10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2024

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ____________ to______________

Commission file number: 001-36046

Axogen, Inc.

(Exact Name of Registrant as Specified in Its Charter)

Minnesota

(State or other jurisdiction of

incorporation or organization)

13631 Progress Blvd., Suite 400 Alachua, FL

(Address of principal executive offices)

41-1301878

(I.R.S. Employer

Identification No.)

32615

(Zip Code)

386-462-6800

(Registrant’s Telephone Number, Including Area Code)

Not Applicable

(Former Name, Former Address and Former Fiscal Year, if Changed Since Last Report)

Securities registered pursuant to Section 12(b) of the Act:
Title of each class	Trading Symbol	Name of each exchange on which registered
Common Stock, $0.01 par value	AXGN	The Nasdaq Stock Market

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒   No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒  No  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☒
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐  No ☒

As of April 29, 2024, the registrant had 43,704,574 shares of common stock outstanding.

Table of Contents

Part I - Financial Information
Item 1.	Financial Statements	3
	Condensed Consolidated Balance Sheets as of March 31, 2024 and December 31, 2023 (Unaudited)	3
	Condensed Consolidated Statements of Operations for the three months ended March 31, 2024 and 2023 (Unaudited)	4
	Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2024 and 2023 (Unaudited)	5
	Condensed Consolidated Statements of Changes in Shareholders' Equity for the three months ended March 31, 2024 and 2023 (Unaudited)	6
	Notes to Unaudited Condensed Consolidated Financial Statements	7
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	19
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	24
Item 4.	Controls and Procedures	25
Part II - Other Information
Item 1.	Legal Proceedings	26
Item 1A.	Risk Factors	26
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	26
Item 3.	Defaults Upon Senior Securities	26
Item 4.	Mine Safety Disclosures	26
Item 5.	Other Information	26
Item 6.	Exhibits	27
	Signatures	28

1

Forward-Looking Statements

From time to time, in reports filed with the U.S. Securities and Exchange Commission (the “SEC”) (including this Quarterly Report on Form 10-Q), in press releases, and in other communications to shareholders or the investment community, Axogen, Inc. (including Axogen, Inc.’s wholly owned subsidiaries, Axogen Corporation, Axogen Processing Corporation, Axogen Germany GmbH, and Axogen Europe GmbH, the “Company,” “Axogen,” “we,” “our,” or “us”) may provide forward-looking statements, as defined in the Private Securities Litigation Reform Act of 1995, concerning possible or anticipated future results of operations or business developments. These statements are based on management's current expectations or predictions of future conditions, events, or results based on various assumptions and management's estimates of trends and economic factors in the markets in which the Company is active, as well as its business plans. Words such as “expects,” “anticipates,” “intends,” “plans,” “believes,” “seeks,” “estimates,” “projects,” “forecasts,” “continue,” “may,” “should,” “will,” “goals,” and variations of such words and similar expressions are intended to identify such forward-looking statements.

The forward-looking statements in this Form 10-Q include, but are not limited to the following:

•Our expectations regarding the timing of manufacturing of Avive+ Soft Tissue Matrix ™, our ability to market Avive+ and growth in the nerve protection category following the launch of Avive+ , and our expectations that Avive+ will, and will continue to, be regulated solely under Section 361 of the Public Health Service Act;

•Our expectation that we will fully launch Avive + in June 2024;

•Our expectation that the rolling BLA submission for Avance Nerve Graft will be completed in the third quarter of 2024;

•Our expectation that the BLA for Avance Nerve Graft will be approved in mid-2025; and

•Our belief that our existing cash and cash equivalents and investments, as well as cash provided by sales of our products will allow us to fund our operations through at least the next 12 months.

The forward-looking statements are and will be subject to risks and uncertainties, which may cause actual results to differ materially from those expressed or implied in such forward-looking statements. Forward-looking statements contained in this Quarterly Report on Form 10-Q should be evaluated together with the many risks and uncertainties that affect the Company’s business and its market, particularly those discussed in the risk factors and cautionary statements set forth in the Company’s filings with the SEC, including as described in “Risk Factors” included in Item 1A and "Risk Factor Summary" included in the Company's Annual Report on Form 10-K for the year ended December 31, 2023. Forward-looking statements are not guarantees of future performance, and actual results may differ materially from those projected. The forward-looking statements are representative only as of the date they are made and, except as required by applicable law, the Company assumes no responsibility to publicly update or revise any forward-looking statements, whether as a result of new information, future events, changed circumstances or otherwise.

2

PART 1 — FINANCIAL INFORMATION

ITEM 1 — FINANCIAL STATEMENTS

Axogen, Inc.

Condensed Consolidated Balance Sheets

(unaudited)

(In thousands, except share and per share amounts)

	March 31, 2024		December 31, 2023
Assets
Current assets:
Cash and cash equivalents	$	15,713	$	31,024
Restricted cash	6,000		6,002
Investments	1,921		—
Accounts receivable, net of allowance for doubtful accounts of $603 and $337, respectively	24,212		25,147
Inventory	27,636		23,020
Prepaid expenses and other	3,181		2,811
Total current assets	78,663		88,004
Property and equipment, net	87,838		88,730
Operating lease right-of-use assets	15,247		15,562
Intangible assets, net	4,768		4,531
Total assets	$	186,516	$	196,827
Liabilities and shareholders’ equity
Current liabilities:
Accounts payable and accrued expenses	$	21,288	$	28,883
Current maturities of long-term lease obligations	1,644		1,547
Total current liabilities	22,932		30,430
Long-term debt, net of debt discount and financing fees	46,825		46,603
Long-term lease obligations	20,681		21,142
Debt derivative liabilities	2,922		2,987
Total liabilities	93,360		101,162
Commitments and contingencies - see Note 12
Shareholders’ equity:
Common stock, $0.01 par value per share; 100,000,000 shares authorized; 43,687,729 and 43,124,496 shares issued and outstanding	437		431
Additional paid-in capital	380,650		376,530
Accumulated deficit	(287,931)		(281,296)
Total shareholders’ equity	93,156		95,665
Total liabilities and shareholders’ equity	$	186,516	$	196,827

                See notes to condensed consolidated financial statements.

Axogen, Inc.

Condensed Consolidated Statements of Operations

(unaudited)

(In thousands, except share and per share amounts)

	Three Months Ended
	March 31, 2024		March 31, 2023
Revenues	$	41,378	$	36,664
Cost of goods sold	8,758		8,172
Gross profit	32,620		28,492
Costs and expenses:
Sales and marketing	19,815		19,446
Research and development	7,409		6,326
General and administrative	9,956		10,061
Total costs and expenses	37,180		35,833
Loss from operations	(4,560)		(7,341)
Other income (expense):
Investment income	293		549
Interest expense	(2,326)		(16)
Change in fair value of derivatives	65		(185)
Other expense	(107)		(81)
Total other (expense) income, net	(2,075)		267
Net loss	$	(6,635)	$	(7,074)
Weighted average common shares outstanding — basic and diluted	43,233,149		42,571,021
Loss per common share — basic and diluted	$	(0.15)	$	(0.17)

                See notes to condensed consolidated financial statements.

Axogen, Inc.

Condensed Consolidated Statements of Cash Flows

(unaudited)

(In thousands)

	Three Months Ended
	March 31, 2024		March 31, 2023
Cash flows from operating activities:
Net loss	$	(6,635)	$	(7,074)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation	1,520		709
Amortization of right-of-use assets	315		464
Amortization of intangible assets	62		71
Amortization of debt discount and deferred financing fees	222		219
Provision for (recovery of) bad debt	255		(267)
Provision for inventory write-down	367		581
Change in fair value of derivatives	(65)		185
Investment (gains) loss	(10)		(426)
Share-based compensation	3,919		2,954
Change in operating assets and liabilities:
Accounts receivable	681		175
Inventory	(4,983)		(1,525)
Prepaid expenses and other	(262)		(509)
Accounts payable and accrued expenses	(7,291)		(2,442)
Operating lease obligations	(360)		(537)
Cash paid for interest portion of finance leases	(1)		(1)
Net cash used in operating activities	(12,266)		(7,423)
Cash flows from investing activities:
Purchase of property and equipment	(924)		(4,304)
Purchase of investments	(1,910)		(10,203)
Proceeds from sale of investments	—		13,974
Cash payments for intangible assets	(417)		(253)
Net cash used in investing activities	(3,251)		(786)
Cash flows from financing activities:
Cash paid for debt portion of finance leases	(3)		(1)
Proceeds from exercise of stock options and ESPP stock purchases	207		634
Net cash provided by financing activities	204		633
Net decrease in cash, cash equivalents, and restricted cash	(15,313)		(7,576)
Cash, cash equivalents, and restricted cash, beginning of period	37,026		21,535
Cash, cash equivalents, and restricted cash, end of period	$	21,713	$	13,959
Supplemental disclosures of cash flow activity:
Cash paid for interest, net of capitalized interest	$	1,656	$	—
Supplemental disclosure of non-cash investing and financing activities:
Acquisition of fixed assets in accounts payable and accrued expenses	$	516	$	1,026
Acquisition of intangible assets in accounts payable and accrued expenses	$	290	$	326

See notes to condensed consolidated financial statements.

Axogen, Inc.

Condensed Consolidated Statements of Changes in Shareholders’ Equity

(unaudited)

(In thousands, except share amounts)

	Common Stock			Additional Paid-in Capital		Accumulated Deficit		Total Shareholders' Equity
	Shares	Amount
Three Months Ended March 31, 2024
Balance at December 31, 2023	43,124,496	$	431	$	376,530	$	(281,296)	$	95,665
Net loss	—	—		—		(6,635)		(6,635)
Stock-based compensation	—	—		3,919		—		3,919
Issuance of restricted and performance stock units	539,233	5		(5)		—		—
Exercise of stock options and employee stock purchase plan	24,000	1		206		—		207
Balance at March 31, 2024	43,687,729	$	437	$	380,650	$	(287,931)	$	93,156
Three Months Ended March 31, 2023
Balance at December 31, 2022	42,445,517	$	424	$	360,155	$	(259,580)	$	100,999
Net loss	—	—		—		(7,074)		(7,074)
Stock-based compensation	—	—		2,954		—		2,954
Issuance of restricted and performance stock units	238,719	3		(3)		—		—
Exercise of stock options and employee stock purchase plan	125,758	1		633		—		634
Balance at March 31, 2023	42,809,994	$	428	$	363,739	$	(266,654)	$	97,513

See notes to condensed consolidated financial statements.

Axogen, Inc.

Notes to Condensed Consolidated Financial Statements

(unaudited)

(In thousands, except share and per share amounts)

1.Nature of Business

Axogen, Inc. (together with its wholly-owned subsidiaries, the “Company”) was incorporated in Minnesota. Our business is focused on the science, development and commercialization of the technologies used for peripheral nerve regeneration and repair. The Company's products include Avance® Nerve Graft, Axoguard Nerve Connector®, Axoguard Nerve Protector®, Axoguard HA+ Nerve Protector™, Axoguard Nerve Cap® and Axotouch® Two-Point Discriminator. The Company is headquartered in Florida. The Company has processing, warehousing, and distribution facilities in Texas and Ohio.

The Company manages its operations as a single operating segment. Substantially all of the Company's assets are maintained in the United States. The Company derives substantially all of its revenues from sales to customers in the United States.

2.Summary of Significant Accounting Policies

Please see Note 2 to the Company’s consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023, filed with the Securities and Exchange Commission ("SEC") on March 5, 2024, for a description of all significant accounting policies.

Reclassifications

Certain reclassifications have been made to the prior period financial information to conform to the presentation used in the condensed consolidated statement of operations for the three months ended March 31, 2024.

Effective as of the first quarter of 2024, the Company voluntarily changed its accounting policy for shipping and handling costs. Under the new accounting policy, these costs are included in Costs of goods sold, whereas they were previously included in Sales and marketing expenses. Including these expenses in Costs of goods sold better aligns these costs with the related revenue in the gross profit calculation. Although the prior method of accounting continues to be an accepted alternative, the new accounting policy is more widely used in the industry and provides improved comparability of the Company's financial statements to its peers. This change in accounting policy has been applied retrospectively. The consolidated statement of operations for the three months ended March 31, 2023, has been reclassified to reflect this change in accounting policy. The impact of this reclassification was an increase of $1,465 to cost of goods sold for the three months ended March 31, 2023, and a corresponding decrease to Sales and marketing expenses in the same period.

Effective as of the first quarter of 2024, the Company also ceased allocating certain costs to and from certain departments. Previously such costs had been allocated based on the Company’s estimate of the proportionate share of total expense to Cost of goods sold, Sales and marketing, Research and development, and General and administrative. The Company determined that these changes would better reflect industry practice and would provide more meaningful information as well as increased transparency of its operations. To conform the 2023 presentation to the current quarter’s presentation, $1,062 was reclassified to General and administrative, of which $353 was previously included in Research and development, $707 was previously included in Sales and marketing, and $2 was previously included in Cost of goods sold for the three months ended March 31, 2023, in the condensed consolidated statement of operations.

These reclassifications had no impact on net revenue, loss from operations, net loss, or loss per common share for prior periods and do not represent a restatement of the Company's previously issued consolidated financial statements.

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements include the accounts of the Company as of March 31, 2024, and December 31, 2023, and for the three months ended March 31, 2024, and 2023. The Company’s condensed consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X, and; therefore, do not include all information and footnotes necessary for a fair presentation of consolidated financial position, results of operations, and cash flows in conformity with accounting principles generally accepted in the United States ("U.S. GAAP") and should be read in conjunction with the audited financial statements of the Company for the year ended December 31, 2023, which are included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023.

The interim condensed consolidated financial statements are unaudited, and in the opinion of management, reflect all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of results for the periods presented. The results of operations for the three months ended March 31, 2024, are not necessarily indicative of the results to be expected for the full year due primarily to the impact of the continued uncertainty of general economic conditions that may impact the Company's markets for the remainder of fiscal year 2024. All intercompany accounts and transactions have been eliminated in consolidation.

Cash and Cash Equivalents and Concentration

Cash and cash equivalents consist of short-term, highly liquid investments with original maturities of three months or less from the date of acquisition. Certain of the Company's cash and cash equivalents balances exceed Federal Deposit Insurance Corporation ("FDIC") insured limits or are invested in money market accounts with investment banks that are not FDIC-insured. The Company places its cash and cash equivalents in what they believe to be credit-worthy financial institutions. As of March 31, 2024, $14,963 of the cash and cash equivalents balance was in excess of FDIC limits.

Restricted Cash

Amounts included in restricted cash represent those required to be set aside to meet contractual terms of a lease agreement held by the Company. See Note 8 - Long-Term Debt, Net of Debt Discount and Financing Fees, Other Credit Facilities.

The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported in the condensed consolidated balance sheets that sum to the total of the same amounts shown in the condensed consolidated statements of cash flows:

(In thousands)	March 31, 2024		December 31, 2023
Cash and cash equivalents	$	15,713	$	31,024
Restricted cash	6,000		6,002
Total cash, cash equivalents, and restricted cash shown in the statement of cash flows	$	21,713	$	37,026

Shipping and Handling

All shipping and handling costs, including facility and warehousing overhead, directly related to bringing the Company’s products to their final selling destination are included in cost of goods sold on the consolidated statements of operations. The Company has elected to account for shipping and handling costs for products shipped to customers as a fulfillment activity as the costs are incurred as part of the transfer of the goods to the customer in accordance with ASC 606. See Reclassifications above.

Recent Accounting Pronouncements

All other Accounting Standards Updates ("ASU's") issued and not yet effective as of December 31, 2023, and through the date of this report, were assessed and determined to be either not applicable or are expected to have minimal impact on the Company’s current or future financial position or results of operations except for the following:

In December 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standard Update 2023-09 — Income Taxes (Topic 740) — Improvements to Income Tax Disclosures ("ASU 2023-09"). The new guidance provides for disclosure on an annual basis of the following: (i) specific categories in the rate reconciliation, and (ii) additional information for reconciling items that meet a quantitative threshold of greater than 5% of the amount computed by multiplying pretax income (or loss) by the applicable statutory income tax rate. The amendment in ASU 2023-09 is effective for the annual periods beginning after December 15, 2025, early adoption is permitted. The Company expects to enhance annual income tax reporting disclosures based on the new requirements.

In November 2023, the FASB issued Accounting Standard Update 2023-07 — Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures ("ASU 2023-07"). The new guidance requires disclosure on an annual and interim basis of the following: (i) significant segment expenses regularly provided to the chief operating decision maker ("CODM") and a measure of segment profit or loss; (ii) an amount for other segment items by reportable segment and a description of its composition; (iii) all annual disclosures about a reportable segment's profit and loss and assets as currently required by Topic 280; (iv) clarify if the CODM uses more than one measure of a segment's profit or loss in assessing segment performance and deciding how to allocate resources; and (v) disclose title and position of the CODM and how the CODM uses

the reported measures. Public entities with a single reportable segment are required to provide all the disclosures required by this amendment. The amendment in ASU 2023-07 is effective for the annual periods beginning after December 15, 2023, and for the quarters in the years after December 15, 2024, early adoption is permitted. The Company expects to enhance annual segment reporting disclosures based on the new requirements.

