Cover Page
Cover Page - shares | 9 Months Ended | |
Sep. 30, 2019 | Oct. 31, 2019 | |
Cover page. | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Sep. 30, 2019 | |
Document Transition Report | false | |
Entity File Number | 001-38847 | |
Entity Registrant Name | SILK ROAD MEDICAL, INC. | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 20-8777622 | |
Entity Address, Address Line One | 1213 Innsbruck Dr. | |
Entity Address, City or Town | Sunnyvale | |
Entity Address, State or Province | CA | |
Entity Address, Postal Zip Code | 94089 | |
City Area Code | 408 | |
Local Phone Number | 720-9002 | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | true | |
Entity Ex Transition Period | true | |
Entity Shell Company | false | |
Title of 12(b) Security | Common Stock | |
Trading Symbol | SILK | |
Security Exchange Name | NASDAQ | |
Entity Common Stock, Shares Outstanding (in shares) | 30,865,553 | |
Entity Central Index Key | 0001397702 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2019 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets (unaudited) - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 |
Current assets: | ||
Cash and cash equivalents | $ 112,277 | $ 24,990 |
Accounts receivable, net | 6,932 | 4,520 |
Inventories | 9,275 | 5,744 |
Prepaid expenses and other current assets | 3,503 | 1,408 |
Total current assets | 131,987 | 36,662 |
Property and equipment, net | 2,697 | 2,880 |
Restricted cash | 310 | 310 |
Other non-current assets | 3,575 | 1,029 |
Total assets | 138,569 | 40,881 |
Current liabilities: | ||
Accounts payable | 1,965 | 1,252 |
Accrued liabilities | 10,476 | 7,586 |
Total current liabilities | 12,441 | 8,838 |
Long-term debt | 44,785 | 44,201 |
Redeemable convertible preferred stock warrant liability | 0 | 16,091 |
Other liabilities | 3,900 | 1,069 |
Total liabilities | 61,126 | 70,199 |
Commitments and contingencies (Note 7) | ||
Redeemable convertible preferred stock issuable in series, $0.001 par value | ||
Liquidation preference: None and $121,144 at September 30, 2019 and December 31, 2018, respectively | 0 | 105,235 |
Preferred stock, $0.001 par value | ||
Shares issued and outstanding: none | 0 | 0 |
Common stock, $0.001 par value | ||
Shares issued and outstanding: 30,775,980 and 1,135,310 at September 30, 2019 and December 31, 2018, respectively | 31 | 1 |
Additional paid-in capital | 260,647 | 4,557 |
Accumulated deficit | (183,235) | (139,111) |
Total stockholders' equity (deficit) | 77,443 | (134,553) |
Total liabilities, redeemable convertible preferred stock and stockholders' equity (deficit) | $ 138,569 | $ 40,881 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (unaudited) (Parenthetical) - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 |
Statement of Financial Position [Abstract] | ||
Temporary equity, par value (in USD per share) | $ 0.001 | $ 0.001 |
Temporary equity, shares authorized (in shares) | 0 | 24,069,615 |
Temporary equity, shares issued (in shares) | 0 | 21,233,190 |
Temporary equity, shares outstanding (in shares) | 0 | 21,233,190 |
Preferential Liquidation Value (in thousands) | $ 0 | $ 121,144 |
Preferred stock par value (in USD per share) | $ 0.001 | $ 0.001 |
Preferred stock authorized (in shares) | 5,000,000 | 0 |
Preferred stock issued (in shares) | 0 | 0 |
Preferred stock outstanding (in shares) | 0 | 0 |
Common stock, par value (in USD per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized (in shares) | 100,000,000 | 29,879,220 |
Common stock, shares issued (in shares) | 30,775,980 | 1,135,310 |
Common stock, shares outstanding (in shares) | 30,775,980 | 1,135,310 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations and Comprehensive Loss (unaudited) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Income Statement [Abstract] | ||||
Revenue | $ 17,026 | $ 9,614 | $ 44,721 | $ 23,087 |
Cost of goods sold | 4,170 | 2,882 | 11,206 | 7,207 |
Gross profit | 12,856 | 6,732 | 33,515 | 15,880 |
Operating expenses: | ||||
Research and development | 3,187 | 2,442 | 9,008 | 6,868 |
Selling, general and administrative | 17,064 | 8,973 | 45,064 | 23,108 |
Total operating expenses | 20,251 | 11,415 | 54,072 | 29,976 |
Loss from operations | (7,395) | (4,683) | (20,557) | (14,096) |
Interest income | 565 | 28 | 1,215 | 65 |
Interest expense | (1,176) | (1,065) | (3,736) | (3,065) |
Other income (expense), net | (1) | (3,233) | (21,046) | (4,915) |
Net loss | (8,007) | (8,953) | (44,124) | (22,011) |
Comprehensive loss | (8,007) | (8,953) | (44,124) | (22,011) |
Net loss attributable to non-controlling interest | 0 | 1 | 0 | 1 |
Comprehensive loss attributable to non-controlling interest | 0 | 1 | 0 | 1 |
Net loss attributable to Silk Road Medical, Inc. common stockholders | (8,007) | (8,952) | (44,124) | (22,010) |
Comprehensive loss attributable to Silk Road Medical, Inc. common stockholders | $ (8,007) | $ (8,952) | $ (44,124) | $ (22,010) |
Net loss per share, basic and diluted (in USD per share) | $ (0.26) | $ (8.49) | $ (2.18) | $ (24.14) |
Weighted average common shares used to compute net loss per share, basic and diluted (in shares) | 30,764,354 | 1,054,794 | 20,249,580 | 911,873 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Redeemable Convertible Preferred Stock and Stockholders' Equity (Deficit) (unaudited) - USD ($) $ in Thousands | Total | IPO | Redeemable Convertible Preferred Stock | Redeemable Convertible Preferred StockIPO | Common Stock | Common StockIPO | Additional Paid-in Capital | Accumulated Deficit | Non-controlling Interest |
Beginning balance at Dec. 31, 2017 | $ (98,578) | $ 1 | $ 2,977 | $ (101,556) | $ 0 | ||||
Beginning balance (in shares) at Dec. 31, 2017 | 663,270 | ||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||
Exercise of stock options | 284 | 284 | |||||||
Exercise of stock options (in shares) | 186,944 | ||||||||
Employee stock-based compensation | 164 | 164 | |||||||
Nonemployee stock-based compensation | (2) | (2) | |||||||
Net loss | (5,408) | (5,408) | |||||||
Comprehensive loss | (5,408) | (5,408) | |||||||
Ending balance at Mar. 31, 2018 | (103,453) | $ 1 | 3,436 | (106,890) | 0 | ||||
Ending balance (in shares) at Mar. 31, 2018 | 850,214 | ||||||||
Temporary equity, beginning balance at Dec. 31, 2017 | $ 105,235 | ||||||||
Temporary equity, beginning balance (in shares) at Dec. 31, 2017 | 21,233,190 | ||||||||
Temporary equity, ending balance at Mar. 31, 2018 | $ 105,235 | ||||||||
Temporary equity, ending balance (in shares) at Mar. 31, 2018 | 21,233,190 | ||||||||
Beginning balance at Dec. 31, 2017 | (98,578) | $ 1 | 2,977 | (101,556) | 0 | ||||
Beginning balance (in shares) at Dec. 31, 2017 | 663,270 | ||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||
Net loss | (22,011) | ||||||||
Comprehensive loss | (22,011) | ||||||||
Ending balance at Sep. 30, 2018 | (119,169) | $ 1 | 4,323 | (123,493) | 0 | ||||
Ending balance (in shares) at Sep. 30, 2018 | 1,097,838 | ||||||||
Temporary equity, beginning balance at Dec. 31, 2017 | $ 105,235 | ||||||||
Temporary equity, beginning balance (in shares) at Dec. 31, 2017 | 21,233,190 | ||||||||
Temporary equity, ending balance at Sep. 30, 2018 | $ 105,235 | ||||||||
Temporary equity, ending balance (in shares) at Sep. 30, 2018 | 21,233,190 | ||||||||
Beginning balance at Mar. 31, 2018 | (103,453) | $ 1 | 3,436 | (106,890) | 0 | ||||
Beginning balance (in shares) at Mar. 31, 2018 | 850,214 | ||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||
Exercise of stock options | 148 | 148 | |||||||
Exercise of stock options (in shares) | 106,732 | ||||||||
Employee stock-based compensation | 178 | 178 | |||||||
Nonemployee stock-based compensation | 151 | 151 | |||||||
Net loss | (7,651) | (7,651) | |||||||
Comprehensive loss | (7,651) | (7,651) | |||||||
Ending balance at Jun. 30, 2018 | (110,627) | $ 1 | 3,913 | (114,541) | 0 | ||||
Ending balance (in shares) at Jun. 30, 2018 | 956,946 | ||||||||
Temporary equity, beginning balance at Mar. 31, 2018 | $ 105,235 | ||||||||
Temporary equity, beginning balance (in shares) at Mar. 31, 2018 | 21,233,190 | ||||||||
Temporary equity, ending balance at Jun. 30, 2018 | $ 105,235 | ||||||||
Temporary equity, ending balance (in shares) at Jun. 30, 2018 | 21,233,190 | ||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||
Exercise of stock options | 216 | 216 | |||||||
Exercise of stock options (in shares) | 140,892 | ||||||||
NeuroCo common stock issuance | 1 | 1 | |||||||
Employee stock-based compensation | 179 | 179 | |||||||
Nonemployee stock-based compensation | 15 | 15 | |||||||
Net loss | (8,953) | (8,952) | (1) | ||||||
Comprehensive loss | (8,953) | (8,952) | (1) | ||||||
Ending balance at Sep. 30, 2018 | (119,169) | $ 1 | 4,323 | (123,493) | $ 0 | ||||
Ending balance (in shares) at Sep. 30, 2018 | 1,097,838 | ||||||||
Temporary equity, ending balance at Sep. 30, 2018 | $ 105,235 | ||||||||
Temporary equity, ending balance (in shares) at Sep. 30, 2018 | 21,233,190 | ||||||||
Beginning balance at Dec. 31, 2018 | (134,553) | $ 1 | 4,557 | (139,111) | |||||
Beginning balance (in shares) at Dec. 31, 2018 | 1,135,310 | ||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||
Exercise of stock options | 375 | 375 | |||||||
Exercise of stock options (in shares) | 251,305 | ||||||||
Employee stock-based compensation | 241 | 241 | |||||||
Nonemployee stock-based compensation | 21 | 21 | |||||||
Net loss | (24,158) | (24,158) | |||||||
Comprehensive loss | (24,158) | (24,158) | |||||||
Ending balance at Mar. 31, 2019 | (158,074) | $ 1 | 5,194 | (163,269) | |||||
Ending balance (in shares) at Mar. 31, 2019 | 1,386,615 | ||||||||
Temporary equity, beginning balance at Dec. 31, 2018 | $ 105,235 | $ 105,235 | |||||||
Temporary equity, beginning balance (in shares) at Dec. 31, 2018 | 21,233,190 | 21,233,190 | |||||||
Increase (Decrease) in Temporary Equity [Roll Forward] | |||||||||
Exercise of warrants | $ 0 | $ 30 | |||||||
Exercise of warrants (in shares) | 4,915 | ||||||||
Temporary equity, ending balance at Mar. 31, 2019 | $ 105,265 | ||||||||
Temporary equity, ending balance (in shares) at Mar. 31, 2019 | 21,238,105 | ||||||||
Beginning balance at Dec. 31, 2018 | $ (134,553) | $ 1 | 4,557 | (139,111) | |||||
Beginning balance (in shares) at Dec. 31, 2018 | 1,135,310 | ||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||
Exercise of stock options (in shares) | 456,147 | ||||||||
Net loss | $ (44,124) | ||||||||
Comprehensive loss | (44,124) | ||||||||
Ending balance at Sep. 30, 2019 | 77,443 | $ 31 | 260,647 | (183,235) | |||||
Ending balance (in shares) at Sep. 30, 2019 | 30,775,980 | ||||||||
Temporary equity, beginning balance at Dec. 31, 2018 | $ 105,235 | $ 105,235 | |||||||
Temporary equity, beginning balance (in shares) at Dec. 31, 2018 | 21,233,190 | 21,233,190 | |||||||
Temporary equity, ending balance at Sep. 30, 2019 | $ 0 | $ 0 | |||||||
Temporary equity, ending balance (in shares) at Sep. 30, 2019 | 0 | 0 | |||||||
Beginning balance at Mar. 31, 2019 | $ (158,074) | $ 1 | 5,194 | (163,269) | |||||
Beginning balance (in shares) at Mar. 31, 2019 | 1,386,615 | ||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||
Exercise of stock options | 364 | $ 1 | 363 | ||||||
Exercise of stock options (in shares) | 176,576 | ||||||||
Issuance of common stock in connection with IPO, net of underwriting discount, commissions and offering costs of $2,561 | 109,039 | $ 6 | 109,033 | ||||||
Issuance of common stock in connection with IPO, net of underwriting discount, commissions and offering costs (in shares) | 6,000,000 | ||||||||
Employee stock-based compensation | 814 | 814 | |||||||
Nonemployee stock-based compensation | 22 | 22 | |||||||
Net loss | (11,959) | (11,959) | |||||||
Comprehensive loss | (11,959) | (11,959) | |||||||
Ending balance at Jun. 30, 2019 | 84,377 | $ 31 | 259,574 | (175,228) | |||||
Ending balance (in shares) at Jun. 30, 2019 | 30,747,714 | ||||||||
Temporary equity, beginning balance at Mar. 31, 2019 | $ 105,265 | ||||||||
Temporary equity, beginning balance (in shares) at Mar. 31, 2019 | 21,238,105 | ||||||||
Increase (Decrease) in Temporary Equity [Roll Forward] | |||||||||
Exercise of warrants | 31 | $ 0 | $ 1,754 | $ 37,121 | 31 | ||||
Exercise of warrants (in shares) | 287,446 | 1,653,004 | 3,764 | 2,204 | |||||
Conversion of preferred stock to common stock upon IPO | 144,140 | $ (144,140) | $ 23 | 144,117 | |||||
Conversion of preferred stock to common stock upon IPO (in shares) | (23,178,555) | 23,178,555 | |||||||
Temporary equity, ending balance at Jun. 30, 2019 | $ 0 | ||||||||
Temporary equity, ending balance (in shares) at Jun. 30, 2019 | 0 | ||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||
Exercise of stock options | 68 | 68 | |||||||
Exercise of stock options (in shares) | 28,266 | ||||||||
Decrease in IPO offering costs | 80 | 80 | |||||||
Employee stock-based compensation | 902 | 902 | |||||||
Nonemployee stock-based compensation | 23 | 23 | |||||||
Net loss | (8,007) | (8,007) | |||||||
Comprehensive loss | (8,007) | (8,007) | |||||||
Ending balance at Sep. 30, 2019 | 77,443 | $ 31 | $ 260,647 | $ (183,235) | |||||
Ending balance (in shares) at Sep. 30, 2019 | 30,775,980 | ||||||||
Temporary equity, ending balance at Sep. 30, 2019 | $ 0 | $ 0 | |||||||
Temporary equity, ending balance (in shares) at Sep. 30, 2019 | 0 | 0 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Redeemable Convertible Preferred Stock and Stockholders' Equity (Deficit) (unaudited) (Parenthetical) $ in Thousands | 3 Months Ended |
Sep. 30, 2019USD ($) | |
Statement of Stockholders' Equity [Abstract] | |
Payments of stock issuance costs | $ 2,561 |
Condensed Consolidated Statem_4
Condensed Consolidated Statements of Cash Flows (unaudited) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2018 | |
Cash flows from operating activities | ||
Net loss | $ (44,124) | $ (22,011) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation and amortization expense | 530 | 325 |
Stock-based compensation expense | 2,023 | 685 |
Change in fair value of redeemable convertible preferred stock warrant liability | 21,030 | 4,907 |
Amortization of debt discount and debt issuance costs | 34 | 57 |
Amortization of right-of-use asset | 440 | |
Non-cash interest expense | 595 | 1,153 |
Provision for sales returns and allowances | 1,163 | 1,255 |
Provision for excess and obsolete inventories | 78 | 0 |
Changes in assets and liabilities | ||
Accounts receivable | (3,575) | (1,515) |
Inventories | (3,609) | (1,925) |
Prepaid expenses and other current assets | (2,096) | (437) |
Other assets | 764 | (58) |
Accounts payable | 712 | (565) |
Accrued liabilities | 2,255 | 1,379 |
Other liabilities | (569) | 445 |
Net cash used in operating activities | (24,349) | (16,305) |
Cash flows from investing activities | ||
Purchases of property and equipment | (337) | (2,168) |
Net cash used in investing activities | (337) | (2,168) |
Cash flows from financing activities | ||
Proceeds from long-term debt | 0 | 15,000 |
Proceeds from initial public offering, net of underwriting discount, commissions and offering costs paid | 109,352 | 0 |
Proceeds from issuance of common stock | 806 | 649 |
Non-controlling interest | 0 | 1 |
Net cash provided by financing activities | 111,973 | 15,650 |
Net change in cash, cash equivalents and restricted cash | 87,287 | (2,823) |
Cash, cash equivalents and restricted cash, beginning of period | 25,300 | 33,841 |
Cash, cash equivalents and restricted cash, end of period | 112,587 | 31,018 |
Supplemental disclosure of cash flow information | ||
Cash paid for interest | 3,107 | 1,855 |
