Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2023 | May 08, 2023 | |
Document Information [Line Items] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Transition Report | false | |
Document Period End Date | Mar. 31, 2023 | |
Entity File Number | 001-39577 | |
Entity Registrant Name | Aziyo Biologics, Inc. | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 47-4790334 | |
Entity Address State Or Province | MD | |
Entity Address, Address Line One | 12510 Prosperity Drive | |
Entity Address, Adress Line Two | Suite 370 | |
Entity Address, City or Town | Silver Spring | |
Entity Address, Postal Zip Code | 20904 | |
City Area Code | 240 | |
Local Phone Number | 247-1170 | |
Title of 12(b) Security | Class A Common Stock, par value $0.001 per share | |
Trading Symbol | AZYO | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | true | |
Entity Ex Transition Period | false | |
Entity Shell Company | false | |
Entity Central Index Key | 0001708527 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2023 | |
Document Fiscal Period Focus | Q1 | |
Amendment Flag | false | |
Class A Common stock | ||
Document Information [Line Items] | ||
Entity Common Stock, Shares Outstanding | 11,921,739 | |
Class B Common stock | ||
Document Information [Line Items] | ||
Entity Common Stock, Shares Outstanding | 4,313,406 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 |
Current assets: | ||
Cash | $ 11,789 | $ 16,989 |
Accounts receivable, net | 7,334 | 6,830 |
Inventory | 11,055 | 10,052 |
Receivables of FiberCel litigation costs | 10,921 | 13,813 |
Prepaid expenses and other current assets | 2,367 | 3,015 |
Total current assets | 43,466 | 50,699 |
Property and equipment, net | 1,488 | 1,403 |
Intangible assets, net | 14,220 | 15,069 |
Operating lease right-of-use assets and other | 1,456 | 1,670 |
Total assets | 60,630 | 68,841 |
Current liabilities: | ||
Accounts payable | 3,498 | 2,328 |
Accrued expenses | 9,342 | 10,103 |
Payables to tissue suppliers | 2,687 | 3,152 |
Current portion of revenue interest obligation | 9,678 | 8,990 |
Contingent liability for FiberCel litigation | 15,631 | 17,360 |
Current operating lease liabilities and other | 588 | 682 |
Total current liabilities | 41,424 | 42,615 |
Long-term debt | 24,589 | 24,260 |
Long-term revenue interest obligation | 5,750 | 5,916 |
Long-term operating lease liabilities | 835 | 956 |
Other long-term liabilities | 207 | 127 |
Total liabilities | 72,805 | 73,874 |
Commitments and contingencies | ||
Stockholders' equity (deficit): | ||
Additional paid-in capital | 133,771 | 132,939 |
Accumulated deficit | (145,962) | (137,988) |
Total stockholders' deficit | (12,175) | (5,033) |
Total liabilities and stockholders' deficit | 60,630 | 68,841 |
Class A Common stock | ||
Stockholders' equity (deficit): | ||
Common stock | 12 | 12 |
Class B Common stock | ||
Stockholders' equity (deficit): | ||
Common stock | $ 4 | $ 4 |
CONDENSED CONSOLIDATED BALANC_2
CONDENSED CONSOLIDATED BALANCE SHEETS (Parentheticals) - $ / shares | Mar. 31, 2023 | Dec. 31, 2022 |
Class A Common stock | ||
Common stock, par value (in dollar per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 200,000,000 | 200,000,000 |
Common stock, shares issued | 11,876,792 | 11,823,445 |
Common stock, shares outstanding | 11,876,792 | 11,823,445 |
Class B Common stock | ||
Common stock, par value (in dollar per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 20,000,000 | 20,000,000 |
Common stock, shares issued | 4,313,406 | 4,313,406 |
Common stock, shares outstanding | 4,313,406 | 4,313,406 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||
Net sales | $ 13,050 | $ 11,495 |
Cost of goods sold | 6,719 | 7,214 |
Gross profit | 6,331 | 4,281 |
Sales and marketing | 5,356 | 4,818 |
General and administrative | 3,679 | 4,025 |
Research and development | 1,803 | 2,272 |
FiberCel litigation costs, net | 1,911 | 88 |
Total operating expenses | 12,749 | 11,203 |
Loss from operations | (6,418) | (6,922) |
Interest expense | 1,544 | 1,215 |
Loss before provision for income taxes | (7,962) | (8,137) |
Income tax expense | 12 | 12 |
Net loss | $ (7,974) | $ (8,149) |
Net loss per share - basic (in dollar per share) | $ (0.49) | $ (0.60) |
Net loss per share - diluted (in dollar per share) | $ (0.49) | $ (0.60) |
Weighted average common shares outstanding - basic | 16,149,567 | 13,574,058 |
Weighted average common shares outstanding - diluted | 16,149,567 | 13,574,058 |
CONDENSED CONSOLIDATED STATEM_2
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY (DEFICIT) - USD ($) $ in Thousands | Common Stock Class A Common stock | Common Stock Class B Common stock | Additional Paid-in Capital | Accumulated Deficit | Total |
Balance at the beginning at Dec. 31, 2021 | $ 9 | $ 4 | $ 118,599 | $ (105,091) | $ 13,521 |