3.     Inventory

Inventory consists of the following:

(in thousands)	March 31, 2024		December 31, 2023
Finished goods	$	19,901	$	13,545
Work in process	1,041		2,120
Raw materials	6,694		7,355
Inventory	$	27,636	$	23,020

The provision for inventory write-down is as follows:

	Three Months Ended March 31,
(in thousands)	2024		2023
Provision for inventory write-down	$	367	$	581

4.     Property and Equipment, Net

Property and equipment, net consist of the following:

(in thousands)	March 31, 2024		December 31, 2023
Land	$	731	$	731
Building	60,679		60,679
Leasehold improvements	17,896		15,348
Processing equipment	13,445		13,116
Furniture and equipment	9,821		8,741
Projects in process	317		3,674
Finance lease right-of-use assets	138		138
Property and equipment, at cost	103,028		102,427
Less: accumulated depreciation and amortization	(15,190)		(13,697)
Property and equipment, net	$	87,838	$	88,730

Depreciation expense is as follows:

	Three Months Ended March 31,
(in thousands)	2024		2023
Depreciation expense	$	1,520	$	709

5.     Intangible Assets, Net

Intangible assets consist of the following:

	March 31, 2024						December 31, 2023
(in thousands)	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Amortizable intangible assets:
Patents	$	5,204	$	(881)	$	4,323	$	4,905	$	(820)	$	4,085
License agreements	1,101		(1,089)		12		1,101		(1,087)		14
Total amortizable intangible assets	6,305		(1,969)		4,335		6,006		(1,907)		4,099
Unamortized intangible assets:
Trademarks	433		—		433		432		—		432
Total intangible assets	$	6,737	$	(1,969)	$	4,768	$	6,438	$	(1,907)	$	4,531

Amortization expense is as follows:

	Three Months Ended March 31,
(in thousands)	2024		2023
Amortization expense	$	62	$	71

As of March 31, 2024, future amortization of patents and license agreements is as follows:

Year Ending December 31,	(in thousands)
2024 (excluding the three months ended March 31, 2024)	$	189
2025	252
2026	250
2027	247
2028	247
Thereafter	3,150
Total	$	4,335

License Agreements

The Company had various license agreements that require the payment of royalty fees.

Royalty fee expense included in sales and marketing expense is as follows:

	Three Months Ended March 31,
(in thousands)	2024		2023
Royalty fee expense (1)	$	—	$	831

(1) Royalty fees are no longer being paid due to the expiration of the patents in 2023.

6.     Fair Value Measurement

The following tables present the Company's fair value hierarchy for its financial assets and liabilities measured at fair value on a recurring basis as of March 31, 2024, and December 31, 2023:

	March 31, 2024
(in thousands)	(Level 1)		(Level 2)		(Level 3)		Total
Assets:
Money market funds	$	8,835	$	—	$	—	$	8,835
U.S. government securities	1,921		—		—		1,921
Total assets	$	10,756	$	—	$	—	$	10,756
Liabilities:
Debt derivative liabilities	$	—	$	—	$	2,922	$	2,922
Total liabilities	$	—	$	—	$	2,922	$	2,922

	December 31, 2023
(in thousands)	(Level 1)		(Level 2)		(Level 3)		Total
Assets:
Money market funds	$	24,977	$	—	$	—	$	24,977
Total assets	$	24,977	$	—	$	—	$	24,977
Liabilities:
Debt derivative liabilities	$	—	$	—	$	2,987	$	2,987
Total liabilities	$	—	$	—	$	2,987	$	2,987

The changes in Level 3 liabilities measured at fair value on a recurring basis for the three months ended March 31, 2024 were as follows (in thousands):

Three Months Ended March 31, 2024
Balance, December 31, 2023	$	2,987
Change in fair value included in net loss	(65)
Balance, March 31, 2024	$	2,922

The fair value of cash, restricted cash, accounts receivable, accounts payable and accrued expenses approximates the carrying values because of the short-term nature of these instruments. The carrying value and fair value of the Credit Facility were $46,825 and $52,049 at March 31, 2024, and $46,603 and $51,486 at December 31, 2023, respectively. See Note 8 - Long-Term Debt, Net of Debt Discount and Financing Fees.

The debt derivative liabilities are measured using a ‘with and without’ valuation model to compare the fair value of each tranche of the Credit Facility including the identified embedded derivative features and the fair value of a plain vanilla note with the same terms. The fair value of the Credit Facility including the identified embedded derivative features was determined using a probability-weighted expected return model based on four potential settlement scenarios, one of which ended December 31, 2023, for the financing agreement as disclosed in the table below. The estimated settlement value of each scenario, which would include any required make-whole payment, (see Note 8 - Long-Term Debt, Net of Debt Discount and Financing Fees), is then discounted to present value using a discount rate that is derived based on the initial terms of the financing agreement at issuance and corroborated utilizing a synthetic credit rating analysis.

The significant inputs that are included in the valuation of the debt derivative liability - first tranche include:

	March 31, 2024			December 31, 2023
Input
Remaining term (years)	3.25 years			3.5 years
Maturity date	June 30, 2027			June 30, 2027
Coupon rate	9.5% - 13.16%			9.5% - 13.2%
Revenue participation payments	Maximum each year			Maximum each year
Discount rate	12.24%		(1)	12.06%		(1)
Probability of mandatory prepayment 2024 or after	15.0	%	(1)	15.0	%	(1)
Estimated timing of mandatory prepayment event 2024 or after	March 31, 2026		(1)	March 31, 2026		(1)
Probability of optional prepayment event	5.0	%	(1)	5.0	%	(1)
Estimated timing of optional prepayment event	December 31, 2025		(1)	December 31, 2025		(1)
Probability of note held-to-maturity(2)	80.0%		(1)	80.0%		(1)

(1)Represents a significant unobservable input

(2) See Maturity date in table.

The significant inputs that are included in the valuation of the debt derivative liability - second tranche include:

	March 31, 2024			December 31, 2023
Input
Remaining term (years)	4.25 years			4.5 years
Maturity date	June 30, 2028			June 30, 2028
Coupon rate	9.5% - 13.16%			9.5% - 13.2%
Revenue participation payments	Maximum each year			Maximum each year
Discount rate	15.49	%	(1)	15.60	%	(1)
Probability of mandatory prepayment 2024 or after	15.0%		(1)	15.0%		(1)
Estimated timing of mandatory prepayment event 2024 or after	March 31, 2026		(1)	March 31, 2026		(1)
Probability of optional prepayment event	5.0%		(1)	5.0%		(1)
Estimated timing of optional prepayment event	December 31, 2025		(1)	December 31, 2025		(1)
Probability of held-to-maturity(2)	80.0%			80.0%

(1)Represents a significant unobservable input

(2)See Maturity date in table.

7.    Leases

The Company leases administrative, processing, research and distribution facilities through operating leases. Several of the leases include fixed payments, including rent and non-lease components such as common area or other maintenance costs.

Operating lease expense is as follows:

	Three Months Ended March 31,
(in thousands)	2024		2023
Operating lease expense	$	1,206	$	1,298

Supplemental balance sheet information related to the operating and financing leases is as follows:

(In thousands, except lease term and discount rate)	March 31, 2024		December 31, 2023
Operating Leases
Right-of-use operating assets	$	15,247	$	15,562
Current maturities of long-term lease obligations	$	1,639	$	1,541
Long-term lease obligations	$	20,663	$	21,123
Financing Leases
Right-of-use financing leases (1)	$	24	$	28
Current maturities of long-term lease obligations	$	5	$	6
Long-term lease obligations	$	18	$	19
Weighted average operating lease term (in years):	9.4		9.6
Weighted average financing lease term (in years):	3.8		6.5
Weighted average discount rate operating leases	10.98%		10.99%
Weighted average discount rate financing leases	13.99%		13.22%

(1) Financing leases are included in property and equipment, net on the condensed consolidated balance sheets.

Future minimum lease payments under operating and financing leases at March 31, 2024, are as follows:

(In thousands)
2024 (excluding three months ended March 31, 2024)	$	2,951
2025	4,134
2026	4,269
2027	3,106
2028	3,104
Thereafter	18,565
Total	36,129
Less: Imputed interest	(13,804)
Total lease liability	22,325
Less: Current lease liability	(1,644)
Long-term lease liability	$	20,681

8.     Long-Term Debt, Net of Debt Discount and Financing Fees

Long-term debt, net of debt discount and financing fees consists of the following:

(in thousands)	March 31, 2024		December 31, 2023
Credit Facility - first tranche	$	35,000	$	35,000
Credit Facility - second tranche	15,000		15,000
Less - unamortized debt discount and deferred financing fees	(3,175)		(3,397)
Long-term debt, net of debt discount and financing fees	$	46,825	$	46,603

Credit Facility

On June 29, 2023, the Company amended its Credit Facility with Oberland Capital and its affiliates TPC Investments II LP and Argo LLC (collectively, the "Lender"). The term loan agreement for the Credit Facility was amended to transition the base interest rate from three month LIBOR to Adjusted SOFR. The Company obtained the first tranche of $35,000 at closing on June 30, 2020. On June 30, 2021, the second tranche of $15,000 was drawn down by the Company.

Each tranche under the Credit Facility requires quarterly interest payments for seven years. Interest is calculated as 7.5% plus the greater of Adjusted SOFR or 2.0% (12.93% at March 31, 2024), provided that the interest rate shall never be less than 9.5%. Each tranche of the Credit Facility has a term of seven years from the date of issuance (with the first tranche issued on June 30, 2020, maturing on June 30, 2027, and the second tranche issued on June 30, 2021, maturing on June 30, 2028). In connection with the Credit Facility, the Company entered into a revenue participation agreement (the “Revenue Participation Agreement”) with the Lender, which provided that, among other things, a quarterly royalty payment as a percentage of the Company’s net revenues, up to $70 million in any given year, after April 1, 2021, ending on the date upon which all amounts owed under the Credit Facility have been paid in full. This structure results in approximately 1.5% per year of additional interest payments on the outstanding loan amount. The Company recorded $447 and $396 as interest expense for this Revenue Participation Agreement for the three months ended March 31, 2024, and 2023, respectively. The Company pays the quarterly debt interest on the last day of the quarter and for the three months ended March 31, 2024, and 2023, paid $1,634 and $1,532, respectively, to the Lender. The Company capitalized interest of $0 and $2,147 for the three months ended March 31, 2024, and 2023, respectively, towards the costs to construct and retrofit the Axogen Processing Center ("APC Facility") in Vandalia, Ohio which was completed during 2023. As of March 31, 2024, the Company was in compliance with all financial covenants.

Embedded Derivatives

The fair values of the debt derivative liabilities were $2,922 and $2,987 at March 31, 2024, and December 31, 2023, respectively. See Note 6 - Fair Value Measurement.

Unamortized Debt Discount and Financing Fees

The unamortized debt discount consists of the remaining initial fair values of the embedded derivatives related to the Credit Facility.

The financing fees for the Credit Facility were $642 and were recorded as a contra liability to long-term debt on the consolidated balance sheet.

Amortization of debt discount and deferred financing fees for the three months ended March 31, 2024, and 2023 was $222 and $219, respectively.

Other Credit Facilities

The Company had restricted cash of $6,000 and $6,002 at March 31, 2024, and December 31, 2023, respectively for an irrevocable standby letter of credit.

9.     Stock-Based Compensation

The Company's stock-based compensation plans are described in Note 11. Stock-Based Compensation to the Company’s consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023.

During the fiscal year 2024, the following stock compensation was awarded to officers and employees. All awards were granted under the 2019 Amended and Restated Long-Term Incentive Plan ("2019 Plan"), with the exception of the inducement shares awarded as inducements material to new employees entering into employment with the Company in accordance with Nasdaq Listing Rule 5635(c)(4).

Type of Award	Quarter Awarded	Target Shares or Units	Weighted Average Grant Date Fair Value
Stock Options (1)	1st Quarter	—	$	—
Restricted Stock Units (2)	1st Quarter	787,688	$	9.05
Performance Stock Units (3)(4)	1st Quarter	911,400	$	8.92
Inducement Shares (5)
Stock Options	1st Quarter	18,700	$	6.04
Restricted Stock Units	1st Quarter	310,000	$	7.00

(1)      Options awarded to officers and employees during the first quarter vest over a four-year period.

(2)     Restricted Stock Units (RSUs) awarded to certain officers and employees during the first quarter vest over a four-year period. Upon vesting, the outstanding number of RSUs vested are converted into common stock.

(3)    Performance Stock Units (PSUs) awarded to certain officers and employees related to their work on the BLA ("2024 BLA PSUs") totaled 487,400 shares during the first quarter of 2024. Participants with 2024 BLA PSUs will earn from 0% to 100% upon achievement of certain milestones related to the BLA submission and FDA approval. The number of shares available for grant is linked to certain milestones related to the BLA submission to and approval by the FDA. These awards will vest provided the participants remain in continuous service to the Company through the achievement of the applicable performance goal and the one-year anniversary of the grant date.

(4)    PSUs awarded to certain officers and employees with a target of 424,400 shares with performance metrics tied to the achievement of stock price goals between February 2024 through February 2027 ("TSR PSU") during the first quarter of 2024. Participants with TSR PSUs will earn from 0% to 200% upon achievement of specific stock price goals. Absent the shareholder approval of an increase to the number of authorized shares under the Amended and Restated 2019 Plan at the 2024 Shareholder Meeting, the settlement of the TSR PSUs awards are limited to 100%. The maximum number of shares that can be issued under this award is 848,800. Vesting occurs at the end of the three-year performance period upon Compensation Committee certification of the results at the end of the performance period.

(5)     Inducement shares were issued to officers during the first quarter of 2024, to new employees entering into employment with the Company in accordance with Nasdaq Listing Rule 5635(c)(4). Vesting for both the stock options and restricted stock units are over both a three-and four-year period.

Total stock-based compensation expense is as follows:

	Three Months Ended March 31,
(in thousands)	2024		2023
Stock-based compensation expense	$	3,919	$	2,954

10.     Net Loss Per Common Share

The following reflects the net loss attributable to common shareholders and share data used in the basic and diluted earnings per share computations using the two-class method:

	Three Months Ended March 31,
(In thousands, except per share amounts)		2024		2023
Numerator:
Net loss		$	(6,635)	$	(7,074)
Denominator:
Weighted-average common shares outstanding (Basic)		43,233,149		42,571,021
Weighted-average common shares outstanding (Diluted)		43,233,149		42,571,021
Net loss per common share (Basic and Diluted)		$	(0.15)	$	(0.17)
Anti-dilutive shares excluded from the calculation of diluted earnings per share (1)
Stock options		3,086,555		3,305,342
Restricted stock units		323,346		436,653

(1) These common equivalent shares are not included in the diluted per share calculations as they would be anti-dilutive if the Company was in a net income position.

11.     Income Taxes

The Company has no recorded income tax expense or income tax benefit for the three months ended March 31, 2024, and 2023 due to the generation of net operating losses, the benefits of which have been fully reserved.

The Company has not recorded current income tax expense due to the generation of net operating losses. Deferred income taxes are accounted for using the balance sheet approach, which requires recognition of deferred tax assets and liabilities for the expected future consequences of temporary differences between the financial reporting basis and the tax basis of assets and liabilities. A valuation allowance is provided when it is more likely than not that a deferred tax asset will not be realized. A full valuation allowance has been established on the deferred tax asset as it is more likely than not that a future tax benefit will not be realized. In addition, future utilization of the available net operating loss carryforward may be limited under Internal Revenue Code Section 382 as a result of changes in ownership.

The Company identifies and evaluates uncertain tax positions, if any, and recognizes the impact of uncertain tax positions for which there is a less than more likely than not probability of the position being upheld when reviewed by the relevant tax authority. Such positions are deemed to be unrecognized tax benefits and a corresponding liability is established on the condensed consolidated balance sheet. The Company has not recognized a liability for uncertain tax positions. If there were an unrecognized tax benefit, the Company would recognize interest accrued related to unrecognized tax benefits in interest expense and penalties in operating expenses. The Company’s remaining open tax years subject to examination by federal tax authorities include the years ended December 31, 2019, through 2023 , and we have received notice of examination from federal tax authorities for tax year 2021. For tax years 2005 through 2018, federal taxing authorities may examine and adjust loss carryforwards in the years in which those loss carryforwards are ultimately utilized.

12.     Commitments and Contingencies

Service Agreements

The Company pays Community Blood Center, (d/b/a Community Tissue Service) ("CTS") a facility fee for the use of clean rooms/manufacturing, storage, and office space and for services in support of its tissue processing including for routine sterilization of daily supplies, providing disposable supplies and microbial services, and office support. Pursuant to the CTS Agreement, the Company recorded expenses of $108 and $541 for the three months ended March 31, 2024 and 2023, respectively, and is included in cost of goods sold. The CTS Agreement was amended on December 31, 2023, extending the term through December 31, 2026. The CTS Agreement may be terminated by either party by providing an eighteen-month written notice. The Company reduced its utilization of CTS in 2023 for Avance, however, is continuing its use of CTS for Avive +.

In December 2011, the Company entered into a Master Services Agreement for Clinical Research and Related Services. The Company was required to pay $151 upon execution of this agreement and the remainder monthly based on activities associated with the execution of the Company's phase 3 pivotal clinical trial to support the biologics license application ("BLA") for Avance Nerve Graft. Payments made under this agreement were $0 and $112 for the three months ended March 31, 2024, and 2023, respectively.

Distribution and Supply Agreements

In August 2008, the Company entered into an exclusive distribution agreement with Cook Biotech Incorporated ("Cook Biotech") to distribute the Axoguard Nerve Connector and Axoguard Nerve Protector products worldwide and the parties subsequently amended the agreement on August 4, 2023. The distribution agreement expires on December 31, 2030. The Cook Biotech agreement establishes a formula for the transfer cost of the Axoguard products and requires certain minimum purchases by the Company, although, through mutual agreement, the parties have not established such minimums; and, to date, have not enforced such provision. Under the Cook Biotech agreement, the Company provides purchase orders to Cook Biotech, and Cook Biotech fulfills the purchase orders. The agreement allows for termination provisions for both parties. The loss of the ability to sell the Axoguard products could have a material adverse effect on the Company's business until other replacement products would be available.

In June 2017, the Company entered into the Nerve End Cap Supply Agreement (the "Supply Agreement") with Cook Biotech whereby Cook Biotech is the exclusive contract manufacturer of the Axoguard Nerve Cap, and the parties subsequently amended the agreement on August 4, 2023. The Supply Agreement expires on December 31, 2030. The Supply Agreement establishes the terms and conditions in which Cook Biotech will manufacture the product for the Company under the Supply Agreement the Company provides purchase orders to Cook Biotech and Cook Biotech fulfills the purchase orders. The Supply Agreement allows for termination provisions for both parties. The loss of the ability to sell the Axoguard Nerve Cap products could have a material adverse effect on the Company's business until other replacement products would be available.