Non-cash investing and financing activities: | ||
Accounts payable and accrued liabilities for purchases of property and equipment | 9 | 26 |
Landlord paid tenant improvements | 0 | 794 |
Right-of-use asset obtained in exchange for lease obligation | 3,982 | |
Net exercise of convertible preferred stock warrants to preferred stock | 37,121 | 0 |
Conversion of convertible preferred stock to common stock upon initial public offering | 144,140 | 0 |
Redeemable Convertible Preferred Stock | ||
Cash flows from financing activities | ||
Proceeds from exercise of warrants | 1,784 | 0 |
Common Stock Warrant | ||
Cash flows from financing activities | ||
Proceeds from exercise of warrants | $ 31 | $ 0 |
Formation and Business of the C
Formation and Business of the Company | 9 Months Ended |
Sep. 30, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Formation and Business of the Company | Formation and Business of the Company The Company Silk Road Medical, Inc. (the “Company”) was incorporated in the state of Delaware on March 21, 2007. The Company has developed a technologically advanced, minimally-invasive solution for patients with carotid artery disease who are at risk for stroke. The Company's portfolio of TCAR products enable a new procedure, referred to as transcarotid artery revascularization, or TCAR, that combines the benefits of endovascular techniques and surgical principles. The Company manufactures and sells in the United States its portfolio of TCAR products which are designed to provide direct access to the carotid artery, effective reduction in stroke risk throughout the procedure, and long-term restraint of carotid plaque. The Company commercialized its products in the United States in April 2016. Reverse Stock Split On March 13, 2019, the Company's Board of Directors approved an amendment to the Company's amended and restated certificate of incorporation to effect a 2.7-for-1 reverse stock split of the Company's common stock and redeemable convertible preferred stock. The par values of the common stock and redeemable convertible preferred stock were not adjusted as a result of the reverse stock split. All common stock, redeemable convertible preferred stock, stock options and warrants, and related per share amounts in the condensed consolidated financial statements have been retroactively adjusted for all periods presented to give effect to the reverse stock split. The reverse stock split was effected on March 27, 2019. Public Offerings In April 2019, the Company issued and sold 6,000,000 shares of its common stock in its initial public offering (“IPO”) at a public offering price of $20.00 per share, for net proceeds of approximately $109,119,000 after deducting underwriting discounts and commissions of approximately $8,400,000 and expenses of approximately $2,481,000. Upon the closing of the IPO, all shares of redeemable convertible preferred stock then outstanding converted into shares of common stock and the Company's outstanding warrants to purchase shares of common and redeemable convertible preferred stock were exercised, or automatically net exercised absent a prior election. The exercises resulted in the reclassification of the fair value of the related redeemable convertible preferred stock warrant liability to additional paid-in capital. In August 2019, the Company completed a secondary public offering of 4,200,000 shares of its common stock sold by certain selling stockholders, and the exercise in full of the underwriters' option to purchase 630,000 additional shares of its common stock from certain selling stockholders, at a public offering price of $39.50 per share. The Company did not receive any of the proceeds from the sale of the shares of its common stock by the selling stockholders. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2019 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies Basis of Preparation The accompanying financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America, or U.S. GAAP, and applicable rules and regulations of the Securities and Exchange Commission, or SEC, regarding interim financial reporting. As permitted under those rules, certain footnotes or other financial information that are normally required by U.S. GAAP have been condensed or omitted, and accordingly the balance sheet as of December 31, 2018, and related disclosures, have been derived from the audited consolidated financial statements at that date but does not include all of the information required by U.S. GAAP for complete consolidated financial statements. These unaudited condensed consolidated financial statements have been prepared on the same basis as the Company’s annual consolidated financial statements and, in the opinion of management, reflect all adjustments (consisting only of normal recurring adjustments) that are necessary for the fair statement of the Company’s condensed consolidated financial information. The results of operations for the three and nine months ended September 30, 2019 are not necessarily indicative of the results to be expected for the year ending December 31, 2019 or for any other interim period or for any other future year. The accompanying interim unaudited condensed consolidated financial statements and related financial information should be read in conjunction with the audited consolidated financial statements and the related notes thereto for the year ended December 31, 2018 included in the Company’s prospectus dated April 3, 2019 filed pursuant to Rule 424(b)(4) with the SEC on April 4, 2019. Principles of Consolidation Through December 17, 2018, the condensed consolidated financial statements of the Company include the accounts of Silk Road Medical, Inc. and its consolidated variable interest entity (“VIE”), NeuroCo, Inc. On December 17, 2018, the Company acquired all assets and assumed all liabilities of its VIE. As a result of the Merger, NeuroCo merged into the Company with the Company being the surviving corporation. All intercompany balances and transactions have been eliminated in consolidation. Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts and disclosures reported in the financial statements. Management uses significant judgment when making estimates related to the common stock valuation and related stock-based compensation, the valuation of the redeemable convertible preferred stock warrants, the valuation of deferred tax assets, provisions for doubtful accounts receivable and excess and obsolete inventories, clinical trial accruals, and the reserves for sales returns. Management bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Although these estimates are based on the Company’s knowledge of current events and actions it may undertake in the future, actual results may ultimately materially differ from these estimates and assumptions. Fair Value of Financial Instruments The Company has evaluated the estimated fair value of its financial instruments as of September 30, 2019 and December 31, 2018. The carrying amounts of cash equivalents, restricted cash, accounts receivable, accounts payable and accrued liabilities approximate their respective fair values because of the short-term nature of these instruments. Prior to its IPO, fair value accounting was applied to the redeemable convertible preferred stock warrant liability. Cash, Cash Equivalents and Restricted Cash The Company considers all highly liquid investments with an original maturity of three months or less at the time of purchase to be cash equivalents. Cash equivalents are considered available-for-sale marketable securities and are recorded at fair value, based on quoted market prices. As of September 30, 2019 and December 31, 2018, the Company’s cash equivalents are entirely comprised of investments in money market funds. Restricted cash as of September 30, 2019 and December 31, 2018 consists of a letter of credit of $310,000 representing collateral for the Company's facility lease. Concentration of Credit Risk, and Other Risks and Uncertainties Financial instruments that potentially subject the Company to credit risk consist of cash and cash equivalents and accounts receivable to the extent of the amounts recorded on the condensed consolidated balance sheet. The Company’s policy is to invest in money market funds, which are classified as cash equivalents on the condensed consolidated balance sheet. The Company's cash is held in Company accounts at two financial institutions and such amounts may exceed federally insured limits. The Company's money market funds are invested in highly rated money market funds. The Company provides for uncollectible amounts when specific credit problems are identified. In doing so, the Company analyzes historical bad debt trends, customer credit worthiness, current economic trends and changes in customer payment patterns when evaluating the adequacy of the allowance for doubtful accounts. The Company’s accounts receivable are due from a variety of health care organizations in the United States. At September 30, 2019 and December 31, 2018, no customer represented 10% or more of the Company’s accounts receivable. For the three and nine months ended September 30, 2019 and September 30, 2018, there were no customers that represented 10% or more of revenue. The Company manufactures certain of its commercial products in-house. Certain of the Company’s product components and sub-assemblies continue to be manufactured by sole suppliers, the most significant of which is the ENROUTE stent. Disruption in component or sub-assembly supply from these manufacturers or from in-house production would have a negative impact on the Company’s financial position and results of operations. The Company is subject to certain risks, including that its devices may not be approved or cleared for marketing by governmental authorities or be successfully marketed. There can be no assurance that the Company’s products will achieve widespread adoption in the marketplace, nor can there be any assurance that existing devices or any future devices can be developed or manufactured at an acceptable cost and with appropriate performance characteristics. The Company is also subject to risks common to companies in the medical device industry, including, but not limited to, new technological innovations, dependence upon third-party payers to provide adequate coverage and reimbursement, dependence on key personnel and suppliers, protection of proprietary technology, product liability claims, and compliance with government regulations. Existing or future devices developed by the Company may require approvals or clearances from the FDA or international regulatory agencies. In addition, in order to continue the Company’s operations, compliance with various federal and state laws is required. If the Company were denied or delayed in receiving such approvals or clearances, it may be necessary to adjust operations to align with the Company’s currently approved portfolio. If clearance for the products in the current portfolio were withdrawn by the FDA, this would have a material adverse impact on the Company. Deferred Public Offering Costs Specific incremental legal, accounting and other fees and costs directly attributable to a proposed or actual offering of securities may properly be deferred and charged against the gross proceeds of the offering. As of September 30, 2019 and December 31, 2018, there were $0 and $950,000, respectively, of offering costs primarily consisting of legal and accounting fees that were capitalized in other non-current assets on the condensed consolidated balance sheet. Leases The Company adopted Accounting Standards Codification (“ASC”) 842, "Leases," on January 1, 2019 and used the modified retrospective method for all leases not substantially completed as of the date of adoption and the package of practical expedients available in the standard. As a result of adopting ASC 842, the Company recorded an operating lease right-of-use ("ROU") asset of $3,982,000 included within other non-current assets and operating lease liabilities of $5,190,000 included within accrued liabilities and other liabilities on the condensed consolidated balance sheet related to its facility lease, based on the present value of the future lease payments on the date of adoption. The operating lease right-of-use asset also includes adjustments for prepayments and excludes lease incentives. The adoption did not have an impact on prior periods or on its condensed consolidated statements of operations and comprehensive loss. In accordance with ASC 842, the disclosure impact of adoption on the condensed consolidated balance sheet were as follows (in thousands): Balance Sheet: Balance at December 31, 2018 Adjustments Due to ASC 842 Balance at January 1, 2019 Other non-current assets $ — $ 3,982 $ 3,982 Accrued liabilities 139 582 721 Other liabilities 1,069 3,400 4,469 The Company recognizes ROU assets and lease liabilities when it obtains the right to control an asset under a leasing arrangement with an initial term greater than twelve months. The Company evaluates the nature of each lease at the inception of an arrangement to determine whether it is an operating or financing lease and recognizes the right-of-use asset and lease liabilities based on the present value of future minimum lease payments over the expected lease term. The Company’s leases do not generally contain an implicit interest rate and therefore the Company uses the incremental borrowing rate it would expect to pay to borrow on a similar collateralized basis over a similar term in order to determine the present value of its lease payments. The Company’s considers renewal options in the determination of the lease term if the option to renew is reasonably certain. The Company has elected to account separately for contracts that contain lease and non-lease components consistent with its historical practice. Variable lease payments will be expensed as incurred. Redeemable Convertible Preferred Stock Warrant Liability Prior to its IPO, the Company accounted for its warrants for shares of redeemable convertible preferred stock as a liability based upon the characteristics and provisions of each instrument. Redeemable convertible preferred stock warrants classified as a liability were initially recorded at their fair value on the date of issuance and were subject to remeasurement at each subsequent balance sheet date. Any change in fair value as a result of a remeasurement was recognized as a component of other income (expense), net in the condensed consolidated statements of operations and comprehensive loss. The Company recorded adjustments to the estimated fair value of the redeemable convertible preferred stock warrants until they were exercised. Upon their exercise, the final fair value of the warrant liability was reclassified to stockholders’ equity (deficit). Subsequent to its IPO, the Company no longer recorded any related periodic fair value adjustments. Redeemable Convertible Preferred Stock Prior to its IPO, the Company recorded its redeemable convertible preferred stock at fair value on the dates of issuance, net of issuance costs, and classified the redeemable convertible preferred stock outside of stockholders’ equity (deficit) on the balance sheet as events triggering the liquidation preferences were not solely within the Company’s control. Upon the closing of the Company's IPO, all shares of convertible preferred stock then outstanding converted into an aggregate of 23,178,555 shares of common stock resulting in