Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2017 | Nov. 03, 2017 | |
Document And Entity Information | ||
Document Type | 10-Q | |
Amendment Flag | false | |
Document Period End Date | Sep. 30, 2017 | |
Document Fiscal Year Focus | 2,017 | |
Document Fiscal Period Focus | Q3 | |
Entity Registrant Name | Invuity, Inc. | |
Entity Central Index Key | 1,393,020 | |
Current Fiscal Year End Date | --12-31 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 17,139,371 |
Condensed Balance Sheets
Condensed Balance Sheets - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Current assets: | ||
Cash and cash equivalents | $ 24,338 | $ 28,300 |
Short-term investments | 4,497 | 10,737 |
Restricted cash - current | 181 | 181 |
Accounts receivable, net | 6,236 | 5,782 |
Inventory | 6,496 | 5,052 |
Prepaid expenses and other current assets | 1,634 | 1,088 |
Total current assets | 43,382 | 51,140 |
Restricted Cash | 909 | 909 |
Property and equipment, net | 7,430 | 8,286 |
Other long-term assets | 333 | |
Total assets | 52,054 | 60,335 |
Current liabilities: | ||
Accounts payable | 3,484 | 2,192 |
Accrued and other current liabilities | 5,934 | 6,351 |
Short-term debt | 5,546 | 1,362 |
Total current liabilities | 14,964 | 9,905 |
Deferred rent | 2,615 | 2,721 |
Long-term debt | 29,076 | 13,261 |
Total liabilities | 46,655 | 25,887 |
Commitments and contingencies (Note 8) | ||
Stockholders' equity : | ||
Preferred stock, $0.001 par value?10,000,000 shares authorized at September 30, 2017 and December 31, 2016, no shares issued and outstanding at September 30, 2017 and December 31, 2016 | ||
Common stock, $0.001 par value?100,000,000 shares authorized at September 30, 2017 and December 31, 2016 17,106,556 and 16,950,940 shares issued and outstanding at September 30, 2017 and December 31, 2016 | 17 | 17 |
Additional paid-in capital | 184,109 | 180,647 |
Accumulated deficit | (178,727) | (146,216) |
Total stockholders' equity | 5,399 | 34,448 |
Total liabilities and stockholders' equity | $ 52,054 | $ 60,335 |
Condensed Balance Sheets (Paren
Condensed Balance Sheets (Parenthetical) - $ / shares | Sep. 30, 2017 | Dec. 31, 2016 |
Condensed Balance Sheets | ||
Preferred stock, par value | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 10,000,000 | 10,000,000 |
Preferred stock, shares issued | 0 | 0 |
Preferred stock, shares outstanding | 0 | 0 |
Common stock, par value | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 100,000,000 | 100,000,000 |
Common stock, shares issued | 17,123,856 | 16,950,940 |
Common stock, shares outstanding | 17,106,556 | 16,950,940 |
Condensed Statements of Operati
Condensed Statements of Operations and Comprehensive Loss - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Condensed Statements of Operations and Comprehensive Loss | ||||
Revenue | $ 9,600 | $ 8,478 | $ 28,391 | $ 23,106 |
Cost of goods sold | 2,888 | 2,219 | 8,002 | 6,416 |
Gross profit | 6,712 | 6,259 | 20,389 | 16,690 |
Operating expenses: | ||||
Research and development | 2,326 | 2,471 | 7,165 | 7,412 |
Selling, general and administrative | 12,790 | 12,134 | 41,847 | 38,885 |
Total operating expenses | 15,116 | 14,605 | 49,012 | 46,297 |
Loss from operations | (8,404) | (8,346) | (28,623) | (29,607) |
Interest expense | (545) | (505) | (1,559) | (1,514) |
Interest income | 51 | 162 | ||
Other income (expense), net | (9) | 30 | (188) | 61 |
Loss on extinguishment of debt | (2,303) | |||
Net loss and comprehensive loss | $ (8,907) | $ (8,821) | $ (32,511) | $ (31,060) |
Net loss per common share, basic and diluted | $ (0.52) | $ (0.56) | $ (1.91) | $ (2.19) |
Weighted-average shares used to compute net loss per common share, basic and diluted | 17,093,183 | 15,690,785 | 17,016,312 | 14,173,534 |
Condensed Statements of Cash Fl
Condensed Statements of Cash Flows - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2017 | Sep. 30, 2016 | |
Cash flows from operating activities | ||
Net loss | $ (32,511) | $ (31,060) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation and amortization | 1,510 | 1,481 |
Stock-based compensation | 2,429 | 1,716 |
Non-cash interest expense | 92 | 107 |
Payment of original issue discount upon extinguishment of debt | (782) | |
Non-cash portion of extinguishment loss | 352 | |
Accretion of premium on marketable securities | (18) | |
Recovery (provision) for doubtful accounts | (6) | 63 |
Changes in operating assets and liabilities: | ||
Accounts receivable | (443) | (1,593) |
Inventory | (1,444) | 61 |
Prepaid expenses and other assets | (546) | (199) |
Other non-current assets | (333) | |
Accounts payable | 1,302 | 327 |
Accrued and other current liabilities | (547) | 1,145 |
Deferred rent | (106) | (59) |
Net cash used in operating activities | (31,051) | (28,011) |
Cash flows from investing activities: | ||
Purchases of property and equipment | (668) | (884) |
Purchases of marketable securities | (9,462) | |
Maturities of marketable securities | 15,720 | |
Net cash provided by (used in) investing activities | 5,590 | (884) |
Cash flows from financing activities: | ||
Proceeds from secondary offering, net of issuance costs | 29,653 | |
Proceeds from common stock offering from at-the-market equity offering, net of offering costs | 57 | |
Proceeds from revolving credit facility | 5,546 | |
Proceeds from issuance of long-term debt, net of issuance costs | 29,672 | |
Payments of long-term debt - related party | (14,193) | |
Proceeds from issuance of common stock upon exercise of stock options | 417 | 655 |
Net cash provided by financing activities | 21,499 | 30,308 |
Net increase (decrease) in cash and cash equivalents | (3,962) | 1,413 |
Cash and cash equivalents, beginning of period | 28,300 | 46,296 |
Cash and cash equivalents, end of period | 24,338 | 47,709 |
Supplemental disclosures of cash flow information: | ||
Interest paid to related party | 1,511 | 1,406 |
Non-cash investing and financing activities: | ||
Purchases of property and equipment in accounts payable and accrued liabilities at period end | $ 15 | 138 |
Capitalized Offering Costs | $ 429 |
Organization and Description of
Organization and Description of Business | 9 Months Ended |
Sep. 30, 2017 | |
Organization and Description of Business | |
Organization and Description of Business | NOTES TO CONDENSED FINANCIAL STATEMENTS (Unaudited) 1. Organization and Description of Business Invuity, Inc. (the “Company”) was incorporated in California on November 29, 2004 and reincorporated in Delaware in May 2015. The Company is a commercial-stage medical technology company that utilizes its proprietary Intelligent Photonics technology to develop single-use and reusable illuminated surgical devices, which provide surgeons with illumination and direct visualization of surgical cavities during minimal access procedures. The Company’s manufacturing, development and management facilities are located in San Francisco, California. Liquidity The Company has incurred net losses from operations since inception, including $32.5 million in the nine months ended September 30, 2017, and has an accumulated deficit of $178.7 million as of September 30, 2017. The Company has $28.8 million in cash and cash equivalents and short-term investments, and $34.6 million in debt outstanding at September 30, 2017. The Company expects to incur additional losses and negative cash flows for the foreseeable future. Management believes that its cash, cash equivalents and short-term investments at September 30, 2017, and additional funding available under the revolving credit facility with MidCap Financial Trust, and their affiliates (“MidCap”), will provide sufficient funds to enable the Company to meet its operating plan through at least twelve months from issuance date. In addition, on July 1, 2016, the Company filed a prospectus supplement for an at-the-market offering (“ATM”) program of up to $25.0 million. However, if the Company’s anticipated operating results are not achieved in future periods, additional debt or equity financing may need to be raised, or planned expenditures may need to be reduced. Basis of Presentation The accompanying unaudited condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and in accordance with the instructions to Form 10‑Q and Rule 10‑01 of Regulation S‑X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. The unaudited interim condensed financial statements have been prepared on the same basis as the annual financial statements. In the opinion of management, the accompanying unaudited condensed financial statements reflect all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair statement of the financial position, results of operations and cash flows for the periods presented. The information included in this Quarterly Report on Form 10-Q should be read in conjunction with the audited financial statements and notes thereto included in the Company’s Annual Report on Form 10‑K for the year ended December 31, 2016 and filed with the U.S. Securities and Exchange Commission (the “SEC”). The accompanying year-end balance sheet was derived from the audited financial statements included in the Company’s Annual Report on Form 10‑K for the year ended December 31, 2016. The results for the three months and nine months ended September 30, 2017 are not necessarily indicative of the results expected for the full fiscal year or any other periods. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2017 | |
