Delaware | 45-4744083 | |||||
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification Number) | |||||
26 Technology Drive Irvine, California | 92618 | |||||
(Address of principal executive offices) | (Zip Code) | |||||
(949) 396-6322 | ||||||
(Registrant’s telephone number, including area code) |
Large accelerated filer | o | Accelerated filer | o |
Non-accelerated filer | ý | Smaller reporting company | ý |
Emerging Growth Company | ý |
Page | ||
• | announcements of regulatory approval or disapproval of our proprietary rechargeable sacral neuromodulation (“SNM”) system (“r-SNM System”) and any future enhancements to our r-SNM System; |
• | adverse results from or delays in clinical studies of our r-SNM System; |
• | unanticipated safety concerns related to the use of our r-SNM System; |
• | U.S. Food and Drug Administration (“FDA”) or other U.S. or foreign regulatory or legal actions or changes affecting us or our industry; |
• | any termination or loss of intellectual property rights; |
• | any voluntary or regulatory mandated product recalls; |
• | adverse developments concerning our manufacturers or suppliers or any future strategic partnerships; |
• | introductions and announcements of new technologies by us, any commercialization partners or our competitors, and the timing of these introductions and announcements; |
• | variations in our financial results or those of companies that are perceived to be similar to us; |
• | success or failure of competitive products or therapies in the SNM market; |
• | changes in the structure of healthcare payment of our r-SNM System; |
• | announcements by us or our competitors of significant acquisitions, licenses, strategic partnerships, joint ventures or capital commitments; |
• | market conditions in the medical technology industry and issuance of securities analysts’ reports or recommendations; |
• | rumors and market speculation involving us or other companies in our industry; |
• | sales of substantial amounts of our stock by directors, officers or significant stockholders, or the expectation that such sales might occur; |
• | general economic, industry and market conditions, including the size and growth, if any, of the market; |
• | additions or departures of key personnel; |
• | intellectual property, product liability or other litigation against us, our third-party manufacturers or other parties on which we rely or litigation against our general industry; |
• | changes in our capital structure, such as future issuances of securities and the incurrence of additional debt; and |
• | the results of any future legal proceedings. |
September 30, | December 31, | ||||||
2018 | 2017 | ||||||
(unaudited) | |||||||
ASSETS | |||||||
Current assets | |||||||
Cash and cash equivalents | $ | 20,148 | $ | 24,398 | |||
Short-term investments | 11,069 | — | |||||
Accounts receivable | 219 | — | |||||
Inventory | 2,148 | 1,541 | |||||
Prepaid expenses and other current assets | 1,751 | 980 | |||||
Total current assets | 35,335 | 26,919 | |||||
Property and equipment, net | 2,817 | 1,530 | |||||
Intangible asset, net | 455 | 541 | |||||
Other assets | 3,712 | 422 | |||||
Total assets | $ | 42,319 | $ | 29,412 | |||
LIABILITIES, MEZZANINE EQUITY AND STOCKHOLDERS’ DEFICIT | |||||||
Current liabilities | |||||||
Accounts payable | $ | 1,983 | $ | 1,616 | |||
Accrued liabilities | 2,713 | 789 | |||||
Lease liability, current portion | 800 | — | |||||
Total current liabilities | 5,496 | 2,405 | |||||
Lease liability, net of current portion | 3,453 | 135 | |||||
Debt, net of unamortized debt issuance costs | 9,056 | — | |||||
Total liabilities | 18,005 | 2,540 | |||||
Mezzanine Equity | |||||||
Convertible Preferred Stock | |||||||
Series A Convertible Preferred Stock, par value $0.0001, 1,030,000 shares authorized, 719,500 shares issued and outstanding at September 30, 2018 and December 31, 2017; aggregate liquidation preference of $15,829 at September 30, 2018 and December 31, 2017 | 14,021 | 14,021 | |||||
Series B-1 Convertible Preferred Stock, par value $0.0001, 2,529,862 shares authorized, 1,925,302 shares issued and outstanding at September 30, 2018 and December 31, 2017; aggregate liquidation preference of $15,248 at September 30, 2018 and December 31, 2017 | 13,757 | 13,757 | |||||
Series B-2 Convertible Preferred Stock, par value $0.0001, 2,537,231 shares authorized, 2,213,794 shares issued and outstanding at September 30, 2018 and December 31, 2017; aggregate liquidation preference of $19,481 at September 30, 2018 and December 31, 2017 | 17,572 | 17,572 | |||||
Series C Convertible Preferred Stock, par value $0.0001, 6,188,888 and 3,888,889 shares authorized at September 30, 2018 and December 31, 2017, respectively; 4,131,546 and 1,898,213 shares issued and outstanding at September 30, 2018 and December 31, 2017, respectively; aggregate liquidation preference of $37,184 and $17,084 at September 30, 2018 and December 31, 2017, respectively | 36,776 | 16,877 | |||||
Noncontrolling interest in Axonics Europe, S.A.S. | 31,066 | 31,066 | |||||
Stockholders’ Deficit | |||||||
Common Stock, par value $0.0001, 17,500,000 and 15,000,000 shares authorized at September 30, 2018 and December 31, 2017, respectively; 2,830,591 and 2,776,583 shares issued and outstanding at September 30, 2018 and December 31, 2017, respectively | — | — | |||||
Additional paid-in capital | 3,336 | 2,900 | |||||
Stock subscriptions receivable | (1,824 | ) | (1,753 | ) | |||
Accumulated deficit | (89,984 | ) | (67,166 | ) | |||
Accumulated other comprehensive loss | (406 | ) | (402 | ) | |||
Total stockholders’ deficit | (88,878 | ) | (66,421 | ) | |||
Total liabilities, mezzanine equity and stockholders’ deficit | $ | 42,319 | $ | 29,412 |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Net revenue | $ | 201 | $ | 128 | $ | 213 | $ | 128 | |||||||
Cost of goods sold | 106 | 118 | 111 | 118 | |||||||||||
Gross profit | 95 | 10 | 102 | 10 | |||||||||||
Operating Expenses | |||||||||||||||
Research and development | 3,898 | 3,132 | 14,619 | 8,959 | |||||||||||
General and administrative | 2,790 | 1,103 | 5,861 | 3,520 | |||||||||||
Sales and marketing | 949 | 368 | 2,308 | 767 | |||||||||||
Total operating expenses | 7,637 | 4,603 | 22,788 | 13,246 | |||||||||||
Loss from operations | (7,542 | ) | (4,593 | ) | (22,686 | ) | (13,236 | ) | |||||||
Other Income (Expense) | |||||||||||||||
Interest income | 172 | 79 | 448 | 121 | |||||||||||
Other expense | (196 | ) | (8 | ) | (579 | ) | (13 | ) | |||||||
Other income (expense), net | (24 | ) | 71 | (131 | ) | 108 | |||||||||
Loss before income tax expense | (7,566 | ) | (4,522 | ) | (22,817 | ) | (13,128 | ) | |||||||
Income tax expense | — | — | 1 | 1 | |||||||||||
Net loss | (7,566 | ) | (4,522 | ) | (22,818 | ) | (13,129 | ) | |||||||
Foreign currency translation adjustment | (1 | ) | 519 | (4 | ) | 588 | |||||||||
Comprehensive loss | $ | (7,567 | ) | $ | (4,003 | ) | $ | (22,822 | ) | $ | (12,541 | ) | |||
Net loss per share, basic and diluted (see Note 1) | $ | (2.67 | ) | $ | (1.67 | ) | $ | (8.10 | ) | $ | (5.26 | ) | |||
Weighted-average shares used to compute basic and diluted net loss per share (see Note 1) | 2,830,591 | 2,705,138 | 2,817,652 | 2,494,424 |
Series A | Series B-1 | Series B-2 | Series C | ||||||||||||||||||||||||||||||||
Preferred Stock | Preferred Stock | Preferred Stock | Preferred Stock | Noncontrolling | |||||||||||||||||||||||||||||||
Shares | Amount | Shares | Amount | Shares | Amount | Shares | Amount | Interests | Total | ||||||||||||||||||||||||||
Balance at December 31, 2017 | 719,500 | $ | 14,021 | 1,925,302 | $ | 13,757 | 2,213,794 | $ | 17,572 | 1,898,213 | $ | 16,877 | $ | 31,066 | $ | 93,293 | |||||||||||||||||||
Issuance of Series C Preferred Stock at $9.00 per share for cash, net of issuance costs of $199 (unaudited) | — | — | — | — | — | — | 2,233,333 | 19,899 | — | 19,899 | |||||||||||||||||||||||||
Balance at September 30, 2018 (unaudited) | 719,500 | $ | 14,021 | 1,925,302 | $ | 13,757 | 2,213,794 | $ | 17,572 | 4,131,546 | $ | 36,776 | $ | 31,066 | $ | 113,192 |
Accumulated | ||||||||||||||||||||||||||
Additional | Stock | Other | ||||||||||||||||||||||||
Common Stock | Paid-in | Subscriptions | Accumulated | Comprehensive | ||||||||||||||||||||||
Shares | Amount | Capital | Receivable | Deficit | Loss | Total | ||||||||||||||||||||
Balance at December 31, 2017 | 2,776,583 | $ | — | $ | 2,900 | $ | (1,753 | ) | $ | (67,166 | ) | $ | (402 | ) | $ | (66,421 | ) | |||||||||
Issuance of Common Stock for employee stock option exercises for promissory notes (unaudited) | 48,720 | — | 71 | (71 | ) | — | — | — | ||||||||||||||||||
Issuance of Common Stock for employee stock option exercises for cash (unaudited) | 5,288 | — | 6 | — | — | — | 6 | |||||||||||||||||||
Stock-based compensation (unaudited) | — | — | 359 | — | — | — | 359 | |||||||||||||||||||
Foreign currency translation adjustment (unaudited) | — | — | — | — | — | (4 | ) | (4 | ) | |||||||||||||||||
Net loss (unaudited) | — | — | — | — | (22,818 | ) | — | (22,818 | ) | |||||||||||||||||
Balance at September 30, 2018 (unaudited) | 2,830,591 | $ | — | $ | 3,336 | $ | (1,824 | ) | $ | (89,984 | ) | $ | (406 | ) | $ | (88,878 | ) |
Nine Months Ended September 30, | |||||||
2018 | 2017 | ||||||
Cash Flows from Operating Activities | |||||||
Net loss | $ | (22,818 | ) | $ | (13,129 | ) | |
Adjustments to reconcile net loss to net cash used in operating activities | |||||||
Depreciation and amortization | 663 | 514 | |||||
Stock-based compensation | 359 | 370 | |||||
Other items | 146 | — | |||||
Changes in operating assets and liabilities | |||||||
Accounts receivable | (219 | ) | (64 | ) | |||
Inventory | (607 | ) | (813 | ) | |||
Prepaid expenses and other current assets | (911 | ) | (249 | ) | |||
Other assets | (120 | ) | (45 | ) | |||
Accounts payable | 367 | 498 | |||||
Accrued liabilities | 1,143 | 137 | |||||
Lease liability | (77 | ) | (66 | ) | |||
Net cash used in operating activities | (22,074 | ) | (12,847 | ) | |||
Cash Flows from Investing Activities | |||||||
Purchases of property and equipment | (1,006 | ) | (492 | ) | |||
Purchases of short-term investments | (23,029 | ) | — | ||||
Proceeds from sale of short-term investments | 12,100 | — | |||||
Net cash used in investing activities | (11,935 | ) | (492 | ) | |||
Cash Flows from Financing Activities | |||||||
Payment of debt issuance costs | (142 | ) | — | ||||
Proceeds from debt | 10,000 | — | |||||
Proceeds from exercise of stock options | 6 | 22 | |||||
Proceeds from issuance of Preferred Stock and noncontrolling interest | 20,098 | 35,000 | |||||
Payment of Preferred Stock issuance costs | (199 | ) | (207 | ) | |||
Net cash provided by financing activities | 29,763 | 34,815 | |||||
Effect of Exchange Rate Changes on Cash and Cash Equivalents | (4 | ) | 588 | ||||
Net increase (decrease) in cash and cash equivalents | (4,250 | ) | 22,064 | ||||
Cash and cash equivalents, beginning of year | 24,398 | 8,209 | |||||
Cash and cash equivalents, end of period | $ | 20,148 | $ | 30,273 | |||
Supplemental Disclosure of Cash Flow Information | |||||||
Cash paid for interest | $ | 393 | $ | — | |||
Cash paid for taxes | $ | 1 | $ | 1 | |||
Noncash Investing and Financing Activities | |||||||
Common Stock issuance on stock option exercises for promissory notes | $ | 71 | $ | 574 | |||
Warrants issued as debt issuance costs | $ | 240 | $ | — | |||
Accrued loan fees as debt issuance costs | $ | 750 | $ | — |
• | Level 1: Inputs are unadjusted quoted prices in active markets for identical assets or liabilities. |
• | Level 2: Inputs are quoted prices for similar assets and liabilities in active markets or quoted prices for identical or similar instruments in markets that are not active and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets. |
• | Level 3: Inputs are unobservable inputs based on the Company’s assumptions and valuation techniques used to measure assets and liabilities at fair value. The inputs require significant management judgment or estimation. |
• | acquisition of the Company by another entity through a reorganization, merger or consolidation by with the Company’s existing stockholders do not continue to hold more than 50% of the surviving or acquiring entity; |
• | transactions (or series of transactions) in which stockholders transfer more than 50% of the voting power of the Company; |
• | sale or disposition of substantially all of the Company’s assets; and |
• | any liquidation, dissolution or winding up of the Company. |
September 30, | December 31, | ||||||
2018 | 2017 | ||||||
Research and development equipment | $ | 878 | $ | 783 | |||
Computer hardware and software | 725 | 545 | |||||
Tools and molds | 1,076 | 877 | |||||
Leasehold improvements | 1,480 | 297 | |||||
Furniture and fixtures | 387 | 181 | |||||
4,546 | 2,683 | ||||||
Less: accumulated depreciation and amortization | (1,729 | ) | (1,153 | ) | |||
$ | 2,817 | $ | 1,530 |
2018 | $ | 29 | |
2019 | 115 | ||
2020 | 115 | ||
2021 | 115 | ||
2022 | 81 | ||
$ | 455 |
2018 | $ | 219 | |
2019 | 855 | ||
2020 | 703 | ||
2021 | 735 | ||
2022 | 768 | ||
Thereafter | 2,146 | ||
$ | 5,426 |
2018 | $ | — | |
2019 | 3,814 | ||
2020 | 4,059 | ||
2021 | 2,127 | ||
$ | 10,000 |
September 30, | December 31, | ||||
2018 | 2017 | ||||
Convertible preferred stock outstanding and issuable | 15,813,297 | 13,079,920 | |||
Options outstanding under the 2014 Plan | 1,417,979 | 903,857 | |||
Options remaining under the 2014 Plan for future issuance | 40,019 | 82,463 | |||
17,271,295 | 14,066,240 |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
General and administrative | $ | 55 | $ | 106 | $ | 211 | $ | 227 | |||||||
Research and development | 44 | 68 | 141 | 143 | |||||||||||
Sales and marketing | 2 | — | 7 | — | |||||||||||
$ | 101 | $ | 174 | $ | 359 | $ | 370 |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||
2018 | 2017 | 2018 | 2017 | ||||
Expected term (in years) | 5.00 - 6.96 | 5.54 - 6.10 | 5.00 - 6.96 | 5.00 - 6.50 | |||
Stock volatility | 76.01% - 77.03% | 75.83% - 76.01% | 76.01% - 77.03% | 70.61% - 76.01% | |||
Risk-free interest rate | 2.26% - 2.81% | 1.83% - 2.05% | 2.26% - 2.81% | 1.82% - 2.05% | |||
Dividend rate | — | — | — | — |
Number of Options | Weighted-Average Exercised Per Share | |||||
Outstanding at December 31, 2016 | 476,451 | $ | 0.98 | |||
Options granted | 896,828 | 1.36 | ||||
Options exercised | (446,971 | ) | 1.33 | |||
Options forfeited | (22,451 | ) | 0.97 | |||
Outstanding at December 31, 2017 | 903,857 | 1.18 | ||||
Options granted | 570,179 | 1.62 | ||||
Options exercised | (54,008 | ) | 1.41 | |||
Outstanding at September 30, 2018 | 1,417,979 | $ | 1.35 | |||
Options exercisable at December 31, 2017 | 638,305 | $ | 1.18 | |||
Options exercisable at September 30, 2018 | 1,082,080 | $ | 1.33 |
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Personnel related | $ | 2,088 | $ | 1,646 | $ | 5,872 | $ | 4,517 | |||||||
Clinical development | 981 | 372 | 3,862 | 1,031 | |||||||||||
Contract fabrication and manufacturing | 323 | 404 | 2,717 | 1,627 | |||||||||||
Contract R&D and consulting | 271 | 517 | 1,385 | 1,253 | |||||||||||
Other R&D expenses | 235 | 193 | 783 | 531 | |||||||||||
Total R&D expenses | $ | 3,898 | $ | 3,132 | $ | 14,619 | $ | 8,959 |
Three Months Ended September 30, | Period to Period Change | Nine Months Ended September 30, | Period to Period Change | ||||||||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||||||||||
Net revenue | $ | 201 | $ | 128 | $ | 73 | $ | 213 | $ | 128 | $ | 85 | |||||||||||
Cost of goods sold | 106 | 118 | (12 | ) | 111 | 118 | (7 | ) | |||||||||||||||
Gross profit | 95 | 10 | 85 | 102 | 10 | 92 | |||||||||||||||||
Gross Margin | 47.5 | % | 7.9 | % | 48.0 | % | 7.9 | % | |||||||||||||||
Operating Expenses | |||||||||||||||||||||||
Research and development | 3,898 | 3,132 | 766 | 14,619 | 8,959 | 5,660 | |||||||||||||||||
General and administrative | 2,790 | 1,103 | 1,687 | 5,861 | 3,520 | 2,341 | |||||||||||||||||
Sales and marketing | 949 | 368 | 581 | 2,308 | 767 | 1,541 | |||||||||||||||||
Total operating expenses | 7,637 | 4,603 | 3,034 | 22,788 | 13,246 | 9,542 | |||||||||||||||||
Loss from operations | (7,542 | ) | (4,593 | ) | (2,949 | ) | (22,686 | ) | (13,236 | ) | (9,450 | ) | |||||||||||
Other Income (Expense) | |||||||||||||||||||||||
Interest income | 172 | 79 | 93 | 448 | 121 | 327 | |||||||||||||||||
Other expense | (196 | ) | (8 | ) | (188 | ) | (579 | ) | (13 | ) | (566 | ) | |||||||||||
Other income (expense), net | (24 | ) | 71 | (95 | ) | (131 | ) | 108 | (239 | ) | |||||||||||||
Loss before income tax expense | (7,566 | ) | (4,522 | ) | (3,044 | ) | (22,817 | ) | (13,128 | ) | (9,689 | ) | |||||||||||
Income tax expense | — | — | — | 1 | 1 | — | |||||||||||||||||
Net loss | $ | (7,566 | ) | $ | (4,522 | ) | $ | (3,044 | ) | $ | (22,818 | ) | $ | (13,129 | ) | $ | (9,689 | ) | |||||
Foreign currency translation adjustment | (1 | ) | 519 | (520 | ) | (4 | ) | 588 | (592 | ) | |||||||||||||
Comprehensive loss | $ | (7,567 | ) | $ | (4,003 | ) | $ | (3,564 | ) | $ | (22,822 | ) | $ | (12,541 | ) | $ | (10,281 | ) |
Nine Months Ended September 30, | |||||||
2018 | 2017 | ||||||
Net cash provided by (used in) | |||||||
Operating activities | $ | (22,074 | ) | $ | (12,847 | ) | |
Investing activities | (11,935 | ) | (492 | ) | |||
Financing activities | 29,763 | 34,815 | |||||
