QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer Identification No.) |
Title of each class |
Trading symbol |
Name of each exchange | ||
Large accelerated filer |
☐ | Accelerated filer | ☐ | |||
☒ |
Smaller reporting company |
|||||
Emerging growth company |
Class of Common Stock |
Outstanding Shares as of September 1 7 | |
Common Stock, $0.001 par value |
Page |
||||||
PART I. FINANCIAL INFORMATION |
||||||
Item 1. | 1 | |||||
1 | ||||||
2 | ||||||
3 | ||||||
5 |
||||||
6 | ||||||
Item 2. | 31 | |||||
Item 3. | 47 | |||||
Item 4. | 47 | |||||
Item 1. | 48 | |||||
Item 1A. | 48 | |||||
Item 2. | 48 | |||||
Item 6. | 49 | |||||
Signatures | 51 |
June 30, 2020 |
December 31, 2019 |
|||||||
(unaudited) |
||||||||
ASSETS: |
||||||||
Current assets: |
||||||||
Cash and cash equivalents |
$ | $ | ||||||
Marketable securities |
||||||||
Restricted cash |
||||||||
Accounts receivable |
||||||||
Inventory |
||||||||
Deferred offering costs |
— |
|||||||
Prepaid expenses and other current assets |
||||||||
Total current assets |
||||||||
Property and equipment, net |
||||||||
Right-of-use asset, net |
||||||||
Intangible assets, net |
||||||||
Goodwill |
||||||||
Other assets |
||||||||
Total assets |
$ |
$ |
||||||
LIABILITIES, CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ DEFICIT |
||||||||
Current liabilities: |
||||||||
Accounts payable |
$ | $ | ||||||
Accrued liabilities |
||||||||
Contingent consideration, short-term |
||||||||
Operating lease liabilities, short-term |
||||||||
Common and preferred stock warrant liability |
||||||||
Total current liabilities |
||||||||
Operating lease liabilities, long-term |
||||||||
Long-term debt |
||||||||
Contingent consideration, long-term |
||||||||
Total liabilities |
||||||||
Commitments and contingencies (Note 11) |
||||||||
C onvertible preferred stock |
||||||||
Series A convertible preferred stock, $ December 31, 2019; liquidation preference of $ |
||||||||
Series B convertible preferred stock, $ December 31, 2019; liquidation preference of $ |
||||||||
Series C convertible preferred stock, $ |
||||||||
Series D convertible preferred stock, $ respectively |
||||||||
Stockholders’ deficit |
||||||||
Common stock, $ |
||||||||
Additional paid-in capital |
||||||||
Accumulated deficit |
( |
) | ( |
) | ||||
Accumulated other comprehensive loss |
( |
) | ( |
) | ||||
Total stockholders’ deficit |
( |
) | ( |
) | ||||
Total liabilities, convertible preferred stock and stockholders’ deficit |
$ |
$ |
||||||
Three Months Ended June 30, |
Six Months Ended June 30, |
|||||||||||||||
2020 |
2019 |
2020 |
2019 |
|||||||||||||
Revenue |
$ | $ | $ | $ | ||||||||||||
Costs and operating expenses: |
||||||||||||||||
Cost of products sold |
||||||||||||||||
Research and development |
||||||||||||||||
Selling, general and administrative |
||||||||||||||||
Change in fair value of contingent consideration |
— | ( |
) | — | ||||||||||||
Total costs and operating expenses |
||||||||||||||||
Loss from operations |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
Other income (expense): |
||||||||||||||||
Change in fair value of warrant liability and embedded derivative |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
Loss on debt extinguishment |
— | ( |
) | — | ( |
) | ||||||||||
Interest income |
||||||||||||||||
Interest expense |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
Total other expense, net |
( |
) | ( |
) | ( |
) | ( |
) | ||||||||
Net loss |
$ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||
Other comprehensive income (loss) |
||||||||||||||||
Unrealized (loss) gain on marketable securities |
( |
) | ( |
) | ||||||||||||
Foreign currency translation adjustment |
( |
) | ||||||||||||||
Comprehensive loss |
$ |
( |
) |
$ |
( |
) |
$ |
( |
) |
$ |
( |
) | ||||
Net loss per common share, basic and diluted |
$ | ( |
) | $ | ( |
) | $ | ( |
) | $ | ( |
) | ||||
Weighted-average shares outstanding, basic and diluted |
||||||||||||||||
Series A Convertible Preferred Stock |
Series B Convertible Preferred Stock |
Series C Convertible Preferred Stock |
Series D Convertible Preferred Stock |
Common Stock |
Additional Paid-in Capital |
Accumulated Deficit |
Accumulated Other Comprehensive Income (Loss) |
Total Stockholders’ Deficit |
||||||||||||||||||||||||||||||||||||||||||||||||
Shares |
Amount |
Shares |
Amount |
Shares |
Amount |
Shares |
Amount |
Shares |
Amount |
|||||||||||||||||||||||||||||||||||||||||||||||
Balance as of March 31, 2020 (unaudited) |
$ |
$ |
$ |
$ |
$ |
$ |
$ |
( |
) |
$ |
( |
) |
$ |
( |
) | |||||||||||||||||||||||||||||||||||||||||