In May 2023, the Company entered into a Supply and Manufacturing Agreement ("HA+ Supply Agreement") with Cook Biotech whereby Cook Biotech is the exclusive contract manufacturer of the Axoguard HA + Nerve Protector. The HA+ Supply Agreement expires on July 1, 2030. The HA + Supply Agreement establishes the terms and condition in which Cook Biotech will manufacture, package, label and deliver the product to the Company. Under the HA+ Supply Agreement, the Company provides purchase orders to Cook Biotech, and Cook Biotech fulfills the purchase orders. The HA+ Supply Agreement allows for termination provisions for both parties. The loss of the ability to sell the Axoguard products could have a material adverse effect on the Company's business until other replacement products would be available. On January 31, 2024, RTI Surgical, Inc. announced the acquisition of Cook Biotech. We do not expect the acquisition of Cook Biotech to have a material impact on our relationship with Cook Biotech or our operations.

Insurance Finance Agreement

We finance certain of our commercial insurance policies ("Insurance Financing Agreement"). Outstanding payments owed under the Insurance Financing Agreement are recorded as "prepaid expenses and other" in our condensed consolidated balance sheets. The amounts owed under the Insurance Financing Agreement included in prepaid expenses and other were $1,520 and $0 as of March 31, 2024, and December 31, 2023, respectively.

Processing Facilities

The Company is highly dependent on the continued availability of its processing facilities at CTS and APC in Dayton, Ohio and could be harmed if the physical infrastructure of these facilities is unavailable for any prolonged period of time.

Certain Economic Development Grants

The Company obtained certain economic development grants from state and local authorities totaling up to $2,685 including $1,250 of cash grants to offset costs to acquire and develop the APC Facility. The economic development grants are subject to certain job creation milestones through December 31, 2023, and have clawback clauses if the Company does not meet the job creation milestones The Company requested an extension from the grant authorities to extend the job creation milestones and received approval to extend the evaluation date to December 31, 2024, and the expiration date to December 31, 2026. As of March 31, 2024, the Company had received $1,188 from the cash grants.

Fair Value of the Debt Derivative Liabilities

The fair value of the debt derivative liabilities is $2,922 as of March 31, 2024. The fair value of the debt derivative liabilities was determined using a probability-weighted expected return model based upon the four potential settlement scenarios for the Credit Facility. The estimated settlement value of each scenario, which includes any required make-whole payment, is then discounted to present value using a discount rate that is derived based upon the initial terms of the Credit Facility at issuance and corroborated utilizing a synthetic rating analysis. The calculated fair values under the four scenarios are then compared to the fair value of a plain vanilla note, with the difference reflecting the fair value of the debt derivative liabilities. The Company estimated the make-whole payments required under each scenario according to the terms of the Credit

Facility to generate an internal rate of return equal to 11.5% through the scheduled maturity dates, less the total of all quarterly interest and royalty payments previously paid to the Lender. The calculation utilized the XIRR function in Microsoft Excel as required by the Credit Facility. If the debt is not prepaid but instead is held to its scheduled maturities, the Company’s estimate of the make-whole payment for the first tranche and second tranche of the Credit Facility due on June 30, 2027, and June 30, 2028, respectively, are approximately zero. The Company has consistently applied this approach since the inception of the debt agreement on June 30, 2020.

The Company is aware that the Lender may have an alternative interpretation of the calculation of the make-whole payments that the Company believes does not properly utilize the same methodology utilized by the XIRR function in Microsoft Excel as described in the Credit Facility. The Company estimates the top end of the range of the make-whole payments if the debt is held to scheduled maturity under an alternative interpretation to be approximately $8,000 for the first tranche of the Credit Facility due on June 30, 2027, and approximately $4,000 for the second tranche of the Credit Facility due on June 30, 2028. Further, if the debt is prepaid prior to the scheduled maturity dates and subject to the alternative interpretation, the make-whole payment would be larger than the amounts herein.

Legal Proceedings

The Company is and may be subject to various claims, lawsuits, and proceedings in the ordinary course of the Company's business. Such matters are subject to many uncertainties and outcomes are not predictable with assurance. While there can be no assurances as to the ultimate outcome of any legal proceeding or other loss contingency involving the Company, in the opinion of management, such claims are either adequately covered by insurance or otherwise indemnified, or are not expected individually or in the aggregate, to result in a material, adverse effect on the Company's financial condition, results of operations or cash flows. However, it is possible that the Company's results of operations, financial position and cash flows in a particular period could be materially affected by these contingencies.

ITEM 2 – MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of the Company's financial condition and results of operations should be read in conjunction with our condensed consolidated financial statements and the related notes thereto appearing elsewhere in this report and our consolidated financial statements for the year ended December 31, 2023 , included in our Annual Report on Form 10-K. All dollar amounts in the discussion and analysis, unless noted otherwise, are presented in thousands.

Financial information for prior periods has been reclassified to reflect the retrospective application of voluntary changes in the Company’s accounting policy for shipping and handling costs, as discussed under “Note 2 – Summary of Significant Accounting Policies” of the Notes to Consolidated Financial Statements in this Form 10-Q.

Unless the context otherwise requires, all references in this report to “Axogen,” the “Company,” “we,” “us” and “our” refer to Axogen, Inc., and its wholly owned subsidiaries Axogen Corporation (“AC”), Axogen Processing Corporation, Axogen Europe GmbH and Axogen Germany GmbH.

OVERVIEW

We are the leading company focused specifically on the science, development, and commercialization of technologies for peripheral nerve regeneration and repair. We are passionate about providing the opportunity to restore nerve function and quality of life for patients with peripheral nerve injuries. We provide innovative, clinically proven, and economically effective repair solutions for surgeons and healthcare providers. Peripheral nerves provide the pathways for both motor and sensory signals throughout the body. Every day, people suffer traumatic injuries or undergo surgical procedures that impact the function of their peripheral nerves. Physical damage to a peripheral nerve or the inability to properly reconnect peripheral nerves can result in the loss of muscle or organ function, the loss of sensory feeling, or the initiation of pain.

Product Portfolio

•Avance® Nerve Graft, a biologically active off-the-shelf processed human nerve allograft for bridging severed peripheral nerves without the comorbidities associated with a second surgical site.

•Axoguard Nerve Connector®, a porcine (pig) submucosa extracellular matrix ("ECM") coaptation aid for tensionless repair of severed peripheral nerves.

•Axoguard Nerve Protector®, a porcine submucosa ECM product used to wrap and protect damaged peripheral nerves and reinforce the nerve reconstruction while preventing soft tissue attachments.

•Axoguard HA+ Nerve Protector™, is comprised of a processed porcine submucosa ECM base layer with a hyaluronate-alginate gel coating designed to provide short- and long-term protection for peripheral nerve injuries. The gel layer facilitates enhanced nerve gliding to aid in minimizing soft tissue attachments, while the base layer is remodeled into a long-term protective tissue layer.

•Axoguard Nerve Cap®, a porcine submucosa ECM product used to protect a peripheral nerve end and separate the nerve from the surrounding environment to reduce the development of symptomatic or painful neuroma.

•Avive+ Soft Tissue Matrix™, a multi-layer amniotic membrane allograft used to protect and separate tissues in the surgical bed during the critical phase of tissue repair.

•Axotouch® Two-Point Discriminator, used to measure the innervation density of any surface area of the skin.

Our portfolio of products is currently available in the United States ("U.S."), Canada, Germany, United Kingdom, Spain and several other European, Asian and Latin American countries.

Revenue from the distribution of our nerve repair products, Avance® Nerve Graft, Axoguard Nerve Connector®, Axoguard Nerve Protector®, Axoguard HA+ Nerve Protector™, and Axoguard Nerve Cap®, in the United States ("U.S.") is the main contributor to our total reported sales and have been the key component of our growth to date.

In the first quarter, we initiated a limited market release of Avive + Soft Tissue Matrix. We believe Avive + will not require a BLA and will fall under the criteria set forth in 21 CFR 1271.10(a) for regulation solely under Section 361 of the Public Health Service Act and the regulations in 21 CFR Part 1271. We seek to fully launch Avive+ in June 2024. Products regulated solely under Section 361 of the Public Health Service Act are a product category under close scrutiny by the FDA for compliance with the regulatory requirements and potentially subject to regulatory change in the future. Failure to comply with

applicable regulatory requirements could expose us to potential compliance actions by the FDA or state regulators and could risk the commercial availability of the product.

We have observed that surgeons are initially cautious adopters of nerve repair products. Surgeons typically start with a few cases and then wait and review the results of these initial cases. Active accounts are usually past this wait period and have developed some level of product reorder. These active accounts have typically gone through the Value Analysis Committee approval process, have at least one surgeon who has converted a portion of his or her treatment algorithms of peripheral nerve repair to our portfolio and have ordered our products at least six times in the last twelve months. As of March 31, 2024, we had 1012 active accounts, an increase of 1.8% from 994 as of March 31, 2023, and an increase of 0.6% from 1,006 compared to December 31, 2023. Active accounts account for approximately 85% of our revenue. The top 10% of these active accounts continue to represent approximately 40% of our revenue.

Core accounts are defined as accounts that have purchased at least $100,000 in the past twelve months. As of March 31, 2024, we had 400 core accounts, an increase of 14.3% from 350 as of March 31, 2023, and an increase of 6.4% from 376 compared to December 31, 2023. These core accounts represented approximately 65% of our revenue in the quarter.

Summary of Operational and Business Highlights

•Revenues were $41,378 for the quarter ended March 31, 2024, an increase of $4,714 or 12.9% compared to the quarter ended March 31, 2023.

•Gross profit was $32,620 for the quarter ended March 31, 2024, an increase of $4,128 or 14.5% compared to the quarter ended March 31, 2023.

•We had 115 and 116 direct sales representatives as of March 31, 2024, and December 31, 2023.

•In February 2024, we completed a productive pre-BLA meeting with FDA where we gained alignment on the content on the modules for submission. We received approval of our rolling submission proposal and anticipate the BLA filing to be completed in the third quarter of 2024. We believe the submission timeline will allow for a potential approval in the middle of 2025.

•We are pleased with the adoption of Axoguard HA+ Nerve Protector™ across multiple applications. In the first quarter we initiated a limited market release of Avive+ Soft Tissue Matrix and have completed the first implant. We expect to drive continued growth within the nerve protection category following the full launch of Avive+ Soft Tissue Matrix in June of 2024.

•We continue to see strong interest in and adoption of the Resensation® neurotization techniques for autologous and implant-based breast reconstructions driven by expanding surgeon education and patient activation.

Results of Operations

Comparison of the Three Months Ended March 31, 2024, and 2023

The following table sets forth, for the periods indicated, our results of operations expressed as dollar amounts and percentage of total revenue:

	Three Months Ended March 31,
	2024				2023
	Amount		% of Revenue		Amount		% of Revenue
	(dollars in thousands)
Revenues	$	41,378	100.0	%	$	36,664	100.0	%
Cost of goods sold	8,758		21.2		8,172		22.3
Gross profit	32,620		78.8		28,492		77.7
Costs and expenses
Sales and marketing	19,815		47.9		19,446		53.0
Research and development	7,409		17.9		6,326		17.3
General and administrative	9,956		24.1		10,061		27.4
Total costs and expenses	37,180		89.9		35,833		97.7
Loss from operations	(4,560)		(11.0)		(7,341)		(20.0)
Other income (expense):
Investment income	293		0.7		549		1.5
Interest expense	(2,326)		(5.6)		(16)		0.0
Change in fair value of derivatives	65		0.2		(185)		(0.5)
Other expense	(107)		(0.3)		(81)		(0.2)
Total other (expense) income, net	(2,075)		(5.0)		267		0.7
Net loss	$	(6,635)	(16.0)	%	$	(7,074)	(19.3)	%

Revenues

Revenues for the three months ended March 31, 2024, increased $4,714 or12.9% to $41,378 as compared to $36,664 for the three months ended March 31, 2023. The increase in revenue was driven by an increase in product mix of 5.3%, unit volume of 4.9%, and a 2.6% increase in prices.

Gross Profit

Gross profit for the three months ended March 31, 2024, increased $4,128 or 14.5% to $32,620 as compared to $28,492 for the three months ended March 31, 2023. Gross margin was 78.8% and 77.7% for the three months ended March 31, 2024, and 2023, respectively.

Costs and Expenses

Total costs and expenses increased $1,347 or 3.8% to $37,180 for the three months ended March 31, 2024, as compared to $35,833 for the three months ended March 31, 2023. The net increase in total costs and expenses was primarily the result of increased compensation costs of $1,207 and professional services of $860 partially offset by a decrease in royalty fees of $835.

Sales and marketing expenses increased $369 or 1.9% to $19,815 for the three months ended March 31, 2024, as compared to $19,446 for the three months ended March 31, 2023. This increase was primarily attributable to compensation costs of $1,245 and professional services of $142, partially offset by a decrease in royalty fees of $835.

Research and development expenses increased $1,083 or 17.1% to $7,409 for the three months ended March 31, 2024, as compared to $6,326 for the three months ended March 31, 2023. The increase was primarily due to product development and clinical expenses. Product development costs include spending in a number of specific programs including the non-clinical expenses related to the BLA for Avance Nerve Graft. Product development expenses represented approximately 59% and 55%

of total research and development expense for the three months ended March 31, 2024, and 2023, respectively. Clinical trial expenses represented approximately 41% and 45% of total research and development expense the three months ended March 31, 2024, and 2023, respectively.

General and administrative expenses decreased by $105 to $9,956 for the three months ended March 31, 2024, as compared to $10,061 for the three months ended March 31, 2023. The decrease was primarily due to compensation costs of $922, partially offset by an increase in professional services of $465 and other items administrative in nature of $350.

Other Income and Expense

Other expense, net increased $2,342 or 877% to $2,075 for the three months ended March 31, 2024, as compared to other income, net of $267 for the three months ended March 31, 2023. The net increase in other expense was due to an increase in interest expense of $2,310 and change in the fair value of the derivative of $249, partially offset by the decrease in investment income of $256.

Investment income decreased $256 to $293 for the three months ended March 31, 2024, as compared to an investment income of $549 for the three months ended March 31, 2023. This change was primarily due to a decrease in total interest-bearing cash and investments as of March 31, 2024 compared to March 31, 2023.

Interest expense increased $2,310 to $2,326 for the three months ended March 31, 2024, as compared to $16 for the three months ended March 31, 2023. The increase was primarily due to capitalizing of interest expense related to the Credit Facility for the three months ended March 31, 2024. We recognized total interest expense of $2,303 and $2,147 in connection with the Credit Facility for the three months ended March 31, 2024, and 2023, respectively, of which $0 and $2,147 of this interest was capitalized to the construction costs of the APC Facility during the first quarter of 2024 and 2023, respectively.

Taxes

We had no income tax expense or benefit during the three months ended March 31, 2024, and 2023, due to the incurrence of net operating losses in each of these periods, the benefits of which have a full valuation allowance. From time to time, we receive notices of examination of prior tax filings from federal and state authorities.We do not believe that there are currently any material outstanding tax expenses or benefits.

Critical Accounting Estimates

In preparing financial statements, we follow accounting principles generally accepted in the United States, which require us to make certain estimates and apply judgments that affect our financial position and results of operations. Management regularly reviews our accounting policies and financial information disclosures. A summary of significant accounting estimates that require the use of estimates and judgments in preparing the financial statements was provided in our 2023 Annual Report on Form 10-K. During the quarter covered by this report, there have been no material changes to the accounting estimates and assumptions previously disclosed.

Reclassification of Financial Information

Effective as of the first quarter for 2024, we voluntarily changed our accounting policy for shipping and handling costs. Although the prior method of accounting continues to be an accepted alternative, the new accounting policy is more widely used in the industry and provides improved comparability of the Company’s financial statements to its peers. Accordingly, the financial information for prior periods has been reclassified to reflect retrospective application of the new policy. Effective as of the first quarter of 2024, we ceased allocating certain costs to and from certain departments. Previously such costs had been allocated based on our estimate of the proportionate share of total expense to each line item. We determined that these changes would better reflect industry practice and would provide more meaningful information as well as increased transparency of our operations. See “Note 2 – Summary of Significant Accounting Policies” for additional discussion.

Liquidity and Capital Resources

As of March 31, 2024, our principal sources of liquidity were our cash and cash equivalents and investments totaling $17,634. Our cash equivalents are comprised primarily of a money market mutual fund and our investments consist of U.S. Treasuries. Our cash and cash equivalents and investments decreased $13,390 from $31,024 at December 31, 2023, primarily as a result of operating activities.

We had working capital of $55,731 and a current ratio of 3.4x at March 31, 2024, compared to working capital of $57,574 and a current ratio of 2.9x at December 31, 2023. The decrease in our working capital at March 31, 2024, as compared to December 31, 2023, was primarily due to cash used in operations. Based on current estimates, we believe that our existing cash

and cash equivalents and investments, as well as cash provided by sales of our products will allow us to fund our operations through at least the next 12 months from the date of the accompanying financial statements.

Cash Flow Information

The following table presents a summary of cash flows from operating, investing and financing activities:

	Three Months Ended March 31,
(In thousands)	2024		2023
Net cash (used in) provided by:
Operating activities	$	(12,266)	$	(7,423)
Investing activities	(3,251)		(786)
Financing activities	204		633
Net decrease in cash, cash equivalents, and restricted cash	$	(15,313)	$	(7,576)

Net Cash Used in Operating Activities

Net cash used in operating activities was $12,266 and $7,423 during the three months ended March 31, 2024, and 2023, respectively. The unfavorable change in net cash used in operating activities of $4,843, or 65%, is due to the net unfavorable change of $7,376 in working capital accounts partially offset by the decrease in the net loss of $439.

Net Cash Used in Investing Activities

Net cash used in investing activities for the three months ended March 31, 2024, was $3,251 as compared to net cash used in investing activities of $786 for the three months ended March 31, 2023, an increase of $2,465, or 314%. The increase of net cash used in investing activities is principally due to the decrease in the net proceeds from the sale and purchase of investments totaling $5,681, and increase in purchases of intangible assets of $164 offset by the reduction in purchases of property and equipment of $3,380 during the three months ended March 31, 2024.

