Document and Entity Information
Document and Entity Information - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2022 | Mar. 16, 2023 | Jun. 30, 2022 | |
Document and Entity Information | |||
Document Type | 10-K | ||
Document Annual Report | true | ||
Document Period End Date | Dec. 31, 2022 | ||
Document Transition Report | false | ||
Entity File Number | 001-39130 | ||
Entity Registrant Name | TELA Bio, Inc. | ||
Entity Incorporation, State or Country Code | DE | ||
Entity Tax Identification Number | 45-5320061 | ||
Entity Address, Address Line One | 1 Great Valley Parkway, Suite 24 | ||
Entity Address, City or Town | Malvern | ||
Entity Address, State or Province | PA | ||
Entity Address, Postal Zip Code | 19355 | ||
City Area Code | 484 | ||
Local Phone Number | 320-2930 | ||
Title of 12(b) Security | Common Stock, $0.001 par value per share | ||
Trading Symbol | TELA | ||
Security Exchange Name | NASDAQ | ||
Entity Well Known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
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 | false | ||
ICFR Auditor Attestation Flag | false | ||
Entity Shell Company | false | ||
Entity Public Float | $ 54.4 | ||
Entity Common Stock, Shares Outstanding | 19,216,821 | ||
Entity Central Index Key | 0001561921 | ||
Current Fiscal Year End Date | --12-31 | ||
Document Fiscal Year Focus | 2022 | ||
Document Fiscal Period Focus | FY | ||
Amendment Flag | false | ||
Auditor Name | KPMG LLP | ||
Auditor Firm ID | 185 | ||
Auditor Location | Philadelphia, PA |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Current assets: | ||
Cash and cash equivalents | $ 42,019 | $ 43,931 |
Accounts receivable, net | 6,621 | 4,234 |
Inventory | 11,792 | 7,658 |
Prepaid expenses and other assets | 2,015 | 3,232 |
Total current assets | 62,447 | 59,055 |
Property and equipment, net | 1,682 | 1,186 |
Intangible assets, net | 2,499 | 2,303 |
Right-of-use assets | 1,227 | |
Total assets | 67,855 | 62,544 |
Current liabilities: | ||
Accounts payable | 1,534 | 2,414 |
Accrued expenses and other current liabilities | 10,869 | 8,161 |
Total current liabilities | 12,403 | 10,575 |
Long-term debt | 39,916 | |
Long-term debt with related party | 31,491 | |
Other long-term liabilities | 1,231 | 380 |
Total liabilities | 53,550 | 42,446 |
Stockholders' equity: | ||
Preferred stock; $0.001 par value: 10,000,000 shares authorized; no shares issued and outstanding | ||
Common stock; $0.001 par value: 200,000,000 shares authorized; 19,165,027 and 14,529,606 shares issued and 19,165,027 and 14,529,577 shares outstanding at December 31, 2022 and December 31, 2021, respectively | 19 | 15 |
Additional paid-in capital | 288,361 | 250,064 |
Accumulated other comprehensive income (loss) | 150 | (52) |
Accumulated deficit | (274,225) | (229,929) |
Total stockholders' equity | 14,305 | 20,098 |
Total liabilities and stockholders' equity | $ 67,855 | $ 62,544 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Dec. 31, 2022 | Dec. 31, 2021 |
Consolidated Balance Sheets | ||
Preferred stock, Par value (in dollars per share) | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized (in shares) | 10,000,000 | 10,000,000 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Preferred stock, shares outstanding (in shares) | 0 | 0 |
Common stock, Par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized (in shares) | 200,000,000 | 200,000,000 |
Common stock, shares issued (in shares) | 19,165,027 | 14,529,606 |
Common stock, shares outstanding (in shares) | 19,165,027 | 14,529,577 |
Consolidated Statements of Oper
Consolidated Statements of Operations and Comprehensive Loss - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Consolidated Statements of Operations and Comprehensive Loss | |||
Revenue | $ 41,418 | $ 29,463 | $ 18,213 |
Cost of revenue (excluding amortization of intangible assets) | 13,570 | 10,346 | 6,675 |
Amortization of intangible assets | 804 | 304 | 304 |
Gross profit | 27,044 | 18,813 | 11,234 |
Operating expenses: | |||
Sales and marketing | 43,252 | 29,062 | 22,111 |
General and administrative | 13,862 | 12,459 | 10,143 |
Research and development | 8,937 | 6,743 | 4,255 |
Total operating expenses | 66,051 | 48,264 | 36,509 |
Loss from operations | (39,007) | (29,451) | (25,275) |
Other expense: | |||
Interest expense | (4,051) | (3,597) | (3,564) |
Loss on extinguishment of debt | (1,228) | ||
Other expense (income) | (10) | (228) | 45 |
Total other expense | (5,289) | (3,825) | (3,519) |
Net loss | $ (44,296) | $ (33,276) | $ (28,794) |
Net loss per common share, basic | $ (2.72) | $ (2.30) | $ (2.23) |
Net loss per common share, diluted | $ (2.72) | $ (2.30) | $ (2.23) |
Weighted average common shares outstanding, basic | 16,267,678 | 14,473,213 | 12,934,421 |
Weighted average common shares outstanding, diluted | 16,267,678 | 14,473,213 | 12,934,421 |
Comprehensive loss: | |||
Net loss | $ (44,296) | $ (33,276) | $ (28,794) |
Foreign currency translation adjustment | 202 | 19 | (52) |
Comprehensive loss | $ (44,094) | $ (33,257) | $ (28,846) |
Consolidated Statements of Stoc
Consolidated Statements of Stockholders' Equity - USD ($) $ in Thousands | Common stock | Additional paid-in capital | Accumulated other comprehensive income (loss) | Accumulated deficit | Total |
Balance at Beginning of period at Dec. 31, 2019 | $ 11 | $ 198,829 | $ (19) | $ (167,859) | $ 30,962 |
Balance at Beginning of period (in shares) at Dec. 31, 2019 | 11,406,221 | ||||
Vesting of common stock previously subject to repurchase | 3 | 3 | |||
Vesting of common stock previously subject to repurchase (in shares) | 306 | ||||
Vesting of share-based awards and exercise of stock options | 175 | $ 175 | |||
Vesting of share-based awards and exercise of stock options (in shares) | 27,783 | 27,783 | |||
Issuance of common stock under the employee stock purchase plan | 34 | $ 34 | |||
Issuance of common stock under the employee stock purchase plan (in shares) | 2,797 | ||||
Foreign currency translation adjustment | (52) | (52) | |||
Stock-based compensation expense | 1,976 | 1,976 | |||
Sale of common stock, net of underwriting discounts, commissions and offering costs | $ 3 | 44,719 | 44,722 | ||
Sale of common stock, net of underwriting discounts, commissions and offering costs (in shares) | 3,000,000 | ||||
Net loss | (28,794) | (28,794) | |||
Balance at Ending period at Dec. 31, 2020 | $ 14 | 245,736 | (71) | (196,653) | 49,026 |
Balance at Ending period (in shares) at Dec. 31, 2020 | 14,437,107 | ||||
Vesting of common stock previously subject to repurchase | 1 | 1 | |||
Vesting of common stock previously subject to repurchase (in shares) | 153 | ||||
Vesting of share-based awards and exercise of stock options | $ 1 | 546 | $ 547 | ||
Vesting of share-based awards and exercise of stock options (in shares) | 89,154 | 77,154 | |||
Issuance of common stock under the employee stock purchase plan | 38 | $ 38 | |||
Issuance of common stock under the employee stock purchase plan (in shares) | 3,163 | ||||
Foreign currency translation adjustment | 19 | 19 | |||
Stock-based compensation expense | 3,661 | 3,661 | |||
Reclassification of liability-classified stock-based compensation awards | 82 | 82 | |||
Net loss | (33,276) | (33,276) | |||
Balance at Ending period at Dec. 31, 2021 | $ 15 | 250,064 | (52) | (229,929) | 20,098 |
Balance at Ending period (in shares) at Dec. 31, 2021 | 14,529,577 | ||||
Vesting of common stock previously subject to repurchase (in shares) | 29 | ||||
Vesting of share-based awards and exercise of stock options | 19 | $ 19 | |||
Vesting of share-based awards and exercise of stock options (in shares) | 44,346 | 3,563 | |||
Issuance of common stock under the employee stock purchase plan | 50 | $ 50 | |||
Issuance of common stock under the employee stock purchase plan (in shares) | 4,523 | ||||
Shares withheld for employee taxes | (157) | (157) | |||
Shares withheld for employee taxes (in shares) | (13,448) | ||||
Foreign currency translation adjustment | 202 | 202 | |||
Stock-based compensation expense | 3,989 | 3,989 | |||
Sale of common stock, net of underwriting discounts, commissions and offering costs | $ 4 | 34,396 | 34,400 | ||
Sale of common stock, net of underwriting discounts, commissions and offering costs (in shares) | 4,600,000 | ||||
Net loss | (44,296) | (44,296) | |||
Balance at Ending period at Dec. 31, 2022 | $ 19 | $ 288,361 | $ 150 | $ (274,225) | $ 14,305 |
Balance at Ending period (in shares) at Dec. 31, 2022 | 19,165,027 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Cash flows from operating activities: | |||
Net loss | $ (44,296) | $ (33,276) | $ (28,794) |
Adjustments to reconcile net loss to net cash used in operating activities: | |||
Depreciation expense | 383 | 231 | 221 |
Noncash interest expense | 657 | 664 | 584 |
Noncash loss on extinguishment of debt | 1,228 | ||
Amortization of intangible assets | 804 | 304 | 304 |
Net changes in operating lease ROU assets and liabilities | (36) | ||
Inventory excess and obsolescence charge | 1,866 | 1,439 | 1,327 |
Stock-based compensation expense | 3,989 | 3,661 | 2,058 |
Loss on disposal of fixed assets | 2 | ||
Change in operating assets and liabilities: | |||
Accounts receivable, net | (2,421) | (1,553) | 149 |
Inventory | (6,073) | (5,194) | (620) |
Prepaid expenses and other assets | 1,216 | (992) | 66 |
Accounts payable | (884) | 1,597 | (2,002) |
Accrued expenses and other current and long-term liabilities | 2,399 | 2,673 | 2,321 |
Foreign currency remeasurement loss | 420 | 12 | (70) |
Net cash used in operating activities | (40,748) | (30,432) | (24,456) |
Cash flows from investing activities: | |||
Proceeds from the sale and maturity of short-term investments | 9,289 | ||
Payment for intangible asset | (1,000) | ||
Purchase of property and equipment | (872) | (627) | (167) |
Net cash (used in) provided by investing activities | (1,872) | (627) | 9,122 |
Cash flows from financing activities: | |||
Proceeds from sale of common stock, net of underwriting discounts, commissions and offering costs | 34,400 | 44,722 | |
Proceeds from issuance of long-term debt | 40,000 | ||
Repayment of long-term debt | (30,000) | ||
Payment of debt financing costs | (3,460) | ||
Payment of initial public offering costs | (522) | ||
Proceeds from exercise of stock options | 19 | 547 | 175 |
Payment of withholding taxes related to stock-based compensation to employees | (157) | ||
Proceeds from issuance of common stock under the employee stock purchase plan | 50 | 38 | 34 |
Net cash provided by financing activities | 40,852 | 585 | 44,409 |
Effect of exchange rate on cash and cash equivalents | (144) | 11 | 17 |
Net (decrease) increase in cash and cash equivalents | (1,912) | (30,463) | 29,092 |
Cash and cash equivalents, beginning of year | 43,931 | 74,394 | 45,302 |
Cash and cash equivalents, end of year | 42,019 | 43,931 | 74,394 |
Supplemental disclosure of cash flow information: | |||
Cash paid during the period for interest | 3,394 | 2,933 | 2,980 |
Supplemental disclosures of noncash investing and financing activities: | |||
Property and equipment in accounts payable and accrued expenses and other current liabilities | 7 | 166 | 3 |
Issuance of common stock for early exercised stock options | 1 | 3 | |
Liability-classified stock-based compensation in accrued expenses and other current liabilities | $ 82 | ||
Reclassification of liability-classified stock-based compensation awards to equity-classified | $ 82 | ||
Operating lease ROU asset exchanged for operating lease liabilities | 1,376 | ||
Tenant improvement and deferred rent reclassified to operating lease liabilities | 380 | ||
Operating lease liabilities assumed for operating lease ROU assets | $ 1,756 |
Background
Background | 12 Months Ended |
Dec. 31, 2022 | |
Background | |
Background | (1) Background TELA Bio, Inc. (the “Company”) was incorporated in the state of Delaware on April 17, 2012 and wholly owns TELA Bio Limited, a company incorporated in the United Kingdom. The Company is commercial-stage medical technology company focused on providing innovative soft-tissue reconstruction solutions that optimize clinical outcomes by prioritizing the preservation and restoration of the patient’s own anatomy. OviTex Reinforced Tissue Matrix (“OviTex”), the Company’s first portfolio of products, addresses unmet needs in hernia repair and abdominal wall reconstruction by combining the benefits of biologic matrices and polymer materials while minimizing their shortcomings, at a cost-effective price. OviTex PRS Reinforced Tissue Matrix (“OviTex PRS”), the Company’s second portfolio of products, addresses unmet needs in plastic and reconstructive surgery. The Company’s principal corporate office and research facility is located in Malvern, Pennsylvania. The Company has been directly impacted by the COVID-19 pandemic since the onset of the pandemic in 2020. To date, among other impacts on the Company’s business related to the pandemic, physicians and their patients have been required by state mandates, or have chosen to, defer elective surgery procedures in which the Company’s products otherwise would be used. There remains uncertainty and lack of visibility regarding the Company’s near-term revenue growth prospects and product development plans due to the volatility in the frequency of surgical procedures using the Company’s products, including through labor and hospital staffing shortages and the allocation of hospital resources due to financial strain experienced during the COVID-19 pandemic. Although the Company continues to monitor developments related to hospital capacity and the volume of elective procedures, there is uncertainty regarding the pace to which surgical volumes will normalize to their pre-pandemic levels and the timing to address the backlog of deferred procedures. The full extent of the impact of the COVID-19 pandemic on the Company’s business, results of operations and financial condition, including revenue, expenses, manufacturing capability, supply chain integrity, staffing availability, research and development costs and employee-related compensation, will depend on future developments that are highly uncertain. |