the reclassification of $144,140,000 from outside of stockholders’ equity (deficit) to additional paid-in capital. Revenue Recognition On January 1, 2018, the Company adopted ASC Topic 606, "Revenue from Contracts with Customers," using the modified retrospective method applied to contracts which were not completed as of that date. Revenue for reporting periods beginning after January 1, 2018 are presented under ASC 606, while prior period revenue amounts are not adjusted and continue to be reported in accordance with the Company’s historic accounting under ASC 605, "Revenue Recognition." Under ASC 606, revenue is recognized when a customer obtains control of promised goods or services, in an amount that reflects the consideration which the entity expects to receive in exchange for those goods or services. To determine revenue recognition for arrangements that an entity determines are within the scope of ASC 606, the Company performs the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the entity satisfies a performance obligation. Under ASC 606, assuming all other revenue recognition criteria have been met, the Company will recognize revenue earlier for arrangements where the Company has satisfied its performance obligations but have not issued invoices. As of September 30, 2019 and December 31, 2018, the Company recorded $149,000 and $128,000, respectively, of unbilled receivables, which are included in accounts receivable, net on the condensed consolidated balance sheet, as the Company has an unconditional right to payment as of the end of the applicable period. The Company’s revenue is generated from the sale of its products to hospitals and medical centers in the United States through direct sales representatives. Revenue is recognized when obligations under the terms of a contract with customers are satisfied, which occurs with the transfer of control of the Company’s products to its customers, either upon shipment of the product or delivery of the product to the customer under the Company’s standard terms and conditions. The Company’s products are readily available for usage as soon as the customer possesses it. Upon receipt, the customer controls the economic benefits of the product, has significant risks and rewards, and the legal title. The Company has present right to payment; therefore, the transfer of control is deemed to happen at a point in time. Revenue is measured as the amount of consideration the Company expects to receive in exchange for transferring the goods. For sales where the Company’s sales representative hand delivers product directly to the hospital or medical center from the sales representative’s trunk stock inventory, the Company recognizes revenue upon delivery, which represents the point in time when control transfers to the customer. Upon delivery there are legally-enforceable rights and obligations between the parties which can be identified, commercial substance exists and collectability is probable. For sales which are sent directly from the Company to hospitals and medical centers, the transfer of control occurs at the time of shipment or delivery of the product. There are no further performance obligations by the Company or the sales representative to the customer after delivery under either method of sale. As allowed under the practical expedient, the Company does not disclose the value of unsatisfied performance obligations for (i) contracts with an original expected length of one year or less and (ii) contracts for which it recognizes revenue at the amount to which it has the right to invoice for services performed. The Company is entitled to the total consideration for the products ordered by customers as product pricing is fixed according to the terms of customer contracts and payment terms are short. Payment terms fall within the one-year guidance for the practical expedient which allows the Company to forgo adjustment of the promised amount of consideration for the effects of a significant financing component. The Company excludes taxes assessed by governmental authorities on revenue-producing transactions from the measurement of the transaction price. Costs associated with product sales include commissions and royalties. The Company applies the practical expedient and recognizes commissions and royalties as expense when incurred because the expense is incurred at a point in time and the amortization period is less than one year. Commissions are recorded as selling expense and royalties are recorded as cost of goods sold in the condensed consolidated statements of operations and comprehensive loss. The Company accepts product returns at its discretion or if the product is defective as manufactured. The Company establishes estimated provisions for returns based on historical experience. The Company elected to expense shipping and handling costs as incurred and includes them in the cost of goods sold. Where the Company bills shipping and handling costs to customers, it will classify the amounts billed as a component of revenue. Cost of Goods Sold The Company manufactures certain of its portfolio of TCAR products at its facility and purchases other products from third party manufacturers. Cost of goods sold consists primarily of costs related to materials, components and subassemblies, manufacturing overhead costs, direct labor, reserves for excess, obsolete and non-sellable inventories as well as distribution-related expenses. A significant portion of the Company’s cost of goods sold currently consists of manufacturing overhead costs. These overhead costs include the cost of quality assurance, material procurement, inventory control, facilities, equipment and operations supervision and management. Cost of goods sold also includes depreciation expense for production equipment and certain direct costs such as shipping costs and royalties. Stock–Based Compensation The Company accounts for stock-based compensation in accordance with Financial Accounting Standards Board (“FASB”) ASC 718, "Compensation-Stock Compensation." ASC 718 requires the recognition of compensation expense, using a fair-value based method, for costs related to all share-based payments including stock options. ASC 718 requires companies to estimate the fair value of all share-based payment option awards on the date of grant using an option pricing model. The fair value of stock options is recognized over the period during which an optionee is required to provide services in exchange for the option award, known as the requisite service period (usually the vesting period), on a straight-line basis. For performance-based stock options, the Company will assess the probability of performance conditions being achieved in each reporting period. The amount of stock-based compensation expense recognized in any one period related to performance-based stock options can vary based on the achievement or anticipated achievement of the performance conditions. The Company accounts for option forfeitures as they occur. Income Taxes The Company accounts for income taxes under the liability method, whereby deferred tax assets and liabilities are determined based on the difference between the condensed consolidated financial statements and tax bases of assets and liabilities using the enacted tax rates in effect for the year in which the differences are expected to affect taxable income. A valuation allowance is established when necessary to reduce deferred tax assets to the amounts expected to be realized. As the Company has historically incurred operating losses, it has established a full valuation allowance against its net deferred tax assets, and there is no provision for income taxes. The Company also follows the provisions of ASC 740-10, "Accounting for Uncertainty in Income Taxes." ASC 740-10 prescribes a comprehensive model for the recognition, measurement, presentation and disclosure in financial statements of any uncertain tax positions that have been taken or expected to be taken on a tax return. No liability related to uncertain tax positions is recorded on the condensed consolidated financial statements. It is the Company's policy to include penalties and interest expense related to income taxes as part of the provision for income taxes. Net Loss per Share Basic net loss per share is computed by dividing the net loss by the weighted average number of shares of common stock outstanding during the period, without consideration for potential dilutive common shares. Diluted net loss per share is computed by dividing the net loss by the weighted average number of shares of common stock and potentially dilutive securities outstanding for the period. For purposes of the diluted net loss per share calculation, redeemable convertible preferred stock and warrants, and common stock options are considered to be potentially dilutive securities. Since the Company was in a loss position for all periods presented, basic net loss per share is the same as diluted net loss per share as the inclusion of all potential dilutive common shares would have been anti-dilutive. The Company allocates no loss to participating securities because they have no contractual obligation to share in the losses of the Company. The shares of the Company’s redeemable convertible preferred stock participate in any dividends declared by the Company and are therefore considered to be participating securities. Net loss per share was determined as follows (in thousands, except share and per share data): Three Months Ended Nine Months Ended 2019 2018 2019 2018 Net loss $ (8,007) $ (8,952) $ (44,124) $ (22,010) Weighted average common stock outstanding used to compute net loss per share, basic and diluted 30,764,354 1,054,794 20,249,580 911,873 Net loss per share, basic and diluted $ (0.26) $ (8.49) $ (2.18) $ (24.14) The following potentially dilutive securities outstanding have been excluded from the computation of diluted weighted average shares outstanding because such securities have an antidilutive impact due to the Company's net loss, in common stock equivalent shares: September 30, 2019 2018 Redeemable convertible preferred stock outstanding — 21,233,190 Redeemable convertible preferred stock warrants outstanding — 2,672,502 Common stock options 4,677,878 4,292,056 Common stock warrants outstanding — 7,527 4,677,878 28,205,275 Comprehensive Loss For the three and nine months ended September 30, 2019 and September 30, 2018, there was no difference between comprehensive loss and the Company’s net loss. Segment and Geographical Information The Company operates and manages its business as one reportable and operating segment. The Company’s chief executive officer, who is the chief operating decision maker, reviews financial information on an aggregate basis for purposes of allocating resources and evaluating financial performance. All of the Company’s long-lived assets are based in the United States. Long-lived assets are comprised of property and equipment. All of the Company’s revenue was in the United States for the three and nine months ended September 30, 2019 and September 30, 2018, based on the shipping location of the external customer. |
Recent Accounting Pronouncement
Recent Accounting Pronouncements | 9 Months Ended |
Sep. 30, 2019 | |
Accounting Changes and Error Corrections [Abstract] | |
Recent Accounting Pronouncements | Recent Accounting Pronouncements Recently Adopted Accounting Standards In February 2016, the FASB issued ASU No. 2016-02, " Leases," that supersedes ASC 840, "Leases." Subsequently, the FASB issued several updates to ASU No. 2016-02, codified in ASC Topic 842 (“ASC 842”). The Company adopted ASC 842 on January 1, 2019 using the modified retrospective method for all leases not substantially completed as of the date of adoption. The Company elected to apply the package of practical expedients, which allowed the Company to not reassess: (i) whether expired or existing contracts contain leases; (ii) lease classification for any expired or existing leases; and (iii) initial direct costs for any existing lease. Recently Issued Accounting Standards In June 2016, the FASB issued ASU 2016-13, "Measurement of Credit Losses on Financial Statements." 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 U.S. 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 evaluating the impact of adopting this guidance to its consolidated financial statements and related disclosures. In August 2018, the FASB issued ASU 2018-13, "Fair Value Measurement," which changed the disclosure requirements for fair value measurements by removing, adding and modifying certain disclosures. The standard is effective for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. Early adoption is permitted. The Company is evaluating the impact of adopting this guidance to its consolidated financial statements and related disclosures. In August 2018, the FASB issued ASU 2018-15, "Cloud Computing Arrangements," which aligns the requirements for capitalizing implementation costs in a Cloud Computing Arrangement service contract with the requirements for capitalizing implementation costs incurred for an internal-use software license. The standard is effective for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. Early adoption is permitted. The Company is evaluating the impact of adopting this guidance to its consolidated financial statements and related disclosures. |
Fair Value Measurements
Fair Value Measurements | 9 Months Ended |
Sep. 30, 2019 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | Fair Value Measurements The Company measures certain financial assets and liabilities at fair value on a recurring basis. Fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or a liability. A three-tier fair value hierarchy is established as a basis for considering such assumptions and for inputs used in the valuation methodologies in measuring fair value: • Level 1 – quoted prices in active markets for identical assets or liabilities; • Level 2 – observable inputs other than quoted prices in active markets for identical assets and liabilities; • Level 3 – unobservable inputs. The Company’s cash equivalents are classified within Level 1 of the fair value hierarchy because they are valued using quoted market prices, broker or dealer quotations, or alternative pricing sources with reasonable levels of price transparency. Management believes that borrowings under its term loan bear interest at the prevailing market rates for instruments with similar characteristics (a Level 2 input); accordingly, the carrying value of this instrument approximates its fair value. In August 2014 through April 2016, the Company issued warrants to purchase 2,672,502 shares of Series C redeemable convertible preferred stock at the exercise price of $6.11 per share. As a derivative liability, the redeemable convertible warrants were initially recorded at fair value and were subject to remeasurement at each balance sheet date through the date of the Company's initial public offering in April 2019. Any change in fair value as a result of a remeasurement was recognized as a component of other income (expense), net in the condensed consolidated statements of operations and comprehensive loss. The Company’s redeemable convertible warrant liability was classified within Level 3 of the fair value hierarchy. At December 31, 2018, the fair value of the redeemable convertible warrant liability was determined by using an option pricing model to allocate the total enterprise value to the various securities within the Company's capital structure. As of December 31, 2018, the fair value of the redeemable convertible warrant liability was based on both the estimated fair value of the Company's common stock and on valuation models discounted at current implied market rates which are based on Level 3 inputs. Additionally, the model's inputs reflect assumptions that market participants would use in pricing the instrument in a current period transaction and included: December 31, 2018 Time to liquidity (years) 0.57 Expected volatility 62.5% Discounted cash flow rate 12.0% Risk-free interest rate 2.6% Marketability discount rate 14% The final fair value of the redeemable convertible warrants was remeasured on the date of the Company's initial public offering in April 2019. The final fair value of the redeemable convertible warrant liability was based on the estimated fair value of the Company's common stock at the time of its initial public offering. Subsequent to April 2019, there were no changes in fair value. The following table sets forth the fair value of the Company’s financial liabilities measured on a recurring basis as of December 31, 2018 (in thousands), as of September 30, 2019, there was no redeemable convertible warrant liability: December 31, 2018 Level 1 Level 2 Level 3 Total Liabilities Redeemable convertible warrant liability $ — $ — $ 16,091 $ 16,091 The changes in the redeemable convertible warrant liability are summarized below (in thousands): Fair Value at December 31, 2018 $ 16,091 Change in fair value recorded in other income (expense), net 21,030 Reclassification upon IPO (37,121) Fair Value at September 30, 2019 $ — There were no transfers between fair value hierarchy levels during the three and nine ended September 30, 2019 and 2018. |