Effect of exchange rate changes on cash and cash equivalents | (4 | ) | 588 | ||||
Net increase (decrease) in cash and cash equivalents | $ | (4,250 | ) | $ | 22,064 |
• | pay cash dividends on, make any other distributions in respect of, or redeem, retire or repurchase, any shares of our capital stock; |
• | convey, sell, lease, transfer, assign, or otherwise dispose of all or any part of our business or property; |
• | effect certain changes in our business, management, ownership or business locations; |
• | merge or consolidate with, or acquire all or substantially all of the capital stock or property of any other company; |
• | create, incur, assume, or be liable for any additional indebtedness, or create, incur, allow, or permit to exist any additional liens; |
• | make certain investments; and |
• | enter into transactions with our affiliates. |
Incorporated by Reference | ||||||||||||
Exhibit Number | Exhibit Title | Form | File No. | Exhibit | Filing Date | Filed Herewith (X) | ||||||
3.1 | 8-K | 001-38721 | 3.1 | 11/05/2018 | ||||||||
3.2 | 8-K | 001-38721 | 3.2 | 11/05/2018 | ||||||||
4.1 | S-1 | 333-227732 | 4.1 | 10/5/2018 | ||||||||
4.2 | S-1 | 333-227732 | 4.2 | 10/5/2018 | ||||||||
4.3 | S-1/A | 333-227732 | 4.3 | 10/22/2018 | ||||||||
4.4 | S-1 | 333-227732 | 4.3 | 10/5/2018 | ||||||||
4.5 | S-1 | 333-227732 | 4.4 | 10/5/2018 | ||||||||
10.1+ | S-1/A | 333-227732 | 10.8 | 10/22/2018 | ||||||||
10.2+ | S-1/A | 333-227732 | 10.9 | 10/22/2018 | ||||||||
10.3+ | S-1/A | 333-227732 | 10.10 | 10/22/2018 | ||||||||
10.4+ | S-1/A | 333-227732 | 10.11 | 10/22/2018 | ||||||||
10.5+# | S-1 | 333-227732 | 10.28 | 10/5/2018 | ||||||||
10.6+# | S-1 | 333-227732 | 10.29 | 10/5/2018 |
10.7 | S-1/A | 333-227732 | 10.31 | 10/22/2018 | ||||||||
31.1 | X | |||||||||||
31.2 | X | |||||||||||
32.1# | X | |||||||||||
32.2# | X | |||||||||||
101.INS** | XBRL Instance Document. | X | ||||||||||
101.SCH** | XBRL Taxonomy Extension Schema Document. | X | ||||||||||
101.CAL** | XBRL Taxonomy Extension Calculation Linkbase Document. | X | ||||||||||
101.DEF** | XBRL Taxonomy Extension Definition Linkbase Document. | X | ||||||||||
101.LAB** | XBRL Taxonomy Extension Label Linkbase Document. | X | ||||||||||
101.PRE** | XBRL Taxonomy Extension Presentation Linkbase Document. | X |
+ | Indicates management contract or compensatory plan. |
# | The information in Exhibits 32.1 and 32.2 shall not be deemed “filed” for purposes of Section 18 of the Exchange Act, or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act or the Exchange Act (including this Quarterly Report on Form 10-Q), unless the Registrant specifically incorporates the foregoing information into those documents by reference. |
** | In accordance with Rule 402 of Regulation S-T, this interactive data file is deemed not filed or part of this Quarterly Report on Form 10-Q for purposes of Sections 11 or 12 of the Securities Act or Section 18 of the Exchange Act and otherwise is not subject to liability under these sections. |
AXONICS MODULATION TECHNOLOGIES, INC. | |||
Date: December 11, 2018 | By: | /s/ Raymond W. Cohen | |
Raymond W. Cohen | |||
Chief Executive Officer and Director | |||
(Principal Executive Officer) | |||
Date: December 11, 2018 | By: | /s/ Danny L. Dearen | |
Danny L. Dearen | |||
President and Chief Financial Officer | |||
(Principal Financial and Accounting Officer) |
1. | I have reviewed this Quarterly Report on Form 10-Q of Axonics Modulation Technologies, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | [Omitted pursuant to Exchange Act Rules 13a-14(a) and 15d-15(a)]; |
c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: December 11, 2018 | By: | /s/ Raymond W. Cohen | |
Raymond W. Cohen | |||
Chief Executive Officer and Director | |||
(Principal Executive Officer) |
1. | I have reviewed this Quarterly Report on Form 10-Q of Axonics Modulation Technologies, Inc.; |
2. | Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report; |
3. | Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report; |
4. | The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and have: |
(a) | Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared; |
b) | [Omitted pursuant to Exchange Act Rules 13a-14(a) and 15d-15(a)]; |
c) | Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and |
d) | Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and |
5. | The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions): |
a) | All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and |
b) | Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting. |
Date: December 11, 2018 | By: | /s/ Danny L. Dearen | |
Danny L. Dearen | |||
President and Chief Financial Officer | |||
(Principal Financial Officer) |
(1) | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and |
(2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Date: December 11, 2018 | By: | /s/ Raymond W. Cohen | |
Raymond W. Cohen | |||
Chief Executive Officer and Director | |||
(Principal Executive Officer) |
(1) | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and |
(2) | The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. |
Date: December 11, 2018 | By: | /s/ Danny L. Dearen | |
Danny L. Dearen | |||
President and Chief Financial Officer | |||
(Principal Financial Officer) |
Document and Entity Information - shares |
9 Months Ended | |
---|---|---|
Sep. 30, 2018 |
Dec. 11, 2018 |
|
Document Information [Abstract] | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Sep. 30, 2018 | |
Document Fiscal Year Focus | 2018 | |
Document Fiscal Period Focus | Q3 | |
Trading Symbol | AXNX | |
Entity Registrant Name | Axonics Modulation Technologies, Inc. | |
Entity Central Index Key | 0001603756 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Non-accelerated Filer | |
Entity Emerging Growth Company | true | |
Entity Small Business | true | |
Entity Ex Transition period | true | |
Entity Common Stock, Shares Outstanding | 27,805,103 |
Condensed Consolidated Statements of Comprehensive Loss - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Statement of Comprehensive Income [Abstract] | ||||
Net revenue | $ 201 | $ 128 | $ 213 | $ 128 |
Cost of goods sold | 106 | 118 | 111 | 118 |
Gross profit | 95 | 10 | 102 | 10 |
Operating Expenses | ||||
Research and development | 3,898 | 3,132 | 14,619 | 8,959 |
General and administrative | 2,790 | 1,103 | 5,861 | 3,520 |
Sales and marketing | 949 | 368 | 2,308 | 767 |
Total operating expenses | 7,637 | 4,603 | 22,788 | 13,246 |
Loss from operations | (7,542) | (4,593) | (22,686) | (13,236) |
Other Income (Expense) | ||||
Interest income | 172 | 79 | 448 | 121 |
Other expense | (196) | (8) | (579) | (13) |
Other income (expense), net | (24) | 71 | (131) | 108 |
Loss before income tax expense | (7,566) | (4,522) | (22,817) | (13,128) |
Income tax expense | 0 | 0 | 1 | 1 |
Net loss | (7,566) | (4,522) | (22,818) | (13,129) |
Foreign currency translation adjustment | (1) | 519 | (4) | 588 |
Comprehensive loss | $ (7,567) | $ (4,003) | $ (22,822) | $ (12,541) |
Net loss per share, basic and diluted (USD per share) | $ (2.67) | $ (1.67) | $ (8.10) | $ (5.26) |
Weighted-average shares used to compute basic and diluted net loss per share (shares) | 2,830,591 | 2,705,138 | 2,817,652 | 2,494,424 |
Condensed Consolidated Statements of Mezzanine Equity - 9 months ended Sep. 30, 2018 - USD ($) $ in Thousands |
Total |
Series A Convertible Preferred Stock, par value $0.0001, 1,030,000 shares authorized, 719,500 shares issued and outstanding at September 30, 2018 and December 31, 2017; aggregate liquidation preference of $15,829 at September 30, 2018 and December 31, 2017 |
Series B-1 Convertible Preferred Stock, par value $0.0001, 2,529,862 shares authorized, 1,925,302 shares issued and outstanding at September 30, 2018 and December 31, 2017; aggregate liquidation preference of $15,248 at September 30, 2018 and December 31, 2017 |
Series B-2 Convertible Preferred Stock, par value $0.0001, 2,537,231 shares authorized, 2,213,794 shares issued and outstanding at September 30, 2018 and December 31, 2017; aggregate liquidation preference of $19,481 at September 30, 2018 and December 31, 2017 |
Series C Convertible Preferred Stock, par value $0.0001, 6,188,888 and 3,888,889 shares authorized at September 30, 2018 and December 31, 2017, respectively; 4,131,546 and 1,898,213 shares issued and outstanding at September 30, 2018 and December 31, 2017, respectively; aggregate liquidation preference of $37,184 and $17,084 at September 30, 2018 and December 31, 2017, respectively |
Preferred Stock
Series A Convertible Preferred Stock, par value $0.0001, 1,030,000 shares authorized, 719,500 shares issued and outstanding at September 30, 2018 and December 31, 2017; aggregate liquidation preference of $15,829 at September 30, 2018 and December 31, 2017
|
Preferred Stock
Series B-1 Convertible Preferred Stock, par value $0.0001, 2,529,862 shares authorized, 1,925,302 shares issued and outstanding at September 30, 2018 and December 31, 2017; aggregate liquidation preference of $15,248 at September 30, 2018 and December 31, 2017
|
Preferred Stock
Series B-2 Convertible Preferred Stock, par value $0.0001, 2,537,231 shares authorized, 2,213,794 shares issued and outstanding at September 30, 2018 and December 31, 2017; aggregate liquidation preference of $19,481 at September 30, 2018 and December 31, 2017
|
Preferred Stock
Series C Convertible Preferred Stock, par value $0.0001, 6,188,888 and 3,888,889 shares authorized at September 30, 2018 and December 31, 2017, respectively; 4,131,546 and 1,898,213 shares issued and outstanding at September 30, 2018 and December 31, 2017, respectively; aggregate liquidation preference of $37,184 and $17,084 at September 30, 2018 and December 31, 2017, respectively
|
Noncontrolling Interests |
---|---|---|---|---|---|---|---|---|---|---|
Balance at beginning of period (shares) at Dec. 31, 2017 | 719,500 | 1,925,302 | 2,213,794 | 1,898,213 | 719,500 | 1,925,302 | 2,213,794 | 1,898,213 | ||
Balance at beginning of period at Dec. 31, 2017 | $ 93,293 | $ 14,021 | $ 13,757 | $ 17,572 | $ 16,877 | $ 31,066 | ||||
Increase (Decrease) in Temporary Equity [Roll Forward] | ||||||||||
Issuance of preferred stock for cash, net of issuance costs (shares) | 2,233,333 | |||||||||
Issuance of preferred stock for cash, net of issuance costs | 19,899 | $ 19,899 | ||||||||
Balance at end of period (shares) at Sep. 30, 2018 | 719,500 | 1,925,302 | 2,213,794 | 4,131,546 | 719,500 | 1,925,302 | 2,213,794 | 4,131,546 | ||
Balance at end of period at Sep. 30, 2018 | $ 113,192 | $ 14,021 | $ 13,757 | $ 17,572 | $ 36,776 | $ 31,066 |
Condensed Consolidated Statements of Mezzanine Equity - (Parenthetical) $ in Thousands |
9 Months Ended |
---|---|
Sep. 30, 2018
USD ($)
$ / shares
| |
Issuance costs | $ (199) |
Series C Convertible Preferred Stock, par value $0.0001, 6,188,888 and 3,888,889 shares authorized at September 30, 2018 and December 31, 2017, respectively; 4,131,546 and 1,898,213 shares issued and outstanding at September 30, 2018 and December 31, 2017, respectively; aggregate liquidation preference of $37,184 and $17,084 at September 30, 2018 and December 31, 2017, respectively | |
Preferred stock issuance cost per share (USD per share) | $ / shares | $ 9 |
Issuance costs | $ (199) |
Nature of Operations and Summary of Significant Accounting Policies |
9 Months Ended | ||||||||||||||||||||||||||||
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Sep. 30, 2018 | |||||||||||||||||||||||||||||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||
Nature of Operations and Summary of Significant Accounting Policies | Nature of Operations and Summary of Significant Accounting Policies Nature of Operations Axonics Modulation Technologies, Inc. (the “Company”), formerly American Restorative Medicine, Inc., was incorporated in the state of Delaware on March 2, 2012. The Company had no operations until October 1, 2013, when the license agreement between Alfred E. Mann Foundation for Scientific Research (“AMF”) and the Company (the “License Agreement”) was entered into. The Company is a medical technology company focused on the design, development, and commercialization of innovative and minimally invasive sacral neuromodulation solutions. The Company has designed and developed the r-SNM System, which delivers mild electrical pulses to the targeted sacral nerve in order to restore normal communication to and from the brain to reduce the symptoms of overactive bladder (“OAB”), urinary retention (“UR”) and fecal incontinence (“FI”). The r-SNM System is protected by intellectual property based on Company-generated innovations and patents and other intellectual property licensed from AMF. To date, the Company has obtained marketing approvals in Europe, Canada, and Australia for OAB, UR, and FI. The Company has derived minimal revenue from its operations, and its activities have consisted primarily of developing the r-SNM System, conducting its RELAX-OAB post-market clinical follow-up study in Europe, and its ARTISAN-SNM pivotal clinical study in the United States. Principles of Consolidation The condensed consolidated financial statements include the accounts of the Company, its wholly-owned subsidiaries, Axonics Modulation Technologies U.K. Limited and Axonics Modulation Technologies Australia Pty Ltd, as well as Axonics Europe, S.A.S., a variable interest entity, in which the Company exercises control and is determined to be the primary beneficiary. The interests held by the other investors in Axonics Europe can be converted at any time into a fixed number of shares of the Company’s preferred stock pursuant to the terms of a Fourth Amended and Restated Share Exchange Agreement, dated June 30, 2017 (the “Share Exchange Agreement”). Due to this conversion right, the investors’ interests are considered to be protected from any losses in Axonics Europe (see Note 6). Therefore, the Company is considered responsible for absorbing the losses of Axonics Europe and as such, has a variable interest in Axonics Europe. Axonics Europe has no equity at risk and is therefore considered a variable interest entity since it is dependent on the Company to finance its activities. The investors in Axonics Europe have entered into an agreement with the Company acknowledging that their investment is not intended to give them voting control over Axonics Europe and they have agreed to vote as directed by the Company’s board of directors. Therefore, the Company is the primary beneficiary of Axonics Europe and consolidates this entity. Axonics Modulation Technologies U.K. Limited and Axonics Europe, S.A.S. did not have significant operations for the years ended December 31 2017 and 2016 or for the nine months ended September 30, 2018 and 2017. Intercompany accounts and transactions have been eliminated in consolidation. Basis of Presentation The accompanying condensed consolidated balance sheet as of September 30, 2018, the interim consolidated statements of comprehensive loss for the three and nine months ended September 30, 2018 and 2017, and the consolidated statements of mezzanine equity, stockholders’ deficit, and cash flows for the nine months ended September 30, 2018 and 2017, and the related footnote disclosures are unaudited. These unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) and, in management’s opinion, on a basis consistent with the audited consolidated financial statements and reflect all adjustments, which only include normal recurring adjustments, necessary for the fair presentation of the Company’s financial position as of September 30, 2018 and its results of operations and comprehensive loss for the three and nine months ended September 30, 2018 and 2017, and the condensed consolidated statements of mezzanine equity, stockholders’ deficit, and cash flows for the nine months ended September 30, 2018 and 2017. The results for the nine months ended September 30, 2018 are not necessarily indicative of the results to be expected for the year ending December 31, 2018 or for any other interim period. Stock Split and Charter Amendment In October 2018, the board of directors and certain stockholders of the Company approved an amendment to the Company’s Certificate of Incorporation to (i) increase the authorized shares of common stock from 17,500,000 to 20,500,000, (ii) effect a 1.2-for-1 forward stock split of the Company’s common stock and (iii) define a “Qualified IPO” to include a per share price equal to at least $12.00 (as adjusted for stock splits, combinations, stock dividends, recapitalizations and the like). All shares of common stock, stock options, and per share information presented in the condensed consolidated financial statements have been adjusted to reflect the stock split on a retroactive basis for all periods presented. Any fractional shares that resulted from the stock split were rounded up to the nearest whole share. There was no change in the par value of the Company’s common stock. The ratios by which shares of preferred stock are convertible into shares of common stock have been adjusted to reflect the effects of the forward stock split. Use of Estimates The preparation of condensed consolidated financial statements in conformity with GAAP requires the Company’s management to make estimates and judgments that affect the reported amounts of assets, liabilities, and expenses, and related disclosure of contingent assets and liabilities. The Company bases its estimates on historical experience and on various other assumptions that it believes to be reasonable under the circumstances. The results of this evaluation then form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions, and such differences may be material to the consolidated financial statements. Revenue Recognition Revenue recognized during the three and nine months ended September 30, 2018 and 2017, relates entirely to the sale of product to four customers. The Company recognizes revenue when title and risk of loss pass to customers, which is typically when the customer takes possession of the product. In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-09 “Revenue from Contracts with Customers” (“ASU 2014-09”) as Accounting Standards Codification (“ASC”) Topic 606. The objective of ASU 2014-09 is to establish a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and superseded most of the existing revenue recognition guidance, including industry-specific guidance. The core principle is that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. ASU 2014-09 applies to all contracts with customers except those that are within the scope of other topics in the FASB ASC. Effective January 1, 2018, the Company early adopted the comprehensive new revenue recognition standard using the modified retrospective method. As the Company generated minimal revenue through the date of adoption, the adoption of this guidance did not have a material impact on the Company’s consolidated financial statements or related disclosures. Cash and Cash Equivalents Cash equivalents consist of short-term, highly liquid investments purchased with an original maturity of three months or less. Financial instruments that potentially subject the Company to a concentration of credit risk consist of cash and cash equivalents. At times, the cash and cash equivalent balances may exceed federally insured limits. The Company does not believe that this results in any significant credit risk. Fair Value of Financial Instruments Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. A three-level fair value hierarchy prioritizes the inputs used to measure fair value. The hierarchy requires entities to maximize the use of observable inputs and minimize the use of unobservable inputs. The three levels of inputs used to measure fair value are as follows:
The Company’s assessment of the significance of an input to the fair value measurement requires judgment, which may affect the valuation of fair value assets and liabilities and their placement within the fair value hierarchy levels. The carrying amounts reported in the condensed consolidated financial statements approximate the fair value for cash and cash equivalents, accounts receivable, accounts payables, and accrued expenses, due to their short-term nature. The carrying amount of the Company’s term loan, which is described below, approximates fair value, considering the interest rates are based on the prime interest rate. Investment Securities The Company classifies its investment securities as available-for-sale. Those investments with maturities less than 12 months at the date of purchase are considered short-term investments. Those investments with maturities greater than 12 months at the date of purchase are considered long-term investments. The Company’s investment securities classified as available-for-sale are recorded at fair value based upon quoted market prices at period end (Level 1 inputs in the fair value hierarchy) and consists primarily of commercial paper and U.S. government securities. Unrealized gains or losses, deemed temporary in nature, are reported as a separate component of comprehensive income (loss). There were no unrealized gains or losses during the three and nine months ended September 30, 2018. A decline in the fair value of any security below cost that is deemed other than temporary results in a charge to net income (loss) and the corresponding establishment of a new cost basis for the security. Premiums (discounts) are amortized (accreted) over the life of the related security as an adjustment to yield using the straight-line interest method. Dividend and interest income are recognized when earned. Realized gains or losses are included in net income (loss) and are derived using the specific identification method for determining the cost of securities sold. Foreign Currency Translation The functional currencies of the Company’s subsidiaries are currencies other than the U.S. dollar. The Company translates assets and liabilities of the foreign subsidiaries into U.S. dollars at the exchange rate in effect on the balance sheet date. Costs and expenses of the subsidiaries are translated into U.S. dollars at the average exchange rate during the period. Gains or losses from these translation adjustments are reported as a separate component of stockholders’ deficit in accumulated other comprehensive loss until there is a sale or complete or substantially complete liquidation of the Company’s investment in the foreign subsidiary at which time the gains or losses will be realized and included in net income (loss). As of September 30, 2018 and December 31, 2017, all foreign currency translation gains (losses) have been unrealized and included in accumulated other comprehensive loss. Accumulated other comprehensive loss consists entirely of losses from translation of foreign subsidiaries at September 30, 2018 and December 31, 2017. Foreign currency transaction gains and losses are included in results of operations and have not been significant for the periods presented. Inventory Inventories are stated at the lower of cost or net realizable value, with cost computed on a first-in, first-out basis. The Company capitalizes inventory produced for commercial sale. Costs associated with developmental products prior to satisfying the Company’s inventory capitalization criteria are charged to research and development expense as incurred. Products that have been approved by certain regulatory authorities are also used in clinical programs to assess the safety and efficacy of the products for usage that have not been approved by the FDA or other regulatory authorities. The form of product utilized for both commercial and clinical programs is identical and, as a result, the inventory has an “alternative future use” as defined in authoritative guidance. Component materials and purchased products associated with clinical development programs are included in inventory and charged to research and development expense when the product enters the research and development process and no longer can be used for commercial purposes and, therefore, does not have an “alternative future use.” For products that are under development and have not yet been approved by regulatory authorities, purchased component materials are charged to research and development expense when the inventory ownership transfers to the Company. The Company analyzes inventory levels to identify inventory that may expire prior to sale, inventory that has a cost basis in excess of its net realizable value, or inventory in excess of expected sales requirements. Although the manufacturing of the r-SNM System is subject to strict quality control, certain batches or units of product may no longer meet quality specifications or may expire, which would require adjustments to the Company’s inventory values. The Company also applies judgment related to the results of quality tests that are performed throughout the production process, as well as the understanding of regulatory guidelines, to determine if it is probable that inventory will be saleable. These quality tests are performed throughout the pre- and post-production processes, and the Company continually gathers information regarding product quality for periods after the manufacturing date. The r-SNM System currently has a maximum estimated shelf life range of 12 to 27 months and, based on sales forecasts, the Company expects to realize the carrying value of the product inventory. In the future, reduced demand, quality issues, or excess supply beyond those anticipated by management may result in a material adjustment to inventory levels, which would be recorded as an increase to cost of sales. The determination of whether or not inventory costs will be realizable requires estimates by the Company’s management. A critical input in this determination is future expected inventory requirements based on internal sales forecasts. Management then compares these requirements to the expiry dates of inventory on hand. To the extent that inventory is expected to expire prior to being sold, management will write down the value of inventory. The r-SNM System inventory manufactured prior to international regulatory approval consisted of raw materials and work-in-process inventory, which was expensed as research and development costs as incurred and was combined with other research and development expenses. While management tracked the quantities of individual product lots, it did not track pre-regulatory approval manufacturing costs and, therefore, the manufacturing cost of the r-SNM System raw materials and work-in-process inventory produced prior to regulatory approval is not reasonably determinable. However, based on management’s expectations for future manufacturing costs to produce the r-SNM System inventory, management estimates that approximately $0.5 million of commercial r-SNM System inventory was expensed prior to regulatory approval. The Company began capitalizing the r-SNM System manufacturing costs as inventory following both the receipt of regulatory approval from the European and Canadian regulatory bodies and the Company’s intent to commercialize, which occurred in 2017. As of September 30, 2018, the Company had $0.9 million and $1.3 million of finished goods inventory and raw materials inventory, respectively, on hand. As of December 31, 2017, the Company had $0.2 million and $1.3 million of finished goods inventory and raw materials inventory, respectively, on hand. As of September 30, 2018 and December 31, 2017, there were minimal work-in-process inventory on hand. The aggregate selling price of reduced-cost finished goods inventory on hand may be affected by a number of factors including, but not limited to, market demand, future pricing of the product, competition, and reimbursement by government and other payers. At this time, management of the Company cannot reasonably estimate the timing and rate of consumption of reduced-cost raw materials and work-in-progress inventory, or the timing of sales of finished goods manufactured with this inventory. The time period over which reduced-cost finished goods inventory is consumed will depend on a number of factors, including the amount of future r-SNM System sales, the ultimate use of this inventory in either commercial sales, clinical development or other research activities, and the ability to utilize inventory prior to its expiration date. Property and Equipment Property and equipment are stated at cost less accumulated depreciation. Depreciation is computed using the straight-line method over the estimated useful lives of the assets, generally between three and seven years. Leasehold improvements are amortized over the lesser of the life of the lease or the useful life of the improvements. Maintenance and repairs are charged to expense as incurred. When assets are retired or otherwise disposed of, the cost and accumulated depreciation are removed from the balance sheet and any resulting gain or loss is reflected in operations. Intangible Asset The intangible asset represents exclusive rights to an additional field-of-use on the patent suite within the License Agreement with AMF. The additional field-of-use was provided in exchange for 50,000 shares of Series A preferred stock, the fair value of which was $1.0 million in 2013. The intangible asset was recorded at its fair value of $1.0 million at the date contributed. Amortization of this asset is recorded over the shorter of the patent or legal life on a straight-line basis. The weighted-average amortization period is 8.71 years. The Company will review the intangible asset for impairment whenever an impairment indicator exists. There have been no intangible asset impairment charges to date. Impairment of Long-Lived Assets The Company reviews its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability is measured by comparing the carrying amount to the future net cash flows that the assets are expected to generate. If said assets are considered to be impaired, the impairment that would be recognized is measured by the amount by which the carrying amount of the assets exceeds the projected discounted future net cash flows arising from the asset. There have been no such impairments of long-lived assets to date. Leases Through December 31, 2017, the Company recognized rent expense related to operating leases on a straight-line basis over the terms of the leases and, accordingly, recorded the difference between cash rent payments and recognition of rent expense as a deferred rent liability. Landlord-funded leasehold improvements were also recorded as deferred rent liabilities and were amortized as a reduction of rent expense over the noncancelable term of the related operating lease. Effective January 1, 2018, the Company early adopted ASU No. 2016-02, “Leases (Topic 842)”, the comprehensive new lease standard issued by the FASB. The most significant impact was the recognition of right-of-use (“ROU”) assets and lease liabilities for operating leases. Adoption of the standard required us to restate certain previously reported results, including the recognition of additional ROU assets and lease liabilities for existing operating leases. The Company recorded an ROU asset of approximately $0.1 million on its condensed consolidated balance sheets at September 30, 2018 and December 31, 2017, related to its existing operating lease. The Company also recorded a lease liability of approximately $0.2 million and $0.3 million on its condensed consolidated balance sheets at September 30, 2018 and December 31, 2017, respectively, related to its existing operating lease. The initial adoption of this standard did not have an impact on the Company’s consolidated statements of comprehensive loss. The Company determines if an arrangement is a lease at inception and includes operating leases on the Company’s consolidated balance sheets. The operating lease ROU asset is included within the Company’s other non-current assets, and lease liabilities are included in current or noncurrent liabilities on the Company’s condensed consolidated balance sheets. Operating lease ROU asset and operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date. As the Company’s lease does not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at commencement date in determining the present value of future payments. The operating lease ROU asset also includes any lease payments made and excludes lease incentives and initial direct costs incurred. The lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term. As of September 30, 2018 and December 31, 2017, the remaining lease terms for all of the Company’s operating leases were 6.8 years and 1.8 years, respectively. The discount rate used to determine the present value of all of the Company’s operating leases’ future payments was 6.75% (see Note 4 regarding the Company’s new lease). Noncontrolling Interests Noncontrolling interests reflected in mezzanine equity are adjusted to the greater of their fair value or carrying value as of each balance sheet date through a charge to additional paid-in capital, if necessary. If classification and presentation outside of permanent equity is not considered necessary, noncontrolling interests are presented as a component of permanent equity on our consolidated balance sheets. On the Company’s consolidated statements of comprehensive loss, expenses and net loss from less-than-wholly-owned consolidated subsidiaries are reported at the consolidated amounts, including both the amounts attributable to the Company and noncontrolling interests. Research and Development Research and development costs are charged to operations as incurred. Research and development costs include salary and personnel-related costs, costs of clinical studies and testing, supplies and materials, and outside consultant costs. Income Taxes The Company accounts for income taxes using the asset and liability method to compute the difference between the tax basis of assets and liabilities and the related financial amounts, using currently enacted tax rates. The Company has deferred tax assets. The realization of these deferred tax assets is dependent upon the Company’s ability to generate sufficient taxable income in future years. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount that more likely than not will be realized. The Company evaluates the recoverability of the deferred tax assets annually. The Company recognizes the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by taxing authorities, based on the technical merits of the position. The Company has determined that it has no uncertain tax positions. Stock-Based Compensation The Company measures the cost of employee services in exchange for an award of equity instruments based on the grant-date fair value of the award and recognizes compensation cost over the requisite service period (typically the vesting period), generally four years. The Company accounts for equity instruments issued to non-employees based on the fair value of the award, which is periodically re-measured as they vest over the performance period. The related expense is recognized over the performance period. Preferred Stock As provided for in the Company’s Certification of Incorporation, liquidation relates to each of the following:
Certain of the above items are considered deemed redemption features that are not solely in the control of the Company. As a result, the Company’s convertible preferred stock is classified as mezzanine equity on the consolidated balance sheets. However, as each of the deemed liquidation events are not considered probable of occurring, the instruments are not required to be re-measured in the reporting period. Net Loss per Share of Common Stock Basic net loss per share of common stock is calculated by dividing the net loss attributable to common stockholders by the weighted-average number of shares of common stock outstanding during the period, without consideration for potentially dilutive securities. Diluted net loss per share is computed by dividing the net loss attributable to common stockholders by the weighted-average number of shares of common stock and potentially dilutive securities outstanding for the period. For purposes of the diluted net loss per share calculation, convertible preferred stock, preferred stock warrants, and common stock options are considered to be potentially dilutive securities. Because the Company has reported a net loss in all periods presented, diluted net loss per share of common stock is the same as basic net loss per share of common stock for those periods. For the three and nine months ended September 30, 2018, there were 14,422,173 and 13,805,246 potentially dilutive shares, respectively, that were not included in the computation of diluted weighted-average shares of common stock and common stock equivalent shares outstanding because their effect would have been antidilutive given the Company’s net loss. For the three and nine months ended September 30, 2017, there were 11,579,432 and 10,282,990 potentially dilutive shares, respectively, that were not included in the computation of diluted weighted-average shares of common stock and common stock equivalent shares outstanding because their effect would have been antidilutive given the Company’s net loss. Recent Accounting Pronouncements In May 2014, the FASB issued ASU 2014-09, a comprehensive new revenue recognition standard that will supersede previous existing revenue recognition guidance. The standard is intended to clarify the principles of recognizing revenue and create common revenue recognition guidance between GAAP and International Financial Reporting Standards. The standard also requires expanded disclosures surrounding revenue recognition. During fiscal year 2016, the FASB issued additional clarification guidance on the new revenue recognition standard which also included certain scope improvements and practical expedients. The Company early adopted this guidance effective January 1, 2018 using the modified retrospective method. The adoption of this guidance did not have a material impact on the Company’s consolidated financial statements or related disclosures. In February 2016, the FASB issued ASU No. 2016-02, “Leases (Topic 842)”, a comprehensive new lease standard that will supersede previous lease guidance. The standard requires a lessee to recognize assets and liabilities related to long-term leases that were classified as operating leases under previous guidance in its balance sheet. An asset would be recognized related to the right to use the underlying asset and a liability would be recognized related to the obligation to make lease payments over the term of the lease. The standard also requires expanded disclosures surrounding leases. The Company adopted this guidance effective January 1, 2018. The most significant impact was the recognition of ROU assets and lease liabilities for operating leases. Adoption of the standard required the Company to restate certain previously reported results, including the recognition of additional ROU assets and lease liabilities for operating leases. The Company recorded an ROU asset of approximately $0.1 million on its condensed consolidated balance sheets at September 30, 2018 and December 31, 2017, respectively. The Company also recorded a lease liability of approximately $0.2 million and $0.3 million on its condensed consolidated balance sheets at September 30, 2018 and December 31, 2017, respectively. The adoption of this standard did not have an impact on the Company’s consolidated income statements. In March 2016, the FASB issued ASU No. 2016-09, “Compensation-Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting”, which simplifies authoritative guidance to simplify the accounting for certain aspects of share-based compensation. This guidance addresses the accounting for income tax effects at award settlement, the use of an expected forfeiture rate to estimate award cancellations prior to the vesting date and the presentation of excess tax benefits and shares surrendered for tax withholdings on the statement of cash flows. The Company adopted this guidance effective January 1, 2018. This guidance requires all income tax effects of awards (resulting from an increase or decrease in the fair value of an award from grant date to the vesting date) to be recognized in the income statement when the awards vest or are settled which is a change from previous guidance that required such activity to be recorded in paid-in capital within stockholders’ equity. Under this guidance, excess tax benefits are also excluded from the assumed proceeds available to repurchase shares in the computation of diluted earnings (loss) per share. This guidance also eliminates the requirement to estimate forfeitures, but rather provides for an election that would allow entities to account for forfeitures as they occur. The Company made an entity-wide accounting policy election to continue to estimate the number of awards that are expected to vest. The adoption of this guidance did not have a material impact on the Company’s consolidated financial statements or related disclosures. In October 2016, the FASB issued ASU No. 2016-16, “Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory”, which amends the accounting for income taxes on intra-entity transfers of assets other than inventory. This guidance requires that entities recognize the income tax consequences of an intra-entity transfer of an asset, other than inventory, when the transfer occurs. The income tax consequences on intra-entity transfers of inventory will continue to be deferred until the inventory has been sold to a third party. This guidance is effective for fiscal years beginning after December 15, 2017, which was the Company’s first quarter of fiscal year 2018, and requires a cumulative-effect adjustment to the balance sheet as of the beginning of the fiscal year of adoption. Early adoption is permitted at the beginning of a fiscal year. The adoption of this guidance did not have a material impact on the consolidated financial statements or related disclosures. In May 2017, the FASB issued ASU No. 2017-09, “Compensation-Stock Compensation (Topic 718): Scope of Modification Accounting”, which provides clarification on accounting for modifications in share-based payment awards. This guidance is effective for fiscal years beginning after December 15, 2017, which was the Company’s first quarter of fiscal year 2018, with early adoption permitted. The adoption of this guidance did not have an impact on the Company’s consolidated financial statements or related disclosures. In June 2018, the FASB issued ASU No. 2018-07, “Compensation-Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting”, which expands guidance on accounting for share-based payment awards, which includes share-based payment transactions for acquiring goods and services from nonemployees and aligns the accounting for share-based payments for employees and non-employees. This guidance is effective for annual periods beginning after December 15, 2018, with early adoption permitted. The guidance should be applied to new awards granted after the date of adoption. The adoption of this guidance is not expected to have an impact on the Company’s consolidated financial statements or related disclosures unless there are modifications to the Company’s share-based payment awards. |
Property and Equipment |
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Property and Equipment | Property and Equipment Property and equipment, net consists of the following (in thousands) at:
Depreciation and amortization expense of property and equipment was $0.2 million and $0.6 million for the three and nine months ended September 30, 2018, respectively. Depreciation and amortization expense of property and equipment was $0.2 million and $0.4 million for the three and nine months ended September 30, 2017, respectively. |
Intangible Asset |
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Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||
Intangible Asset | Intangible Asset The intangible asset represents exclusive rights to an additional field-of-use on the patent suite within the License Agreement with AMF. The intangible asset was recorded at its fair value of $1.0 million at the date contributed in 2013, which is the gross carrying amount of the intangible asset at September 30, 2018 and December 31, 2017. Accumulated amortization of the intangible asset is $0.5 million at September 30, 2018 and December 31, 2017. The Company recorded expense for the amortization of intangible assets of $0.1 million during the nine months ended September 30, 2018, and 2017. The amortization of intangible assets were minimal during the three months ended September 30, 2018 and 2017. The estimated future amortization expense as of September 30, 2018, is as follows (in thousands):
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Commitments |
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Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||
Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||
Commitments | Commitments Operating Leases In August 2014, the Company entered into a five-year operating lease for approximately 12,215 square feet of office space beginning on November 1, 2014, and expiring on October 31, 2019. Under the terms of the lease, the Company is responsible for taxes, insurance, and maintenance expense. The lease contains certain scheduled rent increases. Rent expense is recognized on a straight-line basis over the expected lease term. In November 2017, the Company entered into a new lease agreement (the “Lease”) with its current landlord, The Irvine Company, LLC, for the lease of approximately 25,548 square feet of office space of a building located in Irvine, California. The Company is using the premises as its new principal executive offices and for general office, research and development, lab, and manufacturing uses. The Company is utilizing its old currently-leased space through the lease expiration date to conduct the training of its sales team. Unless earlier terminated, the term of the Lease (the “Initial Term”) will expire on the final day of the calendar month following the seventh anniversary of the commencement date. The commencement date was set as August 2018. The Company did not control the leased premises before the commencement date. The aggregate base rent due over the Initial Term under the terms of the Lease is approximately $5.3 million (without giving effect to certain rent abatement terms). The Company is also responsible for the payment of additional rent to cover certain costs, taxes, and insurance. Based on the estimated monthly additional rent for 2018 as set forth in the Lease, the Company estimates that the additional rent during the Initial Term will be approximately $3.8 million. The Company also paid approximately $1.2 million for leasehold improvements, net of the tenant improvement allowance provided in the Lease of approximately $0.8 million. The Company has a renewal option to extend the term of the Lease for a period of five years (the “Renewal Term”) beyond the Initial Term. Under the terms of the Lease, the base rent payable with respect to each Renewal Term will be equal to the prevailing market rental rent as of the commencement of the applicable Renewal Term. In the event of a default of certain of the Company’s obligations under the Lease, the Company’s landlord would have the right to terminate the Lease. At the commencement date of the Lease, the Company recorded an ROU asset of approximately $3.3 million and a lease liability of approximately $4.2 million on its condensed consolidated balance sheet, calculated using the Initial Term of seven years. Total lease incentives excluded from the calculation of the ROU asset were approximately $0.9 million. The operating lease ROU asset is included within the Company’s other non-current assets, and lease liabilities are included in current or noncurrent liabilities on the Company’s condensed consolidated balance sheets. As of September 30, 2018 and December 31, 2017, the remaining lease term for all of the Company’s operating leases were 6.8 years and 1.8 years, respectively. The discount rate used to determine the present value of all of the Company’s operating leases’ future payments was 6.75%. Rent expense (including the Company’s proportionate share of taxes, insurance, and maintenance expenses) for the three and nine months ended September 30, 2018 was $0.2 million and $0.4 million, respectively. Rent expense (including the Company’s proportionate share of taxes, insurance, and maintenance expenses) for the three and nine months ended September 30, 2017 was $0.1 million and $0.2 million, respectively. The future minimum lease payments of this operating lease as of September 30, 2018, are as follows (in thousands):
License Agreement In October 2013, the Company entered into the License Agreement with AMF, pursuant to which AMF agreed to license to the Company certain patents and know-how (collectively, the “AMF IP”) relating to, in relevant part, an implantable pulse generator and related system components in development by AMF as of that date, in addition to any peripheral or auxiliary devices, including all components, that when assembled, comprise such device, excluding certain implantable pulse generators (collectively, the “AMF Licensed Products”). Pursuant to the License Agreement, AMF granted to the Company a royalty-bearing, sublicensable (by written, executed agreements only, subject to the terms of the License Agreement) license under the AMF IP to make, have made, lease, offer to lease, use, sell, offer for sale, market, promote, advertise, import, research, develop and commercialize the AMF Licensed Products worldwide for the treatment of (i) chronic pain in humans through the application of electrical energy to the nervous system, (ii) inflammatory conditions of the human body through the application of electrical energy to the vagus nerve, a nerve that interfaces with parasympathetic control of the heart, lungs and digestive tract, and (iii) urinary and fecal dysfunction in humans through the application of electrical energy anywhere in or on the human body, excluding, in each case, any product or method that involves the placement of electrodes or the administration of electrical stimulation inside the cranial cavity or to the ocular nervous system or the auditory nervous system. Pursuant to the License Agreement, the Company is obligated to pay a 4% royalty of all net revenue derived from the AMF Licensed Products if one of the following conditions applies: (i) one or more valid claims within any of the patents licensed to the Company by AMF covers such AMF Licensed Products or the manufacture of such AMF Licensed Products or (ii) for a period of 12 years from the first commercial sale anywhere in the world of such AMF Licensed Product, in each case, subject to certain adjustments. The initial term of the License Agreement is from October 1, 2013 to October 1, 2033, and will automatically continue until all patents are no longer in force. The Company generated net revenue of $0.2 million and $0.2 million during the three and nine months ended September 30, 2018, respectively, and recorded minimal related royalties during the three and nine months ended September 30, 2018. The Company generated net revenue of $0.1 million and $0.1 million during the three and nine months ended September 30, 2017, respectively, and recorded minimal related royalties during the three and nine months ended September 30, 2017. Beginning in 2018, the Company is required to pay a minimum annual royalty under the License Agreement. The minimum amount will be $75,000 for 2018, with an increase in subsequent years of $25,000 (i.e., $100,000 for 2019) up to a maximum of $200,000 per year. The Company recorded minimum royalties of $0.1 million during the nine months ended September 30, 2018. Minimum royalties were minimal during the three months ended September 30, 2018. |
Long-Term Debt |