Risks and Liquidity
Risks and Liquidity | 12 Months Ended |
Dec. 31, 2022 | |
Risks and Liquidity | |
Risks and Liquidity | (2) Risks and Liquidity The Company’s operations to date have focused on commercializing products, developing and acquiring technology and assets, business planning, raising capital and organization and staffing. The Company has incurred recurring losses and negative cash flows from operations since inception and has an accumulated deficit of $274.2 million as of December 31, 2022. The Company anticipates incurring additional losses until such time, if ever, it can generate sufficient revenue from its products to cover its expenses. In August 2022, the Company completed an underwritten public offering in which the Company issued and sold 4,600,000 shares of its common stock at a public offering price of $8.00 per share. The Company received net proceeds of $34.4 million after deducting underwriting discounts, commissions and other offering expenses. The operations of the Company are subject to certain risks and uncertainties including, among others, the uncertainty of product development, the impact of macroeconomic conditions, including the COVID-19 pandemic, general economic uncertainty, including as a result of inflationary pressures and the measures undertaken by various governments to address them, banking instability, geopolitical factors such as the war in Ukraine, technological uncertainty, commercial acceptance of any developed products, alternative competing technologies, dependence on collaborative partners, uncertainty regarding patents and proprietary rights, comprehensive government regulations, and dependence on key personnel. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2022 | |
Summary of Significant Accounting Policies | |
Summary of Significant Accounting Policies | (3) Summary of Significant Accounting Policies Basis of Presentation and Principals of Consolidation The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”). Any reference in these notes to applicable guidance is meant to refer to GAAP as found in the Accounting Standards Codification (“ASC”) and Accounting Standards Updates (“ASU”) promulgated by the Financial Accounting Standards Board (“FASB”). The consolidated financial statements include the accounts of TELA Bio, Inc. and its wholly owned subsidiary TELA Bio Limited. All intercompany accounts and transactions have been eliminated in consolidation. Use of Estimates The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and contingent liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. The most significant judgments are employed in estimates used to determine the recoverability of the carrying value of the Company’s inventory. As future events and their effects cannot be determined with precision, actual results may differ significantly from these estimates. Segments Operating segments are defined as components of an enterprise about which separate discrete information is available for evaluation by the chief operating decision maker, or decision-making group, in deciding how to allocate resources and in assessing performance. The Company views its operations and manages its business in one segment. Concentration of Risk Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash and cash equivalents. The Company places its cash with high-credit-quality financial institutions and primarily invests in money market funds. The Company has established guidelines relative to credit ratings and maturities that seek to maintain safety and liquidity. On March 10, 2023, the California Department of Financial Protection and Innovation closed Silicon Valley Bank (“SVB”) and appointed the FDIC as receiver. On March 12, 2023, the U.S. Department of the Treasury, the Federal Reserve and the FDIC released a joint statement confirming that all depositors of SVB would have access to all of their money after only one business day of closure, including funds held in uninsured deposit accounts. In addition, on March 10, 2023, the Bank of England (the “BOE”) announced that it intended to seek the placement of Silicon Valley Bank UK Limited (“SVBUK”), an affiliate of SVB, into a Bank Insolvency Procedure, which ultimately results in the acquisition of SVBUK by HSBC UK Bank Plc (“HSBC") on March 13, 2023. The BOE confirmed that all depositors’ money with SVBUK is safe and secure as a result of the transaction, and that operations at SVBUK would continue as normal. During the course of these events, a portion of the Company’s cash was held in accounts at SVB and SVBUK, with the remainder held at another high-credit-quality financial institution. We have recently established additional redundant accounts with another high-credit-quality financial institution to mitigate liquidity risk to our cash and cash equivalents from any further instability in the financial industry. As described in Note 11, the Company has licensed patents and other intellectual property from Aroa Biosurgery Ltd. (“Aroa”). As part of this agreement, Aroa is also the exclusive contract manufacturer of the Company’s OviTex portfolio of products. The inability of Aroa to fulfill supply requirements of the Company could materially impact future operating results. A change in the relationship with Aroa, or an adverse change in their business, could materially impact future operating results. Cash and Cash Equivalents The Company considers cash equivalents to be highly liquid investments with maturities of three months or less from the date of purchase. Cash equivalents consist of investments in a money market fund. The Company’s cash and cash equivalents are carried at fair value. Inventory Inventory consists of finished goods and is identified and tracked by lot and stated at the lower of cost or net realizable value, with cost being determined on a first-in, first-out basis. The Company periodically analyzes its inventory levels and writes down inventory that has become obsolete or that has a cost basis in excess of its expected net realizable value based on expected customer demand. As of December 31, 2022 and 2021, the Company had $2.3 million and $1.7 million, respectively, in finished goods consigned to others. Property and Equipment Property and equipment are stated at the aggregate cost incurred to acquire and place the asset in service. Expenditures for routine maintenance and repairs are charged to expense as incurred and costs of improvements and renewals are capitalized. Depreciation is provided over the estimated useful lives of the assets using the straight-line method. Intangible Assets Upfront payments and milestone payments due related to licenses or commercialization rights prior to future economic benefit being established are recorded as research and development expenses. Milestone payments due related to licenses or commercialization rights after future economic benefit is established are recorded as intangible assets. In 2022, 2021 and 2020, the Company recorded $0.8 million, $0.3 million and $0.3 million of amortization expense, respectively, related to intangible assets. At December 31, 2022, the remaining life of intangible assets was 6.6 years. The Company anticipates recognizing amortization expense of $0.4 million next five years Long-Lived Assets Long-lived assets, such as property and equipment and intangible assets, are reviewed for impairment whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable. If circumstances require a long-lived asset or asset group be tested for possible impairment, the Company first compares undiscounted cash flows expected to be generated by such asset or asset group to its carrying value. If the carrying value of the long-lived asset or asset group exceeds the undiscounted cash flows, an impairment is recognized to the extent the carrying value exceeds its fair value. Fair value is determined using various valuation techniques, including discounted cash flow models, quoted market values, and third-party independent appraisals, as considered necessary. No impairment losses were recognized during the years ended December 31, 2022, 2021 or 2020. Debt Issuance Costs Debt issuance costs incurred in connection with debt (Note 6) are amortized to interest expense over the term of the respective financing arrangement using the effective-interest method. Debt issuance costs, net of related amortization are deducted from the carrying value of the related debt. Revenue Recognition Under ASC Topic 606, Revenue from Contracts with Customers A significant portion of the Company’s revenue is generated from product shipped to a customer or from consigned inventory maintained at hospitals. Revenue from the sale of consigned products is recognized when control is transferred to the customer, which occurs at the time the product is used in a surgical procedure. For product that is not held on consignment, the Company recognizes revenue when control transfers to the customer which occurs at the time the product is shipped or delivered. For all of the Company’s customer contracts, the only identified performance obligation is providing the product to the customer. Revenue is recognized at the estimated net sales price which includes estimates of variable consideration. The Company enters into contracts with certain third-party payors for the payment of rebates with respect to the utilization of its products. These rebates are based on contractual percentages. The Company estimates and records rebates in the same period the related revenue is recognized, resulting in a reduction of product revenue. Payment terms with customers do not exceed one year and, therefore, the Company does not account for a financing component in its arrangements. There are no incremental costs of obtaining a contract that would rise to or enhance an asset other than product costs, which are a component of inventory. The Company expenses incremental costs of obtaining a contract with a customer (e.g., sales commissions) when incurred as the period of benefit is less than one year. Fees charged to customers for shipping are recognized as revenue. The following table presents revenue disaggregated (in thousands): Year ended December 31, 2022 2021 2020 OviTex $ 28,879 $ 22,990 $ 15,093 OviTex PRS 12,431 6,473 3,120 Other 108 — — Total revenue $ 41,418 $ 29,463 $ 18,213 Sales outside of the U.S. were $3.2 million or 8% of total revenue for the year ended December 31, 2022 and immaterial for the years ended December 31, 2021 and 2020. Research and Development Research and development costs are charged to expense as incurred and consist primarily of salaries, benefits, and other related costs, including stock-based compensation for personnel serving in the research and development functions as well as costs incurred with Aroa under development agreements related to technology transfer, laboratory materials and supplies. At the end of the reporting period, the Company compares payments made to third-party service providers to the estimated progress toward completion of the research or development objectives. Such estimates are subject to change as additional information becomes available. Depending on the timing of payments to the service providers and the progress that the Company estimates has been made as a result of the service provided, the Company may record net prepaid or accrued expense relating to these costs. Costs incurred in obtaining patent and other intellectual property licenses or milestone payments from license agreements for which there are no alternative future uses are charged to expense as incurred. Stock-Based Compensation The Company accounts for stock-based awards in accordance with provisions of ASC Topic 718, Compensation—Stock Compensation Income Taxes Income taxes are accounted for