Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2020 | Jun. 05, 2020 | |
Document and Entity Information | ||
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2020 | |
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 | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 227,641,604 | |
Entity Central Index Key | 0001616543 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2020 | |
Document Fiscal Period Focus | Q1 | |
Amendment Flag | false |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Current assets: | ||
Cash and cash equivalents | $ 18,605 | $ 95,938 |
Restricted cash | 200 | |
Accounts receivable, net | 991 | 3,239 |
Accounts receivable - related parties | 5 | 7,140 |
Inventory, net | 4,995 | 16,929 |
Prepaid expenses and other current assets | 5,740 | 4,512 |
Total current assets | 30,536 | 127,758 |
Deposits and other assets | 2,930 | 3,042 |
Property and equipment, net | 1,803 | 2,001 |
Total assets | 35,269 | 132,801 |
Current liabilities: | ||
Accounts payable | 2,490 | 4,285 |
Accrued expenses and other current liabilities | 15,371 | 18,636 |
Term Loans, net of discount | 43,434 | |
Total current liabilities | 17,861 | 126,708 |
Other liabilities | 2,089 | 2,278 |
Total liabilities | 84,230 | 141,450 |
Commitments and contingencies | ||
Stockholders' deficit: | ||
Common stock, $0.001 par value per share; 450,000,000 shares authorized; 204,444,835 and 203,452,812 shares issued and outstanding as of March 31, 2020 and December 31, 2019 | 204 | 203 |
Additional paid-in capital | 466,771 | 464,491 |
Accumulated deficit | (515,936) | (473,343) |
Total stockholders' deficit | (48,961) | (8,649) |
Total liabilities and stockholders’ deficit | 35,269 | 132,801 |
2023 Notes | ||
Current liabilities: | ||
Notes, net of discount | 12,412 | 12,464 |
2025 Notes | ||
Current liabilities: | ||
Notes, net of discount | $ 60,353 | |
Notes, net of discount | $ 51,868 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parentheticals) - $ / shares | Mar. 31, 2020 | Dec. 31, 2019 |
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 | 204,444,835 | 203,452,812 |
Common stock, shares outstanding | 204,444,835 | 203,452,812 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations and Comprehensive Loss - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Condensed Consolidated Statements of Operations and Comprehensive Loss | ||
Revenue, net | $ 31 | $ 1,243 |
Revenue, net - related parties | 5 | 2,180 |
Total revenue | 36 | 3,423 |
Cost of sales | 19,670 | 6,733 |
Gross profit | (19,634) | (3,310) |
Expenses: | ||
Sales and marketing expenses | 11,145 | 12,834 |
Research and development expenses | 7,362 | 7,108 |
General and administrative expenses | 5,690 | 6,516 |
Operating loss | (43,831) | (29,768) |
Other income, net: | ||
Interest income | 209 | 627 |
Loss on extinguishment of debt | (4,546) | |
Interest expense | (4,373) | (2,034) |
Change in fair value of derivative liabilities | 10,311 | 2,072 |
Other expense | (363) | (262) |
Total other income, net | 1,238 | 403 |
Net loss | (42,593) | (29,365) |
Total comprehensive loss | $ (42,593) | $ (29,365) |
Basic and diluted net loss per common share | $ (0.21) | $ (0.17) |
Basic and diluted weighted-average shares outstanding | 203,745,974 | 176,954,116 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Changes in Stockholders' Equity (Deficit) - USD ($) $ in Thousands | Common Stock | Additional Paid-In Capital | Accumulated Deficit | Total |
Balance at Dec. 31, 2018 | $ 177 | $ 428,878 | $ (357,794) | $ 71,261 |
Balance (in shares) at Dec. 31, 2018 | 176,918,000 | |||
Changes in Stockholders' Equity (Deficit) | ||||
Exercise of stock options and warrants | 23 | 23 | ||
Exercise of stock options and warrants (in shares) | 15,000 | |||
Stock-based compensation expense and vesting of RSUs | 2,025 | 2,025 | ||
Stock-based compensation expense and vesting of RSUs (in shares) | 25,000 | |||
Net loss | (29,365) | (29,365) | ||
Balance at Mar. 31, 2019 | $ 177 | 430,926 | (387,159) | 43,944 |
Balance (in shares) at Mar. 31, 2019 | 176,958,000 | |||
Balance at Dec. 31, 2019 | $ 203 | 464,491 | (473,343) | (8,649) |
Balance (in shares) at Dec. 31, 2019 | 203,453,000 | |||
Changes in Stockholders' Equity (Deficit) | ||||
Issued shares of common stock | (86) | $ (86) | ||
Issued shares of common stock (in shares) | 175,000 | 175,089 | ||
Exercise of stock options and warrants | $ 1 | 497 | $ 498 | |
Exercise of stock options and warrants (in shares) | 754,000 | |||
Stock-based compensation expense and vesting of RSUs | 1,869 | 1,869 | ||
Stock-based compensation expense and vesting of RSUs (in shares) | 63,000 | |||
Net loss | (42,593) | (42,593) | ||
Balance at Mar. 31, 2020 | $ 204 | $ 466,771 | $ (515,936) | $ (48,961) |
Balance (in shares) at Mar. 31, 2020 | 204,445,000 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Cash flows used in operating activities | ||
Net loss | $ (42,593) | $ (29,365) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation and amortization expense | 288 | 200 |
Non-cash interest expense (debt discount and deferred costs) | 2,191 | 909 |
Loss on extinguishment of debt | 4,546 | |
Change in fair value of derivative liabilities | (10,311) | (2,072) |
Stock-based compensation expense | 1,869 | 2,025 |
Provision for inventory obsolescence and net realizable value | 12,551 | 56 |
Loss on disposal of assets | 181 | |
Changes in assets and liabilities: | ||
Accounts receivable | 9,384 | 4,730 |
Prepaid expenses and other current assets | (1,229) | (713) |
Inventory | (617) | (4,195) |
Deposits and other assets | (57) | 3 |
Accounts payable | (1,795) | (1,133) |
Accrued expenses and other current liabilities | (2,305) | (97) |
Deferred revenue | (628) | |
Accrued interest | (1,151) | 128 |
Net cash used in operating activities | (29,048) | (30,152) |
Cash flows used in investing activities | ||
Capital expenditures | (100) | (392) |
Payments on right of use liability, building | (98) | |
Net cash used in investing activities | (100) | (490) |
Cash flows used in financing activities | ||
Proceeds from issuance of common stock | 117 | |
Common stock issuance costs | (204) | |
Proceeds from exercise of stock options and stock warrants | 498 | 23 |
Repayment of term loans | (48,396) | (2,499) |
Net cash used in financing activities | (47,985) | (2,476) |
Net decrease in cash, cash equivalents, and restricted cash | (77,133) | (33,118) |
Cash, cash equivalents and restricted cash at beginning of period | 95,938 | 136,793 |
Cash, cash equivalents and restricted cash at ending of period | 18,805 | 103,675 |
Supplemental disclosure of cash flow information | ||
Cash paid during the period for interest | 3,344 | $ 1,705 |
Supplemental disclosure of non-cash investing and financing activities | ||
Property and equipment purchases included in accounts payable and accrued expenses | $ 48 |
Organization and Nature of Oper
Organization and Nature of Operations | 3 Months Ended |
Mar. 31, 2020 | |
Organization and Nature of Operations | |
Organization and Nature of Operations | 1. Senseonics Holdings, Inc., a Delaware corporation, is a medical technology company focused on the development and commercialization of long-term, implantable continuous glucose monitoring (“CGM”) 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. |
Going Concern and Liquidity Upd
Going Concern and Liquidity Update | 3 Months Ended |
Mar. 31, 2020 | |
Going Concern and Liquidity Update | |
Going Concern and Liquidity Update | 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 suffered substantial operating losses, principally from expenses associated with the Company’s research and development programs and commercial launch of Eversense® CGM System (for use up to 90 days) in the United States and the Eversense CGM and Eversense XL CGM Systems (for use up to 180 days) in Europe, the Middle East, and Africa. 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 to successfully expand the commercialization of Eversense, continue the development of its products and product upgrades, and to obtain necessary regulatory approvals for the sale of those products, including approval by the FDA for the extended Eversense XL CGM system in the United States. These activities will require significant uses of working capital through 2020 and beyond. The Company generated a net loss of $42.6 million for the three months ended March 31, 2020 and had an accumulated deficit of $515.9 million at March 31, 2020. Following the repayment in full of its term loan with Solar Capital Ltd. (“Solar”) in the amount of $48.5 million on March 22, 2020, the Company had $18.8 million of cash, cash equivalents and restricted cash at March 31, 2020. As a result, and in consideration of the evolving impact of the coronavirus (“COVID-19”) pandemic, the Company made reductions in its cost structure to improve operating cash flow and generate future capital expenditure savings to ensure the long-term success of Eversense. Specifically, the Company temporarily suspended commercial sales of the Eversense CGM system in the United States to new patients and streamlined its operational strategy to focus on the development and regulatory submission efforts for its Eversense XL CGM system, for use for up to 180 days, in the United States. In connection with these actions, on March 26, 2020, the Company reduced its workforce by approximately 60%, over half of which were sales personnel. The Company is pursuing strategic alternatives and has been in discussions with new financing sources. Additional financing could include issuing additional equity (including through the Open Market Sales agreement with Jefferies) or either secured or unsecured indebtedness or a combination of both. Given its limited cash resources, and after inclusion of its subsequent financings described in Note 13 – Subsequent Events, and also considering the economic and market uncertainty resulting from COVID-19, the Company has substantial doubt regarding its ability to meet its obligations as they become due in the ordinary course of business for the next twelve months from the date of this Quarterly Report on Form 10-Q. The Company’s ability to generate enough cash to meet its streamlined working capital requirements is dependent on its ability to achieve additional capital sources and favorable outcomes from potential strategic alternatives currently being explored. New financings may not be available to the Company on commercially acceptable terms, or at all, and may be impacted by the current debt covenants. The Company’s plans to alleviate its substantial doubt about its ability to continue as a going concern assume that there will be no material adverse development in its business, liquidity, or capital requirements, or additional material adverse impacts from COVID-19. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2020 | |
Summary of Significant Accounting Policies | |