Unrealized loss on marketable securities |
— |
— |
— |
— |
— |
— |
— |
— |
— |
— |
— |
— |
( |
) |
( |
) | ||||||||||||||||||||||||||||||||||||||||
Foreign currency translation adjustment |
— |
— |
— |
— |
— |
— |
— |
— |
— |
— |
— |
— |
||||||||||||||||||||||||||||||||||||||||||||
Stock option exercises |
— |
— |
— |
— |
— |
— |
— |
— |
— |
— |
— |
|||||||||||||||||||||||||||||||||||||||||||||
Stock-based compensation |
— |
— |
— |
— |
— |
— |
— |
— |
— |
— |
— |
— |
||||||||||||||||||||||||||||||||||||||||||||
Net loss |
— |
— |
— |
— |
— |
— |
— |
— |
— |
— |
— |
( |
) |
— |
( |
) | ||||||||||||||||||||||||||||||||||||||||
Balance as of June 30, 2020 (unaudited) |
$ |
$ |
$ |
$ |
$ |
$ |
$ |
( |
) |
$ |
( |
$ |
( |
) | ||||||||||||||||||||||||||||||||||||||||||
Series A Convertible Preferred Stock |
Series B Convertible Preferred Stock |
Series C Convertible Preferred Stock |
Series D Convertible Preferred Stock |
Common Stock |
Additional Paid-in Capital |
Accumulated Deficit |
Accumulated Other Comprehensive Income (Loss) |
Total Stockholders’ Deficit |
||||||||||||||||||||||||||||||||||||||||||||||||
Shares |
Amount |
Shares |
Amount |
Shares |
Amount |
Shares |
Amount |
Shares |
Amount |
|||||||||||||||||||||||||||||||||||||||||||||||
Balance as of March 31, 2019 (unaudited) |
$ |
$ |
$ |
— |
$ |
— |
$ |
$ |
$ |
( |
) |
$ |
$ |
( |
) | |||||||||||||||||||||||||||||||||||||||||
Unrealized gain on marketable securities |
— |
— |
— |
— |
— |
— |
— |
— |
— |
— |
— |
— |
||||||||||||||||||||||||||||||||||||||||||||
Foreign currency translation adjustment |
— |
— |
— |
— |
— |
— |
— |
— |
— |
— |
— |
— |
||||||||||||||||||||||||||||||||||||||||||||
Issuance of Series D convertible preferred stock for cash, net of issuance costs of $ |
— |
— |
— |
— |
— |
— |
— |
— |
— |
— |
— |
— |
||||||||||||||||||||||||||||||||||||||||||||
Issuance of Series D convertible preferred stock for 2018 Convertible Notes and 2019 Convertible Notes |
— |
— |
— |
— |
— |
— |
— |
— |
— |
— |
— |
— |
||||||||||||||||||||||||||||||||||||||||||||
Stock-based compensation |
— |
— |
— |
— |
— |
— |
— |
— |
— |
— |
— |
|||||||||||||||||||||||||||||||||||||||||||||
Stock option exercises |
— |
— |
— |
— |
— |
— |
— |
— |
— |
— |
— |
|||||||||||||||||||||||||||||||||||||||||||||
Net loss |
— |
— |
— |
— |
— |
— |
— |
— |
— |
— |
— |
( |
) |
— |
( |
) | ||||||||||||||||||||||||||||||||||||||||
Balance as of June 30, 2019 (unaudited) |
$ |
$ |
$ |
$ |
$ |
$ |
$ |
( |
) |
$ |
$ |
( |
) | |||||||||||||||||||||||||||||||||||||||||||
Series A |
Series B |
Series C |
Series D |
Common Stock |
Additional Paid-in Capital |
Accumulated Deficit |
Accumulated Other Comprehensive Income (Loss) |
Total Stockholders’ Deficit |
||||||||||||||||||||||||||||||||||||||||||||||||
Convertible Preferred Stock |
Convertible Preferred Stock |
Convertible Preferred Stock |
Convertible Preferred Stock |
|||||||||||||||||||||||||||||||||||||||||||||||||||||
Shares |
Amount |
Shares |
Amount |
Shares |
Amount |
Shares |
Amount |
Shares |
Amount |
|||||||||||||||||||||||||||||||||||||||||||||||
Balance as of December 31, 2019 |
$ |
$ |
$ |
$ |
$ |
$ |
$ |
( |
$ |
( |
$ |
( |
||||||||||||||||||||||||||||||||||||||||||||
Unrealized loss on marketable securities |
— |
— |
— |
— |
— |
— |
— |
— |
— |
— |
— |
— |
( |
) |
( |
) | ||||||||||||||||||||||||||||||||||||||||
Foreign currency translation adjustment |
— |
— |
— |
— |
— |
— |
— |
— |
— |
— |
— |
— |
||||||||||||||||||||||||||||||||||||||||||||
Issuance of Series D convertible preferred stock for the Biotronik Asset Purchase |
— |
— |
— |
— |
— |
— |
— |
— |
— |
— |
— |
— |
||||||||||||||||||||||||||||||||||||||||||||
Issuance of Series D convertible preferred stock for the contingent consideration related to the Rhythm Xience Acquisition |
— |
— |
— |
— |
— |
— |
— |
— |
— |
— |
— |
— |
||||||||||||||||||||||||||||||||||||||||||||
Stock option exercises |
— |
— |
— |
— |
— |
— |
— |
— |
— |
— |
— |
|||||||||||||||||||||||||||||||||||||||||||||
Stock-based compensation |
— |
— |
— |
— |
— |
— |
— |
— |
— |
— |
— |
|||||||||||||||||||||||||||||||||||||||||||||
Net loss |
— |
— |
— |
— |
— |
— |
— |
— |
— |
— |
— |
( |
) |
— |
( |
) | ||||||||||||||||||||||||||||||||||||||||
Balance as of June 30, 2020 (unaudited) |
$ |
$ |
$ |
$ |
$ |
$ |
$ |
( |
$ |
( |
$ |
( |
) | |||||||||||||||||||||||||||||||||||||||||||
Series A Convertible Preferred Stock |
Series B Convertible Preferred Stock |
Series C Convertible Preferred Stock |
Series D Convertible Preferred Stock |
Common Stock |
Additional Paid-in Capital |
Accumulated Deficit |
