What changed in this filing

/stocks — the workspaceLOADING

Item 7. Management’s Discussion and Analysis

2026-03-03 compared with 2025-03-04 · 115 added, 95 removed, 176 unchanged (54% of the section changed)

10 unchanged sentences

Our RNS System is currently indicated in the United States for use in adult epilepsy patients, meaning patients who are 18 years of age or older, with drug-resistant focal epilepsy.

We recently announced our primary effectiveness endpoint data in our Post-approval Study in this patient population.

The data showed that the RNS System efficacy improved over time, with a 62.5% median seizure reduction at six months after implant (n=314) and an 82.0% median seizure reduction at 36 months after implant (n=255).

Additionally, 42.5% of patients experienced a period of seizure-freedom for at least six months, and 22% of patients were seizure free for at least one year.

Results will be presented at the American Academy of Neurology Annual Meeting, held April 5 through 9, 2025.

We are conducting studies to expand our indication for use to patients with drug-resistant generalized epilepsy and patients with drug-resistant focal epilepsy under the age of 18.

In March 2024, we completed implanting patients in our NAUTILUS study for generalized epilepsy and expect that the last patient will complete one year of follow up in March 2025, with the data lock and subsequent commencement of data analyses expected to begin in the second quarter of 2025.

To support our RESPONSE study for label expansion in focal epilepsy patients under the age of 18, we recently announced our collaboration with the National Evaluation System for health Technology, or NEST, and the FDA to pursue the use of real-world data from the Pediatric Epilepsy Research Consortium, or PERC.

We are planning to file the expanded label submissions to the FDA for both of these indications in the second half of 2025.

Primary effectiveness endpoint data from our Post-approval Study in this patient population demonstrated that the RNS System efficacy improved over time, with a 62.5% median seizure reduction at six months after implant (n=314) and an 82.0% median seizure reduction at 36 months after implant (n=255).

Additionally, 42.5% of patients experienced a period of seizure-freedom for at least six months, and 22% of patients were seizure free for at least one year were presented at the American Academy of Neurology Annual Meeting in April 2025.

We are conducting studies to expand our indication for use in patients with drug-resistant idiopathic generalized epilepsy and patients with drug-resistant focal epilepsy under the age of 18.

In March 2025, the last patient in our NAUTILUS study for drug-resistant idiopathic generalized epilepsy completed one year of follow up.

In May 2025, we announced the preliminary results from the NAUTILUS study based on analysis of the one-year data.

The study met the 12-week post-implant primary safety endpoint, demonstrating excellent safety outcomes and confirming the favorable safety profile of the RNS System.

While the primary effectiveness endpoint did not reach statistical significance in the overall study, pre-specified secondary endpoints did show meaningful and clinically significant seizure reduction.

In December 2025, we filed the Premarket Approval Supplement, or PMA-S, to support label expansion for our RNS System in patients who have drug-resistant idiopathic generalized epilepsy.

The PMA-S is supported by pre-specified secondary endpoint data, which demonstrated robust 77% median GTC seizure reduction and a favorable safety profile in this highly refractory patient population at 18 months of therapy.

Patients in the NAUTILUS trial continue to participate in the study through the completion of two years after the device implant, with prespecified collection of safety and effectiveness data occurring upon completion of the two years post-implant, and we anticipate the final patient two-year completion in the first half of 2026.

In 2025, in an effort to further support the pediatric focal epilepsy label expansion efforts that we began with the RESPONSE study, we began a collaboration with the National Evaluation System for health Technology, or NEST, and the FDA to pursue the use of real-world data to support expanded labeling for patients ages 12 to 17.

These efforts are continuing into 2026.

Our commercial efforts have historically been focused on growing adoption and utilization across Level 4 comprehensive epilepsy centers, or CECs, in the United States that facilitate appropriate care for drug-resistant epilepsy patients.

In 2023, we received FDA approval of a Premarket Approval Supplement, or PMA-S, which updated the qualification criteria for centers and clinicians that may prescribe and implant the RNS System.

We initiated a pilot program to begin our outreach to these centers and clinicians in 2024 and have commenced program expansion that will continue through 2025.

We plan to address this opportunity in a targeted manner with incremental expansion of our sales force.

In 2023, we received FDA approval of a PMA-S which updated the qualification criteria for centers and clinicians that may prescribe and implant the RNS System.

We initiated a pilot program to begin our outreach to these centers and clinicians in 2024 and are expanding these efforts through 2025.

We are actively addressing this opportunity in a targeted manner with incremental expansion of our sales force.

Since our inception, we have generated significant losses.

We have financed our operations primarily through sales of our products, issuance of equity securities, and debt financing.