under the asset-and-liability method as required by ASC Topic 740, Income Taxes ASC Subtopic 740-10, Accounting for Uncertainty of Income Taxes Fair value of financial instruments Fair value is the price that could be received to sell an asset or paid to transfer a liability in an orderly transaction among market participants. Fair value determination in accordance with applicable accounting guidance requires that a number of significant judgments are made. Additionally, fair value is used on a nonrecurring basis to evaluate assets for impairment or as required for disclosure purposes by applicable accounting guidance on disclosures about fair value of financial instruments. Depending on the nature of the assets and liabilities, various valuation techniques and assumptions are used when estimating fair value. The carrying amounts of certain of the Company’s financial instruments, including cash and cash equivalents, accounts receivable, other assets, and accounts payable are shown at cost, which approximates fair value due to the short-term nature of these instruments. Due to the related-party relationship of the OrbiMed Credit Facility (Note 6), it was impractical to determine the fair value of the debt. The Company follows the provisions of ASC Topic 820, Fair Value Measurement ● Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities. ● Level 2: Quoted prices in markets that are not active, or inputs which are observable, either directly or indirectly, for substantially the full term of the asset or liabilities. ● Level 3: Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e., supported by little or no market activity). The following fair value hierarchy table presents information about each major category of the Company’s financial assets and liabilities measured at fair value on a recurring basis (in thousands): Fair value measurement at reporting date using Quoted prices in active markets Significant other Significant for identical observable unobservable assets inputs inputs (Level 1) (Level 2) (Level 3) December 31, 2022: Cash equivalents – money market fund $ 39,010 $ — $ — December 31, 2021: Cash equivalents – money market fund $ 41,396 $ — $ — Net loss per share Basic and diluted net loss per common share is determined by dividing net loss by the weighted-average shares of common stock outstanding during the reporting period. In periods in which the Company reports a net loss, diluted net loss per share is the same as basic net loss per share since dilutive shares are not assumed to have been issued if their effect is antidilutive. Therefore, the weighted-average shares used to calculate both basic and diluted loss per share are the same. The following potentially dilutive securities have been excluded from the computation of diluted weighted-average shares outstanding, as they would be antidilutive. Year ended December 31, 2022 2021 2020 Stock options (including shares subject to repurchase) 2,071,848 1,706,438 1,498,390 Unvested restricted stock units 311,991 163,043 — Common stock warrants 88,556 88,556 88,556 Total 2,472,395 1,958,037 1,586,946 Recently Issued Accounting Pronouncements The Company is an emerging growth company, as defined in the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”). Under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards issued subsequent to the enactment of the JOBS Act, until such time as those standards apply to private companies. The Company has elected to use this extended transition period for complying with new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date that it (i) is no longer an emerging growth company or (ii) affirmatively and irrevocably opts out of the extended transition period provided in the JOBS Act. As a result, these consolidated financial statements may not be comparable to companies that comply with the new or revised accounting pronouncements as of public company effective dates. In February 2016, the FASB issued ASU No. 2016-02, Leases In June 2016, the FASB issued ASU No. 2016-13, Measurement of Credit Losses on Financial Instruments In August 2020, the FASB issued ASU No. 2020-06, Debt - Debt with Conversion and Other Options and Derivatives and Hedging - Contracts in Entity’s Own Equity (“ . |
Property and Equipment
Property and Equipment | 12 Months Ended |
Dec. 31, 2022 | |
Property and Equipment | |
Property and Equipment | (4) Property and Equipment Property and equipment consisted of the following (in thousands): December 31, Asset description Estimated useful lives 2022 2021 Lab equipment 5 Years $ 2,635 $ 2,352 Furniture and fixtures 5 Years 274 242 Computer equipment and software 3 Years 604 468 Leasehold improvements Lesser of useful life or lease term 2,309 1,881 Total 5,822 4,943 Less accumulated depreciation and amortization (4,140) (3,757) Property and equipment, net $ 1,682 $ 1,186 The cost of property and equipment at both December 31, 2022 and 2021 includes $0.2 million of equipment located at Aroa. Depreciation expense was $0.4 million, $0.2 million and $0.2 million for the years ended December 31, 2022, 2021 and 2020, respectively. |
Accrued Expenses and Other Curr
Accrued Expenses and Other Current Liabilities | 12 Months Ended |
Dec. 31, 2022 | |
Accrued Expenses and Other Current Liabilities | |
Accrued Expenses and Other Current Liabilities | (5) Accrued Expenses and Other Current Liabilities Accrued expenses and other current liabilities consisted of the following (in thousands): December 31, December 31, 2022 2021 Compensation and related benefits $ 6,420 $ 4,976 Third-party and professional fees 2,563 2,233 Amounts due to contract manufacturer 1,263 842 Current portion of operating lease liabilities 340 — Research and development expenses 137 31 Other 146 79 Total accrued expenses and other current liabilities $ 10,869 $ 8,161 |
Debt
Debt | 12 Months Ended |
Dec. 31, 2022 | |
Debt | |
Debt | (6) Debt Long-term debt consisted of the following (in thousands): December 31, 2022 2021 MidCap Term Loan $ 40,000 $ — OrbiMed Term Loan (related party) — 30,000 End of term charge 2,000 3,000 Unamortized end of term charge and issuance costs (2,084) (1,509) Long-term debt $ 39,916 $ 31,491 MidCap Term Loan On May 26, 2022, the Company entered into the Credit and Security Agreement (the “MidCap Credit Agreement”) with MidCap Financial Trust, as agent (the “Agent”), and certain lender parties thereto. The MidCap Credit Agreement provides for up to $50.0 million in term loans (the “MidCap Term Loans”), consisting of a $40.0 million Tranche 1 (“Tranche 1”) and a $10.0 million Tranche 2 (“Tranche 2”). Upon closing, the Company borrowed $40.0 million of Tranche 1 and used a portion of the proceeds to repay borrowings under the OrbiMed Credit Facility (described below) and intends to use the remaining proceeds to fund operations and other general corporate purposes. The Company will be eligible to borrow Tranche 2 at the Company’s option upon meeting certain conditions, including, but not limited to, reaching $65.0 million of net product revenue over the preceding four quarters by fiscal year end 2023. Pursuant to the MidCap Credit Agreement, the Company provided a first priority security interest in all existing and future acquired assets, including intellectual property, owned by the Company. The MidCap Credit Agreement contains certain covenants that limit the Company’s ability to engage in certain transactions that may be in the Company’s long-term best interests, including the incurrence of additional indebtedness, effecting certain corporate changes, making certain investments, acquisitions or dispositions and paying dividends. The MidCap Credit Agreement also contains customary indemnification obligations and customary events of default, including, among other things, (i) non-payment, (ii) breach of warranty, (iii) non-performance of covenants and obligations, (iv) default on other indebtedness, (v) judgments, (vi) change of control, (vii) bankruptcy and insolvency, (viii) impairment of security, (ix) key permit events, (x) termination of a pension plan, (xi) regulatory matters, (xii) material adverse effect and (xiii) breach of material contracts. In addition, the Company must maintain minimum net revenue levels tested quarterly. In the event of default under the MidCap Credit Agreement, the Company would be required to pay interest on principal and all other due and unpaid obligations at the current rate in effect plus 2%. The MidCap Term Loans mature on May 1, 2027 and bear interest at a rate equal to 6.25% plus the greater of one-month Term SOFR (as defined in the MidCap Credit Agreement) or 1.0%. The Company is required to make 36 monthly interest payments beginning on June 1, 2022 (the “Interest-Only Period”). If the Company is in covenant compliance at the end of the Interest-Only Period, the Company will have the option to extend the Interest-Only Period by 12 months to 48 monthly interest payments, followed by 12 months of straight-line amortization, with the entire principal payment due at maturity. If the Company is not in covenant compliance at the end of the Interest-Only Period, the Company is required to make 24 months of straight-line amortization payments, with the entire principal amount due at maturity. Subject to certain limitations, the MidCap Term Loans have a prepayment fee equal to 3.0% of the prepaid principal amount for the first year following the closing date of the MidCap Term Loans, 2.0% of the prepaid principal amount for the second year following the closing date and 1.0% of the prepaid principal amount for the third year following the closing date and thereafter. The Company is also required to pay an exit fee at the time of maturity or prepayment event equal to 5% of all principal borrowings (the “End of Term Charge”) (or in the event of a prepayment event, the amount of principal being prepaid). Interest expense associated with the MidCap Credit Facility recorded for the year ended December 31, 2022 was $2.6 million, of which $0.4 million was related to the amortization of debt issuance costs. OrbiMed Term Loan (Related Party) In November 2018, the Company entered into the OrbiMed Credit Facility with OrbiMed, a related party as the lender is affiliated with a stockholder of the Company, which consisted of up to $35.0 million in term loans (the “OrbiMed Term Loans”). The OrbiMed Term Loans consisted of two tranches, a $30.0 million Tranche 1 (“First Tranche”) and a $5.0 million Tranche 2 (“Second Tranche”). In November 2018, the Company borrowed $30.0 million of the First Tranche. The Company elected not to borrow the Second Tranche prior to its expiration on December 31, 2019. On May 26, 2022, the Company entered into the MidCap Credit Agreement and upon closing used a portion of the proceeds to repay all borrowings under the OrbiMed Credit Facility. The OrbiMed Term Loan bore interest at a rate equal to 7.75% plus the greater of one-month LIBOR or 2.0% until the aggregate principal, interest and End of Term Charge of $3.0 million were paid with part of the proceeds received from the MidCap Credit Agreement. As a result of these payments, a $1.2 million loss on extinguishment was recorded during the year ended December 31, 2022. Interest expense associated with the OrbiMed Credit Facility recorded for the year ended December 31, 2022, was $1.5 million, of which $0.3 million was related to the amortization of debt issuance costs. Interest expense associated with the OrbiMed Credit Facility recorded for the year ended December 31, 2021, was $3.6 million, of which $0.7 million was related to the amortization of debt issuance costs. Interest expense associated with the OrbiMed Credit Facility recorded for the year ended December 31, 2020, was $3.6 million, of which $0.6 million was related to the amortization of debt issuance costs. |
Stockholders' Equity
Stockholders' Equity | 12 Months Ended |
Dec. 31, 2022 | |
Stockholders' Equity | |
Stockholders' Equity | (7) Stockholders’ Equity Public Stock Offerings In June 2020, the Company sold 3,000,000 shares of its common stock at a public offering price of $16.00 per share. The Company received net proceeds of $44.7 million after deducting underwriting discounts, commissions and other offering expenses. In December 2020, the Company entered into an Equity Distribution Agreement (the “Equity Agreement”) with Piper Sandler & Co (“Piper”) in connection with the establishment of an at-the-market offering program under which it may sell up to an aggregate of $50.0 million of shares of the Company’s common stock, from time to time through Piper as sales agent. No sales were made under the Equity Agreement during the years ended December 31, 2022, 2021 or 2020. In August 2022, the Company completed an underwritten public offering in which the Company issued and sold 4,600,000 shares of its common stock at a public offering price of $8.00 per share. The Company received net proceeds of $34.4 million after deducting underwriting discounts, commissions and other offering expenses. Warrants The Company had the following warrants outstanding at December 31, 2022: Exercise Expiration Outstanding price dates Common stock warrants 8,379 $ 28.65 2028 Common stock warrants 80,177 28.65 2027 88,556 |