Accumulated Other Comprehensive Income (Loss) |
Total Stockholders’ Deficit |
||||||||||||||||||||||||||||||||||||||||||||||||
Shares |
Amount |
Shares |
Amount |
Shares |
Amount |
Shares |
Amount |
Shares |
Amount |
|||||||||||||||||||||||||||||||||||||||||||||||
Balance as of December 31, 2018 |
$ |
$ |
$ |
— |
$ |
— |
$ |
$ |
$ |
( |
$ |
$ |
( |
|||||||||||||||||||||||||||||||||||||||||||
Unrealized gain on marketable securities |
— |
— |
— |
— |
— |
— |
— |
— |
— |
— |
— |
— |
||||||||||||||||||||||||||||||||||||||||||||
Foreign currency translation adjustment |
— |
— |
— |
— |
— |
— |
— |
— |
— |
— |
— |
— |
( |
) |
( |
) | ||||||||||||||||||||||||||||||||||||||||
Issuance of Series A preferred stock for cashless warrant exercise |
— |
— |
— |
— |
— |
— |
— |
— |
— |
— |
— |
— |
— |
|||||||||||||||||||||||||||||||||||||||||||
Issuance of Series D convertible preferred stock for cash, net of issuance costs of $ |
— |
— |
— |
— |
— |
— |
— |
— |
— |
— |
— |
— |
||||||||||||||||||||||||||||||||||||||||||||
Issuance of Series D convertible preferred stock for 2018 Convertible Notes and 2019 Convertible Notes |
— |
— |
— |
— |
— |
— |
— |
— |
— |
— |
— |
— |
||||||||||||||||||||||||||||||||||||||||||||
Stock-based compensation |
— |
— |
— |
— |
— |
— |
— |
— |
— |
— |
— |
|||||||||||||||||||||||||||||||||||||||||||||
Stock option exercises |
— |
— |
— |
— |
— |
— |
— |
— |
— |
— |
— |
|||||||||||||||||||||||||||||||||||||||||||||
Net loss |
— |
— |
— |
— |
— |
— |
— |
— |
— |
— |
— |
( |
) |
— |
( |
) | ||||||||||||||||||||||||||||||||||||||||
Balance as of June 30, 2019 (unaudited) |
$ |
$ |
$ |
$ |
$ |
$ |
$ |
( |
$ |
$ |
( |
|||||||||||||||||||||||||||||||||||||||||||||
Six Months Ended June 30, |
||||||||
2020 |
2019 |
|||||||
Cash flows from operating activities |
||||||||
Net loss |
$ | ( |
) | $ | ( |
) | ||
Adjustments to reconcile net loss to net cash used in operating activities: |
||||||||
Depreciation expense |
||||||||
Amortization of intangible assets |
— | |||||||
Stock-based compensation expense |
||||||||
Accretion of discounts/(amortization of premiums) on marketable securities, net |
( |
) | ||||||
Amortization of debt issuance costs |
||||||||
Amortization of right-of-use |
||||||||
Loss on debt extinguishment |
— | |||||||
Change in fair value of warrant liability and embedded derivative |
||||||||
Change in fair value of contingent consideration |
( |
) | — | |||||
Changes in operating assets and liabilities, net of effect from business combination: |
||||||||
Accounts receivable |
( |
) | ( |
) | ||||
Inventory |
( |
) | ( |
) | ||||
Prepaid expenses and other current assets |
( |
) | ||||||
Other assets |
( |
) | ||||||
Accounts payable |
||||||||
Accrued liabilities |
||||||||
Operating lease liabilities |
( |
) | ( |
) | ||||
Net cash used in operating activities |
( |
) | ( |
) | ||||
Cash flows from investing activities |
||||||||
Purchases of available-for-sale |
— | ( |
) | |||||
Sales of available-for-sale |
— | |||||||
Maturities of available-for-sale |
||||||||
Purchases of property and equipment |
( |
) | ( |
) | ||||
Cash paid, net of cash acquired for the Rhythm Xience Acquisition |
— | ( |
) | |||||
Net cash provided by (used in) investing activities |
( |
) | ||||||
Cash flows from financing activities |
||||||||
Proceeds from issuance of debt and warrants |
— | |||||||
Repayment of debt |
— | ( |
) | |||||
Payment of issuance and extinguishment costs related to debt |
— | ( |
) | |||||
Payment of contingent consideration |
( |
) | — | |||||
Proceeds from issuance of convertible preferred stock, net of issuance costs |
— | |||||||
Payment of deferred offering costs |
( |
) |
— |
|||||
Proceeds from stock options exercises |
||||||||
Net cash (used in) provided by financing activities |
( |
) | ||||||
Effect of exchange rate changes on cash, cash equivalents and restricted cash |
( |
) | ||||||
Net change in cash, cash equivalents and restricted cash |
||||||||
Cash, cash equivalents and restricted cash, at the beginning of the period |
||||||||
Cash, cash equivalents and restricted cash, at the end of the period |
$ |
$ |
||||||
Supplemental disclosure of cash flow information: |
||||||||
Cash paid for income taxes |
$ | $ | — | |||||
Cash paid for interest |
$ | $ | ||||||
Supplemental disclosure of noncash investing and financing activities: |
||||||||
Issuance of Series D convertible preferred stock for 2018 Convertible Notes and 2019 Convertible Notes |
$ | — | $ | |||||
Issuance of Series D convertible preferred stock for Biotronik asset purchase |
$ | $ | — | |||||