Balance Sheet Components
Balance Sheet Components | 9 Months Ended |
Sep. 30, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Balance Sheet Components | Balance Sheet Components Components of inventories were as follows: (in thousands) September 30, December 31, 2019 2018 Raw materials $ 1,029 $ 1,054 Finished products 8,246 4,690 Total $ 9,275 $ 5,744 As of September 30, 2019 and December 31, 2018, there were no work-in-process inventories. Accrued liabilities consist of the following: (in thousands) September 30, December 31, 2019 2018 Accrued payroll and related expenses $ 6,984 $ 5,157 Accrued professional services 841 1,014 Operating lease liability 749 — Accrued royalty expense 423 313 Deferred revenue 335 137 Accrued travel expenses 394 270 Accrued clinical expenses 197 244 Accrued other expenses 553 451 Total $ 10,476 $ 7,586 |
Long-term Debt
Long-term Debt | 9 Months Ended |
Sep. 30, 2019 | |
Debt Disclosure [Abstract] | |
Long-term Debt | Long-term Debt In October 2015, the Company entered into a term loan agreement with CRG. The term loan agreement provides for up to $30,000,000 in term loans split into two tranches as follows: (i) the Tranche A Loans provided for $20,000,000 in term loans, and (ii) the Tranche B Loans provided for up to $10,000,000 in term loans. The Company drew down the Tranche A Loans on October 13, 2015. The Tranche B Loans were available to be drawn prior to March 29, 2017. In January 2017, the term loan agreement was amended to extend the commitment period of the Tranche B Loans to April 28, 2017. In April 2017, the Company drew down $5,000,000 of the available Tranche B Loans. In September 2018, the Company entered into Amendment No. 5 to the term loan agreement with CRG. Under the amended terms of the amended loan agreement the maturity date was extended to December 31, 2022 and the repayment schedule of the existing term loans were changed to interest only so that the outstanding principal amount of the term loans will be payable in a single installment at maturity. The related fixed interest rate was changed to equal 10.75% per annum, due and payable quarterly in arrears. At the election of the Company, 2.75% of the interest due and payable may be “paid in kind”, or PIK, and added to the then outstanding principal and 8.0% of the interest due and payable paid in cash. All unpaid principal, and accrued and unpaid interest, is due and payable in full on December 31, 2022. The amended term loan agreement also provided for additional term loans in an aggregate principal amount of up to $25,000,000. In September 2018, the Company drew down an additional $15,000,000 under the term loan agreement with CRG. As provided for under the terms of the amended term loan agreement, the related fixed interest rate was further reduced to 10.0% upon the consummation of the Company's IPO in April 2019. Also, post consummation of the Company's IPO, 8.0% of the interest is due and payable in cash and at the election of the Company, 2.0% of the interest due and payable may be PIK. The Company may voluntarily prepay the borrowings in full. The Tranche A borrowing required a payment, on the borrowing date, of a financing fee equal to 1.75% of the borrowed loan principal, which is recorded as a discount to the debt. In addition, a facility fee equal to 5.0% of the amounts borrowed plus any PIK is payable at the end of the term or when the borrowings are repaid in full. A long-term liability is being accreted using the effective interest method for the facility fee over the term of the loan agreement. The borrowings are collateralized by a security interest in substantially all of the Company’s assets. The Company is subject to financial covenants related to liquidity and minimum trailing revenue targets that began in December 31, 2016 and are tested on an annual basis. The liquidity covenant requires the Company to maintain an amount which shall exceed the greater of (i) $3,000,000 and (ii) the minimum cash balance, if any, required of the Company by a creditor to the extent the Company has incurred permitted priority debt. The Company had to achieve minimum net revenue of $1,000,000 in 2016, $5,000,000 in 2017, $15,000,000 in 2018, and must achieve minimum net revenue of $30,000,000 in 2019 and $40,000,000 in 2020. The liquidity financial covenant has a 90-day equity cure period following end of the calendar year to issue additional shares of equity interests in exchange for cash, or to borrow permitted cure debt. In addition, the term loan agreement prohibits the payment of cash dividends on the Company’s capital stock and also places restrictions on mergers, sales of assets, investments, incurrence of liens, incurrence of indebtedness and transactions with affiliates. CRG may accelerate the payment terms of the term loan agreement upon the occurrence of certain events of default set forth therein, which include the failure of the Company to make timely payments of amounts due under the term loan agreement, the failure of the Company to adhere to the covenants set forth in the term loan agreement, the insolvency of the Company or upon the occurrence of a material adverse change. As of September 30, 2019, the Company was in compliance with all applicable financial covenants. As of September 30, 2019, management does not believe that it is probable that the above clauses will be triggered within the next twelve months, and therefore, the debt is classified as long-term on the condensed consolidated balance sheet. In June 2019, the Company entered into Amendment No. 7 to the term loan agreement with CRG to reflect flexibility with respect to permitted cash equivalents. The issuance costs and debt discount have been netted against the borrowed funds on the condensed consolidated balance sheet. The long-term debt balance as of September 30, 2019 was $44,785,000. Future maturities under the term loan agreement as of September 30, 2019 are as follows (in thousands): Period Ending December 31: Amount 2019 $ 1,120 2020 4,454 2021 4,442 2022 48,256 58,272 Add: Accretion of closing fees 1,122 59,394 Less: Amount representing interest (14,458) Less: Amount representing debt discount and debt issuance costs (151) Present value of minimum payments $ 44,785 In October 2015, CRG purchased 327,759 shares of the Company’s Series C redeemable convertible preferred stock at $6.11 per share. In addition,CRG received warrants to purchase 163,877 shares of the Company’s Series C redeemable convertible preferred stock at an exercise price of $.6.11 per share. Upon the closing of the IPO, the warrants were net exercised, based on the IPO price of $20.00 per share, into shares of common stock. In July 2017, CRG purchased an additional 163,877 shares of the Company’s Series C convertible preferred stock at $6.11 per share. |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | Commitments and Contingencies Operating Lease and Rights of Use The Company’s operating lease obligation consists of leased office, laboratory, and manufacturing space under a non-cancellable operating lease that expires in October 2024. Operating lease costs were $217,000 and $652,000 for the three and nine months ended September 30, 2019, respectively. Cash paid for amounts included in the measurement of operating lease liabilities was $178,000 and $540,000 for the three and nine months ended September 30, 2019, respectively. As of September 30, 2019, the weighted average discount rate was approximately 6.50% and the weighted average remaining lease term was 5.08 years. Balance sheet information as of September 30, 2019 consists of the following (in thousands): Operating Lease: September 30, 2019 Operating lease right-of-use asset in other non-current assets $ 3,543 Operating lease liability in accrued liabilities $ 749 Operating lease liability in other liabilities 3,901 Total operating lease liabilities $ 4,650 The following table summarizes the Company’s operating lease maturities as of September 30, 2019 (in thousands): Period Ending December 31: Amount 2019 $ 255 2020 1,037 2021 1,066 2022 1,096 2023 1,127 2024 904 Total lease payments 5,485 Less: imputed interest (835) Present value of lease liabilities $ 4,650 Minimum future lease payments previously disclosed under ASC 840 in the Company’s prospectus dated April 3, 2019 filed pursuant to Rule 424(b)(4) with the SEC on April 4, 2019 for the year ended December 31, 2018 are as follows (in thousands): Year Ending December 31: Total Minimum 2019 $ 1,002 2020 1,002 2021 1,031 2022 1,044 2023 1,920 $ 5,999 Purchase Obligations Purchase obligations consist of agreements to purchase goods and services entered into in the ordinary course of business. The Company had non-cancellable commitments for inventory that were payable within one year to suppliers for purchases totaling $3,715,000 as of September 30, 2019. Indemnification In the normal course of business, the Company enters into contracts and agreements that contain a variety of representations and warranties and may provide for indemnification of the counterparty. The Company’s exposure under these agreements is unknown because it involves claims that may be made against it in the future but have not yet been made. To date, the Company has not been subject to any claims or been required to defend any action related to its indemnification obligations. The Company indemnifies each of its directors and officers for certain events or occurrences, subject to certain limits, while the director is or was serving at the Company’s request in such capacity, as permitted under Delaware law and in accordance with its certificate of incorporation and bylaws. The term of the indemnification period lasts as long as a director may be subject to any proceeding arising out of acts or omissions of such director in such capacity. The maximum amount of potential future indemnification is unlimited; however, the Company currently holds director liability insurance. This insurance allows the transfer of risk associated with the Company’s exposure and may enable it to recover a portion of any future amounts paid. The Company believes that the fair value of these indemnification obligations is minimal. Accordingly, the Company has not recognized any liabilities relating to these obligations as of September 30, 2019. Contingencies The Company is not involved in any pending legal proceedings that it believes could have a material adverse effect on its financial condition, results of operations or cash flows. From time to time, the Company may pursue litigation to assert its legal right and such litigation may be costly and divert the efforts and attention of its management and technical personnel which could adversely affect its business. The Company accrues a liability for such matters when it is probable that future expenditures will be made and such expenditures can be reasonably estimated. There were no contingent liabilities requiring accrual at September 30, 2019 and December 31, 2018. Legal Matters |
Redeemable Convertible Preferre
Redeemable Convertible Preferred Stock | 9 Months Ended |
Sep. 30, 2019 | |
Temporary Equity Disclosure [Abstract] | |
Redeemable Convertible Preferred Stock | Redeemable Convertible Preferred Stock The Company had the following redeemable convertible preferred stock issued and outstanding at December 31, 2018: December 31, 2018 Shares Shares Issued and Per share Preferential Carrying Value (in thousands) Series Series A 1,629,629 1,629,626 $ 2.70 $ 4,400 $ 4,369 Series A-1 1,111,111 1,111,109 $ 3.38 3,755 3,723 Series B 6,264,470 6,264,463 $ 6.11 38,276 38,014 Series C 15,064,405 12,227,992 $ 6.11 74,713 59,129 24,069,615 21,233,190 $ 121,144 $ 105,235 Upon the closing of the IPO, all shares of convertible preferred stock then outstanding converted into shares of common stock. As of September 30, 2019, the Company does not have any convertible preferred stock issued or outstanding. Preferred Stock Warrant s Upon the closing of the IPO, all of the outstanding convertible preferred stock warrants were exercised, or net exercised based on the IPO price of $20.00 per share, into 1,945,365 shares of common stock. As of September 30, 2019 and December 31, 2018, warrants to purchase an aggregate of 0 and 2,672,502, respectively, shares of Series C redeemable convertible preferred stock were outstanding. |
Stockholders Equity (Deficit)
Stockholders Equity (Deficit) | 9 Months Ended |
Sep. 30, 2019 | |
Equity [Abstract] | |
Stockholders Equity (Deficit) | Stockholders Equity (Deficit) Preferred Stock At September 30, 2019, the Company’s certificate of incorporation, as amended and restated, authorizes the Company to issue up to 5,000,000 shares of preferred stock with $0.001 par value per share, of which no shares were issued and outstanding. Common Stock At September 30, 2019, the Company’s certificate of incorporation, as amended and restated, authorizes the Company to issue up to 100,000,000 shares of common stock with $0.001 par value per share, of which 30,775,980 shares were issued and outstanding. The holders of common stock are also entitled to receive dividends whenever funds are legally available, when and if declared by the Board of Directors. As of September 30, 2019, no dividends have been declared to date. Each share of common stock is entitled to one vote. Common Stock Warrant s In connection with the IPO, the common stock warrants were cash, or net exercised based on the IPO price of $20.00 per share, into 5,968 shares of common stock. As of September 30, 2019 and December 31, 2018, warrants to purchase an aggregate of 0 and 7,527 shares of common stock were outstanding. |
Stock Option Plans
Stock Option Plans | 9 Months Ended |
