☒ | 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 |
1555 Adams Drive Menlo Park , California | 94025 | |
(Address of principal executive offices) | (Zip Code) |
Large accelerated filer | ☒ | Accelerated filer | ☐ | |||
Non-accelerated filer | ☐ | Smaller reporting company | ☐ | |||
Emerging growth company | ☐ |
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ITEM 1. | FINANCIAL STATEMENTS |
March 31, 2019 | December 31, 2018 | |||||||
(unaudited) | (1) | |||||||
Assets | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 8,593 | $ | 9,464 | ||||
Short-term investments,available-for-sale | 88,993 | 91,309 | ||||||
Accounts receivable, net | 17,331 | 19,616 | ||||||
Inventory | 13,916 | 11,586 | ||||||
Prepaid expenses and other current assets | 2,372 | 2,695 | ||||||
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Total current assets | 131,205 | 134,670 | ||||||
Property and equipment, net | 5,975 | 5,878 | ||||||
Othernon-current assets | 1,861 | 413 | ||||||
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Total assets | $ | 139,041 | $ | 140,961 | ||||
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Liabilities and Stockholders’ Equity | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 4,240 | $ | 6,202 | ||||
Accrued compensation | 13,180 | 12,281 | ||||||
Other current liabilities | 2,674 | 1,250 | ||||||
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Total current liabilities | 20,094 | 19,733 | ||||||
Othernon-current liabilities | 200 | 234 | ||||||
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Total liabilities | 20,294 | 19,967 | ||||||
Commitments and contingencies (note 9) | ||||||||
Stockholders’ equity: | ||||||||
Preferred stock, $0.001 par value; | ||||||||
Authorized shares: 10,000 at March 31, 2019 and December 31, 2018; Issued and outstanding shares: none | — | — | ||||||
Common stock, $0.001 par value; | ||||||||
Authorized shares: 150,000 at March 31, 2019 and December 31, 2018; Issued and outstanding shares: 31,162 at March 31, 2019 and 30,745 at December 31, 2018 | 31 | 31 | ||||||
Additionalpaid-in capital | 317,247 | 308,766 | ||||||
Accumulated other comprehensive income (loss) | 36 | (41 | ) | |||||
Accumulated deficit | (198,567 | ) | (187,762 | ) | ||||
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Total stockholders’ equity | 118,747 | 120,994 | ||||||
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Total liabilities and stockholders’ equity | $ | 139,041 | $ | 140,961 | ||||
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June 30, | December 31, | |||||||
2019 | 2018 | |||||||
(unaudited) | (1) | |||||||
Assets | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 9,358 | $ | 9,464 | ||||
Short-term investments, available-for-sale | 84,114 | 91,309 | ||||||
Accounts receivable, net | 15,529 | 19,616 | ||||||
Inventory | 15,689 | 11,586 | ||||||
Prepaid expenses and other current assets | 1,998 | 2,695 | ||||||
Total current assets | 126,688 | 134,670 | ||||||
Property and equipment, net | 6,113 | 5,878 | ||||||
Other non-current assets | 1,264 | 413 | ||||||
Total assets | $ | 134,065 | $ | 140,961 | ||||
Liabilities and Stockholders’ Equity | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 3,786 | $ | 6,202 | ||||
Accrued compensation | 9,725 | 12,281 | ||||||
Other current liabilities | 2,442 | 1,250 | ||||||
Total current liabilities | 15,953 | 19,733 | ||||||
Other non-current liabilities | 44 | 234 | ||||||
Total liabilities | 15,997 | 19,967 | ||||||
Commitments and contingencies (note 9) | ||||||||
Stockholders’ equity: | ||||||||
Preferred stock, $0.001 par value; | ||||||||
Authorized shares: 10,000 at June 30, 2019 and December 31, 2018; | ||||||||
Issued and outstanding shares: no | — | — | ||||||
Common stock, $0.001 par value; | ||||||||
Authorized shares: 150,000 at June 30, 2019 and December 31, 2018; | ||||||||
Issued and outstanding shares: 31,469 at June 30, 2019 and30,745 at December 31, 2018 | 31 | 31 | ||||||
Additional paid-in capital | 327,891 | 308,766 | ||||||
Accumulated other comprehensive income (loss) | 97 | (41 | ) | |||||
Accumulated deficit | (209,951 | ) | (187,762 | ) | ||||
Total stockholders’ equity | 118,068 | 120,994 | ||||||
Total liabilities and stockholders’ equity | $ | 134,065 | $ | 140,961 | ||||
(1) | Amounts have been derived from the December 31, 2018 audited consolidated financial statements included in the Company’s Annual Report on Form |