Net Cash Provided by Financing Activities

Net cash provided by financing activities was $204 and $633 for the three months ended March 31, 2024, and 2023, respectively, a decrease of $429. The unfavorable change in net cash provided by financing activities was primarily due to the decrease in proceeds from the exercise of stock options of $427 during the three months ended March 31, 2024.

Credit Facilities

As of March 31, 2024, we had $50,000 outstanding in indebtedness under a credit facility: $35,000 maturing on June 30, 2027, and $15,000 maturing on June 30, 2028. Quarterly interest only and revenue participation payments are due through each of the maturity dates. Interest is calculated as 7.5% plus the greater of three-month SOFR plus 0.1% ("Adjusted SOFR") or 2.0% (12.93% as of March 31, 2024). Revenue participation payments are calculated as a percentage of our net revenues, up to $70,000 in any given year, adding approximately 1.0% per year of additional interest payments on the outstanding indebtedness. Upon each maturity date or upon such date earlier repayment occurs, we will repay the principal balance and provide a make-whole payment calculated to generate an internal rate of return to the lender equal to 11.5%, less the total of all quarterly interest and revenue participation payments previously paid. See Note 8 - Long-Term Debt, Net of Debt Discount and Financing Fees and Note 12 - Commitments and Contingencies.

Sources of Capital

Our expected future capital requirements may depend on many factors including expanding our customer base and sales force and timing and extent of spending in obtaining regulatory approval and introduction of new products. Additional sources of liquidity available to us include issuance of additional equity securities through public or private equity offerings, debt financings or from other sources. The sale of additional equity may result in dilution to our shareholders. Although we have an effective shelf registration statement, there is no assurance that we will be able to secure funding on terms acceptable to us, or at all. The increasing need for capital could also make it more difficult to obtain funding through either equity or debt. Should additional capital not become available to us as needed, we may be required to take certain actions, such as slowing sales and marketing expansion, delaying regulatory approvals, or reducing headcount.

Contractual Obligations and Commitments

Contractual Obligations	Less than 1 year		1-3 years		3-5 years		Thereafter		Total
Credit Facility Principal(1)	$	—	$	—	$	50,000	$	—	$	50,000
Credit Facility Interest(1)(2)	4,849		13,000		6,175		—		24,024
Credit Facility Revenue Participation(1)	309		1,512		987		—		2,808
Credit Facility Make-Whole Payment(1)	—		—		—		—		—
Operating and financing lease obligations(3)	2,951		8,403		6,210		18,566		36,130
Insurance financing agreement(5)	1,520		—		—		—		1,520
Consulting fee obligation to former executives	218		—		—		—		218
Transition and separation obligations to current CEO(4)	603		1,646		—		—		2,249
Total	$	10,450	$	24,561	$	63,372	$	18,566	$	116,949

(1) See Note 8 - Long-Term Debt, Net of Debt Discount and Financing Fees and Note 12 - Commitments and Contingencies in Part I, Item 1 in this Form 10-Q.

(2) Calculated at 12.93%, the interest rate as of March 31, 2024.

(3) See Note 7 - Leases in this Form 10-Q.

(4) Includes CEO's 2024 Salary, 2024 bonus to paid in March of 2025, accrued PTO through January 4, 2025, nine months of senior advisory fees, and eighteen months of COBRA payments. Actual timing of payments are subject to the determination of the end of CEO Term per the Transition and Separation Agreement. See Note 12 - Commitments and Contingencies in Part I, Item 1 in this Form 10-Q.

(5) See Note 12 - Commitments and Contingencies in Part I, Item 1 in this Form 10-Q.

See Note 7 - Leases and Note 12 - Commitments and Contingencies in the Notes to the Consolidated Financial Statements in this Form 10-Q, for further information.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

For a discussion of our market risks, refer to Item 7A, “Quantitative and Qualitative Disclosures about Market Risk,” included in our 2023 Annual Report on Form 10-K.

The amount of interest expense on the outstanding debt is based on Adjusted SOFR. Changes in the Adjusted SOFR rate may affect our interest expense associated with the Credit Facility. Based on the outstanding balance of the Credit Facility as of March 31, 2024, a hypothetical 100 basis point increase in the applicable rate would result in an increase to our annual interest expense of approximately $500.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

We maintain “disclosure controls and procedures” as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), that are designed to ensure that information required to be disclosed by us in reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer, and Board of Directors, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating our disclosure controls and procedures, management recognizes that disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable assurance of achieving the desired objectives, and we necessarily are required to apply our judgment in evaluating the cost-benefit relationship of possible disclosure controls and procedures.

Our management, including our principal executive officer and principal financial officer, evaluated the effectiveness of our disclosure controls and procedures as of March 31, 2024, and concluded that our disclosure controls and procedures were effective.

Changes in Internal Controls Over Financial Reporting

There were no changes in our internal control over financial reporting during the three months ended March 31, 2024, that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting (as defined in Rules 13a-15(d) or 15d-15(f) of the Exchange Act).

PART II –OTHER INFORMATION

ITEM 1 – LEGAL PROCEEDINGS

As disclosed in Note 12 - Commitments and Contingencies in the Notes to Condensed Consolidated Financial Statements included in this Quarterly Report on Form 10-Q, we are engaged in certain legal proceedings, and the disclosure set forth in Note 12 - Commitments and Contingencies relating to legal proceedings is incorporated herein by reference.

ITEM 1A - RISK FACTORS

There have been no material changes to the risk factors disclosed in our 2023 Annual Report on Form 10-K. Any investment in our business involves a high degree of risk. Before making an investment decision, you should carefully consider the information we include in this Quarterly Report on Form 10-Q, including our unaudited interim condensed consolidated financial statements and accompanying notes, our Annual Report on Form 10-K for the year ended December 31, 2023, including our financial statements and related notes contained therein, and the additional information in the other reports we file with the Securities and Exchange Commission. These risks may result in material harm to our business and our financial condition and results of operations. In this event, the market price of our common stock may decline, and you could lose part or all of your investment. Additional risks that we currently believe are immaterial may also impair our business operations. Our business, financial conditions and future prospects and the trading price of our common stock could be harmed as a result of any of these risks.

ITEM 2 - UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

ITEM 3 - DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4 - MINE SAFETY DISCLOSURES

Not Applicable.

ITEM 5 - OTHER INFORMATION

Rule 10b5-1 Trading Plans

During the quarter ended March 31, 2024, our Section 16 officers and directors adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement” as each term is defined in Item 408(a) of Regulation S-K as noted below:

			Trading Arrangement
Name and Title	Action	Adoption Date	Rule 10b5-1*	Non-Rule 10b5-1**	Aggregate Number of Securities to be Sold	Expiration Date
Karen Zaderej	Adopt	3/8/2024	X		740,000	12/31/2024
*Intended to satisfy the affirmative defense of Rule 10b5-1(c)
** Not intended to satisfy the affirmative defense of Rule 10b5-1(c)

ITEM 6 - EXHIBITS

Exhibit Number	Description
10.1**	Employment Agreement, dated February 27, 2024, by and between Axogen Corporation and Erick DeVinney (incorporated by reference to Exhibit 10.62 to the Company’s Annual Report on Form 10-K filed on March 5, 2024).
10.2 **	Amendment No. 1 to Executive Employment Agreement, dated February 27, 2024, by and between Axogen Corporation and Erick DeVinney (incorporated by reference to Exhibit 10.63 to the Company’s Annual Report on Form 10-K filed on March 5, 2024).
10.3 **	Amended and Restated Confidentiality, Intellectual Property, Non-Competition and Non-Solicitation Agreement, dated February 27, 2024, by and between Axogen Corporation and Erick DeVinney (incorporated by reference to Exhibit 10.64 to the Company’s Annual Report on Form 10-K filed on March 5, 2024).
10.4 **	Separation, Waiver and Release of Claims Agreement, dated January 5, 2024, between the Company and Peter Mariani (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K/A filed on January 5, 2024)
10.5 **	Transition and Separation Agreement, dated January 4, 2024, between the Company and Karen Zaderej (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K, filed on January 4, 2024).
10.6 **	Transition and Separation Agreement, dated March 7, 2024, between the Company and Angelo Scopelianos(incorporated by reference to Exhibit 10.1 to the Company's Current Report on Form 8-K, filed on March 8, 2024).
18	Preferability Letter
31.1†	Certification of Principal Executive Officer pursuant to Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2†	Certification of Principal Financial Officer pursuant to Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32††	Certifications of the Principal Executive Officer and Principal Financial Officer pursuant to 18 U.S.C. §1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS†	XBRL Instance Document – The instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH†	XBRL Taxonomy Extension Schema Document.
101.CAL†	XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF†	XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB†	XBRL Extension Labels Linkbase.
101.PRE†	XBRL Taxonomy Extension Presentation Linkbase Document.
104	Cover Page Interactive Data File – The cover pages do not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document

†     Filed herewith.

††   Furnished herewith.

** Management contract or compensatory plan or arrangement.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	AXOGEN, INC.
Dated: May 2, 2024	/s/ Karen Zaderej
	Karen Zaderej Chief Executive Officer and President (Principal Executive Officer)
Dated: May 2, 2024	/s/ Nir Naor
	Nir Naor Chief Financial Officer and (Principal Accounting Officer)

EX-18

Exhibit 18

May 2, 2024

Axogen, Inc.

13631 Progress Blvd., Suite 400

Alachua, FL 32615

Dear Sirs/Madams:

At your request, we have read the description included in your Quarterly Report on Form 10-Q to the Securities and Exchange Commission for the quarter ended March 31, 2024, of the facts relating to the change in the classification of shipping and handling costs from sales and marketing expenses to cost of goods sold in the condensed consolidated statements of operations. We believe, on the basis of the facts so set forth and other information furnished to us by appropriate officials of Axogen, Inc. (the “Company”), that the accounting change described in your Form 10-Q is to an alternative accounting principle that is preferable under the circumstances.

We have not audited any consolidated financial statements of the Company as of any date or for any period subsequent to December 31, 2023. Therefore, we are unable to express, and we do not express, an opinion on the facts set forth in the above-mentioned Form 10-Q, on the related information furnished to us by officials of the Company, or on the financial position, results of operations, or cash flows of the Company as of any date or for any period subsequent to December 31, 2023.

Yours truly,

/s/ Deloitte & Touche LLP

EX-31.1

EXHIBIT 31.1

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER PURSUANT TO SECTION 302 OF

THE SARBANES-OXLEY ACT OF 2002

I, Karen Zaderej, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q of Axogen, 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)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) 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.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

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: May 2, 2024
	/s/ Karen Zaderej
	Karen Zaderej Chief Executive Officer and President

EX-31.2

EXHIBIT 31.2

CERTIFICATION OF PRINCIPAL FINANCIAL OFFICER PURSUANT TO SECTION 302 OF

THE SARBANES-OXLEY ACT OF 2002

I, Nir Naor, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q of Axogen, 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)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) 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)Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

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: May 2, 2024
	/s/Nir Naor
	Nir Naor
	Chief Financial Officer

EX-32

EXHIBIT 32

CERTIFICATION PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002 (SUBSECTIONS (A) AND (B) OF SECTION 1350, CHAPTER 63 OF TITLE 18, UNITED STATES CODE)

In connection with the Quarterly Report on Form 10-Q (the “Report”) of Axogen, Inc. (the “Company”), Karen Zaderej, Chief Executive Officer and President of the Company and Nir Naor, Chief Financial Officer of the Company, each certifies, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, to the best of her/his knowledge that:

1.The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2.The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated: May 2, 2024
	/s/ Karen Zaderej
	Karen Zaderej Chief Executive Officer and President (Principal Executive Officer)
	/s/ Nir Naor
	Nir Naor Chief Financial Officer (Principal Financial Officer)

XML

Cover - shares	3 Months Ended
	Mar. 31, 2024	Apr. 29, 2024
Cover [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Mar. 31, 2024
Document Transition Report	false
Entity File Number	001-36046
Entity Registrant Name	Axogen, Inc.
Entity Incorporation, State or Country Code	MN
Entity Tax Identification Number	41-1301878
Entity Address, Address Line One	13631 Progress Blvd
Entity Address, Address Line Two	Suite 400
Entity Address, City or Town	Alachua,
Entity Address, State or Province	FL
Entity Address, Postal Zip Code	32615
City Area Code	386
Local Phone Number	462-6800
Title of 12(b) Security	Common Stock, $0.01 par value
Trading Symbol	AXGN
Security Exchange Name	NASDAQ
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		43,704,574
Entity Central Index Key	0000805928
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2024
Document Fiscal Period Focus	Q1
Amendment Flag	false

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Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Mar. 31, 2024	Dec. 31, 2023
Current assets:
Cash and cash equivalents	$ 15,713	$ 31,024
Restricted cash	6,000	6,002
Investments	1,921	0
Accounts receivable, net of allowance for doubtful accounts of $603 and $337, respectively	24,212	25,147
Inventory	27,636	23,020
Prepaid expenses and other	3,181	2,811
Total current assets	78,663	88,004
Property and equipment, net	87,838	88,730
Operating lease right-of-use assets	15,247	15,562
Intangible assets, net	4,768	4,531
Total assets	186,516	196,827
Current liabilities:
Accounts payable and accrued expenses	21,288	28,883
Current maturities of long-term lease obligations	1,644	1,547
Total current liabilities	22,932	30,430
Long-term debt, net of debt discount and financing fees	46,825	46,603
Long-term lease obligations	20,681	21,142
Debt derivative liabilities	2,922	2,987
Total liabilities	93,360	101,162
Commitments and contingencies - see Note 12
Shareholders’ equity:
Common stock, $0.01 par value per share; 100,000,000 shares authorized; 43,687,729 and 43,124,496 shares issued and outstanding	437	431
Additional paid-in capital	380,650	376,530
Accumulated deficit	(287,931)	(281,296)
Total shareholders’ equity	93,156	95,665
Total liabilities and shareholders’ equity	$ 186,516	$ 196,827

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Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands	Mar. 31, 2024	Dec. 31, 2023
Statement of Financial Position [Abstract]
Accounts receivable, allowance for doubtful accounts	$ 603	$ 337
Common stock, par value (in USD per share)	$ 0.01	$ 0.01
Common stock authorized (in shares)	100,000,000	100,000,000
Common stock issued (in shares)	43,687,729	43,124,496
Common stock outstanding (in shares)	43,687,729	43,124,496

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Condensed Consolidated Statements of Operations - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Income Statement [Abstract]
Revenues	$ 41,378	$ 36,664
Cost of goods sold	8,758	8,172
Gross profit	32,620	28,492
Costs and expenses:
Sales and marketing	19,815	19,446
Research and development	7,409	6,326
General and administrative	9,956	10,061
Total costs and expenses	37,180	35,833
Loss from operations	(4,560)	(7,341)
Other income (expense):
Investment income	293	549
Interest expense	(2,326)	(16)
Change in fair value of derivatives	65	(185)
Other expense	(107)	(81)
Total other (expense) income, net	(2,075)	267
Net loss	$ (6,635)	$ (7,074)
Weighted average common shares outstanding - basic (in shares)	43,233,149	42,571,021
Weighted average common shares outstanding - diluted (in shares)	43,233,149	42,571,021
Loss per common share - basic (in USD per share)	$ (0.15)	$ (0.17)
Loss per common share - diluted (in USD per share)	$ (0.15)	$ (0.17)

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Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Cash flows from operating activities:
Net loss	$ (6,635)	$ (7,074)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation	1,520	709
Amortization of right-of-use assets	315	464
Amortization of intangible assets	62	71
Amortization of debt discount and deferred financing fees	222	219
Provision for (recovery of) bad debt	255	(267)
Provision for inventory write-down	367	581
Change in fair value of derivatives	(65)	185
Investment (gains) loss	(10)	(426)
Share-based compensation	3,919	2,954
Change in operating assets and liabilities:
Accounts receivable	681	175
Inventory	(4,983)	(1,525)
Prepaid expenses and other	(262)	(509)
Accounts payable and accrued expenses	(7,291)	(2,442)
Operating lease obligations	(360)	(537)
Cash paid for interest portion of finance leases	(1)	(1)
Net cash used in operating activities	(12,266)	(7,423)
Cash flows from investing activities:
Purchase of property and equipment	(924)	(4,304)
Purchase of investments	(1,910)	(10,203)
Proceeds from sale of investments	0	13,974
Cash payments for intangible assets	(417)	(253)
Net cash used in investing activities	(3,251)	(786)
Cash flows from financing activities:
Cash paid for debt portion of finance leases	(3)	(1)
Proceeds from exercise of stock options and ESPP stock purchases	207	634
Net cash provided by financing activities	204	633
Net decrease in cash, cash equivalents, and restricted cash	(15,313)	(7,576)
Cash, cash equivalents, and restricted cash, beginning of period	37,026	21,535
Cash, cash equivalents, and restricted cash, end of period	21,713	13,959
Supplemental disclosures of cash flow activity:
Cash paid for interest, net of capitalized interest	1,656	0
Supplemental disclosure of non-cash investing and financing activities:
Acquisition of fixed assets in accounts payable and accrued expenses	516	1,026
Acquisition of intangible assets in accounts payable and accrued expenses	$ 290	$ 326

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Condensed Consolidated Statements of Changes in Shareholders’ Equity - USD ($) $ in Thousands	Total	Common Stock	Additional Paid-in Capital	Accumulated Deficit
Beginning balance (in shares) at Dec. 31, 2022		42,445,517
Beginning balance at Dec. 31, 2022	$ 100,999	$ 424	$ 360,155	$ (259,580)
Increase (Decrease) in Stockholders' Equity
Net loss	(7,074)			(7,074)
Stock-based compensation	2,954		2,954
Issuance of restricted and performance stock units (in shares)		238,719
Issuance of restricted and performance stock units	0	$ 3	(3)
Exercise of stock options and employee stock purchase plan (in shares)		125,758
Exercise of stock options and employee stock purchase plan	634	$ 1	633
Ending balance (in shares) at Mar. 31, 2023		42,809,994
Ending balance at Mar. 31, 2023	$ 97,513	$ 428	363,739	(266,654)
Beginning balance (in shares) at Dec. 31, 2023	43,124,496	43,124,496
Beginning balance at Dec. 31, 2023	$ 95,665	$ 431	376,530	(281,296)
Increase (Decrease) in Stockholders' Equity
Net loss	(6,635)
Stock-based compensation	3,919		3,919
Issuance of restricted and performance stock units (in shares)		539,233
Issuance of restricted and performance stock units	0	$ 5	(5)
Exercise of stock options and employee stock purchase plan (in shares)		24,000
Exercise of stock options and employee stock purchase plan	$ 207	$ 1	206
Ending balance (in shares) at Mar. 31, 2024	43,687,729	43,687,729
Ending balance at Mar. 31, 2024	$ 93,156	$ 437	$ 380,650	$ (287,931)

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Nature of Business

3 Months Ended

Mar. 31, 2024

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Nature of Business

Nature of Business

Axogen, Inc. (together with its wholly-owned subsidiaries, the “Company”) was incorporated in Minnesota. Our business is focused on the science, development and commercialization of the technologies used for peripheral nerve regeneration and repair. The Company's products include Avance® Nerve Graft, Axoguard Nerve Connector®, Axoguard Nerve Protector®, Axoguard HA+ Nerve Protector™, Axoguard Nerve Cap® and Axotouch® Two-Point Discriminator. The Company is headquartered in Florida. The Company has processing, warehousing, and distribution facilities in Texas and Ohio.