Summary of Significant Accounting Policies | |
Summary of Significant Accounting Policies | 2. Summary of Significant Accounting Policies Use of Estimates The Company’s financial statements have been prepared in conformity with U.S. GAAP. The preparation of the financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. On an ongoing basis, management evaluates its estimates, including those related to revenue recognition, fair value of assets and liabilities, inventory, income taxes and stock-based compensation. Actual results could differ from those estimates and assumptions. Cash Equivalents Cash equivalents consist of short-term, highly liquid investments with original maturities of three months or less from the date of purchase. Cash equivalents consist primarily of amounts invested in money market funds. Restricted Cash Restricted cash represents a certificate of deposit held at a financial institution as collateral for a letter of credit related to the Company’s facility lease in San Francisco, California. Fair Value of Financial Instruments The carrying amounts of the Company’s financial instruments, including cash equivalents, short-term investments, accounts receivable and accounts payable, approximate fair value due to their relatively short maturities. As of September 30, 2017 and December 31, 2016, based on Level 2 inputs and the borrowing rates available to the Company for loans with similar terms and consideration of the Company’s credit risk, the carrying value of the Company’s long-term debt approximates its fair value. Customer Concentration Significant customers are those which represent 10% or more of the Company’s total revenue for each period presented in the condensed statements of operations and comprehensive loss or 10% or more of the Company’s net accounts receivable balance at each respective balance sheet date. As of and for the year ended December 31, 2016 and as of and for the three and nine months ended September 30, 2017 and 2016, the Company had no customers that represented 10% or more of its revenue or accounts receivable balances. Revenue Recognition The Company’s revenue is generated from the sale of its products to hospitals and medical centers through direct sales representatives and independent sales agents. The Company recognizes revenue when all of the following criteria are met: persuasive evidence of an arrangement exists; the sales price is fixed or determinable; collection of the relevant receivable is reasonably assured at the time of sale; and delivery has occurred. The Company recognizes revenue when title to the goods and risk of loss transfers to the customer, which is upon shipment of the product under the Company’s standard terms and conditions. Shipping and handling costs billed to the customer are recorded in revenue. Segment Reporting The Company manages its operations as a single operating segment for the purposes of assessing performance and making operating decisions. The majority of the Company’s assets are maintained in the United States. The Company derives the majority of its revenue from sales to customers in the United States, based upon the billing address of the customer. Net loss per Common Share Basic net loss per common share is calculated by dividing the net loss by the weighted-average number of shares of common stock outstanding during the period, without consideration of potentially dilutive securities. Diluted net loss per common share is the same as basic net loss per common share since the effect of potentially dilutive securities are anti-dilutive. Shares subject to repurchase are excluded from the weighted-average shares. Recent Accounting Pronouncements · In May 2014, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) No. 2014‑09, Revenue from Contracts with Customers (Topic 606) , which supersedes the revenue recognition requirements in ASC 605, Revenue Recognition . This ASU is based on the principle that revenue is recognized to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The ASU also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. In August 2015, FASB issued ASU No. 2015‑14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date , which effectively delayed the adoption date by one year, to an effective date for public entities for annual and interim periods beginning after December 15, 2017. · In March 2016, the FASB issued ASU No. 2016‑08, Revenue from Contracts with Customers (Topic 606): Principal Versus Agent Considerations (Reporting Revenue Gross Versus Net), to clarify certain aspects of the principal-versus-agent guidance in its new revenue recognition standard. · In April 2016 the FASB issued ASU No. 2016‑10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing to clarify on how to identify the performance obligations and the licensing implementation guidance in its new revenue recognition standard. · In May 2016, the FASB issued ASU No. 2016‑12, Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients, to address certain issues identified by the Transition Resource Group, (the “TRG”) in the guidance on assessing collectability, presentation of sales tax, noncash consideration, and completed contracts and contracts modifications at transition. The Company will adopt the new revenue standards on January 1, 2018, using the modified retrospective method. The new revenue standard is principles based and interpretation of those principles may vary from company to company based on their unique circumstances. It is possible that interpretation, industry practice, and guidance may evolve as companies and the accounting profession work to implement this new standard. The Company is in the process of completing the evaluation of the potential impact of the new standard, and has determined the impact to revenues recognized in the period prior to adoption would be immaterial. · In July 2015, the FASB issued ASU No. 2015‑11, Inventory (Topic 330): Simplifying the Measurement of Inventory , which permits companies to measure inventory at the lower of cost and realizable value. ASU 2015‑11 applies to all business entities and is effective for public business entities for annual periods, and interim periods within those annual periods, beginning after December 15, 2016. The adoption of this standard in the first quarter of 2017 did not have a material impact on the Company’s financial statements. · In January 2016, the FASB issued ASU No. 2016‑01, Recognition and Measurement of Financial Assets and Financial Liabilities (Topic 825) , which addresses certain aspects of recognition, measurement, presentation and disclosure of financial instruments. ASU No. 2016‑01 is effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2016. The adoption of this standard in the first quarter of 2017 did not have a material impact on the Company’s financial statements. · In February 2016, the FASB issued ASU No. 2016‑02— Leases (“ASC 842”), which sets out the principles for the recognition, measurement, presentation and disclosure of leases for both parties to a contract (i.e. lessees and lessors). The new standard requires lessees to apply a dual approach, classifying leases as either finance or operating leases based on the principle of whether or not the lease is effectively a financed purchase by the lessee. This classification will determine whether lease expense is recognized based on an effective interest method or on a straight line basis over the term of the lease, respectively. A lessee is also required to record a right-of-use asset and a lease liability for all leases with a term of greater than 12 months regardless of their classification. Leases with a term of 12 months or less will be accounted for similar to existing guidance for operating leases today. ASC 842 supersedes the previous leases standard, ASC 840 Leases . The standard is effective on January 1, 2019, with early adoption permitted. The Company is in the process of evaluating the impact of this new guidance on its financial statements. · In March 2016, the FASB issued ASU No. 2016‑09, Compensation-Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting . This update simplifies the accounting for employee share-based payment transactions, including the accounting for income taxes, forfeitures, and statutory tax