As of December 31, 2024, we had an

accumulated deficit of $531.0 million, cash, cash equivalents and short-term investments of $52.8 million, and $59.5 million of outstanding debt under a term loan, net of debt discount and issuance costs.

As of December 31, 2025, we had an accumulated deficit of $552.4 million, cash, cash equivalents and short-term investments of $61.1 million, and $58.9 million of outstanding debt under a term loan, net of debt discount and issuance costs.

We have invested heavily and expect to continue to invest in research and development and commercial activities.

Our research and development activities include clinical studies to demonstrate the safety and effectiveness of our RNS System, including in expanded indications, and to obtain, as well as retain, FDA approval.

We intend to continue making significant investments in research and development, clinical studies and regulatory affairs to support ongoing and future regulatory submissions for retaining and expanding indications of our RNS System, including to patients with drug-resistant generalized epilepsy and patients under the age of 18, support continuous improvements to our RNS System, and develop future products that address neurological disorders.

We intend to continue making significant investments in research and development, clinical studies and regulatory affairs to support ongoing and future regulatory submissions for retaining and expanding indications of our RNS System, including to patients with drug-resistant idiopathic generalized epilepsy and patients under the age of 18, support continuous improvements to our RNS System, and develop future products that address neurological disorders.

We have also made significant investments in building our field commercial team and intend to make significant investments in sales and marketing efforts in the future, including initiatives to drive awareness and expand our referral channel to increase the number of drug-resistant epilepsy patients referred to CECs.

We may in the future seek to acquire or invest in additional businesses, products, or technologies that we believe could complement or enhance our products, enhance our technical capabilities or otherwise offer growth opportunities, although we currently have no agreements or understandings with respect to any such acquisitions or investments.

Because of these and other factors, we expect to continue to incur net losses and negative cash flows for the next several years.

Because of these and other factors, we expect to continue to incur net losses and negative cash flows for the near term.

We may require additional funding to support operations and pay our obligations or may opportunistically seek to raise additional capital, which may include future equity or debt financings.

3 unchanged sentences

DIXI Distribution Agreement

In August 2022, we entered into an exclusive distribution agreement, or the Distribution Agreement, with DIXI Medical USA Corp., or DIXI Medical, pursuant to which we became the exclusive U.S.

As previously announced, the exclusive distribution agreement with DIXI Medical USA Corp., or DIXI Medical, expired on September 30, 2025.

In August 2022, we entered into this exclusive distribution agreement, or the Distribution Agreement, with DIXI Medical, pursuant to which we became the exclusive U.S.

distributor of DIXI Medical’s stereo electroencephalography, or Stereo EEG, product line beginning in October 2022.

These products are used in the epilepsy monitoring units, or EMUs, of comprehensive epilepsy centers to determine where epileptic seizures originate.

In addition to providing us with an incremental revenue stream, the DIXI Medical partnership provides us with improved visibility of patients moving through the EMUs, many of whom may be candidates for our RNS System.

This synergistic partnership leverages our field organization that is already calling on the same customers and supports our objective to engage earlier in the diagnostic and therapy selection process.

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.

The Distribution Agreement had an initial term of three years.

In March 2025, we notified DIXI Medical of our intent to not renew the Distribution Agreement upon its expiration in September 2025.

Although the Distribution Agreement originally provided for a six-month wind down period following the September 30, 2025 expiration, the parties agreed to an amendment that ended the wind down period on December 31, 2025.

We exercised our right to sell DIXI product inventory that we held through December 31, 2025, and as provided for in the Distribution Agreement, DIXI Medical is in the process of buying back, at cost, all remaining DIXI product inventory held by us that has at least six months of remaining shelf life.

Rapport Agreement

In November 2023, we entered into a collaboration agreement with Rapport Therapeutics, Inc., or Rapport, a clinical-stage biotechnology company, to leverage our data as well as our RNS System’s unique biomarker monitoring and data analysis capabilities.

The collaboration evaluates biomarker changes in currently implanted RNS System patients that enroll in Rapport’s Phase 2a clinical trial of its product candidate.

Pursuant to this agreement, we provide information to Rapport that will help evaluate the impact of their product candidate on certain biomarkers of patients with focal onset seizures.

The collaboration evaluated biomarker changes in currently implanted RNS System patients that enroll in Rapport’s Phase 2a clinical trial of its product candidate.

Pursuant to this

agreement, we provided information to Rapport to help evaluate the impact of their product candidate on certain biomarkers of patients with focal onset seizures.

In June 2025, we executed an agreement to extend our collaboration with Rapport and to continue providing differentiated data, monitoring and data analysis services for the next phase of Rapport’s clinical trial of its product candidate.

We expect this work to continue through first half of 2028.