The Company manages its operations as a single operating segment. Substantially all of the Company's assets are maintained in the United States. The Company derives substantially all of its revenues from sales to customers in the United States.

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Summary of Significant Accounting Policies

3 Months Ended

Mar. 31, 2024

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

Summary of Significant Accounting Policies

Please see Note 2 to the Company’s consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023, filed with the Securities and Exchange Commission ("SEC") on March 5, 2024, for a description of all significant accounting policies.

Reclassifications

Certain reclassifications have been made to the prior period financial information to conform to the presentation used in the condensed consolidated statement of operations for the three months ended March 31, 2024.

Effective as of the first quarter of 2024, the Company voluntarily changed its accounting policy for shipping and handling costs. Under the new accounting policy, these costs are included in Costs of goods sold, whereas they were previously included in Sales and marketing expenses. Including these expenses in Costs of goods sold better aligns these costs with the related revenue in the gross profit calculation. Although the prior method of accounting continues to be an accepted alternative, the new accounting policy is more widely used in the industry and provides improved comparability of the Company's financial statements to its peers. This change in accounting policy has been applied retrospectively. The consolidated statement of operations for the three months ended March 31, 2023, has been reclassified to reflect this change in accounting policy. The impact of this reclassification was an increase of $1,465 to cost of goods sold for the three months ended March 31, 2023, and a corresponding decrease to Sales and marketing expenses in the same period.

Effective as of the first quarter of 2024, the Company also ceased allocating certain costs to and from certain departments. Previously such costs had been allocated based on the Company’s estimate of the proportionate share of total expense to Cost of goods sold, Sales and marketing, Research and development, and General and administrative. The Company determined that these changes would better reflect industry practice and would provide more meaningful information as well as increased transparency of its operations. To conform the 2023 presentation to the current quarter’s presentation, $1,062 was reclassified to General and administrative, of which $353 was previously included in Research and development, $707 was previously included in Sales and marketing, and $2 was previously included in Cost of goods sold for the three months ended March 31, 2023, in the condensed consolidated statement of operations.

These reclassifications had no impact on net revenue, loss from operations, net loss, or loss per common share for prior periods and do not represent a restatement of the Company's previously issued consolidated financial statements.

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements include the accounts of the Company as of March 31, 2024, and December 31, 2023, and for the three months ended March 31, 2024, and 2023. The Company’s condensed consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X, and; therefore, do not include all information and footnotes necessary for a fair presentation of consolidated financial position, results of operations, and cash flows in conformity with accounting principles generally accepted in the United States ("U.S. GAAP") and should be read in conjunction with the audited financial statements of the Company for the year ended December 31, 2023, which are included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023.

The interim condensed consolidated financial statements are unaudited, and in the opinion of management, reflect all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of results for the periods presented. The results of operations for the three months ended March 31, 2024, are not necessarily indicative of the results to be expected for the full year due primarily to the impact of the continued uncertainty of general economic conditions that may impact the Company's markets for the remainder of fiscal year 2024. All intercompany accounts and transactions have been eliminated in consolidation.

Cash and Cash Equivalents and Concentration

Cash and cash equivalents consist of short-term, highly liquid investments with original maturities of three months or less from the date of acquisition. Certain of the Company's cash and cash equivalents balances exceed Federal Deposit Insurance Corporation ("FDIC") insured limits or are invested in money market accounts with investment banks that are not FDIC-insured. The Company places its cash and cash equivalents in what they believe to be credit-worthy financial institutions. As of March 31, 2024, $14,963 of the cash and cash equivalents balance was in excess of FDIC limits.

Restricted Cash

Amounts included in restricted cash represent those required to be set aside to meet contractual terms of a lease agreement held by the Company. See Note 8 - Long-Term Debt, Net of Debt Discount and Financing Fees, Other Credit Facilities.

The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported in the condensed consolidated balance sheets that sum to the total of the same amounts shown in the condensed consolidated statements of cash flows:

(In thousands)	March 31, 2024		December 31, 2023
Cash and cash equivalents	$	15,713	$	31,024
Restricted cash	6,000		6,002
Total cash, cash equivalents, and restricted cash shown in the statement of cash flows	$	21,713	$	37,026

Shipping and Handling

All shipping and handling costs, including facility and warehousing overhead, directly related to bringing the Company’s products to their final selling destination are included in cost of goods sold on the consolidated statements of operations. The Company has elected to account for shipping and handling costs for products shipped to customers as a fulfillment activity as the costs are incurred as part of the transfer of the goods to the customer in accordance with ASC 606. See Reclassifications above.

Recent Accounting Pronouncements

All other Accounting Standards Updates ("ASU's") issued and not yet effective as of December 31, 2023, and through the date of this report, were assessed and determined to be either not applicable or are expected to have minimal impact on the Company’s current or future financial position or results of operations except for the following:

In December 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standard Update 2023-09 — Income Taxes (Topic 740) — Improvements to Income Tax Disclosures ("ASU 2023-09"). The new guidance provides for disclosure on an annual basis of the following: (i) specific categories in the rate reconciliation, and (ii) additional information for reconciling items that meet a quantitative threshold of greater than 5% of the amount computed by multiplying pretax income (or loss) by the applicable statutory income tax rate. The amendment in ASU 2023-09 is effective for the annual periods beginning after December 15, 2025, early adoption is permitted. The Company expects to enhance annual income tax reporting disclosures based on the new requirements.

In November 2023, the FASB issued Accounting Standard Update 2023-07 — Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures ("ASU 2023-07"). The new guidance requires disclosure on an annual and interim basis of the following: (i) significant segment expenses regularly provided to the chief operating decision maker ("CODM") and a measure of segment profit or loss; (ii) an amount for other segment items by reportable segment and a description of its composition; (iii) all annual disclosures about a reportable segment's profit and loss and assets as currently required by Topic 280; (iv) clarify if the CODM uses more than one measure of a segment's profit or loss in assessing segment performance and deciding how to allocate resources; and (v) disclose title and position of the CODM and how the CODM uses

the reported measures. Public entities with a single reportable segment are required to provide all the disclosures required by this amendment. The amendment in ASU 2023-07 is effective for the annual periods beginning after December 15, 2023, and for the quarters in the years after December 15, 2024, early adoption is permitted. The Company expects to enhance annual segment reporting disclosures based on the new requirements.

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Inventory

3 Months Ended

Mar. 31, 2024

Inventory Disclosure [Abstract]

Inventory

Inventory

Inventory consists of the following:

(in thousands)	March 31, 2024		December 31, 2023
Finished goods	$	19,901	$	13,545
Work in process	1,041		2,120
Raw materials	6,694		7,355
Inventory	$	27,636	$	23,020

The provision for inventory write-down is as follows:

	Three Months Ended March 31,
(in thousands)	2024		2023
Provision for inventory write-down	$	367	$	581

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Property and Equipment, Net

3 Months Ended

Mar. 31, 2024

Property, Plant and Equipment [Abstract]

Property and Equipment, Net

Property and Equipment, Net

Property and equipment, net consist of the following:

(in thousands)	March 31, 2024		December 31, 2023
Land	$	731	$	731
Building	60,679		60,679
Leasehold improvements	17,896		15,348
Processing equipment	13,445		13,116
Furniture and equipment	9,821		8,741
Projects in process	317		3,674
Finance lease right-of-use assets	138		138
Property and equipment, at cost	103,028		102,427
Less: accumulated depreciation and amortization	(15,190)		(13,697)
Property and equipment, net	$	87,838	$	88,730

Depreciation expense is as follows:

	Three Months Ended March 31,
(in thousands)	2024		2023
Depreciation expense	$	1,520	$	709

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Intangible Assets, Net

3 Months Ended

Mar. 31, 2024

Goodwill and Intangible Assets Disclosure [Abstract]

Intangible Assets, Net

Intangible Assets, Net

Intangible assets consist of the following:

	March 31, 2024						December 31, 2023
(in thousands)	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Amortizable intangible assets:
Patents	$	5,204	$	(881)	$	4,323	$	4,905	$	(820)	$	4,085
License agreements	1,101		(1,089)		12		1,101		(1,087)		14
Total amortizable intangible assets	6,305		(1,969)		4,335		6,006		(1,907)		4,099
Unamortized intangible assets:
Trademarks	433		—		433		432		—		432
Total intangible assets	$	6,737	$	(1,969)	$	4,768	$	6,438	$	(1,907)	$	4,531

Amortization expense is as follows:

	Three Months Ended March 31,
(in thousands)	2024		2023
Amortization expense	$	62	$	71

As of March 31, 2024, future amortization of patents and license agreements is as follows:

Year Ending December 31,	(in thousands)
2024 (excluding the three months ended March 31, 2024)	$	189
2025	252
2026	250
2027	247
2028	247
Thereafter	3,150
Total	$	4,335

License Agreements

The Company had various license agreements that require the payment of royalty fees.

Royalty fee expense included in sales and marketing expense is as follows:

	Three Months Ended March 31,
(in thousands)	2024		2023
Royalty fee expense (1)	$	—	$	831

(1) Royalty fees are no longer being paid due to the expiration of the patents in 2023.

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Fair Value Measurement

3 Months Ended

Mar. 31, 2024

Fair Value Disclosures [Abstract]

Fair Value Measurement

Fair Value Measurement

The following tables present the Company's fair value hierarchy for its financial assets and liabilities measured at fair value on a recurring basis as of March 31, 2024, and December 31, 2023:

	March 31, 2024
(in thousands)	(Level 1)		(Level 2)		(Level 3)		Total
Assets:
Money market funds	$	8,835	$	—	$	—	$	8,835
U.S. government securities	1,921		—		—		1,921
Total assets	$	10,756	$	—	$	—	$	10,756
Liabilities:
Debt derivative liabilities	$	—	$	—	$	2,922	$	2,922
Total liabilities	$	—	$	—	$	2,922	$	2,922

	December 31, 2023
(in thousands)	(Level 1)		(Level 2)		(Level 3)		Total
Assets:
Money market funds	$	24,977	$	—	$	—	$	24,977
Total assets	$	24,977	$	—	$	—	$	24,977
Liabilities:
Debt derivative liabilities	$	—	$	—	$	2,987	$	2,987
Total liabilities	$	—	$	—	$	2,987	$	2,987

The changes in Level 3 liabilities measured at fair value on a recurring basis for the three months ended March 31, 2024 were as follows (in thousands):

Three Months Ended March 31, 2024
Balance, December 31, 2023	$	2,987
Change in fair value included in net loss	(65)
Balance, March 31, 2024	$	2,922

The fair value of cash, restricted cash, accounts receivable, accounts payable and accrued expenses approximates the carrying values because of the short-term nature of these instruments. The carrying value and fair value of the Credit Facility were $46,825 and $52,049 at March 31, 2024, and $46,603 and $51,486 at December 31, 2023, respectively. See Note 8 - Long-Term Debt, Net of Debt Discount and Financing Fees.

The debt derivative liabilities are measured using a ‘with and without’ valuation model to compare the fair value of each tranche of the Credit Facility including the identified embedded derivative features and the fair value of a plain vanilla note with the same terms. The fair value of the Credit Facility including the identified embedded derivative features was determined using a probability-weighted expected return model based on four potential settlement scenarios, one of which ended December 31, 2023, for the financing agreement as disclosed in the table below. The estimated settlement value of each scenario, which would include any required make-whole payment, (see Note 8 - Long-Term Debt, Net of Debt Discount and Financing Fees), is then discounted to present value using a discount rate that is derived based on the initial terms of the financing agreement at issuance and corroborated utilizing a synthetic credit rating analysis.

The significant inputs that are included in the valuation of the debt derivative liability - first tranche include:

	March 31, 2024			December 31, 2023
Input
Remaining term (years)	3.25 years			3.5 years
Maturity date	June 30, 2027			June 30, 2027
Coupon rate	9.5% - 13.16%			9.5% - 13.2%
Revenue participation payments	Maximum each year			Maximum each year
Discount rate	12.24%		(1)	12.06%		(1)
Probability of mandatory prepayment 2024 or after	15.0	%	(1)	15.0	%	(1)
Estimated timing of mandatory prepayment event 2024 or after	March 31, 2026		(1)	March 31, 2026		(1)
Probability of optional prepayment event	5.0	%	(1)	5.0	%	(1)
Estimated timing of optional prepayment event	December 31, 2025		(1)	December 31, 2025		(1)
Probability of note held-to-maturity(2)	80.0%		(1)	80.0%		(1)

(1)Represents a significant unobservable input

(2) See Maturity date in table.

The significant inputs that are included in the valuation of the debt derivative liability - second tranche include:

	March 31, 2024			December 31, 2023
Input
Remaining term (years)	4.25 years			4.5 years
Maturity date	June 30, 2028			June 30, 2028
Coupon rate	9.5% - 13.16%			9.5% - 13.2%
Revenue participation payments	Maximum each year			Maximum each year
Discount rate	15.49	%	(1)	15.60	%	(1)
Probability of mandatory prepayment 2024 or after	15.0%		(1)	15.0%		(1)
Estimated timing of mandatory prepayment event 2024 or after	March 31, 2026		(1)	March 31, 2026		(1)
Probability of optional prepayment event	5.0%		(1)	5.0%		(1)
Estimated timing of optional prepayment event	December 31, 2025		(1)	December 31, 2025		(1)
Probability of held-to-maturity(2)	80.0%			80.0%

(1)Represents a significant unobservable input

(2)See Maturity date in table.

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Leases

3 Months Ended

Mar. 31, 2024

Leases [Abstract]

Leases

Leases

The Company leases administrative, processing, research and distribution facilities through operating leases. Several of the leases include fixed payments, including rent and non-lease components such as common area or other maintenance costs.

Operating lease expense is as follows:

	Three Months Ended March 31,
(in thousands)	2024		2023
Operating lease expense	$	1,206	$	1,298

Supplemental balance sheet information related to the operating and financing leases is as follows:

(In thousands, except lease term and discount rate)	March 31, 2024		December 31, 2023
Operating Leases
Right-of-use operating assets	$	15,247	$	15,562
Current maturities of long-term lease obligations	$	1,639	$	1,541
Long-term lease obligations	$	20,663	$	21,123
Financing Leases
Right-of-use financing leases (1)	$	24	$	28
Current maturities of long-term lease obligations	$	5	$	6
Long-term lease obligations	$	18	$	19
Weighted average operating lease term (in years):	9.4		9.6
Weighted average financing lease term (in years):	3.8		6.5
Weighted average discount rate operating leases	10.98%		10.99%
Weighted average discount rate financing leases	13.99%		13.22%

(1) Financing leases are included in property and equipment, net on the condensed consolidated balance sheets.

Future minimum lease payments under operating and financing leases at March 31, 2024, are as follows:

(In thousands)
2024 (excluding three months ended March 31, 2024)	$	2,951
2025	4,134
2026	4,269
2027	3,106
2028	3,104
Thereafter	18,565
Total	36,129
Less: Imputed interest	(13,804)
Total lease liability	22,325
Less: Current lease liability	(1,644)
Long-term lease liability	$	20,681

Leases

Leases

The Company leases administrative, processing, research and distribution facilities through operating leases. Several of the leases include fixed payments, including rent and non-lease components such as common area or other maintenance costs.

Operating lease expense is as follows:

	Three Months Ended March 31,
(in thousands)	2024		2023
Operating lease expense	$	1,206	$	1,298

Supplemental balance sheet information related to the operating and financing leases is as follows:

(In thousands, except lease term and discount rate)	March 31, 2024		December 31, 2023
Operating Leases
Right-of-use operating assets	$	15,247	$	15,562
Current maturities of long-term lease obligations	$	1,639	$	1,541
Long-term lease obligations	$	20,663	$	21,123
Financing Leases
Right-of-use financing leases (1)	$	24	$	28
Current maturities of long-term lease obligations	$	5	$	6
Long-term lease obligations	$	18	$	19
Weighted average operating lease term (in years):	9.4		9.6
Weighted average financing lease term (in years):	3.8		6.5
Weighted average discount rate operating leases	10.98%		10.99%
Weighted average discount rate financing leases	13.99%		13.22%

(1) Financing leases are included in property and equipment, net on the condensed consolidated balance sheets.