Balance at the beginning (in shares) at Dec. 31, 2021 | 9,245,146 | 4,313,406 | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Additional issuance costs in connection with Private Placement | (110) | (110) | |||
Proceeds from sale of common stock through Employee Stock Purchase Plan | 192 | 192 | |||
Proceeds from sale of common stock through Employee Stock Purchase Plan (in shares) | 42,345 | ||||
Vesting of restricted stock units (in shares) | 19,247 | ||||
Stock-based compensation | 1,105 | 1,105 | |||
Net loss | (8,149) | (8,149) | |||
Balance at the ending at Mar. 31, 2022 | $ 9 | $ 4 | 119,786 | (113,240) | 6,559 |
Balance at the ending (in shares) at Mar. 31, 2022 | 9,306,738 | 4,313,406 | |||
Balance at the beginning at Dec. 31, 2022 | $ 12 | $ 4 | 132,939 | (137,988) | (5,033) |
Balance at the beginning (in shares) at Dec. 31, 2022 | 11,823,445 | 4,313,406 | |||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Proceeds from sale of common stock through Employee Stock Purchase Plan | 148 | 148 | |||
Proceeds from sale of common stock through Employee Stock Purchase Plan (in shares) | 41,277 | ||||
Vesting of restricted stock units (in shares) | 12,070 | ||||
Stock-based compensation | 684 | 684 | |||
Net loss | (7,974) | (7,974) | |||
Balance at the ending at Mar. 31, 2023 | $ 12 | $ 4 | $ 133,771 | $ (145,962) | $ (12,175) |
Balance at the ending (in shares) at Mar. 31, 2023 | 11,876,792 | 4,313,406 |
CONDENSED CONSOLIDATED STATEM_3
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
OPERATING ACTIVITIES: | ||
Net loss | $ (7,974) | $ (8,149) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation and amortization | 947 | 929 |
Amortization of deferred financing costs and debt discount | 53 | 15 |
Interest expense recorded as additional revenue interest obligation or long-term debt | 796 | 660 |
Stock-based compensation | 684 | 1,105 |
Changes in operating assets and liabilities: | ||
Accounts receivable | (504) | (14) |
Inventory | (1,003) | (309) |
Receivables of FiberCel litigation costs | 2,892 | |
Prepaid expenses and other | 648 | (1,580) |
Accounts payable and accrued expenses | 409 | (492) |
Obligations to tissue suppliers | (465) | 417 |
Contingent liability for FiberCel litigation | (1,729) | |
Deferred revenue and other liabilities | 80 | 68 |
Net cash used in operating activities | (5,166) | (7,350) |
INVESTING ACTIVITIES: | ||
Expenditures for property, plant and equipment | (182) | (34) |
Net cash used in investing activities | (182) | (34) |
FINANCING ACTIVITIES: | ||
Additional issuance costs in connection with Private Placement | (110) | |
Net borrowings (repayments) under revolving line of credit | 1,397 | |
Repayments of long-term debt | (1,667) | |
Payments on revenue interest obligation | (681) | |
Proceeds from sales of common stock through Employee Stock Purchase Plan | 148 | 192 |
Net cash provided by (used in) financing activities | 148 | (869) |
Net decrease in cash and restricted cash | (5,200) | (8,253) |
Cash and restricted cash, beginning of period | 16,989 | 30,428 |
Cash and restricted cash, end of period | 11,789 | 22,175 |
Supplemental Cash Flow and Non-Cash Financing Activities Disclosures: | ||
Cash paid for interest | $ 572 | $ 1,162 |
Organization and Description of
Organization and Description of Business | 3 Months Ended |
Mar. 31, 2023 | |
Organization and Description of Business | |
Organization and Description of Business | Note 1. Organization and Description of Business Aziyo Biologics, Inc. (together with its consolidated subsidiaries, “Aziyo” or the “Company”) is a regenerative medicine company, with a focus on patients receiving implantable medical devices. The Company has developed a portfolio of regenerative products using both human and porcine tissue that are designed to be as close to natural biological material as possible. Aziyo’s portfolio of products span the device protection, women’s health, orthobiologics and cardiovascular markets. These products are primarily sold to healthcare providers or commercial partners. The Company also sells human tissue products under contract manufacturing and certain other arrangements with corporate customers. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2023 | |
Summary of Significant Accounting Policies | |