Issuance of Series D convertible preferred stock for Rhythm Xience Acquisition |
$ | $ | — | |||||
Change in unrealized (gain) loss on marketable securities |
$ | $ | ( |
) | ||||
Warrants issued in conjunction with OrbiMed debt |
$ | — | $ | |||||
Right-of-use |
$ | — | $ | |||||
Unpaid purchases of property and equipment |
$ | $ | ||||||
Unpaid deferred offering costs |
$ |
$ |
— |
June 30, 2020 |
December 31, 2019 |
|||||||
(unaudited) |
||||||||
Cash and cash equivalents |
$ | |
$ | |
||||
Restricted cash |
||||||||
Total cash, cash equivalents and restricted cash |
$ | $ | ||||||
• | Step 1: Identify the contract with the customer. |
• | Step 2: Identify the performance obligations in the contract. |
• | Step 3: Determine the transaction price. |
• | Step 4: Allocate the transaction price to the performance obligations in the contract. |
• | Step 5: Recognize revenue when, or as, the company satisfies a performance obligation. |
Three Months Ended June 30, |
Six Months Ended June 30, |
|||||||||||||||
2020 |
2019 |
2020 |
2019 |
|||||||||||||
(unaudited) |
(unaudited) |
|||||||||||||||
Disposables |
$ | |
$ | |
$ | |
$ | |
||||||||
Systems |
— |
— |
$ |
— |
||||||||||||
Service/Other |
||||||||||||||||
Total |
$ | $ | $ | $ | ||||||||||||
Three Months Ended June 30, |
Six Months Ended June 30, |
|||||||||||||||
2020 |
2019 |
2020 |
2019 |
|||||||||||||
(unaudited) |
(unaudited) |
|||||||||||||||
United States |
$ | $ | $ | $ | ||||||||||||
Europe |
||||||||||||||||
Total Revenue |
$ | $ | $ | $ | ||||||||||||
Fair Value Measured at June 30, 2020 (unaudited) |
||||||||||||||||
Quoted Prices in Active Markets for Identical Assets (Level 1) |
Significant Other Observable Inputs (Level 2) |
Significant Unobservable Inputs (Level 3) |
Fair Value at June 30, 2020 |
|||||||||||||
Assets included in: |
||||||||||||||||
Cash and cash equivalents |
||||||||||||||||
Money market securities |
$ | $ | — | $ | — | $ | ||||||||||
Marketable securities at fair value |
||||||||||||||||
U.S. treasury securities |
— | — | ||||||||||||||
Total fair value |
$ | $ | $ | — | $ | |||||||||||
Liabilities included in: |
||||||||||||||||
Contingent consideration |
$ | — | $ | — | $ | $ | ||||||||||
Common and preferred stock warrant liability |
— | — | ||||||||||||||
Total fair value |
$ | — | $ | — | $ | $ | ||||||||||
Fair Value Measured at December 31, 2019 |
||||||||||||||||
Quoted Prices in Active Markets for Identical Assets (Level 1) |
Significant Other Observable Inputs (Level 2) |
Significant Unobservable Inputs (Level 3) |
Fair Value at December 31, 2019 |
|||||||||||||
Assets included in: |
||||||||||||||||
Cash and cash equivalents |
||||||||||||||||
Money market securities |
$ | $ | — | $ | — | $ | ||||||||||
Marketable securities at fair value |
||||||||||||||||
Corporate debt securities |
— | — | ||||||||||||||
Asset-backed securities |
— | — | ||||||||||||||
U.S. treasury securities |
— | — | ||||||||||||||
Commercial paper |
— | — | ||||||||||||||
Total fair value |
$ | $ | $ | — | $ | |||||||||||
Liabilities included in: |
||||||||||||||||
Contingent consideration |
$ | — | $ | — | $ | $ | ||||||||||
Common and preferred stock warrant liability |
— | — | ||||||||||||||
Total fair value |
$ | — | $ | — | $ | $ | ||||||||||
Common and Preferred Stock Warrant Liability |
Contingent Consideration |
Total |
|||||||||||
Balance, December 31, 2019 |
$ | $ | $ | ||||||||||
Payment of contingent consideration |
— | ( |
) | ( |
) | ||||||||
Issuance of preferred stock for contingent consideration |
— | ( |
) | ( |
) | ||||||||
Change in fair value |
( |
) | |||||||||||
Balance, June 30, 2020 (unaudited) |
$ | $ | $ | ||||||||||
June 30, 2020 |
December 31, 2019 | |||
(unaudited) |
||||
Risk-free interest rate |
% - % |
% - % | ||
Expected dividend yield |
— | — | ||
Contractual term in years |
||||
Expected volatility |
% - % |
% - % |
June 30, 2020 |
December 31, 2019 | |||
(unaudited) |
||||
Risk-free interest rate |
% | % | ||
Expected term in years |
||||
Expected volatility |
% | % |
Accounts receivable, net |
$ | |||
Prepaid expenses and other current assets |
||||
Property and equipment, net |
||||
Intangible assets |
||||
Goodwill |
||||
Contingent consideration |
( |
) | ||
Cash consideration |
$ |
|||
June 30, 2020 (unaudited) |
||||||||||||||||
Amortized Cost |
Gross Unrealized Gains |
Gross Unrealized Losses |
Fair Value |
|||||||||||||
Available-for-sale securities - short-term : |
||||||||||||||||
U.S. treasury securities |
$ | $ | $ | — | $ | |||||||||||
Total available-for-sale |
$ | $ | $ | — | $ | |||||||||||
December 31, 2019 |
||||||||||||||||
Amortized |