Sep. 30, 2019 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Stock Option Plans | Stock Option Plans In 2007, the Company established its 2007 Stock Option Plan which provided for the granting of stock options to employees, directors and consultants of the Company. In connection with its acquisition of NeuroCo in December 2018, the Company also assumed NeuroCo’s 2015 Equity Incentive Plan. In March 2019, the Company's Board of Directors approved the termination of the 2007 Stock Option Plan and the NeuroCo 2015 Equity Incentive Plan and the adoption of the 2019 Equity Incentive Plan, or the 2019 Plan, which became effective immediately prior to the Company's IPO. The 2019 Plan provides for the grant of ISOs to employees and for the grant of NSOs, restricted stock, restricted stock units, stock appreciation rights, performance units and performance shares to employees, directors and consultants. A total of 2,317,000 shares of common stock were initially reserved for issuance pursuant to the 2019 Plan. In addition, the shares reserved for issuance under the 2019 Plan will also include shares reserved but not issued under the 2007 Stock Option Plan, plus any share awards granted under the 2007 Stock Option Plan that expire or terminate without having been exercised in full or that are forfeited or repurchased. In addition, the number of shares available for issuance under the 2019 Plan will also include an annual increase on the first day of each fiscal year beginning in fiscal 2020, equal to the lesser of (i) 3,000,000 shares; (ii) 4.0% of the outstanding shares of common stock as of the last day of the immediately preceding fiscal year; or (iii) an amount as determined by the Board of Directors. As of September 30, 2019, the Company has reserved 2,362,933 shares of common stock for issuance under the 2019 Plan. The exercise price of ISOs and NSOs shall not be less than 100% and 85% of the estimated fair value of the shares on the date of grant, respectively, as determined by the Board of Directors. The exercise price of ISOs and NSOs granted to a 10% stockholder shall not be less than 110% of the estimated fair value of the shares on the date of grant as determined by the Board of Directors. To date, options have a term of 10 years and generally vest over 4 years from the date of grant. Activity under the Company’s 2007 Stock Option Plan, NeuroCo 2015 Equity Incentive Plan and 2019 Plan is set forth below: Options Outstanding Shares Available for Grant Number of Shares Weighted Average Exercise Price Weighted Average Remaining Contractual Term (in Years) Aggregate Intrinsic Value (in thousands) Balances, December 31, 2018 57,889 4,364,377 $ 3.79 7.36 $ 33,132 Authorized 2,317,000 Options granted (792,673) 792,673 $ 21.82 Options exercised — (456,147) $ 1.77 Options cancelled 23,025 (23,025) $ 6.73 Balances, September 30, 2019 1,605,241 4,677,878 $ 7.03 7.27 $ 120,092 Vested and exercisable at September 30, 2019 2,701,774 $ 3.53 6.25 $ 78,404 Vested and expected to vest at September 30, 2019 4,677,878 $ 7.03 7.27 $ 120,092 The aggregate intrinsic value of options exercised during the nine months ended September 30, 2019 was $10,846,000. The aggregate intrinsic value was calculated as the difference between the exercise prices of the underlying options and the estimated fair value of the common stock on the date of exercise. 2019 Employee Stock Purchase Plan In March 2019, the Company's Board of Directors adopted the 2019 Employee Stock Purchase Plan, or 2019 ESPP, under which eligible employees are permitted to purchase common stock at a discount through payroll deductions. A total of 434,000 shares of common stock are reserved for issuance and will be increased on the first day of each fiscal year, beginning in 2020, by an amount equal to the lesser of (i) 1,200,000 shares (ii) 1.0% of the outstanding shares of common stock as of the last day of the immediately preceding fiscal year; or (iii) an amount as determined by the Board of Directors. The price of the common stock purchased will be the lower of 85% of the fair market value of the common stock at the beginning of an offering period or at the end of a purchase period. The 2019 ESPP was effective upon adoption by the Company's Board of Directors but was not in use until the completion of the Company's IPO in April 2019. The 2019 ESPP is intended to qualify as an "employee stock purchase plan" within the meaning of Section 423 of the Internal Revenue Code of 1986, as amended. Stock-Based Compensation The Company estimated the fair value of stock options using the Black–Scholes option pricing model. The fair value of employee and nonemployee stock options is being amortized on a straight–line basis over the requisite service period of the awards. The fair value of employee and nonemployee stock options was estimated using the following assumptions for the three and nine months ended September 30, 2019 and 2018: Three Months Ended Nine Months Ended 2019 2018 2019 2018 Expected term (in years) 6.25 6.25 5.00 - 6.25 5.00 - 6.25 Expected volatility 42.4% 38.3% 42.4% - 42.9% 38.0% - 38.3% Risk-free interest rate 1.47% 2.90-2.98% 1.47% - 2.54% 2.68% - 2.98% Dividend yield —% —% —% —% As of September 30, 2019, there was total unrecognized compensation costs of $8,493,000 related to these stock options. These costs are expected to be recognized over a period of approximately 3.16 years. The fair value of the shares to be issued under the Company’s 2019 ESPP was estimated using the Black-Scholes valuation model with the following assumptions for the three and nine months ended September 30, 2019: Three Months Ended Nine Months Ended 2019 2019 Expected term (in years) 0.63 0.63 Expected volatility 47.8% 47.8% Risk-free interest rate 2.45% 2.45% Dividend yield —% —% Total stock-based compensation expense recognized during the three and nine months ended September 30, 2019 and 2018, is as follows (in thousands): Three Months Ended September 30, Nine Months Ended 2019 2018 2019 2018 Cost of goods sold $ 61 $ 12 $ 129 $ 36 Research and development expenses 134 30 288 220 Selling, general and administrative expenses 730 152 1,606 429 $ 925 $ 194 $ 2,023 $ 685 |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2019 | |
Accounting Policies [Abstract] | |
Basis of Preparation | Basis of Preparation The accompanying financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America, or U.S. GAAP, and applicable rules and regulations of the Securities and Exchange Commission, or SEC, regarding interim financial reporting. As permitted under those rules, certain footnotes or other financial information that are normally required by U.S. GAAP have been condensed or omitted, and accordingly the balance sheet as of December 31, 2018, and related disclosures, have been derived from the audited consolidated financial statements at that date but does not include all of the information required by U.S. GAAP for complete consolidated financial statements. These unaudited condensed consolidated financial statements have been prepared on the same basis as the Company’s annual consolidated financial statements and, in the opinion of management, reflect all adjustments (consisting only of normal recurring adjustments) that are necessary for the fair statement of the Company’s condensed consolidated financial information. The results of operations for the three and nine months ended September 30, 2019 are not necessarily indicative of the results to be expected for the year ending December 31, 2019 or for any other interim period or for any other future year. The accompanying interim unaudited condensed consolidated financial statements and related financial information should be read in conjunction with the audited consolidated financial statements and the related notes thereto for the year ended December 31, 2018 included in the Company’s prospectus dated April 3, 2019 filed pursuant to Rule 424(b)(4) with the SEC on April 4, 2019. |
Principles of Consolidation | Principles of ConsolidationThrough December 17, 2018, the condensed consolidated financial statements of the Company include the accounts of Silk Road Medical, Inc. and its consolidated variable interest entity (“VIE”), NeuroCo, Inc. On December 17, 2018, the Company acquired all assets and assumed all liabilities of its VIE. As a result of the Merger, NeuroCo merged into the Company with the Company being the surviving corporation. All intercompany balances and transactions have been eliminated in consolidation. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts and disclosures reported in the financial statements. Management uses significant judgment when making estimates related to the common stock valuation and related stock-based compensation, the valuation of the redeemable convertible preferred stock warrants, the valuation of deferred tax assets, provisions for doubtful accounts receivable and excess and obsolete inventories, clinical trial accruals, and the reserves for sales returns. Management bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Although these estimates are based on the Company’s knowledge of current events and actions it may undertake in the future, actual results may ultimately materially differ from these estimates and assumptions. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments The Company has evaluated the estimated fair value of its financial instruments as of September 30, 2019 and December 31, 2018. The carrying amounts of cash equivalents, restricted cash, accounts receivable, accounts payable and accrued liabilities approximate their respective fair values because of the short-term nature of these instruments. Prior to its IPO, fair value accounting was applied to the redeemable convertible preferred stock warrant liability. |
Cash, Cash Equivalents and Restricted Cash | Cash, Cash Equivalents and Restricted CashThe Company considers all highly liquid investments with an original maturity of three months or less at the time of purchase to be cash equivalents. Cash equivalents are considered available-for-sale marketable securities and are recorded at fair value, based on quoted market prices. |
Concentration of Credit Risk, and Other Risks and Uncertainties | Concentration of Credit Risk, and Other Risks and Uncertainties Financial instruments that potentially subject the Company to credit risk consist of cash and cash equivalents and accounts receivable to the extent of the amounts recorded on the condensed consolidated balance sheet. The Company’s policy is to invest in money market funds, which are classified as cash equivalents on the condensed consolidated balance sheet. The Company's cash is held in Company accounts at two financial institutions and such amounts may exceed federally insured limits. The Company's money market funds are invested in highly rated money market funds. The Company provides for uncollectible amounts when specific credit problems are identified. In doing so, the Company analyzes historical bad debt trends, customer credit worthiness, current economic trends and changes in customer payment patterns when evaluating the adequacy of the allowance for doubtful accounts. The Company’s accounts receivable are due from a variety of health care organizations in the United States. At September 30, 2019 and December 31, 2018, no customer represented 10% or more of the Company’s accounts receivable. For the three and nine months ended September 30, 2019 and September 30, 2018, there were no customers that represented 10% or more of revenue. The Company manufactures certain of its commercial products in-house. Certain of the Company’s product components and sub-assemblies continue to be manufactured by sole suppliers, the most significant of which is the ENROUTE stent. Disruption in component or sub-assembly supply from these manufacturers or from in-house production would have a negative impact on the Company’s financial position and results of operations. The Company is subject to certain risks, including that its devices may not be approved or cleared for marketing by governmental authorities or be successfully marketed. There can be no assurance that the Company’s products will achieve widespread adoption in the marketplace, nor can there be any assurance that existing devices or any future devices can be developed or manufactured at an acceptable cost and with appropriate performance characteristics. The Company is also subject to risks common to companies in the medical device industry, including, but not limited to, new technological innovations, dependence upon third-party payers to provide adequate coverage and reimbursement, dependence on key personnel and suppliers, protection of proprietary technology, product liability claims, and compliance with government regulations. Existing or future devices developed by the Company may require approvals or clearances from the FDA or international regulatory agencies. In addition, in order to continue the Company’s operations, compliance with various federal and state laws is required. If the Company were denied or delayed in receiving such approvals or clearances, it may be necessary to adjust operations to align with the Company’s currently approved portfolio. If clearance for the products in the current portfolio were withdrawn by the FDA, this would have a material adverse impact on the Company. |
Deferred Public Offering Costs | Deferred Public Offering CostsSpecific incremental legal, accounting and other fees and costs directly attributable to a proposed or actual offering of securities may properly be deferred and charged against the gross proceeds of the offering. As of September 30, 2019 and December 31, 2018, there were $0 and $950,000, respectively, of offering costs primarily consisting of legal and accounting fees that were capitalized in other non-current assets on the condensed consolidated balance sheet. |
Leases | Leases The Company adopted Accounting Standards Codification (“ASC”) 842, "Leases," on January 1, 2019 and used the modified retrospective method for all leases not substantially completed as of the date of adoption and the package of practical expedients available in the standard. As a result of adopting ASC 842, the Company recorded an operating lease right-of-use ("ROU") asset of $3,982,000 included within other non-current assets and operating lease liabilities of $5,190,000 included within accrued liabilities and other liabilities on the condensed consolidated balance sheet related to its facility lease, based on the present value of the future lease payments on the date of adoption. The operating lease right-of-use asset also includes adjustments for prepayments and excludes lease incentives. The adoption did not have an impact on prior periods or on its condensed consolidated statements of operations and comprehensive loss. In accordance with ASC 842, the disclosure impact of adoption on the condensed consolidated balance sheet were as follows (in thousands): Balance Sheet: Balance at December 31, 2018 Adjustments Due to ASC 842 Balance at January 1, 2019 Other non-current assets $ — $ 3,982 $ 3,982 Accrued liabilities 139 582 721 Other liabilities 1,069 3,400 4,469 The Company recognizes ROU assets and lease liabilities when it obtains the right to control an asset under a leasing arrangement with an initial term greater than twelve months. The Company evaluates the nature of each lease at the inception of an arrangement to determine whether it is an operating or financing lease and recognizes the right-of-use asset and lease liabilities based on the present value of future minimum lease payments over the expected lease term. The Company’s leases do not generally contain an implicit interest rate and therefore the Company uses the incremental borrowing rate it would expect to pay to borrow on a similar collateralized basis over a similar term in order to determine the present value of its lease payments. The Company’s considers renewal options in the determination of the lease term if the option to renew is reasonably certain. The Company has elected to account separately for contracts that contain lease and non-lease components consistent with its historical practice. Variable lease payments will be expensed as incurred. |