Future minimum lease payments under operating and financing leases at March 31, 2024, are as follows:

(In thousands)
2024 (excluding three months ended March 31, 2024)	$	2,951
2025	4,134
2026	4,269
2027	3,106
2028	3,104
Thereafter	18,565
Total	36,129
Less: Imputed interest	(13,804)
Total lease liability	22,325
Less: Current lease liability	(1,644)
Long-term lease liability	$	20,681

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Long-Term Debt, Net of Debt Discount and Financing Fees

3 Months Ended

Mar. 31, 2024

Debt Disclosure [Abstract]

Long-Term Debt, Net of Debt Discount and Financing Fees

Long-Term Debt, Net of Debt Discount and Financing Fees

Long-term debt, net of debt discount and financing fees consists of the following:

(in thousands)	March 31, 2024		December 31, 2023
Credit Facility - first tranche	$	35,000	$	35,000
Credit Facility - second tranche	15,000		15,000
Less - unamortized debt discount and deferred financing fees	(3,175)		(3,397)
Long-term debt, net of debt discount and financing fees	$	46,825	$	46,603

Credit Facility

On June 29, 2023, the Company amended its Credit Facility with Oberland Capital and its affiliates TPC Investments II LP and Argo LLC (collectively, the "Lender"). The term loan agreement for the Credit Facility was amended to transition the base interest rate from three month LIBOR to Adjusted SOFR. The Company obtained the first tranche of $35,000 at closing on June 30, 2020. On June 30, 2021, the second tranche of $15,000 was drawn down by the Company.

Each tranche under the Credit Facility requires quarterly interest payments for seven years. Interest is calculated as 7.5% plus the greater of Adjusted SOFR or 2.0% (12.93% at March 31, 2024), provided that the interest rate shall never be less than 9.5%. Each tranche of the Credit Facility has a term of seven years from the date of issuance (with the first tranche issued on June 30, 2020, maturing on June 30, 2027, and the second tranche issued on June 30, 2021, maturing on June 30, 2028). In connection with the Credit Facility, the Company entered into a revenue participation agreement (the “Revenue Participation Agreement”) with the Lender, which provided that, among other things, a quarterly royalty payment as a percentage of the Company’s net revenues, up to $70 million in any given year, after April 1, 2021, ending on the date upon which all amounts owed under the Credit Facility have been paid in full. This structure results in approximately 1.5% per year of additional interest payments on the outstanding loan amount. The Company recorded $447 and $396 as interest expense for this Revenue Participation Agreement for the three months ended March 31, 2024, and 2023, respectively. The Company pays the quarterly debt interest on the last day of the quarter and for the three months ended March 31, 2024, and 2023, paid $1,634 and $1,532, respectively, to the Lender. The Company capitalized interest of $0 and $2,147 for the three months ended March 31, 2024, and 2023, respectively, towards the costs to construct and retrofit the Axogen Processing Center ("APC Facility") in Vandalia, Ohio which was completed during 2023. As of March 31, 2024, the Company was in compliance with all financial covenants.

Embedded Derivatives

The fair values of the debt derivative liabilities were $2,922 and $2,987 at March 31, 2024, and December 31, 2023, respectively. See Note 6 - Fair Value Measurement.

Unamortized Debt Discount and Financing Fees

The unamortized debt discount consists of the remaining initial fair values of the embedded derivatives related to the Credit Facility.

The financing fees for the Credit Facility were $642 and were recorded as a contra liability to long-term debt on the consolidated balance sheet.

Amortization of debt discount and deferred financing fees for the three months ended March 31, 2024, and 2023 was $222 and $219, respectively.

Other Credit Facilities

The Company had restricted cash of $6,000 and $6,002 at March 31, 2024, and December 31, 2023, respectively for an irrevocable standby letter of credit

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Stock-Based Compensation

3 Months Ended

Mar. 31, 2024

Share-Based Payment Arrangement [Abstract]

Stock-Based Compensation

Stock-Based Compensation

The Company's stock-based compensation plans are described in Note 11. Stock-Based Compensation to the Company’s consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023.

During the fiscal year 2024, the following stock compensation was awarded to officers and employees. All awards were granted under the 2019 Amended and Restated Long-Term Incentive Plan ("2019 Plan"), with the exception of the inducement shares awarded as inducements material to new employees entering into employment with the Company in accordance with Nasdaq Listing Rule 5635(c)(4).

Type of Award	Quarter Awarded	Target Shares or Units	Weighted Average Grant Date Fair Value
Stock Options (1)	1st Quarter	—	$	—
Restricted Stock Units (2)	1st Quarter	787,688	$	9.05
Performance Stock Units (3)(4)	1st Quarter	911,400	$	8.92
Inducement Shares (5)
Stock Options	1st Quarter	18,700	$	6.04
Restricted Stock Units	1st Quarter	310,000	$	7.00

(1)      Options awarded to officers and employees during the first quarter vest over a four-year period.

(2)     Restricted Stock Units (RSUs) awarded to certain officers and employees during the first quarter vest over a four-year period. Upon vesting, the outstanding number of RSUs vested are converted into common stock.

(3)    Performance Stock Units (PSUs) awarded to certain officers and employees related to their work on the BLA ("2024 BLA PSUs") totaled 487,400 shares during the first quarter of 2024. Participants with 2024 BLA PSUs will earn from 0% to 100% upon achievement of certain milestones related to the BLA submission and FDA approval. The number of shares available for grant is linked to certain milestones related to the BLA submission to and approval by the FDA. These awards will vest provided the participants remain in continuous service to the Company through the achievement of the applicable performance goal and the one-year anniversary of the grant date.

(4)    PSUs awarded to certain officers and employees with a target of 424,400 shares with performance metrics tied to the achievement of stock price goals between February 2024 through February 2027 ("TSR PSU") during the first quarter of 2024. Participants with TSR PSUs will earn from 0% to 200% upon achievement of specific stock price goals. Absent the shareholder approval of an increase to the number of authorized shares under the Amended and Restated 2019 Plan at the 2024 Shareholder Meeting, the settlement of the TSR PSUs awards are limited to 100%. The maximum number of shares that can be issued under this award is 848,800. Vesting occurs at the end of the three-year performance period upon Compensation Committee certification of the results at the end of the performance period.

(5)     Inducement shares were issued to officers during the first quarter of 2024, to new employees entering into employment with the Company in accordance with Nasdaq Listing Rule 5635(c)(4). Vesting for both the stock options and restricted stock units are over both a three-and four-year period.

Total stock-based compensation expense is as follows:

	Three Months Ended March 31,
(in thousands)	2024		2023
Stock-based compensation expense	$	3,919	$	2,954

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Net Loss Per Common Share

3 Months Ended

Mar. 31, 2024

Earnings Per Share [Abstract]

Net Loss Per Common Share

Net Loss Per Common Share

The following reflects the net loss attributable to common shareholders and share data used in the basic and diluted earnings per share computations using the two-class method:

	Three Months Ended March 31,
(In thousands, except per share amounts)		2024		2023
Numerator:
Net loss		$	(6,635)	$	(7,074)
Denominator:
Weighted-average common shares outstanding (Basic)		43,233,149		42,571,021
Weighted-average common shares outstanding (Diluted)		43,233,149		42,571,021
Net loss per common share (Basic and Diluted)		$	(0.15)	$	(0.17)
Anti-dilutive shares excluded from the calculation of diluted earnings per share (1)
Stock options		3,086,555		3,305,342
Restricted stock units		323,346		436,653

(1) These common equivalent shares are not included in the diluted per share calculations as they would be anti-dilutive if the Company was in a net income position.

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Income Taxes

3 Months Ended

Mar. 31, 2024

Income Tax Disclosure [Abstract]

Income Taxes

Income Taxes

The Company has no recorded income tax expense or income tax benefit for the three months ended March 31, 2024, and 2023 due to the generation of net operating losses, the benefits of which have been fully reserved.

The Company has not recorded current income tax expense due to the generation of net operating losses. Deferred income taxes are accounted for using the balance sheet approach, which requires recognition of deferred tax assets and liabilities for the expected future consequences of temporary differences between the financial reporting basis and the tax basis of assets and liabilities. A valuation allowance is provided when it is more likely than not that a deferred tax asset will not be realized. A full valuation allowance has been established on the deferred tax asset as it is more likely than not that a future tax benefit will not be realized. In addition, future utilization of the available net operating loss carryforward may be limited under Internal Revenue Code Section 382 as a result of changes in ownership.

The Company identifies and evaluates uncertain tax positions, if any, and recognizes the impact of uncertain tax positions for which there is a less than more likely than not probability of the position being upheld when reviewed by the relevant tax authority. Such positions are deemed to be unrecognized tax benefits and a corresponding liability is established on the condensed consolidated balance sheet. The Company has not recognized a liability for uncertain tax positions. If there were an unrecognized tax benefit, the Company would recognize interest accrued related to unrecognized tax benefits in interest expense and penalties in operating expenses. The Company’s remaining open tax years subject to examination by federal tax authorities include the years ended December 31, 2019, through 2023 , and we have received notice of examination from federal tax authorities for tax year 2021. For tax years 2005 through 2018, federal taxing authorities may examine and adjust loss carryforwards in the years in which those loss carryforwards are ultimately utilized.

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Commitments and Contingencies

3 Months Ended

Mar. 31, 2024

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

Commitments and Contingencies

Service Agreements

The Company pays Community Blood Center, (d/b/a Community Tissue Service) ("CTS") a facility fee for the use of clean rooms/manufacturing, storage, and office space and for services in support of its tissue processing including for routine sterilization of daily supplies, providing disposable supplies and microbial services, and office support. Pursuant to the CTS Agreement, the Company recorded expenses of $108 and $541 for the three months ended March 31, 2024 and 2023, respectively, and is included in cost of goods sold. The CTS Agreement was amended on December 31, 2023, extending the term through December 31, 2026. The CTS Agreement may be terminated by either party by providing an eighteen-month written notice. The Company reduced its utilization of CTS in 2023 for Avance, however, is continuing its use of CTS for Avive +.

In December 2011, the Company entered into a Master Services Agreement for Clinical Research and Related Services. The Company was required to pay $151 upon execution of this agreement and the remainder monthly based on activities associated with the execution of the Company's phase 3 pivotal clinical trial to support the biologics license application ("BLA") for Avance Nerve Graft. Payments made under this agreement were $0 and $112 for the three months ended March 31, 2024, and 2023, respectively.

Distribution and Supply Agreements

In August 2008, the Company entered into an exclusive distribution agreement with Cook Biotech Incorporated ("Cook Biotech") to distribute the Axoguard Nerve Connector and Axoguard Nerve Protector products worldwide and the parties subsequently amended the agreement on August 4, 2023. The distribution agreement expires on December 31, 2030. The Cook Biotech agreement establishes a formula for the transfer cost of the Axoguard products and requires certain minimum purchases by the Company, although, through mutual agreement, the parties have not established such minimums; and, to date, have not enforced such provision. Under the Cook Biotech agreement, the Company provides purchase orders to Cook Biotech, and Cook Biotech fulfills the purchase orders. The agreement allows for termination provisions for both parties. The loss of the ability to sell the Axoguard products could have a material adverse effect on the Company's business until other replacement products would be available.

In June 2017, the Company entered into the Nerve End Cap Supply Agreement (the "Supply Agreement") with Cook Biotech whereby Cook Biotech is the exclusive contract manufacturer of the Axoguard Nerve Cap, and the parties subsequently amended the agreement on August 4, 2023. The Supply Agreement expires on December 31, 2030. The Supply Agreement establishes the terms and conditions in which Cook Biotech will manufacture the product for the Company under the Supply Agreement the Company provides purchase orders to Cook Biotech and Cook Biotech fulfills the purchase orders. The Supply Agreement allows for termination provisions for both parties. The loss of the ability to sell the Axoguard Nerve Cap products could have a material adverse effect on the Company's business until other replacement products would be available.

In May 2023, the Company entered into a Supply and Manufacturing Agreement ("HA+ Supply Agreement") with Cook Biotech whereby Cook Biotech is the exclusive contract manufacturer of the Axoguard HA + Nerve Protector. The HA+ Supply Agreement expires on July 1, 2030. The HA + Supply Agreement establishes the terms and condition in which Cook Biotech will manufacture, package, label and deliver the product to the Company. Under the HA+ Supply Agreement, the Company provides purchase orders to Cook Biotech, and Cook Biotech fulfills the purchase orders. The HA+ Supply Agreement allows for termination provisions for both parties. The loss of the ability to sell the Axoguard products could have a material adverse effect on the Company's business until other replacement products would be available. On January 31, 2024, RTI Surgical, Inc. announced the acquisition of Cook Biotech. We do not expect the acquisition of Cook Biotech to have a material impact on our relationship with Cook Biotech or our operations.

Insurance Finance Agreement

We finance certain of our commercial insurance policies ("Insurance Financing Agreement"). Outstanding payments owed under the Insurance Financing Agreement are recorded as "prepaid expenses and other" in our condensed consolidated balance sheets. The amounts owed under the Insurance Financing Agreement included in prepaid expenses and other were $1,520 and $0 as of March 31, 2024, and December 31, 2023, respectively.

Processing Facilities

The Company is highly dependent on the continued availability of its processing facilities at CTS and APC in Dayton, Ohio and could be harmed if the physical infrastructure of these facilities is unavailable for any prolonged period of time.

Certain Economic Development Grants

The Company obtained certain economic development grants from state and local authorities totaling up to $2,685 including $1,250 of cash grants to offset costs to acquire and develop the APC Facility. The economic development grants are subject to certain job creation milestones through December 31, 2023, and have clawback clauses if the Company does not meet the job creation milestones The Company requested an extension from the grant authorities to extend the job creation milestones and received approval to extend the evaluation date to December 31, 2024, and the expiration date to December 31, 2026. As of March 31, 2024, the Company had received $1,188 from the cash grants.

Fair Value of the Debt Derivative Liabilities

The fair value of the debt derivative liabilities is $2,922 as of March 31, 2024. The fair value of the debt derivative liabilities was determined using a probability-weighted expected return model based upon the four potential settlement scenarios for the Credit Facility. The estimated settlement value of each scenario, which includes any required make-whole payment, is then discounted to present value using a discount rate that is derived based upon the initial terms of the Credit Facility at issuance and corroborated utilizing a synthetic rating analysis. The calculated fair values under the four scenarios are then compared to the fair value of a plain vanilla note, with the difference reflecting the fair value of the debt derivative liabilities. The Company estimated the make-whole payments required under each scenario according to the terms of the Credit

Facility to generate an internal rate of return equal to 11.5% through the scheduled maturity dates, less the total of all quarterly interest and royalty payments previously paid to the Lender. The calculation utilized the XIRR function in Microsoft Excel as required by the Credit Facility. If the debt is not prepaid but instead is held to its scheduled maturities, the Company’s estimate of the make-whole payment for the first tranche and second tranche of the Credit Facility due on June 30, 2027, and June 30, 2028, respectively, are approximately zero. The Company has consistently applied this approach since the inception of the debt agreement on June 30, 2020.

The Company is aware that the Lender may have an alternative interpretation of the calculation of the make-whole payments that the Company believes does not properly utilize the same methodology utilized by the XIRR function in Microsoft Excel as described in the Credit Facility. The Company estimates the top end of the range of the make-whole payments if the debt is held to scheduled maturity under an alternative interpretation to be approximately $8,000 for the first tranche of the Credit Facility due on June 30, 2027, and approximately $4,000 for the second tranche of the Credit Facility due on June 30, 2028. Further, if the debt is prepaid prior to the scheduled maturity dates and subject to the alternative interpretation, the make-whole payment would be larger than the amounts herein.

Legal Proceedings

The Company is and may be subject to various claims, lawsuits, and proceedings in the ordinary course of the Company's business. Such matters are subject to many uncertainties and outcomes are not predictable with assurance. While there can be no assurances as to the ultimate outcome of any legal proceeding or other loss contingency involving the Company, in the opinion of management, such claims are either adequately covered by insurance or otherwise indemnified, or are not expected individually or in the aggregate, to result in a material, adverse effect on the Company's financial condition, results of operations or cash flows. However, it is possible that the Company's results of operations, financial position and cash flows in a particular period could be materially affected by these contingencies.

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Pay vs Performance Disclosure - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Pay vs Performance Disclosure
Net loss	$ (6,635)	$ (7,074)

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Insider Trading Arrangements

3 Months Ended

Mar. 31, 2024

shares

Trading Arrangements, by Individual

Material Terms of Trading Arrangement

During the quarter ended March 31, 2024, our Section 16 officers and directors adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement” as each term is defined in Item 408(a) of Regulation S-K as noted below:

			Trading Arrangement
Name and Title	Action	Adoption Date	Rule 10b5-1*	Non-Rule 10b5-1**	Aggregate Number of Securities to be Sold	Expiration Date
Karen Zaderej	Adopt	3/8/2024	X		740,000	12/31/2024
*Intended to satisfy the affirmative defense of Rule 10b5-1(c)
** Not intended to satisfy the affirmative defense of Rule 10b5-1(c)

Non-Rule 10b5-1 Arrangement Adopted

false

Rule 10b5-1 Arrangement Terminated

false

Non-Rule 10b5-1 Arrangement Terminated

false

Karen Zaderej [Member]

Trading Arrangements, by Individual

Name

Karen Zaderej

Rule 10b5-1 Arrangement Adopted

true

Adoption Date

3/8/2024

Arrangement Duration

298 days

Aggregate Available

740,000

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Summary of Significant Accounting Policies (Policies)

3 Months Ended

Mar. 31, 2024

Accounting Policies [Abstract]

Reclassifications

Reclassifications

Certain reclassifications have been made to the prior period financial information to conform to the presentation used in the condensed consolidated statement of operations for the three months ended March 31, 2024.

Effective as of the first quarter of 2024, the Company voluntarily changed its accounting policy for shipping and handling costs. Under the new accounting policy, these costs are included in Costs of goods sold, whereas they were previously included in Sales and marketing expenses. Including these expenses in Costs of goods sold better aligns these costs with the related revenue in the gross profit calculation. Although the prior method of accounting continues to be an accepted alternative, the new accounting policy is more widely used in the industry and provides improved comparability of the Company's financial statements to its peers. This change in accounting policy has been applied retrospectively. The consolidated statement of operations for the three months ended March 31, 2023, has been reclassified to reflect this change in accounting policy. The impact of this reclassification was an increase of $1,465 to cost of goods sold for the three months ended March 31, 2023, and a corresponding decrease to Sales and marketing expenses in the same period.