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Long-Term Debt | Long-Term Debt In February 2018, the Company entered into the Loan and Security Agreement (the “Loan Agreement”), with Silicon Valley Bank, providing for a term loan (the “Term Loan”). Pursuant to the Loan Agreement, the Company may request up to $20.0 million in three tranches of term loans with such drawn obligations maturing on June 1, 2021. We requested $10.0 million from the first tranche (“Tranche A”), simultaneously with the entry into the Loan Agreement, which is currently outstanding. The Company may request (a) an additional $5.0 million (“Tranche B”), after the date commencing on the later of (i) the date that the Company achieves positive three-month results in the Company’s ARTISAN-SNM pivotal study, as confirmed to Silicon Valley Bank by a member of the Company’s management team and a member of its board of directors, and (ii) July 1, 2018, and ending on December 31, 2018 and (b) another $5.0 million (“Tranche C”), after the date commencing on the later of (i) the date that Silicon Valley Bank receives evidence, in form and substance reasonably satisfactory to Silicon Valley Bank, that the Company has received its pre-market approval (“PMA”) in the United States for its r-SNM System or gross proceeds from the sale of its equity securities of not less than $20.0 million, and (ii) January 1, 2019, and ending on March 31, 2019, subject to certain terms and conditions. If either Tranche B or Tranche C is drawn, then the maturity of the Term Loan is automatically extended to December 1, 2021. The Loan Agreement provides for monthly interest payments through December 31, 2018; provided that, (i) if the Company requests and Silicon Valley Bank funds Tranche B or Tranche C, this interest-only period automatically extends through June 30, 2019, and (ii) if the Company has received a PMA in the United States for its r-SNM System and the Company requests and Silicon Valley Bank funds Tranche C, the interest-only period automatically extends through December 31, 2019. On the first day of the end of the interest-only period, the Company will be required to repay the Term Loan in equal monthly installments of principal plus interest through maturity. Outstanding principal balances under the Term Loan bear interest at the prime rate plus 1.75%. See Note 11 for a description of the subsequent amendment to the Loan Agreement in October 2018. The Company may prepay amounts outstanding under the Term Loan in increments of $5.0 million at any time with 30 days prior written notice to Silicon Valley Bank. However, all prepayments of the Term Loan prior to maturity, whether voluntary or mandatory (acceleration or otherwise), are also subject to the payment of a prepayment fee equal to (i) for a prepayment made on or after the closing date through and including the first anniversary of the closing date, 3.00% of the principal amount of the Term Loan being prepaid, (ii) for a prepayment made after the date which is the first anniversary of the closing date through and including the second anniversary of the closing date, 2.00% of the principal amount of the Term Loan being prepaid, and (iii) for a prepayment made after the date which is the second anniversary of the closing date and before the maturity date, 1.00% of the principal amount of the Term Loan being prepaid. Additionally, on the earliest to occur of (i) the maturity date of the Term Loan, (ii) the acceleration of the Term Loan, or (iii) the prepayment of the Term Loan, the Company will be required to make a final payment equal to the original principal amount of such tranche multiplied by 7.50%. The Company is currently accruing the portion of the final payment calculated based on the amount outstanding under the Term Loan. All obligations under the Term Loan are secured by a first priority lien on substantially all of the Company’s assets, excluding intellectual property assets and more than 65% of the shares of voting capital stock of any of its foreign subsidiaries. The Company has agreed with Silicon Valley Bank not to encumber its intellectual property assets without Silicon Valley Bank’s prior written consent unless a security interest in the underlying intellectual property is necessary to have a security interest in the accounts and proceeds that are part of the assets securing the Term Loan, in which case the Company’s intellectual property shall automatically be included within the assets securing the Term Loan. The outstanding balance of the Term Loan at September 30, 2018 is $10.0 million, which is presented net of unamortized debt issuance costs of $0.9 million. As the Company has met conditions to draw Tranche C and therefore will not commence making monthly principal payments until January 2020, the outstanding balance of the Term Loan is classified in noncurrent liabilities at September 30, 2018. Expected future principal payments for the term loan are as follows (in thousands):
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Stockholders' Equity |
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Stockholders' Equity | Stockholders’ Equity Preferred Stock As of September 30, 2018, the Company is authorized to issue 12,285,981 shares of convertible preferred stock with a par value of $0.0001 per share. The authorized shares of preferred stock are designated as Series A, Series B-1, Series B-2, and Series C preferred stock in the amount of 1,030,000, 2,529,862, 2,537,231, and 6,188,888 shares, respectively. The rights, preferences, and privileges of the Series A, Series B-1, Series B-2, and Series C preferred stock (collectively, the “Preferred Stock”) are as follows: Dividends The holders of the outstanding shares of Preferred Stock are entitled to receive, when and if declared by the board of directors, a noncumulative dividend prior and in preference to any declaration or payment of any dividend of the common stock of the Company. As of September 30, 2018, no dividends have been declared since inception. Conversion Each share of Preferred Stock is convertible at any time, at the option of the holder, into that number of fully paid shares of common stock as determined by dividing the original issue price by the conversion price for the shares. The original issue price was $20.00, $7.20, $8.00, and $9.00 per share for Series A, B-1, B-2, and C, respectively. The conversion price is subject to adjustment in accordance with the provisions contained in the Company’s Certificate of Incorporation. As of September 30, 2018 the conversion price for Series A, B-1, B-2, and C was $8.63, $6.00, $6.67, and $7.50 per share, respectively, based on the retroactive adjustment due to the Company’s 1.2-for-1 forward stock split described in Note 1. As of December 31, 2017, the conversion price for Series A, B-1, B-2, and C was $8.83, $6.00, $6.67, and $7.50 per share, respectively, based on the retroactive adjustment due to the Company’s 1.2-for-1 forward stock split described in Note 1. Each share of Preferred Stock automatically converts into shares of common stock at the then effective conversion price for such share immediately upon the earlier of (i) the Company’s sale of its common stock in a firm commitment underwritten public offering pursuant to a registration statement under the Securities Act of 1933, as amended, in which the public offering price per share is not less than $12.00 (as adjusted for recapitalizations and the like) and the aggregate gross proceeds to the Company are not less than $50.0 million or (ii) upon the election of the holders of at least two-thirds of the outstanding shares of Preferred Stock, voting together as a single class on an as-if converted to common stock basis. Each of the events described in (i) and (ii) is referred to as an “Automatic Conversion Event.” See Note 11 regarding the Company’s initial public offering (“IPO”) and related automatic conversion of the Preferred Stock into shares of the Company’s common stock. Liquidation In the event of any liquidation, dissolution, or winding up of the Company, either voluntary or involuntary, the holders of Preferred Stock shall be entitled to receive, prior and in preference to any distribution of any of the assets of the Company to the holders of the common stock of the Company by reason of their ownership of such stock, an amount per share for each Preferred Stock share held by them equal to the sum of (i) 1.1 times the original issue price for the Preferred Stock for Series A and Series B holders and 1.0 times the original issue price for the Preferred Stock for Series C holders and (ii) all declared but unpaid dividends (if any) on such share. If upon the liquidation, dissolution, or winding up of the Company, the assets of the Company legally available for distribution to the holders of the preferred stock are insufficient to permit the payment to such holders of the full amounts, then the entire assets of the Company legally available for distribution shall be distributed ratably among the holders of Preferred Stock in proportion to the full amounts they would otherwise be entitled to receive. After the payment or setting aside for payment to the holders of Preferred Stock of the full amounts specified above, the entire remaining assets of the Company legally available for distribution shall be distributed with equal priority and pro rata among the holders of Preferred Stock and common stock then outstanding in proportion to the number of shares of common stock held by each, with each share of Preferred Stock being treated for this purpose as if it had been converted to common stock at the then-applicable conversion rate. Voting The holder of each share of Preferred Stock is entitled to the number of votes equal to the number of shares of common stock into which each share of Preferred Stock can be converted. Stock Option Plan In 2014, the Company established its 2014 Stock Option Plan (the “2014 Plan”), which provides for the granting of stock options to employees, directors, and consultants of the Company. Options granted under the 2014 Plan may be either incentive stock options (“ISOs”) or nonstatutory stock options (“NSOs”), as determined by the administrator at the time of grant. The term of each option shall be stated in the option agreement; however, the term shall be no more than ten years from the date of the grant thereof. In the case of an ISO granted to an optionee who, at the time the option is granted, owns stock representing more than ten percent (10%) of the voting power of all classes of stock of the Company, the term of the option shall be five years from the date of grant or such shorter term as may be provided in the option agreement. As of September 30, 2018 and December 31, 2017, a total of 3,178,593 and 2,652,903 shares have been reserved for issuance under the 2014 Plan, respectively. As of September 30, 2018 and December 31, 2017, there were 40,019 and 82,463 shares available for grant under the 2014 Plan, respectively. The Company had shares of common stock reserved for future issuance as follows at:
Preferred Stock outstanding and issuable includes shares of the Company and shares in Axonics Europe, S.A.S., which are exchangeable for the applicable series of Preferred Stock pursuant to the Share Exchange Agreement. The fair value of each stock option is measured as of the date of grant, and compensation expense is recognized over the period during which the recipient renders the required services to the Company (typically the vesting period). Stock-based compensation expense recognized is based on the estimated number of stock options that are expected to ultimately become exercisable. Forfeitures are estimated at the time of the grant and revised in subsequent periods to reflect differences between the estimates and the number of shares that actually become exercisable. The expense for options granted to nonemployees is recognized based upon the fair value of the options as the options vest. Stock-based compensation expense included in the Company’s condensed consolidated statements of comprehensive loss is allocated as follows (in thousands):
The option awards issued under the 2014 Plan were measured based on fair value. The Company’s fair value calculations were made using the Black-Scholes option pricing model with the following assumptions:
The Company used the simplified method of determining the expected term of stock options. The expected stock price volatility assumption was determined by examining the historical volatilities for industry peers, as the Company did not have any trading history for the Company’s common stock. The Company will continue to analyze the historical stock price volatility and expected term assumption as more historical data for the Company’s common stock becomes available. The risk-free interest rate assumption is based on the U.S. Treasury instruments, whose term was consistent with the expected term of the Company’s stock options. The expected dividend assumption is based on the Company’s history and expectation of dividend payouts. The assumptions regarding the expected term of the options and the expected volatility of the stock price are subjective, and these assumptions have a significant effect on the estimated fair value amounts. The weighted-average grant date fair value of options granted was $1.32 and $1.32 for the three and nine months ended September 30, 2018, respectively. The weighted-average grant date fair value of options granted was $1.10 and $1.06 for the three and nine months September 30, 2017, respectively. As of September 30, 2018 and December 31, 2017, there was $1.2 million and $0.9 million, respectively, of total unrecognized compensation cost related to non-vested stock options that is expected to be recognized over a weighted-average period of approximately 2.7 years. The following table summarizes stock option activity under the 2014 Plan:
The weighted-average remaining contractual term of options outstanding and exercisable is 7.8 years and 8.7 years, respectively, at September 30, 2018 and December 31, 2017. During the three and nine months ended September 30, 2018, stock options covering 5,288 and 54,008 shares of common stock, respectively, with a total intrinsic value of $0 for each of the periods, were exercised. During the three and nine months ended September 30, 2017, stock options covering 282,026 and 446,971 shares of common stock, respectively, with a total intrinsic value of $0 for each of the periods, were exercised. Stock Subscriptions Receivable As of September 30, 2018, several members of management of the Company have exercised stock options covering 1,685,597 shares of common stock, in exchange for promissory notes with a principal balance of $1.8 million. These promissory notes bear interest at a rate of 4.5% per annum and are due in full in 2020 to 2022. The promissory notes can become due earlier if the shares of common stock received from the option exercises are sold, the employee terminates employment with the Company, or pursuant to other provisions specified in the notes. The notes are secured by the shares of common stock received from the option exercises. See Note 11 regarding the subsequent forgiveness of all outstanding balances relating to the Stock subscriptions receivable. Preferred Stock Warrants In February 2018, in connection with the Company’s entry into the Loan Agreement (as defined below), the Company issued warrants to Silicon Valley Bank and Life Science Loans II, LLC, its counterparty. Each warrant entitles the holder thereof to purchase up to 33,333 shares of the Series C Preferred Stock at an exercise price of $9.00 per share. Initially, each warrant is exercisable for 16,667 shares of Series C Preferred Stock. If the Company draws on Tranche B, an additional 8,333 shares will become exercisable under each warrant and if the Company draws on Tranche C, an additional 8,333 shares will become exercisable under each warrant. Each warrant will expire on February 6, 2028. As of September 30, 2018, warrants to purchase 33,333 shares of the Company’s Series C Preferred Stock were outstanding and are considered liabilities, the value of which is recorded in current liabilities and will be required to be adjusted to fair value each reporting period with the change reflected in the statements of comprehensive loss, if any. Additional warrants exercisable into a total of 33,332 Series C Preferred Stock shares remain issuable as of September 30, 2018. The fair value of the warrants was estimated at $0.2 million as of September 30, 2018 using the Black-Scholes option pricing model with the following assumptions: expected life of 10 years, risk-free interest rate of 2.74% and stock volatility of 76.01%. See Note 11 regarding the Company’s IPO and related impact on the preferred stock warrants. |
Noncontrolling Interest |
9 Months Ended |
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Sep. 30, 2018 | |
Noncontrolling Interest [Abstract] | |