Redeemable Convertible Preferred Stock Warrant Liability | Redeemable Convertible Preferred Stock Warrant Liability Prior to its IPO, the Company accounted for its warrants for shares of redeemable convertible preferred stock as a liability based upon the characteristics and provisions of each instrument. Redeemable convertible preferred stock warrants classified as a liability were initially recorded at their fair value on the date of issuance and were subject to remeasurement at each subsequent balance sheet date. Any change in fair value as a result of a remeasurement was recognized as a component of other income (expense), net in the condensed consolidated statements of operations and comprehensive loss. The Company recorded adjustments to the estimated fair value of the redeemable convertible preferred stock warrants until they were exercised. Upon their exercise, the final fair value of the warrant liability was reclassified to stockholders’ equity (deficit). Subsequent to its IPO, the Company no longer recorded any related periodic fair value adjustments. |
Redeemable Convertible Preferred Stock | Redeemable Convertible Preferred StockPrior to its IPO, the Company recorded its redeemable convertible preferred stock at fair value on the dates of issuance, net of issuance costs, and classified the redeemable convertible preferred stock outside of stockholders’ equity (deficit) on the balance sheet as events triggering the liquidation preferences were not solely within the Company’s control. |
Revenue Recognition and Cost of Goods Sold | Revenue Recognition On January 1, 2018, the Company adopted ASC Topic 606, "Revenue from Contracts with Customers," using the modified retrospective method applied to contracts which were not completed as of that date. Revenue for reporting periods beginning after January 1, 2018 are presented under ASC 606, while prior period revenue amounts are not adjusted and continue to be reported in accordance with the Company’s historic accounting under ASC 605, "Revenue Recognition." Under ASC 606, revenue is recognized when a customer obtains control of promised goods or services, in an amount that reflects the consideration which the entity expects to receive in exchange for those goods or services. To determine revenue recognition for arrangements that an entity determines are within the scope of ASC 606, the Company performs the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the entity satisfies a performance obligation. Under ASC 606, assuming all other revenue recognition criteria have been met, the Company will recognize revenue earlier for arrangements where the Company has satisfied its performance obligations but have not issued invoices. As of September 30, 2019 and December 31, 2018, the Company recorded $149,000 and $128,000, respectively, of unbilled receivables, which are included in accounts receivable, net on the condensed consolidated balance sheet, as the Company has an unconditional right to payment as of the end of the applicable period. The Company’s revenue is generated from the sale of its products to hospitals and medical centers in the United States through direct sales representatives. Revenue is recognized when obligations under the terms of a contract with customers are satisfied, which occurs with the transfer of control of the Company’s products to its customers, either upon shipment of the product or delivery of the product to the customer under the Company’s standard terms and conditions. The Company’s products are readily available for usage as soon as the customer possesses it. Upon receipt, the customer controls the economic benefits of the product, has significant risks and rewards, and the legal title. The Company has present right to payment; therefore, the transfer of control is deemed to happen at a point in time. Revenue is measured as the amount of consideration the Company expects to receive in exchange for transferring the goods. For sales where the Company’s sales representative hand delivers product directly to the hospital or medical center from the sales representative’s trunk stock inventory, the Company recognizes revenue upon delivery, which represents the point in time when control transfers to the customer. Upon delivery there are legally-enforceable rights and obligations between the parties which can be identified, commercial substance exists and collectability is probable. For sales which are sent directly from the Company to hospitals and medical centers, the transfer of control occurs at the time of shipment or delivery of the product. There are no further performance obligations by the Company or the sales representative to the customer after delivery under either method of sale. As allowed under the practical expedient, the Company does not disclose the value of unsatisfied performance obligations for (i) contracts with an original expected length of one year or less and (ii) contracts for which it recognizes revenue at the amount to which it has the right to invoice for services performed. The Company is entitled to the total consideration for the products ordered by customers as product pricing is fixed according to the terms of customer contracts and payment terms are short. Payment terms fall within the one-year guidance for the practical expedient which allows the Company to forgo adjustment of the promised amount of consideration for the effects of a significant financing component. The Company excludes taxes assessed by governmental authorities on revenue-producing transactions from the measurement of the transaction price. Costs associated with product sales include commissions and royalties. The Company applies the practical expedient and recognizes commissions and royalties as expense when incurred because the expense is incurred at a point in time and the amortization period is less than one year. Commissions are recorded as selling expense and royalties are recorded as cost of goods sold in the condensed consolidated statements of operations and comprehensive loss. The Company accepts product returns at its discretion or if the product is defective as manufactured. The Company establishes estimated provisions for returns based on historical experience. The Company elected to expense shipping and handling costs as incurred and includes them in the cost of goods sold. Where the Company bills shipping and handling costs to customers, it will classify the amounts billed as a component of revenue. Cost of Goods Sold The Company manufactures certain of its portfolio of TCAR products at its facility and purchases other products from third party manufacturers. Cost of goods sold consists primarily of costs related to materials, components and subassemblies, manufacturing overhead costs, direct labor, reserves for excess, obsolete and non-sellable inventories as well as distribution-related expenses. A significant portion of the Company’s cost of goods sold currently consists of manufacturing overhead costs. These overhead costs include the cost of quality assurance, material procurement, inventory control, facilities, equipment and operations supervision and management. Cost of goods sold also includes depreciation expense for production equipment and certain direct costs such as shipping costs and royalties. |
Stock-Based Compensation | Stock–Based Compensation The Company accounts for stock-based compensation in accordance with Financial Accounting Standards Board (“FASB”) ASC 718, "Compensation-Stock Compensation." ASC 718 requires the recognition of compensation expense, using a fair-value based method, for costs related to all share-based payments including stock options. ASC 718 requires companies to estimate the fair value of all share-based payment option awards on the date of grant using an option pricing model. The fair value of stock options is recognized over the period during which an optionee is required to provide services in exchange for the option award, known as the requisite service period (usually the vesting period), on a straight-line basis. For performance-based stock options, the Company will assess the probability of performance conditions being achieved in each reporting period. The amount of stock-based compensation expense recognized in any one period related to performance-based stock options can vary based on the achievement or anticipated achievement of the performance conditions. The Company accounts for option forfeitures as they occur. |
Income Taxes | Income Taxes The Company accounts for income taxes under the liability method, whereby deferred tax assets and liabilities are determined based on the difference between the condensed consolidated financial statements and tax bases of assets and liabilities using the enacted tax rates in effect for the year in which the differences are expected to affect taxable income. A valuation allowance is established when necessary to reduce deferred tax assets to the amounts expected to be realized. As the Company has historically incurred operating losses, it has established a full valuation allowance against its net deferred tax assets, and there is no provision for income taxes. The Company also follows the provisions of ASC 740-10, "Accounting for Uncertainty in Income Taxes." ASC 740-10 prescribes a comprehensive model for the recognition, measurement, presentation and disclosure in financial statements of any uncertain tax positions that have been taken or expected to be taken on a tax return. No liability related to uncertain tax positions is recorded on the condensed consolidated financial statements. It is the Company's policy to include penalties and interest expense related to income taxes as part of the provision for income taxes. |
Net Loss per Share | Net Loss per Share Basic net loss per share is computed by dividing the net loss by the weighted average number of shares of common stock outstanding during the period, without consideration for potential dilutive common shares. Diluted net loss per share is computed by dividing the net loss by the weighted average number of shares of common stock and potentially dilutive securities outstanding for the period. For purposes of the diluted net loss per share calculation, redeemable convertible preferred stock and warrants, and common stock options are considered to be potentially dilutive securities. Since the Company was in a loss position for all periods presented, basic net loss per share is the same as diluted net loss per share as the inclusion of all potential dilutive common shares would have been anti-dilutive. The Company allocates no loss to participating securities because they have no contractual obligation to share in the losses of the Company. The shares of the Company’s redeemable convertible preferred stock participate in any dividends declared by the Company and are therefore considered to be participating securities. |
Comprehensive Loss | Comprehensive Loss For the three and nine months ended September 30, 2019 and September 30, 2018, there was no difference between comprehensive loss and the Company’s net loss. |
Segment and Geographical Information | Segment and Geographical Information The Company operates and manages its business as one reportable and operating segment. The Company’s chief executive officer, who is the chief operating decision maker, reviews financial information on an aggregate basis for purposes of allocating resources and evaluating financial performance. All of the Company’s long-lived assets are based in the United States. Long-lived assets are comprised of property and equipment. All of the Company’s revenue was in the United States for the three and nine months ended September 30, 2019 and September 30, 2018, based on the shipping location of the external customer. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements Recently Adopted Accounting Standards In February 2016, the FASB issued ASU No. 2016-02, " Leases," that supersedes ASC 840, "Leases." Subsequently, the FASB issued several updates to ASU No. 2016-02, codified in ASC Topic 842 (“ASC 842”). The Company adopted ASC 842 on January 1, 2019 using the modified retrospective method for all leases not substantially completed as of the date of adoption. The Company elected to apply the package of practical expedients, which allowed the Company to not reassess: (i) whether expired or existing contracts contain leases; (ii) lease classification for any expired or existing leases; and (iii) initial direct costs for any existing lease. Recently Issued Accounting Standards In June 2016, the FASB issued ASU 2016-13, "Measurement of Credit Losses on Financial Statements." 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 U.S. 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 evaluating the impact of adopting this guidance to its consolidated financial statements and related disclosures. In August 2018, the FASB issued ASU 2018-13, "Fair Value Measurement," which changed the disclosure requirements for fair value measurements by removing, adding and modifying certain disclosures. The standard is effective for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. Early adoption is permitted. The Company is evaluating the impact of adopting this guidance to its consolidated financial statements and related disclosures. In August 2018, the FASB issued ASU 2018-15, "Cloud Computing Arrangements," which aligns the requirements for capitalizing implementation costs in a Cloud Computing Arrangement service contract with the requirements for capitalizing implementation costs incurred for an internal-use software license. The standard is effective for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. Early adoption is permitted. The Company is evaluating the impact of adopting this guidance to its consolidated financial statements and related disclosures. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Accounting Policies [Abstract] | |
Schedule of ASC 842 Impact of Adoption on Condensed Consolidated Balance Sheet | In accordance with ASC 842, the disclosure impact of adoption on the condensed consolidated balance sheet were as follows (in thousands): Balance Sheet: Balance at December 31, 2018 Adjustments Due to ASC 842 Balance at January 1, 2019 Other non-current assets $ — $ 3,982 $ 3,982 Accrued liabilities 139 582 721 Other liabilities 1,069 3,400 4,469 |
Net Loss Per Share Determination | Net loss per share was determined as follows (in thousands, except share and per share data): Three Months Ended Nine Months Ended 2019 2018 2019 2018 Net loss $ (8,007) $ (8,952) $ (44,124) $ (22,010) Weighted average common stock outstanding used to compute net loss per share, basic and diluted 30,764,354 1,054,794 20,249,580 911,873 Net loss per share, basic and diluted $ (0.26) $ (8.49) $ (2.18) $ (24.14) |