Stock-Based Compensation
Stock-Based Compensation | 12 Months Ended |
Dec. 31, 2022 | |
Stock-Based Compensation | |
Stock-Based Compensation | (8) Stock-Based Compensation The Company has two equity incentive plans: the 2012 Stock Incentive Plan and the Amended and Restated 2019 Equity Incentive Plan. New awards can only be granted under the Amended and Restated 2019 Equity Incentive Plan (the “Plan”). At December 31, 2022, 1,427,772 shares of common stock were available for future issuances under the Plan. The Plan is subject to an annual increase, subject to prior approval by the Company’s board of directors, equal to the lesser of (i) 432,442 shares, (ii) 4% of the shares outstanding on the last day of the immediately preceding fiscal year and (iii) such smaller number of shares as determined by the board of directors. The Plan provides for the grant of incentive stock options, nonqualified stock options, restricted stock awards, restricted stock units and/or stock appreciation rights to employees, directors, and other persons, as determined by the Company’s board of directors. The Company’s stock options vest based on the terms in each award agreements and generally vest over four years and have a term of 10 years. The Company estimates forfeitures that it expects will occur and adjusts expense for actual forfeitures in the periods they occur. The Company measures employee and nonemployee stock-based awards at grant-date fair value and records compensation expense ratably over the vesting period of the award. The Company recorded stock-based compensation expense in the following expense categories of its accompanying consolidated statements of operations and comprehensive loss (in thousands): Year ended December 31, 2022 2021 2020 Sales and marketing $ 1,373 $ 961 $ 696 General and administrative 2,029 1,542 1,030 Research and development 587 1,158 332 Total stock‑based compensation $ 3,989 $ 3,661 $ 2,058 The following table summarizes stock option activity for the Plan: Weighted average Weighted remaining Number of average exercise contractual term shares price per share (years) Outstanding at January 1, 2020 1,420,942 $ 10.35 Granted 175,086 15.03 Exercised (27,783) 6.29 Canceled/forfeited (70,037) 12.41 Outstanding at December 31, 2020 1,498,208 $ 10.87 Granted 468,000 14.80 Exercised (77,154) 7.08 Canceled/forfeited (182,645) 13.08 Outstanding at December 31, 2021 1,706,409 11.88 Granted 450,410 10.24 Exercised (3,563) 5.51 Canceled/forfeited (81,408) 13.13 Outstanding at December 31, 2022 2,071,848 $ 11.49 7.16 Vested and expected to vest at December 31, 2022 2,022,232 $ 11.48 7.12 Exercisable at December 31, 2022 1,237,751 $ 11.14 6.16 Included in outstanding options at December 31, 2022, were 381,125 stock options granted outside of the Plan. These grants were made pursuant to the Nasdaq inducement grant exception in accordance with Nasdaq listing rule 5635(c)(4). At December 31, 2022, the aggregate intrinsic value of outstanding options and exercisable options was $3.0 million and $2.3 million, respectively. The 2012 Stock Incentive Plan provided the holders of stock options an election to early exercise prior to vesting. The Company had the right, but not the obligation, to repurchase early exercised options without transferring any appreciation to the employee if the employee terminates employment before the end of the original vesting period. The repurchase price is the lesser of the original exercise price or the then fair value of the common stock. At December 31, 2022, all early exercised options had vested. The following table summarizes activity relating to early exercise of stock options: Number of shares Unvested balance at January 1, 2020 755 Vested (306) Forfeited (267) Unvested balance at December 31, 2020 182 Vested (153) Unvested balance at December 31, 2021 29 Vested (29) Unvested balance at December 31, 2022 — The weighted average grant-date fair value per share of options granted was $6.55, $8.66 and $8.13 for the years ended December 31, 2022, 2021 and 2020, respectively. The aggregate intrinsic value of options exercised was $16,000, $0.4 million and $0.2 million for the years ended December 31, 2022, 2021 and 2020, respectively. As of December 31, 2022, the total unrecognized compensation expense related to unvested employee and nonemployee stock option awards was $5.1 million, which is expected to be recognized in expense over a weighted-average period of approximately 2.5 years. Estimating Fair Value of Stock Options The fair value of each grant of stock options was determined by the Company using the methods and assumptions discussed below. Certain of these inputs are subjective and generally require judgment to determine. Expected term Expected volatility Risk-free interest rate Expected dividend The fair value of each option was estimated on the date of grant using the weighted average assumptions in the table below: Year ended December 31, 2022 2021 2020 Expected dividend yield — — — Expected volatility 69.6 % 63.9 % 59.1 % Risk‑free interest rate 2.55 % 0.99 % 0.87 % Expected term (in years) 6.20 6.15 5.98 Restricted Stock Units The Company’s restricted stock units (“RSUs”) vest based on the terms in each award agreement and generally vest over four years. The following table summarizes restricted stock units for the Plan: Number of shares Outstanding at January 1, 2021 — Granted 194,232 Vested (12,000) Canceled/forfeited (19,189) Outstanding at December 31, 2021 163,043 Granted 197,950 Vested (40,783) Canceled/forfeited (8,219) Outstanding at December 31, 2022 311,991 Included in outstanding RSUs at December 31, 2022, were 7,500 RSUs granted outside of the Plan. These grants were made pursuant to the Nasdaq inducement grant exception in accordance with Nasdaq listing rule 5635(c)(4). The weighted average grant-date fair value per RSU granted was $11.21 and $16.57 during the year ended December 31, 2022 and 2021, respectively. The aggregate intrinsic value of RSUs outstanding was $3.6 million and $2.1 million at December 31, 2022 and 2021, respectively. The total unrecognized compensation expense at December 31, 2022 related to RSUs was $2.6 million, which is expected to be recognized in expense over a weighted-average period of approximately 2.6 years. |
Employee Benefit Plans
Employee Benefit Plans | 12 Months Ended |
Dec. 31, 2022 | |
Employee Benefit Plans | |
Employee Benefit Plans | (9) Employee Benefit Plans 401(k) Defined Contribution Plan The Company sponsors a 401(k) defined-contribution plan covering all employees. Participants are permitted to contribute up to 100% of their eligible annual pretax compensation up to an established federal limit on aggregate participant contributions. Discretionary contributions made by the Company, if any, are determined annually by the board of directors. Effective January 1, 2020, the Company matched 50% of employees’ contributions up to 6%, subject to a maximum annual amount. The Company’s contributions were $0.4 million, $0.3 million and $0.2 million for the years ended December 31, 2022, 2021 and 2020, respectively. The match was suspended from April to August 2020 due to COVID-19. Participants are immediately vested in their own contributions to the plan and are fully vested in discretionary profit sharing made by the Company after three years of service. 2019 Employee Stock Purchase Plan In November 2019, the Company adopted the 2019 Employee Stock Purchase Plan (the “ESPP”). At December 31, 2022, 421,065 shares were available for future issuance under the ESPP. The ESPP is subject to an annual increase, subject to prior approval by the Company’s board of directors, equal to the least of (i) 107,887 shares of common stock, (ii) 1% of the shares outstanding on the final day of the immediately preceding calendar year, and (iii) such smaller number of shares as determined by the board of directors. The ESPP provides the opportunity to purchase the Company’s common stock at a 15% discount to the market price through payroll deductions. As of December 31, 2022, 2021 and 2020, 4,523, 3,163 and 2,797 shares, respectively, have been issued under the ESPP. |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2022 | |
Income Taxes | |
Income Taxes | (10) Income Taxes The Company has incurred losses since inception. Deferred tax assets and liabilities are determined based on the differences between the financial statement carrying amounts and tax bases of assets and liabilities using enacted tax rates in effect for years in which differences are expected to reverse. Significant components of the Company’s deferred tax assets for federal income taxes consisted of the following (in thousands): December 31, 2022 2021 Deferred tax assets Net operating loss carryforwards $ 55,091 $ 47,737 Research and development credits 623 623 Lease liability 387 — Accrued expenses and other 4,425 1,356 Inventory reserve 372 171 Gross deferred tax asset 60,898 49,887 Deferred tax liabilities Depreciation and amortization (435) (89) Right of use asset (302) — Gross deferred tax liability (737) (89) Net deferred tax asset before valuation allowance 60,161 49,798 Valuation allowance (60,161) (49,798) Net deferred tax asset $ — $ — The Company does not have unrecognized tax benefits as of December 31, 2022 and 2021. The Company recognizes interest and penalties accrued on any unrecognized tax benefits as a component of income tax expense. The Company’s net operating loss (“NOL”) carryforwards for federal and state income tax purposes consisted of the following (in thousands): December 31, 2022 2021 NOL carryforwards Federal $ 212,314 $ 181,443 State 173,472 151,488 The NOL carryforwards begin expiring in 2032 for federal purposes and in 2026 for state income tax purposes yet $100.7 million of the federal NOL carryforwards have no expiration. The Company recorded a valuation allowance on the deferred tax assets as of December 31, 2022 and 2021 because of the uncertainty of their realization. The valuation allowance increased by $10.4 million and $8.1 million for the years ended December 31, 2022 and 2021, respectively, mainly due to losses incurred. Utilization of the net operating losses and general business tax credits carryforwards may be subject to a substantial limitation under Sections 382 and 383 of the Internal Revenue Code of 1986, as amended, if changes in ownership of the company have occurred previously or occur in the future. Ownership changes may limit the amount of net operating losses and general business tax credits carryforwards that can be utilized annually to offset future taxable income and tax, respectively. In general, an ownership change, as defined by Section 382, results from transactions increasing the ownership of 5% shareholders in the stock of a corporation by more than 50 percentage points over a three-year period. If the Company experiences a Section 382 ownership change, the tax benefits related to the NOL carryforwards may be further limited or lost. The Company has not performed an analysis under Section 382 and cannot predict or otherwise determine whether there would be any limitation to the amount of net operating losses and general business tax credits carryforwards that can be utilized. A reconciliation of income tax benefit at the statutory federal income tax rate and as reflected in the consolidated financial statements is as follows: Year ended December 31, 2022 2021 2020 Rate reconciliation Federal tax benefit at statutory rate (21.0) % (21.0) % (21.0) % State rate, net of federal benefit (3.1) (3.5) (4.2) Permanent differences 0.6 0.2 0.6 Research and development — 0.4 0.7 Change in valuation allowance 23.4 24.2 24.0 Other 0.1 (0.3) (0.1) Total tax provision — % — % — % The Company files income tax returns in the U.S. federal jurisdiction, various state jurisdictions and the United Kingdom. Tax years 2019 and forward remain open for examination for federal and the Company’s more significant state tax jurisdictions. Carryforward attributes from prior years may be adjusted upon examination by taxing authorities if used in an open period. Many governments have enacted or are currently contemplating economic stimulus and financial aid measures. Many of these measures include deferring the due dates for tax payments, including both income tax and other taxes. The Coronavirus Aid, Relief, and Economic Security Act ("CARES Act") was enacted on March 27, 2020 in the United States to address the economic impacts of the COVID-19 pandemic. The CARES Act includes corporate income tax, payroll tax, and other provisions. While the Company may receive financial, tax, or other benefits under the bill, this legislation did not impact the Company during the year ended December 31, 2020. During the year ended December 31, 2021, the Company claimed an employee retention payroll tax credit of $0.5 million for certain employment taxes. |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2022 | |