Gross Gains |
Gross Losses |
Fair |
|||||||||||||
Available-for-sale securities - short-term: |
||||||||||||||||
Corporate debt securities |
$ | $ | $ | — | $ | |||||||||||
Asset-backed securities |
— | |||||||||||||||
U.S. treasury securities |
— | |||||||||||||||
Commercial paper |
— | — | ||||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total available-for-sale |
$ | $ | $ | — | $ | |||||||||||
|
|
|
|
|
|
|
|
June 30, 2020 |
December 31, 2019 |
|||||||
(unaudited) |
||||||||
Raw materials |
$ | $ | ||||||
Work in process |
||||||||
Finish goods |
||||||||
|
|
|
|
|||||
Total inventory |
$ | $ | ||||||
|
|
|
|
June 30, 2020 |
December 31, 2019 |
|||||||
(unaudited) |
||||||||
Medical diagnostic equipment |
$ | $ | ||||||
Furniture and fixtures |
||||||||
Office equipment |
||||||||
Laboratory equipment and software |
||||||||
Leasehold improvements |
||||||||
Construction in process |
||||||||
|
|
|
|
|||||
Total property and equipment |
||||||||
Less: accumulated depreciation |
( |
) | ( |
) | ||||
|
|
|
|
|||||
Property and equipment, net |
$ | $ | ||||||
|
|
|
|
Goodwill |
Intangible Assets |
|||||||
Balance at December 31, 2019 |
$ | $ | ||||||
Amortization expense |
— | ( |
) | |||||
|
|
|
|
|||||
Balance at June 30, 2020 (unaudited) |
$ | $ | ||||||
|
|
|
|
Estimated Useful Life (in years) |
Weighted Average Remaining Life (in years) |
Intangible Assets |
Accumulated Amortization |
June 30, 2020 |
||||||||||||
(unaudited) |
||||||||||||||||
Developed technology |
$ | $ | ( |
) | $ | |||||||||||
Trademarks and trade names |
— | ( |
) | — | ||||||||||||
Customer-related intangible |
( |
) | ||||||||||||||
|
|
|
|
|
|
|||||||||||
Total |
$ | $ | ( |
) | $ | |||||||||||
|
|
|
|
|
|
Estimated Useful Life (in years) |
Weighted Average Remaining Life (in years) |
Intangible Assets |
Accumulated Amortization |
December 31, 2019 |
||||||||||||||||
Developed technology |
$ | $ | ( |
) | $ | |||||||||||||||
In-process technology |
indefinite | — | ||||||||||||||||||
Trademarks and trade names |
— | ( |
) | — | ||||||||||||||||
Customer-related intangible |
( |
) | ||||||||||||||||||
|
|
|
|
|
|
|||||||||||||||
Total |
$ | $ | ( |
) | $ | |||||||||||||||
|
|
|
|
|
|
Developed Technology |
Customer-Related Intangible |
Total Amortization |
|||||||||||
Six months ending December 31, 2020 |
$ | $ | $ | ||||||||||
Year ending December 31, 2021 |
|||||||||||||
Year ending December 31, 2022 |
|||||||||||||
Year ending December 31, 2023 |
|||||||||||||
Year ending December 31, 2024 |
|||||||||||||
Thereafter |
|||||||||||||
Total |
$ | $ | $ | ||||||||||
June 30, 2020 |
December 31, 2019 |
|||||||
(unaudited) |
||||||||
Biotronik Asset Acquisition - accrued purchase price |
$ | — | $ | |||||
Payroll and related expenses |
||||||||
Professional fees |
||||||||
Deferred revenue |
||||||||
Other |
||||||||
Total accrued liabilities |
$ | $ | ||||||
June 30, 2020 |
December 31, 2019 |
|||||||
(unaudited) |
||||||||
2019 Credit Agreement (1) |
$ | $ | ||||||
Total debt, gross |
||||||||
Less: Unamortized debt discount and fees |
( |
) | ( |
) | ||||
Total long-term debt |
$ | $ | ||||||
(1) |
The 2019 Credit Agreement includes final payment fees of $ |
Six Months Ended June 30, |
||||||||
2020 |
2019 |
|||||||
(unaudited) |
||||||||
Operating cash flows used in operating leases |
$ | $ | ||||||
Right-of-use |
$ | — | $ | |||||
Weighted-average remaining lease term – operating leases |
||||||||
Weighted-average discount rate – operating leases |
% | % |
Three Months Ended June 30, |
Six Months Ended June 30, |
|||||||||||||||
2020 |
2019 |
2020 |
2019 |
|||||||||||||
(unaudited) |
(unaudited) |
|||||||||||||||
Operating leases |
||||||||||||||||
Operating lease cost |
$ | $ | $ | $ | ||||||||||||
Variable lease cost |
||||||||||||||||
Total rent expense |
$ | $ | $ | $ | ||||||||||||
Six months ending December 31, 2020 |
$ | |||
Year ending December 31, 2021 |
||||
Year ending December 31, 2022 |
||||
Year ending December 31, 2023 |
||||
Year ending December 31, 2024 |
||||
Total |
||||
Less: present value discount |
( |
) | ||
Operating lease liabilities |
$ |
|||
Equity Upon Exercise |
Exercise |
Expiration |
June 30, 2020 |
December 31, 2019 |
||||||||||||||||
(unaudited) |
||||||||||||||||||||
Warrants issued in 2015 |
$ | |||||||||||||||||||
Warrants issued with 2018 Convertible Notes |
$ | |||||||||||||||||||
Warrants issued with 2018 Term Loan |
preferred |
e |
$ | |||||||||||||||||
Warrants issued with 2019 Credit Agreement |
preferred |
|
$ | |||||||||||||||||
Total Warrants |
||||||||||||||||||||
Series |
Conversion Price |
|||