Noncontrolling Interest | Noncontrolling Interest For less-than-wholly-owned consolidated subsidiaries, noncontrolling interest is the portion of equity not attributable, directly or indirectly, to the Company. The Company’s noncontrolling interest relates to the portion of Axonics Europe S.A.S. not owned by the Company. The Company evaluates whether noncontrolling interests possess any redemption features outside of the Company’s control. If such features are determined to exist, the noncontrolling interests are presented outside of permanent equity on our consolidated balance sheets within mezzanine equity. The Company presents noncontrolling interest as mezzanine equity on the consolidated balance sheets due to the Share Exchange Agreement that provides the holders of the equity in Axonics Europe S.A.S. (excluding the Company) the unilateral right to exchange its equity interest in Axonics Europe S.A.S. for Preferred Stock of the Company at any time. The Company’s Preferred Stock is presented as mezzanine equity, and as such, the rights under the Share Exchange Agreement require the noncontrolling interest to be presented as mezzanine equity as well. Comprehensive loss attributable to the noncontrolling interest in Axonics Europe S.A.S. are absorbed by the Company since the investors are protected from any losses in this entity due to the conversion right. Changes in amounts attributable to the redeemable noncontrolling interest are presented in the Company’s consolidated statements of mezzanine equity. |
Income Taxes |
9 Months Ended |
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Sep. 30, 2018 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes The Company used an annual effective tax rate approach to calculate income taxes for the three and nine months ended September 30, 2018 and 2017. The annual effective tax rate of approximately 0% differs from the federal statutory tax rate due primarily to providing a full valuation allowance on deferred tax assets. On December 22, 2017, the Tax Cuts and Jobs Act of 2017 (the “Tax Act”) was signed into law in the United States. Among other items, the Tax Act reduces the federal corporate tax rate to 21% from the existing maximum rate of 35%, effective January 1, 2018. As a result, the Company revalued its net deferred tax asset at the new lower tax rate at December 31, 2017. At December 31, 2017, the Company had federal and California net operating loss (“NOL”) carryforwards of approximately $65.2 million. Pursuant to Sections 382 and 383 of the Internal Revenue Code of 1986, as amended (the “Internal Revenue Code”), use of the Company’s NOL carryforwards may be limited if the Company experiences a cumulative change in ownership of greater than 50% in a rolling three-year period. The Company has not performed an analysis of changes in ownership for purposes of these Internal Revenue Code sections. Ownership changes could impact the Company’s ability to utilize NOL carryforwards remaining at an ownership change date. NOLs expire between 2033 and 2037. At December 31, 2017, the Company also had research and development tax credit carryforwards of approximately $1.9 million, which will expire in 2035 to 2037. Approximately $0.5 million of these research and development tax credit carryforwards are included in prepaid expenses and other current assets on the Company’s consolidated balance sheets at September 30, 2018 and December 31, 2017, as they are expected to be utilized in 2018 as a credit to offset payroll taxes. The remaining amount of research and development tax credit carryforwards are included in net deferred tax assets. |
Employee Benefit Plan |
9 Months Ended |
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Sep. 30, 2018 | |
Retirement Benefits [Abstract] | |
Employee Benefit Plan | Employee Benefit Plan The Company sponsors a defined contribution retirement savings plan under Section 401(k) of the Internal Revenue Code. This plan covers all employees who meet minimum age and service requirements, and allows participants to defer a portion of their annual compensation on a pre- or post-tax basis. Contributions to the plan by the Company may be made at the discretion of the board of directors. During the three and nine months ended September 30, 2018, the Company contributions to the plan amounted to $0.1 million and $0.2 million, respectively. During the three and nine months ended September 30, 2017, the Company contributions to the plan amounted to $0.1 million and $0.2 million, respectively. |
Related Party Transactions |
9 Months Ended |
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Sep. 30, 2018 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | Related Party Transactions The Company incurred $0.1 million during each of the nine months ended September 30, 2018 and 2017 to a scientific advisor who is also a non-management stockholder of the Company. The Company incurred minimal amounts during each of the three months ended September 30, 2018 and 2017. Amounts payable to this advisor were minimal at September 30, 2018 and December 31, 2017. The Company incurred $0.1 million and $0.3 million during the three and nine months ended September 30, 2018, respectively, for engineering and design services to a company that is owned by a non-management stockholder of the Company. The Company incurred $0.2 million during the nine months ended September 30, 2017, for engineering and design services to a company that is owned by a non-management stockholder of the Company. The Company incurred minimal amounts during the three months ended September 30, 2017. There were no amounts payable to this company at September 30, 2018 or December 31, 2017. The 2014 Plan allows for certain members of management to purchase vested options and unvested options (subject to repurchase rights) through a full recourse promissory note and stock pledge agreement. The promissory notes outstanding are recorded as “Stock subscriptions receivable” in the accompanying condensed consolidated balance sheets. The aggregate principal amounts owed by certain members of management as of September 30, 2018 was $1.8 million. The notes were forgiven on October 4, 2018, refer to Note 11 for discussion of the note forgiveness. |
Subsequent Events |
9 Months Ended |
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Sep. 30, 2018 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events Forgiveness of Stock Subscription Receivable On October 4, 2018, the Company entered into agreements with certain officers and directors to terminate each of their respective promissory notes and to forgive all respective obligations for payment thereof in connection with the Company’s IPO. As a result, on October 4, 2018, the Company forgave all outstanding stock subscriptions receivable referenced above in the aggregate amount of $1.8 million plus accrued interest, which amount will be recorded as compensation expense. Stock Split and Charter Amendment In October 2018, the board of directors and certain stockholders of the Company approved an amendment to the Company’s certificate of incorporation to (i) increase the authorized shares of common stock from 17,500,000 to 20,500,000, (ii) effect a 1.2-for-1 forward stock split of the Company’s common stock and (iii) define a “Qualified IPO” to include a per share price equal to at least $12.00 (as adjusted for stock splits, combinations, stock dividends, recapitalizations and the like). All shares of common stock, stock options, and per share information presented in the condensed consolidated financial statements have been adjusted to reflect the stock split on a retroactive basis for all periods presented. Any fractional shares that resulted from the stock split were rounded up to the nearest whole share. There was no change in the par value of the Company’s common stock. The ratios by which shares of preferred stock are convertible into shares of common stock have been adjusted to reflect the effects of the forward stock split. Term Loan Amendment In October 2018, the Company and Silicon Valley Bank entered into an amendment to the Loan Agreement (the “Loan Amendment”) in connection with which the Company requested the full $5.0 million from Tranche B and the full $5.0 million from Tranche C. The Company received the $10.0 million from both tranches in October 2018. Pursuant to the Loan Amendment, Silicon Valley Bank agreed to (i) extend the interest only period from June 30, 2019 to December 31, 2019, without requiring the receipt of the Company’s PMA in the United States for the r-SNM System, and (ii) make Tranche C available immediately instead of January 1, 2019. In addition, pursuant to the Loan Amendment, Silicon Valley Bank added a fee of $100,000 in the event that the Company did not (i) consummate the IPO, with proceeds of no less than $75.0 million, (ii) receive PMA approval in the United States for the r-SNM System, or (iii) receive gross proceeds of at least $40.0 million from the sale of equity securities, in each case on or prior to June 30, 2019, which will not be owed since the Company completed the IPO offering in October 2018. In addition, as a result of the Company’s request of the full $5.0 million from Tranche B and the full $5.0 million from Tranche C, the maturity of the Term Loan has been automatically extended to December 1, 2021. Warrants to purchase an additional 40,000 shares of the Company’s common stock at an exercise price of $7.50 per share became exercisable in conjunction with the additional loan. Initial Public Offering On November 2, 2018, the Company completed its IPO by issuing 9,200,000 shares of common stock, at an offering price of $15.00 per share, inclusive of 1,200,000 shares of the Company’s common stock issued upon the exercise by the underwriters of their option to purchase additional shares. The net proceeds were approximately $126.0 million, after deducting underwriting discounts, commissions and estimated offering expenses payable by the Company. In connection with the IPO, the Company’s outstanding shares of convertible preferred stock were automatically converted into an aggregate of 15,813,297 shares of common stock, and the Company’s outstanding warrants to purchase shares of Series C convertible preferred stock were automatically converted into warrants to purchase up to an aggregate of 80,000 shares of common stock, resulting in the reclassification of such warrant liability of $0.4 million to additional paid-in-capital. 2018 Omnibus Incentive Plan On October 18, 2018, the Company adopted the 2018 Omnibus Incentive Plan (the “2018 Plan”), under which the Company may grant cash and equity incentive awards to eligible service providers in order to attract, motivate and retain the talent for which it competes. The 2018 Plan provides for awards based on shares of the Company’s common stock. Subject to adjustment by the Company’s board of directors, the total number of shares authorized to be awarded under the 2018 Plan may not exceed 4,540,019. |
Nature of Operations and Summary of Significant Accounting Policies (Policies) |
9 Months Ended | ||||||||||||||||
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Sep. 30, 2018 | |||||||||||||||||
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||
Principles of Consolidation | Principles of Consolidation The condensed consolidated financial statements include the accounts of the Company, its wholly-owned subsidiaries, Axonics Modulation Technologies U.K. Limited and Axonics Modulation Technologies Australia Pty Ltd, as well as Axonics Europe, S.A.S., a variable interest entity, in which the Company exercises control and is determined to be the primary beneficiary. The interests held by the other investors in Axonics Europe can be converted at any time into a fixed number of shares of the Company’s preferred stock pursuant to the terms of a Fourth Amended and Restated Share Exchange Agreement, dated June 30, 2017 (the “Share Exchange Agreement”). Due to this conversion right, the investors’ interests are considered to be protected from any losses in Axonics Europe (see Note 6). Therefore, the Company is considered responsible for absorbing the losses of Axonics Europe and as such, has a variable interest in Axonics Europe. Axonics Europe has no equity at risk and is therefore considered a variable interest entity since it is dependent on the Company to finance its activities. The investors in Axonics Europe have entered into an agreement with the Company acknowledging that their investment is not intended to give them voting control over Axonics Europe and they have agreed to vote as directed by the Company’s board of directors. Therefore, the Company is the primary beneficiary of Axonics Europe and consolidates this entity. Axonics Modulation Technologies U.K. Limited and Axonics Europe, S.A.S. did not have significant operations for the years ended December 31 2017 and 2016 or for the nine months ended September 30, 2018 and 2017. Intercompany accounts and transactions have been eliminated in consolidation. |
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Basis of Presentation | Basis of Presentation The accompanying condensed consolidated balance sheet as of September 30, 2018, the interim consolidated statements of comprehensive loss for the three and nine months ended September 30, 2018 and 2017, and the consolidated statements of mezzanine equity, stockholders’ deficit, and cash flows for the nine months ended September 30, 2018 and 2017, and the related footnote disclosures are unaudited. These unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) and, in management’s opinion, on a basis consistent with the audited consolidated financial statements and reflect all adjustments, which only include normal recurring adjustments, necessary for the fair presentation of the Company’s financial position as of September 30, 2018 and its results of operations and comprehensive loss for the three and nine months ended September 30, 2018 and 2017, and the condensed consolidated statements of mezzanine equity, stockholders’ deficit, and cash flows for the nine months ended September 30, 2018 and 2017. The results for the nine months ended September 30, 2018 are not necessarily indicative of the results to be expected for the year ending December 31, 2018 or for any other interim period. Stock Split and Charter Amendment In October 2018, the board of directors and certain stockholders of the Company approved an amendment to the Company’s Certificate of Incorporation to (i) increase the authorized shares of common stock from 17,500,000 to 20,500,000, (ii) effect a 1.2-for-1 forward stock split of the Company’s common stock and (iii) define a “Qualified IPO” to include a per share price equal to at least $12.00 (as adjusted for stock splits, combinations, stock dividends, recapitalizations and the like). All shares of common stock, stock options, and per share information presented in the condensed consolidated financial statements have been adjusted to reflect the stock split on a retroactive basis for all periods presented. Any fractional shares that resulted from the stock split were rounded up to the nearest whole share. There was no change in the par value of the Company’s common stock. The ratios by which shares of preferred stock are convertible into shares of common stock have been adjusted to reflect the effects of the forward stock split. |
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Use of Estimates | Use of Estimates The preparation of condensed consolidated financial statements in conformity with GAAP requires the Company’s management to make estimates and judgments that affect the reported amounts of assets, liabilities, and expenses, and related disclosure of contingent assets and liabilities. The Company bases its estimates on historical experience and on various other assumptions that it believes to be reasonable under the circumstances. The results of this evaluation then form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions, and such differences may be material to the consolidated financial statements. |
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Revenue Recognition | Revenue Recognition Revenue recognized during the three and nine months ended September 30, 2018 and 2017, relates entirely to the sale of product to four customers. The Company recognizes revenue when title and risk of loss pass to customers, which is typically when the customer takes possession of the product. In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2014-09 “Revenue from Contracts with Customers” (“ASU 2014-09”) as Accounting Standards Codification (“ASC”) Topic 606. The objective of ASU 2014-09 is to establish a single comprehensive model for entities to use in accounting for revenue arising from contracts with customers and superseded most of the existing revenue recognition guidance, including industry-specific guidance. The core principle is that a company should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. ASU 2014-09 applies to all contracts with customers except those that are within the scope of other topics in the FASB ASC. Effective January 1, 2018, the Company early adopted the comprehensive new revenue recognition standard using the modified retrospective method. As the Company generated minimal revenue through the date of adoption, the adoption of this guidance did not have a material impact on the Company’s consolidated financial statements or related disclosures. |
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Cash and Cash Equivalents | Cash and Cash Equivalents Cash equivalents consist of short-term, highly liquid investments purchased with an original maturity of three months or less. Financial instruments that potentially subject the Company to a concentration of credit risk consist of cash and cash equivalents. At times, the cash and cash equivalent balances may exceed federally insured limits. The Company does not believe that this results in any significant credit risk. |