Three Months Ended March 31, | ||||||||
2019 | 2018 | |||||||
Revenue | $ | 26,673 | $ | 24,723 | ||||
Cost of sales | 4,645 | 5,482 | ||||||
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Gross profit | 22,028 | 19,241 | ||||||
Operating expenses: | ||||||||
Selling, general and administrative | 27,207 | 21,516 | ||||||
Research and development | 6,266 | 4,273 | ||||||
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Total operating expenses | 33,473 | 25,789 | ||||||
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Loss from operations | (11,445 | ) | (6,548 | ) | ||||
Interest income and other, net | 640 | 412 | ||||||
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Net loss | (10,805 | ) | (6,136 | ) | ||||
Other comprehensive income (loss): | ||||||||
Unrealized gain (loss) on short-term investments, net | 77 | (65 | ) | |||||
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Comprehensive loss | $ | (10,728) | $ | (6,201 | ) | |||
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Net loss per share, basic and diluted | $ | (0.35) | $ | (0.21) | ||||
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Weighted average common shares used to compute net loss per share, basic and diluted | 30,918 | 29,878 | ||||||
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Three Months Ended | Six Months Ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
Revenue | $ | 26,659 | $ | 26,300 | $ | 53,332 | $ | 51,023 | ||||||||
Cost of sales | 5,046 | 5,558 | 9,691 | 11,040 | ||||||||||||
Gross profit | 21,613 | 20,742 | 43,641 | 39,983 | ||||||||||||
Operating expenses: | ||||||||||||||||
Selling, general and administrative | 27,611 | 21,005 | 54,818 | 42,521 | ||||||||||||
Research and development | 6,041 | 4,374 | 12,307 | 8,647 | ||||||||||||
Total operating expenses | 33,652 | 25,379 | 67,125 | 51,168 | ||||||||||||
Loss from operations | (12,039 | ) | (4,637 | ) | (23,484 | ) | (11,185 | ) | ||||||||
Interest income and other, net | 655 | 477 | 1,295 | 889 | ||||||||||||
Net loss | (11,384 | ) | (4,160 | ) | (22,189 | ) | (10,296 | ) | ||||||||
Other comprehensive income: | ||||||||||||||||
Unrealized gain on short-term investments, net | 61 | 70 | 138 | 5 | ||||||||||||
Comprehensive loss | $ | (11,323 | ) | $ | (4,090 | ) | $ | (22,051 | ) | $ | (10,291 | ) | ||||
Net loss per share, basic and diluted | $ | (0.36 | ) | $ | (0.14 | ) | $ | (0.71 | ) | $ | (0.34 | ) | ||||
Weighted average common shares used to compute net loss per share, basic and diluted | 31,362 | 30,264 | 31,141 | 30,072 | ||||||||||||
Additional | Accumulated Other | Total | ||||||||||||||||||||||
Common Stock | Paid-in Capital | Comprehensive Income (Loss) | Accumulated Deficit | Stockholders’ Equity | ||||||||||||||||||||
Shares | Amount | |||||||||||||||||||||||
Balance at December 31, 2018 | 30,745 | $ | 31 | $ | 308,766 | $ | (41 | ) | $ | (187,762 | ) | $ | 120,994 | |||||||||||
Issuance of common stock and exercise of stock options | 417 | — | 4,467 | — | — | 4,467 | ||||||||||||||||||
Stock-based compensation expense | — | — | 4,014 | — | — | 4,014 | ||||||||||||||||||
Unrealized gain on short-term investments | — | — | — | 77 | — | 77 | ||||||||||||||||||
Net loss | — | — | — | — | (10,805 | ) | (10,805 | ) | ||||||||||||||||
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Balance at March 31, 2019 | 31,162 | $ | 31 | $ | 317,247 | $ | 36 | $ | (198,567 | ) | $ | 118,747 | ||||||||||||
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Balance at December 31, 2017 | 29,678 | $ | 30 | $ | 282,121 | $ | (92 | ) | $ | (164,840 | ) | $ | 117,219 | |||||||||||
Issuance of common stock and exercise of stock options | 421 | — | 4,224 | — | — | 4,224 | ||||||||||||||||||
Stock-based compensation expense | — | — | 3,138 | — | — | 3,138 | ||||||||||||||||||
Unrealized loss on short-term investments | — | — | — | (65 | ) | — | (65 | ) | ||||||||||||||||
Net loss | — | — | — | — | (6,136 | ) | (6,136 | ) | ||||||||||||||||
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Balance at March 31, 2018 | 30,099 | $ | 30 | $ | 289,483 | $ | (157 | ) | $ | (170,976 | ) | $ | 118,380 | |||||||||||
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Accumulated | |||||||||||||||||||||||||
Additional | Other | Total | |||||||||||||||||||||||
Common Stock | Paid-in | Comprehensive | Accumulated | Stockholders’ | |||||||||||||||||||||
Shares | Amount | Capital | Income (Loss) | Deficit | Equity | ||||||||||||||||||||