Series A convertible preferred stock |
$ | |||
Series B convertible preferred stock |
$ | |||
Series C convertible preferred stock |
$ | |||
Series D convertible preferred stock |
$ |
Six Months Ended June 30, |
||||||||
2020 |
2019 |
|||||||
(unaudited) |
||||||||
Risk-free interest rate |
% |
|||||||
Expected dividend yield |
— | — | ||||||
Expected term in years |
||||||||
Expected volatility |
Stock Options |
Weighted Average Exercise Price |
Weighted Average Remaining Contractual Life (in years) |
Aggregate Intrinsic (in |
|||||||||||||
Outstanding as of December 31, 2019 |
$ | $ | ||||||||||||||
Options granted |
||||||||||||||||
Option exercised |
( |
) | ||||||||||||||
Options forfeited |
( |
) | ||||||||||||||
Outstanding as of June 30, 2020 (unaudited) |
$ | $ | ||||||||||||||
Options vested and exercisable as of June 30, 2020 (unaud i ted) |
$ | $ | ||||||||||||||
Number of Shares |
Weighted Average Grant Price |
|||||||
Unvested as of December 31, 2019 |
— | $ | — | |||||
Granted |
||||||||
Vested |
( |
) | ||||||
Unvested as of June 30, 2020 (unaudited) |
— | $ | — | |||||
Three Months Ended June 30, |
Six Months Ended June 30, |
|||||||||||||||
2020 |
2019 |
2020 |
2019 |
|||||||||||||
(unaudited) |
(unaudited) |
|||||||||||||||
Cost of products sold |
$ | $ | $ | $ | ||||||||||||
Research and development |
||||||||||||||||
Selling, general and administrative |
||||||||||||||||
Total stock-based compensation |
$ | $ | $ | $ | ||||||||||||
Six Months Ended June 30, |
||||||||
2020 |
2019 |
|||||||
Shares issuable upon conversion of Series A Preferred Stock |
||||||||
Shares issuable upon conversion of Series B Preferred Stock |
||||||||
Shares issuable upon conversion of Series C Preferred Stock |
||||||||
Shares issuable upon conversion of Series D Preferred Stock |
||||||||
Shares issuable upon exercise of stock options |
||||||||
Shares issuable upon exercise of common stock warrants |
||||||||
Shares issuable upon exercise of preferred stock warrants |
||||||||
Total |
||||||||
As of June 30, |
||||||||
2020 |
2019 |
|||||||
(unaudited) |
||||||||
Acutus Direct |
||||||||
US |
20 | 8 | ||||||
Europe |
18 | 18 | ||||||
|
|
|
|
|||||
Total Acutus Direct |
38 | 26 | ||||||
Biotronik |
— | — | ||||||
|
|
|
|
|||||
Total net system placements |
38 | 26 | ||||||
|
|
|
|
Three Months Ended June 30, |
Six Months Ended June 30, |
|||||||||||||||
2020 |
2019 |
2020 |
2019 |
|||||||||||||
(unaudited) |
(unaudited) |
|||||||||||||||
Acutus Direct |
||||||||||||||||
US |
7 | 1 | 10 | 3 | ||||||||||||
Europe |
— | 2 | 1 | 2 | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total Acutus Direct |
7 | 3 | 11 | 5 | ||||||||||||
Biotronik |
— | — | — | — | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total net system placements |
7 | 3 | 11 | 5 | ||||||||||||
|
|
|
|
|
|
|
|
• | Market Acceptance |
• | Commercial Organization Size and Effectiveness |
• | Strategic Partnerships and Acquisitions |
• | Continued Investment in Innovation |
• | Product and Geographic Mix; Timing end-of-year |
• | Regulatory Approvals/Clearances and Timing and Efficiency of New Product Introductions |
• | Competition |
• | COVID-19 PandemicCOVID-19 pandemic and the measures imposed to contain this pandemic disrupted and are expected to continue to impact our business. For example, on March 19, 2020, the Executive Department of the State of California issued Executive Order N-33-20, follow-ups for clinical trials done via telecom, and we believe enrollment timing in our planned clinical trials will be slowed due to COVID-19 driven delayed access to enrollment sites. As a result of the interruptions to our business due to COVID-19, we enacted a cash conservation program, which included delaying certain non-critical capital expenditures and other projects and implementing a hiring freeze, headcount reductions and temporary compensation reductions (through August 2020). Although the effects of the pandemic began to decrease in late April 2020 as electrophysiology labs began reopening and procedure volumes began increasing as compared to COVID-19 related low points in March 2020, the magnitude of the impact of the COVID-19 pandemic on our productivity, results of operations and financial position, and its disruption to our business and our clinical programs and timelines, will depend, in part, on the length and severity of these restrictions and on our ability to conduct business in the ordinary course. Quarantines, shelter-in-place |
Three Months Ended June 30, |
Change |
|||||||||||||||
(dollars in thousands) | 2020 |
2019 |
$ |
% |
||||||||||||