Commitments and Contingencies [Abstract] | |
Commitments and Contingencies | (11) Commitments and Contingencies Legal Proceedings From time to time, the Company may be a party to various other lawsuits, claims, and other legal proceedings that arise in the ordinary course of its business. While the outcomes of these matters are uncertain, management does not expect that the ultimate costs to resolve these matters will have a material adverse effect on the Company’s financial position, results of operations, or cash flows. Agreements with Aroa In August 2012, the Company entered into a License, Product Development, and Supply Umbrella Agreement (“Aroa Agreement”) with Aroa. The Aroa Agreement provides the Company a license to patent rights and other intellectual property related to Aroa’s products and technologies for use in certain indications and expires on the expiration of the last patent covering the products (currently March 9, 2031). The Company has the right to extend the term of the agreement by an additional 10 years following the expiration of the last patent covering the products on commercially reasonable terms to be negotiated by the parties. This agreement initially limited the Company’s license rights to the U.S. but was subsequently amended in March 2013 to include certain countries in Europe including the United Kingdom and members of the European Union and certain former Union of Soviet Socialist Republic satellite nations. The Aroa Agreement required payments aggregating up to $4.0 million upon the achievement of U.S. and European cumulative product sales targets. The Company paid $1.0 million to Aroa in 2018 related to one of the cumulative product sales targets and the remaining $2.0 million in 2019. The Company paid $1.0 million in 2022 related to the sales milestone payments in the European territory. Other key terms of the amended Aroa agreement in addition to those disclosed above are as follows: ● The transfer price for product produced by Aroa is 200% of Aroa’s cost of goods sold. The transfer price and the quarterly true-up amount continued to equal 27% of Company’s net sales of licensed products. Upon a change in control of the Company (as defined in the amended agreement), the annual minimum amounts will be extended for a sixth year with a $5.0 million minimum amount for the North American territory and $1.0 million minimum amount for the European territory. If a change in control of the Company occurs prior to the first product launch in the applicable territory, then the annual minimum requirements shall commence upon such change in control. If the make whole payments, if any, are not made by the Company after a notice and cure period, then the license will convert to a nonexclusive basis in the territory for which the payment was required but not made. ● Provisions exist for the Company to step in and operate Aroa’s plant if a supply failure occurs and is not cured within a set timeframe. Under the amended agreement, the criteria for a supply failure was modified to mean a failure by Aroa to timely supply, during any consecutive 60-day period, at least 75% of the products ordered by the Company under binding purchase orders. During the period that the Company steps in and assumes manufacturing responsibility, it shall not be required to purchase product from or pay transfer prices to Aroa, the annual minimums shall be proportionately reduced to reflect the lack of supply responsibility by Aroa and the Company shall pay a royalty of 6% of net sales in lieu of 27% of net sales of the licensed products. The Company expects to enter into similar milestone-based agreements with its strategic partner for both product territories and new products in order to expand and extend its product portfolio. As of December 31, 2022, the Company had $1.0 million in purchase commitments with Aroa, $20.7 million in commitments with certain other suppliers to maintain exclusivity rights over time and $2.2 million milestone payments related to certain research and development arrangements which are currently deemed not probable as the timing and likelihood of such payments are not known with certainty. Other Commitments In November 2021, the Company entered into an exclusive distribution agreement with Next Science, a medical technology company, granting the Company exclusive rights to sell and market Next Science’s proprietary antimicrobial surgical wash in the U.S. plastic reconstructive surgery market. To maintain exclusivity, the Company had purchase commitments and annual license fees over a ten-year period. In April 2022, the Company entered into an exclusive development and distribution partnership for Collagen Matrix, Inc.’s proprietary fibrillar collagen pack in the U.S. To maintain exclusivity, the Company has purchase commitments of $20.7 million over the remaining nine-year period. Employment Agreements The Company entered into employment agreements with key personnel providing for compensation and severance in certain circumstances, as defined in the respective employment agreements. Leases The Company leases office and laboratory space in Malvern, Pennsylvania under a noncancelable lease (the “Malvern Lease”). The Malvern Lease, which was concluded to be an operating lease, was amended in December 2020 to extend the term of the lease from May 2021 to May 2028. The Malvern Lease has annual scheduled payment increases and provides the Company a renewal option for an additional term of 60 months at the end of the lease term. The Company evaluates renewal options at lease inception and on an ongoing basis and includes renewal options that it is reasonably certain to exercise in its expected lease terms when classifying leases and measuring lease liabilities. As the Company is not reasonably certain to exercise the renewal option, the additional 60-month term has been excluded. On January 1, 2022 and upon adoption of ASU 2016-02, the Company recorded an operating lease liability of $1.8 million and an operating lease ROU asset of $1.4 million related to the Malvern Lease. The Company also eliminated approximately $0.4 million of deferred rent and tenant allowance liabilities as of January 1, 2022 as these components are reflected as a reduction in the operating lease ROU asset. Operating lease leasehold improvements are depreciated over the lesser of the useful lives of the leasehold improvements or the lease term. The tenant allowance was historically amortized over the initial, non-cancelable term of the Malvern Lease. The Company's lease does not provide an implicit rate, and therefore, the Company uses its incremental borrowing rate as the discount rate when measuring operating lease liabilities. The incremental borrowing rate represents an estimate of the interest rate the Company would incur at lease commencement to borrow an amount equal to the lease payments on a collateralized basis over the term of a lease. The Company used an incremental borrowing rate of 9.75% to discount the Malvern Lease payments included in the operating lease liabilities recognized upon adoption of ASU 2016-02. The Company recognized $0.3 million of lease cost during the year ended December 31, 2022. Cash paid for amounts included in the measurement of operating lease liabilities was $0.3 million for the year ended December 31, 2022, and this amount is included in operating activities in the consolidated statements of cash flows. As of December 31, 2022, the remaining lease term for the Malvern Lease is 5.5 years. The following table reconciles the undiscounted future minimum lease payments (displayed in aggregate by year) under non-cancelable operating leases with terms of more than one year to the total operating lease liabilities recognized on the consolidated balance sheets as of December 31, 2022 (in thousands): 2023 $ 358 2024 366 2025 375 2026 383 2027 392 Thereafter 165 Total undiscounted future minimum lease payments $ 2,039 Less imputed interest (468) Total operating lease liabilities $ 1,571 At December 31, 2021, the Company’s future minimum lease payments under non-cancelable operating leases for the five years ending December 31, 2022 through 2026 and thereafter were as follows: $0.3 million, $0.4 million, $0.4 million, $0.4 million, $0.4 million and $0.5 million, respectively. As of December 31, 2022, $0.3 million representing the current portion of operating lease liabilities is included in accrued expenses and other current liabilities other long-term liabilities in the consolidated balance sheets. |
Related-Party Transactions
Related-Party Transactions | 12 Months Ended |
Dec. 31, 2022 | |
Related-Party Transactions | |
Related-Party Transactions | (12) Related-Party Transactions On November 16, 2018, the Company entered into a senior secured term loan facility with OrbiMed, an entity affiliated with an owner of a material amount of the Company’s outstanding voting securities. The terms of the debt and related components are described in more detail in Note 6. On May 26, 2022, the Company entered into the MidCap Credit Agreement and upon closing used a portion of the proceeds to repay all borrowings under the OrbiMed Credit Facility, and terminated the OrbiMed Credit Facility. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2022 | |
Summary of Significant Accounting Policies | |
Basis of Presentation and Principals of Consolidation | Basis of Presentation and Principals of Consolidation The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”). Any reference in these notes to applicable guidance is meant to refer to GAAP as found in the Accounting Standards Codification (“ASC”) and Accounting Standards Updates (“ASU”) promulgated by the Financial Accounting Standards Board (“FASB”). The consolidated financial statements include the accounts of TELA Bio, Inc. and its wholly owned subsidiary TELA Bio Limited. All intercompany accounts and transactions have been eliminated in consolidation. |
Use of Estimates | Use of Estimates The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and contingent liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. The most significant judgments are employed in estimates used to determine the recoverability of the carrying value of the Company’s inventory. As future events and their effects cannot be determined with precision, actual results may differ significantly from these estimates. |
Segments | Segments Operating segments are defined as components of an enterprise about which separate discrete information is available for evaluation by the chief operating decision maker, or decision-making group, in deciding how to allocate resources and in assessing performance. The Company views its operations and manages its business in one segment. |
Concentration of Risk | Concentration of Risk Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash and cash equivalents. The Company places its cash with high-credit-quality financial institutions and primarily invests in money market funds. The Company has established guidelines relative to credit ratings and maturities that seek to maintain safety and liquidity. On March 10, 2023, the California Department of Financial Protection and Innovation closed Silicon Valley Bank (“SVB”) and appointed the FDIC as receiver. On March 12, 2023, the U.S. Department of the Treasury, the Federal Reserve and the FDIC released a joint statement confirming that all depositors of SVB would have access to all of their money after only one business day of closure, including funds held in uninsured deposit accounts. In addition, on March 10, 2023, the Bank of England (the “BOE”) announced that it intended to seek the placement of Silicon Valley Bank UK Limited (“SVBUK”), an affiliate of SVB, into a Bank Insolvency Procedure, which ultimately results in the acquisition of SVBUK by HSBC UK Bank Plc (“HSBC") on March 13, 2023. The BOE confirmed that all depositors’ money with SVBUK is safe and secure as a result of the transaction, and that operations at SVBUK would continue as normal. During the course of these events, a portion of the Company’s cash was held in accounts at SVB and SVBUK, with the remainder held at another high-credit-quality financial institution. We have recently established additional redundant accounts with another high-credit-quality financial institution to mitigate liquidity risk to our cash and cash equivalents from any further instability in the financial industry. As described in Note 11, the Company has licensed patents and other intellectual property from Aroa Biosurgery Ltd. (“Aroa”). As part of this agreement, Aroa is also the exclusive contract manufacturer of the Company’s OviTex portfolio of products. The inability of Aroa to fulfill supply requirements of the Company could materially impact future operating results. A change in the relationship with Aroa, or an adverse change in their business, could materially impact future operating results. |