Balance at December 31, 2018 | 30,745 | $ | 31 | $ | 308,766 | $ | (41 | ) | $ | (187,762 | ) | $ | 120,994 | ||||||||||||
Issuance of common stock and exercise of stock options | 417 | — | 4,467 | — | — | 4,467 | |||||||||||||||||||
Stock-based compensation expense | — | — | 4,014 | — | — | 4,014 | |||||||||||||||||||
Unrealized gain on short-term investments | — | — | — | 77 | — | 77 | |||||||||||||||||||
Net loss | — | — | — | — | (10,805 | ) | (10,805 | ) | |||||||||||||||||
Balance at March 31, 2019 | 31,162 | 31 | 317,247 | 36 | (198,567 | ) | 118,747 | ||||||||||||||||||
Issuance of common stock and exercise of stock options | 307 | — | 4,964 | — | — | 4,964 | |||||||||||||||||||
Stock-based compensation expense | — | — | 5,680 | — | — | 5,680 | |||||||||||||||||||
Unrealized gain on short-term investments | — | — | — | 61 | — | 61 | |||||||||||||||||||
Net loss | — | — | — | — | (11,384 | ) | (11,384 | ) | |||||||||||||||||
Balance at June 30, 2019 | 31,469 | $ | 31 | $ | 327,891 | $ | 97 | $ | (209,951 | ) | $ | 118,068 | |||||||||||||
Balance at December 31, 2017 | 29,678 | $ | 30 | $ | 282,121 | $ | (92 | ) | $ | (164,840 | ) | $ | 117,219 | ||||||||||||
Issuance of common stock and exercise of stock options | 421 | — | 4,224 | — | — | 4,224 | |||||||||||||||||||
Stock-based compensation expense | — | — | 3,138 | — | — | 3,138 | |||||||||||||||||||
Unrealized loss on short-term investments | — | — | — | (65 | ) | — | (65 | ) | |||||||||||||||||
Net loss | — | — | — | — | (6,136 | ) | (6,136 | ) | |||||||||||||||||
Balance at March 31, 2018 | 30,099 | 30 | 289,483 | (157 | ) | (170,976 | ) | 118,380 | |||||||||||||||||
Issuance of common stock and exercise of stock options | 336 | — | 4,484 | — | — | 4,484 | |||||||||||||||||||
Stock-based compensation expense | — | — | 3,605 | — | — | 3,605 | |||||||||||||||||||
Unrealized gain on short-term investments | — | — | — | 70 | — | 70 | |||||||||||||||||||
Net loss | — | — | — | — | (4,160 | ) | (4,160 | ) | |||||||||||||||||
Balance at June 30, 2018 | 30,435 | $ | 30 | $ | 297,572 | $ | (87 | ) | $ | (175,136 | ) | $ | 122,379 | ||||||||||||
Three Months Ended March 31, | ||||||||
2019 | 2018 | |||||||
Operating activities: | ||||||||
Net loss | $ | (10,805 | ) | $ | (6,136 | ) | ||
Adjustments to reconcile net loss to cash used in operating activities: | ||||||||
Depreciation and amortization | 588 | 414 | ||||||
Amortization ofright-of-use assets | 266 | — | ||||||
Stock-based compensation expense | 3,869 | 3,138 | ||||||
Amortization of net investment discount | (377 | ) | (83 | ) | ||||
Changes in operating assets and liabilities: | ||||||||
Accounts receivable, net | 2,285 | 2,322 | ||||||
Inventory | (2,184 | ) | (24 | ) | ||||
Prepaid expenses and other assets | 182 | 144 | ||||||
Accounts payable | (1,295 | ) | (406 | ) | ||||
Accrued compensation | 899 | (2,983 | ) | |||||
Other liabilities | (320 | ) | (6 | ) | ||||
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Net cash used in operating activities | (6,892 | ) | (3,620 | ) | ||||
Investing activities: | ||||||||
Purchases of short-term investments | (42,539 | ) | (31,502 | ) | ||||
Maturities of short-term investments | 45,310 | 21,282 | ||||||
Purchases of property and equipment | (1,217 | ) | (344 | ) | ||||
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Net cash provided by (used in) investing activities | 1,554 | (10,564 | ) | |||||
Financing activities: | ||||||||
Proceeds from issuance of common stock and exercise of stock options | 4,467 | 4,873 | ||||||
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Net cash provided by financing activities | 4,467 | 4,873 | ||||||
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Net decrease in cash and cash equivalents | (871 | ) | (9,311 | ) | ||||
Cash and cash equivalents: | ||||||||
Beginning of the period | 9,464 | 19,837 | ||||||
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End of the period | $ | 8,593 | $ | 10,526 | ||||
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Non-cash investing activities: | ||||||||
Right-of-use asset obtained in exchange for lease obligations | $ | 117 | $ | — | ||||
Property and equipment included in accounts payable | 346 | 21 | ||||||
Lessor funded building improvements | 152 | — |
Six Months Ended | ||||||||
June 30, | ||||||||
2019 | 2018 | |||||||
Operating activities: | ||||||||
Net loss | $ | (22,189 | ) | $ | (10,296 | ) | ||