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Fair Value of Financial Instruments | Fair Value of Financial Instruments Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. A three-level fair value hierarchy prioritizes the inputs used to measure fair value. The hierarchy requires entities to maximize the use of observable inputs and minimize the use of unobservable inputs. The three levels of inputs used to measure fair value are as follows:
The Company’s assessment of the significance of an input to the fair value measurement requires judgment, which may affect the valuation of fair value assets and liabilities and their placement within the fair value hierarchy levels. The carrying amounts reported in the condensed consolidated financial statements approximate the fair value for cash and cash equivalents, accounts receivable, accounts payables, and accrued expenses, due to their short-term nature. The carrying amount of the Company’s term loan, which is described below, approximates fair value, considering the interest rates are based on the prime interest rate. |
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Investment Securities | Investment Securities The Company classifies its investment securities as available-for-sale. Those investments with maturities less than 12 months at the date of purchase are considered short-term investments. Those investments with maturities greater than 12 months at the date of purchase are considered long-term investments. The Company’s investment securities classified as available-for-sale are recorded at fair value based upon quoted market prices at period end (Level 1 inputs in the fair value hierarchy) and consists primarily of commercial paper and U.S. government securities. Unrealized gains or losses, deemed temporary in nature, are reported as a separate component of comprehensive income (loss). There were no unrealized gains or losses during the three and nine months ended September 30, 2018. A decline in the fair value of any security below cost that is deemed other than temporary results in a charge to net income (loss) and the corresponding establishment of a new cost basis for the security. Premiums (discounts) are amortized (accreted) over the life of the related security as an adjustment to yield using the straight-line interest method. Dividend and interest income are recognized when earned. Realized gains or losses are included in net income (loss) and are derived using the specific identification method for determining the cost of securities sold. |
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Foreign Currency Translation | Foreign Currency Translation The functional currencies of the Company’s subsidiaries are currencies other than the U.S. dollar. The Company translates assets and liabilities of the foreign subsidiaries into U.S. dollars at the exchange rate in effect on the balance sheet date. Costs and expenses of the subsidiaries are translated into U.S. dollars at the average exchange rate during the period. Gains or losses from these translation adjustments are reported as a separate component of stockholders’ deficit in accumulated other comprehensive loss until there is a sale or complete or substantially complete liquidation of the Company’s investment in the foreign subsidiary at which time the gains or losses will be realized and included in net income (loss). As of September 30, 2018 and December 31, 2017, all foreign currency translation gains (losses) have been unrealized and included in accumulated other comprehensive loss. Accumulated other comprehensive loss consists entirely of losses from translation of foreign subsidiaries at September 30, 2018 and December 31, 2017. Foreign currency transaction gains and losses are included in results of operations and have not been significant for the periods presented. |
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Inventory | Inventory Inventories are stated at the lower of cost or net realizable value, with cost computed on a first-in, first-out basis. The Company capitalizes inventory produced for commercial sale. Costs associated with developmental products prior to satisfying the Company’s inventory capitalization criteria are charged to research and development expense as incurred. Products that have been approved by certain regulatory authorities are also used in clinical programs to assess the safety and efficacy of the products for usage that have not been approved by the FDA or other regulatory authorities. The form of product utilized for both commercial and clinical programs is identical and, as a result, the inventory has an “alternative future use” as defined in authoritative guidance. Component materials and purchased products associated with clinical development programs are included in inventory and charged to research and development expense when the product enters the research and development process and no longer can be used for commercial purposes and, therefore, does not have an “alternative future use.” For products that are under development and have not yet been approved by regulatory authorities, purchased component materials are charged to research and development expense when the inventory ownership transfers to the Company. The Company analyzes inventory levels to identify inventory that may expire prior to sale, inventory that has a cost basis in excess of its net realizable value, or inventory in excess of expected sales requirements. Although the manufacturing of the r-SNM System is subject to strict quality control, certain batches or units of product may no longer meet quality specifications or may expire, which would require adjustments to the Company’s inventory values. The Company also applies judgment related to the results of quality tests that are performed throughout the production process, as well as the understanding of regulatory guidelines, to determine if it is probable that inventory will be saleable. These quality tests are performed throughout the pre- and post-production processes, and the Company continually gathers information regarding product quality for periods after the manufacturing date. The r-SNM System currently has a maximum estimated shelf life range of 12 to 27 months and, based on sales forecasts, the Company expects to realize the carrying value of the product inventory. In the future, reduced demand, quality issues, or excess supply beyond those anticipated by management may result in a material adjustment to inventory levels, which would be recorded as an increase to cost of sales. The determination of whether or not inventory costs will be realizable requires estimates by the Company’s management. A critical input in this determination is future expected inventory requirements based on internal sales forecasts. Management then compares these requirements to the expiry dates of inventory on hand. To the extent that inventory is expected to expire prior to being sold, management will write down the value of inventory. The r-SNM System inventory manufactured prior to international regulatory approval consisted of raw materials and work-in-process inventory, which was expensed as research and development costs as incurred and was combined with other research and development expenses. While management tracked the quantities of individual product lots, it did not track pre-regulatory approval manufacturing costs and, therefore, the manufacturing cost of the r-SNM System raw materials and work-in-process inventory produced prior to regulatory approval is not reasonably determinable. However, based on management’s expectations for future manufacturing costs to produce the r-SNM System inventory, management estimates that approximately $0.5 million of commercial r-SNM System inventory was expensed prior to regulatory approval. The Company began capitalizing the r-SNM System manufacturing costs as inventory following both the receipt of regulatory approval from the European and Canadian regulatory bodies and the Company’s intent to commercialize, which occurred in 2017. As of September 30, 2018, the Company had $0.9 million and $1.3 million of finished goods inventory and raw materials inventory, respectively, on hand. As of December 31, 2017, the Company had $0.2 million and $1.3 million of finished goods inventory and raw materials inventory, respectively, on hand. As of September 30, 2018 and December 31, 2017, there were minimal work-in-process inventory on hand. The aggregate selling price of reduced-cost finished goods inventory on hand may be affected by a number of factors including, but not limited to, market demand, future pricing of the product, competition, and reimbursement by government and other payers. At this time, management of the Company cannot reasonably estimate the timing and rate of consumption of reduced-cost raw materials and work-in-progress inventory, or the timing of sales of finished goods manufactured with this inventory. The time period over which reduced-cost finished goods inventory is consumed will depend on a number of factors, including the amount of future r-SNM System sales, the ultimate use of this inventory in either commercial sales, clinical development or other research activities, and the ability to utilize inventory prior to its expiration date. |
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Property and Equipment | Property and Equipment Property and equipment are stated at cost less accumulated depreciation. Depreciation is computed using the straight-line method over the estimated useful lives of the assets, generally between three and seven years. Leasehold improvements are amortized over the lesser of the life of the lease or the useful life of the improvements. Maintenance and repairs are charged to expense as incurred. When assets are retired or otherwise disposed of, the cost and accumulated depreciation are removed from the balance sheet and any resulting gain or loss is reflected in operations. |
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Intangible Asset | Intangible Asset The intangible asset represents exclusive rights to an additional field-of-use on the patent suite within the License Agreement with AMF. The additional field-of-use was provided in exchange for 50,000 shares of Series A preferred stock, the fair value of which was $1.0 million in 2013. The intangible asset was recorded at its fair value of $1.0 million at the date contributed. Amortization of this asset is recorded over the shorter of the patent or legal life on a straight-line basis. The weighted-average amortization period is 8.71 years. The Company will review the intangible asset for impairment whenever an impairment indicator exists. There have been no intangible asset impairment charges to date. |
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Impairment of Long-Lived Assets | Impairment of Long-Lived Assets The Company reviews its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability is measured by comparing the carrying amount to the future net cash flows that the assets are expected to generate. If said assets are considered to be impaired, the impairment that would be recognized is measured by the amount by which the carrying amount of the assets exceeds the projected discounted future net cash flows arising from the asset. There have been no such impairments of long-lived assets to date. |
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Leases | Leases Through December 31, 2017, the Company recognized rent expense related to operating leases on a straight-line basis over the terms of the leases and, accordingly, recorded the difference between cash rent payments and recognition of rent expense as a deferred rent liability. Landlord-funded leasehold improvements were also recorded as deferred rent liabilities and were amortized as a reduction of rent expense over the noncancelable term of the related operating lease. Effective January 1, 2018, the Company early adopted ASU No. 2016-02, “Leases (Topic 842)”, the comprehensive new lease standard issued by the FASB. The most significant impact was the recognition of right-of-use (“ROU”) assets and lease liabilities for operating leases. Adoption of the standard required us to restate certain previously reported results, including the recognition of additional ROU assets and lease liabilities for existing operating leases. The Company recorded an ROU asset of approximately $0.1 million on its condensed consolidated balance sheets at September 30, 2018 and December 31, 2017, related to its existing operating lease. The Company also recorded a lease liability of approximately $0.2 million and $0.3 million on its condensed consolidated balance sheets at September 30, 2018 and December 31, 2017, respectively, related to its existing operating lease. The initial adoption of this standard did not have an impact on the Company’s consolidated statements of comprehensive loss. The Company determines if an arrangement is a lease at inception and includes operating leases on the Company’s consolidated balance sheets. The operating lease ROU asset is included within the Company’s other non-current assets, and lease liabilities are included in current or noncurrent liabilities on the Company’s condensed consolidated balance sheets. Operating lease ROU asset and operating lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term at commencement date. As the Company’s lease does not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at commencement date in determining the present value of future payments. The operating lease ROU asset also includes any lease payments made and excludes lease incentives and initial direct costs incurred. The lease terms may include options to extend or terminate the lease when it is reasonably certain that the Company will exercise that option. Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term. As of September 30, 2018 and December 31, 2017, the remaining lease terms for all of the Company’s operating leases were 6.8 years and 1.8 years, respectively. The discount rate used to determine the present value of all of the Company’s operating leases’ future payments was 6.75% (see Note 4 regarding the Company’s new lease). |
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Noncontrolling Interests | Noncontrolling Interests Noncontrolling interests reflected in mezzanine equity are adjusted to the greater of their fair value or carrying value as of each balance sheet date through a charge to additional paid-in capital, if necessary. If classification and presentation outside of permanent equity is not considered necessary, noncontrolling interests are presented as a component of permanent equity on our consolidated balance sheets. On the Company’s consolidated statements of comprehensive loss, expenses and net loss from less-than-wholly-owned consolidated subsidiaries are reported at the consolidated amounts, including both the amounts attributable to the Company and noncontrolling interests. |
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Research and Development | Research and Development Research and development costs are charged to operations as incurred. Research and development costs include salary and personnel-related costs, costs of clinical studies and testing, supplies and materials, and outside consultant costs. |
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Income Taxes | Income Taxes The Company accounts for income taxes using the asset and liability method to compute the difference between the tax basis of assets and liabilities and the related financial amounts, using currently enacted tax rates. The Company has deferred tax assets. The realization of these deferred tax assets is dependent upon the Company’s ability to generate sufficient taxable income in future years. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount that more likely than not will be realized. The Company evaluates the recoverability of the deferred tax assets annually. The Company recognizes the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained on examination by taxing authorities, based on the technical merits of the position. The Company has determined that it has no uncertain tax positions. |
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Stock-Based Compensation | Stock-Based Compensation The Company measures the cost of employee services in exchange for an award of equity instruments based on the grant-date fair value of the award and recognizes compensation cost over the requisite service period (typically the vesting period), generally four years. The Company accounts for equity instruments issued to non-employees based on the fair value of the award, which is periodically re-measured as they vest over the performance period. The related expense is recognized over the performance period. |
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Preferred Stock | Preferred Stock As provided for in the Company’s Certification of Incorporation, liquidation relates to each of the following:
Certain of the above items are considered deemed redemption features that are not solely in the control of the Company. As a result, the Company’s convertible preferred stock is classified as mezzanine equity on the consolidated balance sheets. However, as each of the deemed liquidation events are not considered probable of occurring, the instruments are not required to be re-measured in the reporting period. |