Factors Affecting Our Performance

35 unchanged sentences

We have experienced and may continue to experience changes in the percentage of our revenue from replacement procedures over the next few years as a result of the extended replacement cycle of the newer device, which may cause variability in our gross margin.

We also derive revenue from sales of DIXI Medical products.

A change in product mix between sales of our RNS System and DIXI Medical products would cause variability in our gross margin.

With the termination of the Distribution Agreement and cessation of DIXI product sales on December 31, 2025, there will be no further revenue from DIXI product sales, reducing future variability in our gross margin.

Components of Our Results of Operations

2 unchanged sentences

Our revenue has also fluctuated and will continue to fluctuate in the future from quarter-to-quarter due to a variety of factors, including the success of our sales force in expanding adoption of our RNS System in new accounts and the number of physicians who are aware of and prescribe our RNS System.

We also derive revenue from sales of DIXI Medical products, primarily to our current customer base.

Our revenue from the sale of DIXI Medical products will fluctuate in the future due to a variety of factors, including our ability to take market share from competitive Stereo EEG products.

Beginning in the fourth quarter of 2023, we also derive revenue from services provided to Rapport pursuant to our collaboration agreement with Rapport.

We also derived revenue from sales of DIXI Medical products, primarily to our current customer base.

The Distribution Agreement expired on September 30, 2025, and under an amendment to the agreement, we exercised our right to continue to sell DIXI Medical products in our inventory through December 31, 2025, after which DIXI Medical is contractually obligated to repurchase remaining DIXI product inventory held by us that has at least six month of remaining shelf life at cost.

Beginning in the fourth quarter of 2023, we also began to derive revenue from services provided to Rapport pursuant to our collaboration agreement with Rapport.

Our revenue from this collaboration fluctuates due to the timing of services provided and other factors.

Nearly all of our revenue results from sales in the United States, but we also have limited sales of our RNS System in Canada pursuant to a special program that involves case-by-case approvals of the use of our RNS System in adult patients with drug-resistant focal epilepsy.

Cost of Goods Sold and Gross Margin

2 unchanged sentences

Cost of goods sold also includes certain direct costs such as those incurred for shipping our RNS System.

We record adjustments to our inventory valuation for estimated excess, obsolete and non-sellable inventories based on assumptions about future demand, past usage, changes to manufacturing processes and overall market conditions.

We record adjustments to our inventory valuation for estimated excess, obsolete and non-sellable

inventories based on assumptions about future demand, past usage, changes to manufacturing processes and overall market conditions.

Cost of goods sold also includes costs of procuring and shipping DIXI Medical products.

We expect cost of goods sold to increase in absolute dollars as more of our RNS Systems and DIXI Medical products are sold.

We expect cost of goods sold to increase in absolute dollars as more of our RNS Systems are sold, with no contribution from DIXI Medical product sales after December 31, 2025.

We calculate gross margin as gross profit divided by revenue.

3 unchanged sentences

Operating Expenses

Our operating expenses consist of research and development costs and selling, general and administrative costs.

Our operating expenses consist of sales and marketing costs, research and development costs, and general and administrative costs.

Sales and Marketing Expenses

Our sales and marketing expenses consist primarily of personnel-related costs for our sales and marketing employees, including stock-based compensation and sales-based variable compensation, travel expenses, consulting, public relations costs, direct marketing, customer training, trade show and promotional expenses and allocated facility and information technology expenses.

We expense sales variable compensation when revenue related to the underlying sale is recognized.

We intend to continue to increase our sales and marketing spending to support increased adoption of our RNS System.

We expect our sales and marketing expenses will increase in absolute dollars as we hire additional personnel and add programs in order to more fully penetrate the market opportunity.

Research and Development Expenses

Our research and development activities primarily consist of engineering and research programs associated with our products under development and clinical studies.

Research and development expenses include personnel-related costs for our research and development employees, including stock-based compensation, and expenses related to consulting services, clinical trials, regulatory activities, prototyping, testing, materials and supplies, and allocated overhead including facilities and information technology expenses.

Our clinical trial expenses include costs associated with clinical trial design, clinical trial site development and study costs, data management costs, related travel expenses, the cost of products used for clinical activities, and costs associated with our regulatory compliance.

1 unchanged sentence

We expect our research and development expenses will increase in absolute dollars as we continue to develop new product offerings and product enhancements and conduct studies for expanded indications for use.

Selling, General and Administrative Expenses

Our selling, general and administrative expenses consist primarily of personnel-related costs for our sales and marketing employees, including stock-based compensation and sales-based variable compensation, travel expenses, consulting, public relations costs, direct marketing, customer training, trade show and promotional expenses and allocated facility and information technology expenses, and for administrative personnel that support our general operations such as executive management and information technology, finance, accounting, customer services, human resources and legal personnel.