Adjustments to reconcile net loss to cash used in operating activities: | ||||||||
Depreciation and amortization | 1,269 | 837 | ||||||
Amortization of right-of-use assets | 555 | — | ||||||
Stock-based compensation expense | 9,366 | 6,743 | ||||||
Amortization of net investment discount | (790 | ) | (254 | ) | ||||
Changes in operating assets and liabilities: | ||||||||
Accounts receivable, net | 4,087 | 1,949 | ||||||
Inventory | (3,774 | ) | (659 | ) | ||||
Prepaid expenses and other assets | 713 | 375 | ||||||
Accounts payable | (1,842 | ) | (470 | ) | ||||
Accrued compensation | (2,556 | ) | (4,454 | ) | ||||
Other liabilities | (707 | ) | (260 | ) | ||||
Net cash used in operating activities | (15,868 | ) | (6,489 | ) | ||||
Investing activities: | ||||||||
Purchases of short-term investments | (69,342 | ) | (68,583 | ) | ||||
Maturities of short-term investments | 77,465 | 58,232 | ||||||
Purchases of property and equipment | (1,792 | ) | (549 | ) | ||||
Net cash provided by (used in) investing activities | 6,331 | (10,900 | ) | |||||
Financing activities: | ||||||||
Proceeds from issuance of common stock and exercise of stock options | 9,431 | 9,355 | ||||||
Net cash provided by financing activities | 9,431 | 9,355 | ||||||
Net decrease in cash and cash equivalents | (106 | ) | (8,034 | ) | ||||
Cash and cash equivalents: | ||||||||
Beginning of the period | 9,464 | 19,837 | ||||||
End of the period | $ | 9,358 | $ | 11,803 | ||||
Non-cash investing activities: | ||||||||
Right-of-use asset obtained in exchange for lease obligations | $ | 117 | $ | — | ||||
Property and equipment included in accounts payable | 440 | 183 | ||||||
Lessor funded building improvements | 152 | — |
1. | Organization |
2. | Summary of Significant Accounting Policies |
The results for the three and six months ended March 31,June 30, 2019 are presented under Topic 842. The results for the three and six months ended March 31,June 30, 2018 and other prior period amounts were not adjusted and continue to be reported in accordance with our historical accounting under prior lease guidance, ASC Topic 840: (“
3. | Composition of Certain Financial Statement Items |
March 31, 2019 | December 31, 2018 | |||||||
Accounts receivable | $ | 17,400 | $ | 19,696 | ||||
Allowance for doubtful accounts | (69 | ) | (80 | ) | ||||
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$ | 17,331 | $ | 19,616 | |||||
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June 30, | December 31, | |||||||
2019 | 2018 | |||||||
Accounts receivable | $ | 15,626 | $ | 19,696 | ||||
Allowance for doubtful accounts | (97 | ) | (80 | ) | ||||
$ | 15,529 | $ | 19,616 | |||||
March 31, 2019 | December 31, 2018 | |||||||
Raw materials | $ | 2,246 | $ | 1,872 | ||||
Work-in-process | 68 | 368 | ||||||
Finished goods | 11,602 | 9,346 | ||||||
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$ | 13,916 | $ | 11,586 | |||||
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June 30, | December 31, | |||||||
2019 | 2018 | |||||||
Raw materials | $ | 2,407 | $ | 1,872 | ||||
Work-in-process | 283 | 368 | ||||||
Finished goods | 12,999 | 9,346 | ||||||
$ | 15,689 | $ | 11,586 | |||||
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
PROPEL family of products | $ | 25,563 | $ | 25,788 | $ | 51,295 | $ | 50,251 | ||||||||
SINUVA | 1,096 | 512 | 2,037 | 772 | ||||||||||||
$ | 26,659 | $ | 26,300 | $ | 53,332 | $ | 51,023 | |||||||||
4. | Cash, Cash Equivalents and Short-term Investments |
March 31, 2019 | December 31, 2018 | |||||||||||||||||||||||||||||||
Amortized | Gross Unrealized | Estimated | Amortized | Gross Unrealized | Estimated | |||||||||||||||||||||||||||
Cost | Gains | Losses | Fair Value | Cost | Gains | Losses | Fair Value | |||||||||||||||||||||||||
Cash | $ | 5,202 | $ | — | $ | — | $ | 5,202 | $ | 4,168 | $ | — | $ | — | $ | 4,168 | ||||||||||||||||
Money market funds | 2,139 | — | — | 2,139 | 2,308 | — | — | 2,308 | ||||||||||||||||||||||||
Corporate debt securities | 39,595 | 21 | (3 | ) | 39,613 | 45,177 | 5 | (17 | ) | 45,165 | ||||||||||||||||||||||
Commercial paper | 50,614 | 19 | (1 | ) | 50,632 | 49,161 | — | (29 | ) | 49,132 | ||||||||||||||||||||||
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$ | 97,550 | $ | 40 | $ | (4 | ) | $ | 97,586 | $ | 100,814 | $ | 5 | $ | (46 | ) | $ | 100,773 | |||||||||||||||
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Reported as: | ||||||||||||||||||||||||||||||||