Cash and Cash Equivalents | Cash and Cash Equivalents The Company considers cash equivalents to be highly liquid investments with maturities of three months or less from the date of purchase. Cash equivalents consist of investments in a money market fund. The Company’s cash and cash equivalents are carried at fair value. |
Inventory | Inventory Inventory consists of finished goods and is identified and tracked by lot and stated at the lower of cost or net realizable value, with cost being determined on a first-in, first-out basis. The Company periodically analyzes its inventory levels and writes down inventory that has become obsolete or that has a cost basis in excess of its expected net realizable value based on expected customer demand. As of December 31, 2022 and 2021, the Company had $2.3 million and $1.7 million, respectively, in finished goods consigned to others. |
Property and Equipment | Property and Equipment Property and equipment are stated at the aggregate cost incurred to acquire and place the asset in service. Expenditures for routine maintenance and repairs are charged to expense as incurred and costs of improvements and renewals are capitalized. Depreciation is provided over the estimated useful lives of the assets using the straight-line method. |
Intangible Assets | Intangible Assets Upfront payments and milestone payments due related to licenses or commercialization rights prior to future economic benefit being established are recorded as research and development expenses. Milestone payments due related to licenses or commercialization rights after future economic benefit is established are recorded as intangible assets. In 2022, 2021 and 2020, the Company recorded $0.8 million, $0.3 million and $0.3 million of amortization expense, respectively, related to intangible assets. At December 31, 2022, the remaining life of intangible assets was 6.6 years. The Company anticipates recognizing amortization expense of $0.4 million next five years |
Long-Lived Assets | Long-Lived Assets Long-lived assets, such as property and equipment and intangible assets, are reviewed for impairment whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable. If circumstances require a long-lived asset or asset group be tested for possible impairment, the Company first compares undiscounted cash flows expected to be generated by such asset or asset group to its carrying value. If the carrying value of the long-lived asset or asset group exceeds the undiscounted cash flows, an impairment is recognized to the extent the carrying value exceeds its fair value. Fair value is determined using various valuation techniques, including discounted cash flow models, quoted market values, and third-party independent appraisals, as considered necessary. No impairment losses were recognized during the years ended December 31, 2022, 2021 or 2020. |
Debt Issuance Costs | Debt Issuance Costs Debt issuance costs incurred in connection with debt (Note 6) are amortized to interest expense over the term of the respective financing arrangement using the effective-interest method. Debt issuance costs, net of related amortization are deducted from the carrying value of the related debt. |
Revenue Recognition | Revenue Recognition Under ASC Topic 606, Revenue from Contracts with Customers A significant portion of the Company’s revenue is generated from product shipped to a customer or from consigned inventory maintained at hospitals. Revenue from the sale of consigned products is recognized when control is transferred to the customer, which occurs at the time the product is used in a surgical procedure. For product that is not held on consignment, the Company recognizes revenue when control transfers to the customer which occurs at the time the product is shipped or delivered. For all of the Company’s customer contracts, the only identified performance obligation is providing the product to the customer. Revenue is recognized at the estimated net sales price which includes estimates of variable consideration. The Company enters into contracts with certain third-party payors for the payment of rebates with respect to the utilization of its products. These rebates are based on contractual percentages. The Company estimates and records rebates in the same period the related revenue is recognized, resulting in a reduction of product revenue. Payment terms with customers do not exceed one year and, therefore, the Company does not account for a financing component in its arrangements. There are no incremental costs of obtaining a contract that would rise to or enhance an asset other than product costs, which are a component of inventory. The Company expenses incremental costs of obtaining a contract with a customer (e.g., sales commissions) when incurred as the period of benefit is less than one year. Fees charged to customers for shipping are recognized as revenue. The following table presents revenue disaggregated (in thousands): Year ended December 31, 2022 2021 2020 OviTex $ 28,879 $ 22,990 $ 15,093 OviTex PRS 12,431 6,473 3,120 Other 108 — — Total revenue $ 41,418 $ 29,463 $ 18,213 Sales outside of the U.S. were $3.2 million or 8% of total revenue for the year ended December 31, 2022 and immaterial for the years ended December 31, 2021 and 2020. |
Research and Development | Research and Development Research and development costs are charged to expense as incurred and consist primarily of salaries, benefits, and other related costs, including stock-based compensation for personnel serving in the research and development functions as well as costs incurred with Aroa under development agreements related to technology transfer, laboratory materials and supplies. At the end of the reporting period, the Company compares payments made to third-party service providers to the estimated progress toward completion of the research or development objectives. Such estimates are subject to change as additional information becomes available. Depending on the timing of payments to the service providers and the progress that the Company estimates has been made as a result of the service provided, the Company may record net prepaid or accrued expense relating to these costs. Costs incurred in obtaining patent and other intellectual property licenses or milestone payments from license agreements for which there are no alternative future uses are charged to expense as incurred. |
Stock-Based Compensation | Stock-Based Compensation The Company accounts for stock-based awards in accordance with provisions of ASC Topic 718, Compensation—Stock Compensation |
Income Taxes | Income Taxes Income taxes are accounted for under the asset-and-liability method as required by ASC Topic 740, Income Taxes ASC Subtopic 740-10, Accounting for Uncertainty of Income Taxes |
Fair value of financial instruments | Fair value of financial instruments Fair value is the price that could be received to sell an asset or paid to transfer a liability in an orderly transaction among market participants. Fair value determination in accordance with applicable accounting guidance requires that a number of significant judgments are made. Additionally, fair value is used on a nonrecurring basis to evaluate assets for impairment or as required for disclosure purposes by applicable accounting guidance on disclosures about fair value of financial instruments. Depending on the nature of the assets and liabilities, various valuation techniques and assumptions are used when estimating fair value. The carrying amounts of certain of the Company’s financial instruments, including cash and cash equivalents, accounts receivable, other assets, and accounts payable are shown at cost, which approximates fair value due to the short-term nature of these instruments. Due to the related-party relationship of the OrbiMed Credit Facility (Note 6), it was impractical to determine the fair value of the debt. The Company follows the provisions of ASC Topic 820, Fair Value Measurement ● Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities. ● Level 2: Quoted prices in markets that are not active, or inputs which are observable, either directly or indirectly, for substantially the full term of the asset or liabilities. ● Level 3: Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e., supported by little or no market activity). The following fair value hierarchy table presents information about each major category of the Company’s financial assets and liabilities measured at fair value on a recurring basis (in thousands): Fair value measurement at reporting date using Quoted prices in active markets Significant other Significant for identical observable unobservable assets inputs inputs (Level 1) (Level 2) (Level 3) December 31, 2022: Cash equivalents – money market fund $ 39,010 $ — $ — December 31, 2021: Cash equivalents – money market fund $ 41,396 $ — $ — |
Net loss per share | Net loss per share Basic and diluted net loss per common share is determined by dividing net loss by the weighted-average shares of common stock outstanding during the reporting period. In periods in which the Company reports a net loss, diluted net loss per share is the same as basic net loss per share since dilutive shares are not assumed to have been issued if their effect is antidilutive. Therefore, the weighted-average shares used to calculate both basic and diluted loss per share are the same. The following potentially dilutive securities have been excluded from the computation of diluted weighted-average shares outstanding, as they would be antidilutive. Year ended December 31, 2022 2021 2020 Stock options (including shares subject to repurchase) 2,071,848 1,706,438 1,498,390 Unvested restricted stock units 311,991 163,043 — Common stock warrants 88,556 88,556 88,556 Total 2,472,395 1,958,037 1,586,946 |
Recently Issued Accounting Pronouncements | Recently Issued Accounting Pronouncements The Company is an emerging growth company, as defined in the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”). Under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards issued subsequent to the enactment of the JOBS Act, until such time as those standards apply to private companies. The Company has elected to use this extended transition period for complying with new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date that it (i) is no longer an emerging growth company or (ii) affirmatively and irrevocably opts out of the extended transition period provided in the JOBS Act. As a result, these consolidated financial statements may not be comparable to companies that comply with the new or revised accounting pronouncements as of public company effective dates. In February 2016, the FASB issued ASU No. 2016-02, Leases In June 2016, the FASB issued ASU No. 2016-13, Measurement of Credit Losses on Financial Instruments In August 2020, the FASB issued ASU No. 2020-06, Debt - Debt with Conversion and Other Options and Derivatives and Hedging - Contracts in Entity’s Own Equity (“ . |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Summary of Significant Accounting Policies | |
Disaggregation of Revenue | The following table presents revenue disaggregated (in thousands): Year ended December 31, 2022 2021 2020 OviTex $ 28,879 $ 22,990 $ 15,093 OviTex PRS 12,431 6,473 3,120 Other 108 — — Total revenue $ 41,418 $ 29,463 $ 18,213 |
Schedule of fair value of assets and liabilities measured on recurring basis | The following fair value hierarchy table presents information about each major category of the Company’s financial assets and liabilities measured at fair value on a recurring basis (in thousands): Fair value measurement at reporting date using Quoted prices in active markets Significant other Significant for identical observable unobservable assets inputs inputs (Level 1) (Level 2) (Level 3) December 31, 2022: Cash equivalents – money market fund $ 39,010 $ — $ — December 31, 2021: Cash equivalents – money market fund $ 41,396 $ — $ — |
Schedule of dilutive securities excluded | Year ended December 31, 2022 2021 2020 Stock options (including shares subject to repurchase) 2,071,848 1,706,438 1,498,390 Unvested restricted stock units 311,991 163,043 — Common stock warrants 88,556 88,556 88,556 Total 2,472,395 1,958,037 1,586,946 |
Property and Equipment (Tables)
Property and Equipment (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Property and Equipment | |
Schedule of Property and Equipment | Property and equipment consisted of the following (in thousands): December 31, Asset description Estimated useful lives 2022 2021 Lab equipment 5 Years $ 2,635 $ 2,352 Furniture and fixtures 5 Years 274 242 Computer equipment and software 3 Years 604 468 Leasehold improvements Lesser of useful life or lease term 2,309 1,881 Total 5,822 4,943 Less accumulated depreciation and amortization (4,140) (3,757) Property and equipment, net $ 1,682 $ 1,186 |