Effective as of the first quarter of 2024, the Company also ceased allocating certain costs to and from certain departments. Previously such costs had been allocated based on the Company’s estimate of the proportionate share of total expense to Cost of goods sold, Sales and marketing, Research and development, and General and administrative. The Company determined that these changes would better reflect industry practice and would provide more meaningful information as well as increased transparency of its operations. To conform the 2023 presentation to the current quarter’s presentation, $1,062 was reclassified to General and administrative, of which $353 was previously included in Research and development, $707 was previously included in Sales and marketing, and $2 was previously included in Cost of goods sold for the three months ended March 31, 2023, in the condensed consolidated statement of operations.

These reclassifications had no impact on net revenue, loss from operations, net loss, or loss per common share for prior periods and do not represent a restatement of the Company's previously issued consolidated financial statements.

Basis of Presentation

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements include the accounts of the Company as of March 31, 2024, and December 31, 2023, and for the three months ended March 31, 2024, and 2023. The Company’s condensed consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q and Rule 10-01 of Regulation S-X, and; therefore, do not include all information and footnotes necessary for a fair presentation of consolidated financial position, results of operations, and cash flows in conformity with accounting principles generally accepted in the United States ("U.S. GAAP") and should be read in conjunction with the audited financial statements of the Company for the year ended December 31, 2023, which are included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023.

The interim condensed consolidated financial statements are unaudited, and in the opinion of management, reflect all adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of results for the periods presented. The results of operations for the three months ended March 31, 2024, are not necessarily indicative of the results to be expected for the full year due primarily to the impact of the continued uncertainty of general economic conditions that may impact the Company's markets for the remainder of fiscal year 2024. All intercompany accounts and transactions have been eliminated in consolidation.

Cash and Cash Equivalents and Concentration​ and Restricted Cash

Cash and Cash Equivalents and Concentration

Cash and cash equivalents consist of short-term, highly liquid investments with original maturities of three months or less from the date of acquisition. Certain of the Company's cash and cash equivalents balances exceed Federal Deposit Insurance Corporation ("FDIC") insured limits or are invested in money market accounts with investment banks that are not FDIC-insured. The Company places its cash and cash equivalents in what they believe to be credit-worthy financial institutions. As of March 31, 2024, $14,963 of the cash and cash equivalents balance was in excess of FDIC limits.

Restricted Cash

Amounts included in restricted cash represent those required to be set aside to meet contractual terms of a lease agreement held by the Company.

Shipping and Handling

Shipping and Handling

All shipping and handling costs, including facility and warehousing overhead, directly related to bringing the Company’s products to their final selling destination are included in cost of goods sold on the consolidated statements of operations. The Company has elected to account for shipping and handling costs for products shipped to customers as a fulfillment activity as the costs are incurred as part of the transfer of the goods to the customer in accordance with ASC 606. See Reclassifications above.

Recent Accounting Pronouncements

Recent Accounting Pronouncements

All other Accounting Standards Updates ("ASU's") issued and not yet effective as of December 31, 2023, and through the date of this report, were assessed and determined to be either not applicable or are expected to have minimal impact on the Company’s current or future financial position or results of operations except for the following:

In December 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standard Update 2023-09 — Income Taxes (Topic 740) — Improvements to Income Tax Disclosures ("ASU 2023-09"). The new guidance provides for disclosure on an annual basis of the following: (i) specific categories in the rate reconciliation, and (ii) additional information for reconciling items that meet a quantitative threshold of greater than 5% of the amount computed by multiplying pretax income (or loss) by the applicable statutory income tax rate. The amendment in ASU 2023-09 is effective for the annual periods beginning after December 15, 2025, early adoption is permitted. The Company expects to enhance annual income tax reporting disclosures based on the new requirements.

In November 2023, the FASB issued Accounting Standard Update 2023-07 — Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures ("ASU 2023-07"). The new guidance requires disclosure on an annual and interim basis of the following: (i) significant segment expenses regularly provided to the chief operating decision maker ("CODM") and a measure of segment profit or loss; (ii) an amount for other segment items by reportable segment and a description of its composition; (iii) all annual disclosures about a reportable segment's profit and loss and assets as currently required by Topic 280; (iv) clarify if the CODM uses more than one measure of a segment's profit or loss in assessing segment performance and deciding how to allocate resources; and (v) disclose title and position of the CODM and how the CODM uses

the reported measures. Public entities with a single reportable segment are required to provide all the disclosures required by this amendment. The amendment in ASU 2023-07 is effective for the annual periods beginning after December 15, 2023, and for the quarters in the years after December 15, 2024, early adoption is permitted. The Company expects to enhance annual segment reporting disclosures based on the new requirements.

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Summary of Significant Accounting Policies (Tables)

3 Months Ended

Mar. 31, 2024

Accounting Policies [Abstract]

Schedule of Cash and Cash Equivalents

The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported in the condensed consolidated balance sheets that sum to the total of the same amounts shown in the condensed consolidated statements of cash flows:

(In thousands)	March 31, 2024		December 31, 2023
Cash and cash equivalents	$	15,713	$	31,024
Restricted cash	6,000		6,002
Total cash, cash equivalents, and restricted cash shown in the statement of cash flows	$	21,713	$	37,026

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Inventory (Tables)

3 Months Ended

Mar. 31, 2024

Inventory Disclosure [Abstract]

Schedule of Inventory

Inventory consists of the following:

(in thousands)	March 31, 2024		December 31, 2023
Finished goods	$	19,901	$	13,545
Work in process	1,041		2,120
Raw materials	6,694		7,355
Inventory	$	27,636	$	23,020

The provision for inventory write-down is as follows:

	Three Months Ended March 31,
(in thousands)	2024		2023
Provision for inventory write-down	$	367	$	581

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Property and Equipment, Net (Tables)

3 Months Ended

Mar. 31, 2024

Property, Plant and Equipment [Abstract]

Schedule of Property and Equipment, Net

Property and equipment, net consist of the following:

(in thousands)	March 31, 2024		December 31, 2023
Land	$	731	$	731
Building	60,679		60,679
Leasehold improvements	17,896		15,348
Processing equipment	13,445		13,116
Furniture and equipment	9,821		8,741
Projects in process	317		3,674
Finance lease right-of-use assets	138		138
Property and equipment, at cost	103,028		102,427
Less: accumulated depreciation and amortization	(15,190)		(13,697)
Property and equipment, net	$	87,838	$	88,730

Depreciation expense is as follows:

	Three Months Ended March 31,
(in thousands)	2024		2023
Depreciation expense	$	1,520	$	709

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Intangible Assets, Net (Tables)

3 Months Ended

Mar. 31, 2024

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of Intangible Assets

Intangible assets consist of the following:

	March 31, 2024						December 31, 2023
(in thousands)	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Amortizable intangible assets:
Patents	$	5,204	$	(881)	$	4,323	$	4,905	$	(820)	$	4,085
License agreements	1,101		(1,089)		12		1,101		(1,087)		14
Total amortizable intangible assets	6,305		(1,969)		4,335		6,006		(1,907)		4,099
Unamortized intangible assets:
Trademarks	433		—		433		432		—		432
Total intangible assets	$	6,737	$	(1,969)	$	4,768	$	6,438	$	(1,907)	$	4,531

Schedule of Indefinite-Lived Intangible Assets

Intangible assets consist of the following:

	March 31, 2024						December 31, 2023
(in thousands)	Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount		Gross Carrying Amount		Accumulated Amortization		Net Carrying Amount
Amortizable intangible assets:
Patents	$	5,204	$	(881)	$	4,323	$	4,905	$	(820)	$	4,085
License agreements	1,101		(1,089)		12		1,101		(1,087)		14
Total amortizable intangible assets	6,305		(1,969)		4,335		6,006		(1,907)		4,099
Unamortized intangible assets:
Trademarks	433		—		433		432		—		432
Total intangible assets	$	6,737	$	(1,969)	$	4,768	$	6,438	$	(1,907)	$	4,531

Schedule of Amortization Expense

Amortization expense is as follows:

	Three Months Ended March 31,
(in thousands)	2024		2023
Amortization expense	$	62	$	71

Schedule of Future Amortization

As of March 31, 2024, future amortization of patents and license agreements is as follows:

Year Ending December 31,	(in thousands)
2024 (excluding the three months ended March 31, 2024)	$	189
2025	252
2026	250
2027	247
2028	247
Thereafter	3,150
Total	$	4,335

Schedule of Royalty Expenses

Royalty fee expense included in sales and marketing expense is as follows:

	Three Months Ended March 31,
(in thousands)	2024		2023
Royalty fee expense (1)	$	—	$	831

(1) Royalty fees are no longer being paid due to the expiration of the patents in 2023.

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Fair Value Measurement (Tables)

3 Months Ended

Mar. 31, 2024

Fair Value Disclosures [Abstract]

Schedule of Fair Value Financial Assets Measured on a Recurring Basis

The following tables present the Company's fair value hierarchy for its financial assets and liabilities measured at fair value on a recurring basis as of March 31, 2024, and December 31, 2023:

	March 31, 2024
(in thousands)	(Level 1)		(Level 2)		(Level 3)		Total
Assets:
Money market funds	$	8,835	$	—	$	—	$	8,835
U.S. government securities	1,921		—		—		1,921
Total assets	$	10,756	$	—	$	—	$	10,756
Liabilities:
Debt derivative liabilities	$	—	$	—	$	2,922	$	2,922
Total liabilities	$	—	$	—	$	2,922	$	2,922

	December 31, 2023
(in thousands)	(Level 1)		(Level 2)		(Level 3)		Total
Assets:
Money market funds	$	24,977	$	—	$	—	$	24,977
Total assets	$	24,977	$	—	$	—	$	24,977
Liabilities:
Debt derivative liabilities	$	—	$	—	$	2,987	$	2,987
Total liabilities	$	—	$	—	$	2,987	$	2,987

Schedule of Fair Value Instruments Classified Level 3

The changes in Level 3 liabilities measured at fair value on a recurring basis for the three months ended March 31, 2024 were as follows (in thousands):

Three Months Ended March 31, 2024
Balance, December 31, 2023	$	2,987
Change in fair value included in net loss	(65)
Balance, March 31, 2024	$	2,922

Schedule of Significant Inputs in Liability Valuation

The significant inputs that are included in the valuation of the debt derivative liability - first tranche include:

	March 31, 2024			December 31, 2023
Input
Remaining term (years)	3.25 years			3.5 years
Maturity date	June 30, 2027			June 30, 2027
Coupon rate	9.5% - 13.16%			9.5% - 13.2%
Revenue participation payments	Maximum each year			Maximum each year
Discount rate	12.24%		(1)	12.06%		(1)
Probability of mandatory prepayment 2024 or after	15.0	%	(1)	15.0	%	(1)
Estimated timing of mandatory prepayment event 2024 or after	March 31, 2026		(1)	March 31, 2026		(1)
Probability of optional prepayment event	5.0	%	(1)	5.0	%	(1)
Estimated timing of optional prepayment event	December 31, 2025		(1)	December 31, 2025		(1)
Probability of note held-to-maturity(2)	80.0%		(1)	80.0%		(1)

(1)Represents a significant unobservable input

(2) See Maturity date in table.

The significant inputs that are included in the valuation of the debt derivative liability - second tranche include:

	March 31, 2024			December 31, 2023
Input
Remaining term (years)	4.25 years			4.5 years
Maturity date	June 30, 2028			June 30, 2028
Coupon rate	9.5% - 13.16%			9.5% - 13.2%
Revenue participation payments	Maximum each year			Maximum each year
Discount rate	15.49	%	(1)	15.60	%	(1)
Probability of mandatory prepayment 2024 or after	15.0%		(1)	15.0%		(1)
Estimated timing of mandatory prepayment event 2024 or after	March 31, 2026		(1)	March 31, 2026		(1)
Probability of optional prepayment event	5.0%		(1)	5.0%		(1)
Estimated timing of optional prepayment event	December 31, 2025		(1)	December 31, 2025		(1)
Probability of held-to-maturity(2)	80.0%			80.0%

(1)Represents a significant unobservable input

(2)See Maturity date in table.

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Leases (Tables)

3 Months Ended

Mar. 31, 2024

Leases [Abstract]

Schedule of Operating Lease Expense

Operating lease expense is as follows:

	Three Months Ended March 31,
(in thousands)	2024		2023
Operating lease expense	$	1,206	$	1,298

Schedule of Supplemental Balance Sheet Information

Supplemental balance sheet information related to the operating and financing leases is as follows:

(In thousands, except lease term and discount rate)	March 31, 2024		December 31, 2023
Operating Leases
Right-of-use operating assets	$	15,247	$	15,562
Current maturities of long-term lease obligations	$	1,639	$	1,541
Long-term lease obligations	$	20,663	$	21,123
Financing Leases
Right-of-use financing leases (1)	$	24	$	28
Current maturities of long-term lease obligations	$	5	$	6
Long-term lease obligations	$	18	$	19
Weighted average operating lease term (in years):	9.4		9.6
Weighted average financing lease term (in years):	3.8		6.5
Weighted average discount rate operating leases	10.98%		10.99%
Weighted average discount rate financing leases	13.99%		13.22%

(1) Financing leases are included in property and equipment, net on the condensed consolidated balance sheets.

Schedule of Operating Lease Maturity

Future minimum lease payments under operating and financing leases at March 31, 2024, are as follows:

(In thousands)
2024 (excluding three months ended March 31, 2024)	$	2,951
2025	4,134
2026	4,269
2027	3,106
2028	3,104
Thereafter	18,565
Total	36,129
Less: Imputed interest	(13,804)
Total lease liability	22,325
Less: Current lease liability	(1,644)
Long-term lease liability	$	20,681

Schedule of Finance Lease Maturity

Future minimum lease payments under operating and financing leases at March 31, 2024, are as follows:

(In thousands)
2024 (excluding three months ended March 31, 2024)	$	2,951
2025	4,134
2026	4,269
2027	3,106
2028	3,104
Thereafter	18,565
Total	36,129
Less: Imputed interest	(13,804)
Total lease liability	22,325
Less: Current lease liability	(1,644)
Long-term lease liability	$	20,681

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Long-Term Debt, Net of Debt Discount and Financing Fees (Tables)

3 Months Ended

Mar. 31, 2024

Debt Disclosure [Abstract]

Schedule of Long-Term Debt, Net of Debt Discount and Financing Fees

Long-term debt, net of debt discount and financing fees consists of the following:

(in thousands)	March 31, 2024		December 31, 2023
Credit Facility - first tranche	$	35,000	$	35,000
Credit Facility - second tranche	15,000		15,000
Less - unamortized debt discount and deferred financing fees	(3,175)		(3,397)
Long-term debt, net of debt discount and financing fees	$	46,825	$	46,603

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Stock-Based Compensation (Tables)

3 Months Ended

Mar. 31, 2024

Share-Based Payment Arrangement [Abstract]

Schedule of Stock Unit Activity

During the fiscal year 2024, the following stock compensation was awarded to officers and employees. All awards were granted under the 2019 Amended and Restated Long-Term Incentive Plan ("2019 Plan"), with the exception of the inducement shares awarded as inducements material to new employees entering into employment with the Company in accordance with Nasdaq Listing Rule 5635(c)(4).

Type of Award	Quarter Awarded	Target Shares or Units	Weighted Average Grant Date Fair Value
Stock Options (1)	1st Quarter	—	$	—
Restricted Stock Units (2)	1st Quarter	787,688	$	9.05
Performance Stock Units (3)(4)	1st Quarter	911,400	$	8.92
Inducement Shares (5)
Stock Options	1st Quarter	18,700	$	6.04
Restricted Stock Units	1st Quarter	310,000	$	7.00

(1)      Options awarded to officers and employees during the first quarter vest over a four-year period.

(2)     Restricted Stock Units (RSUs) awarded to certain officers and employees during the first quarter vest over a four-year period. Upon vesting, the outstanding number of RSUs vested are converted into common stock.

(3)    Performance Stock Units (PSUs) awarded to certain officers and employees related to their work on the BLA ("2024 BLA PSUs") totaled 487,400 shares during the first quarter of 2024. Participants with 2024 BLA PSUs will earn from 0% to 100% upon achievement of certain milestones related to the BLA submission and FDA approval. The number of shares available for grant is linked to certain milestones related to the BLA submission to and approval by the FDA. These awards will vest provided the participants remain in continuous service to the Company through the achievement of the applicable performance goal and the one-year anniversary of the grant date.

(4)    PSUs awarded to certain officers and employees with a target of 424,400 shares with performance metrics tied to the achievement of stock price goals between February 2024 through February 2027 ("TSR PSU") during the first quarter of 2024. Participants with TSR PSUs will earn from 0% to 200% upon achievement of specific stock price goals. Absent the shareholder approval of an increase to the number of authorized shares under the Amended and Restated 2019 Plan at the 2024 Shareholder Meeting, the settlement of the TSR PSUs awards are limited to 100%. The maximum number of shares that can be issued under this award is 848,800. Vesting occurs at the end of the three-year performance period upon Compensation Committee certification of the results at the end of the performance period.

(5)     Inducement shares were issued to officers during the first quarter of 2024, to new employees entering into employment with the Company in accordance with Nasdaq Listing Rule 5635(c)(4). Vesting for both the stock options and restricted stock units are over both a three-and four-year period.

Schedule of Stock Based Compensation Expense

Total stock-based compensation expense is as follows:

	Three Months Ended March 31,
(in thousands)	2024		2023
Stock-based compensation expense	$	3,919	$	2,954

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Net Loss Per Common Share (Tables)

3 Months Ended

Mar. 31, 2024

Earnings Per Share [Abstract]

Schedule of Net Loss Per Common Share

The following reflects the net loss attributable to common shareholders and share data used in the basic and diluted earnings per share computations using the two-class method:

	Three Months Ended March 31,
(In thousands, except per share amounts)		2024		2023
Numerator:
Net loss		$	(6,635)	$	(7,074)
Denominator:
Weighted-average common shares outstanding (Basic)		43,233,149		42,571,021
Weighted-average common shares outstanding (Diluted)		43,233,149		42,571,021
Net loss per common share (Basic and Diluted)		$	(0.15)	$	(0.17)
Anti-dilutive shares excluded from the calculation of diluted earnings per share (1)
Stock options		3,086,555		3,305,342
Restricted stock units		323,346		436,653

(1) These common equivalent shares are not included in the diluted per share calculations as they would be anti-dilutive if the Company was in a net income position.