Cash and cash equivalents | $ | 8,593 | $ | 9,464 | ||||||||||||||||||||||||||||
Short-term investments,available-for-sale |
| 88,993 | 91,309 | |||||||||||||||||||||||||||||
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$ | 97,586 | $ | 100,773 | |||||||||||||||||||||||||||||
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June 30, | December 31, | ||||||||||||||||||||||||||||||||
2019 | 2018 | ||||||||||||||||||||||||||||||||
Amortized | Gross Unrealized | Estimated | Amortized | Gross Unrealized | Estimated | ||||||||||||||||||||||||||||
Cost | Gains | Losses | Fair Value | Cost | Gains | Losses | Fair Value | ||||||||||||||||||||||||||
Cash | $ | 5,532 | $ | — | $ | — | $ | 5,532 | $ | 4,168 | $ | — | $ | — | $ | 4,168 | |||||||||||||||||
Money market funds | 3,826 | — | — | 3,826 | 2,308 | — | — | 2,308 | |||||||||||||||||||||||||
Corporate debt securities | 47,250 | 53 | (9 | ) | 47,294 | 45,177 | 5 | (17 | ) | 45,165 | |||||||||||||||||||||||
Commercial paper | 36,767 | 53 | — | 36,820 | 49,161 | — | (29 | ) | 49,132 | ||||||||||||||||||||||||
$ | 93,375 | $ | 106 | $ | (9 | ) | $ | 93,472 | $ | 100,814 | $ | 5 | $ | (46 | ) | $ | 100,773 | ||||||||||||||||
Reported as: | |||||||||||||||||||||||||||||||||
Cash and cash equivalents | $ | 9,358 | $ | 9,464 | |||||||||||||||||||||||||||||
Short-term investments, available-for-sale | 84,114 | 91,309 | |||||||||||||||||||||||||||||||
$ | 93,472 | $ | 100,773 | ||||||||||||||||||||||||||||||
5. | Fair Value of Financial Instruments |
Level 1 – | Observable inputs such as quoted prices (unadjusted) for identical assets or liabilities in active markets. | |||
Level 2 – | Other inputs that are based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active and model-based valuation techniques for which all significant inputs are observable in the market or can be derived from observable market data. | |||
Level 3 – | Unobservable inputs that are supported by little or no market activities, which would require the Company to develop its own assumptions. |
March 31, 2019 | December 31, 2018 | |||||||||||||||||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | Level 1 | Level 2 | Level 3 | Total | |||||||||||||||||||||||||
Cash | $ | 5,202 | $ | — | $ | — | $ | 5,202 | $ | 4,168 | $ | — | $ | — | $ | 4,168 | ||||||||||||||||
Money market funds | 2,139 | — | — | 2,139 | 2,308 | — | — | 2,308 | ||||||||||||||||||||||||
Corporate debt securities | — | 39,613 | — | 39,613 | — | 45,165 | — | 45,165 | ||||||||||||||||||||||||
Commercial paper | — | 50,632 | — | 50,632 | — | 49,132 | — | 49,132 | ||||||||||||||||||||||||
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$ | 7,341 | $ | 90,245 | $ | — | $ | 97,586 | $ | 6,476 | $ | 94,297 | $ | — | $ | 100,773 | |||||||||||||||||
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Reported as: | ||||||||||||||||||||||||||||||||
Cash and cash equivalents | $ | 8,593 | $ | 9,464 | ||||||||||||||||||||||||||||
Short-term investments,available-for-sale | 88,993 | 91,309 | ||||||||||||||||||||||||||||||
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$ | 97,586 | $ | 100,773 | |||||||||||||||||||||||||||||
|
|
|
|
June 30, | December 31, | |||||||||||||||||||||||||||||||
2019 | 2018 | |||||||||||||||||||||||||||||||
Level 1 | Level 2 | Level 3 | Total | Level 1 | Level 2 | Level 3 | Total | |||||||||||||||||||||||||
Cash | $ | 5,532 | $ | — | $ | — | $ | 5,532 | $ | 4,168 | $ | — | $ | — | $ | 4,168 | ||||||||||||||||
Money market funds | 3,826 | — | — | 3,826 | 2,308 | — | — | 2,308 | ||||||||||||||||||||||||
Corporate debt securities | — | 47,294 | — | 47,294 | — | 45,165 | — | 45,165 | ||||||||||||||||||||||||
Commercial paper | — | 36,820 | — | 36,820 | — | 49,132 | — | 49,132 | ||||||||||||||||||||||||
$ | 9,358 | $ | 84,114 | $ | — | $ | 93,472 | $ | 6,476 | $ | 94,297 | $ | — | $ | 100,773 | |||||||||||||||||
Reported as: | ||||||||||||||||||||||||||||||||
Cash and cash equivalents | $ | 9,358 | $ | 9,464 | ||||||||||||||||||||||||||||
Short-term investments, available-for-sale | 84,114 | 91,309 | ||||||||||||||||||||||||||||||
$ | 93,472 | $ | 100,773 | |||||||||||||||||||||||||||||
6. | Leases |
March 31, 2019 | ||||
Upon the adoption of Topic 842 | $ | 1,572 | ||
Additional warehouse operating lease | 117 | |||
Less: accumulated amortization | (266 | ) | ||
|
| |||
$ | 1,423 | |||
|
|
June 30, | ||||
2019 | ||||