Summary of Significant Accounting Policies | Note 2. Summary of Significant Accounting Policies Basis of Presentation and Liquidity The unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all the information and footnotes required by GAAP for complete financial statements and should be read in conjunction with the Company’s consolidated financial statements and accompanying notes included in the Company's annual report on Form 10-K (“Annual Report”) for the fiscal year ended December 31, 2022. The financial information as of March 31, 2023 and for the three months ended March 31, 2023 and 2022 is unaudited, but in the opinion of management, all adjustments considered necessary for a fair statement of the results for these interim periods have been included. The condensed consolidated balance sheet data as of December 31, 2022 was derived from audited financial statements but does not include all disclosures required by GAAP. The results of the Company’s operations for any interim period are not necessarily indicative of the results that may be expected for any other interim period or any future year or period. The condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. Intercompany accounts and transactions have been eliminated in consolidation. In accordance with Accounting Standards Update (“ASU”) 2014-15, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern (Subtopic 205-40) In order to mitigate the current and potential future liquidity issues caused by the matters noted above, the Company may seek to raise capital through the issuance of common stock or debt, restructure its Revenue Interest Obligation (as such term is defined, and further described, in Note 7), or pursue asset sale or other transactions. However, such transactions may not be successful and the Company may not be able to raise additional equity or debt, restructure its Revenue Interest Obligation, or sell or license assets on acceptable terms, or at all. As such, based on its current operating plans, the Company believes there is uncertainty as to whether its future cash flows along with its existing cash, issuances of additional equity and cash generated from expected future sales will be sufficient to meet the Company’s anticipated operating needs through twelve months from the financial statement issuance date. Due to these factors, there is substantial doubt about the Company’s ability to continue as a going concern within one year after the issuance of the financial statements. The accompanying consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. That is, the accompanying financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates continuity of operations, realization of assets, and satisfaction of liabilities in the ordinary course of business. Reclassifications Certain reclassifications have been made to prior year amounts to conform to current year financial statement presentation. The reclassifications relate to the separate presentation of prior year costs related to the FiberCel Litigation. Such costs were formerly shown as a component of general and administrative expenses in the accompanying consolidated statements of operations. Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Estimates and assumptions relating to inventories, receivables, long-lived assets, the valuation of stock-based awards, the valuation of the revenue interest obligation, the contingent liability for the FiberCel Litigation and deferred income taxes are made at the end of each financial reporting period by management. Management continually re-evaluates its estimates, judgments and assumptions, and management's evaluation could change. Actual results could differ from those estimates. Net Loss per Share Attributable to Common Stockholders Our common stock has a dual class structure, consisting of Class A common stock, $0.001 par value per share (the “Class A common stock”) and Class B common stock, $0.001 par value per share (the “Class B common stock”). Other than voting rights, the Class B common stock has the same rights as the Class A common stock, and therefore both are treated as the same class of stock for purposes of the earnings per share calculation. Basic net loss per share attributable to common stockholders is calculated by dividing the net loss attributable to common stockholders by the weighted-average shares outstanding during the period. For purposes of the diluted net income (loss) per share attributable to common stockholders calculation, stock options, restricted stock units (“RSUs”) and warrants are considered to be common stock equivalents. All common stock equivalents have been excluded from the calculation of diluted net loss per share attributable to common stockholders, as their effect would be anti-dilutive for all periods presented. Therefore, basic and diluted net loss per share were the same for both periods presented. Fair Value of Financial Instruments Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. To increase the comparability of fair value measures, the following hierarchy prioritizes the inputs to valuation methodologies used to measure fair value: Level 1 - Level 2 - Level 3 - The estimated fair value of financial instruments disclosed in the financial