withholding requirements, as well as classification in the statement of cash flows. ASU No. 2016‑09 is effective for public entities for annual periods beginning after December 15, 2016. As a result of adopting ASU No. 2016‑09, the Company has made an accounting policy election to account for forfeitures as they occur. This change has been applied on a modified retrospective basis, with no material impacts on the Company’s financial statements. The adoption of ASU No. 2016‑09 also requires excess tax benefits and tax deficiencies be recorded in the income statement as opposed to additional paid‑in capital when the awards vest or are settled, and has been applied on a prospective basis with no impact on the financial statements as of and for the three and nine months ended September 30, 2017. As a result of the adoption, the Company's increased its total NOLs by $1.0 million on January 1, 2017 related to deferred tax assets that arose directly from tax deductions related to equity compensation greater than compensation recognized for financial reporting purposes. This amount is fully offset by the valuation allowance. The adoption of ASU No. 2016‑09 related to the accounting for minimum statutory withholding tax requirements and cash paid by an employer when directly withholding shares for tax-withholding purposes had no impact on the Company's current consolidated financial statements or on any prior period financial statements presented. · In June 2016, the FASB issued ASU No. 2016‑13, Measurement of Credit Losses on Financial Statements (Topic 326) . This update provides financial statement users with more decision-useful information about the expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity at each reporting date. The update replaces the incurred loss impairment methodology in current GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. ASU No. 2016‑13 is effective for public entities for annual periods beginning after December 15, 2019. The Company is in the process of evaluating the impact of this new guidance on its financial statements. · In August 2016, the FASB issued ASU No. 2016‑15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments (a consensus of the FASB Emerging Issues Task Force) . The new guidance is intended to reduce diversity in practice in how certain transactions are classified in the statement of cash flows. This update addresses the following eight specific cash flow issues: debt prepayment or debt extinguishment costs; settlement of zero-coupon debt instruments or other debt instruments with coupon interest rates that are insignificant in relation to the effective interest rate of the borrowing; contingent consideration payments made after a business combination; proceeds from the settlement of insurance claims; proceeds from the settlement of corporate-owned life insurance policies (“COLIs”) (including bank-owned life insurance policies (“BOLIs”); distributions received from equity method investees; beneficial “interests in securitization transactions; and separately identifiable cash flows and application of the predominance principle. ASU No. 2016‑15 is effective for public entities for annual periods beginning after December 15, 2017. The Company has evaluated the potential impact of the new standard, and determined the impact to the Statement of Cash Flows in the period prior to adoption is immaterial. · In November 2016, the FASB issued ASU No. 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash. The amendments in this Update require that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Therefore, amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. The amendments in this Update are effective for public business entities for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. The Company has evaluated the potential impact of the new standard, and determined the impact to the Statement of Cash Flows in the period prior to adoption is immaterial. |
Fair Value Measurements
Fair Value Measurements | 9 Months Ended |
Sep. 30, 2017 | |
Fair Value Measurements | |
Fair Value Measurements | 3. Fair Value Measurements The Company discloses and recognizes the fair value of its assets and liabilities using a hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the reporting date. The hierarchy gives the highest priority to valuations based upon unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to valuations based upon unobservable inputs that are significant to the valuation (Level 3 measurements). The guidance establishes three levels of the fair value hierarchy as follows: Level 1 —Inputs are unadjusted quoted prices in active markets for identical assets or liabilities at the measurement date. Level 2 —Inputs (other than quoted market prices included in Level 1) are either directly or indirectly observable for the asset or liability through correlation with market data at the measurement date and for the duration of the instrument’s anticipated life. Level 3 —Inputs reflect management’s best estimate of what market participants would use in pricing the asset or liability at the measurement date. Consideration is given to the risk inherent in the valuation technique and the risk inherent in the inputs to the model. The Company’s financial instruments consist of Level 1 and 2 assets. Level 1 assets consist primarily of highly liquid money market funds that are included in cash, cash equivalents, and restricted cash. Commercial paper and corporate debt securities are classified in Level 2 of the fair value hierarchy because these valuation inputs are observable or market-corroborated. The following table sets forth the fair value of the Company’s financial assets and liabilities measured at fair value on a recurring basis based on the three-tier fair value hierarchy (in thousands): September 30, 2017 Level 1 Level 2 Level 3 Total Assets Money market funds $ 21,535 $ — $ — $ 21,535 Commercial paper — 4,497 — 4,497 $ 21,535 $ 4,497 $ — $ 26,032 December 31, 2016 Level 1 Level 2 Level 3 Total Assets Money market funds $ 18,755 $ — $ — $ 18,755 Commercial paper — 9,582 — 9,582 Corporate debt securities — 9,533 — 9,533 $ 18,755 $ 19,115 $ — $ 37,870 As of September 30, 2017 and December 31, 2016, the carrying value of the Company’s short-term investments approximates their fair value. |
Balance Sheet Components
Balance Sheet Components | 9 Months Ended |
Sep. 30, 2017 | |
Balance Sheet Components | |
Balance Sheet Components | 4. Balance sheet components Inventory Inventory consisted of the following (in thousands): September 30, December 31, 2017 2016 Raw materials $ 1,079 $ 699 Work-in-process 1,756 1,144 Finished goods 3,661 3,209 Total inventory $ 6,496 $ 5,052 Prepaid Expenses and Other Current Assets Prepaid expenses and other current assets consisted of the following (in thousands): September 30, December 31, 2017 2016 Prepaid expenses $ 1,436 $ 1,004 Other 198 84 Total prepaid expenses and other current assets $ 1,634 $ 1,088 Property and Equipment, Net Property and equipment, net, consisted of the following (in thousands): September 30, December 31, 2017 2016 Computer equipment and software $ 1,353 $ 1,330 Laboratory and manufacturing equipment 2,613 2,165 Furniture and fixtures 1,516 1,442 Leasehold improvements 7,153 7,153 Assets in Progress 358 304 Total property and equipment, gross 12,993 12,394 Less: accumulated depreciation and amortization (5,563) (4,108) Total property and equipment, net $ 7,430 $ 8,286 Depreciation and amortization expense was $0.5 million for each of the three months ended September 30, 2017 and 2016, and $1.5 million for each of the nine months ended September 30, 2017 and 2016. Accrued and Other Current Liabilities Accrued and other current liabilities consisted of the following (in thousands): September 30, December 31, 2017 2016 Accrued payroll-related expenses $ 4,390 $ 5,301 Accrued distributor/GPO commission 394 193 Accrued professional fees 599 246 Deferred rent 261 261 Other accrued liabilities 290 350 Total accrued and other current liabilities $ 5,934 $ 6,351 |
Debt
Debt | 9 Months Ended |
Sep. 30, 2017 | |
Debt | |