We expense sales variable compensation when revenue related to the underlying sale is recognized.

Selling, general and administrative expenses also include costs attributable to professional fees for legal, accounting and tax services, insurance and recruiting fees.

We intend to continue to increase our sales and marketing spending to support increased adoption of our RNS System.

We expect our sales and marketing expenses will increase in absolute dollars as we hire additional personnel and add programs in order to more fully penetrate the market opportunity.

We expect our administrative expenses, including stock-based compensation expense, will increase as we increase our headcount to support our growth.

General and Administrative Expenses

Our general and administrative expenses consist primarily of personnel-related costs, including stock-based compensation, for administrative personnel that support our general operations such as executive management, information technology, finance, accounting, customer services, human resources and legal personnel.

General and administrative expenses also include costs attributable to professional fees for legal, accounting and tax services, insurance and recruiting fees.

We expect our administrative expenses will increase as we increase our headcount to support our growth.

Additionally, we may incur increased expenses related to audit, legal, regulatory and tax-related services, compliance with exchange listing and Securities and Exchange Commission, or SEC, requirements, and director and officer insurance premiums.

Our selling, general and administrative expenses may fluctuate from period to period as we continue to grow.

Our general and administrative expenses may fluctuate from period to period as we continue to grow.

Interest Expense and Income

2 unchanged sentences

Other Income (Expense), Net

Other income (expense), net primarily consists of gain and loss from short-term investments.

Other income (expense), net primarily consists of gain and loss from short-term investments, and loss on debt extinguishment.

Results of Operations

Comparison of the Years Ended December 31, 2025 and 2024

The following table summarizes our results of operations for the periods indicated (in thousands):

The following table summarizes our results of operations for the periods indicated:

Years Ended December 31,

2024 2023 Change % Change

(in thousands) 2025 2024 Change % Change

Revenue $ 99,986 $ 79,906 $ 20,080 25 %

2 unchanged sentences

Operating expenses:

Sales and marketing 46,580 39,669 6,911 17 %

Research and development 27,888 23,653 4,235 18 %

Selling, general and administrative 57,103 54,518 2,585 5 %

General and administrative 19,090 17,434 1,656 9 %

Total operating expenses 93,558 80,756 12,802 16 %

4 unchanged sentences

Net loss $ (21,465) $ (27,141) $ 5,676 (21) %

Revenue increased by $14.5 million, or 22%, to $79.9 million during the year ended December 31, 2024, compared to $65.4 million during the year ended December 31, 2023.

The increase in revenue was primarily due to an increase in the number of RNS System units sold and an increase in sales of DIXI Medical products.

Revenue increased by $20.1 million, or 25%, to $100.0 million during the year ended December 31, 2025, compared to $79.9 million during the year ended December 31, 2024, due to an increase in the number of RNS System units sold, an increase in sales of DIXI Medical products, and an increase in service revenue.

Revenue from sales of DIXI Medical products represented approximately 16% of our total revenue for the year ended December 31, 2025, as compared to approximately 17% for the year ended December 31, 2024.

All of our revenue, with the exception of $0.2 million and less than $0.1 million for the years ended December 31, 2024 and 2023, was generated from sales in the United States.

All of our revenue, with the exception of $0.9 million and $0.2 million for the years ended December 31, 2025 and 2024, respectively, was generated from sales in the United States.

Cost of Goods Sold and Gross Margin

Cost of goods sold increased by $3.5 million, or 20%, to $20.8 million during the year ended December 31, 2024, compared to $17.3 million during the year ended December 31, 2023.

The increase was primarily due to an increase in the number of RNS Systems sold and the costs of distributing DIXI Medical products.

Our gross margin increased from 73.6% for the year ended December 31, 2023 to 73.9% for the year ended December 31, 2024 primarily due to lower fixed costs per unit as a result of increased production volume of the RNS System, partially offset by the lower gross margin from distribution of DIXI Medical products.

Cost of goods sold increased by $2.0 million, or 9%, to $22.8 million during the year ended December 31, 2025, compared to $20.8 million during the year ended December 31, 2024, primarily due to an increase in the number of RNS Systems sold and the costs of distributing DIXI Medical products.

Our gross margin increased from 73.9% for the year ended December 31, 2024 to 77.2% for the year ended December 31, 2025, primarily due to lower fixed costs per unit as a result of increased production volume of the RNS System.

Sales and Marketing Expenses

Sales and marketing expenses increased by $6.9 million, or 17%, to $46.6 million during the year ended December 31, 2025, compared to $39.7 million during the year ended December 31, 2024, primarily due to an increase of $4.1 million in personnel-related expenses resulting from an increase in sales and field support personnel costs, including sales commissions, increase in headcount, employee bonus, and one-time severance costs, and an increase of $2.6 million in marketing expenses, including travel, for the year ended December 31, 2025.

