Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2019 | Nov. 07, 2019 | |
Document and Entity Information | ||
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2019 | |
Entity Registrant Name | Senseonics Holdings, Inc. | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | true | |
Entity Shell Company | false | |
Entity Ex Transition Period | true | |
Entity Common Stock, Shares Outstanding | 203,452,603 | |
Entity Central Index Key | 0001616543 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2019 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 |
Current assets: | ||
Cash and cash equivalents | $ 130,580 | $ 136,793 |
Accounts receivable | 2,800 | 830 |
Accounts receivable - related parties | 3,468 | 6,267 |
Inventory, net | 19,862 | 10,231 |
Prepaid expenses and other current assets | 4,862 | 3,985 |
Total current assets | 161,572 | 158,106 |
Deposits and other assets | 3,108 | 117 |
Property and equipment, net | 2,366 | 1,750 |
Total assets | 167,046 | 159,973 |
Current liabilities: | ||
Accounts payable | 3,253 | 4,407 |
Accrued expenses and other current liabilities | 18,705 | 13,851 |
Deferred revenue | 628 | |
Term Loans, current portion | 10,000 | |
Total current liabilities | 21,958 | 28,886 |
Term Loans, net of discount and current portion | 43,092 | 4,783 |
Derivative liabilities | 26,988 | 17,091 |
Other liabilities | 2,464 | 1,849 |
Total liabilities | 141,699 | 88,712 |
Commitments and contingencies | ||
Stockholders’ equity: | ||
Common stock, $0.001 par value per share; 450,000,000 shares authorized; 203,365,624 and 176,918,381 shares issued and outstanding as of September 30, 2019 and December 31, 2018 | 203 | 177 |
Additional paid-in capital | 462,876 | 428,878 |
Accumulated deficit | (437,732) | (357,794) |
Total stockholders' equity | 25,347 | 71,261 |
Total liabilities and stockholders’ equity | 167,046 | 159,973 |
2023 Notes | ||
Current liabilities: | ||
Notes, net of discount | 11,529 | $ 36,103 |
2025 Notes | ||
Current liabilities: | ||
Notes, net of discount | $ 35,668 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parentheticals) - $ / shares | Sep. 30, 2019 | Dec. 31, 2018 |
Class of stock information | ||
Common stock, par value per share (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 450,000,000 | 450,000,000 |
Common stock, shares issued | 203,365,624 | 176,918,381 |
Common stock, shares outstanding | 203,365,624 | 176,918,381 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations and Comprehensive Loss - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Condensed Consolidated Statements of Operations and Comprehensive Loss | ||||
Revenue, net | $ 959 | $ 837 | $ 3,678 | $ 1,768 |
Revenue, net - related parties | 3,360 | 4,321 | 8,671 | 9,960 |
Total revenue | 4,319 | 5,158 | 12,349 | 11,728 |
Cost of sales | 7,659 | 7,742 | 23,552 | 14,889 |
Gross profit | (3,340) | (2,584) | (11,203) | (3,161) |
Expenses: | ||||
Sales and marketing expenses | 11,560 | 7,851 | 38,573 | 17,469 |
Research and development expenses | 11,076 | 7,402 | 28,688 | 23,805 |
General and administrative expenses | 5,388 | 5,138 | 17,321 | 14,531 |
Operating loss | (31,364) | (22,975) | (95,785) | (58,966) |
Other income (expense), net: | ||||
Interest income | 519 | 820 | 1,556 | 1,245 |
Loss on extinguishment of debt | (398) | (398) | ||
Interest expense | (3,460) | (2,170) | (7,459) | (6,177) |
Debt issuance costs | (3,344) | (3,344) | ||
Change in fair value of derivative liabilities | 19,186 | (7,513) | 26,147 | (22,526) |
Other income (expense) | (638) | (43) | (655) | (226) |
Total other income (expense), net | 11,865 | (8,906) | 15,847 | (27,684) |
Net loss | (19,499) | (31,881) | (79,938) | (86,650) |
Total comprehensive loss | $ (19,499) | $ (31,881) | $ (79,938) | $ (86,650) |
Basic and diluted net loss per common share | $ (0.10) | $ (0.18) | $ (0.43) | $ (0.57) |
Basic and diluted weighted-average shares outstanding | 197,223,419 | 176,332,575 | 183,804,257 | 150,866,978 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Changes in Stockholders' Equity - USD ($) shares in Thousands, $ in Thousands | Common Stock | Additional Paid-In Capital | Accumulated Deficit | Total |
Balance at Dec. 31, 2017 | $ 137 | $ 270,953 | $ (263,823) | $ 7,267 |
Balance (in shares) at Dec. 31, 2017 | 136,883 | |||
Changes in Stockholders' Equity (Deficit) | ||||
Issued shares of common stock | $ 38 | 149,004 | 149,042 | |
Issued shares of common stock (in shares) | 38,076 | |||
Exercise of stock options and warrants | $ 1 | 2,018 | 2,019 | |
Exercise of stock options and warrants (in shares) | 1,602 | |||
Conversion of 2023 Notes | $ 1 | 250 | 251 | |
Conversion of 2023 Notes (in shares) | 74 | |||
Stock-based compensation expense and vesting of RSUs | 4,675 | 4,675 | ||
Stock-based compensation expense and vesting of RSUs (in shares) | 91 | |||
Net loss | (86,650) | (86,650) | ||
Balance at Sep. 30, 2018 | $ 177 | 426,900 | (350,473) | 76,604 |
Balance (in shares) at Sep. 30, 2018 | 176,726 | |||
Balance at Jun. 30, 2018 | $ 177 | 424,130 | (318,592) | 105,715 |
Balance (in shares) at Jun. 30, 2018 | 176,242 | |||
Changes in Stockholders' Equity (Deficit) | ||||
Issued shares of common stock | (54) | (54) | ||
Issued shares of common stock (in shares) | 735 | |||
Exercise of stock options and warrants | 1,205 | 1,205 | ||
Exercise of stock options and warrants (in shares) | 390 | |||
Conversion of 2023 Notes | 1 | 1 | ||
Conversion of 2023 Notes (in shares) | (661) | |||
Stock-based compensation expense and vesting of RSUs | 1,618 | 1,618 | ||
Stock-based compensation expense and vesting of RSUs (in shares) | 20 | |||
Net loss | (31,881) | (31,881) | ||
Balance at Sep. 30, 2018 | $ 177 | 426,900 | (350,473) | 76,604 |
Balance (in shares) at Sep. 30, 2018 | 176,726 | |||
Balance at Dec. 31, 2018 | $ 177 | 428,878 | (357,794) | 71,261 |
Balance (in shares) at Dec. 31, 2018 | 176,918 | |||
Changes in Stockholders' Equity (Deficit) | ||||
Issued shares of common stock | $ 26 | 26,731 | 26,757 | |
Issued shares of common stock (in shares) | 26,136 | |||
Exercise of stock options and warrants | 93 | 93 | ||
Exercise of stock options and warrants (in shares) | 230 | |||
Stock-based compensation expense and vesting of RSUs | 6,451 | 6,451 | ||
Stock-based compensation expense and vesting of RSUs (in shares) | 82 | |||
Issuance of warrants related to debt | 723 | 723 | ||
Net loss | (79,938) | (79,938) | ||
Balance at Sep. 30, 2019 | $ 203 | 462,876 | (437,732) | 25,347 |
Balance (in shares) at Sep. 30, 2019 | 203,366 | |||
Balance at Jun. 30, 2019 | $ 177 | 433,228 | (418,233) | 15,172 |
Balance (in shares) at Jun. 30, 2019 | 177,031 | |||
Changes in Stockholders' Equity (Deficit) | ||||
Issued shares of common stock | $ 26 | 26,731 | 26,757 | |
Issued shares of common stock (in shares) | 26,136 | |||
Exercise of stock options and warrants (in shares) | 179 | |||
Stock-based compensation expense and vesting of RSUs | 2,194 | 2,194 | ||
Stock-based compensation expense and vesting of RSUs (in shares) | 20 | |||
Issuance of warrants related to debt | 723 | 723 | ||
Net loss | (19,499) | (19,499) | ||
Balance at Sep. 30, 2019 | $ 203 | $ 462,876 | $ (437,732) | $ 25,347 |
Balance (in shares) at Sep. 30, 2019 | 203,366 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2018 | |
Cash flows from operating activities | ||
Net loss | $ (79,938) | $ (86,650) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation and amortization expense | 335 | 178 |
Non-cash interest expense (debt discount and deferred costs) | 6,798 | 2,415 |
Change in fair value of derivative liabilities | (26,147) | 22,525 |
Stock-based compensation expense | 6,452 | 4,676 |
Provision for lower of cost or net realizable value | (121) | 133 |
Provision for inventory obsolescence | 2,198 | |
Non-cash lease expense | 336 | |
Net realized gain on marketable securities | (112) | |
Changes in assets and liabilities: | ||
Accounts receivable | 829 | (719) |
Prepaid expenses and other current assets | (877) | (2,631) |
Inventory | (11,708) | (7,143) |
Deposits and other assets | (4) | 57 |
Accounts payable | (1,154) | (3,842) |
Accrued expenses and other current liabilities | 3,998 | 3,446 |
Deferred revenue | (628) | |
Term Loans, accrued interest | (908) | 560 |
Deferred rent | 10 | |
Other | (947) | |
Net cash (used in) operating activities | (101,486) | (67,097) |
Cash flows from investing activities | ||
Capital expenditures | (951) | (683) |
Purchases of marketable securities | (7,935) | |
Sales and maturities of marketable securities | 22,350 | |
Net cash (used in) provided by investing activities | (951) | 13,732 |
Cash flows from financing activities | ||
Proceeds from issuance of common stock, net of issuance costs | 26,757 | 149,044 |
Proceeds from exercise of stock options and stock warrants | 94 | 2,018 |
Proceeds from Solar Term Loan, net of costs | 42,951 | |
Proceeds from issuance of warrants, net of costs | 723 | |
Repayment of Oxford and SVB Term Loan | (15,000) | |
Repurchase of 2023 notes | (37,000) | (7,500) |
Principal payments under capital lease obligations | (20) | |
Net cash provided by financing activities | 96,224 | 194,247 |
Net (decrease) increase in cash and cash equivalents | (6,213) | 140,882 |
Cash and cash equivalents, at beginning of period | 136,793 | 16,150 |
Cash and cash equivalents, at end of period | 130,580 | 157,032 |
Supplemental disclosure of cash flow information | ||
Cash paid during the period for interest | 4,200 | 2,768 |
Lease liabilities arising from obtaining right-of-use assets | 3,109 | |
Supplemental disclosure of non-cash investing and financing activities | ||
Property and equipment purchases included in accounts payable and accrued expenses | 182 | |
2023 Notes | ||
Cash flows from financing activities | ||
Proceeds from Notes, net of costs | $ 50,705 | |
2025 Notes | ||
Cash flows from financing activities | ||
Proceeds from Notes, net of costs | $ 77,699 |
Organization
Organization | 9 Months Ended |
Sep. 30, 2019 | |
Organization | |
Organization | 1. Senseonics Holdings, Inc., a Delaware corporation, is a medical technology company focused on the design, development and commercialization of glucose monitoring systems to improve the lives of people with diabetes by enhancing their ability to manage their disease with relative ease and accuracy. Senseonics, Incorporated is a wholly-owned subsidiary of Senseonics Holdings and was originally incorporated on October 30, 1996 and commenced operations on January 15, 1997. Senseonics Holdings and Senseonics, Incorporated are hereinafter collectively referred to as the “Company” unless otherwise indicated or the context otherwise requires. |
Liquidity
Liquidity | 9 Months Ended |
Sep. 30, 2019 | |
Liquidity | |
Liquidity | 2. The Company’s operations are subject to certain risks and uncertainties including, among others, current and potential competitors with greater resources, lack of operating history and uncertainty of future profitability. Since inception, the Company has incurred substantial operating losses, principally from expenses associated with the Company’s research and development programs. The Company has not generated significant revenue from the sale of products and its ability to generate revenue and achieve profitability largely depends on the Company’s ability, alone or with others, to complete the development of its products or product candidates, and to obtain necessary regulatory approvals for the manufacture, marketing and sales of those products. These activities will require significant uses of working capital through the remainder of 2019 and beyond. At September 30, 2019, the Company had $130.6 million in cash and cash equivalents. In July 2019, the Company completed financing and debt transactions totaling gross proceeds of over $100 million, after repayment of the Term Loans (as defined below) and a portion of the Company’s convertible senior subordinated notes due 2023 (the “2023 Notes”). As a result of these transactions, management has concluded that, based on the Company’s current operating plans, including the restructuring described in Note 13, and its existing cash and cash equivalents, will be sufficient to meet the Company’s anticipated operating needs through the end of 2020. Historically, the Company has financed its operating activities through the sale of equity and equity linked securities and the issuance of debt. The Company plans to continue financing its operations with external capital for the foreseeable future. However, the Company may not be able to raise additional funds on acceptable terms, or at all. If the Company is unable to secure sufficient capital to fund its research and development and other operating activities, the Company may be required to delay or suspend operations, enter into collaboration agreements with partners that could require the Company to share commercial rights to its products to a greater extent or at earlier stages in the product development process than is currently intended, merge or consolidate with other entities, or liquidate. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2019 | |
Summary of Significant Accounting Policies | |
Summary of Significant Accounting Policies | 3. Basis of Presentation The accompanying unaudited interim condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). In the Company’s opinion, the accompanying unaudited interim condensed consolidated financial statements include all adjustments, consisting of normal recurring adjustments, which are necessary to present fairly its financial position, results of operations, and cash flows. The consolidated balance sheet at December 31, 2018, has been derived from audited financial statements as of that date. The interim condensed consolidated results of operations are not necessarily indicative of the results that may occur for the full fiscal year. Certain information and footnote disclosure normally included in financial statements prepared in accordance with U.S. GAAP have been omitted pursuant to instructions, rules, and regulations prescribed by the U.S. Securities and Exchange Commission (“SEC”). The Company believes that the disclosures provided herein are adequate to make the information presented not misleading when these unaudited interim condensed consolidated financial statements are read in conjunction with the audited financial statements and notes previously included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018. Use of Estimates The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the reported amounts of revenue and expenses during the reporting period. In the accompanying consolidated financial statements, estimates are used for, but not limited to, stock-based compensation, recoverability of long-lived assets, deferred taxes and valuation allowances, obsolete inventory, product returns, patient access program costs, depreciable lives of property and equipment, and estimated accruals for clinical study costs, which are accrued based on estimates of work performed under contract . Actual results could differ from those estimates; however management does not believe that such differences would be material. Segment Information The Company views its operations and manages its business in one segment, glucose monitoring products. Comprehensive Loss Comprehensive loss comprises net loss and other changes in equity that are excluded from net loss. For the three and nine months ended September 30, 2019 and 2018, the Company’s net loss equaled its comprehensive loss and, accordingly, no additional disclosure is presented. Cash and Cash Equivalents and Concentration of Credit Risk The Company considers