Upon the adoption of Topic 842 | $ | 1,572 | ||
Additional warehouse operating lease | 117 | |||
Less: accumulated amortization | (555 | ) | ||
$ | 1,134 | |||
March 31, 2019 | ||||
Current portion included in other current liabilities | $ | 1,786 | ||
Non-current portion included in othernon-current liabilities | 156 | |||
|
| |||
$ | 1,942 | |||
|
|
June 30, | ||||
2019 | ||||
Current portion included in other current liabilities | $ | 1,512 | ||
Non-current portion included in othernon-current liabilities | — | |||
$ | 1,512 | |||
Fiscal Years Ending December 31, | March 31, 2019 | |||
2019 (remaining) | $ | 1,247 | ||
2020 | 782 | |||
Thereafter | — | |||
|
| |||
Total minimum payments | 2,029 | |||
Less: present value adjustment | (87 | ) | ||
|
| |||
Total | $ | 1,942 | ||
|
|
June 30, | ||||
Fiscal Years Ending December 31, | 2019 | |||
2019 (remaining) | $ | 783 | ||
2020 | 782 | |||
Thereafter | — | |||
Total minimum payments | 1,565 | |||
Less: present value adjustment | (53 | ) | ||
Total | $ | 1,512 | ||
7. | Stock-based Compensation Expense |
Three Months Ended March 31, 2019 | ||||||||
Options | Weighted Average Exercise Price | |||||||
Outstanding, beginning of period | 3,688 | $ | 20.84 | |||||
Granted | 815 | 31.18 | ||||||
Exercised | (284 | ) | 15.74 | |||||
Forfeited | (77 | ) | 23.48 | |||||
|
| |||||||
Outstanding, end of period | 4,142 | 23.18 | ||||||
|
| |||||||
Exercisable | 1,945 | 18.87 | ||||||
|
|
Six Months Ended | ||||||||
June 30, 2019 | ||||||||
Weighted Average | ||||||||
Options | Exercise Price | |||||||
Outstanding, beginning of period | 3,688 | $ | 20.84 | |||||
Granted | 1,099 | 29.93 | ||||||
Exercised | (505 | ) | 15.29 | |||||
Forfeited | (170 | ) | 26.21 | |||||
Outstanding, end of period | 4,112 | 23.73 | ||||||
Exercisable | 1,959 | 19.82 | ||||||
Three Months Ended March 31, 2019 | ||||||||
RSUs | Weighted Average Fair Value | |||||||
Outstanding, beginning of period | 350 | $ | 24.92 | |||||
Awarded | 205 | 32.42 | ||||||
Vested | (133 | ) | 22.07 | |||||
Forfeited | (14 | ) | 25.49 | |||||
|
| |||||||
Outstanding, end of period | 408 | 29.60 | ||||||
|
|
Six Months Ended | ||||||||
June 30, 2019 | ||||||||
Weighted Average | ||||||||
RSUs | Fair Value | |||||||
Outstanding, beginning of period | 350 | $ | 24.92 | |||||
Awarded | 364 | 29.16 | ||||||
Vested | (142 | ) | 23.34 | |||||
Forfeited | (36 | ) | 28.38 | |||||
Outstanding, end of period | 536 | 27.98 | ||||||
Three Months Ended March 31, | ||||||||
2019 | 2018 | |||||||
Cost of sales | $ | 236 | $ | 260 | ||||
Selling, general and administrative | 2,974 | 2,366 | ||||||
Research and development | 659 | 512 | ||||||
|
|
|
| |||||
$ | 3,869 | $ | 3,138 | |||||
|
|
|
|
Three Months Ended | Six Months Ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
Cost of sales | $ | 246 | $ | 330 | $ | 482 | $ | 590 | ||||||||
Selling, general and administrative | 4,440 | 2,646 | 7,414 | 5,012 | ||||||||||||
Research and development | 811 | 629 | 1,470 | 1,141 | ||||||||||||
$ | 5,497 | $ | 3,605 | $ | 9,366 | $ | 6,743 | |||||||||
8. | Net Loss per Share |
Three Months Ended March 31, | ||||||||
2019 | 2018 | |||||||
Common stock options | 4,142 | 4,087 | ||||||
Restricted stock units | 408 | 371 | ||||||
Employee stock purchase plan shares | 74 | 190 | ||||||
|
|
|
| |||||
4,624 | 4,648 | |||||||
|
|
|
|
Three Months Ended | Six Months Ended | |||||||||||||||
June 30, | June 30, | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
Common stock options | 4,112 | 3,819 | 4,112 | 3,819 | ||||||||||||
Restricted stock units | 536 | 354 | 536 | 354 | ||||||||||||
Employee stock purchase plan shares | 75 | 102 | 75 | 102 | ||||||||||||
4,723 | 4,275 | 4,723 | 4,275 | |||||||||||||
9. | Commitments and Contingencies |
The Company is not currently a party to any material legal proceedings.
study were required to use an intranasal steroid spray daily. In addition, the study demonstrated a 61% reduction in the proportion of patients indicated for revision surgery at day 90. To supplement clinical trials performed with SINUVA
J7401.
grows or we make additional investments in our manufacturing capabilities.
expenses. We expect SG&A expenses to continue to increase in absolute dollars for the foreseeable future as we expand our commercial and administrative infrastructure to drive and support the anticipated growth in revenue and incur additional legal, accounting, insurance and other professional services fees.