Schedule of Potentially Dilutive Securities Outstanding Excluded from Diluted Weighted Average Shares Outstanding | The following potentially dilutive securities outstanding have been excluded from the computation of diluted weighted average shares outstanding because such securities have an antidilutive impact due to the Company's net loss, in common stock equivalent shares: September 30, 2019 2018 Redeemable convertible preferred stock outstanding — 21,233,190 Redeemable convertible preferred stock warrants outstanding — 2,672,502 Common stock options 4,677,878 4,292,056 Common stock warrants outstanding — 7,527 4,677,878 28,205,275 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Fair Value Disclosures [Abstract] | |
Option Pricing Model Assumptions | Additionally, the model's inputs reflect assumptions that market participants would use in pricing the instrument in a current period transaction and included: December 31, 2018 Time to liquidity (years) 0.57 Expected volatility 62.5% Discounted cash flow rate 12.0% Risk-free interest rate 2.6% Marketability discount rate 14% |
Financial Liabilities Measure on a Recurring Basis | The following table sets forth the fair value of the Company’s financial liabilities measured on a recurring basis as of December 31, 2018 (in thousands), as of September 30, 2019, there was no redeemable convertible warrant liability: December 31, 2018 Level 1 Level 2 Level 3 Total Liabilities Redeemable convertible warrant liability $ — $ — $ 16,091 $ 16,091 |
Changes in the Redeemable Convertible Warrant Liability | The changes in the redeemable convertible warrant liability are summarized below (in thousands): Fair Value at December 31, 2018 $ 16,091 Change in fair value recorded in other income (expense), net 21,030 Reclassification upon IPO (37,121) Fair Value at September 30, 2019 $ — |
Balance Sheet Components (Table
Balance Sheet Components (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Schedule of Inventories | Components of inventories were as follows: (in thousands) September 30, December 31, 2019 2018 Raw materials $ 1,029 $ 1,054 Finished products 8,246 4,690 Total $ 9,275 $ 5,744 |
Schedule of Accrued Liabilities | Accrued liabilities consist of the following: (in thousands) September 30, December 31, 2019 2018 Accrued payroll and related expenses $ 6,984 $ 5,157 Accrued professional services 841 1,014 Operating lease liability 749 — Accrued royalty expense 423 313 Deferred revenue 335 137 Accrued travel expenses 394 270 Accrued clinical expenses 197 244 Accrued other expenses 553 451 Total $ 10,476 $ 7,586 |
Long-term Debt (Tables)
Long-term Debt (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Debt Disclosure [Abstract] | |
Future Maturities Under the Term Loan Agreement | Future maturities under the term loan agreement as of September 30, 2019 are as follows (in thousands): Period Ending December 31: Amount 2019 $ 1,120 2020 4,454 2021 4,442 2022 48,256 58,272 Add: Accretion of closing fees 1,122 59,394 Less: Amount representing interest (14,458) Less: Amount representing debt discount and debt issuance costs (151) Present value of minimum payments $ 44,785 |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
Balance Sheet Information | Balance sheet information as of September 30, 2019 consists of the following (in thousands): Operating Lease: September 30, 2019 Operating lease right-of-use asset in other non-current assets $ 3,543 Operating lease liability in accrued liabilities $ 749 Operating lease liability in other liabilities 3,901 Total operating lease liabilities $ 4,650 |
Operating Lease Maturities | The following table summarizes the Company’s operating lease maturities as of September 30, 2019 (in thousands): Period Ending December 31: Amount 2019 $ 255 2020 1,037 2021 1,066 2022 1,096 2023 1,127 2024 904 Total lease payments 5,485 Less: imputed interest (835) Present value of lease liabilities $ 4,650 |
Minimum Future Lease Payment Previously Disclosed Under ASC 840 | Minimum future lease payments previously disclosed under ASC 840 in the Company’s prospectus dated April 3, 2019 filed pursuant to Rule 424(b)(4) with the SEC on April 4, 2019 for the year ended December 31, 2018 are as follows (in thousands): Year Ending December 31: Total Minimum 2019 $ 1,002 2020 1,002 2021 1,031 2022 1,044 2023 1,920 $ 5,999 |
Redeemable Convertible Prefer_2
Redeemable Convertible Preferred Stock (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Temporary Equity Disclosure [Abstract] | |
Redeemable Convertible Preferred Stock Issued and Outstanding | The Company had the following redeemable convertible preferred stock issued and outstanding at December 31, 2018: December 31, 2018 Shares Shares Issued and Per share Preferential Carrying Value (in thousands) Series Series A 1,629,629 1,629,626 $ 2.70 $ 4,400 $ 4,369 Series A-1 1,111,111 1,111,109 $ 3.38 3,755 3,723 Series B 6,264,470 6,264,463 $ 6.11 38,276 38,014 Series C 15,064,405 12,227,992 $ 6.11 74,713 59,129 24,069,615 21,233,190 $ 121,144 $ 105,235 |
Stock Option Plans (Tables)
Stock Option Plans (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
Activity Under Stock Option Plans | Activity under the Company’s 2007 Stock Option Plan, NeuroCo 2015 Equity Incentive Plan and 2019 Plan is set forth below: Options Outstanding Shares Available for Grant Number of Shares Weighted Average Exercise Price Weighted Average Remaining Contractual Term (in Years) Aggregate Intrinsic Value (in thousands) Balances, December 31, 2018 57,889 4,364,377 $ 3.79 7.36 $ 33,132 Authorized 2,317,000 Options granted (792,673) 792,673 $ 21.82 Options exercised — (456,147) $ 1.77 Options cancelled 23,025 (23,025) $ 6.73 Balances, September 30, 2019 1,605,241 4,677,878 $ 7.03 7.27 $ 120,092 Vested and exercisable at September 30, 2019 2,701,774 $ 3.53 6.25 $ 78,404 Vested and expected to vest at September 30, 2019 4,677,878 $ 7.03 7.27 $ 120,092 |
Assumptions Used for Estimating Fair Value of Employee Stock Options | The fair value of employee and nonemployee stock options was estimated using the following assumptions for the three and nine months ended September 30, 2019 and 2018: Three Months Ended Nine Months Ended 2019 2018 2019 2018 Expected term (in years) 6.25 6.25 5.00 - 6.25 5.00 - 6.25 Expected volatility 42.4% 38.3% 42.4% - 42.9% 38.0% - 38.3% Risk-free interest rate 1.47% 2.90-2.98% 1.47% - 2.54% 2.68% - 2.98% Dividend yield —% —% —% —% |
Schedule of Fair Value Assumptions | The fair value of the shares to be issued under the Company’s 2019 ESPP was estimated using the Black-Scholes valuation model with the following assumptions for the three and nine months ended September 30, 2019: Three Months Ended Nine Months Ended 2019 2019 Expected term (in years) 0.63 0.63 Expected volatility 47.8% 47.8% Risk-free interest rate 2.45% 2.45% Dividend yield —% —% |
Stock-Based Compensation Expense Relating to Stock Options to Employees and Nonemployees | Total stock-based compensation expense recognized during the three and nine months ended September 30, 2019 and 2018, is as follows (in thousands): Three Months Ended September 30, Nine Months Ended 2019 2018 2019 2018 Cost of goods sold $ 61 $ 12 $ 129 $ 36 Research and development expenses 134 30 288 220 Selling, general and administrative expenses 730 152 1,606 429 $ 925 $ 194 $ 2,023 $ 685 |
Formation and Business of the_2
Formation and Business of the Company (Details) $ / shares in Units, $ in Thousands | Mar. 13, 2019 | Aug. 31, 2019$ / sharesshares | Apr. 30, 2019USD ($)$ / sharesshares | Sep. 30, 2019USD ($)$ / shares |
Subsequent Event [Line Items] | ||||
Reverse stock split | 0.3704 | |||
Payments of stock issuance costs | $ 2,561 | |||
IPO | ||||
Subsequent Event [Line Items] | ||||
Number of shares issued in transaction (in shares) | shares | 6,000,000 | |||
Stock issued, price per share (in USD per share) | $ / shares | $ 20 | $ 20 | ||
Proceeds from stock issued, net of issuance costs | $ 109,119 | |||
IPO - Underwriting Discounts and Commissions | ||||
Subsequent Event [Line Items] | ||||
Payments of stock issuance costs | 8,400 | |||
IPO - Other Expenses | ||||
Subsequent Event [Line Items] | ||||
Payments of stock issuance costs | $ 2,481 | |||
Second Public Offering | ||||
Subsequent Event [Line Items] | ||||
Number of shares issued in transaction (in shares) | shares | 4,200,000 | |||
Stock issued, price per share (in USD per share) | $ / shares | $ 39.50 | |||
Over-Allotment Option | ||||
Subsequent Event [Line Items] | ||||
Number of shares issued in transaction (in shares) | shares | 630,000 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies - Cash, Cash Equivalents and Restricted Cash (Details) - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 |
Accounting Policies [Abstract] | ||
Restricted cash | $ 310 | $ 310 |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Deferred Initial Public Offering Costs (Details) - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 |
Accounting Policies [Abstract] | ||
Deferred initial public offering costs | $ 0 | $ 950 |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies - Leases (Details) - USD ($) $ in Thousands | Sep. 30, 2019 | Jan. 01, 2019 |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Operating lease right-of-use asset | $ 3,543 | |
Operating lease liabilities | $ 4,650 | |
Adjustments Due to ASC 842 | ||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||
Operating lease right-of-use asset | $ 3,982 | |
Operating lease liabilities | $ 5,190 |
Summary of Significant Accoun_7
Summary of Significant Accounting Policies - ASC 842 Impact on Condensed Consolidated Balance Sheet (Details) - USD ($) $ in Thousands | Sep. 30, 2019 | Jan. 01, 2019 | Dec. 31, 2018 |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Other non-current assets | $ 3,575 | $ 3,982 | $ 1,029 |
Accrued liabilities | 10,476 | 721 | 7,586 |
Other liabilities | $ 3,900 | 4,469 | 1,069 |
Previously Reported | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Other non-current assets | 0 | ||
Accrued liabilities | 139 | ||
Other liabilities | $ 1,069 | ||
Restatement Adjustment | Adjustments Due to ASC 842 | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Other non-current assets | 3,982 | ||
Accrued liabilities | 582 | ||
Other liabilities | $ 3,400 |
Summary of Significant Accoun_8
Summary of Significant Accounting Policies - Redeemable Convertible Preferred Stock (Details) - USD ($) $ in Thousands | 3 Months Ended | 5 Months Ended |
Jun. 30, 2019 | Sep. 30, 2019 | |
Class of Stock [Line Items] | ||
Conversion of preferred stock to common stock upon IPO | $ 144,140 | $ 144,140 |
Common Stock | ||
Class of Stock [Line Items] | ||
Conversion of preferred stock to common stock upon IPO (in shares) | 23,178,555 |
Summary of Significant Accoun_9
Summary of Significant Accounting Policies - Revenue Recognition (Details) - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 |
Accounting Policies [Abstract] | ||
Unbilled receivables | $ 149 | $ 128 |
Summary of Significant Accou_10
Summary of Significant Accounting Policies - Schedule of Earnings Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Accounting Policies [Abstract] | ||||
Net loss | $ (8,007) | $ (8,952) | $ (44,124) | $ (22,010) |
Weighted average common stock outstanding used to compute net loss per share, basic and diluted (in shares) | 30,764,354 | 1,054,794 | 20,249,580 | 911,873 |
Net loss per share, basic and diluted (in USD per share) | $ (0.26) | $ (8.49) | $ (2.18) | $ (24.14) |
Summary of Significant Accou_11
Summary of Significant Accounting Policies - Schedule of Potentially Dilutive Securities Not Included in Calculation of Earnings per Share (Details) - shares | 9 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2018 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive securities excluded from computation of earnings per share (in shares) | 4,677,878 | 28,205,275 |
Redeemable convertible preferred stock outstanding | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive securities excluded from computation of earnings per share (in shares) | 0 | 21,233,190 |
Redeemable convertible preferred stock warrants outstanding | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive securities excluded from computation of earnings per share (in shares) | 0 | 2,672,502 |
Common stock options | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive securities excluded from computation of earnings per share (in shares) | 4,677,878 | 4,292,056 |
Common stock warrants outstanding | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive securities excluded from computation of earnings per share (in shares) | 0 | 7,527 |
Summary of Significant Accou_12
Summary of Significant Accounting Policies - Segment and Geographical Information (Details) | 9 Months Ended |
Sep. 30, 2019segment | |
Accounting Policies [Abstract] | |
Number of operating segments | 1 |
Number of reportable segments | 1 |
Fair Value Measurements - Narra
Fair Value Measurements - Narrative (Details) - USD ($) | Sep. 30, 2019 | Dec. 31, 2018 | Apr. 30, 2016 |
Recurring | |||
Class of Stock [Line Items] | |||
Redeemable convertible warrant liability | $ 0 | $ 16,091,000 | |
Preferred Stock Warrants | |||
Class of Stock [Line Items] | |||
Temporary equity, shares issued (in shares) | 2,672,502 | ||
Warrant exercise price (in USD per share) | $ 6.11 |
Fair Value Measurements - Fair
Fair Value Measurements - Fair Value Assumptions (Details) - Recurring - Level 3 | Dec. 31, 2018 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Time to liquidity (years) | 6 months 25 days |
Expected volatility | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Measurement input | 0.625 |
Discounted cash flow rate | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Measurement input | 0.120 |
Risk-free interest rate | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Measurement input | 0.026 |
Marketability discount rate | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Measurement input | 0.14 |
Fair Value Measurements - Measu
Fair Value Measurements - Measurement of Financial Liabilities (Details) - Recurring - USD ($) | Sep. 30, 2019 | Dec. 31, 2018 |
Liabilities | ||
Redeemable convertible warrant liability | $ 0 | $ 16,091,000 |
Level 1 | ||
Liabilities | ||
Redeemable convertible warrant liability | 0 | |
Level 2 | ||
Liabilities | ||
Redeemable convertible warrant liability | 0 | |
Level 3 | ||
Liabilities | ||
Redeemable convertible warrant liability | $ 16,091,000 |
Fair Value Measurements - Chang
Fair Value Measurements - Changes in Redeemable Convertible Warrant Liability (Details) $ in Thousands | 9 Months Ended |
Sep. 30, 2019USD ($) | |
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | |
Beginning balance | $ 16,091 |
Change in fair value recorded in other income (expense), net | 21,030 |
Reclassification upon IPO | (37,121) |
Ending balance | $ 0 |
Balance Sheet Components - Sche
Balance Sheet Components - Schedule of Inventory (Details) - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Raw materials | $ 1,029 | $ 1,054 |
Finished products | 8,246 | 4,690 |
Total | $ 9,275 | $ 5,744 |
Balance Sheet Components - Narr
Balance Sheet Components - Narrative (Details) - USD ($) | Sep. 30, 2019 | Dec. 31, 2018 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
Work-in-process | $ 0 | $ 0 |
Balance Sheet Components - Accr
Balance Sheet Components - Accrued Liabilities (Details) - USD ($) $ in Thousands | Sep. 30, 2019 | Jan. 01, 2019 | Dec. 31, 2018 |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||
Accrued payroll and related expenses | $ 6,984 | $ 5,157 | |