highly liquid investments with maturities of three months or less from the date of purchase to be cash equivalents. These investments are carried at cost, which approximates fair value. The Company’s cash and cash equivalents potentially subject the Company to credit and liquidity risk. The Company maintains cash deposits at major financial institutions with high credit quality and, at times, the balances of those deposits may exceed the Federal Deposit Insurance Corporation limits of $250,000. The Company has not experienced and does not anticipate any losses on deposits with commercial banks and financial institutions that exceed the federally insured amounts. Concentration of Revenue and Customers At any given time, the Company’s trade receivables are concentrated among a small number of principal customers. If any of the Company’s customers fail to pay their obligations under the terms of these financial instruments, the Company’s maximum exposure to potential losses would be equal to amounts reported on its consolidated balance sheets. During the three and nine months ended September 30, 2019 and 2018, the Company derived a majority of its total net revenue from one customer, who is also a related party. During the three months ended September 30, 2019 and 2018, the Company derived 78 percent and 84 percent of its total net revenue from this customer, respectively. During the nine months ended September 30, 2019 and 2018, the Company derived 70 percent and 85 percent of its total net revenue from this one customer, respectively. Revenue by geographic region The following table sets forth net revenue derived from the Company’s two primary geographical markets, the United States and outside of the United States, based on the geographic location to which the Company delivers the product, for the three and nine months ended September 30, 2019 and 2018. Three Months Ended Nine Months Ended September 30, 2019 September 30, 2019 % % (Dollars in thousands) Amount of Total Amount of Total Revenue, net: Outside of the United States $ 3,792 % $ 9,908 % United States 527 2,441 Total $ 4,319 % $ 12,349 % Three Months Ended Nine Months Ended September 30, 2018 September 30, 2018 % % (Dollars in thousands) Amount of Total Amount of Total Revenue, net: Outside of the United States $ 4,658 % $ 11,228 % United States 500 500 Total $ 5,158 % $ 11,728 % Inventory Inventory is valued at the lower of cost or net realizable value. Cost is determined using the standard cost method that approximates first in, first out. The Company periodically reviews inventory to determine if a write-down is necessary for inventory that has become obsolete, inventory that has a cost basis less than net realizable value, and inventory in excess of future demand taking into consideration the product shelf life. Accounts Receivable The Company grants credit to various customers in the normal course of business. Accounts receivable consist of amounts due from distributors. The Company records an allowance for doubtful accounts at the time potential collection risk is identified. Uncollectible accounts are written off against the allowance after appropriate collection efforts have been exhausted and when it is deemed that a balance is uncollectible. Property and Equipment Property and equipment are stated at cost. Depreciation is computed by use of the straight-line method over the estimated useful lives of the assets, which is between three to five years for laboratory equipment, between five to seven years for office furniture and equipment, and the shorter of lease term or useful life for leasehold improvements. Upon disposition of the assets, the costs and related accumulated depreciation are removed from the accounts and any resulting gain or loss is included in the results of operations. Repairs and maintenance costs are included as expense in the accompanying statement of operations. Management reviews property and equipment for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of the long-lived asset is measured by a comparison of the carrying amount of the asset to future undiscounted net cash flows expected to be generated by the asset. If the undiscounted cash flows are less than the carrying amount, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the estimated fair value of the assets. Management did not identify any indicators of impairment through September 30, 2019. Derivative Financial Instruments In July 2019, the Company issued $82.0 million in aggregate principal amount of convertible senior subordinated notes due 2025 (the “2025 Notes”). In connection with the 2025 Notes, the Company bifurcated the embedded conversion option along with the fundamental change make-whole provision and the cash settled fundamental make-whole shares provision, and recorded the fair value of these embedded features as a derivative liability in the Company’s consolidated balance sheets in accordance with Accounting Standards Codification (“ASC”) Topic 815, Derivatives and Hedging . In connection with the Company’s issuance of the 2023 Notes in January 2018, the Company bifurcated the embedded conversion option, along with the interest make-whole provision and make-whole fundamental change provision, and recorded the embedded conversion option as a derivative liability in the Company’s consolidated balance sheets in accordance with ASC Topic 815, Derivatives and Hedging . The two financial instruments above are remeasured at the end of each reporting period with changes in fair value recorded in the consolidated statements of operations in other income (expense) as a change in fair value of the derivative liability. Warranty Reserve The Company may replace Eversense system components that do not function in accordance with the product specifications. Estimated replacement costs are recorded at the time of shipment and are developed by analyzing historical replacement experience and product performance. Revenue Recognition The Company recognizes revenue in accordance with ASC Topic 606, Revenue from Contracts with Customers . This standard applies to all contracts with customers, except for contracts that are within the scope of other standards, such as leases, insurance, collaboration arrangements and financial instruments. Under ASC Topic 606, an entity recognizes revenue when its customer obtains control of promised goods or services, in an amount that reflects the consideration that the entity expects to receive in exchange for those goods or services. To determine revenue recognition for arrangements that an entity determines are within the scope of ASC Topic 606, the entity performs the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the entity satisfies a performance obligation. The Company only applies the five-step model to contracts when it is probable that the entity will collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer. At contract inception, once the contract is determined to be within the scope of ASC Topic 606, the Company assesses the goods or services promised within each contract and determines those that are performance obligations, and assesses whether each promised good or service is distinct. The Company then recognizes as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied. The Company generates product revenue from sales of the Eversense system and related components and supplies at a fixed price to third-party distributors in the European Union and to a network of strategic fulfillment partners in the United States (collectively, “Customers”) who then resell the products to health care providers and patients. The Company is paid for its sales directly to the Customers, regardless of whether or not the Customers resell the products to health care providers and patients. Revenue from product sales is recognized when the Customers obtain control of the Company’s product, which occurs at a point in time, based upon the delivery terms as defined in the contract. The Company is typically paid within 60 days of invoicing subsequent to the Customers obtaining control of the Company’s product. Product sales are recorded net of estimated costs for patient access and sales incentive programs. In March 2019, the Company introduced the Eversense Bridge Program (the “program”) in the United States. Under the program, the Company provides financial assistance, in the form of reimbursement, to eligible patients based on their insurance coverage. Reimbursement payments to the patient under the program are treated as a reduction of revenue in the period in which the corresponding gross revenue is recognized. Estimated reimbursement payments for product shipped to the Company’s customers but not provided to a patient within the same reporting period is based on historical experience and recorded within accrued expenses and other current liabilities in the accompanying consolidated balance sheets. Because of the limited experience with the program as of September 30, 2019, the Company’s estimated reimbursement rates with respect to such shipped, but unsold, products could change in future periods, and such changes could be material. The Company also, at its discretion, offers discounts and other allowances under defined promotional or prompt pay programs to the Customers which result in the establishment of reserves against product revenue, however, to date these amounts have been immaterial. Cost of Sales The Company uses third-party contract manufacturers to manufacture Eversense and related components and supplies. Cost of sales consists primarily of raw materials, contract manufacturing service fees, expected warranty costs, recall costs, product obsolescence, scrap, warehousing indirect personnel costs and shipping and handling expenses associated with product delivery. Sales and Marketing Expenses Sales and marketing expenses consist primarily of salaries, commissions, and other related costs, including stock-based compensation, for personnel who perform sales, marketing, and customer support functions. Other significant costs include marketing programs, website design and advertising, educational and promotional materials, consultants, and tradeshow expenses. Research and Development Expenses Research and development expenses consist of expenses incurred in performing research and development activities in developing Eversense, including clinical trials and feasibility studies, and partnerships for strategic initiatives including insulin delivery and new indications. Research and development expenses include compensation and benefits for research and development employees including stock‑based compensation, cost of laboratory supplies, clinical trial and related clinical manufacturing expenses, costs related to regulatory operations, fees paid to contract research organizations and other consultants, and other outside expenses. Research and development expenses are expensed as incurred. General and Administrative Expenses General and administrative expenses consist primarily of salaries and other related costs, including stock‑based compensation, for personnel in the Company’s executive, finance, accounting, business development, information technology, and human resources functions. Other significant costs include information technology, facility costs, legal fees relating to patent and corporate matters and fees for accounting and consulting services. Stock‑Based Compensation The Company recognizes the cost of employee services received in exchange for awards of equity instruments, such as stock options, based on the fair value of those awards at the date of grant. The estimated fair value of stock options on the date of grant is amortized on a straight‑line basis over the requisite service period for each separately vesting portion of the award for those awards with service conditions only. For awards that also contain performance conditions, expense is recognized beginning at the time the performance condition is considered probable of being met over the remaining vesting period. The Company accounts for forfeitures in the period in which they occur. The Company uses the Black‑Scholes option pricing model to determine the fair value of stock‑option awards. Valuation of stock awards requires management to make assumptions and to apply judgment to determine the fair value of the awards. These assumptions and judgments include estimating the fair value of the Company’s common stock, future volatility of the Company’s stock price, dividend yields, future employee turnover rates, and future employee stock option exercise behaviors. Changes in these assumptions can affect the fair value estimate. Under ASC Topic 718, the cumulative amount of compensation cost recognized for instruments classified as equity that ordinarily would result in a future tax deduction under existing tax law shall be considered to be a deductible difference in applying ASC Topic 740, Income Taxes . The deductible temporary difference is based on the compensation cost recognized for financial reporting purposes; however, these provisions currently do not impact the Company, as all the deferred tax assets have a full valuation allowance. Since the Company had net operating loss (“NOL”) carryforwards as of September 30, 2019, no excess tax benefits for the tax deductions related to stock-based awards were recognized in the statements of operations and comprehensive loss. Income Taxes The Company uses the asset and liability method of accounting for income taxes. Deferred tax assets and liabilities are determined based on differences between the financial reporting and tax basis of assets and liabilities and are measured using the enacted tax rates and laws that are in effect when the differences are expected to reverse. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the period that such tax rate changes are enacted. The measurement of a deferred tax asset is reduced, if necessary, by a valuation allowance if it is more likely than not that some portion or all of the deferred tax asset will not be realized. Management uses a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return, as well as guidance on derecognition, classification, interest and penalties and financial statement reporting disclosures. For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by taxing authorities. In the ordinary course of business, transactions occur for which the ultimate outcome may be uncertain. Management does not expect the outcome related to accrued uncertain tax provisions to have a material adverse effect on the Company’s financial position, results of operations or cash flows. The Company recognizes interest and penalties accrued on any unrecognized tax exposures as a component of income tax expense. The Company did not have any amounts accrued relating to interest and penalties as of September 30, 2019 and December 31, 2018. The Company is subject to taxation in various jurisdictions in the United States and remains subject to examination by taxing jurisdictions for the year 1998 and all subsequent periods due to the availability of NOL carryforwards. In addition, all of the NOLs and research and development credit carryforwards that may be used in future years are still subject to adjustment. Fair Value of Financial Instruments The carrying amounts of cash and cash equivalents, accounts receivable, accounts payable, and accrued expenses approximate fair value because of their short maturities. The Company’s 2025 Notes and 2023 Notes are recorded at historical cost, net of discounts, and are not remeasured at fair value. Net Loss per Share Basic net loss per share is computed by dividing net loss by the weighted average number of shares of common stock outstanding during the period. For periods of net loss, diluted net loss per share is calculated similarly to basic loss per share because the impact of all potential common shares is anti-dilutive. At September 30, 2019 and 2018, the total number of anti-dilutive shares, consisting of common stock options, stock purchase warrants, and the 2025 Notes and 2023 Notes using the if-converted method, which have been excluded from the computation of diluted loss per share, were as follows: September 30, 2019 2018 Stock-based awards 25,684,676 21,006,058 2023 Notes 6,672,500 15,499,998 2025 Notes 63,565,883 — Warrants 5,196,581 4,068,581 Total anti-dilutive shares outstanding 101,119,640 40,574,637 For periods of net income, and when the effects are not anti-dilutive, diluted earnings per share is computed by dividing net income available to common stockholders by the weighted-average number of shares outstanding plus the impact of all potential dilutive common shares, consisting primarily of common stock options and stock purchase warrants using the treasury stock method, and the 2025 Notes and 2023 Notes using the if-converted method. Recent Accounting Pronouncements Recently Adopted In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-02, Leases (Topic 842) (“ASC 842”). The guidance requires lessees to recognize assets and liabilities related to long-term leases on the balance sheet and expands disclosure requirements regarding leasing arrangements. In July 2018, the FASB issued ASU 2018-11 to provide another transition method, allowing a cumulative effect adjustment to the opening balance of retained earnings during the period of adoption. The guidance is effective for annual reporting periods beginning after December 15, 2018, subject to early adoption. The Company adopted the new standard effective January 1, 2019 using the modified retrospective approach. The Company did not elect the transition option, but elected certain practical expedients, including not separating lease components from nonlease components for all classes of underlying assets. Additionally, all leases with a term at commencement of 12 months or less will be excluded from analysis under ASC 842. The standard did not materially affect the Company’s consolidated net loss or cash flows. Impact of Adopting ASC 842 on the Financial Statements January 1, 2019 January 1, 2019 Prior to ASC 842 Adoption ASC 842 Adoption As Adjusted Consolidated Balance Sheet Data (in thousands) Operating lease assets (1) $ — $ 2,235 $ 2,235 Deferred rent non-current (2) $ 84 $ (84) $ — Operating lease liabilities (3) $ — $ 417 $ 417 Non-current operating lease liabilities (3) $ — $ 1,902 $ 1,902 (1) Represents capitalization of operating lease assets, including reclassification of deferred rent to operating lease assets. (2) As of December 31, 2018, the deferred rent balance was $84. (3) Represents recognition of operating lease liabilities. The Company has evaluated all other issued unadopted ASUs and believes the adoption of these standards will not have a material impact on its consolidated statements of earnings, balance sheets, or cash flows. |
Inventory, net
Inventory, net | 9 Months Ended |
Sep. 30, 2019 | |
Inventory, net | |
Inventory, net | 4. Inventory, net Inventory, net of reserves, consisted of the following (in thousands): September 30, December 31, 2019 2018 Finished goods $ 4,312 $ 1,457 Work-in-process 12,571 7,211 Raw materials 2,979 1,563 Total $ 19,862 $ 10,231 |
Prepaid Expenses and Other Curr
Prepaid Expenses and Other Current Assets | 9 Months Ended |
Sep. 30, 2019 | |
Prepaid Expenses and Other Current Assets | |
Prepaid expenses and other current assets | 5. Prepaid Expenses and Other Current Assets Prepaid expenses and other current assets consisted of the following (in thousands): September 30, December 31, 2019 2018 Contract manufacturing $ 3,359 $ 2,962 Clinical and preclinical 193 111 Marketing and sales 416 287 IT and software 144 244 Insurance 333 — Interest receivable 2 239 Other receivables 235 — Other 180 142 Total prepaid expenses and other current assets $ 4,862 $ 3,985 |
Accrued Expenses and Other Curr
Accrued Expenses and Other Current Liabilities | 9 Months Ended |
Sep. 30, 2019 | |
Accrued Expenses and Other Current Liabilities | |
Accrued Expenses and Other Current Liabilities | 6. Accrued expenses and other current liabilities consisted of the following (in thousands): September 30, December 31, 2019 2018 Contract manufacturing $ 4,192 $ 6,068 Compensation and benefits 4,363 3,685 Sales and marketing services 816 738 Professional & administration services 2,576 727 Interest on notes payable 856 1,268 Research and development 2,504 147 Product warranty and replacement obligations 1,405 816 Patient access and incentive programs 1,299 — Operating lease 647 — Other 47 402 Total accrued expenses and other current liabilities $ 18,705 $ 13,851 |
Leases
Leases | 9 Months Ended |
Sep. 30, 2019 | |
Leases | |
Leases | 7. The Company evaluates whether contractual arrangements contain leases at the inception of such arrangements. Specific considerations include whether the Company can control the underlying asset and has the right to obtain substantially all of the economic benefits or outputs from the asset. Substantially all of the Company’s leases are long-term operating leases with fixed payment terms. The Company currently does not have financing leases. Right-of-use (“ROU”) operating lease assets represent the Company’s right-to-use an underlying asset for the lease term, and operating lease liabilities represent the Company’s obligation to make lease payments. Operating lease expense is recognized on a straight-line basis over the lease term and is included in general and administrative expenses on the Company’s consolidated statement of operations and comprehensive loss. Options to extend the leases or terminate the leases early are only included in the lease term when it is reasonably certain that the option will be exercised. The Company recognizes a ROU operating lease asset and liability as of the lease commencement date at the present value of the lease payments over the lease term. If the discount rate in the lease agreement is not implicit, the Company estimates the incremental borrowing rate based on the rate of interest the Company would have to pay to borrow a similar amount on a collateralized basis over a similar term. Lease and non-lease components are accounted for as a single component. Leases with an initial term of 12 months or less are expensed to rent expense over the related term. The Company leases approximately 33,000 square feet of research and office space for its corporate headquarters under a non-cancelable operating lease expiring in 2023. The Company has an option to renew the lease for one additional five year term. With the adoption of ASC 842, the Company has recorded a right-of-use asset and corresponding lease liability, and does not include the additional five year term under the option. The Company leases approximately 12,000 square feet of office space under a cancelable operating lease that expired on June 30, 2019 and subsequently became a month-to-month lease. The Company elected to account for this lease in accordance with the policy of not recording leases with an initial term of 12 months or less on the balance sheet. This lease terminated on October 31, 2019. On September 2, 2019, the Company entered into a new non-cancellable operating lease agreement for approximately 30,500 square feet of office space expiring in 2023. The Company does not have the option to renew the lease for an additional term. The Company did not have any lease related payments made to the lessor before the commitment date, lease incentives received from the lessor or initial direct cost adjustments to be added to the initial measurement of the liability. The Company recorded $1.1 million of associated right-of-use assets and lease liabilities in its consolidated balance sheet at September 30, 2019. Operating lease expense for the three and nine months ended September 30, 2019 was $0.2 million and $0.5 million, respectively. Short-term lease expense is included in total lease expense. For the nine months ended September 30, 2019, short term lease expense was $0.1 million and for the three months ended September 30, 2019 the short term lease expense amount was not significant. Operating lease expense was $0.2 million and $0.5 million for the three and nine months ended September 30, 2018, respectively. The following table summarizes the lease assets and liabilities as of September 30, 2019 (in thousands): Operating Lease Assets and Liabilities Balance Sheet Classification Amount Assets Operating lease ROU assets Deposits and other assets $ 2,987 Liabilities Current operating lease liabilities Accrued expenses and other current liabilities $ 647 Non-current operating lease liabilities Other non-current liabilities 2,462 Total operating lease liabilities $ 3,109 The following table summarizes the maturity of undiscounted payments due under lease liabilities and the present value of those liabilities as of September 30, 2019 (in thousands): 2019 (remaining 3 months) $ 206 2020 938 2021 969 2022 1,002 2023 600 Total 3,715 Present value adjustment (606) Present value of lease liabilities $ 3,109 The following table summarizes the weighted-average lease term and weighted-average discount rate as of September 30, 2019: Remaining lease term (years) Operating leases 3.9 Discount rate Operating leases 9.1 % During the nine months ended September 30, 2019, the Company made cash payments of $0.5 million under its operating leases, which are included in cash flows used in operating activities in the consolidated statement of cash flows. |
Notes Payable
Notes Payable | 9 Months Ended |
Sep. 30, 2019 | |
Notes Payable | |
Notes Payable | 8. Term Loans Solar Loan Agreement On July 16, 2019, the Company entered into a Loan and Security Agreement (the “Solar Loan Agreement”) with Solar Capital, Ltd. (“Solar”). Pursuant to the Solar Loan Agreement, on July 25, 2019, the Company borrowed term loans in an aggregate principal amount of $45.0 million (the “Solar Term Loan”), of which the Company used $11.6 million to repay in full the Term Loans and terminate the Amended and Restated Loan and Security Agreement with Oxford and SVB described below. Interest on the Solar Term Loan is payable monthly at a floating annual rate of 6.50% plus the greater of (i) the rate per annum rate published by the Intercontinental Exchange Benchmark Administration Ltd. and (ii) 2.48%, provided that the minimum floor interest rate is 8.98%. The maturity date for the Solar Term Loan is July 1, 2024 (the “Solar Maturity Date”). Commencing on August 1, 2021, the Company will be required to make monthly principal amortization payments; provided that the interest only period may be extended to (i) August 1, 2022 if the Company’s product revenue is greater than or equal to $40.0 million on a trailing six-month basis prior to the second anniversary of the effective date and (ii) August 1, 2023 if the Company’s product revenue is greater than or equal to $75.0 million on a trailing six-month basis after the achievement of the first extension. The Company may elect to prepay the Solar Term Loan prior to the Solar Maturity Date subject to a prepayment fee equal to 3.00% if the prepayment occurs within one year of the effective date, 2.00% if the prepayment occurs during the second year following the effective date, and 1.00% if the prepayment occurs more than two years after the effective date and prior to the Solar Maturity Date. The Solar Loan Agreement contains customary events of default, including bankruptcy, the failure to make payments when due, the occurrence of a material impairment on the Solar Lenders’ security interest over the collateral, a material adverse change, the occurrence of a default under certain other agreements entered into by the Company and its subsidiaries, the rendering of certain types of judgments against the Company and its subsidiaries, the revocation of certain government approvals, violation of covenants, and incorrectness of representations and warranties in any material respect. Upon the occurrence of an event of default, subject to specified cure periods, all amounts owed by the Company would begin to bear interest at a rate that is 5.00% above the rate effective immediately before the event of default, and may be declared immediately due and payable by the Solar Lenders. The Solar Term Loan is secured by substantially all of the Company and its subsidiaries’ assets. The Solar Loan Agreement also contains specified financial covenants related to the Company’s liquidity and trailing six-month revenue. The Solar Loan Agreement also contains certain restrictive covenants that limit the Company’s ability to incur additional indebtedness and liens, merge with other companies or consummate certain changes of control, acquire other companies, engage in new lines of business, make certain investments, pay dividends, transfer or dispose of assets, amend certain material agreements or enter into various specified transactions, as well as financial reporting requirements. A final fee (“Final Fee”), which is equal to $2.9 million (6.45% of the Solar Term Loan), is due and payable on the earliest to occur of (i) Solar Maturity Date, (ii) the acceleration of the Solar Term Loan including, upon the occurrence of a bankruptcy or insolvency event, or (iii) prepayment, refinancing, substitution or replacement of the Solar Term Loan. The fee is accreted to interest expense over the term of the loan to the Final Fee amount. In connection with the Solar Term Loan, the Company incurred issuance costs in the amount of $0.4 million, and paid fees to Lenders (as defined below) in the amount of $0.9 million in connection with the repayment of the Term Loans, which are netted against the principal balance of the Solar Term Loan and amortized as additional interest expense over the term of the Solar Term Loan using the effective interest method. Unamortized debt issuance costs and additional prepayment fees in the amount of $0.4 million associated with the repayment of the Term Loans were recorded as a loss on the extinguishment of debt in other income (expense) in the Company’s consolidated statements of operations and comprehensive loss as of September 30, 2019. Additionally, the Company issued Solar warrants to purchase an aggregate of 1,125,000 shares of the Company’s common stock with an exercise price of $1.20 per share (the “Solar Warrants”). The Solar Warrants are exercisable until July 25, 2029. The proceeds from the Solar Term Loan were allocated between the debt and the Solar Warrants based on their respective fair value of $0.7 million, and were recorded within equity resulting in a debt discount that is being amortized as additional interest expense over the term of the Solar Term Loan using the effective interest method. Oxford and Silicon Valley Bank Term Loans On June 30, 2016, the Company entered into an Amended and Restated Loan and Security Agreement with Oxford Finance LLC (“Oxford”) and Silicon Valley Bank (“SVB” and together with Oxford, the “Lenders”). Pursuant to the Amended and Restated Loan and Security Agreement, the Company borrowed an aggregate principal amount of $25.0 million in the following three tranches: $15.0 million (“Tranche 1 Term Loan”); $5.0 million (“Tranche 2 Term Loan”); and $5.0 million (“Tranche 3 Term Loan”) (each, a “Term Loan,” and collectively, the “Term Loans”). The funding conditions for the Tranche 1 Term Loan were