Three Months Ended March 31, | ||||||||
2019 | 2018 | |||||||
(in thousands, except percentages) | ||||||||
Revenue | $ | 26,673 | $ | 24,723 | ||||
Cost of sales | 4,645 | 5,482 | ||||||
|
|
|
| |||||
Gross profit | 22,028 | 19,241 | ||||||
Gross margin | 83 | % | 78 | % | ||||
Operating expenses: | ||||||||
Selling, general and administrative | 27,207 | 21,516 | ||||||
Research and development | 6,266 | 4,273 | ||||||
|
|
|
| |||||
Total operating expenses | 33,473 | 25,789 | ||||||
|
|
|
| |||||
Loss from operations | (11,445 | ) | (6,548 | ) | ||||
Interest income and other, net | 640 | 412 | ||||||
|
|
|
| |||||
Net loss | $ | (10,805 | ) | $ | (6,136 | ) | ||
|
|
|
|
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
(in thousands, except percentages) | ||||||||||||||||
Revenue | $ | 26,659 | $ | 26,300 | $ | 53,332 | $ | 51,023 | ||||||||
Cost of sales | 5,046 | 5,558 | 9,691 | 11,040 | ||||||||||||
Gross profit | 21,613 | 20,742 | 43,641 | 39,983 | ||||||||||||
Gross margin | 81 | % | 79 | % | 82 | % | 78 | % | ||||||||
Operating expenses: | ||||||||||||||||
Selling, general and administrative | 27,611 | 21,005 | 54,818 | 42,521 | ||||||||||||
Research and development | 6,041 | 4,374 | 12,307 | 8,647 | ||||||||||||
Total operating expenses | 33,652 | 25,379 | 67,125 | 51,168 | ||||||||||||
Loss from operations | (12,039 | ) | (4,637 | ) | (23,484 | ) | (11,185 | ) | ||||||||
Interest income and other, net | 655 | 477 | 1,295 | 889 | ||||||||||||
Net loss | $ | (11,384 | ) | $ | (4,160 | ) | $ | (22,189 | ) | $ | (10,296 | ) |
The per unit allocation of our manufacturing overhead costs may increase and our gross margin may decline as production volume decreases.
Three Months Ended March 31, | ||||||||
2019 | 2018 | |||||||
(in thousands) | ||||||||
Net cash (used in) provided by: | ||||||||
Operating activities | $ | (6,892 | ) | $ | (3,620 | ) | ||
Investing activities | 1,554 | (10,564 | ) | |||||
Financing activities | 4,467 | 4,873 | ||||||
|
|
|
| |||||
Net decrease in cash and cash equivalents | $ | (871 | ) | $ | (9,311 | ) | ||
|
|
|
|
Six Months Ended June 30, | ||||||||
2019 | 2018 | |||||||
(in thousands) | ||||||||
Net cash (used in) provided by: | ||||||||
Operating activities | $ | (15,868 | ) | $ | (6,489 | ) | ||
Investing activities | 6,331 | (10,900 | ) | |||||
Financing activities | 9,431 | 9,355 | ||||||
Net decrease in cash and cash equivalents | $ | (106 | ) | $ | (8,034 | ) | ||
During the three months ended March 31, 2018, net cash used in investing activities was $10.6 million, consisting of net purchases of short-term investments,available-for-sale, of $10.3 million and purchases of property and equipment of $0.3 million.
options and purchases under our employee stock purchase plan.
options and purchases under our employee stock purchase plan.
ITEM 3. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |
ITEM 4. | CONTROLS AND PROCEDURES |
ITEM 1. | LEGAL PROCEEDINGS |
be appointed lead plaintiff. The court has set a hearing date to decide that motion for November 1, 2019. Once a lead plaintiff is appointed, the Company expects the lead plaintiff to file an amended complaint. The Company believes this lawsuit is without merit and intends to vigorously defend against it.
ITEM 1A. | RISK FACTORS |
have produced. We cannot assure that any data that we or others generate will be consistent with that observed in these studies or meet the endpoints, nor that the results will be maintained beyond the time points studied. We also cannot assure that any data that may be collected will be compelling to the medical community because the data may not be scientifically meaningful and may not demonstrate that sinus procedures using our steroid releasing implants are an attractive option when compared against data from alternative treatments.
systems, we may experience events or circumstances which could disrupt our operations, including our ability to timely ship and track product orders, project inventory requirements, manage our supply chain and otherwise adequately service our customers. In the event we experience significant disruptions, such as natural disasters or security breaches, as a result of the current implementation of our information technology systems, we may not be able to repair our systems in an efficient and timely manner. Accordingly, such events may disrupt or reduce the efficiency of our entire operation and have a material adverse effect on our results of operations and cash flows.