Summary of Significant Accounting Policies | 3. Basis of Presentation The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X. Although the Company considers the disclosures in these unaudited consolidated financial statements to be adequate to make the information presented not misleading, certain information or footnote information normally included in consolidated financial statements prepared in accordance with U.S. GAAP have been condensed or omitted as permitted under the rules and regulations of the United States Securities and Exchange Commission (“SEC”). In the opinion of management, all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair statement of financial position at March 31, 2020 and December 31, 2019 and results of operations for the three months ended March 31, 2020 and 2019, and cash flows for the three months ended March 31, 2020 and 2019 have been included. The unaudited condensed consolidated financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2019, as filed with the SEC on March 16, 2020, and amended on April 28, 2020. The interim results for March 31, 2020 are not necessarily indicative of the results to be expected for the year ending December 31, 2020 or for any future interim periods. The consolidated financial statements reflect the accounts of Senseonics Holdings, Inc. and its wholly owned operating subsidiary Senseonics Incorporated. 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 unaudited consolidated financial statements, estimates are used for, but not limited to, stock-based compensation, recoverability of long-lived assets, deferred taxes and valuation allowances, derivative liabilities, obsolete inventory, warranty obligations, variable consideration related to revenue, depreciable lives of property and equipment, and accruals for clinical study costs, which are accrued based on estimates of work performed under contract. The Company considered COVID-19 related impacts to its estimates, as appropriate, within its unaudited consolidated financial statements and there may be changes to those estimates in future periods due to the uncertainties surrounding the severity and duration of the COVID-19 pandemic. 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 months ended March 31, 2020 and 2019, the Company’s net loss equaled its comprehensive loss and, accordingly, no additional disclosure is presented. Cash and Cash Equivalents The Company considers highly liquid investments with original 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. Cash and cash equivalents consisted of the following as of the periods listed below (in thousands): March 31, December 31, 2020 2019 Cash ⁽¹⁾ $ 12,308 $ 38,043 Money market funds 1,500 37,769 Commercial paper 4,797 13,870 Corporate bonds — 6,256 Cash and cash equivalents $ 18,605 $ 95,938 ⁽¹⁾ Includes overnight repurchase agreements Restricted Cash The Company’s restricted cash includes pledged cash as collateral related to its credit card program with Silicon Valley Bank. The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the consolidated balance sheets that sum to the total of the same such amounts shown in the statement of cash flows (in thousands): March 31, December 31, 2020 2019 Cash and cash equivalents $ 18,605 $ 95,938 Restricted cash 200 — Cash, cash equivalents and restricted cash $ 18,805 $ 95,938 Long-lived Assets Management reviews long-lived assets, including property and equipment and right-of-use assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. As a result of COVID-19 and the events described above in Note 2, the Company concluded the fair value of some of its property and equipment did not exceed its carrying values. Accordingly, a loss on disposal of property and equipment in the amount of $0.2 million for the three months ended March 31, 2020 was recorded in the Company’s consolidated statement of operations and comprehensive loss. Revenue The Company recognizes revenue in an amount that reflects the consideration that the entity expects to receive in exchange for those goods or services. To determine revenue recognition, 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, 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 revenue from sales of the Eversense CGM system and related components 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. Customer contracts do include the right to return. Revenue is recognized, at a point in time, when the Customers obtain control of the product based upon the delivery terms as defined in the contract at an amount that reflects the consideration which is expected to be received in exchange for the product. Contracts with the Customers include performance obligations for supply of goods and the performance obligation is typically satisfied upon transfer of control of the product. Distribution contracts may also contain requirements for training and customer service support, however these are not assessed as performance obligations given the activities are considered immaterial in the context of the contract. The payment terms and conditions of the Customers vary, but the Company is typically paid within 60 days of invoicing subsequent to the Customers obtaining control of the Company’s product. Revenue is recognized only to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur in a future period. The Company’s contracts may contain variable consideration such as prompt-pay discounts or tier-volume price discounts. Variable consideration, including the reimbursements paid by the Company to its Customers in accordance with the Eversense Bridge Program initiated in March 2019 and to a lesser extent, other discounts and prompt-pay incentives, is treated as a reduction in revenue when the product sale is recognized. Depending on the variable consideration, the Company estimates the expected value based on the terms of the agreements, historical data, insurance payor mix, reimbursement rates, and market conditions. In connection with the Eversense Bridge Program, the Company reimburses participating Customers an amount up to a fixed maximum for the difference in the cost of the Eversense System and what they collect from insurance payors and the patient’s fee of $99. The Customers are responsible for confirming patient insurance coverage, obtaining pre-authorizations, determining eligibility, and continuously provide the Company with data regarding which patient orders are under the program and which are not. Customer supplied data, along with actual reimbursements that have been validated to patient claims, are used to support expected reimbursement estimates. Estimated reimbursement payments for product shipped to Customers but not provided to a patient within the same reporting period are recorded within accrued expenses and other current liabilities in the accompanying consolidated balance sheets. Because of the limited experience with the Eversense Bridge Program, the estimates used in determining the variable consideration on a sale transaction could change in future periods, and such changes could be material. Contract assets consist of trade receivables from Customers and contract liabilities consist of amounts due to Customers in connection with the Eversense Bridge Program, classified as patient access and incentive programs within accrued liabilities on the accompanying unaudited consolidated balance sheets. Trade receivables for customers in the United States are recorded at net realizable value, which is generally the contractual price but may be net of anticipated prompt-pay or promotional discounts. Concentration of Revenue and Customers For the three months ended March 31, 2020 and 2019, the Company derived 0% and 59%, respectively, from one customer, Roche Diabetes Care GmbH. 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 months ended March 31, 2020 and 2019. March 31, 2020 March 31, 2019 % % (Dollars in thousands) Amount of Total Amount of Total Revenue, net: Outside of the United States $ 12 % $ 2,607 % United States 24 816 Total $ 36 % $ 3,423 % Accounts Receivable Accounts receivable consist of amounts due from the Company’s Customers and are recorded at net realizable value, which may include reductions for allowances for doubtful accounts at the time potential collection risk is identified or for promotional or prompt-pay discounts offered. The Company provided one-time COVID-19 pandemic relief concessions to some of its customers in the United States for allowances up to a specified amount if they are unable to sell through Eversense and related components on hand prior to expiry, which the Company expects to occur in the third and fourth quarters of 2020. The Company’s net revenues and corresponding accounts receivables were reduced by $1.2 million for these allowances at March 31, 2020. The Company does not have a history of collectability concerns and there have been no provisions for uncollectible accounts recorded against accounts receivable at March 31, 2020 or December 31, 2019. Net Loss per Share Basic net loss per share is computed by dividing net loss available to common stockholders 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. The total number of anti-dilutive shares at March 31, 2020 and 2019, consisting of common stock options and stock purchase warrants, which have been excluded from the computation of diluted net loss per share, was as follows: March 31, 2020 2019 Stock-based awards 18,918,008 27,518,174 2023 Notes 6,672,500 20,017,048 2025 Notes 63,018,091 — Warrants 5,196,581 4,071,581 Total anti-dilutive shares outstanding 93,805,180 51,606,803 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 stock purchase warrants and employee stock purchases using the treasury stock method. Exit or Disposal Costs Costs associated with exit or disposal activities, such as restructuring, sale or termination of a line of business, the closure of business activities in a particular location, the relocation of business activities, changes in management structure and a fundamental reorganization that affects the nature and focus of operations, are recognized and measured initially at their fair values during the period in which an obligation meets the definition of a liability. As a result of the Company’s financial condition following the repayment in full of its term loan with Solar on March 22, 2020, further described above in Note 2 – Going Concern and Liquidity Update, and in consideration of the economic uncertainty due to the COVID-19 pandemic, the Company made reductions in its cost structure and operational focus to improve operating cash flow and generate future capital expenditure savings to ensure the long-term success of Eversense. These cost reductions included a reduction in force by approximately 60%, which was communicated to employees on March 26, 2020 and did not permit continuation of service past March 31, 2020. Associated one-time employee termination benefit costs in the amount of $1.6 million were accrued and recorded in the Company’s accompanying unaudited consolidated financial statements as of March 31, 2020. Recent Accounting Pronouncements Recently Adopted In August 2018, the Financial Accounting Standards Board (“FASB “) issued Accounting Standards Update (“ASU”) 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement , which eliminates, adds and modifies certain disclosure requirements on fair value measurements. The new standard includes additional disclosure requirements regarding the range and weighted average to develop significant unobservable inputs within Level 3 fair value measurements. The Company adopted this on its effective date, January 1, 2020 and did not have a material impact on the consolidated financial statements and related disclosures. Not Yet Adopted In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses: Measurement of Credit Losses on Financial Instruments , which requires entities to record expected credit losses for certain financial instruments, including trade receivables, as an allowance that reflects the entity's current estimate of credit losses expected to be incurred. For available-for-sale debt securities in unrealized loss positions, the new standard requires allowances to be recorded instead of reducing the amortized cost of the investment. The Company does not currently hold or plan to invest in available-for-sale securities and has not historically experienced collection issues or bad debts with trade receivables. Accordingly, the Company does not expect this to have a significant impact on its consolidated financial statements and related disclosures at this time. The Company will adopt this guidance on its effective date for smaller reporting companies, January 1, 2023. In December 2019, the FASB issued ASU No. 2019-12, Simplifying the Accounting for Income Taxes , which is intended to simplify various aspects of the income tax accounting guidance, including requirements such as tax basis step-up in goodwill obtained in a transaction that is not a business combination, ownership changes in investments, and interim-period accounting for enacted changes in tax law. ASU 2019-12 is effective for public business entities for fiscal years beginning after December 15, 2020, including interim periods within those fiscal years, and early adoption is permitted. The Company is currently evaluating the impact that this guidance will have on its consolidated financial statements. |