satisfied as of June 30, 2016. Therefore, the Company issued secured notes to the Lenders for aggregate gross proceeds of $15.0 million (the “Oxford/SVB Notes”) on June 30, 2016. The Company used approximately $11.0 million from the proceeds from the Oxford/SVB Notes to repay the outstanding balance under the Company’s previously existing Loan and Security Agreement with Oxford. The Company borrowed the Tranche 2 Term Loan and Tranche 3 Term Loan in November 2016 and March 2017, respectively. The maturity date for all Term Loans was June 1, 2020. The Company was also required to make a final payment equal to 9.00% of the aggregate principal balances of the funded Term Loans and was being accrued as additional interest expense over the term of the Oxford/SVB Notes using the effective interest method. Proceeds from the Solar Term Loan were used to repay the remaining balance of the Oxford and SVB Term Loans, which were subject to a prepayment fee equal to $0.1 million. Convertible Notes 2025 Notes In July 2019, the Company issued $82.0 million in aggregate principal amount of 2025 Notes. The 2025 Notes are general, unsecured, senior subordinated obligations of the Company and bear interest at a rate of 5.25% per year, payable semiannually in arrears on January 15 and July 15 of each year, beginning on January 15, 2020. The 2025 Notes will mature on January 15, 2025, unless earlier repurchased or converted. The Company used $37.9 million of the net proceeds from the issuance of the 2025 Notes to repurchase $37.0 million aggregate principal amount of the Company’s outstanding 2023 Notes, at a purchase price equal to the principal amount thereof, plus accrued and unpaid interest thereon . The 2025 Notes are convertible, at the option of the holders, into shares of the Company’s common stock, at an initial conversion rate of 757.5758 shares per $1,000 principal amount of the 2025 Notes (equivalent to an initial conversion price of approximately $1.32 per share). The Company may redeem for cash all or part of the 2025 Notes, at its option, if (1) the last reported sale price of the Company’s common stock has been at least 150% of the conversion price then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading day period (including the last trading day of such period) ending on, and including, the trading day immediately preceding the date on which the Company provides notice of redemption and (2) a registration statement covering the resale of the shares of the Company’s common stock issuable upon conversion of the 2025 Notes is effective and available for use and is expected to remain effective and available for use during the redemption period as of the date of the redemption notice date. The redemption price will be equal to 100% of the principal amount of the 2025 Notes to be redeemed plus accrued and unpaid interest to, but excluding, the redemption date. If the Company undergoes a fundamental change, such as a merger, sale, greater than 50% ownership change, liquidation, dissolution or delisting, holders may require the Company to repurchase for cash all or any portion of their 2025 Notes at a fundamental change repurchase price equal to 100% of the principal amount of the 2025 Notes to be repurchased, plus accrued and unpaid interest to, but excluding, the fundamental change repurchase date. In addition, following a notice of redemption or certain corporate events that occur prior to the maturity date, the Company will, in certain circumstances, increase the conversion rate for a holder who elects to convert its 2025 Notes in connection with such notice of redemption or corporate event. In certain circumstances, the Company will be required to pay cash in lieu of delivering make whole shares unless the Company obtains stockholder approval to issue shares. The 2025 Notes are guaranteed on a senior unsecured basis by the Company’s wholly-owned subsidiary, Senseonics, Incorporated, and may be guaranteed by certain future subsidiaries. The subsidiary guarantor is 100% owned, the guarantee is full and unconditional and joint and several and the parent company has no independent assets or operations and any subsidiaries of the parent company other than the subsidiary guarantor are minor. In connection with the issuance of the 2025 Notes, the Company incurred $4.3 million in debt issuance costs and debt discounts. Several note holders of the 2025 Notes were also note holders of the 2023 Notes, and as a result, these transactions qualified as loan modifications. The associated debt issuance costs were allocated between the portion of 2025 Notes purchased by new note holders, and of 2025 Notes purchased by existing 2023 Note holders. Loan modifications require third-party debt related costs to be expensed immediately, whereas fees paid to lenders of the modified loans are deferred. The third-party costs associated with the new note holders are also deferred as discounts that are amortized as additional interest expense over the term of the notes. Of the $4.3 million, $3.3 million were expensed for loan modifications and $1.0 million were deferred as discounts to the debt. The 2025 Notes also contained an embedded conversion option requiring bifurcation as a separate derivative liability, along with the fundamental change make-whole provision and the cash settled fundamental make-whole shares provision. The Company recorded the fair value of the embedded features in the amount of $36.0 million as a debt discount and derivative liability in the Company’s consolidated balance sheets in accordance with ASC Topic 815, Derivatives and Hedging. The derivative is adjusted to fair value at each reporting period, with the change in the fair value recorded to other income (expense) in the Company’s consolidated statement of operations and comprehensive loss. Based upon recent trading prices (Level 2 — market approach) and other observable inputs, including the Company’s common stock, implied volatility, interest rates and credit spreads, the fair value of the Company’s 2025 Notes, excluding the embedded features, were $57 million as of September 30, 2019. 2023 Notes In January 2018, the Company issued $50.0 million in aggregate principal amount of the 2023 Notes. In February 2018, the Company issued an additional $3.0 million in aggregate principal amount of the 2023 Notes, pursuant to the partial exercise of the overallotment option by the underwriter. The net proceeds from the issuance of the 2023 Notes, after deducting transaction costs, were $50.7 million. The 2023 Notes are general, unsecured, senior subordinated obligations of the Company. The Company pays interest semiannually in arrears on February 1 and August 1 of each year, beginning on August 1, 2018. In July 2019, the Company used the net proceeds from the issuance of the 2025 Notes to repurchase $37.0 million aggregate principal amount of the outstanding 2023 Notes. As the 2023 Notes have a maturity date of February 1, 2023, they are classified as a long-term liability on the Company’s consolidated balance sheet at September 30, 2019. Each $1,000 of principal of the 2023 Notes is initially convertible into 294.1176 shares of the Company’s common stock, which is equivalent to an initial conversion price of approximately $3.40 per share, subject to adjustment upon the occurrence of specified events. Holders may convert at any time prior to February 1, 2023. Holders who convert on or after the date that is six months after the last date of original issuance of the 2023 Notes but prior to February 1, 2021, may also be entitled to receive, under certain circumstances, an interest make-whole payment payable in shares of common stock. If specific corporate events occur prior to the maturity date, the Company would increase the conversion rate pursuant to the make-whole fundamental change provision for a holder who elects to convert their 2023 Notes in connection with such an event in certain circumstances. Additionally, if a fundamental change occurs prior to the maturity date, holders of the 2023 Notes may require the Company to repurchase all or a portion of their 2023 Notes for cash at a repurchase price equal to 100% of the principal amount plus any accrued and unpaid interest. The Company bifurcated the embedded conversion option, along with the interest make-whole provision and make-whole fundamental change provision, and in January 2018 recorded the embedded features as a debt discount and derivative liability in the Company’s consolidated balance sheets at its initial fair value of $17.3 million. Additionally, the Company incurred transaction costs of $2.2 million. The debt discount and transaction costs are being amortized to interest expense over the term of the 2023 Notes at an effective interest rate of 9.30%. The derivative is adjusted to fair value at each reporting period, with the change in the fair value recorded to other income/(expense) in the Company’s consolidated statement of operations and comprehensive loss. Based upon recent trading prices (Level 2 — market approach) and other observable inputs, including the Company’s common stock, implied volatility, interest rates and credit spreads, the fair value of the Company’s 2023 Notes, excluding the embedded features, was $13.4 million as of September 30, 2019 and $41 million at December 31, 2018. In the nine months ended September 30, 2018, the Company issued 73,529 shares of common stock upon the conversion of $250,000 in aggregate principal amount of the 2023 Notes. There were no conversions of 2023 Notes in the three months ended September 30, 2018 and 2019, or the nine months ended September 30, 2019. The following carrying amounts are outstanding under the Company’s notes payable as of September 30, 2019 and December 31, 2018 (in thousands): September 30, 2019 December 31, 2018 Principal ($) Debt Discount ($) Issuance Costs ($) Warrants ($) Carrying Amount ($) Principal ($) Debt Discount ($) Issuance Costs ($) Warrants ($) Carrying Amount ($) Solar Term Loan 45,000 (834) (328) (746) 43,092 - - - - - Oxford / SVB Term - - - - - 15,000 (113) (103) - 14,784 2023 Notes 15,700 (4,171) 11,529 52,700 (16,597) - 36,103 2025 Notes 82,000 (45,603) (729) 35,668 - - - - - Interest expense related to the notes payable for the periods presented below is as follows (in thousands): Three Months Ended September 30, 2019 Nine Months Ended September 30, 2019 Effective Interest Rate Interest ($) Debt Discount & Fees ($) Loss on Extinguishment of Debt ($) Total Interest Expense ($) Effective Interest Rate Interest ($) Debt Discount & Fees ($) Loss on Extinguishment of Debt ($) Total Interest Expense ($) Solar Term Loan 772 60 - 832 772 60 - 832 Oxford / SVB Term 68 - 68 900 56 - 955 2023 Notes 708 176 398 1,282 1,924 1,888 398 4,210 2025 Notes 761 915 - 1,676 943 915 - 1,859 Three Months Ended September 30, 2018 Nine Months Ended September 30, 2018 Effective Interest Rate Interest ($) Debt Discount & Fees ($) Loss on Extinguishment of Debt ($) Total Interest Expense ($) Effective Interest Rate Interest ($) Debt Discount & Fees ($) Loss on Extinguishment of Debt ($) Total Interest Expense ($) Oxford / SVB Term 361 88 - 449 1,211 292 - 1,503 2023 Notes 694 1,027 - 1,721 1,853 4,655 - 6,508 The following are the scheduled maturities of the Solar Term Loan, 2025 Notes, and 2023 Notes as of September 30, 2019 (in thousands): 2019 (remaining three months) $ — 2020 — 2021 6,250 2022 15,000 2023 30,700 Thereafter 90,750 Total $ 142,700 |
Stockholders' Equity
Stockholders' Equity | 9 Months Ended |
Sep. 30, 2019 | |
Stockholders' Equity | |
Stockholders' Equity | 9. Preferred Stock As of September 30, 2019 and December 31, 2018, the Company’s authorized capital stock included 5,000,000 shares of undesignated preferred stock, par value $0.001 per share. No shares of preferred stock were outstanding as of September 30, 2019 or December 31, 2018. Common Stock In July 2019, pursuant to an underwriting agreement with Jefferies LLC, the Company closed a follow-on public offering of 26,136,363 shares of its common stock at a price of $1.10 per share, which included the exercise in full by Jefferies LLC of its option to purchase up to 3,409,090 additional shares. The Company received net proceeds of $26.9 million from the offering, after deducting underwriting discounts and offering expenses. As of September 30, 2019 and December 31, 2018, the Company’s authorized capital stock included 450,000,000 shares of common stock, par value $0.001 per share. The Company had 203,365,624 and 176,918,381 shares of common stock issued and outstanding at September 30, 2019 and December 31, 2018, respectively. Stock Purchase Warrants Additionally, the Company issued the Solar Warrants to purchase an aggregate of 1,125,000 shares of the Company’s common stock with an exercise price of $1.20 per share. The Solar Warrants are exercisable until July 25, 2029. The proceeds from the Solar Term Loan were allocated between the debt and the Solar Warrants based on their fair value of $0.7 million, and were recorded within equity resulting in a discount to the Solar Term Loan. In connection with the issuance of the Oxford/SVB Notes, the Company issued to the Lenders 10-year stock purchase warrants to purchase an aggregate of 116,581, 63,025 and 80,645 shares of common stock at an exercise price of $3.86, $2.38 and $1.86 per share, respectively. The cumulative fair value of the warrants, which the Company estimated to be $0.5 million, resulted in a discount to the Oxford/SVB Notes. These warrants expire on June 30, 2026, November 22, 2026, and March 29, 2027, respectively, and are classified in equity. In connection with the Company’s original Loan and Security Agreement with Oxford in 2014, the Company issued to Oxford 10-year stock purchase warrants to purchase an aggregate of 167,570 shares of common stock at an exercise price of $1.79 per share. The fair value of the warrants, which the Company estimated to be $0.2 million, resulted in a discount to the promissory notes issued to Oxford in connection with the original Loan and Security Agreement. These warrants expire on November 2, 2020, July 14, 2021 and August 19, 2021, and are classified in equity. The unamortized deferred financing fees and debt discount related to the notes rollover amount was being amortized along with the deferred financing costs and the discount created by the new issuance of the Solar Warrants over the term of the loan using the effective interest method. In connection with the repayment of the Term Loans, the unamortized discount and additional prepayment fee of $0.4 million was recorded as a loss on extinguishment of debt in other income (expense) in the Company’s consolidated statements of operations and comprehensive loss. Stock‑Based Compensation In December 2015, the Company adopted the 2015 Equity Incentive Plan (the “2015 Plan”) under which incentive stock options, non-qualified stock options, and restricted stock awards may be granted to the Company’s employees and certain other persons in accordance with the 2015 Plan provisions. In connection with the March 2016 Offering, the Company’s board of directors adopted and the Company’s stockholders approved an Amended and Restated 2015 Equity Incentive Plan (the “amended and restated 2015 Plan”). The amended and restated 2015 Plan became effective as of the date of the pricing of the March 2016 Offering. The Company’s board of directors may terminate the amended and restated 2015 Plan at any time. Options granted under the amended and restated 2015 Plan expire ten years after the date of grant. Pursuant to the amended and restated 2015 Plan, the number of shares initially reserved for