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Net Loss per Share of Common Stock | Net Loss per Share of Common Stock Basic net loss per share of common stock is calculated by dividing the net loss attributable to common stockholders by the weighted-average number of shares of common stock outstanding during the period, without consideration for potentially dilutive securities. Diluted net loss per share is computed by dividing the net loss attributable to common stockholders by the weighted-average number of shares of common stock and potentially dilutive securities outstanding for the period. For purposes of the diluted net loss per share calculation, convertible preferred stock, preferred stock warrants, and common stock options are considered to be potentially dilutive securities. Because the Company has reported a net loss in all periods presented, diluted net loss per share of common stock is the same as basic net loss per share of common stock for those periods. For the three and nine months ended September 30, 2018, there were 14,422,173 and 13,805,246 potentially dilutive shares, respectively, that were not included in the computation of diluted weighted-average shares of common stock and common stock equivalent shares outstanding because their effect would have been antidilutive given the Company’s net loss. For the three and nine months ended September 30, 2017, there were 11,579,432 and 10,282,990 potentially dilutive shares, respectively, that were not included in the computation of diluted weighted-average shares of common stock and common stock equivalent shares outstanding because their effect would have been antidilutive given the Company’s net loss. |
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Recent Accounting Pronouncements | Recent Accounting Pronouncements In May 2014, the FASB issued ASU 2014-09, a comprehensive new revenue recognition standard that will supersede previous existing revenue recognition guidance. The standard is intended to clarify the principles of recognizing revenue and create common revenue recognition guidance between GAAP and International Financial Reporting Standards. The standard also requires expanded disclosures surrounding revenue recognition. During fiscal year 2016, the FASB issued additional clarification guidance on the new revenue recognition standard which also included certain scope improvements and practical expedients. The Company early adopted this guidance effective January 1, 2018 using the modified retrospective method. The adoption of this guidance did not have a material impact on the Company’s consolidated financial statements or related disclosures. In February 2016, the FASB issued ASU No. 2016-02, “Leases (Topic 842)”, a comprehensive new lease standard that will supersede previous lease guidance. The standard requires a lessee to recognize assets and liabilities related to long-term leases that were classified as operating leases under previous guidance in its balance sheet. An asset would be recognized related to the right to use the underlying asset and a liability would be recognized related to the obligation to make lease payments over the term of the lease. The standard also requires expanded disclosures surrounding leases. The Company adopted this guidance effective January 1, 2018. The most significant impact was the recognition of ROU assets and lease liabilities for operating leases. Adoption of the standard required the Company to restate certain previously reported results, including the recognition of additional ROU assets and lease liabilities for operating leases. The Company recorded an ROU asset of approximately $0.1 million on its condensed consolidated balance sheets at September 30, 2018 and December 31, 2017, respectively. The Company also recorded a lease liability of approximately $0.2 million and $0.3 million on its condensed consolidated balance sheets at September 30, 2018 and December 31, 2017, respectively. The adoption of this standard did not have an impact on the Company’s consolidated income statements. In March 2016, the FASB issued ASU No. 2016-09, “Compensation-Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting”, which simplifies authoritative guidance to simplify the accounting for certain aspects of share-based compensation. This guidance addresses the accounting for income tax effects at award settlement, the use of an expected forfeiture rate to estimate award cancellations prior to the vesting date and the presentation of excess tax benefits and shares surrendered for tax withholdings on the statement of cash flows. The Company adopted this guidance effective January 1, 2018. This guidance requires all income tax effects of awards (resulting from an increase or decrease in the fair value of an award from grant date to the vesting date) to be recognized in the income statement when the awards vest or are settled which is a change from previous guidance that required such activity to be recorded in paid-in capital within stockholders’ equity. Under this guidance, excess tax benefits are also excluded from the assumed proceeds available to repurchase shares in the computation of diluted earnings (loss) per share. This guidance also eliminates the requirement to estimate forfeitures, but rather provides for an election that would allow entities to account for forfeitures as they occur. The Company made an entity-wide accounting policy election to continue to estimate the number of awards that are expected to vest. The adoption of this guidance did not have a material impact on the Company’s consolidated financial statements or related disclosures. In October 2016, the FASB issued ASU No. 2016-16, “Income Taxes (Topic 740): Intra-Entity Transfers of Assets Other Than Inventory”, which amends the accounting for income taxes on intra-entity transfers of assets other than inventory. This guidance requires that entities recognize the income tax consequences of an intra-entity transfer of an asset, other than inventory, when the transfer occurs. The income tax consequences on intra-entity transfers of inventory will continue to be deferred until the inventory has been sold to a third party. This guidance is effective for fiscal years beginning after December 15, 2017, which was the Company’s first quarter of fiscal year 2018, and requires a cumulative-effect adjustment to the balance sheet as of the beginning of the fiscal year of adoption. Early adoption is permitted at the beginning of a fiscal year. The adoption of this guidance did not have a material impact on the consolidated financial statements or related disclosures. In May 2017, the FASB issued ASU No. 2017-09, “Compensation-Stock Compensation (Topic 718): Scope of Modification Accounting”, which provides clarification on accounting for modifications in share-based payment awards. This guidance is effective for fiscal years beginning after December 15, 2017, which was the Company’s first quarter of fiscal year 2018, with early adoption permitted. The adoption of this guidance did not have an impact on the Company’s consolidated financial statements or related disclosures. In June 2018, the FASB issued ASU No. 2018-07, “Compensation-Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting”, which expands guidance on accounting for share-based payment awards, which includes share-based payment transactions for acquiring goods and services from nonemployees and aligns the accounting for share-based payments for employees and non-employees. This guidance is effective for annual periods beginning after December 15, 2018, with early adoption permitted. The guidance should be applied to new awards granted after the date of adoption. The adoption of this guidance is not expected to have an impact on the Company’s consolidated financial statements or related disclosures unless there are modifications to the Company’s share-based payment awards. |
Property and Equipment (Tables) |
9 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Property, Plant and Equipment [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Property and Equipment, Net | Property and equipment, net consists of the following (in thousands) at:
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Intangible Asset (Tables) |
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Sep. 30, 2018 | |||||||||||||||||||||||||||||||||
Goodwill and Intangible Assets Disclosure [Abstract] | |||||||||||||||||||||||||||||||||
Schedule of Estimated Future Amortization Expense | The estimated future amortization expense as of September 30, 2018, is as follows (in thousands):
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Commitments (Tables) |
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Sep. 30, 2018 | |||||||||||||||||||||||||||||||||||||
Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||
Schedule of Future Minimum Lease Payments for Operating Lease | The future minimum lease payments of this operating lease as of September 30, 2018, are as follows (in thousands):
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Long-Term Debt (Tables) |
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Sep. 30, 2018 | |||||||||||||||||||||||||||||
Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||
Schedule of Expected Future Principal Payments for Term Loan | Expected future principal payments for the term loan are as follows (in thousands):
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Stockholders' Equity (Tables) |
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Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Common Stock Reserved for Future Issuance | The Company had shares of common stock reserved for future issuance as follows at:
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Schedule of Stock-based Compensation Expense | Stock-based compensation expense included in the Company’s condensed consolidated statements of comprehensive loss is allocated as follows (in thousands):
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Schedule of Stock Option Award Valuation Assumptions | The option awards issued under the 2014 Plan were measured based on fair value. The Company’s fair value calculations were made using the Black-Scholes option pricing model with the following assumptions:
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Schedule of Stock Option Activity | The following table summarizes stock option activity under the 2014 Plan:
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Property and Equipment - Narrative (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
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Property, Plant and Equipment [Line Items] | ||||
Depreciation and amortization expense | $ 663 | $ 514 | ||
Property and Equipment | ||||
Property, Plant and Equipment [Line Items] | ||||
Depreciation and amortization expense | $ 200 | $ 200 | $ 600 | $ 400 |
Property and Equipment - Summary (Details) - USD ($) $ in Thousands |
Sep. 30, 2018 |
Dec. 31, 2017 |
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Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 4,546 | $ 2,683 |
Less: accumulated depreciation and amortization | (1,729) | (1,153) |
Property and equipment, net | 2,817 | 1,530 |
Research and development equipment | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 878 | 783 |
Computer hardware and software | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 725 | 545 |
Tools and molds | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 1,076 | 877 |
Leasehold improvements | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 1,480 | 297 |
Furniture and fixtures | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 387 | $ 181 |
Intangible Asset - Narrative (Details) - USD ($) $ in Millions |
9 Months Ended | |||
---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Dec. 31, 2017 |
Dec. 31, 2013 |
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Goodwill and Intangible Assets Disclosure [Abstract] | ||||
Intangible Assets, fair value at the date contributed | $ 1.0 | |||
Gross carrying value of intangible assets | $ 1.0 | $ 1.0 | ||
Accumulated amortization on intangible assets | 0.5 | $ 0.5 | ||
Amortization expense of intangible assets | $ 0.1 | $ 0.1 |
Intangible Asset - Estimated Future Amortization Expense (Details) - USD ($) $ in Thousands |
Sep. 30, 2018 |
Dec. 31, 2017 |
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Finite-Lived Intangible Assets, Amortization Expense, Maturity Schedule [Abstract] | ||
2018 | $ 29 | |
2019 | 115 | |
2020 | 115 | |
2021 | 115 | |
2022 | 81 | |
Estimated future amortization expense | $ 455 | $ 541 |
Commitments - Future Minimum Lease Payments for Operating Lease (Details) $ in Thousands |
Sep. 30, 2018
USD ($)
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Operating Lease Liabilities, Payments Due [Abstract] | |
2018 | $ 219 |
2019 | 855 |
2020 | 703 |
2021 | 735 |
2022 | 768 |
Thereafter | 2,146 |
Total | $ 5,426 |
Long-Term Debt - Expected Future Principal Payments for Term Loan (Details) $ in Thousands |
Sep. 30, 2018
USD ($)
|
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Debt Disclosure [Abstract] | |
2018 | $ 0 |
2019 | 3,814 |
2020 | 4,059 |
2021 | 2,127 |
Total long-term debt | $ 10,000 |
Stockholders' Equity - Common Stock Reserved for Future Issuance (Details) - shares |
Sep. 30, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
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Equity [Abstract] | |||
Convertible preferred stock outstanding and issuable | 15,813,297 | 13,079,920 | |
Options outstanding under the 2014 Plan | 1,417,979 | 903,857 | 476,451 |
Options remaining under the 2014 Plan for future issuance | 40,019 | 82,463 | |
Common stock reserved for future issuance (shares) | 17,271,295 | 14,066,240 |
Stockholders' Equity - Stock-based Compensation Expense (Details) - USD ($) $ in Thousands |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Share-based compensation expense | $ 101 | $ 174 | $ 359 | $ 370 |
General and administrative | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Share-based compensation expense | 55 | 106 | 211 | 227 |
Research and development | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Share-based compensation expense | 44 | 68 | 141 | 143 |
Sales and marketing | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Share-based compensation expense | $ 2 | $ 0 | $ 7 | $ 0 |
Stockholders' Equity - Stock Option Activity (Details) - $ / shares |
3 Months Ended | 9 Months Ended | 12 Months Ended | ||
---|---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
Dec. 31, 2017 |
|
Number of Options | |||||
Outstanding at beginning of period (shares) | 903,857 | 476,451 | 476,451 | ||
Options granted (shares) | 570,179 | 896,828 | |||
Options exercised (shares) | (5,288) | (282,026) | (54,008) | (446,971) | (446,971) |
Options forfeited (shares) | (22,451) | ||||
Outstanding at end of period (shares) | 1,417,979 | 1,417,979 | 903,857 | ||
Options exercisable (shares) | 1,082,080 | 1,082,080 | 638,305 | ||
Weighted-Average Exercise Price | |||||
Outstanding at beginning of period (USD per share) | $ 1.18 | $ 0.98 | $ 0.98 | ||
Options granted (USD per share) | 1.62 | 1.36 | |||
Options exercised (USD per share) | 1.41 | 1.33 | |||
Options forfeited (USD per share) | 0.97 | ||||
Outstanding at end of period (USD per share) | $ 1.35 | 1.35 | 1.18 | ||
Options exercisable (shares) | $ 1.33 | $ 1.33 | $ 1.18 |
Stockholders' Equity - Stock Subscriptions Receivable (Details) - USD ($) $ in Thousands |
Sep. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Equity [Abstract] | ||
Exercised stock options in exchange for promissory notes (in shares) | 1,685,597 | |
Stock subscriptions receivable | $ 1,824 | $ 1,753 |
Promissory notes interest rate | 4.50% |
Income Taxes - Narrative (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | |||
---|---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
Dec. 31, 2017 |
|
Income Tax Contingency [Line Items] | |||||
Annual effective tax rate (as a percent) | 0.00% | 0.00% | 0.00% | 0.00% | |
Operating loss carryforwards | $ 65.2 | ||||
Prepaid Expenses and Other Current Assets | |||||
Income Tax Contingency [Line Items] | |||||
Tax credit carryforwards | $ 0.5 | $ 0.5 | 0.5 | ||
Research Tax Credit Carryforward | |||||
Income Tax Contingency [Line Items] | |||||
Tax credit carryforwards | $ 1.9 |
Employee Benefit Plan - Narrative (Details) - USD ($) $ in Millions |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2017 |
Sep. 30, 2018 |
Sep. 30, 2017 |
|
Retirement Benefits [Abstract] | ||||
Contributions by employer | $ 0.1 | $ 0.1 | $ 0.2 | $ 0.2 |
Related Party Transactions - Narrative (Details) - USD ($) |
3 Months Ended | 9 Months Ended | ||
---|---|---|---|---|
Sep. 30, 2018 |
Sep. 30, 2018 |
Sep. 30, 2017 |
Dec. 31, 2017 |
|
Related Party Transaction [Line Items] | ||||
Aggregate principal amount owed by certain members of management | $ 1,800,000 | $ 1,800,000 | ||
Scientific Advisory | ||||
Related Party Transaction [Line Items] | ||||
Expenses from transactions with related parties | 100,000 | $ 100,000 | ||
Engineering and Design Services | ||||
Related Party Transaction [Line Items] | ||||
Expenses from transactions with related parties | 100,000 | 300,000 | $ 200,000 | |
Accounts payable to related parties | $ 0 | $ 0 | $ 0 |
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