(Unaudited) |
||||||||||||||||
Revenue (2) |
$ | 1,134 | $ | 734 | $ | 400 | 54 | % | ||||||||
Costs and operating expenses: |
||||||||||||||||
Costs of products sold (1) |
2,663 | 2,435 | 228 | 9 | % | |||||||||||
Research and development (1) |
8,176 | 5,247 | 2,929 | 56 | % | |||||||||||
Selling, general and administrative (1) |
9,125 | 6,927 | 2,198 | 32 | % | |||||||||||
Change in fair value of contingent consideration |
635 | — | 635 | NM | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total operating expenses |
20,599 | 14,609 | 5,990 | 41 | % | |||||||||||
|
|
|
|
|
|
|
|
|||||||||
Loss from operations |
(19,465 | ) | (13,875 | ) | (5,590 | ) | 40 | % | ||||||||
Other income (expense): |
||||||||||||||||
Change in fair value of warrant liability and embedded derivative |
(2,453 | ) | (1,446 | ) | (1,007 | ) | 70 | % | ||||||||
Loss on debt extinguishment |
— | (1,398 | ) | 1,398 | (100 | %) | ||||||||||
Interest income |
95 | 143 | (48 | ) | (34 | %) | ||||||||||
Interest expense |
(1,370 | ) | (13,769 | ) | 12,399 | (90 | %) | |||||||||
|
|
|
|
|
|
|
|
|||||||||
Total other expense, net |
(3,728 | ) | (16,470 | ) | 12,742 | (77 | %) | |||||||||
|
|
|
|
|
|
|
|
|||||||||
Net loss |
$ | (23,193 | ) | $ | (30,345 | ) | $ | 7,152 | (24 | %) | ||||||
|
|
|
|
|
|
|
|
|||||||||
Other comprehensive income (loss) |
||||||||||||||||
Unrealized gain (loss) on marketable securities |
(14 | ) | 6 | (20 | ) | NM | ||||||||||
Foreign currency translation adjustment |
96 | 2 | 94 | NM | ||||||||||||
|
|
|
|
|
|
|
|
|||||||||
Comprehensive loss |
$ | (23,111 | ) | $ | (30,337 | ) | $ | 7,226 | (24 | %) | ||||||
|
|
|
|
|
|
|
|
(1) | The following table sets forth the stock-based compensation expense included in our results of operations for the three months ended June 30, 2020 and 2019: |
Three Months Ended June 30, |
||||||||
2020 |
2019 |
|||||||
(unaudited) |
||||||||
Cost of products sold |
$ | 58 | $ | 54 | ||||
Research and development |
167 | 150 | ||||||
Selling, general and administrative |
932 | 599 | ||||||
|
|
|
|
|||||
Total stock-based compensation |
$ | 1,157 | $ | 803 | ||||
|
|
|
|
(2) | The following table sets forth our revenue for disposables and systems/service for the three months ended June 30, 2020 and 2019: |
Three Months Ended June 30, |
||||||||
2020 |
2019 |
|||||||
(Unaudited) |
||||||||
Acutus Direct |
||||||||
Disposables |
$ | 899 | $ | 705 | ||||
Systems |
— | — | ||||||
Service/Other |
12 | 4 | ||||||
|
|
|
|
|||||
Total Acutus direct revenue |
911 | 709 | ||||||
Distribution agreements |
223 | 25 | ||||||
|
|
|
|
|||||
Total revenue |
$ | 1,134 | $ | 734 | ||||
|
|
|
|
Three Months Ended June 30, |
||||||||
2020 |
2019 |
|||||||
(Unaudited) |
||||||||
Acutus Direct |
||||||||
United States |
$ | 544 | $ | 221 | ||||
Europe |
367 | 488 | ||||||
|
|
|
|
|||||
Total Acutus direct revenue |
911 | 709 | ||||||
|
|
|
|
|||||
Distribution Agreements |
||||||||
United States |
15 | — | ||||||
Europe |
208 | 25 | ||||||
|
|
|
|
|||||
Total revenue through distribution |
223 | 25 | ||||||
|
|
|
|
|||||
Total revenue |
$ | 1,134 | $ | 734 | ||||
|
|
|
|
Six Months Ended June 30, |
Change |
|||||||||||||||
2020 |
2019 |
$ |
% |
|||||||||||||
(Unaudited) |
||||||||||||||||
Revenue (2) |
$ | 2,717 | $ | 1,521 | $ | 1,196 | 79 | % | ||||||||
Costs and operating expenses: |
||||||||||||||||
Costs of products sold (1) |
5,857 | 4,611 | 1,246 | 27 | % | |||||||||||
Research and development (1) |
16,149 | 9,624 | 6,525 | 68 | % | |||||||||||
Selling, general and administrative (1) |
19,360 | 11,020 | 8,340 | 76 | % | |||||||||||
Change in fair value of contingent consideration |
(1,584 | ) | — | (1,584 | ) | NM | ||||||||||
|
|
|
|
|
|
|
|
|||||||||
Total operating expenses |
39,782 | 25,255 | 14,527 | 58 | % | |||||||||||
|
|
|
|
|
|
|
|
|||||||||
Loss from operations |
(37,065 | ) | (23,734 | ) | (13,331 | ) | 56 | % | ||||||||
Other income (expense): |
||||||||||||||||
Change in fair value of warrant liability and embedded derivative |
(1,872 | ) | (605 | ) | (1,267 | ) | 209 | % | ||||||||
Loss on debt extinguishment |
— | (1,398 | ) | 1,398 | (100 | %) | ||||||||||
Interest income |
370 | 208 | 162 | 78 | % | |||||||||||
Interest expense |
(2,724 | ) | (19,511 | ) | 16,787 | (86 | %) | |||||||||
|
|
|
|
|
|
|
|
|||||||||
Total other expense, net |
(4,226 | ) | (21,306 | ) | 17,080 | (80 | %) | |||||||||
|
|
|
|
|
|
|
|
|||||||||
Net loss |
$ | (41,291 | ) | $ | (45,040 | ) | $ | 3,749 | (8 | %) | ||||||
|
|
|
|
|
|
|
|
|||||||||
Other comprehensive income (loss) |
||||||||||||||||
Unrealized gain (loss) on marketable securities |