statements has been determined by using available market information and appropriate valuation methodologies. The carrying value of all current assets and current liabilities approximates fair value because of their short-term nature. Cash The Company maintains its cash balances at banks and financial institutions. The balances are insured up to the legal limit. The Company maintains cash balances that may, at times, exceed this insured limit. Accounts Receivable and Allowances Accounts receivable in the accompanying balance sheets are presented net of allowances for credit losses. The Company grants credit to customers in the normal course of business, but generally does not require collateral or any other security to support its receivables. The Company evaluates the collectability of accounts receivable based on a combination of factors. In circumstances where a specific customer is unable to meet its financial obligations to the Company, a provision to the allowance for doubtful accounts is recorded to reduce the net recognized receivable to the amount that is reasonably expected to be collected. For all other customers, a provision to the allowance for credit losses is recorded based on factors including the length of time the receivables are past due, the current business environment and the Company’s historical experience. Provisions to the allowance for doubtful accounts are recorded to general and administrative expenses. Account balances are charged off against the allowance when it is probable that the receivable will not be recovered. Inventory Inventory, consisting of purchased materials, direct labor and manufacturing overhead, is stated at the lower of cost or net realizable value, with cost determined generally using the average cost method. Inventory write-downs for unprocessed and certain processed donor tissue are recorded based on the estimated amount of inventory that will not pass the quality control process based on historical data. At each balance sheet date, the Company also evaluates inventory for excess quantities, obsolescence or shelf life expiration. This evaluation includes analysis of the Company’s current and future strategic plans, historical sales levels by product, projections of future demand, the risk of technological or competitive obsolescence for products, general market conditions and a review of the shelf life expiration dates for products. To the extent that management determines there is excess or obsolete inventory or quantities with a shelf life that is too near its expiration for the Company to reasonably expect that it can sell those products prior to their expiration, the Company adjusts the carrying value to estimated net realizable value. Property and Equipment Property and equipment are stated at cost less accumulated depreciation. Depreciation is computed on the straight-line method over the following estimated useful lives of the assets: Processing and research equipment 5 to 10 years Office equipment and furniture 3 to 5 years Computer hardware and software 3 years Leasehold improvements are amortized on the straight-line method over the shorter of the lease term or the estimated useful life of the asset. Repairs and maintenance costs are expensed as incurred. Leases In February 2016, the FASB issued ASU No 2016-02 “Leases” to increase the transparency and comparability about leases among entities. ASU 2016-02 and certain additional ASUs are now codified as Accounting Standards Codification Standard 842 - “Leases” (“ASC 842”). ASC 842 supersedes the lease accounting guidance in Accounting Standards Codification 840 “Leases” (“ASC 840”) and requires lessees to recognize a lease liability and a corresponding lease asset for virtually all lease contracts. The Company determines if an arrangement contains a lease at inception. Right-of-use (“ROU”) assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from that lease. For leases with a term greater than 12 months, ROU assets and liabilities are recognized at the lease commencement date based on the estimated present value of lease payments over the lease term. The lease term includes the option to extend the lease when it is reasonably certain the Company will exercise that option. When available, the Company uses the rate implicit in the lease to discount lease payments to present value. In the case the implicit rate is not available, the Company uses its incremental borrowing rate based on information available at the lease commencement date, including publicly available data for instruments with similar characteristics, to determine the present value of lease payments. The Company combines lease and non-lease elements for office leases. Long-Lived Assets Purchased intangible assets with finite lives are