • expenditures that we may incur to acquire, develop or commercialize additional products and technologies;
−Removed: • the timing and cost of obtaining regulatory approvals or clearances to expand our indications and get future approvals of any future products or features;
−Removed: • pricing pressures;
−Removed: • our ability to expand the geographic reach of our commercial efforts;
−Removed: • the degree of competition in our industry and any change in the competitive landscape of our industry, including consolidation among our competitors or future partners;
−Removed: • coverage and reimbursement policies with respect to our products, and potential future products that compete with our products;
−Removed: • the timing and success or failure of preclinical or clinical studies for expanding the indications of our RNS System or any future products we develop or competing products;
−Removed: • positive or negative coverage in the media or clinical publications of our products or products of our competitors or our industry;
−Removed: • the timing of customer orders or scheduling of implants using our products and the number of available selling days in any quarterly period, which can be impacted by holidays, vacations, the mix of products sold and the geographic mix of where products are sold, including any related foreign currency impact;
−Removed: • the impact of hospital accessibility and staffing shortages on procedure volume or otherwise;
−Removed: • the timing and cost of, and level of investment in, research, development, licenses, regulatory approval, commercialization activities, acquisitions and other strategic transactions, or other significant events relating to our products, which may change from time to time;
−Removed: • the cost of manufacturing our products, which may vary depending on the quantity of production and the terms of our agreements with third-party suppliers;
−Removed: • future accounting pronouncements or changes in our accounting policies.
−Removed: The cumulative effects of these factors could result in fluctuations and unpredictability in our quarterly and annual operating results.
−Removed: As a result, comparing our operating results on a period-to-period basis may not be meaningful.
−Removed: Further, our historical results are not necessarily indicative of results expected for any future period, and quarterly results are not necessarily indicative of the results to be expected for the full year or any other period.
−Removed: Investors should not rely on our past results as an indication of our future performance.
−Removed: This variability and unpredictability could also result in our failing to meet the expectations of industry or financial analysts or investors for any period.
−Removed: If our revenue or operating results fall below the expectations of analysts or investors or below any forecasts we may provide to the market, it could harm our business, financial condition, and results or operations.
−Removed: Our actual operating results may differ significantly from any guidance provided.
−Removed: Our guidance, including forward-looking statements, is prepared by management and is qualified by, and subject to, a number of assumptions and estimates that, while presented with numerical specificity, are inherently subject to significant business, economic and competitive uncertainties and contingencies.
−Removed: Many of these uncertainties and contingencies are beyond our control and are based upon specific assumptions with respect to future business decisions, some of which will change.
−Removed: We generally state possible outcomes as high and low ranges, which are intended to provide a sensitivity analysis as variables are changed but are not intended to represent that actual results could not fall outside of the suggested ranges.
−Removed: Guidance is necessarily speculative in nature, and it can be expected that some or all of the assumptions of the guidance furnished by us will not materialize or will vary significantly from actual results.
−Removed: In particular, guidance offered in periods of extreme uncertainty, such as the uncertainty caused by macroeconomic conditions, is inherently more speculative in nature than guidance offered in periods of relative stability.
−Removed: Accordingly, any guidance with respect to our projected financial performance is necessarily only an estimate of what management believes is realizable as of the date the guidance is given.
−Removed: Actual results will vary from the guidance and the variations may be material.
−Removed: Investors should also recognize that the reliability of any forecasted financial data will diminish the farther in the future that the data is forecasted.
−Removed: Actual operating results may be different from our guidance, and such differences may be adverse and material.
−Removed: In light of the foregoing, investors are urged to put the guidance in context and not to place undue reliance on it.
−Removed: In addition, the market price of our common stock may reflect various market assumptions as to the accuracy of our guidance.
−Removed: If our actual results of operations fall below the expectations of investors or securities analysts, the price of our common stock could decline substantially.
−Removed: We will continue to incur increased costs as a result of operating as a public company, and our management and board of directors will be required to devote substantial time to compliance with our public company responsibilities and corporate governance practices.
+Added: We cannot be certain that the actions we may take in the future will prevent or avoid potential future material weaknesses.
+Added: If we are unable to conclude that our internal control over financial reporting is effective, or if we identify additional material weaknesses in our internal control over financial reporting and are unable to successfully remediate them, our reputation could be negatively impacted, we could lose investor confidence in the accuracy and completeness of our financial reports, the market price of our common stock could decline, we could be subject to sanctions or investigations by the Nasdaq Global Market, the SEC or other regulatory authorities and our access to the capital markets could be restricted in the future.
+Added: We will continue to incur significant costs as a result of operating as a public company, and our management and board of directors will be required to devote substantial time to compliance with our public company responsibilities and corporate governance practices.
As a public company, we have and will continue to incur significant legal, accounting, and other expenses.
1 unchanged sentence
The Sarbanes-Oxley Act, the Dodd-Frank Wall Street Reform and Consumer Protection Act, the listing requirements of the Nasdaq Global Market, and other applicable securities rules and regulations impose various requirements on public companies.
−Removed: Furthermore, most senior members of our management team as well as our board of directors do not have significant experience with operating a public company.
−Removed: As a result, our management, board of directors, and other personnel will have to devote a substantial amount of time to compliance with these requirements.
+Added: Our management, board of directors, and other personnel will have to devote a substantial amount of time to compliance with these requirements.
Moreover, these rules and regulations will drive high legal and financial compliance costs and will make some activities more time-consuming and costly.
We cannot predict or estimate the amount of these additional costs or the timing of such costs.
−Removed: We may become subject to numerous laws and regulations related to anti-bribery and anti-corruption laws, such as the FCPA and the U.K.
−Removed: Bribery Act, in which violations of these laws could result in substantial penalties and prosecution.
−Removed: We currently do not market and sell our products outside the United States.
−Removed: However, if we choose to conduct business outside the United States, our business will be subject to various heavily-enforced anti-bribery and anti-corruption laws, such as the FCPA and similar laws around the world.
−Removed: These laws generally prohibit U.S.
−Removed: companies and their employees and intermediaries from offering, promising, authorizing or making improper payments to foreign government officials for the purpose of obtaining or retaining business or gaining any advantage.
−Removed: We face significant risks if we, which includes our third-party business partners and intermediaries, fail to comply with the FCPA or other anti-corruption and anti-bribery laws.
−Removed: In many foreign countries, particularly in countries with developing economies, it may be a local custom that businesses engage in practices that are prohibited by the FCPA or other applicable laws and regulations.
−Removed: To that end, we may have to incur substantial costs to enhance our controls if we begin doing business outside the United States, and even so, such compliance measures ultimately may not be effective in prohibiting our employees, contractors, business partners, intermediaries or agents from violating or circumventing our policies and/or the law.
−Removed: Responding to any enforcement action or related investigation may result in a significant diversion of management’s attention and resources and significant defense costs and other professional fees.
−Removed: Any violation of the FCPA or other applicable anti-bribery, anti-corruption or anti-money laundering laws to which we become subject could result in whistleblower complaints, adverse media coverage, investigations, loss of export privileges, severe criminal or civil sanctions and, in the case of the FCPA, suspension or debarment from U.S.
−Removed: government contracts, which could harm our business, financial condition and results of operations.
We may partner with or acquire other businesses, which could require significant management attention, disrupt our business, dilute stockholder value and harm our results of operations.
11 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.