Debt | 5. Debt On March 10, 2017, the Company entered into a credit and security agreement with MidCap, as agent, for up to $30.0 million in term loans. Under the terms of the agreement, the Company borrowed the first term loan of $20.0 million (“Tranche 1”) at closing. The Tranche 1 term loan accrues interest at a floating rate equal to 6.50% per annum, plus the greater of (i) 1.5% or (ii) one month LIBOR. Interest shall accrue on the date of the commencement of funding and is payable in arrears on the first day of each month. Principal is payable in 36 equal monthly installments beginning April 1, 2019, subject to extension to October 1, 2019, if the Company achieves a certain revenue target, until paid in full on March 1, 2022. The Company used $17.2 million of the $20.0 million Tranche 1 term loan to pay off in full the outstanding $15.0 million loan with Health Care Royalty Partners including a $1.8 million prepayment fee and $0.4 million in interest. On September 26, 2017, the Company amended the credit and security agreement with MidCap and borrowed the second term loan of $10.0 million (“Tranche 2”). The Tranche 2 term loan accrues interest at a floating rate equal to 6.50% per annum, plus the greater of (i) 1.5% or (ii) one month LIBOR. Interest shall accrue on the date of the commencement of funding and is payable in arrears on the first day of each month. Principal is payable in 36 equal monthly installments beginning April 1, 2019, subject to extension to October 1, 2019, if the Company achieves a certain revenue target, until paid in full on March 1, 2022. The Company also entered into a separate credit and security agreement with MidCap on March 10, 2017 that provides for a revolving credit facility of up to $10.0 million based on the eligible accounts receivable and inventory balances, as amended on September 26, 2017. The Company may increase the total commitments under the revolving credit facility by up to an additional $10.0 million, subject to the Company meeting certain conditions. Loans under the revolving credit facility accrue interest at a floating rate equal to 3.25% per annum, plus the greater of (i) 1.5% or (ii) one month LIBOR. Interest is payable in arrears on the first day of each month subsequent to the draw down date. The facility terminates in full on March 1, 2022 unless terminated earlier. As of September 30, 2017, the Company had drawn down $5.5 million under the revolving credit facility. This revolving credit facility replaced the Company’s $7.5 million accounts receivable credit facility that existed with Silicon Valley Bank (“SVB”), which the Company terminated in March 2017 and paid a termination fee of $150,000. The term loan facility and the revolving credit facility are secured by substantially all of the Company’s assets, including intellectual property. In addition, under the terms of the agreement, the Company is required to meet certain covenants which if the Company is unable to meet, or if the Company does not make its payments, the Company may be found in default and all obligations may be accelerated and become immediately due and payable upon the sole election of the lenders. The Company must also comply with a financial covenant relating to certain quarterly minimum Net Revenue (as defined in the credit agreements) requirements on a trailing twelve month basis. As of September 30, 2017, the Company was in compliance with all required covenants. In connection with the term loan facility, the Company agreed to issue to each lender warrants to purchase shares of the Company’s common stock upon the drawdown of each tranche in an aggregate amount equal to 2.0% of the amount drawn, divided by the exercise price per share for that tranche. In connection with the Tranche 1 term loan, the Company issued warrants to purchase an aggregate of 50,618 shares of the Company’s common stock, at an exercise price equal to $7.90 per share. These warrants, which were recorded within stockholders’ equity, were fair valued at $279,000 upon issuance using a Black-Scholes valuation model. The assumptions used in the Black-Scholes model consisted of a 10 year contractual term, interest free rate of 2.58%, dividend yield of 0.0% and volatility of 60.0%. The fair value was recorded as a discount to the initial $20.0 million term loan and will be amortized as interest expense over the term of the agreement, which is approximately five years. In connection with the Tranche 2 term loan, the Company issued warrants to purchase an aggregate of 47,790 shares of the Company’s common stock, at an exercise price equal to $8.37 per share. These warrants, which were recorded within stockholders’ equity, were fair valued at $278,000 upon issuance using a Black-Scholes valuation model. The assumptions used in the Black-Scholes model consisted of a 10 year contractual term, interest free rate of 2.24%, dividend yield of 0.0% and volatility of 60.0%. The fair value was recorded as a discount to the initial $10.0 million term loan and will be amortized as interest expense over the term of the agreement, which is approximately five years. |
Stock Option Plans
Stock Option Plans | 9 Months Ended |
Sep. 30, 2017 | |
Stock Option Plans | |
Stock Option Plans | 6. Stock Option Plans In April 2015, the Company’s board of directors and stockholders approved the 2015 Equity Incentive plan (the “2015 Plan”), effective June 11, 2015, covering incentive stock options, nonstatutory stock options and restricted stock awards that may be granted to employees, directors and consultants. During the three months ended September 30, 2017 and 2016, the Company granted 349,800 and 21,400 options, respectively, to employees, with a weighted average grant date fair value of $8.01 per share and $11.59 per share respectively. During the nine months ended September 30, 2017 and 2016, the Company granted 1,084,505 and 756,950 options, respectively, to employees, with a weighted average grant date fair value of $7.09 per share and $7.49 per share, respectively. The options granted in 2017 included 268,000 options granted to certain executive officers with a market-based condition. The 268,000 options were valued at an aggregate value of $0.7 million using the Monte Carlo Simulation model, which will be amortized over three years from the date of grant. The aggregate intrinsic value of options exercised was $0.2 million and $0.6 million for the three and nine months ended September 30, 2017, and $0.0 million and $0.5 million for the three and nine months ended September 30, 2016, respectively. The weighted-average remaining contractual life of options outstanding was 7.5 years as of each of September 30, 2017 and December 31, 2016. For vested and expected to vest options, the weighted-average remaining contractual life as of each of September 30, 2017 and December 31, 2016 was 7.5 years. For the three months ended September 30, 2017, the Company granted 15,000 restricted stock units (“RSUs”) to a new non-employee board member (“Outside Director”) with a grant date fair value, in the aggregate, of $0.1 million. Under the Company’s Restricted Stock Unit Deferral Program for Outside Directors, Outside Directors may elect to defer the receipt of shares upon vesting of RSUs granted under the 2015 Plan. A deferral election will apply to the entirety of the particular RSU award and no partial elections may be made. A deferral election is irrevocable once made. In the event an Outside Director makes a deferral election, the shares of common stock underlying the deferred RSUs will not be distributed to such Outside Director until the earlier of his or her separation of service as a board member or upon a “Change in Control” (as defined in the 2015 Plan) of the Company. The new Outside Director elected to defer receipt of the RSUs granted to him under the 2015 Plan. For the nine months ended September 30, 2017, the total RSUs granted were 168,000 with a fair value of $1.1 million, including the RSUs granted to Outside Directors on the date of the Company’s 2017 Annual Meeting (the “2017 Annual Meeting”) and 71,500 RSUs granted to executive officers with a fair value of $0.5 million. The RSUs granted to executive officers have a four-year term and vest 25% annually. The RSUs granted to Outside Directors on the date of the 2017 Annual Meeting will vest 100% on the earlier of the 2018 Annual Meeting of Stockholders or the one year anniversary of the 2017 Annual Meeting, with the exception of any RSUs that an Outside Director elected to defer, which RSUs generally will vest 100% on the first anniversary of the date that the Outside Director elected to defer such RSUs. Four out of five of the Company’s Outside Directors elected to defer receipt of the RSUs granted to them under the 2015 Plan on the date of the 2017 Annual Meeting. During the three months ended September 30, 2016, the Company granted a total of 10,000 RSUs to a consultant with an aggregate grant date fair value of $110,000. For the nine months ended September 30, 2016, the Company granted a total of 217,000 RSUs with an aggregate grant date fair value of $1.5 million. The RSUs had a range of vesting terms from a minimum of one month to a maximum of five years. Stock‑Based Compensation The fair value of stock options granted to employees is amortized on a straight-line basis over the requisite service period of the award. Stock‑based compensation related to stock options granted to non-employees is recognized as the stock options are earned. The Company recognized total employee-related stock compensation expenses