carried at acquired fair value, less accumulated amortization. Amortization is computed over the estimated useful lives of the respective assets. The Company periodically evaluates the period of depreciation or amortization for long-lived assets to determine whether current circumstances warrant revised estimates of useful lives. The Company reviews its property and equipment and intangible assets for impairment whenever events or changes in circumstances indicate the carrying value of an asset may not be recoverable. Impairment exists when the carrying value of the company’s asset exceeds the related estimated undiscounted future cash flows expected to be derived from the asset. If impairment exists, the carrying value of that asset is adjusted to its fair value. A discounted cash flow analysis is used to estimate an asset’s fair value, using assumptions that market participants would apply. The results of impairment tests are subject to management’s estimates and assumptions of projected cash flows and operating results. Changes in assumptions or market conditions could result in a change in estimated future cash flows and could result in a lower fair value and therefore an impairment, which could impact reported results. There were no impairment losses for the three months ended March 31, 2023 or 2022. Revenue Recognition The Company’s revenue is generated from contracts with customers in accordance with ASC 606. The core principle of ASC 606 is that the Company recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services. The ASC 606 revenue recognition model consists of the following five steps: (1) identify the contracts with a customer, (2) identify the performance obligations in the contract, (3) determine the transaction price, (4) allocate the transaction price to the performance obligations in the contract and (5) recognize revenue when (or as) the entity satisfies a performance obligation. As noted above, the Company enters into contracts to primarily (i) sell and distribute products to healthcare providers or commercial partners, or (ii) produce and sell products under contract manufacturing arrangements with corporate customers, which are billed under ship and bill contract terms. Revenue is recognized when the Company has met its performance obligations pursuant to its contracts with its customers in an amount that the Company expects to be entitled to in exchange for the transfer of control of the products to the Company’s customers. For all product sales, the Company has no further performance obligations and revenue is recognized at the point control transfers which occurs either when: i) the product is shipped via common carrier; or ii) the product is delivered to the customer or distributor, in accordance with the terms of the agreement. A portion of the Company’s product revenue is generated from consigned inventory maintained at hospitals and from inventory physically held by distributors and direct sales representatives. For these types of products sales, the Company retains control until the product has been used or implanted, at which time revenue is recognized. The Company elected to account for shipping and handling activities as a fulfillment cost rather than a separate performance obligation. Amounts billed to customers for shipping and handling are included as part of the transaction price and recognized as revenue when control of the underlying products is transferred to the customer. The related shipping and freight charges incurred by the Company are included in sales and marketing costs. Contracts with customers state the final terms of the sale, including the description, quantity, and price of each implant distributed. The payment terms and conditions in the Company’s contracts vary; however, as a common business practice, payment terms are typically due in full within 30 The Company permits returns of its products in accordance with the terms of contractual agreements with customers. Allowances for returns are provided based upon analysis of the Company’s historical patterns of returns matched against the revenues from which they originated. The Company records estimated returns as a reduction of revenue in the same period revenue is recognized. Stock-Based Compensation Plans The Company accounts for its stock-based compensation plans in accordance with FASB ASC 718, Accounting for Stock Compensation Research and Development Costs Research and development costs, which include mainly salaries, outside services and supplies, are expensed as incurred. Concentration of Credit Risk Financial instruments that potentially subject the Company to significant concentrations of credit risk consist primarily of cash. At March 31, 2023, the Company maintained $11.7 million in bank