issuance pursuant to equity awards was 17,251,115 shares, representing 8,000,000 shares plus up to an additional 9,251,115 shares in the event that options that were outstanding under the Company’s equity incentive plans as of February 16, 2016 expire or otherwise terminate without having been exercised (in such case, the shares not acquired will revert to and become available for issuance under the amended and restated 2015 Plan). The number of shares of the Company’s common stock reserved for issuance under the amended and restated 2015 Plan will automatically increase on January 1 of each year, beginning on January 1, 2017 and ending on January 1, 2026, by 3.5% of the total number of shares of the Company’s common stock outstanding on December 31 of the preceding calendar year, or a lesser number of shares as may be determined by the Company’s board of directors. As of September 30, 2019, 3,343,444 shares remained available for grant under the amended and restated 2015 Plan. On May 30, 2019, the Company adopted the Senseonics Holdings, Inc. Inducement Plan (the “Inducement Plan”), pursuant to which the Company reserved 1,800,000 shares of the Company’s common stock for issuance. The only persons eligible to receive grants of Awards (as defined below) under the Inducement Plan are individuals who satisfy the standards for inducement grants in accordance with NYSE American Company Guide Section 711(a), including individuals who were not previously an employee or director of the Company, or following a bona fide period of non-employment, as an inducement material to such persons entering into employment with the Company. An “Award” is any right to receive the Company’s common stock pursuant to the Inducement Plan, consisting of nonstatutory options, restricted stock unit awards and other equity incentive awards. As of September 30, 2019, 1,031,458 shares remained available for grant under the Inducement Plan. On May 8, 1997, the Company adopted the 1997 Stock Option Plan (the “1997 Plan”), under which incentive stock options, non‑qualified stock options, and restricted stock awards may be granted to the Company’s employees and certain other persons in accordance with the 1997 Plan provisions. Approximately 6,253,301 shares of the Company’s common stock underlying options have vested or are expected to vest under the 1997 Plan. Upon the effectiveness of the 2015 Plan, the Company no longer grants any awards under the 1997 Plan. The Company recognizes the cost of employee services received in exchange for awards of equity instruments, such as stock options, based on the fair value of those awards at the date of grant. The estimated fair value of stock options on the date of grant is amortized on a straight-line basis over the requisite service period for each separately vesting portion of the award for those awards with service conditions only. For awards that also contain performance conditions, expense is recognized beginning at the time the performance condition is considered probable of being met over the remaining vesting period. |
Fair Value Measurements
Fair Value Measurements | 9 Months Ended |
Sep. 30, 2019 | |
Fair Value Measurements | |
Fair Value Measurements | 10. The Company accounts for recurring and non-recurring fair value measurements in accordance with Financial Accounting Standards Board Accounting Standards Codification (ASC) 820, Fair Value Measurements and Disclosures (ASC 820). ASC 820 defines fair value, establishes a fair value hierarchy for assets and liabilities measured at fair value, and requires expanded disclosures about fair value measurements. The ASC 820 hierarchy ranks the quality of reliability of inputs, or assumptions, used in the determination of fair value and requires assets and liabilities carried at fair value to be classified and disclosed in one of the following three categories: · Level 1—Quoted prices for identical assets or liabilities in active markets. · Level 2—Observable inputs other than quoted prices in active markets for identical assets and liabilities, quoted prices for identical or similar assets or liabilities in inactive markets, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. · Level 3—Inputs that are generally unobservable and typically reflect management’s estimate of assumptions that market participants would use in pricing the asset or liability. Financial Assets and Liabilities Measured at Fair Value The following table represents the fair value hierarchy of the Company’s financial assets and liabilities measured at fair value (in thousands): September 30, 2019 Total Level 1 Level 2 Level 3 Assets Money market funds $ 923 $ 923 $ — $ — Liabilities Embedded features of the 2025 Notes $ 26,201 $ — $ — $ 26,201 Embedded features of the 2023 Notes $ 787 $ — $ — $ 787 December 31, 2018 Total Level 1 Level 2 Level 3 Assets Money market funds $ 122,859 $ 122,859 $ — $ — Liabilities Embedded features of the 2023 Notes $ 17,091 $ — $ — $ 17,091 The inputs used in measuring the fair value of the Company’s money market funds included in cash equivalents are considered to be Level 1 in accordance with the three-tier fair value hierarchy. The fair market values are based on period-end statements supplied by the various banks and brokers that held the majority of the funds. The following table provides a reconciliation of the beginning and ending balances of items measured at fair value that used significant unobservable inputs (Level 3) (in thousands): Embedded Features of the the Notes December 31, 2018 $ 17,091 Initial fair value of embedded features of 2025 Notes 36,044 Change in derivative liabilities (including the partial settlement of the 2023 Notes) (26,147) September 30, 2019 $ 26,988 During the nine months ended September 30, 2019 and 2018, the Company did not have any transfers between levels . |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2019 | |
Income Taxes | |
Income Taxes | 11. The Company has not recorded any tax provision or benefit for the nine months ended September 30, 2019 or September 30, 2018. The Company has provided a valuation allowance for the full amount of its net deferred tax assets since realization of any future benefit from deductible temporary differences, NOL carryforwards and research and development credits is not more-likely-than-not to be realized at September 30, 2019 and December 31, 2018. |
Related Party Transactions
Related Party Transactions | 9 Months Ended |
Sep. 30, 2019 | |
Related Party Transactions | |
Related Party Transactions | 12. Related Party Transactions Roche Holding A.G, through its ownership interests in Roche Finance Ltd (collectively, “Roche”), has a noncontrolling ownership interest in the Company. For the three months ended September 30, 2019 and 2018, revenue from Roche was $3.4 million and $4.3 million, respectively. For the nine months ended September 30, 2019 and 2018, revenue from Roche was $8.7 million and $9.9 million, respectively. Amounts due from Roche as of September 30, 2019 and December 31, 2018 were $3.5 million and $6.3 million, respectively. |
Subsequent Events
Subsequent Events | 9 Months Ended |
Sep. 30, 2019 | |
Subsequent Events | |
Subsequent Events | 13 . On November 7, 2019, the Company implemented a restructuring designed to meet the following objectives: - Reset strategic goals based on learnings from the Company’s first year of U.S. commercial launch; - Enhance the customer experience with the Company’s Eversense CGM system, including outcomes, longevity, reliability, access, support, and training; - Focus on executing pathways to successful launch of the 180-day product in the United States; and - Reduce cash burn to support these activities while minimizing near-term dilution and ensuring the best allocation of capital Pursuant to the restructuring, the Company also immediately reduced its current, open and planned workforce by approximately 30%. The Company expects to incur one-time restructuring costs related to severance expenses of approximately $0.8 million in the fourth quarter of 2019. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2019 | |
Summary of Significant Accounting Policies | |
Basis of Presentation | Basis of Presentation The accompanying unaudited interim condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). In the Company’s opinion, the accompanying unaudited interim condensed consolidated financial statements include all adjustments, consisting of normal recurring adjustments, which are necessary to present fairly its financial position, results of operations, and cash flows. The consolidated balance sheet at December 31, 2018, has been derived from audited financial statements as of that date. The interim condensed consolidated results of operations are not necessarily indicative of the results that may occur for the full fiscal year. Certain information and footnote disclosure normally included in financial statements prepared in accordance with U.S. GAAP have been omitted pursuant to instructions, rules, and regulations prescribed by the U.S. Securities and Exchange Commission (“SEC”). The Company believes that the disclosures provided herein are adequate to make the information presented not misleading when these unaudited interim condensed consolidated financial statements are read in conjunction with the audited financial statements and notes previously included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018. |
Use of Estimates | Use of Estimates The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the reported amounts of revenue and expenses during the reporting period. In the accompanying consolidated financial statements, estimates are used for, but not limited to, stock-based compensation, recoverability of long-lived assets, deferred taxes and valuation allowances, obsolete inventory, product returns, patient access program costs, depreciable lives of property and equipment, and estimated accruals for clinical study costs, which are accrued based on estimates of work performed under contract . Actual results could differ from those estimates; however management does not believe that such differences would be material. |
Segment Information | Segment Information The Company views its operations and manages its business in one segment, glucose monitoring products. |
Comprehensive Loss | Comprehensive Loss Comprehensive loss comprises net loss and other changes in equity that are excluded from net loss. For the three and nine months ended September 30, 2019 and 2018, the Company’s net loss equaled its comprehensive loss and, accordingly, no additional disclosure is presented. |
Cash and Cash Equivalents and Concentration of Credit Risk | Cash and Cash Equivalents and Concentration of Credit Risk The Company considers highly liquid investments with maturities of three months or less from the date of purchase to be cash equivalents. These investments are carried at cost, which approximates fair value. The Company’s cash and cash equivalents potentially subject the Company to credit and liquidity risk. The Company maintains cash deposits at major financial institutions with high credit quality and, at times, the balances of those deposits may exceed the Federal Deposit Insurance Corporation limits of $250,000. The Company has not experienced and does not anticipate any losses on deposits with commercial banks and financial institutions that exceed the federally insured amounts. |
Concentration of Revenue and Customers | Concentration of Revenue and Customers At any given time, the Company’s trade receivables are concentrated among a small number of principal customers. If any of the Company’s customers fail to pay their obligations under the terms of these financial instruments, the Company’s maximum exposure to potential losses would be equal to amounts reported on its consolidated balance sheets. During the three and nine months ended September 30, 2019 and 2018, the Company derived a majority of its total net revenue from one customer, who is also a related party. During the three months ended September 30, 2019 and 2018, the Company derived 78 percent and 84 percent of its total net revenue from this customer, respectively. During the nine months ended September 30, 2019 and 2018, the Company derived 70 percent and 85 percent of its total net revenue from this one customer, respectively. Revenue by geographic region The following table sets forth net revenue derived from the Company’s two primary geographical markets, the United States and outside of the United States, based on the geographic location to which the Company delivers the product, for the three and nine months ended September 30, 2019 and 2018. Three Months Ended Nine Months Ended September 30, 2019 September 30, 2019 % % (Dollars in thousands) Amount of Total Amount of Total Revenue, net: Outside of the United States $ 3,792 % $ 9,908 % United States 527 2,441 Total $ 4,319 % $ 12,349 % Three Months Ended Nine Months Ended September 30, 2018 September 30, 2018 % % (Dollars in thousands) Amount of Total Amount of Total Revenue, net: Outside of the United States $ 4,658 % $ 11,228 % United States 500 500 Total $ 5,158 % $ 11,728 % |
Inventory | Inventory Inventory is valued at the lower of cost or net realizable value. Cost is determined using the standard cost method that approximates first in, first out. The Company periodically reviews inventory to determine if a write-down is necessary for inventory that has become obsolete, inventory that has a cost basis less than net realizable value, and inventory in excess of future demand taking into consideration the product shelf life. |
Accounts Receivable | Accounts Receivable The Company grants credit to various customers in the normal course of business. Accounts receivable consist of amounts due from distributors. The Company records an allowance for doubtful accounts at the time potential collection risk is identified. Uncollectible accounts are written off against the allowance after appropriate collection efforts have been exhausted and when it is deemed that a balance is uncollectible. |
Property and Equipment | Property and Equipment Property and equipment are stated at cost. Depreciation is computed by use of the straight-line method over the estimated useful lives of the assets, which is between three to five years for laboratory equipment, between five to seven years for office furniture and equipment, and the shorter of lease term or useful life for leasehold improvements. Upon disposition of the assets, the costs and related accumulated depreciation are removed from the accounts and any resulting gain or loss is included in the results of operations. Repairs and maintenance costs are included as expense in the accompanying statement of operations. Management reviews property and equipment for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of the long-lived asset is measured by a comparison of the carrying amount of the asset to future undiscounted net cash flows expected to be generated by the asset. If the undiscounted cash flows are less than the carrying amount, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the estimated fair value of the assets. Management did not identify any indicators of impairment through September 30, 2019. |