of $0.9 million and $2.2 million for the three and nine months ended September 30, 2017, respectively, and $0.5 million and $1.6 million for the three months and nine months ended September 30, 2016, respectively. In addition, the Company recognized non-employee stock compensation expenses of $93,600 and $205,000 for the three and nine months ended September 30, 2017, respectively, and $46,000 and $88,000 for the three and nine months ended September 30, 2016, respectively. The following table summarizes stock‑based compensation expense related to stock options and restricted stock units included in the condensed statements of operations and comprehensive loss (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2017 2016 2017 2016 Cost of goods sold $ 74 $ 37 $ 172 $ 95 Selling, general and administrative 713 425 1,719 1,306 Research and development 222 107 538 315 Total stock-based compensation expense $ 1,009 $ 569 $ 2,429 $ 1,716 As of September 30, 2017, unrecognized compensation expense related to unvested options was $6.3 million, which the Company expects to recognize on a straight‑line basis over a weighted‑average period of 3 years. Unrecognized compensation expense related to unvested RSUs was $ 1.4 million, which the Company expects to recognize on a straight‑line basis over a weighted‑average period of 2.6 years. |
Net Loss per Common Share
Net Loss per Common Share | 9 Months Ended |
Sep. 30, 2017 | |
Net Loss per Common Share | |
Net Loss per Common Share | 7. Net Loss per Common Share As the Company generated net losses for all the periods presented, all potentially dilutive common securities are determined to be anti-dilutive. The following table sets forth the computation of the basic and diluted net loss per share (in thousands, except share and per share data): Three Months Ended September 30, Nine Months Ended September 30, 2017 2016 2017 2016 Numerator: Net loss $ (8,907) $ (8,821) $ (32,511) $ (31,060) Denominator: Weighted-average common shares outstanding 17,093,183 15,695,193 17,017,110 14,176,655 Less: weighted-average unvested common shares subject to repurchase — (4,408) (798) (3,121) Weighted-average shares used to compute net loss per common share, basic and diluted 17,093,183 15,690,785 17,016,312 14,173,534 Net loss per common share, basic and diluted $ (0.52) $ (0.56) $ (1.91) $ (2.19) The following outstanding shares of potentially dilutive securities have been excluded from diluted net loss per share because their inclusion would be anti‑dilutive: September 30, September 30, 2017 2016 Options to purchase common stock 3,177,852 2,453,373 Restricted stock units 255,327 127,000 Warrants to purchase common stock 235,415 137,007 Total 3,668,594 2,717,380 |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2017 | |
Commitments and Contingencies. | |
Commitments and Contingencies | 8. Commitments and Contingencies On February 27, 2017, a purported stockholder class action titled Paciga v. Invuity, Inc., et al., Case No. 3:17‑cv‑01005, was filed in the United States District Court for the Northern District of California against the Company, its Chief Executive Officer, and its Chief Financial Officer. The complaint alleges that the defendants made false or misleading statements to investors regarding the Company’s business prospects. The complaint purports to assert claims for violation of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as amended, and the Securities Exchange Commission Rule 10b-5 on behalf of a purported class consisting of all purchasers of the Company’s common stock between July 19, 2016 and November 3, 2016, and seeks unspecified compensatory damages, attorney fees and costs, and other relief. On May 30, 2017, the Court appointed Mike Paciga as lead plaintiff. The lead plaintiff filed an amended complaint on July 31, 2017. Defendants filed a motion to dismiss on September 14, 2017, and the lead plaintiff filed his opposition to the motion on October 30, 2017. Defendants’ reply brief is due on December 4, 2017 and the motion to dismiss is currently scheduled for hearing on January 26, 2018. The Company intends to defend the litigation vigorously. Based on information currently available, the Company has determined that the amount of any possible loss or range of possible loss is not reasonably estimable. The Company is, and from time to time may become, involved in legal proceedings arising from the ordinary course of its business. Management is currently not aware of any matters that will have a material adverse effect on the financial position, results of operations or cash flows of the Company. |
Organization and Description 14
Organization and Description of Business (Policies) | 9 Months Ended |
Sep. 30, 2017 | |
Organization and Description of Business | |
Liquidity | Liquidity The Company has incurred net losses from operations since inception, including $32.5 million in the nine months ended September 30, 2017, and has an accumulated deficit of $178.7 million as of September 30, 2017. The Company has $28.8 million in cash and cash equivalents and short-term investments, and $34.6 million in debt outstanding at September 30, 2017. The Company expects to incur additional losses and negative cash flows for the foreseeable future. Management believes that its cash, cash equivalents and short-term investments at September 30, 2017, and additional funding available under the revolving credit facility with MidCap Financial Trust, and their affiliates (“MidCap”), will provide sufficient funds to enable the Company to meet its operating plan through at least twelve months from issuance date. In addition, on July 1, 2016, the Company filed a prospectus supplement for an at-the-market offering (“ATM”) program of up to $25.0 million. However, if the Company’s anticipated operating results are not achieved in future periods, additional debt or equity financing may need to be raised, or planned expenditures may need to be reduced. |
Basis of Presentation | Basis of Presentation The accompanying unaudited condensed financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and in accordance with the instructions to Form 10‑Q and Rule 10‑01 of Regulation S‑X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. The unaudited interim condensed financial statements have been prepared on the same basis as the annual financial statements. In the opinion of management, the accompanying unaudited condensed financial statements reflect all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair statement of the financial position, results of operations and cash flows for the periods presented. The information included in this Quarterly Report on Form 10-Q should be read in conjunction with the audited financial statements and notes thereto included in the Company’s Annual Report on Form 10‑K for the year ended December 31, 2016 and filed with the U.S. Securities and Exchange Commission (the “SEC”). The accompanying year-end balance sheet was derived from the audited financial statements included in the Company’s Annual Report on Form 10‑K for the year ended December 31, 2016. The results for the three months and nine months ended September 30, 2017 are not necessarily indicative of the results expected for the full fiscal year or any other periods. |
Summary of Significant Accoun15
Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2017 | |
Summary of Significant Accounting Policies | |
Use of Estimates | Use of Estimates The Company’s financial statements have been prepared in conformity with U.S. GAAP. The preparation of the financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. On an ongoing basis, management evaluates its estimates, including those related to revenue recognition, fair value of assets and liabilities, inventory, income taxes and stock-based compensation. Actual results could differ from those estimates and assumptions. |
Cash Equivalents | Cash Equivalents Cash equivalents consist of short-term, highly liquid investments with original maturities of three months or less from the date of purchase. Cash equivalents consist primarily of amounts invested in money market funds. |
Restricted Cash | Restricted Cash Restricted cash represents a certificate of deposit held at a financial institution as collateral for a letter of credit related to the Company’s facility lease in San Francisco, California. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments The carrying amounts of the Company’s financial instruments, including cash equivalents, short-term investments, accounts receivable and accounts payable, approximate fair value due to their relatively short maturities. As of September 30, 2017 and December 31, 2016, based on Level 2 inputs and the borrowing rates available to the Company for loans with similar terms and consideration of the Company’s credit risk, the carrying value of the Company’s long-term debt approximates its fair value. |