Research and Development Expenses

Research and development expenses increased by $2.9 million, or 14%, to $23.7 million during the year ended December 31, 2024, compared to $20.8 million during the year ended December 31, 2023.

The increase in research and development expenses was primarily due to an increase of $2.4 million in personnel-related expenses, including stock-based compensation, driven by an increase in personnel during the year ended December 31, 2024, and an increase of $1.2 million in product development expenses.

The increases were offset in part by an increase of $0.5 million in grant funds received primarily under the NIH funding agreement which are recognized as a reduction in research and development expenses.

Selling, General and Administrative Expenses

Selling, general and administrative expenses increased by $2.6 million, or 5%, to $57.1 million during the year ended December 31, 2024, compared to $54.5 million during the year ended December 31, 2023.

The increase in selling, general and administrative expenses was primarily due to an increase of $2.4 million in personnel-related expenses driven by an increase in our sales and field support personnel during the year ended December 31, 2024, compared to the year ended December 31, 2023, an increase of $0.3 million in sales, field support and marketing

costs, including travel, and an increase of $0.4 million in expenses related to commercial operations.

The increases were partially offset by a decrease of $0.4 million in general and administrative expenses.

Research and development expenses increased by $4.2 million, or 18%, to $27.9 million during the year ended December 31, 2025, compared to $23.7 million during the year ended December 31, 2024, primarily due to an increase of $2.5 million in personnel-related expenses, including employee bonus and stock-based compensation, driven by an increase in headcount, and a decrease of $1.2 million in grant funds received primarily under the National Institutes of Health funding agreement which are recognized as a reduction in research and development expenses, and an increase of $0.5 million in product development expenses.

General and Administrative Expenses

General and administrative expenses increased by $1.7 million, or 9%, to $19.1 million during the year ended December 31, 2025, compared to $17.4 million during the year ended December 31, 2024, primarily due to an increase of $1.7 million in personnel-related expenses and one-time severance costs.

Interest Expense and Income

Interest expense increased by $0.3 million for the year ended December 31, 2024, compared to the year ended December 31, 2023, due to an increase in the average balance of our Term Loan as a result of using the PIK interest option for the payment dates from January 2023 through June 2024.

Interest income decreased by less than $0.1 million for the year ended December 31, 2024, compared to the year ended December 31, 2023, primarily due to a decrease in average balances of our money market funds and short-term marketable securities, partially offset by higher interest yields in the year ended December 31, 2024.

Interest expense decreased by $1.3 million to $7.5 million for the year ended December 31, 2025, compared to $8.8 million for the year ended December 31, 2024, primarily due to repayment of the CRG Term Loan and the lower annual effective interest rate pursuant to the MidCap Term Loan compared to the CRG Term Loan.

Interest income decreased by $0.2 million for the year ended December 31, 2025, compared to the year ended December 31, 2024, primarily due to lower interest yields.

Other Income (Expense), net

Other income (expense), net increased by 0.6 million to $0.3 million during the year ended December 31, 2024, compared to ($0.3) million during the year ended December 31, 2023, primarily due to unrealized gain, net on short-term investments in the year ended December 31, 2024.

Other income (expense), net decreased by $0.8 million to $(0.5) million during the year ended December 31, 2025, compared to $0.3 million during the year ended December 31, 2024, primarily due to a loss on extinguishment of the CRG Term Loan of $0.5 million.

Liquidity and Capital Resources

We have financed our operations primarily through sales of our products, issuance of equity securities and debt financing.

As of December 31, 2024, we had cash, cash equivalents and short-term investments of $52.8 million and $59.5 million outstanding under the Term Loan, net of debt discount and issuance costs.

As of December 31, 2025, we had cash, cash equivalents and short-term investments of $61.1 million and $58.9 million outstanding under the MidCap Term Loan, net of debt discount and issuance costs.

2025 Follow-On Offering

In February 2025, we received approximately $69.8 million in net proceeds after deducting underwriting discounts and commissions and offering expenses from the sale of 7,475,000 shares of our common stock, including 975,000 shares from the exercise of the underwriters’ option to purchase additional shares, at a public offering price of $10.00 per share.

In February 2025, we completed a follow-on offering and received $69.7 million in net proceeds after deducting underwriting discounts and commissions and offering expenses from the sale of 7,475,000 shares of our common stock, including 975,000 shares from the exercise of the underwriters’ option to purchase additional shares, at a public offering price of $10.00 per share.

We used $49.5 million of the net proceeds from the offering to repurchase all of the shares held by our significant stockholder, KCK Ltd.