Derivative Financial Instruments | Derivative Financial Instruments In July 2019, the Company issued $82.0 million in aggregate principal amount of convertible senior subordinated notes due 2025 (the “2025 Notes”). In connection with the 2025 Notes, the Company bifurcated the embedded conversion option along with the fundamental change make-whole provision and the cash settled fundamental make-whole shares provision, and recorded the fair value of these embedded features as a derivative liability in the Company’s consolidated balance sheets in accordance with Accounting Standards Codification (“ASC”) Topic 815, Derivatives and Hedging . In connection with the Company’s issuance of the 2023 Notes in January 2018, the Company bifurcated the embedded conversion option, along with the interest make-whole provision and make-whole fundamental change provision, and recorded the embedded conversion option as a derivative liability in the Company’s consolidated balance sheets in accordance with ASC Topic 815, Derivatives and Hedging . The two financial instruments above are remeasured at the end of each reporting period with changes in fair value recorded in the consolidated statements of operations in other income (expense) as a change in fair value of the derivative liability. |
Warranty Reserve | Warranty Reserve The Company may replace Eversense system components that do not function in accordance with the product specifications. Estimated replacement costs are recorded at the time of shipment and are developed by analyzing historical replacement experience and product performance. |
Revenue Recognition | Revenue Recognition The Company recognizes revenue in accordance with ASC Topic 606, Revenue from Contracts with Customers . This standard applies to all contracts with customers, except for contracts that are within the scope of other standards, such as leases, insurance, collaboration arrangements and financial instruments. Under ASC Topic 606, an entity recognizes revenue when its customer obtains control of promised goods or services, in an amount that reflects the consideration that the entity expects to receive in exchange for those goods or services. To determine revenue recognition for arrangements that an entity determines are within the scope of ASC Topic 606, the entity performs the following five steps: (i) identify the contract(s) with a customer; (ii) identify the performance obligations in the contract; (iii) determine the transaction price; (iv) allocate the transaction price to the performance obligations in the contract; and (v) recognize revenue when (or as) the entity satisfies a performance obligation. The Company only applies the five-step model to contracts when it is probable that the entity will collect the consideration it is entitled to in exchange for the goods or services it transfers to the customer. At contract inception, once the contract is determined to be within the scope of ASC Topic 606, the Company assesses the goods or services promised within each contract and determines those that are performance obligations, and assesses whether each promised good or service is distinct. The Company then recognizes as revenue the amount of the transaction price that is allocated to the respective performance obligation when (or as) the performance obligation is satisfied. The Company generates product revenue from sales of the Eversense system and related components and supplies at a fixed price to third-party distributors in the European Union and to a network of strategic fulfillment partners in the United States (collectively, “Customers”) who then resell the products to health care providers and patients. The Company is paid for its sales directly to the Customers, regardless of whether or not the Customers resell the products to health care providers and patients. Revenue from product sales is recognized when the Customers obtain control of the Company’s product, which occurs at a point in time, based upon the delivery terms as defined in the contract. The Company is typically paid within 60 days of invoicing subsequent to the Customers obtaining control of the Company’s product. Product sales are recorded net of estimated costs for patient access and sales incentive programs. In March 2019, the Company introduced the Eversense Bridge Program (the “program”) in the United States. Under the program, the Company provides financial assistance, in the form of reimbursement, to eligible patients based on their insurance coverage. Reimbursement payments to the patient under the program are treated as a reduction of revenue in the period in which the corresponding gross revenue is recognized. Estimated reimbursement payments for product shipped to the Company’s customers but not provided to a patient within the same reporting period is based on historical experience and recorded within accrued expenses and other current liabilities in the accompanying consolidated balance sheets. Because of the limited experience with the program as of September 30, 2019, the Company’s estimated reimbursement rates with respect to such shipped, but unsold, products could change in future periods, and such changes could be material. The Company also, at its discretion, offers discounts and other allowances under defined promotional or prompt pay programs to the Customers which result in the establishment of reserves against product revenue, however, to date these amounts have been immaterial. |
Cost of Sales | Cost of Sales The Company uses third-party contract manufacturers to manufacture Eversense and related components and supplies. Cost of sales consists primarily of raw materials, contract manufacturing service fees, expected warranty costs, recall costs, product obsolescence, scrap, warehousing indirect personnel costs and shipping and handling expenses associated with product delivery. |
Sales and Marketing Expenses | Sales and Marketing Expenses Sales and marketing expenses consist primarily of salaries, commissions, and other related costs, including stock-based compensation, for personnel who perform sales, marketing, and customer support functions. Other significant costs include marketing programs, website design and advertising, educational and promotional materials, consultants, and tradeshow expenses. |
Research and Development Expenses | Research and Development Expenses Research and development expenses consist of expenses incurred in performing research and development activities in developing Eversense, including clinical trials and feasibility studies, and partnerships for strategic initiatives including insulin delivery and new indications. Research and development expenses include compensation and benefits for research and development employees including stock‑based compensation, cost of laboratory supplies, clinical trial and related clinical manufacturing expenses, costs related to regulatory operations, fees paid to contract research organizations and other consultants, and other outside expenses. Research and development expenses are expensed as incurred. |
General and Administrative Expenses | General and Administrative Expenses General and administrative expenses consist primarily of salaries and other related costs, including stock‑based compensation, for personnel in the Company’s executive, finance, accounting, business development, information technology, and human resources functions. Other significant costs include information technology, facility costs, legal fees relating to patent and corporate matters and fees for accounting and consulting services. |
Stock-Based Compensation | Stock‑Based Compensation The Company recognizes the cost of employee services received in exchange for awards of equity instruments, such as stock options, based on the fair value of those awards at the date of grant. The estimated fair value of stock options on the date of grant is amortized on a straight‑line basis over the requisite service period for each separately vesting portion of the award for those awards with service conditions only. For awards that also contain performance conditions, expense is recognized beginning at the time the performance condition is considered probable of being met over the remaining vesting period. The Company accounts for forfeitures in the period in which they occur. The Company uses the Black‑Scholes option pricing model to determine the fair value of stock‑option awards. Valuation of stock awards requires management to make assumptions and to apply judgment to determine the fair value of the awards. These assumptions and judgments include estimating the fair value of the Company’s common stock, future volatility of the Company’s stock price, dividend yields, future employee turnover rates, and future employee stock option exercise behaviors. Changes in these assumptions can affect the fair value estimate. Under ASC Topic 718, the cumulative amount of compensation cost recognized for instruments classified as equity that ordinarily would result in a future tax deduction under existing tax law shall be considered to be a deductible difference in applying ASC Topic 740, Income Taxes . The deductible temporary difference is based on the compensation cost recognized for financial reporting purposes; however, these provisions currently do not impact the Company, as all the deferred tax assets have a full valuation allowance. Since the Company had net operating loss (“NOL”) carryforwards as of September 30, 2019, no excess tax benefits for the tax deductions related to stock-based awards were recognized in the statements of operations and comprehensive loss. |
Income Taxes | Income Taxes The Company uses the asset and liability method of accounting for income taxes. Deferred tax assets and liabilities are determined based on differences between the financial reporting and tax basis of assets and liabilities and are measured using the enacted tax rates and laws that are in effect when the differences are expected to reverse. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the period that such tax rate changes are enacted. The measurement of a deferred tax asset is reduced, if necessary, by a valuation allowance if it is more likely than not that some portion or all of the deferred tax asset will not be realized. Management uses a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return, as well as guidance on derecognition, classification, interest and penalties and financial statement reporting disclosures. For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by taxing authorities. In the ordinary course of business, transactions occur for which the ultimate outcome may be uncertain. Management does not expect the outcome related to accrued uncertain tax provisions to have a material adverse effect on the Company’s financial position, results of operations or cash flows. The Company recognizes interest and penalties accrued on any unrecognized tax exposures as a component of income tax expense. The Company did not have any amounts accrued relating to interest and penalties as of September 30, 2019 and December 31, 2018. The Company is subject to taxation in various jurisdictions in the United States and remains subject to examination by taxing jurisdictions for the year 1998 and all subsequent periods due to the availability of NOL carryforwards. In addition, all of the NOLs and research and development credit carryforwards that may be used in future years are still subject to adjustment. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments The carrying amounts of cash and cash equivalents, accounts receivable, accounts payable, and accrued expenses approximate fair value because of their short maturities. The Company’s 2025 Notes and 2023 Notes are recorded at historical cost, net of discounts, and are not remeasured at fair value. |
Net Loss per Share | Net Loss per Share Basic net loss per share is computed by dividing net loss by the weighted average number of shares of common stock outstanding during the period. For periods of net loss, diluted net loss per share is calculated similarly to basic loss per share because the impact of all potential common shares is anti-dilutive. At September 30, 2019 and 2018, the total number of anti-dilutive shares, consisting of common stock options, stock purchase warrants, and the 2025 Notes and 2023 Notes using the if-converted method, which have been excluded from the computation of diluted loss per share, were as follows: September 30, 2019 2018 Stock-based awards 25,684,676 21,006,058 2023 Notes 6,672,500 15,499,998 2025 Notes 63,565,883 — Warrants 5,196,581 4,068,581 Total anti-dilutive shares outstanding 101,119,640 40,574,637 For periods of net income, and when the effects are not anti-dilutive, diluted earnings per share is computed by dividing net income available to common stockholders by the weighted-average number of shares outstanding plus the impact of all potential dilutive common shares, consisting primarily of common stock options and stock purchase warrants using the treasury stock method, and the 2025 Notes and 2023 Notes using the if-converted method. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements Recently Adopted In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-02, Leases (Topic 842) (“ASC 842”). The guidance requires lessees to recognize assets and liabilities related to long-term leases on the balance sheet and expands disclosure requirements regarding leasing arrangements. In July 2018, the FASB issued ASU 2018-11 to provide another transition method, allowing a cumulative effect adjustment to the opening balance of retained earnings during the period of adoption. The guidance is effective for annual reporting periods beginning after December 15, 2018, subject to early adoption. The Company adopted the new standard effective January 1, 2019 using the modified retrospective approach. The Company did not elect the transition option, but elected certain practical expedients, including not separating lease components from nonlease components for all classes of underlying assets. Additionally, all leases with a term at commencement of 12 months or less will be excluded from analysis under ASC 842. The standard did not materially affect the Company’s consolidated net loss or cash flows. Impact of Adopting ASC 842 on the Financial Statements January 1, 2019 January 1, 2019 Prior to ASC 842 Adoption ASC 842 Adoption As Adjusted Consolidated Balance Sheet Data (in thousands) Operating lease assets (1) $ — $ 2,235 $ 2,235 Deferred rent non-current (2) $ 84 $ (84) $ — Operating lease liabilities (3) $ — $ 417 $ 417 Non-current operating lease liabilities (3) $ — $ 1,902 $ 1,902 (1) Represents capitalization of operating lease assets, including reclassification of deferred rent to operating lease assets. (2) As of December 31, 2018, the deferred rent balance was $84. (3) Represents recognition of operating lease liabilities. The Company has evaluated all other issued unadopted ASUs and believes the adoption of these standards will not have a material impact on its consolidated statements of earnings, balance sheets, or cash flows. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Schedule of revenue by geographic region | Three Months Ended Nine Months Ended September 30, 2019 September 30, 2019 % % (Dollars in thousands) Amount of Total Amount of Total Revenue, net: Outside of the United States $ 3,792 % $ 9,908 % United States 527 2,441 Total $ 4,319 % $ 12,349 % Three Months Ended Nine Months Ended September 30, 2018 September 30, 2018 % % (Dollars in thousands) Amount of Total Amount of Total Revenue, net: Outside of the United States $ 4,658 % $ 11,228 % United States 500 500 Total $ 5,158 % $ 11,728 % |
Schedule of anti-dilutive shares which have been excluded from the computation of diluted loss per share | September 30, 2019 2018 Stock-based awards 25,684,676 21,006,058 2023 Notes 6,672,500 15,499,998 2025 Notes 63,565,883 — Warrants 5,196,581 4,068,581 Total anti-dilutive shares outstanding 101,119,640 40,574,637 |
ASU 2016-02 | |