deposit accounts that are in excess of the $0.25 million insurance provided by the Federal Deposit Insurance Corporation in one federally insured financial institution. Market conditions can impact the viability of these institutions. In the event of failure of any of the financial institutions where we maintain our cash, the Company could lose its deposits in excess of the federally insured or protected amounts and there can be no assurance that we will be able to access uninsured funds in a timely manner or at all. The Company has not experienced any losses in such accounts. Comprehensive Income (Loss) Comprehensive income (loss) comprises net income (loss) and other changes in equity that are excluded from net income (loss). For the three months ended March 31, 2023 and 2022, the Company’s net loss equaled its comprehensive loss and accordingly, no additional disclosure is presented. Income Taxes The Company uses the asset and liability method of accounting for income taxes. Deferred income taxes are recorded to reflect the tax consequences on future years for differences between the tax basis of assets and liabilities and their financial reporting amounts at each year-end based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established when necessary to reduce deferred tax assets to amounts that are more likely than not to be realized. The Company is subject to income taxes in the federal and state jurisdictions. Tax regulations within each jurisdiction are subject to the interpretation of the related tax laws and regulations and require significant judgment to apply. In accordance with the authoritative guidance on accounting for uncertainty in income taxes, the Company recognizes tax liabilities for uncertain tax positions when it is more likely than not that a tax position will not be sustained upon examination and settlement with various taxing authorities. Liabilities for uncertain tax positions are measured based upon the largest amount of benefit that is more likely than not (greater than 50%) of being realized upon settlement. The Company’s policy is to recognize interest and/or penalties related to income tax matters in income tax expense. |
Recently Issued Accounting Stan
Recently Issued Accounting Standards | 3 Months Ended |
Mar. 31, 2023 | |
Recently Issued Accounting Standards | |
Recently Issued Accounting Standards | Note 3. Recently Issued Accounting Standards In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 326): Disclosure Framework – Measurement of Credit Losses on Financial Instruments, which requires financial assets measured at amortized cost, including trade receivables, be presented net of the amount expected to be collected. The measurement of all expected credit losses is based on relevant information about the credit quality of customers, past events, including historical experience, and reasonable and supportable forecasts that affect the collectability of the reported amount. In October 2019, the FASB voted to approve a proposal to defer the effective date of ASC 2016-13 for certain entities, including emerging growth companies that take advantage of the extended transition period, to fiscal years beginning after December 15, 2022. This ASU was effective for the Company beginning on January 1, 2023 and did not have a material impact on our condensed consolidated Financial Statements. The Company adopted this ASU using the modified retrospective transition method. Under this transition method, the new standard is applied from January 1, 2023 without restatement of comparative period amounts. The impact of transitioning to the new standard was immaterial and no adjustment was recorded to retained earnings for the cumulative effect of adopting this ASU on January 1, 2023. Results for reporting periods beginning after January 1, 2023 are presented under Topic 326 while prior period amounts continue to be reported in accordance with previously applicable GAAP. |
Stock-Based Compensation
Stock-Based Compensation | 3 Months Ended |
Mar. 31, 2023 | |
Stock-Based Compensation | |