We intend to use the remaining net proceeds from the offering for general corporate purposes, which may include clinical trial and other research and development expenses, selling, general and administrative expenses, debt reduction and working capital.

We are using the remaining net proceeds from the offering for general corporate purposes, including, but not limited to, sales and marketing, clinical trial and other research and development, and general and administrative expenses, debt reduction and working capital.

At-the-Market Equity Program

In November 2022, we entered into a Sales Agreement with Leerink Partners LLC, or Leerink, to sell shares of our common stock, from time to time, through an at-the-market, or ATM, equity offering program under which Leerink will act as our sales agent and pursuant to which we may sell common stock for aggregate gross sales proceeds of up to $50.0 million.

During the year ended December 31, 2023, we received net proceeds of approximately $7.6 million from the sale of shares of common stock pursuant to our ATM offering program, after deducting sales commission and offering expenses.

In November 2022, we entered into a Sales Agreement with Leerink Partners LLC, or Leerink, to sell shares of our common stock, from time to time, through an at-the-market, or ATM, equity offering program under which Leerink acted as our sales agent and pursuant to which we could sell common stock for aggregate gross proceeds of up to $50.0 million.

During the year ended December 31, 2024, we received net proceeds of approximately $3.2 million after deducting sales commissions and offering expenses.

On February 20, 2025, we terminated the Sales Agreement and closed the ATM program.

In January 2025, we received net proceeds of approximately $0.2 million after deducting sales commissions and offering expenses.

In February 2025, we terminated the Sales Agreement and the ATM program.

On the date of termination, we had $38.3 million remaining under our ATM program.

In September 2020, we entered into the Term Loan with CRG Partners IV L.P.

CRG Term Loan

In September 2020, we entered into the CRG Term Loan with CRG Partners IV L.P.

and its affiliates for total borrowings of up to $60 million and borrowed $50 million.

The remaining $10.0 million expired without being drawn.

The Term Loan currently bears interest at a rate of 13.5% per year.

Payments under the loan are made quarterly with payment dates fixed at the end of each calendar quarter.

From January 2023 through June 2025, we had the option to pay interest as follows:

8.5% per annum in cash and 5.0% per annum PIK by increasing the principal of the Term Loan.

For each payment date from January 2023 through June 2024, we elected the PIK option.

The Term Loan was interest-only through its original final maturity of September 30, 2025.

The CRG Term Loan bore interest at a rate of 13.5% per year.

Payments under the loan were made quarterly with payment dates fixed at the end of each calendar quarter.

From March 2023 through June 2024, we had the option to pay interest as follows:

8.5% per annum in cash and 5.0% per annum paid-in-kind, or PIK, by increasing the principal of the CRG Term Loan.

For each payment date from March 2023 through June 2024, we elected the PIK option.

The CRG Term Loan was interest-only through its original final maturity of September 30, 2025.

Following the interest-only period, principal payment would have been due in one installment on September 30, 2025.

In May 2024, we amended the Term Loan to extend the final maturity by one year to September 30, 2026 and eliminate the PIK interest option after June 30, 2024.

The Term Loan includes a fee upon repayment of the loan equal to 10% of the aggregate principal amount being prepaid or repaid.

The Term Loan is collateralized by substantially all of our assets.

The loan agreement contains customary representations and warranties, covenants, events of default and termination provisions.

The financial covenants require that we achieve minimum annual revenue thresholds and maintain a minimum balance of cash and cash equivalents.

In May 2024, we amended the CRG Term Loan to extend the final maturity by one year to September 30, 2026 and eliminate the PIK interest option after June 30, 2024.

The CRG Term Loan included an exit fee upon repayment of the loan equal to 10% of the aggregate principal amount being prepaid or repaid.

In June 2025, we repaid the entire obligation under the CRG Term Loan using the proceeds received from the MidCap Term Loan.

At the time of repayment, the lender agreed to decrease the exit fee from 10% to 8% of the aggregate principal amount repaid.

MidCap Term Loan

In June 2025, we entered into a credit, security and guaranty agreement, or Credit Agreement, by and among us, MidCap Funding IV Trust, as agent, MidCap Financial Trust, as term loan servicer and the financial institutions and other entities from time to time party thereto, and borrowed $60.0 million, or MidCap Term Loan.

The Credit Agreement also provided for a revolving credit facility in an aggregate principal amount not to exceed $15.0 million, or the Revolver and together with the MidCap Term Loan, the Loans.

The Revolver has not been drawn upon as of December 31, 2025.

The Loans mature on June 4, 2030, and are due in one installment on June 4, 2030.

The MidCap Term Loan bears interest at an annual rate of 30-day forward-looking term Secured Overnight Financing Rate, or SOFR, plus 5.5%, subject to a SOFR floor of 2.0%.