Schedule of impact of adopting ASC 842 on the financial statements | January 1, 2019 January 1, 2019 Prior to ASC 842 Adoption ASC 842 Adoption As Adjusted Consolidated Balance Sheet Data (in thousands) Operating lease assets (1) $ — $ 2,235 $ 2,235 Deferred rent non-current (2) $ 84 $ (84) $ — Operating lease liabilities (3) $ — $ 417 $ 417 Non-current operating lease liabilities (3) $ — $ 1,902 $ 1,902 (1) Represents capitalization of operating lease assets, including reclassification of deferred rent to operating lease assets. (2) As of December 31, 2018, the deferred rent balance was $84. (3) Represents recognition of operating lease liabilities. |
Inventory, net (Tables)
Inventory, net (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Inventory, net | |
Schedule of Inventory, net | Inventory, net of reserves, consisted of the following (in thousands): September 30, December 31, 2019 2018 Finished goods $ 4,312 $ 1,457 Work-in-process 12,571 7,211 Raw materials 2,979 1,563 Total $ 19,862 $ 10,231 |
Prepaid Expenses and Other Cu_2
Prepaid Expenses and Other Current Assets (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Prepaid Expenses and Other Current Assets | |
Prepaid expenses and other current assets | Prepaid expenses and other current assets consisted of the following (in thousands): September 30, December 31, 2019 2018 Contract manufacturing $ 3,359 $ 2,962 Clinical and preclinical 193 111 Marketing and sales 416 287 IT and software 144 244 Insurance 333 — Interest receivable 2 239 Other receivables 235 — Other 180 142 Total prepaid expenses and other current assets $ 4,862 $ 3,985 |
Accrued Expenses and Other Cu_2
Accrued Expenses and Other Current Liabilities (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
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): September 30, December 31, 2019 2018 Contract manufacturing $ 4,192 $ 6,068 Compensation and benefits 4,363 3,685 Sales and marketing services 816 738 Professional & administration services 2,576 727 Interest on notes payable 856 1,268 Research and development 2,504 147 Product warranty and replacement obligations 1,405 816 Patient access and incentive programs 1,299 — Operating lease 647 — Other 47 402 Total accrued expenses and other current liabilities $ 18,705 $ 13,851 |
Leases (Tables)
Leases (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Leases | |
Summary of lease assets and liabilities | The following table summarizes the lease assets and liabilities as of September 30, 2019 (in thousands): Operating Lease Assets and Liabilities Balance Sheet Classification Amount Assets Operating lease ROU assets Deposits and other assets $ 2,987 Liabilities Current operating lease liabilities Accrued expenses and other current liabilities $ 647 Non-current operating lease liabilities Other non-current liabilities 2,462 Total operating lease liabilities $ 3,109 |
Schedule of operating lease liabilities maturities | The following table summarizes the maturity of undiscounted payments due under lease liabilities and the present value of those liabilities as of September 30, 2019 (in thousands): 2019 (remaining 3 months) $ 206 2020 938 2021 969 2022 1,002 2023 600 Total 3,715 Present value adjustment (606) Present value of lease liabilities $ 3,109 |
Schedule of lease term and discount rate | The following table summarizes the weighted-average lease term and weighted-average discount rate as of September 30, 2019: Remaining lease term (years) Operating leases 3.9 Discount rate Operating leases 9.1 % |
Notes Payable (Tables)
Notes Payable (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Notes Payable | |
Schedule of carrying amounts outstanding under the Company’s notes payable | The following carrying amounts are outstanding under the Company’s notes payable as of September 30, 2019 and December 31, 2018 (in thousands): September 30, 2019 December 31, 2018 Principal ($) Debt Discount ($) Issuance Costs ($) Warrants ($) Carrying Amount ($) Principal ($) Debt Discount ($) Issuance Costs ($) Warrants ($) Carrying Amount ($) Solar Term Loan 45,000 (834) (328) (746) 43,092 - - - - - Oxford / SVB Term - - - - - 15,000 (113) (103) - 14,784 2023 Notes 15,700 (4,171) 11,529 52,700 (16,597) - 36,103 2025 Notes 82,000 (45,603) (729) 35,668 - - - - - |
Schedule of interest expense related to the notes payable | Interest expense related to the notes payable for the periods presented below is as follows (in thousands): Three Months Ended September 30, 2019 Nine Months Ended September 30, 2019 Effective Interest Rate Interest ($) Debt Discount & Fees ($) Loss on Extinguishment of Debt ($) Total Interest Expense ($) Effective Interest Rate Interest ($) Debt Discount & Fees ($) Loss on Extinguishment of Debt ($) Total Interest Expense ($) Solar Term Loan 772 60 - 832 772 60 - 832 Oxford / SVB Term 68 - 68 900 56 - 955 2023 Notes 708 176 398 1,282 1,924 1,888 398 4,210 2025 Notes 761 915 - 1,676 943 915 - 1,859 Three Months Ended September 30, 2018 Nine Months Ended September 30, 2018 Effective Interest Rate Interest ($) Debt Discount & Fees ($) Loss on Extinguishment of Debt ($) Total Interest Expense ($) Effective Interest Rate Interest ($) Debt Discount & Fees ($) Loss on Extinguishment of Debt ($) Total Interest Expense ($) Oxford / SVB Term 361 88 - 449 1,211 292 - 1,503 2023 Notes 694 1,027 - 1,721 1,853 4,655 - 6,508 |
Schedule of future maturities | The following are the scheduled maturities of the Solar Term Loan, 2025 Notes, and 2023 Notes as of September 30, 2019 (in thousands): 2019 (remaining three months) $ — 2020 — 2021 6,250 2022 15,000 2023 30,700 Thereafter 90,750 Total $ 142,700 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 9 Months Ended |
Sep. 30, 2019 | |
Fair Value Measurements | |
Schedule of fair value hierarchy of the Company’s financial assets and liabilities measured at fair value on a recurring basis | The following table represents the fair value hierarchy of the Company’s financial assets and liabilities measured at fair value (in thousands): September 30, 2019 Total Level 1 Level 2 Level 3 Assets Money market funds $ 923 $ 923 $ — $ — Liabilities Embedded features of the 2025 Notes $ 26,201 $ — $ — $ 26,201 Embedded features of the 2023 Notes $ 787 $ — $ — $ 787 December 31, 2018 Total Level 1 Level 2 Level 3 Assets Money market funds $ 122,859 $ 122,859 $ — $ — Liabilities Embedded features of the 2023 Notes $ 17,091 $ — $ — $ 17,091 |
Schedule of changes in the fair value of Level 3 derivative liability measured at fair value | The following table provides a reconciliation of the beginning and ending balances of items measured at fair value that used significant unobservable inputs (Level 3) (in thousands): Embedded Features of the the Notes December 31, 2018 $ 17,091 Initial fair value of embedded features of 2025 Notes 36,044 Change in derivative liabilities (including the partial settlement of the 2023 Notes) (26,147) September 30, 2019 $ 26,988 |
Liquidity (Details)
Liquidity (Details) - USD ($) $ in Thousands | 1 Months Ended | ||
Jul. 31, 2019 | Sep. 30, 2019 | Dec. 31, 2018 | |
Convertible Notes | |||
Cash and cash equivalents | $ 130,580 | $ 136,793 | |
Gross proceeds | $ 100,000 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies - Segment Information (Details) | 9 Months Ended |
Sep. 30, 2019segment | |
Segment Information | |
Number of operating segments | 1 |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Concentration of Revenue and Customers (Details) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019USD ($)customeritem | Sep. 30, 2018USD ($)customeritem | Sep. 30, 2019USD ($)customeritem | Sep. 30, 2018USD ($)customeritem | |
Estimated total revenue from major customers | ||||
FDIC maximum | $ 250,000 | $ 250,000 | ||
Number of geographical markets | item | 2 | 2 | 2 | 2 |
Revenue | $ 4,319,000 | $ 5,158,000 | $ 12,349,000 | $ 11,728,000 |
Revenue | ||||
Estimated total revenue from major customers | ||||
Number of customers | customer | 1 | 1 | 1 | 1 |
Revenue | Customer Concentration Risk | One Major Customer | ||||
Estimated total revenue from major customers | ||||
Percentage of total revenue | 78.00% | 84.00% | 70.00% | 85.00% |
Revenue | Geographic Concentration Risk | ||||
Estimated total revenue from major customers | ||||
Percentage of total revenue | 100.00% | 100.00% | 100.00% | 100.00% |
Revenue | $ 4,319,000 | $ 5,158,000 | $ 12,349,000 | $ 11,728,000 |
Outside of the United States | Revenue | Geographic Concentration Risk | ||||
Estimated total revenue from major customers | ||||
Percentage of total revenue | 87.80% | 90.00% | 80.20% | 96.00% |
Revenue | $ 3,792,000 | $ 4,658,000 | $ 9,908,000 | $ 11,228,000 |
United States | Revenue | Geographic Concentration Risk | ||||
Estimated total revenue from major customers | ||||
Percentage of total revenue | 12.20% | 10.00% | 19.80% | 4.00% |
Revenue | $ 527,000 | $ 500,000 | $ 2,441,000 | $ 500,000 |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies - Property and Equipment (Details) | 9 Months Ended |
Sep. 30, 2019 | |
Laboratory equipment | Minimum | |
Property and Equipment, net | |
Useful lives | 3 years |
Laboratory equipment | Maximum | |
Property and Equipment, net | |
Useful lives | 5 years |
Office furniture and equipment | Minimum | |
Property and Equipment, net | |
Useful lives | 5 years |
Office furniture and equipment | Maximum | |
Property and Equipment, net | |
Useful lives | 7 years |
Summary of Significant Accoun_7
Summary of Significant Accounting Policies - Derivative Financial Instruments (Details) $ in Thousands | 9 Months Ended | |
Sep. 30, 2019USD ($)instrument | Jul. 31, 2019USD ($) | |
Derivative [Line Items] | ||
Financial instruments remeasured | instrument | 2 | |
2025 Notes | ||
Derivative [Line Items] | ||
Principal amount | $ | $ 82,000 | $ 82,000 |
Summary of Significant Accoun_8
Summary of Significant Accounting Policies - Revenue Recognition (Details) | 9 Months Ended |
Sep. 30, 2019 | |
Summary of Significant Accounting Policies | |
Payment period | 60 days |
Summary of Significant Accoun_9
Summary of Significant Accounting Policies - Stock-Based Compensation and Income Taxes (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2019 | Dec. 31, 2018 | |
Stock-Based Compensation | ||
Excess tax benefits recognized in statements of operations | $ 0 | |
Income Taxes | ||
Accrued for income tax penalties and interest | $ 0 | $ 0 |
Summary of Significant Accou_10
Summary of Significant Accounting Policies - Net Loss per Share (Details) - shares | 9 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2018 | |
Net Loss per Share | ||
Total anti-dilutive shares outstanding | 101,119,640 | 40,574,637 |
Stock-based awards | ||
Net Loss per Share | ||
Total anti-dilutive shares outstanding | 25,684,676 | 21,006,058 |
2023 Notes | ||
Net Loss per Share | ||
Total anti-dilutive shares outstanding | 6,672,500 | 15,499,998 |
2025 Notes | ||
Net Loss per Share | ||
Total anti-dilutive shares outstanding | 63,565,883 | |
Warrants | ||
Net Loss per Share | ||
Total anti-dilutive shares outstanding | 5,196,581 | 4,068,581 |
Summary of Significant Accou_11
Summary of Significant Accounting Policies - Recent Accounting Pronouncements (Details) - USD ($) $ in Thousands | Sep. 30, 2019 | Jan. 01, 2019 | Dec. 31, 2018 |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Operating lease ROU assets | $ 2,987 | $ 2,235 | |
Deferred rent non-current | $ 84 | ||
Operating lease liabilities | 647 | 417 | |
Non-current operating lease liabilities | $ 2,462 | 1,902 | |
ASU 2016-02 | Prior to ASC 842 Adoption | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Deferred rent non-current | 84 | ||
ASU 2016-02 | As Adjusted | |||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | |||
Operating lease ROU assets | 2,235 | ||
Deferred rent non-current | (84) | ||
Operating lease liabilities | 417 | ||
Non-current operating lease liabilities | $ 1,902 |
Inventory, net - Summary (Detai
Inventory, net - Summary (Details) - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 |
Inventory, net | ||
Finished goods | $ 4,312 | $ 1,457 |
Work-in-process | 12,571 | 7,211 |
Raw materials | 2,979 | 1,563 |
Total | $ 19,862 | $ 10,231 |
Prepaid Expenses and Other Cu_3
Prepaid Expenses and Other Current Assets (Details) - USD ($) $ in Thousands | Sep. 30, 2019 | Dec. 31, 2018 |
Prepaid Expenses and Other Current Assets | ||
Contract manufacturing | $ 3,359 | $ 2,962 |
Clinical and preclinical | 193 | 111 |
Marketing and sales | 416 | 287 |
IT and software | 144 | 244 |
Insurance | 333 | |
Interest receivable | 2 | 239 |
Other receivables | 235 | |
Other | 180 | 142 |
Total prepaid expenses and other current assets | $ 4,862 | $ 3,985 |
Accrued Expenses and Other Cu_3
Accrued Expenses and Other Current Liabilities (Details) - USD ($) $ in Thousands | Sep. 30, 2019 | Jan. 01, 2019 | Dec. 31, 2018 |
Accrued Expenses and Other Current Liabilities | |||
Contract manufacturing | $ 4,192 | $ 6,068 | |
Compensation and benefits | 4,363 | 3,685 | |
Sales and marketing services | 816 | 738 | |
Professional and administrative services | 2,576 | 727 | |
Interest on notes payable | 856 | 1,268 | |
Research and development | 2,504 | 147 | |
Product warranty and replacement obligations | 1,405 | 816 | |
Patient access and incentive programs | 1,299 | ||
Operating lease | 647 | $ 417 | |
Other | 47 | 402 | |
Total accrued expenses and other current liabilities | $ 18,705 | $ 13,851 |
Leases - (Details)
Leases - (Details) $ in Thousands | Sep. 02, 2019USD ($)ft² | Sep. 30, 2019USD ($)ft² | Sep. 30, 2019USD ($)ft²item | Jun. 30, 2019ft² | Jan. 01, 2019USD ($) |
Lessee, Lease, Description [Line Items] | |||||
Operating lease ROU assets | $ 2,987 | $ 2,987 | $ 2,235 | ||
Operating Lease, Liability | 3,109 | 3,109 | |||
Operating lease expense | $ 200 | 500 | |||
Short-term lease expense | $ 100 | ||||
Office Space | |||||
Lessee, Lease, Description [Line Items] | |||||
Leased space, in square feet | ft² | 30,500 | 12,000 | |||
Option to renew lease | false | ||||
Operating lease ROU assets | $ 1,100 | ||||
Operating Lease, Liability | $ 1,100 | ||||
Research and Office Space | |||||
Lessee, Lease, Description [Line Items] | |||||
Leased space, in square feet | ft² | 33,000 | 33,000 | |||
Number of renewal terms | item | 1 | ||||
Renewal term of lease | 5 years | 5 years | |||
Option to renew lease | true |
Leases - Assets and liabilities
Leases - Assets and liabilities (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2019 | Jan. 01, 2019 | |
Operating Lease Assets and Liabilities | ||
Operating lease ROU assets | $ 2,987 | $ 2,235 |
Operating Lease, Right-of-Use Asset, Statement of Financial Position [Extensible List] | Deposits and Other Assets, Noncurrent | |
Operating lease liabilities | $ 647 | 417 |
Operating Lease, Liability, Current, Statement of Financial Position [Extensible List] | Accrued Liabilities and Other Liabilities, Current | |
Non-current operating lease liabilities | $ 2,462 | $ 1,902 |
Operating Lease, Liability, Noncurrent, Statement of Financial Position [Extensible List] | Other Liabilities, Noncurrent | |
Total operating lease liabilities | $ 3,109 | |
Maturity of undiscounted payments | ||
2019 (remaining 3 months) | 206 | |
2020 | 938 | |
2021 | 969 | |
2022 | 1,002 | |
2023 | 600 | |
Total | 3,715 | |
Present value adjustment | (606) | |
Total operating lease liabilities | $ 3,109 | |
Remaining lease term (years) | 3 years 10 months 24 days | |
Discount rate | 9.10% | |
Operating lease payments | $ 500 |
Notes Payable (Details)
Notes Payable (Details) $ / shares in Units, $ in Thousands | Jul. 25, 2019USD ($)$ / sharesshares | Jun. 30, 2016USD ($)tranche | Sep. 30, 2019USD ($) |