Customer Concentration | Customer Concentration Significant customers are those which represent 10% or more of the Company’s total revenue for each period presented in the condensed statements of operations and comprehensive loss or 10% or more of the Company’s net accounts receivable balance at each respective balance sheet date. As of and for the year ended December 31, 2016 and as of and for the three and nine months ended September 30, 2017 and 2016, the Company had no customers that represented 10% or more of its revenue or accounts receivable balances. |
Revenue Recognition | Revenue Recognition The Company’s revenue is generated from the sale of its products to hospitals and medical centers through direct sales representatives and independent sales agents. The Company recognizes revenue when all of the following criteria are met: persuasive evidence of an arrangement exists; the sales price is fixed or determinable; collection of the relevant receivable is reasonably assured at the time of sale; and delivery has occurred. The Company recognizes revenue when title to the goods and risk of loss transfers to the customer, which is upon shipment of the product under the Company’s standard terms and conditions. Shipping and handling costs billed to the customer are recorded in revenue. |
Segment Reporting | Segment Reporting The Company manages its operations as a single operating segment for the purposes of assessing performance and making operating decisions. The majority of the Company’s assets are maintained in the United States. The Company derives the majority of its revenue from sales to customers in the United States, based upon the billing address of the customer. |
Net loss per Common Share | Net loss per Common Share Basic net loss per common share is calculated by dividing the net loss by the weighted-average number of shares of common stock outstanding during the period, without consideration of potentially dilutive securities. Diluted net loss per common share is the same as basic net loss per common share since the effect of potentially dilutive securities are anti-dilutive. Shares subject to repurchase are excluded from the weighted-average shares. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements · In May 2014, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) No. 2014‑09, Revenue from Contracts with Customers (Topic 606) , which supersedes the revenue recognition requirements in ASC 605, Revenue Recognition . This ASU is based on the principle that revenue is recognized to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The ASU also requires additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. In August 2015, FASB issued ASU No. 2015‑14, Revenue from Contracts with Customers (Topic 606): Deferral of the Effective Date , which effectively delayed the adoption date by one year, to an effective date for public entities for annual and interim periods beginning after December 15, 2017. · In March 2016, the FASB issued ASU No. 2016‑08, Revenue from Contracts with Customers (Topic 606): Principal Versus Agent Considerations (Reporting Revenue Gross Versus Net), to clarify certain aspects of the principal-versus-agent guidance in its new revenue recognition standard. · In April 2016 the FASB issued ASU No. 2016‑10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing to clarify on how to identify the performance obligations and the licensing implementation guidance in its new revenue recognition standard. · In May 2016, the FASB issued ASU No. 2016‑12, Revenue from Contracts with Customers (Topic 606): Narrow-Scope Improvements and Practical Expedients, to address certain issues identified by the Transition Resource Group, (the “TRG”) in the guidance on assessing collectability, presentation of sales tax, noncash consideration, and completed contracts and contracts modifications at transition. The Company will adopt the new revenue standards on January 1, 2018, using the modified retrospective method. The new revenue standard is principles based and interpretation of those principles may vary from company to company based on their unique circumstances. It is possible that interpretation, industry practice, and guidance may evolve as companies and the accounting profession work to implement this new standard. The Company is in the process of completing the evaluation of the potential impact of the new standard, and has determined the impact to revenues recognized in the period prior to adoption would be immaterial. · In July 2015, the FASB issued ASU No. 2015‑11, Inventory (Topic 330): Simplifying the Measurement of Inventory , which permits companies to measure inventory at the lower of cost and realizable value. ASU 2015‑11 applies to all business entities and is effective for public business entities for annual periods, and interim periods within those annual periods, beginning after December 15, 2016. The adoption of this standard in the first quarter of 2017 did not have a material impact on the Company’s financial statements. · In January 2016, the FASB issued ASU No. 2016‑01, Recognition and Measurement of Financial Assets and Financial Liabilities (Topic 825) , which addresses certain aspects of recognition, measurement, presentation and disclosure of financial instruments. ASU No. 2016‑01 is effective for annual periods, and interim periods within those annual periods, beginning after December 15, 2016. The adoption of this standard in the first quarter of 2017 did not have a material impact on the Company’s financial statements. · In February 2016, the FASB issued ASU No. 2016‑02— Leases (“ASC 842”), which sets out the principles for the recognition, measurement, presentation and disclosure of leases for both parties to a contract (i.e. lessees and lessors). The new standard requires lessees to apply a dual approach, classifying leases as either finance or operating leases based on the principle of whether or not the lease is effectively a financed purchase by the lessee. This classification will determine whether lease expense is recognized based on an effective interest method or on a straight line basis over the term of the lease, respectively. A lessee is also required to record a right-of-use asset and a lease liability for all leases with a term of greater than 12 months regardless of their classification. Leases with a term of 12 months or less will be accounted for similar to existing guidance for operating leases today. ASC 842 supersedes the previous leases standard, ASC 840 Leases . The standard is effective on January 1, 2019, with early adoption permitted. The Company is in the process of evaluating the impact of this new guidance on its financial statements. · In March 2016, the FASB issued ASU No. 2016‑09, Compensation-Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting . This update simplifies the accounting for employee share-based payment transactions, including the accounting for income taxes, forfeitures, and statutory tax withholding requirements, as well as classification in the statement of cash flows. ASU No. 2016‑09 is effective for public entities for annual periods beginning after December 15, 2016. As a result of adopting ASU No. 2016‑09, the Company has made an accounting policy election to account for forfeitures as they occur. This change has been applied on a modified retrospective basis, with no material impacts on the Company’s financial statements. The adoption of ASU No. 2016‑09 also requires excess tax benefits and tax deficiencies be recorded in the income statement as opposed to additional paid‑in capital when the awards vest or are settled, and has been applied on a prospective basis with no impact on the financial statements as of and for the three and nine months ended September 30, 2017. As a result of the adoption, the Company's increased its total NOLs by $1.0 million on January 1, 2017 related to deferred tax assets that arose directly from tax deductions related to equity compensation greater than compensation recognized for financial reporting purposes. This amount is fully offset by the valuation allowance. The adoption of ASU No. 2016‑09 related to the accounting for minimum statutory withholding tax requirements and cash paid by an employer when directly withholding shares for tax-withholding purposes had no impact on the Company's current consolidated financial statements or on any prior period financial statements presented. · In June 2016, the FASB issued ASU No. 2016‑13, Measurement of Credit Losses on Financial Statements (Topic 326) . This update provides financial statement users with more decision-useful information about the expected credit losses on financial instruments and other commitments to extend credit held by a reporting entity