Borrowing under the Revolver will accrue interest at an annual rate of 30-day forward-looking term SOFR plus 3.75%, subject to a SOFR floor of 2.0%.

Following the initial borrowing of the Revolver, we will pay an unused line fee equal to 0.25% per annum of the average unused portion of the Revolver.

Interest and unused line fee, if any, are payable monthly in arrears.

We may voluntarily prepay the Loans in whole or in part and terminate the respective commitments thereunder prior to the maturity date.

Each of the MidCap Term Loan and the Revolver is subject to a prepayment premium equal to 3.0% of the amount terminated during the first year, 2.0% in the second year, 1.0% in the third year, and 0% thereafter.

In addition, we will pay an exit fee of 2% of the amount borrowed under the MidCap Term Loan upon prepayment or repayment.

The Loans are collateralized by substantially all of our assets.

The Credit Agreement contains customary representations and warranties, covenants, events of default and termination provisions.

See Notes 1 and 6 to our financial statements included elsewhere in this Annual Report on Form 10-K for additional information.

Material Cash Requirements

We have future minimum payments for the Term Loan totaling $75.0 million, with $7.7 million due within twelve months.

We have future minimum payments for the MidCap Term Loan totaling $87.5 million, with $5.9 million due within twelve months.

In addition, we lease our office and manufacturing facilities in Mountain View, California under a non-cancelable operating lease which expires in June 2030.

Future minimum lease payments under non-cancelable operating leases were $14.4 million as of December 31, 2025.

See Note 5 to our financial statements included elsewhere in this Annual Report on Form 10-K for additional information.

See Note 5 to our financial statements included elsewhere in this Annual Report on Form 10-K for additional information about our facility lease.

Future Funding Requirements

8 unchanged sentences

• the costs of activities related to commercializing and marketing our RNS System in the United States and elsewhere, and manufacturing and distribution costs;

• our revenue and costs related to the DIXI Medical distribution agreement;

• the research and development activities we intend to undertake, including product enhancements and clinical studies for indication expansions that we intend to pursue;

10 unchanged sentences

Summary Statements of Cash Flows

The following table sets forth the primary sources and uses of cash and cash equivalents for the periods presented below (in thousands):

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

Year Ended December 31,

(in thousands)

Net cash (used in) provided by:

2 unchanged sentences

Financing activities 19,600 4,327

Net (decrease) increase in cash and cash equivalents

Net increase (decrease) in cash and cash equivalents

$ 8,262 $ (4,628)

2 unchanged sentences

Cash used in operating activities was primarily a result of the net loss of $21.5 million, adjusted for non-cash charges of $14.5 million and change in operating assets and liabilities of $4.0 million.

The non-cash charges primarily consisted of $10.3 million of stock-based compensation, $1.6 million of amortization of right-of-use assets, $1.4 million of interest incurred but paid-in-kind, $1.0 million of non-cash interest expense related to our Term Loan, and $0.3 million of inventory write-downs.

The change in operating assets and liabilities was due to an increase in inventories of $2.4 million largely due to an increase in work-in-process inventory and finished goods, a decrease in operating lease liabilities of $1.6 million, a decrease in accrued liabilities of $1.4 million largely due to accrued payroll and related expenses, an increase in accounts receivable of $0.5 million, and a decrease in deferred revenue of $0.5 million, offset in part by an increase in accounts payable of $0.7 million, and a decrease in prepaid expenses and other assets of $0.4 million.

The non-cash charges primarily consisted of $11.1 million of stock-based compensation, $1.7 million of amortization of right-of-use assets, $0.5 million of loss on extinguishment of the CRG Term Loan, and $0.5 million of non-cash interest expense related to our term loans.

The change in operating assets and liabilities was due to an increase in inventories of $3.7 million largely due to an increase in raw materials and finished goods, an increase in accounts receivable of $1.8 million primarily due to an increase in sales of our products including our RNS System and DIXI Medical products, a decrease in operating lease liabilities of $1.9 million, a decrease in accounts payable of $0.7 million primarily due to the timing of payments to our vendors and a decrease in deferred revenue of $0.4 million, offset in part by an increase in accrued liabilities of $3.6 million and an increase in prepaid expenses and other assets of $0.9 million.

Net cash used in operating activities was $17.9 million for the year ended December 31, 2024.

Cash used in operating activities was primarily a result of the net loss of $27.1 million, adjusted for non-cash charges of $14.6 million and change in operating assets and liabilities of $5.4 million.

The non-cash charges primarily consisted of $9.6 million of stock-based compensation, $2.7 million of interest incurred but paid-in-kind, $1.4 million of amortization of right-of-use assets, $1.1 million of non-cash interest expense related to our Term Loan, $0.3 million of amortization of debt discount and issuance costs and $0.3 million of loss from short-term investments.