Accrued professional services | 841 | 1,014 | |
Operating lease liability | 749 | ||
Accrued royalty expense | 423 | 313 | |
Deferred revenue | 335 | 137 | |
Accrued travel expenses | 394 | 270 | |
Accrued clinical expenses | 197 | 244 | |
Accrued other expenses | 553 | 451 | |
Total | $ 10,476 | $ 721 | $ 7,586 |
Long-term Debt - Term Loan Narr
Long-term Debt - Term Loan Narrative (Details) - USD ($) | 9 Months Ended | 12 Months Ended | ||||||||
Sep. 30, 2019 | Dec. 31, 2020 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 | May 01, 2019 | Sep. 30, 2018 | Apr. 30, 2017 | Oct. 31, 2015 | |
Debt Instrument [Line Items] | ||||||||||
Term loan agreement amount | $ 15,000,000 | |||||||||
Debt drawn down | $ 59,394,000 | |||||||||
Minimum liquidity amount | $ 3,000,000 | |||||||||
Minimum net revenue target | $ 15,000,000 | $ 5,000,000 | $ 1,000,000 | |||||||
Equity cure period | 90 days | |||||||||
Long-term debt | $ 44,785,000 | |||||||||
Scenario, Forecast | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Minimum net revenue target | $ 40,000,000 | $ 30,000,000 | ||||||||
Term Loan | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Term loan agreement amount | $ 25,000,000 | $ 30,000,000 | ||||||||
Stated interest rate | 10.00% | 1075.00% | ||||||||
Interest rate paid-in-kind | 2.00% | 275.00% | ||||||||
Interest rate paid in cash | 8.00% | 800.00% | ||||||||
Term Loan, Tranche A | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Term loan agreement amount | $ 20,000,000 | |||||||||
Financing fee | 175.00% | |||||||||
Facility fee | 500.00% | |||||||||
Term Loan, Tranche B | ||||||||||
Debt Instrument [Line Items] | ||||||||||
Term loan agreement amount | $ 10,000,000 | |||||||||
Debt drawn down | $ 5,000,000 |
Long-term Debt - Future Maturit
Long-term Debt - Future Maturities Under the Term Loan (Details) $ in Thousands | Sep. 30, 2019USD ($) |
Debt Disclosure [Abstract] | |
2019 | $ 1,120 |
2020 | 4,454 |
2021 | 4,442 |
2022 | 48,256 |
Long-term debt, gross before accretion of closing fees | 58,272 |
Add: Accretion of closing fees | 1,122 |
Long-term debt, gross | 59,394 |
Less: Amount representing interest | (14,458) |
Less: Amount representing debt discount and debt issuance costs | (151) |
Present value of minimum payments | $ 44,785 |
Long-term Debt - Series C Narra
Long-term Debt - Series C Narrative (Details) - $ / shares | 1 Months Ended | |||||
Apr. 30, 2019 | Jul. 31, 2017 | Oct. 31, 2015 | Sep. 30, 2019 | Dec. 31, 2018 | Apr. 30, 2016 | |
IPO | ||||||
Class of Stock [Line Items] | ||||||
Temporary equity, shares issued (in shares) | 6,000,000 | |||||
Stock issued, price per share (in USD per share) | $ 20 | $ 20 | ||||
Preferred Stock Warrants | ||||||
Class of Stock [Line Items] | ||||||
Warrants outstanding (in shares) | 163,877 | 0 | 2,672,502 | |||
Warrant exercise price (in USD per share) | $ 6.11 | |||||
Series C | ||||||
Class of Stock [Line Items] | ||||||
Temporary equity, shares issued (in shares) | 163,877 | 327,759 | ||||
Stock issued, price per share (in USD per share) | $ 6.11 | $ 6.11 |
Commitments and Contingencies -
Commitments and Contingencies - Lease Narrative (Details) $ in Thousands | 3 Months Ended | 9 Months Ended |
Sep. 30, 2019USD ($) | Sep. 30, 2019USD ($) | |
Commitments and Contingencies Disclosure [Abstract] | ||
Operating lease costs | $ 217 | $ 652,000 |
Operating lease liabilities | $ 178 | $ 540,000 |
Weighted average discount rate | 6.50% | 6.50% |
Weighted average remaining lease term | 5 years 29 days | 5 years 29 days |
Commitments and Contingencies_2
Commitments and Contingencies - Balance Sheet Information (Details) $ in Thousands | Sep. 30, 2019USD ($) |
Commitments and Contingencies Disclosure [Abstract] | |
Operating lease right-of-use asset in other non-current assets | $ 3,543 |
Operating lease liability in accrued liabilities | 749 |
Operating lease liability in other liabilities | 3,901 |
Total operating lease liabilities | $ 4,650 |
Commitments and Contingencies_3
Commitments and Contingencies - Operating Lease Maturities (Details) $ in Thousands | Sep. 30, 2019USD ($) |
Commitments and Contingencies Disclosure [Abstract] | |
2019 | $ 255 |
2020 | 1,037 |
2021 | 1,066 |
2022 | 1,096 |
2023 | 1,127 |
2024 and Thereafter | 904 |
Total lease payments | 5,485 |
Less: imputed interest | (835) |
Present value of lease liabilities | $ 4,650 |
Commitments and Contingencies_4
Commitments and Contingencies - Topic 840 Aggregate Future Minimum Lease Payments (Details) $ in Thousands | Dec. 31, 2018USD ($) |
Commitments and Contingencies Disclosure [Abstract] | |
2019 | $ 1,002 |
2020 | 1,002 |
2021 | 1,031 |
2022 | 1,044 |
2023 | 1,920 |
Total Minimum Lease Payments | $ 5,999 |
Commitments and Contingencies_5
Commitments and Contingencies - Purchase Obligation Narrative (Details) $ in Thousands | Sep. 30, 2019USD ($) |
Commitments and Contingencies Disclosure [Abstract] | |
Purchase obligation | $ 3,715 |
Redeemable Convertible Prefer_3
Redeemable Convertible Preferred Stock - Schedule of Redeemable Convertible Preferred Stock (Details) - USD ($) $ / shares in Units, $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 |
Temporary Equity [Line Items] | ||
Shares Authorized (in shares) | 0 | 24,069,615 |
Shares Issued (in shares) | 0 | 21,233,190 |
Shares Outstanding (in shares) | 0 | 21,233,190 |
Preferential Liquidation Value (in thousands) | $ 0 | $ 121,144 |
Carrying Value (in thousands) | $ 0 | $ 105,235 |
Series A | ||
Temporary Equity [Line Items] | ||
Shares Authorized (in shares) | 1,629,629 | |
Shares Issued (in shares) | 1,629,626 | |
Shares Outstanding (in shares) | 1,629,626 | |
Per share Preference (in USD per share) | $ 2.70 | |
Preferential Liquidation Value (in thousands) | $ 4,400 | |
Carrying Value (in thousands) | $ 4,369 | |
Series A-1 | ||
Temporary Equity [Line Items] | ||
Shares Authorized (in shares) | 1,111,111 | |
Shares Issued (in shares) | 1,111,109 | |
Shares Outstanding (in shares) | 1,111,109 | |
Per share Preference (in USD per share) | $ 3.38 | |
Preferential Liquidation Value (in thousands) | $ 3,755 | |
Carrying Value (in thousands) | $ 3,723 | |
Series B | ||
Temporary Equity [Line Items] | ||
Shares Authorized (in shares) | 6,264,470 | |
Shares Issued (in shares) | 6,264,463 | |
Shares Outstanding (in shares) | 6,264,463 | |
Per share Preference (in USD per share) | $ 6.11 | |
Preferential Liquidation Value (in thousands) | $ 38,276 | |
Carrying Value (in thousands) | $ 38,014 | |
Series C | ||
Temporary Equity [Line Items] | ||
Shares Authorized (in shares) | 15,064,405 | |
Shares Issued (in shares) | 12,227,992 | |
Shares Outstanding (in shares) | 12,227,992 | |
Per share Preference (in USD per share) | $ 6.11 | |
Preferential Liquidation Value (in thousands) | $ 74,713 | |
Carrying Value (in thousands) | $ 59,129 |
Redeemable Convertible Prefer_4
Redeemable Convertible Preferred Stock - Narrative (Details) - $ / shares | 9 Months Ended | |||
Sep. 30, 2019 | Apr. 30, 2019 | Dec. 31, 2018 | Oct. 31, 2015 | |
Temporary Equity [Line Items] | ||||
Temporary equity, shares issued (in shares) | 0 | 21,233,190 | ||
Temporary equity, shares outstanding (in shares) | 0 | 21,233,190 | ||
Preferred Stock Warrants | ||||
Temporary Equity [Line Items] | ||||
Warrants outstanding (in shares) | 0 | 2,672,502 | 163,877 | |
IPO | ||||
Temporary Equity [Line Items] | ||||
Stock issued, price per share (in USD per share) | $ 20 | $ 20 | ||
IPO | Preferred Stock Warrants | ||||
Temporary Equity [Line Items] | ||||
Shares converted (in shares) | 1,945,365 | |||
Convertible Preferred Stock | ||||
Temporary Equity [Line Items] | ||||
Temporary equity, shares issued (in shares) | 0 | |||
Temporary equity, shares outstanding (in shares) | 0 |
Stockholders Equity (Deficit) -
Stockholders Equity (Deficit) - Narrative (Details) | 9 Months Ended | ||
Sep. 30, 2019USD ($)vote$ / sharesshares | Apr. 30, 2019$ / shares | Dec. 31, 2018$ / sharesshares | |
Class of Warrant or Right [Line Items] | |||
Preferred stock authorized (in shares) | 5,000,000 | 0 | |
Preferred stock par value (in USD per share) | $ / shares | $ 0.001 | $ 0.001 | |
Preferred stock issued (in shares) | 0 | 0 | |
Preferred stock outstanding (in shares) | 0 | 0 | |
Shares authorized (in shares) | 100,000,000 | 29,879,220 | |
Par value (in USD per share) | $ / shares | $ 0.001 | $ 0.001 | |
Shares issued (in shares) | 30,775,980 | 1,135,310 | |
Shares outstanding (in shares) | 30,775,980 | 1,135,310 | |
Dividends declared | $ | $ 0 | ||
Number of votes entitled per share of common stock | vote | 1 | ||
Warrants to Purchase Common Stock | |||
Class of Warrant or Right [Line Items] | |||
Warrants outstanding (in shares) | 0 | 7,527 | |
IPO | |||
Class of Warrant or Right [Line Items] | |||
Stock issued, price per share (in USD per share) | $ / shares | $ 20 | $ 20 | |
IPO | Common Stock Warrant | |||
Class of Warrant or Right [Line Items] | |||
Shares converted (in shares) | 5,968 |
Stock Option Plans - Narrative
Stock Option Plans - Narrative (Details) - USD ($) $ in Thousands | 1 Months Ended | 9 Months Ended |
Mar. 31, 2019 | Sep. 30, 2019 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Aggregate intrinsic value of options exercised | $ 10,846 | |
Compensation expensed not yet recognized | $ 8,493 | |
Compensation expensed not yet recognized, period for recognition | 3 years 1 month 28 days | |
ISO | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Exercise threshold as a percentage of fair value of shares | 10000.00% | |
NSO | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Exercise threshold as a percentage of fair value of shares | 8500.00% | |
ISO and NSO | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Option term | 10 years | |
Option vesting term | 4 years | |
ISO and NSO | 10% Stockholders | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Exercise threshold as a percentage of fair value of shares | 11000.00% | |
Common stock options | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Number of additional shares allowable under the plan (in shares) | 1,200,000 | |
Percent of outstanding shares of common stock | 1.00% | |
Common stock reserved for future issuance (in shares) | 434,000 | |
Percent of purchase of price of common stock | 85.00% | |
2019 Stock Option Plan | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Shares of common stock reserved for issuance (in shares) | 2,317,000 | 2,362,933 |
Percent of outstanding shares of common stock | 4.00% | |
2019 Stock Option Plan | Maximum | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Number of additional shares allowable under the plan (in shares) | 3,000,000 |
Stock Option Plans - Activity U
Stock Option Plans - Activity Under Compensation Plan (Details) $ / shares in Units, $ in Thousands | 9 Months Ended | 12 Months Ended |
Sep. 30, 2019USD ($)$ / sharesshares | Dec. 31, 2018USD ($)$ / sharesshares | |
Shares Available for Grant | ||
Beginning balance (in shares) | 57,889 | |
Authorized (in shares) | 2,317,000 | |
Options granted (in shares) | 792,673 | |
Options cancelled (in shares) | 23,025 | |
Ending balance (in shares) | 1,605,241 | 57,889 |
Number of Shares | ||
Beginning balance (in shares) | 4,364,377 | |
Options granted (in shares) | 792,673 | |
Options exercised (in shares) | (456,147) | |
Options cancelled (in shares) | (23,025) | |
Ending balance (in shares) | 4,677,878 | 4,364,377 |
Weighted Average Exercise Price | ||
Beginning balance (in USD per share) | $ / shares | $ 3.79 | |
Options granted (in USD per share) | $ / shares | 21.82 | |
Options exercised (in USD per share) | $ / shares | 1.77 | |
Options cancelled (in USD per share) | $ / shares | 6.73 | |
Ending balance (in USD per share) | $ / shares | $ 7.03 | $ 3.79 |
Weighted Average Remaining Contractual Term (in Years), awards outstanding | 7 years 3 months 7 days | 7 years 4 months 9 days |
Aggregate Intrinsic Value, awards outstanding | $ | $ 120,092 | $ 33,132 |
Number of Shares, vested and exercisable (in shares) | 2,701,774 | |
Weighted Average Exercise Price, vested and exercisable (in USD per share) | $ / shares | $ 3.53 | |
Weighted Average Remaining Contractual Term (in Years), vested and exercisable | 6 years 3 months | |
Aggregate Intrinsic Value, vested and exercisable | $ | $ 78,404 | |
Number of Shares, vested and expect to vest (in shares) | 4,677,878 | |
Weighted Average Exercise Price, vested and expected to vest (in USD per share) | $ / shares | $ 7.03 | |
Weighted Average Remaining Contractual Term (in Years), vested and expected to vest | 7 years 3 months 7 days | |
Aggregate Intrinsic Value, vested and expected to vest | $ | $ 120,092 |
Stock Option Plans - Fair Value
Stock Option Plans - Fair Value of Stock Options (Details) - Common stock options | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Expected term (in years) | 6 years 3 months | 6 years 3 months | ||
Expected volatility | 42.40% | 38.30% | ||
Expected volatility, minimum | 42.40% | 38.00% | ||
Expected volatility, maximum | 42.90% | 38.30% | ||
Risk-free interest rate | 1.47% | |||
Risk-free interest rate, minimum | 2.90% | 1.47% | 2.68% | |
Risk-free interest rate, maximum | 2.98% | 2.54% | 2.98% | |
Dividend yield | 0.00% | 0.00% | 0.00% | 0.00% |
2019 Stock Option Plan | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Expected term (in years) | 7 months 17 days | 7 months 17 days | ||
Expected volatility | 47.80% | 47.80% | ||
Risk-free interest rate | 2.45% | 2.45% | ||
Dividend yield | 0.00% | 0.00% | ||
Minimum | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Expected term (in years) | 5 years | 5 years | ||
Maximum | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Expected term (in years) | 6 years 3 months | 6 years 3 months |
Stock Option Plans - Stock-base
Stock Option Plans - Stock-based Compensation (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | ||||
Stock-based compensation expense | $ 925 | $ 194 | $ 2,023 | $ 685 |
Cost of goods sold | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | ||||
Stock-based compensation expense | 61 | 12 | 129 | 36 |
Research and development expenses | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | ||||
Stock-based compensation expense | 134 | 30 | 288 | 220 |
Selling, general and administrative expenses | ||||
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items] | ||||
Stock-based compensation expense | $ 730 | $ 152 | $ 1,606 | $ 429 |
Uncategorized Items - silk-2019
Label | Element | Value |
Accounting Standards Update 2016-09 [Member] | ||
Cumulative Effect of New Accounting Principle in Period of Adoption | us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption | $ 0 |
Accounting Standards Update 2016-09 [Member] | Additional Paid-in Capital [Member] | ||
Cumulative Effect of New Accounting Principle in Period of Adoption | us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption | 13,000 |
Accounting Standards Update 2016-09 [Member] | Retained Earnings [Member] | ||
Cumulative Effect of New Accounting Principle in Period of Adoption | us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption | (13,000) |
Accounting Standards Update 2014-09 [Member] | ||
Cumulative Effect of New Accounting Principle in Period of Adoption | us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption | 87,000 |
Accounting Standards Update 2014-09 [Member] | Retained Earnings [Member] | ||
Cumulative Effect of New Accounting Principle in Period of Adoption | us-gaap_CumulativeEffectOfNewAccountingPrincipleInPeriodOfAdoption | $ 87,000 |