Notes payable | |||
Debt and the warrants based on their fair value | $ 723 | ||
Oxford Notes | |||
Notes payable | |||
Amount used to retire existing loans | $ 11,000 | ||
Prepayment Fee | 100 | ||
Term Notes Payable | Amended and Restated Loan and Security Agreement | |||
Notes payable | |||
Principal amount | $ 25,000 | ||
Repurchase amount | $ 11,600 | ||
Number of tranches under facility | tranche | 3 | ||
Final prepayment fee (as a percent) | 9.00% | ||
Term Notes Payable | Solar Term Loan | |||
Notes payable | |||
Principal amount | $ 45,000 | ||
Floating annual rate, spread (as a percent) | 6.50% | ||
Floor interest rate (as a percent) | 2.48% | ||
Threshold product revenue for monthly principal amortization payments prior to second anniversary | $ 40,000 | ||
Period prior to second anniversary for monthly principal amortization payments | 6 months | ||
Threshold product revenue for monthly principal amortization payments after achievement of first extension | $ 75,000 | ||
Period after achievement of first extension for monthly principal amortization payments | 6 months | ||
Prepayment fee percentage within one year of funding | 3.00% | ||
Prepayment period, first year | 1 year | ||
Prepayment fee percentage second year after funding date | 2.00% | ||
Prepayment fee percentage after second anniversary of funding | 1.00% | ||
Prepayment period, after two years | 2 years | ||
Debt default, interest rate (as a percent) | 5.00% | ||
Revenue Period for Specified Financial Covenants | 6 months | ||
Debt issuance cost | $ 400 | ||
Repayment of term loan | $ 400 | ||
Final payment fee, notes | $ 2,900 | ||
Final prepayment fee (as a percent) | 6.45% | ||
Fees paid to lenders | $ 900 | ||
Term Notes Payable | Solar Term Loan | Minimum | |||
Notes payable | |||
Floor interest rate (as a percent) | 8.98% | ||
Tranche 1 Term Loan | Amended and Restated Loan and Security Agreement | |||
Notes payable | |||
Principal amount | $ 15,000 | ||
Proceeds from issuance of notes | 15,000 | ||
Tranche 2 Term Loan | Amended and Restated Loan and Security Agreement | |||
Notes payable | |||
Principal amount | 5,000 | ||
Tranche 3 Term Loan | Amended and Restated Loan and Security Agreement | |||
Notes payable | |||
Principal amount | $ 5,000 | ||
Solar Warrants | Solar Term Loan | |||
Notes payable | |||
Debt and the warrants based on their fair value | $ 700 | ||
Solar Warrants | Term Notes Payable | Solar Term Loan | |||
Notes payable | |||
Number of shares called by warrants | shares | 1,125,000 | ||
Exercise price of warrant (in dollars per share) | $ / shares | $ 1.20 |
Notes Payable - Term Notes Paya
Notes Payable - Term Notes Payable (Details) | 1 Months Ended | 3 Months Ended | 9 Months Ended | |||||
Jul. 31, 2019USD ($)D$ / shares | Feb. 28, 2018USD ($) | Jan. 31, 2018USD ($)$ / shares | Sep. 30, 2019USD ($) | Sep. 30, 2018USD ($) | Sep. 30, 2019USD ($) | Sep. 30, 2018USD ($)shares | Dec. 31, 2018USD ($) | |
Long term debt | ||||||||
Net proceeds | $ 100,000,000 | |||||||
Derivative liabilities | $ 26,988,000 | $ 26,988,000 | $ 17,091,000 | |||||
2023 Notes | ||||||||
Long term debt | ||||||||
Principal amount | $ 3,000,000 | $ 50,000,000 | 15,700,000 | 15,700,000 | 52,700,000 | |||
Proceeds from issuance of notes | $ 50,700,000 | |||||||
Conversion rate (per $1,000 of principal) | 294.1176 | |||||||
Amortization of Debt Discount (Premium) | 176,000 | $ 1,027,000 | 1,888,000 | $ 4,655,000 | ||||
Amount of principal which is converted to shares | $ 1,000 | |||||||
Conversion price (in dollars per share) | $ / shares | $ 3.40 | |||||||
Conversion period | 6 months | |||||||
Repurchase price as a percent of principal amount | 100.00% | |||||||
Derivative liabilities | $ 17,300,000 | |||||||
Transaction costs | $ 2,200,000 | |||||||
Amortization percent | 9.30% | |||||||
Debt conversion amount | 0 | $ 0 | 0 | $ 250,000 | ||||
Fair value of notes excluding the derivative liability | 13,400,000 | 13,400,000 | $ 41,000,000 | |||||
Repurchase amount | 37,000,000 | |||||||
2023 Notes | Common Stock | ||||||||
Long term debt | ||||||||
Debt converted, shares issued | shares | 73,529 | |||||||
2025 Notes | ||||||||
Long term debt | ||||||||
Principal amount | $ 82,000,000 | 82,000,000 | 82,000,000 | |||||
Interest rate (as a percent) | 5.25% | |||||||
Net proceeds | $ 37,900,000 | |||||||
Conversion rate (per $1,000 of principal) | 757.5758 | |||||||
Debt issuance costs and discounts | $ 4,300,000 | |||||||
Issuance costs incurred | 3,300,000 | 729,000 | 729,000 | |||||
Deferred discount | 1,000,000 | |||||||
Amortization of Debt Discount (Premium) | 915,000 | 915,000 | ||||||
Amount of principal which is converted to shares | $ 1,000 | |||||||
Conversion price (in dollars per share) | $ / shares | $ 1.32 | |||||||
Conversion price percentage | 150.00% | |||||||
Number of trading days | D | 20 | |||||||
Number of consecutive trading days | D | 30 | |||||||
Repurchase price as a percent of principal amount | 100.00% | |||||||
Derivative liabilities | $ 36,000,000 | |||||||
Fair value of notes excluding the derivative liability | $ 57,000,000 | $ 57,000,000 | ||||||
Senseonics, Incorporated | ||||||||
Long term debt | ||||||||
Ownership of subsidiary guarantor (as a percent) | 100.00% |
Notes Payable - Carrying amount
Notes Payable - Carrying amount of notes payable (Details) - USD ($) $ in Thousands | Sep. 30, 2019 | Jul. 31, 2019 | Dec. 31, 2018 | Feb. 28, 2018 | Jan. 31, 2018 |
Debt Instrument [Line Items] | |||||
Debt Discount | $ (400) | ||||
Solar Term Loan | |||||
Debt Instrument [Line Items] | |||||
Principal | 45,000 | ||||
Debt Discount | (834) | ||||
Issuance costs | (328) | ||||
Warrants | (746) | ||||
Carrying Amount | 43,092 | ||||
Oxford / SVB Term | |||||
Debt Instrument [Line Items] | |||||
Principal | $ 15,000 | ||||
Debt Discount | (113) | ||||
Issuance costs | (103) | ||||
Carrying Amount | 14,784 | ||||
2023 Notes | |||||
Debt Instrument [Line Items] | |||||
Principal | 15,700 | 52,700 | $ 3,000 | $ 50,000 | |
Debt Discount | (4,171) | (16,597) | |||
Carrying Amount | 11,529 | $ 36,103 | |||
2025 Notes | |||||
Debt Instrument [Line Items] | |||||
Principal | 82,000 | $ 82,000 | |||
Debt Discount | (45,603) | ||||
Issuance costs | (729) | $ (3,300) | |||
Carrying Amount | $ 35,668 |
Notes Payable - Interest expens
Notes Payable - Interest expense (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | |
Long term debt | ||||
Loss on extinguishment of debt | $ 398 | $ 398 | ||
Solar Term Loan | ||||
Long term debt | ||||
Effective Interest Rate | 8.98% | 8.98% | ||
Interest | $ 772 | $ 772 | ||
Debt discount and fees | 60 | 60 | ||
Total Interest Expense | $ 832 | $ 832 | ||
Oxford / SVB Term | ||||
Long term debt | ||||
Effective Interest Rate | 7.37% | 7.37% | 7.37% | 7.37% |
Interest | $ 68 | $ 361 | $ 900 | $ 1,211 |
Debt discount and fees | 88 | 56 | 292 | |
Total Interest Expense | $ 68 | $ 449 | $ 955 | $ 1,503 |
2023 Notes | ||||
Long term debt | ||||
Effective Interest Rate | 5.25% | 5.25% | 5.25% | 5.25% |
Interest | $ 708 | $ 694 | $ 1,924 | $ 1,853 |
Debt discount and fees | 176 | 1,027 | 1,888 | 4,655 |
Loss on extinguishment of debt | 398 | 398 | ||
Total Interest Expense | $ 1,282 | $ 1,721 | $ 4,210 | $ 6,508 |
2025 Notes | ||||
Long term debt | ||||
Effective Interest Rate | 5.25% | 5.25% | ||
Interest | $ 761 | $ 943 | ||
Debt discount and fees | 915 | 915 | ||
Total Interest Expense | $ 1,676 | $ 1,859 |
Notes Payable - Scheduled Matur
Notes Payable - Scheduled Maturities (Details) $ in Thousands | Sep. 30, 2019USD ($) |
Scheduled maturities | |
2021 | $ 6,250 |
2022 | 15,000 |
2023 | 30,700 |
Thereafter | 90,750 |
Total | $ 142,700 |
Stockholders' Equity (Deficit)
Stockholders' Equity (Deficit) - Class of Stock (Details) - USD ($) $ / shares in Units, $ in Thousands | 1 Months Ended | 9 Months Ended | ||
Jul. 31, 2019 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | |
Class of stock information | ||||
Preferred stock, shares authorized | 5,000,000 | 5,000,000 | ||
Preferred stock, par value per share (in dollars per share) | $ 0.001 | $ 0.001 | ||
Preferred stock, shares outstanding | 0 | 0 | ||
Issued shares of common stock (in shares) | 26,136,363 | |||
Price per share (in dollars per share) | $ 1.10 | |||
Proceeds from issuance of common stock, net of issuance costs | $ 26,900 | $ 26,757 | $ 149,044 | |
Common stock, shares authorized | 450,000,000 | 450,000,000 | ||
Common stock, par value per share (in dollars per share) | $ 0.001 | $ 0.001 | ||
Common stock, shares issued | 203,365,624 | 176,918,381 | ||
Common stock, shares outstanding | 203,365,624 | 176,918,381 | ||
Jefferies LLC | ||||
Class of stock information | ||||
Issued shares of common stock (in shares) | 3,409,090 |
Stockholders' Equity - Stock Pu
Stockholders' Equity - Stock Purchase Warrants (Details) - USD ($) $ / shares in Units, $ in Thousands | Jul. 25, 2019 | Jun. 30, 2016 | Sep. 30, 2019 | Dec. 31, 2014 |
Stock Purchase Warrants | ||||
Debt and the warrants based on their fair value | $ 723 | |||
Unamortized Discount | $ 400 | |||
Amended and Restated Loan and Security Agreement | Term Notes Payable | Stock Purchase Warrants | Warrant liability | ||||
Stock Purchase Warrants | ||||
Cumulative fair value of warrants | $ 500 | |||
Amended and Restated Loan and Security Agreement | Term Notes Payable | Stock Purchase Warrants, $3.86 Exercise Price | Warrant liability | Common Stock | ||||
Stock Purchase Warrants | ||||
Term of stock purchase warrants | 10 years | |||
Number of shares called by warrants | 116,581 | |||
Exercise price of warrant (in dollars per share) | $ 3.86 | |||
Amended and Restated Loan and Security Agreement | Term Notes Payable | Stock Purchase Warrants, $2.38 Exercise Price | Warrant liability | Common Stock | ||||
Stock Purchase Warrants | ||||
Term of stock purchase warrants | 10 years | |||
Number of shares called by warrants | 63,025 | |||
Exercise price of warrant (in dollars per share) | $ 2.38 | |||
Amended and Restated Loan and Security Agreement | Term Notes Payable | Stock Purchase Warrants, $1.86 Exercise Price | Warrant liability | Common Stock | ||||
Stock Purchase Warrants | ||||
Term of stock purchase warrants | 10 years | |||
Number of shares called by warrants | 80,645 | |||
Exercise price of warrant (in dollars per share) | $ 1.86 | |||
Oxford Notes | Stock Purchase Warrants | Common Stock | ||||
Stock Purchase Warrants | ||||
Term of stock purchase warrants | 10 years | |||
Number of shares called by warrants | 167,570 | |||
Exercise price of warrant (in dollars per share) | $ 1.79 | |||
Oxford Notes | Stock Purchase Warrants | Warrant liability | ||||
Stock Purchase Warrants | ||||
Cumulative fair value of warrants | $ 200 | |||
Solar Term Loan | Solar Warrants | ||||
Stock Purchase Warrants | ||||
Debt and the warrants based on their fair value | $ 700 | |||
Solar Term Loan | Term Notes Payable | Solar Warrants | ||||
Stock Purchase Warrants | ||||
Number of shares called by warrants | 1,125,000 | |||
Exercise price of warrant (in dollars per share) | $ 1.20 |
Stockholders' Equity - Stock-Ba
Stockholders' Equity - Stock-Based Compensation (Details) - shares | Feb. 16, 2016 | Dec. 31, 2015 | Sep. 30, 2019 | May 30, 2019 |
2015 Equity Incentive Plan | ||||
Stock-based compensation | ||||
Expiration period | 10 years | |||
Total shares that may be issued | 17,251,115 | |||
Shares available for grant | 8,000,000 | 3,343,444 | ||
Automatic annual increase in shares authorized, percent of common stock outstanding | 3.50% | |||
2015 Equity Incentive Plan | Maximum | ||||
Stock-based compensation | ||||
Additional shares authorized | 9,251,115 | |||
1997 Stock Option Plan | ||||
Stock-based compensation | ||||
Options vested and expected to vest | 6,253,301 | |||
Inducement Plan | ||||
Stock-based compensation | ||||
Total shares that may be issued | 1,800,000 | |||
Shares available for grant | 1,031,458 |
Fair Value Measurements (Detail
Fair Value Measurements (Details) - USD ($) | 9 Months Ended | |||
Sep. 30, 2019 | Jul. 31, 2019 | Dec. 31, 2018 | Jan. 31, 2018 | |
Fair Value Measurements | ||||
Money market funds | $ 130,580,000 | $ 136,793,000 | ||
Embedded features | 26,988,000 | 17,091,000 | ||
Reconciliation of items measured at fair value on a recurring basis that used significant unobservable inputs (Level 3) | ||||
Fair Value, Assets, Level 1 to Level 2 Transfers, Amount | 0 | |||
Fair Value, Assets, Level 2 to Level 1 Transfers, Amount | 0 | |||
Fair Value, Liabilities, Level 1 to Level 2 Transfers, Amount | 0 | |||
Fair Value, Liabilities, Level 2 to Level 1 Transfers, Amount | 0 | |||
Fair Value, Measurement with Unobservable Inputs Reconciliation, Liability, Transfers Into Level 3 | 0 | |||
Fair Value, Measurement with Unobservable Inputs Reconciliation, Liability, Transfers out of Level 3 | 0 | |||
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Asset Transfers Into Level 3 | 0 | |||
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Asset, Transfers out of Level 3 | 0 | |||
2025 Notes | ||||
Fair Value Measurements | ||||
Embedded features | $ 36,000,000 | |||
2023 Notes | ||||
Fair Value Measurements | ||||
Embedded features | $ 17,300,000 | |||
Recurring | Embedded conversion option | 2025 Notes | ||||
Fair Value Measurements | ||||
Embedded features | 26,201,000 | |||
Recurring | Embedded conversion option | 2023 Notes | ||||
Fair Value Measurements | ||||
Embedded features | 787,000 | 17,091,000 | ||
Recurring | Money market funds | ||||
Fair Value Measurements | ||||
Money market funds | 923,000 | 122,859,000 | ||
Recurring | Level 1 | Money market funds | ||||
Fair Value Measurements | ||||
Money market funds | 923,000 | 122,859,000 | ||
Recurring | Level 3 | Embedded conversion option | ||||
Reconciliation of items measured at fair value on a recurring basis that used significant unobservable inputs (Level 3) | ||||
Balance at the beginning of the period | 17,091,000 | |||
Balance at the end of the period | 26,988,000 | |||
Recurring | Level 3 | Embedded conversion option | 2025 Notes | ||||
Fair Value Measurements | ||||
Embedded features | 26,201,000 | |||
Reconciliation of items measured at fair value on a recurring basis that used significant unobservable inputs (Level 3) | ||||
Initial fair value of embedded features of 2025 Notes | 36,044,000 | |||
Recurring | Level 3 | Embedded conversion option | 2023 Notes | ||||
Fair Value Measurements | ||||
Embedded features | 787,000 | $ 17,091,000 | ||
Reconciliation of items measured at fair value on a recurring basis that used significant unobservable inputs (Level 3) | ||||
Change in derivative liabilities (including the partial settlement of the 2023 Notes) | $ (26,147,000) |
Income Taxes - Tax Provision (D
Income Taxes - Tax Provision (Details) - USD ($) | 9 Months Ended | |
Sep. 30, 2019 | Sep. 30, 2018 | |
Income Taxes | ||
Income tax provision | $ 0 | $ 0 |
Related Party Transactions - Re
Related Party Transactions - Revenues (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2019 | Sep. 30, 2018 | Sep. 30, 2019 | Sep. 30, 2018 | Dec. 31, 2018 | |
Related party transactions | |||||
Revenue | $ 3,360 | $ 4,321 | $ 8,671 | $ 9,960 | |
Due from related party | 3,468 | 3,468 | $ 6,267 | ||
Roche Diabetes Care (related party) | |||||
Related party transactions | |||||
Revenue | 3,400 | $ 4,300 | 8,700 | $ 9,900 | |
Due from related party | $ 3,500 | $ 3,500 | $ 6,300 |
Subsequent Events - (Details)
Subsequent Events - (Details) - Subsequent Event - USD ($) $ in Millions | Nov. 07, 2019 | Dec. 31, 2019 |
Subsequent Event [Line Items] | ||
Production period | 180 days | |
Percentage reduction of head count | 30.00% | |
Severance expenses | $ 0.8 |