Inventory, net
Inventory, net | 3 Months Ended |
Mar. 31, 2020 | |
Inventory, net | |
Inventory, net | 4. Inventory, net Inventory, net of reserves, consisted of the following (in thousands): March 31, December 31, 2020 2019 Finished goods $ 1,043 $ 3,944 Work-in-process 1,282 10,938 Raw materials 2,670 2,047 Total $ 4,995 $ 16,929 The Company charged $15.0 million and $0.1 million to cost of sales for the three months ended March 31, 2020 and 2019, respectively, to reduce the value of inventory for items that are potentially obsolete, in excess of product demand, or to adjust costs to their net realizable value. |
Prepaid Expenses and Other Curr
Prepaid Expenses and Other Current Assets | 3 Months Ended |
Mar. 31, 2020 | |
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): March 31, December 31, 2020 2019 Contract manufacturing $ 3,723 $ 3,043 Insurance 1,040 44 Marketing and sales 534 605 Clinical and preclinical 216 240 IT and software 202 294 Interest receivable 18 107 Other 7 179 Total prepaid expenses and other current assets $ 5,740 $ 4,512 |
Accrued Expenses and Other Curr
Accrued Expenses and Other Current Liabilities | 3 Months Ended |
Mar. 31, 2020 | |
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): March 31, December 31, 2020 2019 Compensation and benefits⁽¹⁾ $ 3,496 $ 5,630 Contract manufacturing 3,274 2,452 Product warranty and replacement obligations 2,157 2,197 Professional & administration services 1,856 1,384 Research and development 1,140 1,956 Patient access programs 1,053 1,578 Interest on notes payable 1,001 2,153 Operating lease 719 696 Sales and marketing services 625 553 Other 50 37 Total accrued expenses and other current liabilities $ 15,371 $ 18,636 |
Notes Payable and Stock Purchas
Notes Payable and Stock Purchase Warrants | 3 Months Ended |
Mar. 31, 2020 | |
Notes Payable and Stock Purchase Warrants | |
Notes Payable and Stock Purchase Warrants | 7. Repayment of Solar Term Loan On March 22, 2020, the Company and Solar terminated its Loan and Security Agreement, dated as of July 16, 2019 (the “Solar Loan Agreement”). As previously disclosed in the Company’s Annual Report on Form 10-K, the Company expected to default on its obligations under the Solar Loan Agreement and was seeking a waiver from Solar of any default under the Solar Loan Agreement. Following discussions with Solar, the parties were unable to negotiate such a waiver and, as a result, the parties determined to terminate the Solar Loan Agreement. In connection with the termination, the Company paid $48.5 million representing all amounts outstanding under the Solar Loan Agreement, including the principal amount and interest of the loans, a payoff fee of 6.45% of the loans outstanding, a prepayment premium of 3.0% of the loans outstanding and other obligations owed to Solar thereunder. The Company issued warrants in connection to the Solar Loan Agreement to purchase an aggregate of 1,125,000 shares of the Company’s common stock with an exercise price of $1.20 per share, which are exercisable until July 25, 2029. A loss on the extinguishment of debt in the amount of $4.5 million reflecting the difference between the repayment amount and the carrying value of the principal balance, accrued interest, unamortized debt issuance costs and unaccreted prepayment fee at March 22, 2020 was recorded to other income (expense) in the Company’s unaudited consolidated statement of operations and comprehensive loss during the three months ended March 31, 2020. Convertible Notes 2025 Notes In July 2019, the Company issued $82.0 million in aggregate principal amount of senior convertible notes that will mature on January 15, 2025, unless earlier repurchased or converted (the “2025 Notes”). 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 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 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. 2023 Notes In the first quarter of 2018, the Company issued $53.0 million in aggregate principal amount of senior convertible notes due February 1, 2023 (the “2023 Notes”). 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. 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 $3.40 per share, subject to adjustment upon the occurrence of specified events. The Company bifurcated the embedded conversion option, along with the interest make-whole provision and make-whole fundamental change provision as a derivative liability. The derivative is adjusted to fair value at each reporting period, with the change in the fair value recorded to other income (expense) in the Company’s consolidated statement of operations and comprehensive loss. The following carrying amounts were outstanding under the Company’s notes payable as of March 31, 2020 and December 31, 2019 (in thousands): March 31, 2020 Principal ($) Debt Discount ($) Issuance Costs ($) Carrying Amount ($) 2023 Notes 15,700 (3,624) - 12,076 2025 Notes 82,000 (45,006) (686) 36,308 December 31, 2019 Principal ($) Debt Discount ($) Issuance Costs ($) Carrying Amount ($) Solar Term Loan 45,000 (1,466) (100) 43,434 2023 Notes 15,700 (3,900) - 11,800 2025 Notes 82,000 (46,482) (708) 34,810 Interest expense related to the notes payable for the three months ended March 31, 2020 was as follows (in thousands): Three months ended March 31, 2020 Effective Interest Rate Interest ($) Debt Discount & Fees ($) Issuance Costs ($) Final Payment Fee ($) Total Interest Expense ($) Solar Term Loan 887 139 36 240 1,302 2023 Notes 1,087 1,476 22 - 2,585 2025 Notes 206 276 - - 482 Total 2,180 1,891 58 240 4,369 The following are the scheduled maturities of the 2025 Notes and 2023 Notes as of March 31, 2020 (in thousands): 2020 (remaining nine months) $ — 2021 — 2022 — 2023 15,700 2024 — Thereafter 82,000 ⁽¹⁾ Total $ 97,700 ⁽¹⁾ On April 21, 2020 the Company entered into a Note Purchase and Exchange Agreement with certain funds managed by Highbridge Capital Management, LLC providing for the exchange of $24.0 million aggregate principal amount of the Company’s outstanding 2025 Notes for (i) $15.7 million aggregate principal amount of newly issued Second Lien Secured Notes due January 2022, (ii) 11,026,086 shares of Common Stock, (iii) warrants to purchase up to 4,500,000 shares of Common Stock at an exercise price of $0.66 per share, and (iv) $0.3 million in accrued and unpaid interest on the 2025 Notes being exchanged. See Note 13 below for more details. |
Stockholders_ Deficit
Stockholders’ Deficit | 3 Months Ended |
Mar. 31, 2020 | |
Stockholders’ Deficit | |
Stockholders’ Deficit | 8. In November 2019, the Company entered into an Open Market Sale Agreement with Jefferies LLC which allows the Company to issue and sell up to $50 million in gross proceeds of its common stock. During the three months ended March 31, 2020 the Company sold 175,089 shares of common stock resulting in gross proceeds of $0.1 million. |
Stock-Based Compensation
Stock-Based Compensation | 3 Months Ended |
Mar. 31, 2020 | |
Stock-Based Compensation | |
Stock-Based Compensation | 9. Stock‑Based Compensation 2015 Plan 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 units may be granted to the Company’s employees and certain other persons in accordance with the 2015 Plan provisions, such as officers and directors. In February 2016, 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”), which became effective on March 17, 2016. 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 of the Company’s common stock reserved for issuance automatically increases on January 1 of each year, ending on January 1, 2026, by 3.5% of the total number of shares of its common stock outstanding on December 31 of the preceding calendar year, or a lesser number of shares as may be determined by its board of directors. As of March 31, 2020, 17,261,319 shares remained available for grant under the amended and restated 2015 Plan. Inducement 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 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 non-statutory options, restricted stock unit awards and other equity incentive awards. As of March 31, 2020, 1,229,132 shares remained available for grant under the Inducement Plan. 2016 Employee Stock Purchase Plan In February 2016, the Company adopted the 2016 Employee Stock Purchase Plan, (the “2016 ESPP”). The 2016 ESPP became effective on March 17, 2016. The maximum number of shares of common stock that may be issued under the 2016 ESPP was initially 800,000 shares and automatically increases on January 1 of each year, ending on and including January 1, 2026, by 1.0% of the total number of shares of common stock outstanding on December 31 of the preceding calendar year; provided, however, the Board of Directors may act prior to the first day of any calendar year to provide that there will be no January 1 increase in the share reserve for such calendar year or that the increase in the share reserve for such calendar year will be a lesser number of shares of common stock. At March 31, 2020 there were 6,341,661 shares of common stock available for issuance under the 2016 ESPP. The 2016 ESPP permits participants to purchase shares of the Company’s common stock through payroll deductions of up to 15% of their earnings. Unless otherwise determined by the administrator, the purchase price of the shares will be 85% of the lower of the fair market value of common stock on the first day of an offering or on the date of purchase. Participants may end their participation at any time and deductions not yet used in a purchase are refundable upon employment termination. The Company initiated its first 2016 ESPP offering period on August 1, 2019 and new offering periods occur every six months thereafter, each consisting of two purchase periods of six months in duration ending on or about January 31st and July 31st of each year. A participant may only be in one offering at a time. On February 1, 2020, there were 566,573 shares purchased in connection with the initial offering period. The 2016 ESPP contains an offering reset provision whereby if the fair market value of a share on offering date of an ongoing offering is less than or equal to the fair market value of a share on a new offering date, the ongoing offering will terminate immediately after the purchase date and rolls over to the new offering. During the three months ended March 31, 2020, 40 participants in the initial offering were automatically rolled over to the subsequent new offering as a result this reset provision and an incremental cost of less than $0.1 million. The 2016 ESPP is considered compensatory for financial reporting purposes. 1997 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 3,515,817 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 . |