at each reporting date. The update replaces the incurred loss impairment methodology in current GAAP with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. ASU No. 2016‑13 is effective for public entities for annual periods beginning after December 15, 2019. The Company is in the process of evaluating the impact of this new guidance on its financial statements. · In August 2016, the FASB issued ASU No. 2016‑15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments (a consensus of the FASB Emerging Issues Task Force) . The new guidance is intended to reduce diversity in practice in how certain transactions are classified in the statement of cash flows. This update addresses the following eight specific cash flow issues: debt prepayment or debt extinguishment costs; settlement of zero-coupon debt instruments or other debt instruments with coupon interest rates that are insignificant in relation to the effective interest rate of the borrowing; contingent consideration payments made after a business combination; proceeds from the settlement of insurance claims; proceeds from the settlement of corporate-owned life insurance policies (“COLIs”) (including bank-owned life insurance policies (“BOLIs”); distributions received from equity method investees; beneficial “interests in securitization transactions; and separately identifiable cash flows and application of the predominance principle. ASU No. 2016‑15 is effective for public entities for annual periods beginning after December 15, 2017. The Company has evaluated the potential impact of the new standard, and determined the impact to the Statement of Cash Flows in the period prior to adoption is immaterial. · In November 2016, the FASB issued ASU No. 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash. The amendments in this Update require that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Therefore, amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the statement of cash flows. The amendments in this Update are effective for public business entities for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. The Company has evaluated the potential impact of the new standard, and determined the impact to the Statement of Cash Flows in the period prior to adoption is immaterial. |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Fair Value Measurements | |
Financial Assets and Liabilities Measured at Fair Value on Recurring Basis Based on Three-Tier Fair Value Hierarchy | The following table sets forth the fair value of the Company’s financial assets and liabilities measured at fair value on a recurring basis based on the three-tier fair value hierarchy (in thousands): September 30, 2017 Level 1 Level 2 Level 3 Total Assets Money market funds $ 21,535 $ — $ — $ 21,535 Commercial paper — 4,497 — 4,497 $ 21,535 $ 4,497 $ — $ 26,032 December 31, 2016 Level 1 Level 2 Level 3 Total Assets Money market funds $ 18,755 $ — $ — $ 18,755 Commercial paper — 9,582 — 9,582 Corporate debt securities — 9,533 — 9,533 $ 18,755 $ 19,115 $ — $ 37,870 |
Balance Sheet Components (Table
Balance Sheet Components (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Balance Sheet Components | |
Schedule of Inventory | Inventory consisted of the following (in thousands): September 30, December 31, 2017 2016 Raw materials $ 1,079 $ 699 Work-in-process 1,756 1,144 Finished goods 3,661 3,209 Total inventory $ 6,496 $ 5,052 |
Schedule of Prepaid Expenses and Other Assets | Prepaid expenses and other current assets consisted of the following (in thousands): September 30, December 31, 2017 2016 Prepaid expenses $ 1,436 $ 1,004 Other 198 84 Total prepaid expenses and other current assets $ 1,634 $ 1,088 |
Schedule of Property and Equipment, Net | Property and equipment, net, consisted of the following (in thousands): September 30, December 31, 2017 2016 Computer equipment and software $ 1,353 $ 1,330 Laboratory and manufacturing equipment 2,613 2,165 Furniture and fixtures 1,516 1,442 Leasehold improvements 7,153 7,153 Assets in Progress 358 304 Total property and equipment, gross 12,993 12,394 Less: accumulated depreciation and amortization (5,563) (4,108) Total property and equipment, net $ 7,430 $ 8,286 |
Schedule of Accrued and Other Current Liabilities | Accrued and other current liabilities consisted of the following (in thousands): September 30, December 31, 2017 2016 Accrued payroll-related expenses $ 4,390 $ 5,301 Accrued distributor/GPO commission 394 193 Accrued professional fees 599 246 Deferred rent 261 261 Other accrued liabilities 290 350 Total accrued and other current liabilities $ 5,934 $ 6,351 |
Stock Option Plans (Tables)
Stock Option Plans (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Stock Option Plans | |
Summary of Stock-based Compensation Expense Related to Stock Options and Restricted Stock Units Included in Condensed Statements of Operations and Comprehensive Loss | Three Months Ended September 30, Nine Months Ended September 30, 2017 2016 2017 2016 Cost of goods sold $ 74 $ 37 $ 172 $ 95 Selling, general and administrative 713 425 1,719 1,306 Research and development 222 107 538 315 Total stock-based compensation expense $ 1,009 $ 569 $ 2,429 $ 1,716 |
Net Loss per Common Share (Tabl
Net Loss per Common Share (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Net Loss per Common Share | |
Schedule of Computation of Basic and Diluted Net Loss per Share | Three Months Ended September 30, Nine Months Ended September 30, 2017 2016 2017 2016 Numerator: Net loss $ (8,907) $ (8,821) $ (32,511) $ (31,060) Denominator: Weighted-average common shares outstanding 17,093,183 15,695,193 17,017,110 14,176,655 Less: weighted-average unvested common shares subject to repurchase — (4,408) (798) (3,121) Weighted-average shares used to compute net loss per common share, basic and diluted 17,093,183 15,690,785 17,016,312 14,173,534 Net loss per common share, basic and diluted $ (0.52) $ (0.56) $ (1.91) $ (2.19) |
Schedule of Potentially Dilutive Securities Outstanding Excluded from Computation of Diluted Shares Outstanding | September 30, September 30, 2017 2016 Options to purchase common stock 3,177,852 2,453,373 Restricted stock units 255,327 127,000 Warrants to purchase common stock 235,415 137,007 Total 3,668,594 2,717,380 |
Organization and Description 20
Organization and Description of Business (Detail) - USD ($) | Jul. 01, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2016 |
Organization And Nature Of Operations | ||||||
Net loss | $ 8,907,000 | $ 8,821,000 | $ 32,511,000 | $ 31,060,000 | ||
Accumulated deficit | 178,727,000 | 178,727,000 | $ 146,216,000 | |||
Cash and cash equivalents and short-term investments | 28,800,000 | 28,800,000 | ||||
Face value of debt outstanding | $ 34,600,000 | 34,600,000 | ||||
Gross proceeds from issuance of shares | $ 57,000 | |||||
Maximum | ||||||
Organization And Nature Of Operations | ||||||
ATM Offering | $ 25 |
Summary of Significant Accoun21
Summary of Significant Accounting Policies (Detail) $ in Millions | Jan. 01, 2017USD ($) | Sep. 30, 2017segmentcustomer | Dec. 31, 2016customer |
Significant Accounting Policies | |||
Number of operating segments | segment | 1 | ||
ASU 2016-09 | |||
Significant Accounting Policies | |||
Amount recognized related to deferred tax assets arose directly from tax deductions related to equity compensation | $ | $ 1 | ||
Customer Concentration Risk | |||
Significant Accounting Policies | |||
Number of Customers | customer | 0 | 0 | |
Revenue | Customer Concentration Risk | |||
Significant Accounting Policies | |||
Concentration risk, percentage | 10.00% | ||
Accounts Receivable, Net | Customer Concentration Risk | |||
Significant Accounting Policies | |||
Concentration risk, percentage | 10.00% |
Fair Value Measurements - Finan
Fair Value Measurements - Financial Assets and Liabilities Measured at Fair Value on Recurring Basis Based on Three-Tier Fair Value Hierarchy (Detail) - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Assets | ||
Assets | $ 26,032 | $ 37,870 |
Level 1 | ||
Assets | ||
Assets | 21,535 | 18,755 |
Level 2 | ||
Assets | ||
Assets | 4,497 | 19,115 |
Money Market Funds | ||
Assets | ||
Assets | 21,535 | 18,755 |
Money Market Funds | Level 1 | ||
Assets | ||
Assets | 21,535 | 18,755 |
Commercial Paper | ||
Assets | ||
Assets | 4,497 | 9,582 |
Commercial Paper | Level 2 | ||
Assets | ||
Assets | $ 4,497 | 9,582 |
Corporate Debt Securities | ||
Assets | ||
Assets | 9,533 | |
Corporate Debt Securities | Level 2 | ||
Assets | ||
Assets | $ 9,533 |
Balance Sheet Components - Sche
Balance Sheet Components - Schedule of Inventory (Detail) - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Balance Sheet Components | ||
Raw materials | $ 1,079 | $ 699 |
Work-in-process | 1,756 | 1,144 |
Finished goods | 3,661 | 3,209 |
Total inventory | $ 6,496 | $ 5,052 |
Balance Sheet Components - Sc24