The change in operating assets and liabilities was due to an increase in accounts receivable of $4.9 million primarily due to an increase in sales of our products, including our RNS System and DIXI Medical products, an increase in inventories of $1.7 million largely due to an increase in raw materials and finished goods, partially offset by a reduction in work-in-process inventory, a decrease in operating lease liabilities of $1.4 million due to cash paid for rent net of the accretion of imputed interest, offset in part by a decrease in prepaid expenses and other assets of $0.4 million, an increase in accrued liabilities of $3.8 million primarily due to an increase in accrued employee bonuses and payroll related expenses, and an increase in deferred revenue of $1.1 million related to our collaboration agreement with Rapport.

Cash Flows Provided by Investing Activities

Net cash provided by investing activities was $9.0 million for the year ended December 31, 2024, which primarily consisted of sales of short-term investments of $9.3 million, partially offset by purchases of property and equipment of $0.3 million.

The non-cash charges primarily consisted of $10.3 million of stock-based compensation, $1.6 million of amortization of right-of-use assets, $1.4 million of interest incurred but PIK, $1.0 million of non-cash interest expense related to our Term Loan, and $0.3 million of inventory write-downs.

Cash Flows (Used in) Provided by Investing Activities

Net cash used in investing activities was $0.3 million for the year ended December 31, 2025, which primarily consisted of purchases of property and equipment of $0.3 million.

Cash Flows Provided by Financing Activities

Net cash provided by financing activities was $4.3 million for the year ended December 31, 2024, which primarily consisted of $3.3 million of net cash proceeds from our At-the-Market offering and proceeds from the issuance of common stock under employee plans of $1.9 million, partially offset by taxes withheld and paid related to net share settlement of equity awards of $0.9 million.

Net cash provided by financing activities was $8.1 million for the year ended December 31, 2023, which primarily consisted of $7.9 million of net cash proceeds from our At-the-Market offering and proceeds from the issuance of common stock under employee plans of $0.8 million, partially offset by taxes withheld and paid related to net share settlement of equity awards of $0.3 million and payment of deferred offering costs of $0.3 million.

Net cash provided by financing activities was $19.6 million for the year ended December 31, 2025, which primarily consisted of $69.7 million in proceeds, net of underwriting discounts and commissions, from our February 2025 follow-on offering of common stock, proceeds of $58.4 million from the MidCap Term Loan, net of discounts and issuance costs, proceeds from the issuance of common stock under employee plans of $1.9 million and $0.2 million of net cash proceeds from our ATM offering, partially offset by repayment of the CRG Term Loan of $60.5

million, a repurchase of common stock of $49.5 million, and taxes withheld and paid related to net share settlement of equity awards of $0.5 million.

Net cash provided by financing activities was $4.3 million for the year ended December 31, 2024, which primarily consisted of $3.3 million of net cash proceeds from our ATM offering and proceeds from the issuance of common stock under employee plans of $1.9 million, partially offset by taxes withheld and paid related to net share settlement of equity awards of $0.9 million.

Critical Accounting Estimates

4 unchanged sentences

Our estimates are based on our historical experience, knowledge of current events and actions we may undertake in the future, and on various other factors that we believe are reasonable under the circumstances.

Our most critical accounting estimates subsequent to our IPO are those affecting the provision for excess and obsolete inventories.

Our most critical accounting estimates are those affecting the provision for excess and obsolete inventories.

We regularly review inventory quantities in consideration of actual loss experiences, projected future demand, and remaining shelf life to record a provision for excess and obsolete inventory when appropriate.

2 unchanged sentences

If our estimate of future demand is too high, we may have to write-down excess inventory for the product and record a charge to cost of goods sold, which could have a material adverse effect on our results of operations.

Inventory write-downs were $0.3 million and $0.2 million for the years ended December 31, 2024 and December 31, 2023, respectively.

Inventory write-downs were $0.2 million and $0.3 million for the years ended December 31, 2025 and 2024, respectively.

JOBS Act Accounting Election

2 unchanged sentences

As a result, our financial statements may not be comparable to the financial statements of issuers who are required to comply with the effective dates for new or revised accounting standards that are applicable to public companies, which may make comparison of our financials to those of other public companies more difficult.

We will cease to be an emerging growth company on the date that is the earliest of (i) December 31, 2026, (ii) the last day of the fiscal year in which we have total annual gross revenues of $1.235 billion or more, (iii) the date on which we have issued more than $1.0 billion in nonconvertible debt during the previous three years, or (iv) the

date on which we are deemed to be a large accelerated filer under the rules of the Securities and Exchange Commission.

Further, 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 take advantage of many of the same exemptions from disclosure requirements, including reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements.

4 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis