What changed in this filing

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Item 1. Financial Statements

2022-11-04 compared with 2022-08-03 · 139 added, 129 removed, 353 unchanged (43% of the section changed)

3 unchanged sentences

(In thousands, except share amounts)

September 30,

Current assets:

24 unchanged sentences

150,000,000 shares authorized;

shares and 27,791,615 shares issued and outstanding at June 30, 2022

shares and 27,791,615 shares issued and outstanding at September 30, 2022

and December 31, 2021, respectively

7 unchanged sentences

(In thousands, except share and per share amounts)

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

Cost of revenue

6 unchanged sentences

Interest expense

Other income (expense), net

Other expense, net

Total other expense, net

9 unchanged sentences

(In thousands)

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

Other comprehensive income (loss):

12 unchanged sentences

exercise of common stock options

Issuance of common stock in

connection with employee stock

purchase plan

Issuance of common stock in connection

with employee stock purchase plan

Stock-based compensation expense

Foreign currency translation

Unrealized losses on marketable

Foreign currency translation adjustment

Unrealized losses on marketable securities

Balances at March 31, 2022

3 unchanged sentences

Issuance of restricted common stock

Foreign currency translation

Unrealized gains on marketable

Foreign currency translation adjustment

Unrealized gains on marketable securities

Balances at June 30, 2022

Stockholders'

Balances at December 31, 2020

Issuance of common stock in public

offering, net of discounts and

issuance costs of $ 676

Issuance of common stock upon the

3 unchanged sentences

purchase plan

Issuance of restricted common stock

Restricted common stock forfeitures

Stock-based compensation expense

Foreign currency translation

Foreign currency translation adjustment

Unrealized gains on marketable

Balances at September 30, 2022

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

TRANSMEDICS GROUP, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(in thousands, except share amounts)

Stockholders'

Balances at December 31, 2020

Issuance of common stock upon the

exercise of common stock options

Issuance of common stock in connection

with employee stock purchase plan

Stock-based compensation expense

Foreign currency translation adjustment

Unrealized gains on marketable securities

Balances at March 31, 2021

2 unchanged sentences

Stock-based compensation expense

Foreign currency translation

Unrealized losses on marketable

Foreign currency translation adjustment

Unrealized losses on marketable securities

Balances at June 30, 2021

Issuance of common stock upon the

exercise of common stock options

Issuance of common stock in connection

with employee stock purchase plan

Stock-based compensation expense

Foreign currency translation adjustment

Balances at September 30, 2021

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

2 unchanged sentences

(in thousands)

Six Months Ended June 30,

Nine Months Ended September 30,

Cash flows from operating activities:

2 unchanged sentences

Stock-based compensation expense

Loss on extinguishment of debt

Loss on sale of marketable securities

Non-cash interest expense and end of term accretion expense

17 unchanged sentences

Cash flows from financing activities:

Proceeds from issuance of long-term debt, net of issuance costs

Repayments of long-term debt

Proceeds from issuance of common stock in public offering, net of underwriting

discounts and commissions and issuance costs paid

Proceeds from issuance of common stock upon exercise of stock options

3 unchanged sentences

Effect of exchange rate changes on cash, cash equivalents and restricted cash

Net increase in cash, cash equivalents and restricted cash

Net increase (decrease) in cash, cash equivalents and restricted cash

Cash, cash equivalents and restricted cash, beginning of period

3 unchanged sentences

Purchases of property and equipment included in accounts payable and accrued

Offering costs included in accounts payable and accrued expenses

Reconciliation of cash, cash equivalents and restricted cash:

15 unchanged sentences

The accompanying consolidated financial statements have been prepared on the basis of continuity of operations, realization of assets and the satisfaction of liabilities and commitments in the ordinary course of business.

The Company has incurred recurring losses since inception, including net losses of $ 22.1 million for the six months ended June 30, 2022 and $ 44.2 million for the year ended December 31, 2021.

As of June 30, 2022, the Company had an accumulated deficit of $ 464.5 million.

The Company has incurred recurring losses since inception, including net losses of $ 29.5 million for the nine months ended September 30, 2022 and $ 44.2 million for the year ended December 31, 2021.

As of September 30, 2022, the Company had an accumulated deficit of $ 472.0 million.

The Company expects to continue to generate operating losses in the foreseeable future.

The Company believes that its existing cash, cash equivalents, and marketable securities of $ 58.1 million as of June 30, 2022 in addition to the net proceeds from its debt financing in July 2022 (see Note 13), will be sufficient to fund its operations, capital expenditures, and debt service payments for at least the next 12 months following the filing of this Quarterly Report on Form 10-Q.

The Company believes that its existing cash and cash equivalents of $ 204.5 million as of September 30, 2022 will be sufficient to fund its operations, capital expenditures, and debt service payments for at least the next 12 months following the filing of this Quarterly Report on Form 10-Q.

The Company may need to seek additional funding through equity financings, debt financings or strategic alliances.

2 unchanged sentences

The Company is subject to risks and uncertainties common to companies in the medical device industry and of similar size, including, but not limited to, development by competitors of new technological innovations, dependence on key personnel, protection of proprietary technology, compliance with government regulations, uncertainty of market acceptance of products, and the need to obtain additional financing to fund operations.

Potential risks and uncertainties also include, without limitation, uncertainties regarding the duration and magnitude of the impact of the COVID-19 pandemic on the Company’s business and the economy generally.

Products currently under development will require additional research and development efforts, including additional clinical testing and regulatory approval, prior to commercialization.

3 unchanged sentences

The impact of the COVID-19 pandemic has been and may continue to be extensive in many aspects of society, which has resulted in and may continue to result in significant disruptions to the global economy, as well as businesses and capital markets around the world.

Impacts to the Company’s business as a result of COVID-19 have included the temporary disruption of transplant procedures at many of the organ transplant centers that purchase OCS products;

customer delays or reductions in customer capital expenditures and operating budgets and the related impact on its product sales;

disruptions to the Company’s manufacturing operations and supply chain caused by facility closures, reductions in operating hours, staggered shifts and other social distancing efforts;

Continued impacts to the Company’s business as a result of COVID-19 may include disruptions to the Company’s manufacturing operations and supply chain;

labor shortages;

decreased productivity and unavailability of materials or components;

delays of reviews and approvals by the Food and Drug Administration (“FDA”) and other health authorities;

delays in the Company’s clinical trial enrollment;

limitations on its employees’ and customers’ ability to travel, and delays in product installations, trainings or shipments to and from other affected countries and within the United States.

In response to the pandemic, healthcare providers have, and may need to further, reallocate resources, such as physicians, staff, hospital beds and intensive care unit facilities, and these actions significantly delay the provision of other medical care such as organ transplantation and reduce the number of transplant procedures that are performed, which negatively impacts the Company’s revenue and cash flows.

While the Company maintains an inventory of finished products and raw materials used in its OCS products, a prolonged pandemic could lead to shortages in the raw materials necessary to manufacture its products.

The COVID-19 pandemic also has impacted operations at the FDA and other health authorities, resulting in delays of reviews and approvals.

While the Company maintains an inventory of finished products and raw materials used in its OCS products, prolonged pandemic-related disruptions could lead to shortages in the raw materials necessary to manufacture its products.

The Company’s consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America (“GAAP”).

7 unchanged sentences

These consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and the notes thereto for the year ended December 31, 2021 included in the Company’s Annual Report on Form 10-K filed with the SEC.

In the opinion of management, all adjustments, consisting only of normal recurring adjustments necessary for a fair statement of the Company’s financial position as of June 30, 2022 and results of operations for the three and six months ended June 30, 2022 and 2021 and cash flows for the six months ended June 30, 2022 and 2021 have been made.

The Company’s results of operations for the three and six months ended June 30, 2022 are not necessarily indicative of the results of operations that may be expected for the year ending December 31, 2022.

In the opinion of management, all adjustments, consisting only of normal recurring adjustments necessary for a fair statement of the Company’s financial position as of September 30, 2022 and results of operations for the three and nine months ended September 30, 2022 and 2021 and cash flows for the nine months ended September 30, 2022 and 2021 have been made.

The Company’s results of operations for the three and nine months ended September 30, 2022 are not necessarily indicative of the results of operations that may be expected for the year ending December 31, 2022.

Use of Estimates

4 unchanged sentences

Changes in estimates are recorded in the period in which they become known.

The full extent to which the COVID-19 pandemic will directly or indirectly impact the Company’s business, results of operations and financial condition, including sales, expenses, reserves and allowances, manufacturing, clinical trials, research and development costs and employee-related amounts, will depend on future developments that are highly uncertain, including as a result of new information that may emerge concerning COVID-19 and the actions taken to contain or treat COVID-19, as well as the economic impact on local, regional, national and international customers and markets.

The Company has made estimates of the impact of COVID-19 within its financial statements and there may be changes to those estimates in future periods.

As of the date of issuance of these unaudited consolidated financial statements, the Company is not aware of any specific event or circumstance that would require the Company to update estimates, judgments or revise the carrying value of any assets or liabilities.

3 unchanged sentences

The Company does not believe that it is subject to unusual credit risk beyond the normal credit risk associated with commercial banking relationships.

As of June 30, 2022 and December 31, 2021, the Company had no allowance for credit losses.

As of September 30, 2022 and December 31, 2021, the Company had no allowance for credit losses.

Significant customers are those that accounted for 10 % or more of the Company’s net revenue or accounts receivable.

For the three months ended June 30, 2022, one customer accounted for 17 % of net revenue.

For the six months ended June 30, 2022, one customer accounted for 17 % of net revenue.

For the three months ended June 30, 2021, no customer accounted for 10% or more of net revenue.

For the six months ended June 30, 2021, one customer accounted for 10 % of net revenue.

As of June 30, 2022, two customers accounted for 13 % and 11 % of accounts receivable, respectively.

For the three months ended September 30, 2022, one customer accounted for 13 % of net revenue.

For the nine months ended September 30, 2022, one customer accounted for 15 % of net revenue.

For the three months ended September 30, 2021, two customers accounted for 16 % and 12 % of net revenue, respectively.

For the nine months ended September 30, 2021, one customer accounted for 10 % of net revenue.

As of September 30, 2022, there were no customers that accounted for more than 10 % of accounts receivable.

As of December 31, 2021, two customers accounted for 21 % and 15 % of accounts receivable, respectively.

22 unchanged sentences

For periods in which the Company reports a net loss, diluted net loss per common share is the same as basic net loss per common share, since dilutive common shares are not assumed to have been issued if their effect is anti-dilutive.

The Company reported a net loss attributable to common stockholders for each of the three and six months ended June 30, 2022 and 2021.

The Company reported a net loss attributable to common stockholders for each of the three and nine months ended September 30, 2022 and 2021.

The Company’s potential dilutive securities have been excluded from the computation of diluted net loss per share as the effect would be to reduce the net loss per share.

The Company excluded the following potential common shares, presented based on amounts outstanding at each period end, from the computation of diluted net loss per share attributable to common stockholders for the periods indicated above because including them would have had an anti-dilutive effect:

As of June 30,

As of September 30,

Warrants to purchase common stock

3 unchanged sentences

Marketable Securities

Marketable securities by security type consisted of the following (in thousands):

June 30, 2022

Credit Losses

Treasury securities (due within one year)

government agency bonds (due within

The Company did no t have marketable securities as of September 30, 2022.

Marketable securities by security type as of December 31, 2021 consisted of the following (in thousands):

December 31, 2021

4 unchanged sentences

The following tables present the Company’s fair value hierarchy for its assets and liabilities that are measured at fair value on a recurring basis (in thousands):

Fair Value Measurements at June 30, 2022 Using:

Fair Value Measurements at September 30, 2022 Using:

Cash equivalents:

Money market funds

Marketable securities:

Treasury securities

government agency bonds

Fair Value Measurements at December 31, 2021 Using:

8 unchanged sentences

Inventory consisted of the following (in thousands):

June 30, 2022

September 30, 2022

December 31, 2021

2 unchanged sentences

Finished goods

During the six months ended June 30, 2022 and 2021, the Company made non-cash transfers of OCS Consoles from inventory to property and equipment (OCS Consoles loaned to customers) of $ 1.4 million and $ 0.8 million, respectively.

During the nine months ended September 30, 2022 and 2021, the Company made non-cash transfers of OCS Consoles from inventory to property and equipment (OCS Consoles loaned to customers) of $ 2.1 million and $ 0.9 million, respectively.

Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities consisted of the following (in thousands):

June 30, 2022

September 30, 2022

December 31, 2021

4 unchanged sentences

Long-Term Debt

TransMedics has a credit agreement (the “Credit Agreement”) with OrbiMed Royalty Opportunities II, LP (“OrbiMed”), entered into in June 2018, pursuant to which TransMedics borrowed $ 35.0 million.

Long-term debt consisted of the following (in thousands):

June 30, 2022

September 30, 2022

December 31, 2021

5 unchanged sentences

Long-term debt, net of discount and current portion

On July 25, 2022, the Company entered into a credit agreement with Canadian Imperial Bank of Commerce (“CIBC”) for total borrowings of $ 60.0 million (the “CIBC Credit Agreement”) (see Note 13).

A portion of the proceeds were used to repay the outstanding principal, accrued interest and end-of-term payment of the Credit Agreement with OrbiMed totaling $ 36.3 million.

In accordance with the applicable accounting standards, a short-term debt obligation should be excluded from current liabilities if the entity has both the intent and ability to refinance the obligation on a long-term basis.

The intent and ability can be demonstrated by the issuance of a long-term obligation to refinance the short-term obligation on a long-term basis after the date of an entity’s balance sheet but before that balance sheet is issued.

In connection with the repayment of the outstanding borrowings under the Credit Agreement with the proceeds from the CIBC Credit Agreement and the related repayment provisions under the CIBC Credit Agreement, the Company has classified $ 35.5 million of long-term debt, net of discount and current portion outstanding as of June 30, 2022 under the Credit Agreement as a long-term liability.

Prior to repayment, borrowings under the Credit Agreement bore interest at an annual rate equal to the London Interbank Offered Rate (“LIBOR”), subject to a minimum of 1.0 % and a maximum of 4.0 % , plus 8.5 % (the “Applicable Margin”), subject in the aggregate to a maximum interest rate of 11.5 %.

In addition, borrowings under the Credit Agreement bore paid-in-kind (“PIK”) interest at an annual rate equal to the amount by which LIBOR plus the Applicable Margin exceeded 11.5 %, but not to exceed 12.5 %.

OrbiMed Credit Agreement

The Company entered into a credit agreement with OrbiMed Royalty Opportunities II, LP (the “OrbiMed Credit Agreement”) in June 2018, pursuant to which TransMedics borrowed $ 35.0 million.

Borrowings under the OrbiMed Credit Agreement bore interest at an annual rate equal to the London Interbank Offered Rate (“LIBOR”), subject to a minimum of 1.0 % and a maximum of 4.0 % , plus 8.5 % (the “Applicable Margin”), subject in the aggregate to a maximum interest rate of 11.5 %.

In addition, borrowings under the OrbiMed Credit Agreement bore paid-in-kind (“PIK”) interest at an annual rate equal to the amount by which LIBOR plus the Applicable Margin exceeded 11.5 %, but not to exceed 12.5 %.

The PIK interest was added to the principal amount of the borrowings outstanding at the end of each quarter until the repayment of the borrowings in July 2022 .

Borrowings under the Credit Agreement were repayable in quarterly interest-only payments until the maturity date, at which time all principal and accrued interest was due and payable.

At its option, the company could prepay outstanding borrowings under the Credit Agreement.

Borrowings under the OrbiMed Credit Agreement were repayable in quarterly interest-only payments until the maturity date, at which time all principal and accrued interest was due and payable.

At its option, the company could prepay outstanding borrowings under the OrbiMed Credit Agreement.

The Company was required to make a final payment in an amount equal to 3.0 % of the principal amount of any prepayment or repayment.

The final payment and debt discount amounts were being accreted to interest expense over the term of the Credit Agreement using the effective interest method.

All obligations under the Credit Agreement were guaranteed by the Company and each of its material subsidiaries.

All obligations of the Company and each guarantor were secured by substantially all of the Company’s and each guarantor’s assets, including their intellectual property, subject to certain exceptions, including a perfected security interest in substantially all tangible and intangible assets of the Company and each guarantor.

Under the Credit Agreement, the Company agreed to certain affirmative and negative covenants to which it was subject until repayment.

The financial covenants included maintaining a minimum liquidity amount of $ 3.0 million;

the requirement, on an annual basis, to deliver to OrbiMed annual audited financial statements with an unqualified audit opinion from the Company’s independent registered public accounting firm;

and restrictions on the Company’s activities, including limitations on dispositions, mergers or acquisitions;

encumbering its intellectual property;

incurring indebtedness or liens;

paying dividends;

making certain investments;

and engaging in certain other business transactions.

As of June 30, 2022, the Company was in compliance with the financial covenants under the Credit Agreement.

The obligations under the Credit Agreement were subject to acceleration upon the occurrence of specified events of default, including payment default, change in control, bankruptcy, insolvency, certain defaults under other material debt, certain events with respect to governmental approvals (if such events could cause a material adverse change in the Company’s business), failure to comply with certain covenants, including the minimum liquidity and unqualified audit opinion covenants, and a material adverse change in the Company’s business, operations or other financial condition.

Upon the occurrence of an event of default and until such event of default was no longer continuing, the Applicable Margin would increase by 4.0 % per annum.

If an event of default (other than certain events of bankruptcy or insolvency) occurred and was continuing, OrbiMed may have declared all or any portion of the outstanding principal amount of the borrowings plus accrued and unpaid interest to be due and payable.

Upon the occurrence of certain events of bankruptcy or insolvency, all of the outstanding principal amount of the borrowings plus accrued and unpaid interest would have

automatically bec ame due and payable.

In addition, the Company may have been required to prepay outstanding borrowings, subject to certain exceptions, with portions of net cash proceeds of certain asset sales and certain casualty and condemnation events.

As of June 30, 2022, the interest rate applicable to borrowings under the Credit Agreement was 9.5 %.

During the six months ended June 30, 2022, the weighted average effective interest rate on outstanding borrowings under the Credit Agreement was approximately 11.2 %.

The final payment and debt discount amounts were being accreted to interest expense over the term of the OrbiMed Credit Agreement using the effective interest method.

In July 2022, the Company repaid amounts due under the OrbiMed Credit Agreement, including $ 35.0 million of principal repayments and a $ 1.1 million end of term payment, as well as accrued interest and the OrbiMed Credit Agreement

was terminated.

Upon repayment of the outstanding amounts, the Company recorded a loss on extinguishment of debt of $ 0.6 million, which was classified as other expense in the consolidated statemen t s of operations.

Canadian Imperial Bank of Commerce Credit Agreement

In July 2022, the Company entered into a credit agreement with Canadian Imperial Bank of Commerce (“CIBC”), pursuant to which the Company borrowed $ 60.0 million (the “CIBC Credit Agreement”).

Borrowings under the CIBC Credit Agreement bear interest at an annual rate equal to either, at the Company’s option, (i) the secured overnight financing rate for an interest period selected by the Company, subject to a minimum of 1.5 %, plus 2.0 % or (ii) 1.0 % plus the higher of a) the prime rate subject to a minimum of 4.0 % or b) the Federal Funds Effective Rate, plus 0.5 %.

Borrowings under the CIBC Credit Agreement are payable in monthly interest-only payments for the first 24 months, and then payable in equal monthly principal payments plus accrued interest until the maturity date of the CIBC Credit Agreement in July 2027 .

If certain revenue milestones are met after the first 24 months, the Company may extend the interest-only repayment period by one additional year.

At the Company’s option, the Company may prepay borrowings outstanding under the CIBC Credit Agreement, subject to a prepayment fee of 2.0 % of outstanding borrowings if paid prior to 12 months after the closing date, and 1.0 % if paid on or after 12 months after the closing date but prior to 24 months after the closing date.

In connection with entering into the CIBC Credit Agreement, the Company paid upfront fees and other costs of $ 1.5 million, which were recorded by the Company as a debt discount.

The debt discount is reflected as a reduction of the carrying value of long-term debt on the Company’s consolidated balance sheet and is being accreted to interest expense over the term of the CIBC Credit Agreement using the effective interest method.

All obligations under the CIBC Credit Agreement are guaranteed by the Company and each of its material subsidiaries.

All obligations of the Company and each guarantor are secured by substantially all of the Company’s and each guarantor’s assets, including their intellectual property, subject to certain exceptions.

Under the CIBC Credit Agreement, the Company has agreed to customary representations and warranties, events of default and certain affirmative and negative covenants to which it will remain subject until maturity.

The financial covenants include, among other covenants, (x) a requirement to maintain a minimum liquidity amount of the greater of either (i) the consolidated adjusted EBITDA loss (or gain) for the trailing four month period (only if EBITDA is negative) and (ii) $ 10.0 million, and (y) a requirement to maintain total net revenue of at least 75 % of the level set forth in the total revenue plan presented to CIBC.

The obligations under the CIBC Credit Agreement are subject to acceleration upon the occurrence of specified events of default, including payment default, change in control, bankruptcy, insolvency, certain defaults under other material debt, certain events with respect to governmental approvals (if such events could cause a material adverse change in the Company’s business), failure to comply with certain covenants and a material adverse change in the Company’s business, operations or financial condition.

As of September 30, 2022, the Company was in compliance with all financial covenants of the CIBC Credit Agreement.

During the continuance of an event of default, the interest rate per annum will be equal to the rate that would have otherwise been applicable at the time of the event of default plus 2.0 %.

If an event of default (other than certain events of bankruptcy or insolvency) occurs and is continuing, CIBC may declare all or any portion of the outstanding principal amount of the borrowings plus accrued and unpaid interest to be due and payable.

Upon the occurrence of certain events of bankruptcy or insolvency, all of the outstanding principal amount of the borrowings plus accrued and unpaid interest will automatically become due and payable.

In addition, the Company may be required to prepay outstanding borrowings, subject to certain exceptions, with portions of net cash proceeds of certain asset sales and certain casualty and condemnation events.

The Company assessed all terms and features of the CIBC Credit Agreement in order to identify any potential embedded features that would require bifurcation.

As part of this analysis, the Company assessed the economic characteristics and risks of the debt.

The Company determined that all features of the CIBC Credit Agreement are either clearly and closely associated with a debt host or have a de minimis fair value and, as such, do not require separate accounting as a derivative liability.

As of September 30, 2022, the interest rate applicable to borrowings under the CIBC Credit Agreement was 4.5 %.

During the three months ended September 30, 2022, the weighted average effective interest rate on outstanding borrowings under the CIBC Credit Agreement was approximately 5.2 %.

Stock-Based Compensation

1 unchanged sentence

The Company’s 2019 Stock Incentive Plan (the “2019 Plan”) provides for the grant of incentive stock options, nonqualified stock options, stock appreciation rights, restricted stock, restricted stock units, unrestricted stock, unrestricted stock units, and other stock-based awards to employees, directors, and consultants of the Company and its subsidiaries.

The number of shares of common stock of TransMedics Group initially available for issuance under the 2019 Plan was 3,428,571 shares, plus the number of shares underlying awards under the previously outstanding 2014 Stock Incentive Plan (the “2014 Plan”), not to exceed 1,595,189 shares, that expire or are terminated, surrendered, or cancelled without the delivery of shares, are forfeited to or repurchased by TransMedics Group or otherwise become available again for grant.

The number of shares of common stock of TransMedics Group initially available for issuance under the 2019 Plan was 3,428,571 shares, plus the number of shares underlying awards under the previously outstanding 2014 Stock Incentive Plan (the “2014 Plan”), not to exceed 1,595,189 shares, that expire or are terminated, surrendered, or canceled without the delivery of shares, are forfeited to or repurchased by TransMedics Group or otherwise become available again for grant.

Since the effectiveness of the Company’s 2019 Plan in April 2019, no future awards will be made under the 2014 Plan.

1 unchanged sentence

In addition, the number of shares available for issuance under the 2019 Plan (i) will not be increased by any shares delivered under the 2019 Plan that are subsequently repurchased using proceeds directly attributable to stock option exercises and (ii) will not be reduced by any awards that are settled in cash or that expire, become unexercisable, terminate or are forfeited to or repurchased by TransMedics Group without the issuance of stock under the 2019 Plan.

As of June 30, 2022, 809,496 shares of common stock were available for issuance under the 2019 Plan.

As of September 30, 2022, 819,791 shares of common stock were available for issuance under the 2019 Plan.

2019 Employee Stock Purchase Plan

2 unchanged sentences

A total of 371,142 shares of the Company’s common stock are reserved for issuance under the 2019 ESPP.

During the six months ended June 30, 2022, 12,465 shares of common stock were issued under the 2019 ESPP and as of June 30, 2022, 308,131 shares of common stock remained available for issuance.

During the nine months ended September 30, 2022, 30,143 shares of common stock were issued under the 2019 ESPP and as of September 30, 2022, 290,453 shares of common stock remained available for issuance.

2021 Inducement Plan

3 unchanged sentences

A total of 1,000,000 shares of the Company’s common stock were initially available for issuance under the Inducement Plan.

As of June 30, 2022, 615,400 shares of common stock were available for issuance under the Inducement Plan.

As of September 30, 2022, 616,100 shares of common stock remained available for issuance under the Inducement Plan.

Stock Option Activity

During the six months ended June 30, 2022, the Company granted options under the 2019 Plan and the Inducement Plan to its employees and directors with service-based vesting for the purchase of an aggregate of 1,040,210 shares of common stock with a weighted average grant-date fair value of $ 8.53 per share.

During the nine months ended September 30, 2022, the Company granted options under the 2019 Plan and the Inducement Plan to its employees and directors with service-based vesting for the purchase of an aggregate of 1,057,510 shares of common stock with a weighted average grant-date fair value of $ 8.91 per share.

Restricted Common Stock Activity

During the three months ended June 30, 2022, the Company granted shares of restricted common stock.

During the nine months ended September 30, 2022, the Company granted shares of restricted common stock.

Shares of unvested restricted common stock may not be sold or transferred by the holder.

If the holder’s service to the Company and its affiliates ceases for any reason, unvested shares of restricted common stock held by these individuals will immediately be forfeited for no consideration, as defined in the restricted stock agreement.

During the three months ended June 30, 2022, the Company granted 23,120 shares of restricted common stock under the 2019 Plan to consultants with service-based vesting conditions and a weighted-average grant-date fair value of $ 25.95 per share.

During the nine months ended September 30, 2022, the Company granted 26,093 shares of restricted common stock under the 2019 Plan to consultants with service-based vesting conditions and a weighted-average grant-date fair value of $ 28.74 per share.

Stock-Based Compensation

The Company recorded stock-based compensation expense in the following expense categories of its consolidated statements of operations (in thousands):

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

Cost of revenue

1 unchanged sentence

Selling, general and administrative expenses

As of June 30, 2022, total unrecognized compensation cost related to unvested share-based awards was $ 23.4 million, which is expected to be recognized over a weighted average period of 2.8 years.

As of September 30, 2022, total unrecognized compensation cost related to unvested share-based awards was $ 21.1 million, which is expected to be recognized over a weighted average period of 2.6 years.

Commitments and Contingencies

1 unchanged sentence

The Company leases office, laboratory and manufacturing space under two non-cancelable operating leases.

There have been no material changes to the Company’s leases during the six months ended June 30, 2022.

There have been no material changes to the Company’s leases during the nine months ended September 30, 2022.

For additional information, please read Note 12 Leases, to the consolidated financial statements in the Company’s Form 10-K for the year ended December 31, 2021.

17 unchanged sentences

Company contributions to the plan may be made at the discretion of the board of directors.

As of June 30, 2022 and December 31, 2021, the Company had no t made any contributions to the plan.

As of September 30, 2022 and December 31, 2021, the Company had no t made any contributions to the plan.

Indemnification Agreements

In the ordinary course of business, the Company has agreed to defend and indemnify its customers against third-party claims asserting infringement of certain intellectual property rights, which may include patents, copyrights, trademarks, or trade secrets.

The Company’s exposure under these indemnification provisions is generally limited to the total amount paid by the end-customer under the agreement.

The Company’s exposure under these indemnification provisions is generally limited to the total amount paid

by the end-customer under the agreement.

However, certain agreements include indemnification provisions that could potentially expose the Company to losses in excess of the amount received under the agreement.

3 unchanged sentences

To date, the Company has not incurred any material costs as a result of such indemnifications.

The Company is not currently aware of any indemnification claims and had not accrued any liabilities related to such obligations in its consolidated financial statements as of June 30, 2022 and December 31, 2021.

The Company is not currently aware of any indemnification claims and had not accrued any liabilities related to such obligations in its consolidated financial statements as of September 30, 2022 and December 31, 2021.

Unconditional Purchase Commitment

1 unchanged sentence

The contract is not cancellable without penalty.

The remaining purchase commitment as of June 30, 2022 was $ 8.0 million.

The remaining purchase commitment as of September 30, 2022 was $ 8.0 million.

Legal Proceedings

6 unchanged sentences

Long-lived assets by geography are summarized as follows (in thousands):

June 30, 2022

September 30, 2022

December 31, 2021

7 unchanged sentences

The reconciliation of gross revenue to net revenue for these certain payments is shown below (in thousands):

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

Gross revenue from sales to customers

clinical trial payments reducing

clinical trial payments

Total net revenue

Clinical trial payments for the three and nine months ended September 30, 2022 include adjustments for certain clinical trial accrual estimates.

As clinical trials reach the end of their follow up period, the Company updates its accrual estimates.

The Company will continue to update its clinical trial accrual estimates as all information related to clinical trial payments is received.

The Company determined that payments made to customers to obtain information related to post-approval studies or existing standard-of-care protocols (i.e., unrelated to the Company’s OCS products) meet the criteria to be classified as a cost because the Company receives a distinct good or service transferred by the customer separate from the customer’s purchase of the Company’s OCS products and the consideration paid to the customer represents the fair value of the distinct good or service received.

As a result, such payments made to the customers are recorded as operating expenses.

The Company recorded payments made to customers related to post-approval studies and for documentation related to existing standard-of-care protocols of $ 0.2 million and $ 0.5 million for the three and six months ended June 30, 2022, respectively, as operating expenses.

The Company recorded payments made to customers related to post-approval studies and for documentation related to existing standard-of-care protocols of $ 0.7 million and $ 1.2 million, respectively, for the three and six months ended June 30, 2021, respectively, as operating expenses.

The Company recorded payments made to customers related to post-approval studies and for documentation related to existing standard-of-care protocols of $ 0.5 million and $ 1.0 million for the three and nine months ended September 30, 2022, respectively, as operating expenses.

The Company recorded payments made to customers related to post-approval studies and for documentation related to existing standard-of-care protocols of $ 0.4 million and $ 1.6 million for the three and nine months ended September 30, 2021, respectively, as operating expenses.

Disaggregated Revenue

The Company disaggregates revenue from contracts with customers by product type and geographical area as it believes this presentation best depicts how the nature, amount, timing and uncertainty of the Company’s revenue and cash flows are affected by economic factors, as shown below (in thousands):

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

Net revenue by OCS product:

3 unchanged sentences

Total net revenue

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

Net revenue by country(1):

4 unchanged sentences

When a customer order includes disposable sets and organ retrieval or OCS organ management services, the Company has determined that the disposable sets and services constitute separate performance obligations and recognizes revenue as the disposable sets and services are delivered to the customer.

Net revenue during the three and six months ended June 30, 2022 included service revenue comprising approximately 13 % and less than 10 %, respectively, of net revenue relating to organ retrieval and OCS organ management services sold under the National OCS Program, the Company’s turnkey solution to provide outsourced organ retrieval and OCS organ management.

Net revenue during the three and nine months ended September 30, 2022 included service revenue comprising approximately 17 % and 13 %, respectively, of net revenue relating to organ retrieval and OCS organ management services sold under the National OCS Program, the Company’s turnkey solution to provide outsourced organ retrieval and OCS organ management.

Contract Assets and Liabilities

2 unchanged sentences

Contract assets arise from unbilled amounts in customer arrangements when revenue recognized exceeds the amount billed to the customer and the Company’s right to payment is not just subject to the passage of time.

The Company had no contract assets as of June 30, 2022 and December 31, 2021.

The Company had no contract assets as of September 30, 2022 and December 31, 2021.

Contract liabilities represent the Company’s obligation to transfer goods or services to a customer for which it has received consideration (or the amount is due) from the customer.

1 unchanged sentence

The Company generally satisfies performance obligations within one year of the contract inception date.

As of June 30, 2022, the Company’s wholly- or partially unsatisfied performance obligations totaled $ 1.7 million and are expected to be completed within the next year.

As of September 30, 2022, the Company’s wholly or partially unsatisfied performance obligations totaled $ 1.6 million and are expected to be completed within the next year.

Related Party Transactions

4 unchanged sentences

The Company paid Dr.

Amira Hassanein approximately $ 0.1 million and $ 0.2 million in total compensation for the three and six months ended June 30, 2022, respectively, and $ 0.1 million and $ 0.2 million in total compensation for the three and six months ended June 30, 2021, respectively, for her services as an employee.

Subsequent Events

Canadian Imperial Bank of Commerce Credit Agreement

On July 25, 2022, the Company entered into a credit agreement with CIBC pursuant to which CIBC made a term loan commitment of $ 60.0 million available to the Company.

The entire term loan was drawn on July 25, 2022 .

The term loan under the CIBC Credit Agreement bears interest at an annual rate equal to either, at the Company’s option, (i) the secured overnight financing rate for an interest period selected by the Company, subject to a minimum of 1.5 %, plus 2.0 % or (ii) 1.0 % plus the higher of a) the prime rate subject to a minimum of 4.0 % or b) the Federal Funds Effective Rate plus 0.5 %.

If certain revenue milestones are met after the first 24 months, the Company may extend the interest-only repayment period by one additional year.

At its option, the Company may prepay borrowings outstanding under the CIBC Credit Agreement, subject to a prepayment fee of 2.0 % of outstanding borrowings if paid prior to 12 months after the closing date, and 1.0 % if paid after 12 months but prior to 24 months after the closing date.

The obligations under the CIBC Credit Agreement are guaranteed by the Company’s material wholly-owned subsidiaries and are secured by substantially all of the assets of the Company and the guarantors.

Repayment of OrbiMed Credit Agreement

On July 25, 2022, the Company repaid all amounts due under the Credit Agreement with OrbiMed of $ 36.3 million, including $ 35.0 million of principal repayments, using proceeds from the borrowings under the CIBC Credit Agreement.

The Credit Agreement was terminated on July 25, 2022 and all security interests securing obligations under the Credit Agreement were released.

Amira Hassanein approximately $ 0.1 million and $ 0.3 million in total compensation for the three and nine months ended September 30, 2022, respectively, and $ 0.1 million and $ 0.3 million in total compensation for the three and nine months ended September 30, 2021, respectively, for her services as an employee.

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

What changed 10-Q

Item 1. Financial Statements