(41 | ) | 7 | (48 | ) | NM | ||||||||||
Foreign currency translation adjustment |
69 | (12 | ) | 81 | NM | |||||||||||
|
|
|
|
|
|
|
|
|||||||||
Comprehensive loss |
$ | (41,263 | ) | $ | (45,045 | ) | $ | 3,782 | (8 | %) | ||||||
|
|
|
|
|
|
|
|
(1) | The following table sets forth the stock-based compensation expense included in our results of operations for the six months ended June 30, 2020 and 2019: |
Six Months Ended June 30, |
||||||||
2020 |
2019 |
|||||||
(unaudited) |
||||||||
Cost of products sold |
$ | 166 | $ | 106 | ||||
Research and development |
378 | 292 | ||||||
Selling, general and administrative |
2,354 | 964 | ||||||
|
|
|
|
|||||
Total stock-based compensation |
$ | 2,898 | $ | 1,362 | ||||
|
|
|
|
(2) | The following table sets forth our revenue for disposables and systems/service for the six months ended June 30, 2020 and 2019: |
Six Months Ended June 30, |
||||||||
2020 |
2019 |
|||||||
(unaudited) |
||||||||
Acutus Direct |
||||||||
Disposables |
$ | 1,919 | $ | 1,487 | ||||
Systems |
520 | — | ||||||
Service/Other |
18 | 9 | ||||||
|
|
|
|
|||||
Total Acutus direct revenue |
2,457 | 1,496 | ||||||
Distribution agreements |
260 | 25 | ||||||
|
|
|
|
|||||
Total revenue |
$ | 2,717 | $ | 1,521 | ||||
|
|
|
|
Six Months Ended June 30, |
||||||||
2020 |
2019 |
|||||||
(unaudited) |
||||||||
Acutus Direct |
||||||||
United States |
$ | 1,313 | $ | 456 | ||||
Europe |
1,144 | 1,040 | ||||||
|
|
|
|
|||||
Total Acutus direct revenue |
2,457 | 1,496 | ||||||
|
|
|
|
|||||
Distribution Agreements |
||||||||
United States |
15 | — | ||||||
Europe |
245 | 25 | ||||||
|
|
|
|
|||||
Total revenue through distribution |
260 | 25 | ||||||
|
|
|
|
|||||
Total revenue |
$ | 2,717 | $ | 1,521 | ||||
|
|
|
|
• | our revenue growth; |
• | our research and development efforts; |
• | our sales and marketing activities; |
• | our success in leveraging our strategic partnerships, including with Biotronik, as well as entrance into any other strategic partnerships or strategic transactions in the future; |
• | our ability to raise additional funds to finance our operations; |
• | the outcome, costs and timing of any clinical trial results for our current or future products; |
• | the emergence and effect of competing or complementary products; |
• | the availability and amount of reimbursement for procedures using our products; |
• | our ability to maintain, expand and defend the scope of our intellectual property portfolio, including the amount and timing of any payments we may be required to make, or that we may receive, in connection with the licensing, filing, prosecution, defense and enforcement of any patents or other intellectual property rights; |
• | our ability to retain our current employees and the need and ability to hire additional management and sales, scientific and medical personnel; |
• | the terms and timing of any collaborative, licensing or other arrangements that we have or may establish; |
• | debt service requirements; |
• | the extent to which we acquire or invest in businesses, products or technologies; and |
• | the impact of the COVID-19 pandemic. |
Six Months Ended June 30, |
||||||||
2020 |
2019 |
|||||||
(Unaudited) |
||||||||
Net cash used in operating activities |
$ | (34,761 | ) | $ | (22,084 | ) | ||
Net cash provided by (used in) investing activities |
52,650 | (17,424 | ) | |||||
Net cash (used in) provided by financing activities |
(3,115 | ) | 97,951 | |||||
Effect of exchange rate changes on cash, cash equivalents and restricted cash | 69 | (12 | ) | |||||
|
|
|
|
|||||
Net change in cash, cash equivalents and restricted cash |
$ | 14,843 | $ | 58,431 | ||||
|
|
|
|
• | we issued and sold to our current and former officers and employees an aggregate of 64,562 shares of common stock upon the exercise of options under our equity compensation plans at exercise prices ranging from $0.54 to $1.06 per share, for an aggregate amount of $0.2 million. |
* | The certifications furnished in Exhibit 32 hereto are deemed to accompany this Quarterly Report on Form 10-Q and will not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, except to the extent that the registrant specifically incorporates it by reference. |
Acutus Medical, Inc. | ||||||
(Registrant) | ||||||
Date: September 18, 2020 | By: | /s/ Vince Burgess | ||||
Vince Burgess | ||||||
President and Chief Executive Officer | ||||||
(Principal Executive Officer) | ||||||
Date: September 18, 2020 | By: | /s/ Gary W. Doherty | ||||
Gary W. Doherty | ||||||
Chief Financial Officer | ||||||
(Principal Financial Officer) |