Fair Value Measurements
Fair Value Measurements | 3 Months Ended |
Mar. 31, 2020 | |
Fair Value Measurements | |
Fair Value Measurements | 10. The following table represents the fair value hierarchy of the Company’s financial assets and liabilities measured at fair value on a recurring basis at March 31, 2020 and December 31, 2019 (in thousands): March 31, 2020 Total Level 1 Level 2 Level 3 Assets Money market funds⁽¹⁾ $ 1,501 $ 1,501 $ — $ — Commercial paper⁽¹⁾ 4,797 — 4,797 — Liabilities Embedded features of the 2023 Notes $ 336 $ — $ — $ 336 Embedded features of the 2025 Notes $ 15,560 $ — $ 15,560 $ — December 31, 2019 Total Level 1 Level 2 Level 3 Assets Money market funds⁽¹⁾ $ 37,769 $ 37,769 $ — $ — Commercial paper⁽¹⁾ 13,870 — 13,870 — Corporate bonds 6,256 — 6,256 — Liabilities Embedded features of the 2023 Notes $ 664 $ — $ — $ 664 Embedded features of the 2025 Notes 25,543 — 25,543 — ⁽¹⁾ Classified as cash and cash equivalents due to their short-term maturity The following table provides a reconciliation of the beginning and ending balances of items measured at fair value on a recurring basis that used significant unobservable inputs (Level 3) (in thousands): Embedded Features of the the Notes December 31, 2019 $ 664 Change in derivative liabilities (328) March 31, 2020 $ 336 The recurring Level 3 fair value measurements of the embedded features of the 2023 Notes include the following significant unobservable inputs at March 31, 2020: Unobservable Inputs Assumptions Risky (bond) rate 25.7 % Stock price volatility 75.8 % - 99.1 % Probabilities of make-whole provision 6.0 % - 83.1 % Time period until maturity (yrs) .25 - 2.84 Dividend yield — % |
Income Taxes
Income Taxes | 3 Months Ended |
Mar. 31, 2020 | |
Income Taxes | |
Income Taxes | 11. The Company has not recorded any tax provision or benefit for the three months ended March 31, 2020 or March 31, 2019. 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 March 31, 2020 and December 31, 2019. On March 27, 2020, Congress enacted the Coronavirus Aid, Relief and Economic Security Act (“CARES Act”) to provide certain relief as a result of the COVID-19 pandemic. The enactment of the CARES Act did not result in any material adjustments to the Company’s income tax provision or net deferred tax assets for the three months ended March 31, 2020. |
Related Party Transactions
Related Party Transactions | 3 Months Ended |
Mar. 31, 2020 | |
Related Party Transactions | |
Related Party Transactions | 12. Roche Holding A.G, through its ownership interests in Roche Finance Ltd (collectively, “Roche”), has a noncontrolling ownership interest in the Company. Revenue from Roche during the three months ended March 31, 2020 was less than $0.1 million. For the three months ended March 31, 2019, revenue from Roche was $2.2 million. Amounts due from Roche were less than $0.1 million at March 31, 2020 and $7.1 million at December 31, 2019. At each of March 31, 2020 and December 31, 2019, the Company had committed replacement obligations under warranties of $0.6 million. |
Subsequent Events
Subsequent Events | 3 Months Ended |
Mar. 31, 2020 | |
Subsequent Events | |
Subsequent Events | 13 . April 2020 Financings PPP Loan On April 22, 2020, the Company received $5.8 million in loan funding from the Paycheck Protection Program (“PPP”), established pursuant to the CARES Act and administered by the SBA. The unsecured loan (the “PPP Loan”) is evidenced by a promissory note of the Company dated April 21, 2020 (the “PPP Note”) in the principal amount of $5.8 million with Silicon Valley Bank (the “Bank”). Under the terms of the PPP Note and the PPP Loan, interest accrues on the outstanding principal at the rate of 1.0% per annum. The term of the PPP Note is two years, though it may be payable sooner in connection with an event of default under the PPP Note. To the extent the loan amount is not forgiven under the PPP, the Company is obligated to make equal monthly payments of principal and interest, beginning seven months from the date of the PPP Note, until the maturity date. The CARES Act and the PPP provide a mechanism for forgiveness of up to the full amount borrowed. Under the PPP, the Company may apply for forgiveness for all or a part of the PPP Loan. The amount of loan proceeds eligible for forgiveness is based on a formula that takes into account a number of factors, including the amount of loan proceeds used by the Company during the specified period after the loan origination for certain purposes including payroll costs, interest on certain mortgage obligations, rent payments on certain leases, and certain qualified utility payments, provided that at least 75% of the loan amount is used for eligible payroll costs; the employer maintaining or rehiring employees and maintaining salaries at certain levels; and other factors. Subject to the other requirements and limitations on loan forgiveness, only loan proceeds spent on payroll and other eligible costs during the specified period will qualify for forgiveness. As a result of the Company’s workforce reduction, the amount of forgiveness will correspondingly decrease, unless the Company is able to rehire impacted employees. The PPP Note may be prepaid in part or in full, at any time, without penalty. The PPP Note provides for certain customary events of default, including (i) failing to make a payment when due under the PPP Note, (ii) failure to do anything required by the PPP Note or any other loan document, (iii) defaults of any other loan with the Bank, (iv) failure to disclose any material fact or make a materially false or misleading representation to the Bank or SBA, (v) default on any loan or agreement with another creditor, if the Bank believes the default may materially affect the Company’s ability to pay the PPP Note, (vi) failure to pay any taxes when due, (vii) becoming the subject of a proceeding under any bankruptcy or insolvency law, having a receiver or liquidator appointed for any part of the Company’s business or property, or making an assignment for the benefit of creditors, (viii) having any adverse change in financial condition or business operation that the Bank believes may materially affect the Company’s ability to pay the PPP Note, (ix) if the Company reorganizes, merges, consolidates, or otherwise changes ownership or business structure without the Bank’s prior written consent, or (x) becoming the subject of a civil or criminal action that the Bank believes may materially affect the Company’s ability to pay the PPP Note. Upon the occurrence of an event of default, the Bank has customary remedies and may, among other things, require immediate payment of all amounts owed under the PPP Note, collect all amounts owing from the Company, and file suit and obtain judgment against the Company. Highbridge Loan Agreement On April 21, 2020, the Company entered into a Loan and Security Agreement (the “Highbridge Loan Agreement”), with certain funds managed by Highbridge Capital Management, LLC, (“Highbridge”), as the lenders, together with the other lenders from time to time party thereto (“the Lenders”) and Wilmington Savings Fund Society, SCB, as collateral agent. Pursuant to the Highbridge Loan Agreement, the Company may borrow up to an aggregate of $20.0 million in aggregate principal through the issuance and sale of First Lien Notes due October 2021 (the “First Lien Notes”). The Company received the first tranche of borrowing in the aggregate principal amount of $15.0 million on April 24, 2020. Under the terms of the Highbridge Loan Agreement, the Company may issue up to an additional $5.0 million in aggregate principal amount of First Lien Notes in a subsequent closing. In connection with the Highbridge Loan Agreement and receipt of the first tranche of borrowing, the Company issued 1,500,000 shares of its common stock to the Lenders as a commitment fee. The First Lien Notes are secured, senior obligations that bear interest at the annual rate of 12% or, at the Company’s election, payment in kind at an annual rate of 13%, payable monthly in arrears. The First Lien Notes will mature on October 24, 2021 (the “First Lien Maturity Date”) unless earlier repurchased, redeemed or converted in accordance with their terms. The obligations under the First Lien Notes are secured by substantially all the Company’s assets. The Company has the right to prepay the First Lien Notes at any time, subject to a prepayment premium, which in certain circumstances the Company may elect to pay in its common stock, equal to the aggregate amount of interest payments through maturity. However, if the date of payment in cash of such prepayment premium is on or before August 22, 2020, the prepayment premium will be reduced by 25%. Subject to certain conditions, if the Company retains or reinvests proceeds of an asset sale pursuant to the asset sale prepayment provisions in the Highbridge Loan Agreement, the Lenders shall be entitled to convert First Lien Notes and Holders (defined below) shall be entitled to convert Second Lien Notes in aggregate combined principal amount equal to 45% of such net proceeds retained or reinvested (together with any applicable prepayment premium) to the Company’s common stock at a price per share equal to 90% of the greater of (i) the daily volume weighted average of the price per share of the common stock, on the conversion date, or if the conversion date is not a trading date, the trading day immediately prior to the conversion date and (ii) $0.57 per share. This conversion option has a daily limit of $1.0 million in aggregate converted principal (inclusive of principal amount of Second Lien Notes that are voluntarily converted by the Holders). From and after a strategic transaction announcement (as defined in the form of First Lien Note), the Company may elect to convert up to $9.4 million in aggregate principal of the First Lien Notes to its common stock at a price per share equal to 90% of the greater of (i) the daily volume weighted average of the price per share of the common stock, on the conversion date, or if the conversion date is not a trading date, the trading day immediately prior to the conversion date and (ii) $0.57 per share of its common stock. This conversion option has a daily limit of $0.3 million in aggregate converted principal. If the Company or the Lenders elect to convert any of the First Lien Notes, the amount converted will be equal to the principal and unpaid accrued interest plus the applicable prepayment premium. The Highbridge Loan Agreement contains customary terms and covenants, including without limitation: financial covenants, such as operating within an approved budget and maintaining a minimum cash balance; and negative covenants, such as limitations on indebtedness, liens, mergers, asset transfers, certain investing activities and other matters customarily restricted in such agreements. Most of these restrictions are subject to certain minimum thresholds and exceptions. The Highbridge Loan Agreement also contains customary events of default, after which the First Lien Notes may be due and payable immediately, including, without limitation, payment defaults, material inaccuracy of representations and warranties, covenant defaults, material adverse changes, bankruptcy and insolvency proceedings, cross-defaults to certain other agreements, judgments against the Company, and change of control, termination of any guaranty, governmental approvals, and lien priority. Exchange Agreement with Highbridge On April 21, 2020 the Company entered into a Note Purchase and Exchange Agreement (the “Exchange Agreement”) with certain funds managed by Highbridge providing for the exchange (the “Exchange”) of $24.0 million aggregate principal amount of the Company’s outstanding 2025 Notes for (i) $15.7 million aggregate principal amount of newly issued Second Lien Secured Notes due January 2022 (the “Second Lien Notes” and, together with the First Lien Notes, the “Senior Notes”), (ii) 11,026,086 shares of common stock, (iii) warrants (the “Warrants”) to purchase up to 4,500,000 shares of common stock at an exercise price of $0.66 per share, and (iv) $0.3 million in accrued and unpaid interest on the 2025 Notes being exchanged. The Exchange closed on April 24, 2020. The Warrants may be exercised in cash or on a cashless basis at any time through the three year anniversary of the issuance date. The Second Lien Notes are secured, senior obligations of the Company, junior only to the First Lien Notes. Interest in cash at the annual rate of 7.5% or, at the Company’s option, payment in kind at an annual rate of 8.25%, on the Second Lien Notes will be payable monthly in arrears. The maturity date for the Second Lien Notes will be January 24, 2022 (the “Second Lien Maturity Date”), unless earlier repurchased, redeemed or converted in accordance with their terms. The obligations under the Second Lien Notes are secured by substantially all of the Company’s assets. The Company will have the right to prepay the Second Lien Notes at any time, subject to a prepayment premium, which in certain circumstances the Company may elect to pay in common stock, equal to the aggregate amount of interest payments through maturity. However, if the date of payment in cash of such prepayment premium is on or before August 22, 2020, the prepayment premium will be reduced by 25%. The holders of the Second Lien Notes (the “Holders”) will have the right to convert up to $7.0 million aggregate principal of the Second Lien Notes (together with any applicable prepayment premium) to common stock at a price per share equal to 90% of the greater of (i) the daily volume weighted average of the price per share of the common stock, on the conversion date, or if the conversion date is not a trading date, the trading day immediately prior to the conversion date and (ii) $0.57 per share. This conversion option has a daily limit of $1.0 million in aggregate converted principal (inclusive of principal amount of First Lien Notes that are voluntarily converted by the Lenders). Subject to certain conditions, if the Company retains or reinvests proceeds of an asset sale pursuant to the Asset Sale Prepayment Provisions in the Exchange Agreement, the Holders shall be entitled to convert additional Second Lien Notes and the Lenders shall be entitled to convert First Lien Notes in aggregate combined principal amount equal to 45% of such net proceeds retained or reinvested (together with any applicable prepayment premium). As of June 5, 2020, the Holders have converted $4.8 million for issuance of 10,502,291 shares of common stock. From and after a strategic transaction announcement, the Company may elect to convert up to $8.7 million in aggregate principal of the Second Lien Notes to common stock at a price per share equal to 90% of the greater of (i) the daily volume weighted average of the price per share of the common stock, on the conversion date, or if the conversion date is not a trading date, the trading day immediately prior to the conversion date and (ii) $0.57 per share. This conversion option has a daily limit of $0.3 million in aggregate converted principal. If the Company or the Holders elect to convert any of the Second Lien Notes, the amount converted will be equal to the principal and unpaid accrued interest plus the applicable premium. The Exchange Agreement contains customary terms and covenants, including without limitation: financial covenants, such as maintaining a minimum cash balance; and negative covenants, such as limitations on indebtedness, liens, mergers, asset transfers, certain investing activities and other matters customarily restricted in such agreements. Most of these restrictions are subject to certain minimum thresholds and exceptions. The Exchange Agreement also contains customary events of default, after which the Second Lien Notes may be due and payable immediately, without limitation, payment defaults, material inaccuracy of representations and warranties, covenant defaults, material adverse changes, bankruptcy and insolvency proceedings, cross-defaults to certain other agreements, judgments against us, and change of control, termination of any guaranty, governmental approvals, and lien priority. The Company may not issue shares of its common stock, net of the 18,181,818 shares underlying the 2025 Notes exchanged in the Exchange, in excess of 19.99% of the common stock outstanding on April 21, 2020; this restriction is subject to removal upon approval by stockholders of the Company (the “Stockholder Approval”). The Company intends to seek the Stockholder Approval at the Company’s 2020 Annual Meeting of Stockholders on June 30, 2020. Supplier and Contract Manufacturer Obligations As a result of the impact of the COVID-19 pandemic on the global healthcare community and the Company’s streamlined operational focus implemented at the end of the first quarter of 2020, the Company has been negotiating with certain of its major suppliers and contract manufacturers to pay for materials procured by these parties on the Company’s behalf or for costs incurred related to Eversense manufacturing activities that were paused or delayed by the Company. Some of these fees may also be dependent on whether the materials will expire prior to when the Company resumes production at normal operating levels, or if further delays in manufacturing occur. As of June 9, 2020, the Company expects to have to pay approximately $1.9 million for costs related to pausing manufacturing activities and $0.6 million if certain manufacturing timelines are not met within a specified period. The Company will record any fees contingent upon future manufacturing in its consolidated financial statements if, and when, it is probable such obligations will become due. When the Company resumes manufacturing activity, some of the amounts paid for materials may be credited back to the Company upon consumption. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2020 | |
Summary of Significant Accounting Policies | |
Basis of Presentation | Basis of Presentation The accompanying unaudited consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X. Although the Company considers the disclosures in these unaudited consolidated financial statements to be adequate to make the information presented not misleading, certain information or footnote information normally included in consolidated financial statements prepared in accordance with U.S. GAAP have been condensed or omitted as permitted under the rules and regulations of the United States Securities and Exchange Commission (“SEC”). In the opinion of management, all adjustments (consisting only of normal recurring adjustments) considered necessary for a fair statement of financial position at March 31, 2020 and December 31, 2019 and results of operations for the three months ended March 31, 2020 and 2019, and cash flows for the three months ended March 31, 2020 and 2019 have been included. The unaudited condensed consolidated financial statements should be read in conjunction with the Company’s Annual Report on Form 10-K for the year ended December 31, 2019, as filed with the SEC on March 16, 2020, and amended on April 28, 2020. The interim results for March 31, 2020 are not necessarily indicative of the results to be expected for the year ending December 31, 2020 or for any future interim periods. The consolidated financial statements reflect the accounts of Senseonics Holdings, Inc. and its wholly owned operating subsidiary Senseonics Incorporated. |
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 unaudited consolidated financial statements, estimates are used for, but not limited to, stock-based compensation, recoverability of long-lived assets, deferred taxes and valuation allowances, derivative liabilities, obsolete inventory, warranty obligations, variable consideration related to revenue, depreciable lives of property and equipment, and accruals for clinical study costs, which are accrued based on estimates of work performed under contract. The Company considered COVID-19 related impacts to its estimates, as appropriate, within its unaudited consolidated financial statements and there may be changes to those estimates in future periods due to the uncertainties surrounding the severity and duration of the COVID-19 pandemic. 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 months ended March 31, 2020 and 2019, the Company’s net loss equaled its comprehensive loss and, accordingly, no additional disclosure is presented. |
Cash and Cash Equivalents | Cash and Cash Equivalents The Company considers highly liquid investments with original 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. Cash and cash equivalents consisted of the following as of the periods listed below (in thousands): March 31, December 31, 2020 2019 Cash ⁽¹⁾ $ 12,308 $ 38,043 Money market funds 1,500 37,769 Commercial paper 4,797 13,870 Corporate bonds — 6,256 Cash and cash equivalents $ 18,605 $ 95,938 ⁽¹⁾ Includes overnight repurchase agreements |
Restricted Cash | Restricted Cash The Company’s restricted cash includes pledged cash as collateral related to its credit card program with Silicon Valley Bank. The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the consolidated balance sheets that sum to the total of the same such amounts shown in the statement of cash flows (in thousands): March 31, December 31, 2020 2019 Cash and cash equivalents $ 18,605 $ 95,938 Restricted cash 200 — Cash, cash equivalents and restricted cash $ 18,805 $ 95,938 |
Long-lived Assets | Long-lived Assets Management reviews long-lived assets, including property and equipment and right-of-use assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. As a result of COVID-19 and the events described above in Note 2, the Company concluded the fair value of some of its property and equipment did not exceed its carrying values. Accordingly, a loss on disposal of property and equipment in the amount of $0.2 million for the three months ended March 31, 2020 was recorded in the Company’s consolidated statement of operations and comprehensive loss. |
Revenue | Revenue The Company recognizes revenue in an amount that reflects the consideration that the entity expects to receive in exchange for those goods or services. To determine revenue recognition, 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, 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 revenue from sales of the Eversense CGM system and related components 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. Customer contracts do include the right to return. Revenue is recognized, at a point in time, when the Customers obtain control of the product based upon the delivery terms as defined in the contract at an amount that reflects the consideration which is expected to be received in exchange for the product. Contracts with the Customers include performance obligations for supply of goods and the performance obligation is typically satisfied upon transfer of control of the product. Distribution contracts may also contain requirements for training and customer service support, however these are not assessed as performance obligations given the activities are considered immaterial in the context of the contract. The payment terms and conditions of the Customers vary, but the Company is typically paid within 60 days of invoicing subsequent to the Customers obtaining control of the Company’s product. Revenue is recognized only to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized will not occur in a future period. The Company’s contracts may contain variable consideration such as prompt-pay discounts or tier-volume price discounts. Variable consideration, including the reimbursements paid by the Company to its Customers in accordance with the Eversense Bridge Program initiated in March 2019 and to a lesser extent, other discounts and prompt-pay incentives, is treated as a reduction in revenue when the product sale is recognized. Depending on the variable consideration, the Company estimates the expected value based on the terms of the agreements, historical data, insurance payor mix, reimbursement rates, and market conditions. In connection with the Eversense Bridge Program, the Company reimburses participating Customers an amount up to a fixed maximum for the difference in the cost of the Eversense System and what they collect from insurance payors and the patient’s fee of $99. The Customers are responsible for confirming patient insurance coverage, obtaining pre-authorizations, determining eligibility, and continuously provide the Company with data regarding which patient orders are under the program and which are not. Customer supplied data, along with actual reimbursements that have been validated to patient claims, are used to support expected reimbursement estimates. Estimated reimbursement payments for product shipped to Customers but not provided to a patient within the same reporting period are recorded within accrued expenses and other current liabilities in the accompanying consolidated balance sheets. Because of the limited experience with the Eversense Bridge Program, the estimates used in determining the variable consideration on a sale transaction could change in future periods, and such changes could be material. Contract assets consist of trade receivables from Customers and contract liabilities consist of amounts due to Customers in connection with the Eversense Bridge Program, classified as patient access and incentive programs within accrued liabilities on the accompanying unaudited consolidated balance sheets. Trade receivables for customers in the United States are recorded at net realizable value, which is generally the contractual price but may be net of anticipated prompt-pay or promotional discounts. Concentration of Revenue and Customers For the three months ended March 31, 2020 and 2019, the Company derived 0% and 59%, respectively, from one customer, Roche Diabetes Care GmbH. 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 months ended March 31, 2020 and 2019. March 31, 2020 March 31, 2019 % % (Dollars in thousands) Amount of Total Amount of Total Revenue, net: Outside of the United States $ 12 % $ 2,607 % United States 24 816 Total $ 36 % $ 3,423 % |
Accounts Receivable | Accounts Receivable Accounts receivable consist of amounts due from the Company’s Customers and are recorded at net realizable value, which may include reductions for allowances for doubtful accounts at the time potential collection risk is identified or for promotional or prompt-pay discounts offered. The Company provided one-time COVID-19 pandemic relief concessions to some of its customers in the United States for allowances up to a specified amount if they are unable to sell through Eversense and related components on hand prior to expiry, which the Company expects to occur in the third and fourth quarters of 2020. The Company’s net revenues and corresponding accounts receivables were reduced by $1.2 million for these allowances at March 31, 2020. The Company does not have a history of collectability concerns and there have been no provisions for uncollectible accounts recorded against accounts receivable at March 31, 2020 or December 31, 2019. |
Net Loss per Share | Net Loss per Share Basic net loss per share is computed by dividing net loss available to common stockholders 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. The total number of anti-dilutive shares at March 31, 2020 and 2019, consisting of common stock options and stock purchase warrants, which have been excluded from the computation of diluted net loss per share, was as follows: March 31, 2020 2019 Stock-based awards 18,918,008 27,518,174 2023 Notes 6,672,500 20,017,048 2025 Notes 63,018,091 — Warrants 5,196,581 4,071,581 Total anti-dilutive shares outstanding 93,805,180 51,606,803 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 stock purchase warrants and employee stock purchases using the treasury stock method. |
Exit or Disposal Costs | Exit or Disposal Costs Costs associated with exit or disposal activities, such as restructuring, sale or termination of a line of business, the closure of business activities in a particular location, the relocation of business activities, changes in management structure and a fundamental reorganization that affects the nature and focus of operations, are recognized and measured initially at their fair values during the period in which an obligation meets the definition of a liability. As a result of the Company’s financial condition following the repayment in full of its term loan with Solar on March 22, 2020, further described above in Note 2 – Going Concern and Liquidity Update, and in consideration of the economic uncertainty due to the COVID-19 pandemic, the Company made reductions in its cost structure and operational focus to improve operating cash flow and generate future capital expenditure savings to ensure the long-term success of Eversense. These cost reductions included a reduction in force by approximately 60%, which was communicated to employees on March 26, 2020 and did not permit continuation of service past March 31, 2020. Associated one-time employee termination benefit costs in the amount of $1.6 million were accrued and recorded in the Company’s accompanying unaudited consolidated financial statements as of March 31, 2020. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements Recently Adopted In August 2018, the Financial Accounting Standards Board (“FASB “) issued Accounting Standards Update (“ASU”) 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework – Changes to the Disclosure Requirements for Fair Value Measurement , which eliminates, adds and modifies certain disclosure requirements on fair value measurements. The new standard includes additional disclosure requirements regarding the range and weighted average to develop significant unobservable inputs within Level 3 fair value measurements. The Company adopted this on its effective date, January 1, 2020 and did not have a material impact on the consolidated financial statements and related disclosures. Not Yet Adopted In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses: Measurement of Credit Losses on Financial Instruments , which requires entities to record expected credit losses for certain financial instruments, including trade receivables, as an allowance that reflects the entity's current estimate of credit losses expected to be incurred. For available-for-sale debt securities in unrealized loss positions, the new standard requires allowances to be recorded instead of reducing the amortized cost of the investment. The Company does not currently hold or plan to invest in available-for-sale securities and has not historically experienced collection issues or bad debts with trade receivables. Accordingly, the Company does not expect this to have a significant impact on its consolidated financial statements and related disclosures at this time. The Company will adopt this guidance on its effective date for smaller reporting companies, January 1, 2023. In December 2019, the FASB issued ASU No. 2019-12, Simplifying the Accounting for Income Taxes , which is intended to simplify various aspects of the income tax accounting guidance, including requirements such as tax basis step-up in goodwill obtained in a transaction that is not a business combination, ownership changes in investments, and interim-period accounting for enacted changes in tax law. ASU 2019-12 is effective for public business entities for fiscal years beginning after December 15, 2020, including interim periods within those fiscal years, and early adoption is permitted. The Company is currently evaluating the impact that this guidance will have on its consolidated financial statements. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Summary of Significant Accounting Policies | |
Schedule of cash and cash equivalents | March 31, December 31, 2020 2019 Cash ⁽¹⁾ $ 12,308 $ 38,043 Money market funds 1,500 37,769 Commercial paper 4,797 13,870 Corporate bonds — 6,256 Cash and cash equivalents $ 18,605 $ 95,938 |
Schedule of restricted cash | March 31, December 31, 2020 2019 Cash and cash equivalents $ 18,605 $ 95,938 Restricted cash 200 — Cash, cash equivalents and restricted cash $ 18,805 $ 95,938 |
Schedule of revenue by geographic region | March 31, 2020 March 31, 2019 % % (Dollars in thousands) Amount of Total Amount of Total Revenue, net: Outside of the United States $ 12 % $ 2,607 % United States 24 816 Total $ 36 % $ 3,423 % |
Schedule of anti-dilutive shares which have been excluded from the computation of diluted loss per share | March 31, 2020 2019 Stock-based awards 18,918,008 27,518,174 2023 Notes 6,672,500 20,017,048 2025 Notes 63,018,091 — Warrants 5,196,581 4,071,581 Total anti-dilutive shares outstanding 93,805,180 51,606,803 |
Inventory, net (Tables)
Inventory, net (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Inventory, net | |
Schedule of Inventory, net | Inventory, net of reserves, consisted of the following (in thousands): March 31, December 31, 2020 2019 Finished goods $ 1,043 $ 3,944 Work-in-process 1,282 10,938 Raw materials 2,670 2,047 Total $ 4,995 $ 16,929 |
Prepaid Expenses and Other Cu_2
Prepaid Expenses and Other Current Assets (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Prepaid Expenses and Other Current Assets | |
Schedule of prepaid expenses and other current assets | Prepaid expenses and other current assets consisted of the following (in thousands): March 31, December 31, 2020 2019 Contract manufacturing $ 3,723 $ 3,043 Insurance 1,040 44 Marketing and sales 534 605 Clinical and preclinical 216 240 IT and software 202 294 Interest receivable 18 107 Other 7 179 Total prepaid expenses and other current assets $ 5,740 $ 4,512 |
Accrued Expenses and Other Cu_2
Accrued Expenses and Other Current Liabilities (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
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): March 31, December 31, 2020 2019 Compensation and benefits⁽¹⁾ $ 3,496 $ 5,630 Contract manufacturing 3,274 2,452 Product warranty and replacement obligations 2,157 2,197 Professional & administration services 1,856 1,384 Research and development 1,140 1,956 Patient access programs 1,053 1,578 Interest on notes payable 1,001 2,153 Operating lease 719 696 Sales and marketing services 625 553 Other 50 37 Total accrued expenses and other current liabilities $ 15,371 $ 18,636 |
Notes Payable and Stock Purch_2
Notes Payable and Stock Purchase Warrants (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Notes Payable and Stock Purchase Warrants | |
Schedule of carrying amounts outstanding under the Company’s notes payable | The following carrying amounts were outstanding under the Company’s notes payable as of March 31, 2020 and December 31, 2019 (in thousands): March 31, 2020 Principal ($) Debt Discount ($) Issuance Costs ($) Carrying Amount ($) 2023 Notes 15,700 (3,624) - 12,076 2025 Notes 82,000 (45,006) (686) 36,308 December 31, 2019 Principal ($) Debt Discount ($) Issuance Costs ($) Carrying Amount ($) Solar Term Loan 45,000 (1,466) (100) 43,434 2023 Notes 15,700 (3,900) - 11,800 2025 Notes 82,000 (46,482) (708) 34,810 |
Schedule of interest expense related to the notes payable | Interest expense related to the notes payable for the three months ended March 31, 2020 was as follows (in thousands): Three months ended March 31, 2020 Effective Interest Rate Interest ($) Debt Discount & Fees ($) Issuance Costs ($) Final Payment Fee ($) Total Interest Expense ($) Solar Term Loan 887 139 36 240 1,302 2023 Notes 1,087 1,476 22 - 2,585 2025 Notes 206 276 - - 482 Total 2,180 1,891 58 240 4,369 |
Schedule of future maturities | The following are the scheduled maturities of the 2025 Notes and 2023 Notes as of March 31, 2020 (in thousands): 2020 (remaining nine months) $ — 2021 — 2022 — 2023 15,700 2024 — Thereafter 82,000 ⁽¹⁾ Total $ 97,700 ⁽¹⁾ On April 21, 2020 the Company entered into a Note Purchase and Exchange Agreement with certain funds managed by Highbridge Capital Management, LLC providing for the exchange of $24.0 million aggregate principal amount of the Company’s outstanding 2025 Notes for (i) $15.7 million aggregate principal amount of newly issued Second Lien Secured Notes due January 2022, (ii) 11,026,086 shares of Common Stock, (iii) warrants to purchase up to 4,500,000 shares of Common Stock at an exercise price of $0.66 per share, and (iv) $0.3 million in accrued and unpaid interest on the 2025 Notes being exchanged. See Note 13 below for more details. |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
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 on a recurring basis at March 31, 2020 and December 31, 2019 (in thousands): March 31, 2020 Total Level 1 Level 2 Level 3 Assets Money market funds⁽¹⁾ $ 1,501 $ 1,501 $ — $ — Commercial paper⁽¹⁾ 4,797 — 4,797 — Liabilities Embedded features of the 2023 Notes $ 336 $ — $ — $ 336 Embedded features of the 2025 Notes $ 15,560 $ — $ 15,560 $ — December 31, 2019 Total Level 1 Level 2 Level 3 Assets Money market funds⁽¹⁾ $ 37,769 $ 37,769 $ — $ — Commercial paper⁽¹⁾ 13,870 — 13,870 — Corporate bonds 6,256 — 6,256 — Liabilities Embedded features of the 2023 Notes $ 664 $ — $ — $ 664 Embedded features of the 2025 Notes 25,543 — 25,543 — |
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 on a recurring basis that used significant unobservable inputs (Level 3) (in thousands): Embedded Features of the the Notes December 31, 2019 $ 664 Change in derivative liabilities (328) March 31, 2020 $ 336 |
Schedule of assumptions used to determine fair value of 2023 notes | Unobservable Inputs Assumptions Risky (bond) rate 25.7 % Stock price volatility 75.8 % - 99.1 % Probabilities of make-whole provision 6.0 % - 83.1 % Time period until maturity (yrs) .25 - 2.84 Dividend yield — % |
Going Concern and Liquidity U_2
Going Concern and Liquidity Update (Details) - USD ($) $ in Thousands | Mar. 26, 2020 | Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 | Dec. 31, 2018 |
Net loss | $ (42,593) | $ (29,365) | |||
Accumulated deficit | (515,936) | $ (473,343) | |||
Cash, cash equivalents, and restricted cash | 18,805 | 103,675 | $ 95,938 | $ 136,793 | |
Amounts repaid under term loan | $ 48,396 | $ 2,499 | |||
Percentage reduction of workforce | 60.00% | ||||
Maximum | |||||
CGM systems monitoring and management period | 180 days | ||||
Minimum | |||||
CGM systems monitoring and management period | 90 days |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies - Segment Information (Details) | 3 Months Ended |
Mar. 31, 2020segment | |
Segment Information | |
Number of operating segments | 1 |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Cash and Cash Equivalents (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Cash and Cash Equivalents, at Carrying Value [Abstract] | ||
Cash | $ 12,308 | $ 38,043 |
Money market funds | 1,500 | 37,769 |
Commercial paper | 4,797 | 13,870 |
Corporate bonds | 6,256 | |
Cash and cash equivalents | $ 18,605 | $ 95,938 |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies - Restricted Cash (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 | Mar. 31, 2019 | Dec. 31, 2018 |
Cash and Cash Equivalents, at Carrying Value [Abstract] | ||||
Cash and cash equivalents | $ 18,605 | $ 95,938 | ||
Restricted cash | 200 | |||
Cash, cash equivalents, and restricted cash | $ 18,805 | $ 95,938 | $ 103,675 | $ 136,793 |
Summary of Significant Accoun_7
Summary of Significant Accounting Policies - Long-lived assets (Details) $ in Thousands | 3 Months Ended |
Mar. 31, 2020USD ($) | |
Property and Equipment, net | |
Loss on disposal of assets | $ (181) |
Summary of Significant Accoun_8
Summary of Significant Accounting Policies - Revenue (Details) | 3 Months Ended |
Mar. 31, 2020USD ($) | |
Summary of Significant Accounting Policies | |
Payment period | 60 days |
Patient's fee | $ 99 |
Summary of Significant Accoun_9
Summary of Significant Accounting Policies - Concentration of Revenue and Customers (Details) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020USD ($)itemcustomer | Mar. 31, 2019USD ($)itemcustomer | |
Estimated total revenue from major customers | ||
Number of geographical markets | item | 2 | 2 |
Revenues | $ 36 | $ 3,423 |
Revenue | ||
Estimated total revenue from major customers | ||
Number of customers | customer | 1 | 1 |
Revenue | Roche Diabetes Care | ||
Estimated total revenue from major customers | ||
Percentage of total revenue | 0.00% | 59.00% |
Revenue | Geographic Concentration Risk | ||
Estimated total revenue from major customers | ||
Percentage of total revenue | 100.00% | 100.00% |
Revenues | $ 36 | $ 3,423 |
Outside of the United States | Revenue | Geographic Concentration Risk | ||
Estimated total revenue from major customers | ||
Percentage of total revenue | 33.30% | 76.20% |
Revenues | $ 12 | $ 2,607 |
United States | Revenue | Geographic Concentration Risk | ||
Estimated total revenue from major customers | ||
Percentage of total revenue | 66.70% | 23.80% |
Revenues | $ 24 | $ 816 |
Summary of Significant Accou_10
Summary of Significant Accounting Policies - Accounts Receivable (Details) - USD ($) $ in Millions | Mar. 31, 2020 | Dec. 31, 2019 |
Accounts Receivable | ||
Allowance for COVID-19 relief concessions | $ 1.2 | |
Allowance for doubtful accounts | $ 0 | $ 0 |
Summary of Significant Accou_11
Summary of Significant Accounting Policies - Net Loss per Share (Details) - USD ($) $ in Millions | Mar. 26, 2020 | Mar. 31, 2020 | Mar. 31, 2019 |
Net Loss per Share | |||
Total anti-dilutive shares outstanding | 93,805,180 | 51,606,803 | |
Percentage reduction of workforce | 60.00% | ||
Termination benefits | $ 1.6 | ||
Stock-based awards | |||
Net Loss per Share | |||
Total anti-dilutive shares outstanding | 18,918,008 | 27,518,174 | |
2023 Notes | |||
Net Loss per Share | |||
Total anti-dilutive shares outstanding | 6,672,500 | 20,017,048 | |
2025 Notes | |||
Net Loss per Share | |||
Total anti-dilutive shares outstanding | 63,018,091 | ||
Warrants | |||
Net Loss per Share | |||
Total anti-dilutive shares outstanding | 5,196,581 | 4,071,581 |
Inventory, net (Details)
Inventory, net (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 | Mar. 31, 2019 |
Inventory, net | |||
Finished goods | $ 1,043 | $ 3,944 | |
Work-in-process | 1,282 | 10,938 | |
Raw materials | 2,670 | 2,047 | |
Total | 4,995 | $ 16,929 | |
Inventory adjustments included in cost of sales | |||
Inventory adjustments | $ 15,000 | $ 100 |
Prepaid Expenses and Other Cu_3
Prepaid Expenses and Other Current Assets (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Prepaid Expenses and Other Current Assets | ||
Contract manufacturing | $ 3,723 | $ 3,043 |
Insurance | 1,040 | 44 |
Marketing and sales | 534 | 605 |
Clinical and preclinical | 216 | 240 |
IT and software | 202 | 294 |
Interest receivable | 18 | 107 |
Other | 7 | 179 |
Total prepaid expenses and other current assets | $ 5,740 | $ 4,512 |
Accrued Expenses and Other Cu_3
Accrued Expenses and Other Current Liabilities (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Accrued Expenses and Other Current Liabilities | ||
Compensation and benefits | $ 3,496 | $ 5,630 |
Contract manufacturing | 3,274 | 2,452 |
Product warranty and replacement obligations | 2,157 | 2,197 |
Professional & administration services | 1,856 | 1,384 |
Research and development | 1,140 | 1,956 |
Patient access programs | 1,053 | 1,578 |
Interest on notes payable | 1,001 | 2,153 |
Operating lease | 719 | 696 |
Sales and marketing services | 625 | 553 |
Other | 50 | 37 |
Total accrued expenses and other current liabilities | 15,371 | $ 18,636 |
Termination benefits | $ 1,600 |
Notes Payable and Stock Purch_3
Notes Payable and Stock Purchase Warrants (Details) - USD ($) $ / shares in Units, $ in Thousands | Mar. 22, 2020 | Mar. 31, 2020 |
Notes payable | ||
Loss on extinguishment of debt | $ (4,546) | |
Solar Term Loan | ||
Notes payable | ||
Repayment of term loan | $ 48,500 | |
Payoff fee percentage | 6.45% | |
Percentage of debt prepayment premium | 3.00% | |
Exercise price of warrant (in dollars per share) | $ 1.20 | |
Warrants to purchase shares | 1,125,000 | |
Loss on extinguishment of debt | $ 4,500 |
Notes Payable and Stock Purch_4
Notes Payable and Stock Purchase Warrants - Term Notes Payable (Details) | 1 Months Ended | 3 Months Ended | ||
Jul. 31, 2019USD ($)$ / shares | Mar. 31, 2018USD ($)$ / shares | Mar. 31, 2020USD ($) | Dec. 31, 2019USD ($) | |
2023 Notes | ||||
Long term debt | ||||
Principal amount | $ 53,000,000 | $ 15,700,000 | $ 15,700,000 | |
Conversion rate (per $1,000 of principal) | 294.1176 | |||
Amount of principal which is converted to shares | $ 1,000 | |||
Conversion price (in dollars per share) | $ / shares | $ 3.40 | |||
Repurchase amount | $ 37,000,000 | |||
2025 Notes | ||||
Long term debt | ||||
Principal amount | $ 82,000,000 | $ 82,000,000 | $ 82,000,000 | |
Conversion rate (per $1,000 of principal) | 757.5758 | |||
Amount of principal which is converted to shares | $ 1,000 | |||
Conversion price (in dollars per share) | $ / shares | $ 1.32 |
Notes Payable and Stock Purch_5
Notes Payable and Stock Purchase Warrants - Carrying amount of notes payable (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 | Jul. 31, 2019 | Mar. 31, 2018 |
Solar Term Loan | ||||
Debt Instrument [Line Items] | ||||
Aggregate principal amount | $ 45,000 | |||
Debt Discount | (1,466) | |||
Issuance costs | (100) | |||
Carrying Amount | 43,434 | |||
2023 Notes | ||||
Debt Instrument [Line Items] | ||||
Aggregate principal amount | $ 15,700 | 15,700 | $ 53,000 | |
Debt Discount | (3,624) | (3,900) | ||
Carrying Amount | 12,076 | 11,800 | ||
2025 Notes | ||||
Debt Instrument [Line Items] | ||||
Aggregate principal amount | 82,000 | 82,000 | $ 82,000 | |
Debt Discount | (45,006) | (46,482) | ||
Issuance costs | (686) | (708) | ||
Carrying Amount | $ 36,308 | $ 34,810 |
Notes Payable and Stock Purch_6
Notes Payable and Stock Purchase Warrants - Interest expense (Details) $ in Thousands | 3 Months Ended |
Mar. 31, 2020USD ($) | |
Long term debt | |
Interest | $ 2,180 |
Final Payment Fee | 240 |
Debt Discount & Fees | 1,891 |
Issuance Costs | 58 |
Loss on extinguishment of debt | 4,546 |
Total Interest Expense | $ 4,369 |
Solar Term Loan | |
Long term debt | |
Effective Interest Rate | 8.98% |
Interest | $ 887 |
Final Payment Fee | 240 |
Debt Discount & Fees | 139 |
Issuance Costs | 36 |
Total Interest Expense | $ 1,302 |
2023 Notes | |
Long term debt | |
Effective Interest Rate | 5.25% |
Interest | $ 1,087 |
Debt Discount & Fees | 1,476 |
Issuance Costs | 22 |
Total Interest Expense | $ 2,585 |
2025 Notes | |
Long term debt | |
Effective Interest Rate | 5.25% |
Interest | $ 206 |
Debt Discount & Fees | 276 |
Total Interest Expense | $ 482 |
Notes Payable and Stock Purch_7
Notes Payable and Stock Purchase Warrants - Scheduled Maturities (Details) - USD ($) $ / shares in Units, $ in Thousands | Apr. 21, 2020 | Mar. 31, 2020 |
Scheduled maturities | ||
2023 | $ 15,700 | |
Thereafter | 82,000 | |
Total | $ 97,700 | |
2025 Notes | ||
Scheduled maturities | ||
Original debt conversion amount | $ 24,000 | |
Debt converted, Shares issued | 11,026,086 | |
Debt converted, Warrants issued | 4,500,000 | |
Exercise price of warrant (in dollars per share) | $ 0.66 | |
Amount of debt exchanged for accrued and unpaid interest | $ 300 | |
Second Lien Secured Notes | 2025 Notes | ||
Scheduled maturities | ||
Converted debt amount | $ 15,700 |
Stockholders_ Deficit (Details)
Stockholders’ Deficit (Details) - USD ($) $ in Thousands | 1 Months Ended | 3 Months Ended |
Nov. 30, 2019 | Mar. 31, 2020 | |
Class of Stock [Line Items] | ||
Net Proceeds | $ (86) | |
Common Stock, shares issued | 175,089 | |
Proceeds from issuance of common stock | $ 117 | |
Maximum | ||
Class of Stock [Line Items] | ||
Net Proceeds | $ 50,000 |
Stock-Based Compensation - (Det
Stock-Based Compensation - (Details) $ in Millions | Feb. 01, 2020shares | Feb. 29, 2016shares | Dec. 31, 2015 | Mar. 31, 2020USD ($)employeeitemshares | May 31, 2019shares |
2015 Equity Incentive Plan | |||||
Stock-based compensation | |||||
Expiration period | 10 years | ||||
Shares available for grant | 17,261,319 | ||||
Automatic annual increase in shares authorized, percent of common stock outstanding | 3.50% | ||||
1997 Stock Option Plan | |||||
Stock-based compensation | |||||
Options vested and expected to vest | 3,515,817 | ||||
Inducement Plan | |||||
Stock-based compensation | |||||
Total shares that may be issued | 1,800,000 | ||||
Shares available for grant | 1,229,132 | ||||
2016 Employee Stock Purchase Plan | |||||
Stock-based compensation | |||||
Shares available for grant | 800,000 | 6,341,661 | |||
Share increase (as a percent) | 1.00% | ||||
Payroll deductions for ESPP participants (as a percent) | 15.00% | ||||
Percentage on share price issued | 85.00% | ||||
Offering period duration | 6 months | ||||
Purchase periods | item | 2 | ||||
Participates rolled over | employee | 40 | ||||
Stock issued | 566,573 | ||||
ESPP incremental cost | $ | $ 0.1 |
Fair Value Measurements - Recur
Fair Value Measurements - Recurring (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Dec. 31, 2019 | |
Fair Value Measurements | ||
Cash and cash equivalents | $ 18,605 | $ 95,938 |
Recurring | Embedded conversion option | 2023 Notes | ||
Fair Value Measurements | ||
Embedded features | 336 | 664 |
Recurring | Embedded conversion option | 2025 Notes | ||
Fair Value Measurements | ||
Embedded features | 15,560 | 25,543 |
Recurring | Money market funds | ||
Fair Value Measurements | ||
Cash and cash equivalents | 1,501 | 37,769 |
Recurring | Commercial | ||
Fair Value Measurements | ||
Cash and cash equivalents | 4,797 | 13,870 |
Recurring | Corporate bonds | ||
Fair Value Measurements | ||
Marketable securities | 6,256 | |
Recurring | Level 1 | Money market funds | ||
Fair Value Measurements | ||
Cash and cash equivalents | 1,501 | 37,769 |
Recurring | Level 2 | Embedded conversion option | 2025 Notes | ||
Fair Value Measurements | ||
Embedded features | 15,560 | 25,543 |
Recurring | Level 2 | Commercial | ||
Fair Value Measurements | ||
Cash and cash equivalents | 4,797 | 13,870 |
Recurring | Level 2 | Corporate bonds | ||
Fair Value Measurements | ||
Marketable securities | 6,256 | |
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 | 664 | |
Balance at the end of the period | 336 | |
Recurring | Level 3 | Embedded conversion option | 2023 Notes | ||
Fair Value Measurements | ||
Embedded features | 336 | $ 664 |
Reconciliation of items measured at fair value on a recurring basis that used significant unobservable inputs (Level 3) | ||
Change in derivative liabilities | $ (328) |
Fair Value Measurements - Valua
Fair Value Measurements - Valuation Assumptions (Details) - Recurring - Level 3 - Warrant liability | Mar. 31, 2020USD ($) |
Risky (bond) rate | |
Fair value valuation assumptions | |
Embedded Derivative Liability, Measurement Input | 0.257 |
Stock price volatility | Minimum | |
Fair value valuation assumptions | |
Embedded Derivative Liability, Measurement Input | 0.758 |
Stock price volatility | Maximum | |
Fair value valuation assumptions | |
Embedded Derivative Liability, Measurement Input | 0.991 |
Probabilities of make-whole provision | Minimum | |
Fair value valuation assumptions | |
Embedded Derivative Liability, Measurement Input | 0.060 |
Probabilities of make-whole provision | Maximum | |
Fair value valuation assumptions | |
Embedded Derivative Liability, Measurement Input | 0.831 |
Time period until maturity | Minimum | |
Fair value valuation assumptions | |
Embedded Derivative Liability, Measurement Input | 0.25 |
Time period until maturity | Maximum | |
Fair value valuation assumptions | |
Embedded Derivative Liability, Measurement Input | 2.84 |
Income Taxes - Tax Provision (D
Income Taxes - Tax Provision (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Income Taxes | ||
Income tax provision | $ 0 | $ 0 |
Related Party Transactions - Re
Related Party Transactions - Revenues (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 | |
Related party transactions | |||
Revenue | $ 5 | $ 2,180 | |
Due from related party | 5 | $ 7,140 | |
Roche Diabetes Care | |||
Related party transactions | |||
Revenue | $ 2,200 | ||
Due from related party | 100 | 7,100 | |
Replacement obligations | 600 | $ 600 | |
Maximum | Roche Diabetes Care | |||
Related party transactions | |||
Revenue | $ 100 |
Subsequent Events - (Details)
Subsequent Events - (Details) - USD ($) $ / shares in Units, $ in Millions | Jun. 09, 2020 | Jun. 05, 2020 | Apr. 24, 2020 | Apr. 22, 2020 | Apr. 21, 2020 | Mar. 31, 2020 | Dec. 31, 2019 |
Subsequent Event [Line Items] | |||||||
Common Stock, shares issued | 175,089 | ||||||
Registration for resale of shares | 450,000,000 | 450,000,000 | |||||
Common stock, par value per share (in dollars per share) | $ 0.001 | $ 0.001 | |||||
Common stock outstanding | 204,444,835 | 203,452,812 | |||||
Subsequent Event | Highbridge Loan Agreement | |||||||
Subsequent Event [Line Items] | |||||||
Percentage of weighted average price per share | 90.00% | ||||||
Conversion price per share | $ 0.57 | ||||||
Threshold limit of conversion option | $ 1 | ||||||
Percentage of net proceeds retained or reinvested | 45.00% | ||||||
Subsequent Event | Exchange Agreement with Highbridge | |||||||
Subsequent Event [Line Items] | |||||||
Common Stock, shares issued | 11,026,086 | ||||||
Warrants to purchase shares | 4,500,000 | ||||||
Exercise price (in dollars per share) | $ 0.66 | ||||||
Accrued and unpaid interest | $ 0.3 | ||||||
Number of anniversaries | 3 years | ||||||
Subsequent Event | Supplier And Contract Manufacturer Obligations | |||||||
Subsequent Event [Line Items] | |||||||
Expected fee payable on pausing manufacturing activities | $ 1.9 | ||||||
Subsequent Event | Contingent Obligations for Suppliers | |||||||
Subsequent Event [Line Items] | |||||||
Fee if certain timelines are not met | $ 0.6 | ||||||
Subsequent Event | 2025 Notes | Exchange Agreement with Highbridge | |||||||
Subsequent Event [Line Items] | |||||||
Aggregate principal amount | $ 24 | ||||||
Shares converted in exchange of notes | 18,181,818 | ||||||
Percentage of common stock outstanding | 19.99% | ||||||
Subsequent Event | First Lien Notes Due October 2021 | Highbridge Loan Agreement | |||||||
Subsequent Event [Line Items] | |||||||
Aggregate principal amount | $ 20 | ||||||
Annual Interest rate in kind (as a percent) | 13.00% | ||||||
Prepayment premium (as a percent) | 25.00% | ||||||
Annual interest rate (as a percent) | 12.00% | ||||||
Subsequent Event | First Lien Notes Due October 2021 | Highbridge Loan Agreement | After Strategic Transaction Announcement | |||||||
Subsequent Event [Line Items] | |||||||
Convertible debt | $ 9.4 | ||||||
Percentage of weighted average price per share | 90.00% | ||||||
Conversion price per share | $ 0.57 | ||||||
Threshold limit of conversion option | $ 0.3 | ||||||
Subsequent Event | First Lien Notes Due October 2021 | Highbridge Loan Agreement | First Tranche Of Borrowing | |||||||
Subsequent Event [Line Items] | |||||||
Common Stock, shares issued | 1,500,000 | ||||||
Amount received from loan funding | $ 15 | ||||||
Subsequent Event | First Lien Notes Due October 2021 | Highbridge Loan Agreement | Subsequent Closing | |||||||
Subsequent Event [Line Items] | |||||||
Aggregate principal amount | $ 5 | ||||||
Subsequent Event | Second Lien Notes | Exchange Agreement with Highbridge | |||||||
Subsequent Event [Line Items] | |||||||
Aggregate principal amount | $ 15.7 | ||||||
Annual Interest rate in cash (as a percent) | 7.50% | ||||||
Annual Interest rate in kind (as a percent) | 8.25% | ||||||
Prepayment premium (as a percent) | 25.00% | ||||||
Convertible debt | $ 7 | ||||||
Percentage of weighted average price per share | 90.00% | ||||||
Conversion price per share | $ 0.57 | ||||||
Percentage of net proceeds retained or reinvested | 45.00% | ||||||
Value of shares issued on conversion | $ 4.8 | ||||||
Shares issued on conversion of notes | 10,502,291 | ||||||
Subsequent Event | Second Lien Notes | Exchange Agreement with Highbridge | After Strategic Transaction Announcement | |||||||
Subsequent Event [Line Items] | |||||||
Convertible debt | $ 8.7 | ||||||
Percentage of weighted average price per share | 90.00% | ||||||
Conversion price per share | $ 0.57 | ||||||
Threshold limit of conversion option | $ 0.3 | ||||||
Subsequent Event | Second Lien Notes | Maximum | Exchange Agreement with Highbridge | |||||||
Subsequent Event [Line Items] | |||||||
Threshold limit of conversion option | $ 1 | ||||||
Subsequent Event | PPP Loan | |||||||
Subsequent Event [Line Items] | |||||||
Aggregate principal amount | $ 5.8 | ||||||
Interest rate (as a percent) | 1.00% | ||||||
Note term | 2 years | ||||||
Amount received from loan funding | $ 5.8 | ||||||
Monthly payments of principal and interest, beginning term | 7 months | ||||||
Subsequent Event | PPP Loan | Minimum | |||||||
Subsequent Event [Line Items] | |||||||
Percentage of loan used for eligible payroll costs | 75.00% |