Accrued Expenses and Other Cu_2
Accrued Expenses and Other Current Liabilities (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Accrued Expenses and Other Current Liabilities | |
Schedule of Accrued Expenses and Other Current Liabilities | Accrued expenses and other current liabilities consisted of the following (in thousands): December 31, December 31, 2022 2021 Compensation and related benefits $ 6,420 $ 4,976 Third-party and professional fees 2,563 2,233 Amounts due to contract manufacturer 1,263 842 Current portion of operating lease liabilities 340 — Research and development expenses 137 31 Other 146 79 Total accrued expenses and other current liabilities $ 10,869 $ 8,161 |
Debt (Tables)
Debt (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Debt | |
Schedule of long term debt | Long-term debt consisted of the following (in thousands): December 31, 2022 2021 MidCap Term Loan $ 40,000 $ — OrbiMed Term Loan (related party) — 30,000 End of term charge 2,000 3,000 Unamortized end of term charge and issuance costs (2,084) (1,509) Long-term debt $ 39,916 $ 31,491 |
Stockholders' Equity (Tables)
Stockholders' Equity (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Stockholders' Equity | |
Schedule of warrants outstanding to purchase common stock | Exercise Expiration Outstanding price dates Common stock warrants 8,379 $ 28.65 2028 Common stock warrants 80,177 28.65 2027 88,556 |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Stock-Based Compensation | |
Schedule of stock based compensation expense categories in statement of operations | Year ended December 31, 2022 2021 2020 Sales and marketing $ 1,373 $ 961 $ 696 General and administrative 2,029 1,542 1,030 Research and development 587 1,158 332 Total stock‑based compensation $ 3,989 $ 3,661 $ 2,058 |
Schedule of stock option activity | Weighted average Weighted remaining Number of average exercise contractual term shares price per share (years) Outstanding at January 1, 2020 1,420,942 $ 10.35 Granted 175,086 15.03 Exercised (27,783) 6.29 Canceled/forfeited (70,037) 12.41 Outstanding at December 31, 2020 1,498,208 $ 10.87 Granted 468,000 14.80 Exercised (77,154) 7.08 Canceled/forfeited (182,645) 13.08 Outstanding at December 31, 2021 1,706,409 11.88 Granted 450,410 10.24 Exercised (3,563) 5.51 Canceled/forfeited (81,408) 13.13 Outstanding at December 31, 2022 2,071,848 $ 11.49 7.16 Vested and expected to vest at December 31, 2022 2,022,232 $ 11.48 7.12 Exercisable at December 31, 2022 1,237,751 $ 11.14 6.16 |
Schedule of activity relating to early exercise of stock options | Number of shares Unvested balance at January 1, 2020 755 Vested (306) Forfeited (267) Unvested balance at December 31, 2020 182 Vested (153) Unvested balance at December 31, 2021 29 Vested (29) Unvested balance at December 31, 2022 — |
Schedule of weighted average assumptions | Year ended December 31, 2022 2021 2020 Expected dividend yield — — — Expected volatility 69.6 % 63.9 % 59.1 % Risk‑free interest rate 2.55 % 0.99 % 0.87 % Expected term (in years) 6.20 6.15 5.98 |
Schedule of restricted stock units (RSUs) | The Company’s restricted stock units (“RSUs”) vest based on the terms in each award agreement and generally vest over four years. The following table summarizes restricted stock units for the Plan: Number of shares Outstanding at January 1, 2021 — Granted 194,232 Vested (12,000) Canceled/forfeited (19,189) Outstanding at December 31, 2021 163,043 Granted 197,950 Vested (40,783) Canceled/forfeited (8,219) Outstanding at December 31, 2022 311,991 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Income Taxes | |
Summary of Significant components of the Company's deferred tax assets | December 31, 2022 2021 Deferred tax assets Net operating loss carryforwards $ 55,091 $ 47,737 Research and development credits 623 623 Lease liability 387 — Accrued expenses and other 4,425 1,356 Inventory reserve 372 171 Gross deferred tax asset 60,898 49,887 Deferred tax liabilities Depreciation and amortization (435) (89) Right of use asset (302) — Gross deferred tax liability (737) (89) Net deferred tax asset before valuation allowance 60,161 49,798 Valuation allowance (60,161) (49,798) Net deferred tax asset $ — $ — |
Schedule of Company's net operating loss (NOL) carryforwards | December 31, 2022 2021 NOL carryforwards Federal $ 212,314 $ 181,443 State 173,472 151,488 |
Schedule of reconciliation of income tax benefit | Year ended December 31, 2022 2021 2020 Rate reconciliation Federal tax benefit at statutory rate (21.0) % (21.0) % (21.0) % State rate, net of federal benefit (3.1) (3.5) (4.2) Permanent differences 0.6 0.2 0.6 Research and development — 0.4 0.7 Change in valuation allowance 23.4 24.2 24.0 Other 0.1 (0.3) (0.1) Total tax provision — % — % — % |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Commitments and Contingencies [Abstract] | |
Schedule of future minimum lease payments under non-cancelable operating lease agreement | The following table reconciles the undiscounted future minimum lease payments (displayed in aggregate by year) under non-cancelable operating leases with terms of more than one year to the total operating lease liabilities recognized on the consolidated balance sheets as of December 31, 2022 (in thousands): 2023 $ 358 2024 366 2025 375 2026 383 2027 392 Thereafter 165 Total undiscounted future minimum lease payments $ 2,039 Less imputed interest (468) Total operating lease liabilities $ 1,571 |
Risks and Liquidity (Details)
Risks and Liquidity (Details) - USD ($) $ / shares in Units, $ in Thousands | 1 Months Ended | 12 Months Ended | ||
Aug. 31, 2022 | Dec. 31, 2022 | Dec. 31, 2020 | Dec. 31, 2021 | |
Unusual Risk or Uncertainty [Line Items] | ||||
Accumulated deficit | $ (274,225) | $ (229,929) | ||
Received net proceeds of after deducting underwriting discounts, commissions and other offering expenses | $ 34,400 | $ 44,722 | ||
Over-Allotment Option | ||||
Unusual Risk or Uncertainty [Line Items] | ||||
Common stock issued and sold (in shares) | 4,600,000 | |||
Offering price (in dollar per share) | $ 8 | |||
Received net proceeds of after deducting underwriting discounts, commissions and other offering expenses | $ 34,400 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies - Segments (Details) | 12 Months Ended |
Dec. 31, 2022 segment | |
Segments | |
Number of segments | 1 |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Inventory (Details) - USD ($) $ in Millions | Dec. 31, 2022 | Dec. 31, 2021 |
Inventory | ||
Inventory consigned to others | $ 2.3 | $ 1.7 |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies - Intangible Assets (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Intangible Assets | |||
Amortization expense related to intangible assets | $ 804 | $ 304 | $ 304 |
Remaining life of intangible assets | 6 years 7 months 6 days | ||
Intangible assets future amortization | |||
Year 1 | $ 400 | ||
Year 2 | 400 | ||
Year 3 | 400 | ||
Year 4 | 400 | ||
Year 5 | 400 | ||
Thereafter | $ 500 |
Summary of Significant Accoun_7
Summary of Significant Accounting Policies - Long-Lived Assets (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Long-Lived Assets | |||
Impairment of long-lived assets | $ 0 | $ 0 | $ 0 |
Summary of Significant Accoun_8
Summary of Significant Accounting Policies - Revenue Disaggregated (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Disaggregation of Revenue [Line Items] | |||
Revenue | $ 41,418 | $ 29,463 | $ 18,213 |
Incremental costs of obtaining a contract | 0 | ||
Non-US [Member] | |||
Disaggregation of Revenue [Line Items] | |||
Revenue | $ 3,200 | ||
Revenue, as a percentage | 8% | ||
OviTex | |||
Disaggregation of Revenue [Line Items] | |||
Revenue | $ 28,879 | 22,990 | 15,093 |
OviTex PRS | |||
Disaggregation of Revenue [Line Items] | |||
Revenue | 12,431 | $ 6,473 | $ 3,120 |
Other | |||
Disaggregation of Revenue [Line Items] | |||
Revenue | $ 108 |
Summary of Significant Accoun_9
Summary of Significant Accounting Policies - Fair value of financial instruments (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Recurring | Level 1 | Money market funds | ||
Fair value of financial instruments | ||
Cash equivalents | $ 39,010 | $ 41,396 |
Summary of Significant Accou_10
Summary of Significant Accounting Policies - Net loss per share (Potentially dilutive securities) (Details) - shares | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Potentially dilutive securities | |||
Potentially dilutive securities excluded from computation of diluted weighted average shares | 2,472,395 | 1,958,037 | 1,586,946 |
Stock Options | |||
Potentially dilutive securities | |||
Potentially dilutive securities excluded from computation of diluted weighted average shares | 2,071,848 | 1,706,438 | 1,498,390 |
Restricted stock units | |||
Potentially dilutive securities | |||
Potentially dilutive securities excluded from computation of diluted weighted average shares | 311,991 | 163,043 | |
Common Stock Warrants | |||
Potentially dilutive securities | |||
Potentially dilutive securities excluded from computation of diluted weighted average shares | 88,556 | 88,556 | 88,556 |
Property and Equipment (Details
Property and Equipment (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Property and Equipment | |||
Property and Equipment, Total | $ 5,822 | $ 4,943 | |
Less accumulated depreciation and amortization | (4,140) | (3,757) | |
Property and equipment, net | 1,682 | 1,186 | |
Depreciation expense | 383 | 231 | $ 221 |
Umbrella Agreement with Aroa | |||
Property and Equipment | |||
Property and Equipment, Total | 200 | 200 | |
Lab equipment | |||
Property and Equipment | |||
Property and Equipment, Total | $ 2,635 | 2,352 | |
Estimated useful lives | 5 years | ||
Furniture and fixtures | |||
Property and Equipment | |||
Property and Equipment, Total | $ 274 | 242 | |
Estimated useful lives | 5 years | ||
Computer equipment and software | |||
Property and Equipment | |||
Property and Equipment, Total | $ 604 | 468 | |
Estimated useful lives | 3 years | ||
Leasehold improvements | |||
Property and Equipment | |||
Property and Equipment, Total | $ 2,309 | $ 1,881 |
Accrued Expenses and Other Cu_3
Accrued Expenses and Other Current Liabilities (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Accrued Expenses and Other Current Liabilities | ||
Compensation and related benefits | $ 6,420 | $ 4,976 |
Third-party and professional fees | 2,563 | 2,233 |
Amounts due to contract manufacturer | 1,263 | 842 |
Current portion of operating lease liabilities | 340 | |
Research and development expenses | 137 | 31 |
Other | 146 | 79 |
Total accrued expenses and other current liabilities | $ 10,869 | $ 8,161 |
Debt - Schedule of long term de
Debt - Schedule of long term debt (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | May 26, 2022 | Dec. 31, 2021 |
Debt | |||
End of term charge | $ 2,000 | $ 3,000 | |
Unamortized end of term charge and issuance costs | (2,084) | (1,509) | |
Longterm debt | 39,916 | 31,491 | |
MidCap Term Loan | |||
Debt | |||
Long Term Debt | $ 40,000 | $ 50,000 | |
OrbiMed Term Loans (related party) | |||
Debt | |||
Long Term Debt | $ 30,000 |
Debt - MidCap Term Loan (Detail
Debt - MidCap Term Loan (Details) - USD ($) $ in Thousands | 12 Months Ended | |
May 26, 2022 | Dec. 31, 2022 | |
MidCap Term Loan | ||
Debt | ||
Debt amount | $ 50,000 | $ 40,000 |
Eligibility Requirement To Borrow Tranche 2 | 65,000 | |
Interest due to unpaid obligation | 2% | |
Interest Rate (as a percent) | 6.25% | |
Number of Installment | 36 months | |
Exit fee (as a percent) | 5% | |
Interest expenses | $ 2,600 | |
Amortization of debt issuance costs | $ 400 | |
MidCap Term Loan | Maximum | ||
Debt | ||
Extension for interest only payment period | 48 months | |
MidCap Term Loan | Minimum | ||
Debt | ||
Extension for interest only payment period | 12 months | |
MidCap Term Loan | First year | ||
Debt | ||
Percentage of prepayment penalty on prepaid principal amount | 3% | |
MidCap Term Loan | Second year | ||
Debt | ||
Percentage Of Prepayment Penalty On Prepaid Principal Amount 2 | 2% | |
MidCap Term Loan | Third year | ||
Debt | ||
Percentage of prepayment penalty on prepaid principal amount | 1% | |
MidCap Term Loan | SOFR | ||
Debt | ||
Variable Interest Rate (as a percent) | 1% | |
Tranche One | ||
Debt | ||
Debt amount | 40,000 | |
Tranche Two | ||
Debt | ||
Debt amount | $ 10,000 |
Debt - OrbiMed Term Loan (relat
Debt - OrbiMed Term Loan (related party) (Details) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 USD ($) tranche | Dec. 31, 2021 USD ($) | Dec. 31, 2020 USD ($) | |
Debt | |||
Loss on extinguishment of debt | $ (1,228) | ||
OrbiMed Term Loans (related party) | |||
Debt | |||
Debt amount | $ 35,000 | ||
Number of Tranches | tranche | 2 | ||
Interest Rate (as a percent) | 7.75% | ||
End of Term Charge | $ 3,000 | ||