price, or AMP, and best price, or BP, for the quarter. If we become aware that our reporting for a prior quarter was incorrect or has changed as a result of recalculation of the pricing data, we are obligated to resubmit the corrected data for a period not to exceed twelve quarters from the quarter in which the data originally were due, and CMS may request or require restatements for earlier periods as well. Such restatements and recalculations increase our costs for complying with the laws and regulations governing the Medicaid Drug Rebate Program. Any corrections to our rebate calculations could result in an overage or underage in our rebate liability for past quarters, depending on the nature of the correction. Price recalculations also may affect the ceiling price at which we are required to offer our products to certain covered entities, such asprograms.
programs
time, and we are required to
governmental bodies have the authority to require the recall of our products in their respective jurisdictions in the event of material deficiencies or defects in the design or manufacture of our products. We may, under our own initiative, recall a product if any material deficiency in our steroid releasing implants is found. The FDA requires that recalls be reported to the FDA within 10 working days after the recall is initiated. A government-mandated or voluntary recall by us or one of our international distributors could occur as a result of an unacceptable risk to health, component failures, malfunctions, manufacturing errors, design or labeling defects or other deficiencies and issues. Recalls of any of our products would divert managerial and financial resources and have an adverse effect on our reputation, results of operations and financial condition, which could impair our ability to produce our products in a cost-effective and timely manner in order to meet our customers’ demands. In addition, corrective action to a recall may require regulatory approvals
In certain cases, federal and state authorities pursue actions for false claims on the basis that manufacturers and distributors are promoting
purpose of obtaining or retaining business or other advantages. In many foreign countries, particularly in countries with developing economies, some of which may represent attractive markets for us, it may be a local custom that businesses operating in such countries engage in business practices that are prohibited by the FCPA or other laws and regulations. Although we have implemented a company policy requiring our employees and consultants to comply with the FCPA and similar laws, such policy may not be effective at preventing all potential FCPA or other violations. There can be no assurance that none of our employees and agents, or those companies to which we outsource certain portions of our business operations, will not take actions that violate our policies or applicable laws, for which we may be ultimately held responsible. As a result of our focus on managing our growth, our development of infrastructure designed to identify FCPA matters and monitor compliance is at an early stage. Any violation of the FCPA and related policies could result in severe criminal or civil sanctions, which could have a material and adverse effect on our reputation, business, operating results and financial condition.
invention regardless of whether another inventor had made the invention earlier. The U.S. Patent and Trademark Office, or USPTO, recently developed new regulations and procedures to govern administration of the Leahy-Smith Act, and many of the substantive changes to patent law associated with the Leahy-Smith Act, and in particular, the
a patent lawsuit, alleging our infringement of a competitor’s patents, we may be prevented from marketing our steroid releasing implants in one or more countries. We may also initiate litigation against third parties to protect our own intellectual property. Our intellectual property has not been tested in litigation. If we initiate litigation to protect our rights, we run the risk of having our patents invalidated, which may undermine our competitive position.
ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
ITEM 2. | UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS |
ITEM 3.DEFAULTS UPON SENIOR SECURITIES
ITEM 3. | DEFAULTS UPON SENIOR SECURITIES |
ITEM 4. MINE SAFETY DISCLOSURES
ITEM 4. | MINE SAFETY DISCLOSURES |
ITEM 5. | OTHER INFORMATION |
|
Incorporation by Reference | ||||||||||||||||||||
Exhibit | Description | Form | SEC File No. | Exhibit | Filing Date | |||||||||||||||
3.1 | 8-K | 001-36545 | 3.1 | 7/30/2014 | ||||||||||||||||
3.2 | S-1 | 333-196974 | 3.4 | 7/9/2014 | ||||||||||||||||
4.1 | S-1 | 333-196974 | 4.1 | 7/14/2014 | ||||||||||||||||
4.2 | ||||||||||||||||||||
4.3 | S-1 | 333-196974 | 10.6 | 6/23/2014 | ||||||||||||||||
10.1 | ||||||||||||||||||||
31.1 | ||||||||||||||||||||
31.2 | ||||||||||||||||||||
32.1* | ||||||||||||||||||||
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 Taxonomy Extension Label Linkbase Document. | |||||||||||||||||||
101.PRE | XBRL Taxonomy Extension Presentation Linkbase Document. |
* | Exhibit 32.1 is being furnished and shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liability of that section, nor shall such exhibit be deemed to be incorporated by reference in any registration statement or other document filed under the Securities Act of 1933, as amended, or the Exchange Act, except as otherwise specifically stated in such filing. |
Dated: | Intersect ENT, Inc. (Registrant) | |||||||
/s/ | ||||||||
Thomas A. West | ||||||||
President and Chief Executive Officer (Duly Authorized Officer) | ||||||||
/s/ Jeryl L. Hilleman | ||||||||
Jeryl L. Hilleman | ||||||||
Chief Financial Officer | ||||||||
(Principal Financial and Accounting Officer) |
40