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Summary of Significant Accounting Policies - Narrative (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Reduction to sales and marketing expense	$ (19,815)	$ (19,446)
Cost of goods sold increase (decrease)	8,758	8,172
General and administrative	9,956	10,061
Decrease in research and development	(7,409)	(6,326)
Cash and cash equivalents balance outside of FDIC limit	$ 14,963
Revision of Prior Period, Reclassification, Adjustment
Reduction to sales and marketing expense		707
Cost of goods sold increase (decrease)		(2)
General and administrative		1,062
Decrease in research and development		353
Shipping and Handling | Revision of Prior Period, Change in Accounting Principle, Adjustment
Reduction to sales and marketing expense		1,465
Cost of goods sold increase (decrease)		$ 1,465

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Summary of Significant Accounting Policies - Reconciliation of Cash (Details) - USD ($) $ in Thousands	Mar. 31, 2024	Dec. 31, 2023	Mar. 31, 2023	Dec. 31, 2022
Accounting Policies [Abstract]
Cash and cash equivalents	$ 15,713	$ 31,024
Restricted cash	6,000	6,002
Total cash, cash equivalents, and restricted cash shown in the statement of cash flows	$ 21,713	$ 37,026	$ 13,959	$ 21,535

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Inventory (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023	Dec. 31, 2023
Inventory Disclosure [Abstract]
Finished goods	$ 19,901		$ 13,545
Work in process	1,041		2,120
Raw materials	6,694		7,355
Inventory	27,636		$ 23,020
Provision for inventory write-down	$ 367	$ 581

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Property and Equipment, Net - Schedule of Property and Equipment (Details) - USD ($) $ in Thousands	Mar. 31, 2024	Dec. 31, 2023
Property, Plant and Equipment [Line Items]
Finance lease right-of-use assets	$ 138	$ 138
Property and equipment, at cost	103,028	102,427
Less: accumulated depreciation and amortization	(15,190)	(13,697)
Property and equipment, net	87,838	88,730
Land
Property, Plant and Equipment [Line Items]
Property and equipment, at cost	731	731
Building
Property, Plant and Equipment [Line Items]
Property and equipment, at cost	60,679	60,679
Leasehold improvements
Property, Plant and Equipment [Line Items]
Property and equipment, at cost	17,896	15,348
Processing equipment
Property, Plant and Equipment [Line Items]
Property and equipment, at cost	13,445	13,116
Furniture and equipment
Property, Plant and Equipment [Line Items]
Property and equipment, at cost	9,821	8,741
Projects in process
Property, Plant and Equipment [Line Items]
Property and equipment, at cost	$ 317	$ 3,674

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Property and Equipment, Net - Schedule of Depreciation Expense (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Property, Plant and Equipment [Abstract]
Depreciation expense	$ 1,520	$ 709

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Intangible Assets, Net - Components of Intangible Assets (Details) - USD ($) $ in Thousands	Mar. 31, 2024	Dec. 31, 2023
Amortizable intangible assets:
Gross Carrying Amount	$ 6,305	$ 6,006
Accumulated Amortization	(1,969)	(1,907)
Net Carrying Amount	4,335	4,099
Unamortized intangible assets:
Intangible assets, gross	6,737	6,438
Intangible assets, net	4,768	4,531
Trademarks
Unamortized intangible assets:
Carrying amount	433	432
Patents
Amortizable intangible assets:
Gross Carrying Amount	5,204	4,905
Accumulated Amortization	(881)	(820)
Net Carrying Amount	4,323	4,085
License agreements
Amortizable intangible assets:
Gross Carrying Amount	1,101	1,101
Accumulated Amortization	(1,089)	(1,087)
Net Carrying Amount	$ 12	$ 14

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Intangible Assets, Net - Amortization Expense (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Goodwill and Intangible Assets Disclosure [Abstract]
Amortization expense	$ 62	$ 71

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Intangible Assets, Net - Future Amortization of Patents and License Agreements (Details) - USD ($) $ in Thousands	Mar. 31, 2024	Dec. 31, 2023
Intangible assets
Net Carrying Amount	$ 4,335	$ 4,099
Patents and License Agreements
Intangible assets
2024 (excluding the three months ended March 31, 2024)	189
2025	252
2026	250
2027	247
2028	247
Thereafter	3,150
Net Carrying Amount	$ 4,335

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Intangible Assets, Net - Schedule of Royalty Expenses (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Selling and Marketing Expense
Intangible assets
Royalty fee expense	$ 0	$ 831

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Fair Value Measurement - Schedule of Assets and Liabilities at Fair Value on a Recurring Basis (Details) - USD ($) $ in Thousands	Mar. 31, 2024	Dec. 31, 2023
Debt derivative liabilities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Debt derivative liabilities	$ 2,922	$ 2,987
Recurring
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets	10,756	24,977
Total liabilities	2,922	2,987
Recurring | Money market funds
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets	8,835	24,977
Recurring | U.S. government securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets	1,921
Recurring | Debt derivative liabilities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Debt derivative liabilities	2,922	2,987
(Level 1) | Recurring
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets	10,756	24,977
Total liabilities	0	0
(Level 1) | Recurring | Money market funds
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets	8,835	24,977
(Level 1) | Recurring | U.S. government securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets	1,921
(Level 1) | Recurring | Debt derivative liabilities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Debt derivative liabilities	0	0
(Level 2) | Recurring
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets	0	0
Total liabilities	0	0
(Level 2) | Recurring | Money market funds
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets	0	0
(Level 2) | Recurring | U.S. government securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets	0
(Level 2) | Recurring | Debt derivative liabilities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Debt derivative liabilities	0	0
(Level 3) | Recurring
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets	0	0
Total liabilities	2,922	2,987
(Level 3) | Recurring | Money market funds
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets	0	0
(Level 3) | Recurring | U.S. government securities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Total assets	0
(Level 3) | Recurring | Debt derivative liabilities
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Debt derivative liabilities	$ 2,922	$ 2,987

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Fair Value Measurement - Fair Value of Instruments Classified as Level 3 (Details) - Recurring $ in Thousands	3 Months Ended
	Mar. 31, 2024 USD ($)
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Beginning balance	$ 2,987
Ending balance	2,922
Debt derivative liabilities
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Change in fair value included in net loss	$ (65)

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Fair Value Measurement - Narrative (Details) - Oberland Facility $ in Thousands	Mar. 31, 2024 USD ($) settlementScenario	Dec. 31, 2023 USD ($)
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Long-term debt	$ 46,825	$ 46,603
Fair value of long-term debt	$ 52,049	$ 51,486
Debt derivative liabilities
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Number of potential settlement scenarios | settlementScenario	4

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Fair Value Measurement - Significant Inputs Included in the Valuation of the Debt Derivative Liability (Details)	Mar. 31, 2024	Dec. 31, 2023
First Tranche | Mandatory prepayment rate | Probability of note held-to-maturity
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Derivative liability measurement input (as a percent)	0.800	0.800
First Tranche | Debt derivative liabilities | Remaining term (years)
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Derivative liability measurement input (as a percent)	3.25	3.5
First Tranche | Debt derivative liabilities | Coupon rate | Minimum
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Derivative liability measurement input (as a percent)	0.095	0.095
First Tranche | Debt derivative liabilities | Coupon rate | Maximum
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Derivative liability measurement input (as a percent)	0.1316	0.132
First Tranche | Debt derivative liabilities | Discount rate
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Derivative liability measurement input (as a percent)	0.1224	0.1206
First Tranche | Debt derivative liabilities | Mandatory prepayment rate | Probability of mandatory prepayment 2024 or after
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Derivative liability measurement input (as a percent)	0.150	0.150
First Tranche | Debt derivative liabilities | Mandatory prepayment rate | Probability of optional prepayment event
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Derivative liability measurement input (as a percent)	0.050	0.050
Second Tranche | Mandatory prepayment rate | Probability of note held-to-maturity
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Derivative liability measurement input (as a percent)	0.800	0.800
Second Tranche | Debt derivative liabilities | Remaining term (years)
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Derivative liability measurement input (as a percent)	4.25	4.5
Second Tranche | Debt derivative liabilities | Coupon rate | Minimum
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Derivative liability measurement input (as a percent)	0.095	0.095
Second Tranche | Debt derivative liabilities | Coupon rate | Maximum
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Derivative liability measurement input (as a percent)	0.1316	0.132
Second Tranche | Debt derivative liabilities | Discount rate
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Derivative liability measurement input (as a percent)	0.1549	0.1560
Second Tranche | Debt derivative liabilities | Mandatory prepayment rate | Probability of mandatory prepayment 2024 or after
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Derivative liability measurement input (as a percent)	0.150	0.150
Second Tranche | Debt derivative liabilities | Mandatory prepayment rate | Probability of optional prepayment event
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Derivative liability measurement input (as a percent)	0.050	0.050

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Leases - Operating Lease Expense (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Leases [Abstract]
Operating lease expense	$ 1,206	$ 1,298

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Leases - Supplemental Balance Sheet Information (Details) - USD ($) $ in Thousands	Mar. 31, 2024	Dec. 31, 2023
Operating Leases
Right-of-use operating assets	$ 15,247	$ 15,562
Current maturities of long-term lease obligations	1,639	1,541
Long-term lease obligations	20,663	21,123
Financing Leases
Right-of-use financing leases	24	28
Current maturities of long-term lease obligations	5	6
Long-term lease obligations	$ 18	$ 19
Weighted average operating lease term (in years):	9 years 4 months 24 days	9 years 7 months 6 days
Weighted average financing lease term (in years):	3 years 9 months 18 days	6 years 6 months
Weighted average discount rate operating leases	10.98%	10.99%
Weighted average discount rate financing leases	13.99%	13.22%
Operating Lease, Liability, Current, Statement of Financial Position [Extensible List]	Current maturities of long-term lease obligations	Current maturities of long-term lease obligations
Operating Lease, Liability, Noncurrent, Statement of Financial Position [Extensible List]	Long-term lease obligations	Long-term lease obligations
Finance Lease, Liability, Current, Statement of Financial Position [Extensible List]	Current maturities of long-term lease obligations	Current maturities of long-term lease obligations
Finance Lease, Liability, Noncurrent, Statement of Financial Position [Extensible List]	Long-term lease obligations	Long-term lease obligations

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Leases - Future Minimum Lease Payments (Details) $ in Thousands	Mar. 31, 2024 USD ($)
Leases [Abstract]
2024 (excluding three months ended March 31, 2024)	$ 2,951
2025	4,134
2026	4,269
2027	3,106
2028	3,104
Thereafter	18,565
Total	36,129
Less: Imputed interest	(13,804)
Total lease liability	22,325
Less: Current lease liability	(1,644)
Long-term lease liability	$ 20,681

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Long-Term Debt, Net of Debt Discount and Financing Fees - Carrying Value of Outstanding Debt (Details) - USD ($) $ in Thousands	Mar. 31, 2024	Dec. 31, 2023
Debt Instrument [Line Items]
Less - unamortized debt discount and deferred financing fees	$ (3,175)	$ (3,397)
Long-term debt, net of debt discount and financing fees	46,825	46,603
Credit Facility - first tranche
Debt Instrument [Line Items]
Long-term debt	35,000	35,000
Credit Facility - second tranche
Debt Instrument [Line Items]
Long-term debt	$ 15,000	$ 15,000

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Long-Term Debt, Net of Debt Discount and Financing Fees - Narrative (Details) - USD ($) $ in Thousands		3 Months Ended
	Jun. 29, 2023	Mar. 31, 2024	Mar. 31, 2023	Dec. 31, 2023	Jun. 30, 2021	Jun. 30, 2020
Debt Instrument [Line Items]
Interest capitalized		$ 0	$ 2,147
Amortization of debt discount and deferred financing fees		222	219
Restricted cash		6,000		$ 6,002
Debt derivative liabilities
Debt Instrument [Line Items]
Debt derivative liabilities		$ 2,922		$ 2,987
Credit Facility
Debt Instrument [Line Items]
Long-term debt					$ 15,000	$ 35,000
Period for which quarterly interest payments should be made	7 years
Interest rate	7.50%
Interest rate at period end		12.93%
Term of debt (in years)	7 years
Threshold revenue achievement for payment of additional quarterly royalty	$ 70,000
Additional payment	1.50%
Interest costs incurred		$ 447	396
Cash paid for interest		1,634	$ 1,532
Financing costs		$ 642
Credit Facility | Minimum
Debt Instrument [Line Items]
Interest rate	9.50%
Credit Facility | Secured Overnight Financing Rate (SOFR)
Debt Instrument [Line Items]
Additional interest floor rate	2.00%

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Stock-Based Compensation - Schedule of Stock-based Compensation Activity (Details)	3 Months Ended
	Mar. 31, 2024 $ / shares shares
2024 BLA PSU | Minimum
Weighted Average Granted Date Fair Value
Payout opportunity target	0.00%
2024 BLA PSU | Maximum
Weighted Average Granted Date Fair Value
Payout opportunity target	100.00%
TSR PSU
Weighted Average Granted Date Fair Value
Payout opportunity target	100.00%
TSR PSU | Minimum
Weighted Average Granted Date Fair Value
Payout opportunity target	0.00%
TSR PSU | Maximum
Weighted Average Granted Date Fair Value
Payout opportunity target	200.00%
Stock options
Target Shares or Units
Stock options granted (in shares)	0
Weighted Average Granted Date Fair Value
Stock options granted (in USD per share) | $ / shares	$ 0
Vesting period	4 years
Restricted stock units
Target Shares or Units
Stock units granted (in shares)	787,688
Weighted Average Granted Date Fair Value
Stock options/units granted (in USD per share) | $ / shares	$ 9.05
Vesting period	4 years
Performance Stock Units
Target Shares or Units
Stock units granted (in shares)	911,400
Weighted Average Granted Date Fair Value
Stock options/units granted (in USD per share) | $ / shares	$ 8.92
Performance Stock Units | 2024 BLA PSU
Target Shares or Units
Stock units granted (in shares)	487,400
Weighted Average Granted Date Fair Value
Vesting period	1 year
Performance Stock Units | TSR PSU
Target Shares or Units
Stock units granted (in shares)	424,400
Weighted Average Granted Date Fair Value
Vesting period	3 years
Shares authorized for issuance (in shares)	848,800
Inducement Shares, Stock Options
Target Shares or Units
Stock options granted (in shares)	18,700
Weighted Average Granted Date Fair Value
Stock options granted (in USD per share) | $ / shares	$ 6.04
Inducement Shares, Stock Options | Inducement Shares
Weighted Average Granted Date Fair Value
Vesting period	3 years
Inducement Shares, Restricted Stock Units
Target Shares or Units
Stock units granted (in shares)	310,000
Weighted Average Granted Date Fair Value
Stock options/units granted (in USD per share) | $ / shares	$ 7.00
Inducement Shares, Restricted Stock Units | Inducement Shares
Weighted Average Granted Date Fair Value
Vesting period	4 years

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Stock-Based Compensation - Schedule of Stock-based Compensation Expense (Details) - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Share-Based Payment Arrangement [Abstract]
Stock-based compensation expense	$ 3,919	$ 2,954

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Net Loss Per Common Share (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended
	Mar. 31, 2024	Mar. 31, 2023
Numerator:
Net loss	$ (6,635)	$ (7,074)
Denominator:
Weighted-average common shares outstanding (Basic) (in shares)	43,233,149	42,571,021
Weighted-average common shares outstanding (Diluted) (in shares)	43,233,149	42,571,021
Net loss per common share - Basic (in USD per share)	$ (0.15)	$ (0.17)
Net loss per common share - Diluted (in USD per share)	$ (0.15)	$ (0.17)
Stock options
Denominator:
Anti-dilutive shares excluded from the calculation of diluted earnings per share (in shares)	3,086,555	3,305,342
Restricted stock units
Denominator:
Anti-dilutive shares excluded from the calculation of diluted earnings per share (in shares)	323,346	436,653

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Commitments and Contingencies - Service Agreements Narrative (Details) - USD ($) $ in Thousands	1 Months Ended	3 Months Ended
	Dec. 31, 2011	Mar. 31, 2024	Mar. 31, 2023	Dec. 31, 2023
Insurance Finance Agreement
Service Agreements
Prepaid commitment		$ 1,520		$ 0
CTS Agreement
Service Agreements
License fee amount		$ 108	$ 541
License fee termination period		18 months
Master Services Agreement For Clinical Research and Related Services
Service Agreements
Service agreement amount paid upon execution of agreement	$ 151
Payments made under agreement		$ 0	$ 112

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Commitment and Contingencies - Certain Economic Development Grants Narrative (Details) - APC Facility - Design Build Agreement - USD ($) $ in Thousands	3 Months Ended
	Mar. 31, 2024	Jul. 09, 2019
Service Agreements
Grants receivable		$ 2,685
Cash grants receivable		$ 1,250
Economic development grant proceeds	$ 1,188

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Commitments and Contingencies - Fair Value of the Debt Derivative Liabilities (Details)	Mar. 31, 2024 USD ($) settlementScenario	Dec. 31, 2023 USD ($)
Debt derivative liabilities
Debt Instrument [Line Items]
Debt derivative liabilities	$ 2,922,000	$ 2,987,000
Credit Facility | Debt derivative liabilities
Debt Instrument [Line Items]
Number of potential settlement scenarios | settlementScenario	4
Make-whole payment required under each scenario, internal rate of return (as a percent)	11.50%
Credit Facility - first tranche
Debt Instrument [Line Items]
Debt instrument, held to maturity make-whole payment	$ 0
Held to maturity make-whole payment, alternative interpretation	8,000,000
Credit Facility - second tranche
Debt Instrument [Line Items]
Debt instrument, held to maturity make-whole payment	0
Held to maturity make-whole payment, alternative interpretation	$ 4,000,000