Loss on extinguishment of debt | 1,200 | ||
Interest expenses | 1,500 | $ 3,600 | $ 3,600 |
Amortization of debt issuance costs | $ 300 | $ 700 | $ 600 |
OrbiMed Term Loans (related party) | LIBOR | |||
Debt | |||
Variable Interest Rate (as a percent) | 2% | ||
OrbiMed Term Loans - Tranche One | |||
Debt | |||
Debt amount | $ 30,000 | ||
OrbiMed Term Loans - Tranche Two | |||
Debt | |||
Debt amount | $ 5,000 |
Stockholders' Equity - Public S
Stockholders' Equity - Public Stock Offerings (Details) - USD ($) $ / shares in Units, $ in Thousands | 1 Months Ended | 12 Months Ended | |||
Aug. 31, 2022 | Jun. 30, 2020 | Dec. 31, 2022 | Dec. 31, 2020 | Dec. 31, 2021 | |
Stockholders' Equity | |||||
Received net proceeds of after deducting underwriting discounts, commissions and other offering expenses | $ 34,400 | $ 44,722 | |||
Over-Allotment Option | |||||
Stockholders' Equity | |||||
Common stock issued and sold (in shares) | 4,600,000 | ||||
Offering price (in dollar per share) | $ 8 | ||||
Received net proceeds of after deducting underwriting discounts, commissions and other offering expenses | $ 34,400 | ||||
Second Underwritten Public Offering | |||||
Stockholders' Equity | |||||
Common stock issued and sold (in shares) | 3,000,000 | ||||
Offering price (in dollar per share) | $ 16 | ||||
Received net proceeds of after deducting underwriting discounts, commissions and other offering expenses | $ 44,700 | ||||
Equity Distribution Agreement | |||||
Stockholders' Equity | |||||
Value Of Shares Authorized To Be Sold Under Equity Distribution Agreement | $ 0 | $ 50,000 | $ 0 |
Stockholders' Equity - Warrants
Stockholders' Equity - Warrants outstanding (Details) | 12 Months Ended |
Dec. 31, 2022 $ / shares shares | |
Stockholders' Equity | |
Warrants outstanding | 88,556 |
Common stock warrants expiring in 2028 | |
Stockholders' Equity | |
Warrants outstanding | 8,379 |
Warrants exercise price | $ / shares | $ 28.65 |
Expiration dates | 2028 |
Common stock warrants expiring in 2027 | |
Stockholders' Equity | |
Warrants outstanding | 80,177 |
Warrants exercise price | $ / shares | $ 28.65 |
Expiration dates | 2027 |
Stock-Based Compensation - Narr
Stock-Based Compensation - Narratives (Details) | 12 Months Ended | ||
Dec. 31, 2022 USD ($) item $ / shares shares | Dec. 31, 2021 USD ($) $ / shares | Dec. 31, 2020 USD ($) $ / shares | |
Stock-Based Compensation | |||
Number of equity incentive plans | item | 2 | ||
Aggregate intrinsic value of exercisable options | $ 16,000 | $ 400,000 | $ 200,000 |
Stock Options | |||
Stock-Based Compensation | |||
Weighted average grant date fair value, Options (per share) | $ / shares | $ 6.55 | $ 8.66 | $ 8.13 |
Inducement grants | shares | 381,125 | ||
Aggregate intrinsic value of outstanding options | $ 3,000,000 | ||
Aggregate intrinsic value of exercisable options | 2,300,000 | ||
Unrecognized compensation expense | $ 5,100,000 | ||
Weighted average period for recognition of unrecognized expenses | 2 years 6 months | ||
Restricted stock units | |||
Stock-Based Compensation | |||
Vesting period | 4 years | ||
Weighted average grant date fair value, Equity Instruments (per share) | $ / shares | $ 11.21 | $ 16.57 | |
Inducement grants | shares | 7,500 | ||
Aggregate intrinsic value | $ 3,600,000 | $ 2,100,000 | |
Unrecognized compensation expense | $ 2,600,000 | ||
Weighted average period for recognition of unrecognized expenses | 2 years 7 months 6 days | ||
2019 Equity Incentive Plan | |||
Stock-Based Compensation | |||
Shares available for future issuance | shares | 1,427,772 | ||
Common Stock Capital Shares Reserved For Future Annual Issuance | shares | 432,442 | ||
Common Stock Capital Shares Reserved For Future Issuance, Percentage Of Shares Outstanding Last Day Of Fiscal Year | 4% | ||
Vesting period | 4 years | ||
Vesting term | 10 years |
Stock-Based Compensation - Expe
Stock-Based Compensation - Expenses (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Stock-Based Compensation | |||
Total stock-based compensation | $ 3,989 | $ 3,661 | $ 2,058 |
Sales and marketing | |||
Stock-Based Compensation | |||
Total stock-based compensation | 1,373 | 961 | 696 |
General and administrative | |||
Stock-Based Compensation | |||
Total stock-based compensation | 2,029 | 1,542 | 1,030 |
Research and development | |||
Stock-Based Compensation | |||
Total stock-based compensation | $ 587 | $ 1,158 | $ 332 |
Stock-Based Compensation - Stoc
Stock-Based Compensation - Stock Option Activity (Details) - $ / shares | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Number of shares | |||
Balance at beginning of period | 1,706,409 | 1,498,208 | 1,420,942 |
Granted | 450,410 | 468,000 | 175,086 |
Exercised | (3,563) | (77,154) | (27,783) |
Canceled/forfeited | (81,408) | (182,645) | (70,037) |
Balance at end of period | 2,071,848 | 1,706,409 | 1,498,208 |
Vested and expected to vest at end of period | 2,022,232 | ||
Exercisable at end of period | 1,237,751 | ||
Weighted average exercise price per share | |||
Balance at beginning of period (in dollars per share) | $ 11.88 | $ 10.87 | $ 10.35 |
Granted ( in dollars per share) | 10.24 | 14.80 | 15.03 |
Exercised (in dollars per share) | 5.51 | 7.08 | 6.29 |
Canceled/forfeited (in dollars per share) | 13.13 | 13.08 | 12.41 |
Balance at end of period (in dollars per share) | 11.49 | $ 11.88 | $ 10.87 |
Vested and expected to vest at end of period (in dollars per share) | 11.48 | ||
Exercisable at end of period (in dollars per share) | $ 11.14 | ||
Weighted average remaining contractual term (years) | |||
Weighted average remaining contractual term, outstanding | 7 years 1 month 28 days | ||
Weighted average remaining contractual term, Vested and expected to vest | 7 years 1 month 13 days | ||
Weighted average remaining contractual term, Exercisable | 6 years 1 month 28 days |
Stock-Based Compensation - Earl
Stock-Based Compensation - Early Exercise Of Stock Options (Details) - shares | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Stock-Based Compensation | |||
Early exercised stock options, Unvested balance at beginning of period | 29 | 182 | 755 |
Vested | (29) | (153) | (306) |
Forfeited | (267) | ||
Early exercised stock options, Unvested balance at end of period | 29 | 182 |
Stock-Based Compensation - Weig
Stock-Based Compensation - Weighted average assumptions (Details) | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Stock-Based Compensation | |||
Expected dividend yield | 0% | 0% | 0% |
Expected volatility | 69.60% | 63.90% | 59.10% |
Risk-free interest rate | 2.55% | 0.99% | 0.87% |
Expected term (in years) | 6 years 2 months 12 days | 6 years 1 month 24 days | 5 years 11 months 23 days |
Stock-Based Compensation - Rest
Stock-Based Compensation - Restricted Stock Units (Details) - Restricted stock units - shares | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||
Outstanding at beginning of period | 163,043 | |
Granted | 197,950 | 194,232 |
Vested | (40,783) | (12,000) |
Canceled/forfeited | (8,219) | (19,189) |
Outstanding at end of period | 311,991 | 163,043 |
Employee Benefit Plans (Details
Employee Benefit Plans (Details) - USD ($) $ in Millions | 1 Months Ended | 12 Months Ended | ||
Nov. 30, 2019 | Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Defined Contribution Plan Disclosure [Line Items] | ||||
Maximum contribution of participant (as a percent) | 100% | |||
Percentage of employer's contribution | 50% | |||
Percentage of employer's contribution to employees | 6% | |||
Amount of employer's contribution | $ 0.4 | $ 0.3 | $ 0.2 | |
Deferred Compensation Arrangement with Individual, Requisite Service Period | 3 years | |||
Employee Stock Purchase Plan 2019 | ||||
Defined Contribution Plan Disclosure [Line Items] | ||||
Shares reserved for future issuance | 421,065 | |||
Increase in number of shares | 107,887 | |||
Increase in percentage of shares outstanding | 1% | |||
Discount on purchase of common stock | 15% | |||
Shares issued | 4,523 | 3,163 | 2,797 |
Income Taxes - Deferred tax ass
Income Taxes - Deferred tax assets (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Deferred tax assets | ||
Net operating loss carryforwards | $ 55,091 | $ 47,737 |
Research and development credits | 623 | 623 |
Lease liability | 387 | |
Accrued expenses and other | 4,425 | 1,356 |
Inventory reserve | 372 | 171 |
Gross deferred tax asset | 60,898 | 49,887 |
Deferred tax liabilities | ||
Depreciation and amortization | (435) | (89) |
Right of use asset | (302) | |
Gross deferred tax liability | (737) | (89) |
Net deferred tax asset before valuation allowance | 60,161 | 49,798 |
Valuation allowance | (60,161) | (49,798) |
Net deferred tax asset | $ 0 | $ 0 |
Income Taxes - NOL carryforward
Income Taxes - NOL carryforwards (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Federal | ||
Income Taxes | ||
NOL carryforwards | $ 212,314 | $ 181,443 |
Deferred Tax Assets, Operating Loss Carryforwards, Not Subject to Expiration | 100,700 | |
State | ||
Income Taxes | ||
NOL carryforwards | $ 173,472 | $ 151,488 |
Income Taxes - Rate reconciliat
Income Taxes - Rate reconciliation (Details) | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Rate reconciliation | |||
Federal tax benefit at statutory rate | (21.00%) | (21.00%) | (21.00%) |
State rate, net of federal benefit | (3.10%) | (3.50%) | (4.20%) |
Permanent differences | 0.6 | 0.2 | 0.6 |
Research and development | 0.40% | 0.70% | |
Change in valuation allowance | 23.40% | 24.20% | 24% |
Other | 0.10% | (0.30%) | (0.10%) |
Total tax provision |
Income Taxes - Narratives (Deta
Income Taxes - Narratives (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Income Taxes | ||
Unrecognized tax benefits | $ 0 | $ 0 |
Increase (decrease) in valuation allowance | $ 10,400 | 8,100 |
Employee retention payroll tax credit | $ 500 |
Commitments and Contingencies_2
Commitments and Contingencies (Details) - USD ($) $ in Thousands | 1 Months Ended | 12 Months Ended | ||||
Jan. 01, 2022 | Dec. 31, 2020 | Aug. 31, 2012 | Dec. 31, 2022 | Dec. 31, 2019 | Dec. 31, 2018 | |
Contingencies and Commitments | ||||||
Lease liability | $ 1,571 | |||||
Right-of-use assets | 1,227 | |||||
Operating lease cost | 300 | |||||
Operating lease payments made | 300 | |||||
Operating Lease, Liability, Current | $ 340 | |||||
Operating Lease, Liability, Current, Statement of Financial Position [Extensible Enumeration] | Accrued Liabilities, Current | |||||
Operating Lease, Liability, Noncurrent | $ 1,200 | |||||
Operating Lease, Liability, Noncurrent, Statement of Financial Position [Extensible Enumeration] | Other Liabilities, Noncurrent | |||||
Pennsylvania | Office and laboratory space | ||||||
Contingencies and Commitments | ||||||
Lessee, Operating Lease, Existence of Option to Extend [true false] | true | |||||
Renewal term of operating lease | 60 months | |||||
Incremental borrowing rate | 9.75% | |||||
Remaining lease term | 5 years 6 months | |||||
Pennsylvania | Office and laboratory space | Cumulative Effect, Period of Adoption, Adjustment [Member] | ASU 2016-02 | ||||||
Contingencies and Commitments | ||||||
Lease liability | $ 1,800 | |||||
Right-of-use assets | 1,400 | |||||
Deferred rent and tenant allowance netted off against right-of-use asset | $ 400 | |||||
Umbrella Agreement with Aroa | ||||||
Contingencies and Commitments | ||||||
Payment for agreement | $ 4,000 | |||||
Milestone payments related to research and development arrangements | $ 2,200 | |||||
Fixed Cost Of Net Sales | 27% | |||||
Purchase commitments | $ 1,000 | |||||
Number of days for product supply | 60 days | |||||
Percentage of products ordered to be supplied | 75% | |||||
Royalty percentage of net sales | 6% | |||||
Umbrella Agreement with Aroa | European territory | ||||||
Contingencies and Commitments | ||||||
Sales milestone payments due | $ 1,000 | |||||
Purchase commitments due year Six | $ 1,000 | |||||
Umbrella Agreement with Aroa | North American territory | ||||||
Contingencies and Commitments | ||||||
Sales milestone payment | $ 2,000 | $ 1,000 | ||||
Transfer Price For Product Produced | 200% | |||||
Fixed Cost Of Net Sales | 27% | |||||
Purchase commitments due year Six | $ 5,000 | |||||
Other Suppliers for Exclusivity Rights [Member] | ||||||
Contingencies and Commitments | ||||||
Aggregate future payments | $ 20,700 | |||||
Next Science | ||||||
Contingencies and Commitments | ||||||
Term of Contract | 10 years | |||||
Collagen Matrix, Inc. | ||||||
Contingencies and Commitments | ||||||
Purchase commitments | $ 20,700 | |||||
Term of Contract | 9 years |
Commitments and Contingencies -
Commitments and Contingencies - Operating Leases (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Leases, Operating [Abstract] | ||
2022/2023 | $ 358 | $ 300 |
2023/2024 | 366 | 400 |
2024/2025 | 375 | 400 |
2025/2026 | 383 | 400 |
2026/2027 | 392 | 400 |
Thereafter | 165 | $ 500 |
Total undiscounted future minimum lease payments | 2,039 | |
Less imputed interest | (468) | |
Total operating lease liabilities | $ 1,571 |