Balance Sheet Components - Schedule of Prepaid Expenses and Other Assets (Detail) - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Balance Sheet Components | ||
Prepaid expenses | $ 1,436 | $ 1,004 |
Other | 198 | 84 |
Total prepaid expenses and other current assets | $ 1,634 | $ 1,088 |
Balance Sheet Components - Sc25
Balance Sheet Components - Schedule of Property and Equipment, Net (Detail) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2016 | |
Property, Plant and Equipment | |||||
Total property and equipment, gross | $ 12,993 | $ 12,993 | $ 12,394 | ||
Less: accumulated depreciation and amortization | (5,563) | (5,563) | (4,108) | ||
Total property and equipment, net | 7,430 | 7,430 | 8,286 | ||
Depreciation and amortization | 500 | $ 500 | 1,510 | $ 1,481 | |
Computer Equipment and Software | |||||
Property, Plant and Equipment | |||||
Total property and equipment, gross | 1,353 | 1,353 | 1,330 | ||
Laboratory and Manufacturing Equipment | |||||
Property, Plant and Equipment | |||||
Total property and equipment, gross | 2,613 | 2,613 | 2,165 | ||
Furniture and Fixtures | |||||
Property, Plant and Equipment | |||||
Total property and equipment, gross | 1,516 | 1,516 | 1,442 | ||
Leasehold Improvements | |||||
Property, Plant and Equipment | |||||
Total property and equipment, gross | 7,153 | 7,153 | 7,153 | ||
Assets in Progress | |||||
Property, Plant and Equipment | |||||
Total property and equipment, gross | $ 358 | $ 358 | $ 304 |
Balance Sheet Components - Sc26
Balance Sheet Components - Schedule of Accrued and Other Current Liabilities (Detail) - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Balance Sheet Components | ||
Accrued payroll-related expenses | $ 4,390 | $ 5,301 |
Accrued distributor/GPO commission | 394 | 193 |
Accrued professional fees | 599 | 246 |
Deferred rent | 261 | 261 |
Other | 290 | 350 |
Total accrued and other current liabilities | $ 5,934 | $ 6,351 |
Debt - (Detail)
Debt - (Detail) - USD ($) | Sep. 26, 2017 | Mar. 10, 2017 | Sep. 30, 2017 |
Mid Cap | Revolving Credit Facility | |||
Debt | |||
Maximum loan amount | $ 10,000,000 | ||
Additional loan amount | $ 10,000,000 | ||
Drawn amount | $ 5,500,000 | ||
Term loan rate (as a percent) | 3.25% | ||
Applicable margin (as a percent) | 1.50% | ||
Silicon Valley Bank | Accounts Receivable Credit Facility | |||
Debt | |||
Drawn amount | 7,500,000 | ||
Termination fee | $ 150,000 | ||
Term loan | |||
Debt | |||
Common stock drawdown percent of amount drawn | 2.00% | ||
Term loan | HealthCare Royalty Partners | |||
Debt | |||
Debt instrument, repayment of loan payable | $ 15,000,000 | ||
Prepayment penalty on debt | 1,800,000 | ||
Interest paid | 400,000 | ||
Term loan | Mid Cap | |||
Debt | |||
Maximum loan amount | $ 30,000,000 | ||
Term loan rate (as a percent) | 6.50% | 6.50% | |
Applicable margin (as a percent) | 1.50% | 1.50% | |
Loan term period | 36 months | 36 months | |
Frequency periodic payment of loan | monthly | monthly | |
Tranche 1 | |||
Debt | |||
Loan term period | 5 years | ||
Warrants issued to purchase of shares | 50,618 | ||
Exercise price of warrants | $ 7.90 | ||
Tranche 1 | Level 3 | |||
Debt | |||
Warrants liability | $ 279,000 | ||
Assumptions used in Black-Sholes model | |||
Contractual term | 10 years | ||
Interest free rate | 2.58% | ||
Dividend yield | 0.00% | ||
Volatility | 60.00% | ||
Tranche 1 | Mid Cap | |||
Debt | |||
Drawn amount | $ 20,000,000 | ||
Tranche 1 | Mid Cap | HealthCare Royalty Partners | |||
Debt | |||
Loan paid off | $ 17,200,000 | ||
Tranche 2 | |||
Debt | |||
Loan term period | 5 years | ||
Warrants issued to purchase of shares | 47,790 | ||
Exercise price of warrants | $ 8.37 | ||
Tranche 2 | Level 3 | |||
Debt | |||
Warrants liability | $ 278,000 | ||
Assumptions used in Black-Sholes model | |||
Contractual term | 10 years | ||
Interest free rate | 2.24% | ||
Dividend yield | 0.00% | ||
Volatility | 60.00% | ||
Tranche 2 | Mid Cap | |||
Debt | |||
Drawn amount | $ 10,000,000 |
Stock Option Plans - Additional
Stock Option Plans - Additional Information (Detail) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2016 | |
Aggregate intrinsic value of options exercised | $ 200 | $ 0 | $ 600 | $ 500 | |
Weighted-average remaining contractual life of options outstanding | 7 years 6 months | ||||
Weighted-average remaining contractual life of options outstanding, vested and expected to vest | 7 years 6 months | 7 years 6 months | |||
Employees | |||||
Stock options granted | 349,800 | 21,400 | 1,084,505 | 756,950 | |
Weighted average grant date fair value of options, granted | $ 8.01 | $ 11.59 | $ 7.09 | $ 7.49 | |
Aggregate intrinsic value of options exercised | $ 700 | ||||
Amortized period | 3 years | ||||
Executive | |||||
Stock options granted | 268,000 | ||||
Restricted Stock Units | |||||
Stock options granted | 217,000 | ||||
Aggregate intrinsic value of options exercised | $ 1,500 | ||||
Restricted Stock Units | Minimum | |||||
Restricted stock units, vesting term | 1 month | ||||
Restricted Stock Units | Maximum | |||||
Restricted stock units, vesting term | 5 years | ||||
Restricted Stock Units | Executive | |||||
Stock options granted | 71,500 | ||||
Aggregate intrinsic value of options exercised | $ 500 | ||||
Restricted stock units, vesting term | 4 years | ||||
Restricted stock units, vesting percentage | 25.00% | ||||
Restricted Stock Units | Outside Directors | |||||
Stock options granted | 15,000 | 168,000 | |||
Aggregate intrinsic value of options exercised | $ 100 | $ 1,100 | |||
Restricted stock units, vesting percentage | 100.00% | ||||
Restricted Stock Units | Consultants [Member] | |||||
Stock options granted | 10,000 | ||||
Aggregate intrinsic value of options exercised | $ 110,000 |
Stock Option Plans - Stock-base
Stock Option Plans - Stock-based Compensation (Detail) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost | ||||
Total stock-based compensation expense | $ 1,009,000 | $ 569,000 | $ 2,429,000 | $ 1,716,000 |
Unrecognized compensation expense | ||||
Unrecognized compensation expense related to unvested options | 6,300,000 | $ 6,300,000 | ||
Weighted-average expected period to recognize of compensation expense, term | 3 years | |||
Cost of Goods Sold | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost | ||||
Total stock-based compensation expense | 74,000 | 37,000 | $ 172,000 | 95,000 |
Selling, General and Administrative | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost | ||||
Total stock-based compensation expense | 713,000 | 425,000 | 1,719,000 | 1,306,000 |
Research and Development | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost | ||||
Total stock-based compensation expense | 222,000 | 107,000 | 538,000 | 315,000 |
Non-employees | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost | ||||
Total stock-based compensation expense | 93,600 | $ 46,000 | $ 205,000 | $ 88,000 |
Restricted Stock Units | ||||
Unrecognized compensation expense | ||||
Weighted-average expected period to recognize of compensation expense, term | 2 years 7 months 6 days | |||
Unrecognized compensation expense related to RSUs | $ 1,400,000 | $ 1,400,000 |
Net Loss per Common Share - Sch
Net Loss per Common Share - Schedule of Computation of Basic and Diluted Net Loss per Share (Detail) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Numerator: | ||||
Net loss | $ (8,907) | $ (8,821) | $ (32,511) | $ (31,060) |
Denominator: | ||||
Weighted-average common shares outstanding | 17,093,183 | 15,695,193 | 17,017,110 | 14,176,655 |
Less: weighted-average unvested common shares subject to repurchase | (4,408) | (798) | (3,121) | |
Weighted-average shares used to compute net loss per common share, basic and diluted | 17,093,183 | 15,690,785 | 17,016,312 | 14,173,534 |
Net loss per common share, basic and diluted | $ (0.52) | $ (0.56) | $ (1.91) | $ (2.19) |
Net Loss per Common Share - S31
Net Loss per Common Share - Schedule of Potentially Dilutive Securities Outstanding Excluded from Computation of Diluted Shares Outstanding (Detail) - shares | 9 Months Ended | |
Sep. 30, 2017 | Sep. 30, 2016 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share | ||
Antidilutive securities excluded from computation of diluted net loss per share | 3,668,594 | 2,717,380 |
Options to Purchase Common Stock | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share | ||
Antidilutive securities excluded from computation of diluted net loss per share | 3,177,852 | 2,453,373 |
Restricted Stock Units | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share | ||
Antidilutive securities excluded from computation of diluted net loss per share | 255,327 | 127,000 |
Warrants to Purchase Common Stock | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share | ||
Antidilutive securities excluded from computation of diluted net loss per share | 235,415 | 137,007 |