Stock-Based Compensation | Note 4. Stock-Based Compensation In 2015, the Company established the Aziyo Biologics, Inc. 2015 Stock Option/Stock Issuance Plan, as amended (the “2015 Plan”) which provided for the granting of incentive and non-qualified stock options to employees, directors and consultants of the Company. On October 7, 2020, in connection with the Company’s IPO, the Company adopted the Aziyo Biologics, Inc. 2020 Incentive Award Plan (the “2020 Plan”), which authorizes the grant of incentive and non-qualified stock options, restricted stock, restricted stock units and stock appreciation rights to employees, directors and consultants. Shares of Class A common stock totaling 1,636,000 were initially reserved for issuance pursuant to the 2020 Plan. In addition, the shares reserved for issuance under the 2020 Plan will also include shares reserved but not issued under the 2015 Plan as well as an annual increase as set forth in the 2020 Plan. As of March 31, 2023, the Company had 1,630,411 shares of Class A common stock available for issuance under the 2020 Plan. On June 21, 2022, C. Randa l Mills, Ph.D., a member of the Board of Directors (the “Board”) of the Company, was appointed as the Company’s Interim President and Chief Executive Officer, succeeding Ronald Lloyd, who stepped down as the Company’s President and Chief Executive Officer and as a member of the Board. three-fifths two-fifths three-fifths two-fifths One-third August 9, 2022 two-thirds One-third grant date two-thirds twenty Accounting for Stock Based Compensation however, the RSUs had not been legally granted as of March 31, 2023. Such RSUs were legally granted in April 2023 and the vested shares underlying the award were deemed outstanding as of such time. Stock Options The Company’s policy is to grant stock options at an exercise price equal to 100% of the market value of a share of Class A common stock at closing on the date of the grant. The Company’s stock options generally have contractual terms of ten years and vest over a four-year period from the date of grant. A summary of stock option activity under the Company’s 2015 Plan and 2020 Plan for the three months ended March 31, 2023 is as follows: Weighted- Average Weighted- Remaining Aggregate Average Contractual Intrinsic Exercise Term Value Number of Shares Price (years) (in thousands) Outstanding, December 31, 2022 1,864,739 $ 9.41 7.5 $ 8 Granted 20,000 $ 4.50 Exercised — $ — Forfeited (314,870) $ 9.75 Outstanding, March 31, 2023 1,569,869 $ 9.28 8.2 $ - Vested and exercisable, March 31, 2023 548,300 $ 11.25 6.9 $ - The weighted average grant date fair value of options granted during the three months ended March 31, 2023 was $2.79. As of March 31, 2023, there was approximately $3.4 million of total unrecognized compensation expense related to unvested stock options. These costs are expected to be recognized over a weighted-average period of 2.4 years. The Company uses the Black-Scholes model to value its time-based stock option grants and expenses the related compensation cost using the straight-line method over the vesting period. The fair value of stock options is determined on the grant date using assumptions for the estimated fair value of the underlying common stock, expected term, expected volatility, dividend yield, and the risk-free interest rate. Before the completion of the Company’s IPO, the Board determined the fair value of common stock considering the state of the business, input from management, third party valuations and other considerations. The Company uses the simplified method for estimating the expected term used to determine the fair value of options. The expected volatility of the Class A common stock is primarily based on the historical volatility of comparable companies in the industry whose share prices are publicly available. The Company uses a zero-dividend yield assumption as the Company has not paid dividends since inception nor does it anticipate paying dividends in the future. The risk-free interest rate approximates recent U.S. Treasury note auction results with a similar life to that of the option. The period expense is then determined based on the valuation of the options, and is recognized on a straight-line basis over the requisite service period for the entire award. The following weighted-average assumptions were used to determine the fair value of options granted during the three months ended March 31, 2023 and 2022: Three Months Ended March 31, 2023 2022 Expected term (years) 6.0 6.2 Risk-free interest rate 4.3 % 1.8 % Volatility factor 63.8 % 63.8 % Dividend yield — — For the Performance-Based Options granted as described above, the Company accounted for the awards as market condition awards and used an option pricing model, the Monte Carlo model, to determine the fair value of the respective equity instruments and an expense recognition term of approximately three years . Restricted Stock Units Restricted stock units (“RSUs”) represent rights to receive common shares at a future date. There is no exercise price and no monetary payment is required for receipt of restricted stock units or the shares issued in settlement of the award. The Company’s RSUs generally vest over a three A summary of the RSU activity under the Company’s 2020 Plan for the three months ended March 31, 2023 is as follows: Weighted- Average Number of Shares Grant Date Underlying RSUs Fair Value Unvested, December 31, 2022 372,307 $ 5.90 Granted — $ — Vested (12,070) $ 14.53 Forfeited (33,378) $ 4.45 Unvested, March 31, 2023 326,859 $ 5.66 For the Performance-Based RSUs, including those granted to Dr. Mills as described above, the Company accounted for the awards as market condition awards and used an option pricing model, the Monte Carlo model, to determine the fair value of the respective equity instruments and an expense recognition term of two to three years using the graded vesting method. As of March 31, 2023, $1.1 million of unrecognized compensation costs related to RSUs is expected to be recognized over a weighted average period of approximately two years. Employee Stock Purchase Plan The Company makes shares of its Class A common stock available for purchase under the Aziyo Biologics, Inc. 2020 Employee Stock Purchase Plan (the “ESPP”). The ESPP provides for separate six-month offering periods that begin in March and September of each year. Under the ESPP, employees may purchase a limited number of shares of Aziyo Class A common stock at 85% of the fair market value on either the first day of the offering period or the purchase date, whichever is lower. The ESPP is considered compensatory for purposes of stock-based compensation expense. The number of shares reserved under the ESPP will automatically increase on the first day of each fiscal year through January 1, 2030, in an amount as set forth in the ESPP. As of March 31, 2023, the total shares of Class A common stock authorized for issuance under the ESPP was 542,365, of which 399,436 remained available for future issuance. During the three months ended March 31, 2023, 41,277 shares of Class A common stock were issued under the ESPP. Stock-Based Compensation Expense Stock-based compensation expense recognized during the three months ended March 31, 2023 and 2022 was comprised of the following (in thousands): Three Months Ended March 31, 2023 2022 Sales and marketing $ 144 $ 195 General and administrative 454 682 Research and development 46 178 Cost of goods sold 40 50 Total stock-based compensation expense $ 684 $ 1,105 |
Inventory
Inventory | 3 Months Ended |
Mar. 31, 2023 | |
Inventory | |
Inventory | Note 5. Inventory Inventory was comprised of the following (in thousands): March 31, December 31, 2023 2022 Raw materials $ 1,705 $ 1,716 Work in process 737 623 Finished goods 8,613 7,713 Total $ 11,055 $ 10,052 |
Long-Term Debt
Long-Term Debt | 3 Months Ended |
Mar. 31, 2023 | |
Long-Term Debt | |
Long-Term Debt | Note 6. Long-Term Debt On May 31, 2017, Aziyo entered into a $12 million term loan facility (the “MidCap Loan Facility”) and an $8.0 million asset-backed revolving line of credit (the “MidCap Credit Facility”), under which the Company’s borrowing capacity was limited by certain qualifying assets, with a financial institution (the “May 2017 Financing”). The MidCap Loan Facility was amended in December 2017, February 2018 and July 2019 (all amendments being considered modifications) such that an additional $1.5 million, $3.0 million, and $3.5 million, respectively were received by the Company bringing the total aggregate principal amount outstanding under the MidCap Loan Facility to $20 million. The borrowings under the MidCap Loan Facility and the MidCap Credit Facility were fully repaid with a portion of the proceeds from the SWK Loan Facility (as defined below) as more fully described below. O n August 10, 2022 (the “Closing Date”), the Company entered into a senior secured term loan facility with SWK Funding LLC (“SWK”), as agent, and other lenders party thereto (the “SWK Loan Facility”) for an aggregate principal amount of $25 million. An initial draw of $21 million drawn was made on the Closing Date with the additional $4 million drawn on December 14, 2022 upon satisfaction of the amended terms enabling such receipt. The SWK Loan Facility also allows for the establishment of a separate, new asset-based revolving loan facility of up to $8 million, which had not been entered into as of March 31, 2023. The SWK Loan Facility matures on August 10, 2027 and accrues interest, payable quarterly in arrears. he SWK Loan Facility also includes both revenue and liquidity covenants, All of the SWK Loan Facility borrowings take the form of Secured Overnight Financing Rate (“SOFR”) loans and bear interest at a rate per annum equal to the sum of an applicable margin of (i) 7.75% and the “Term SOFR Rate” (based upon an interest period of 3 months), or (ii) if the Company has elected the PIK Interest option (as defined below), 3.75% and the “Term SOFR Rate.” The Company may elect a portion of the interest due, to be paid in-kind at a rate per annum of 4.5% (“PIK Interest”), and such election may be made (x) until November 15, 2024 if the conditions to draw the Additional Term Loan have not been met, or (y) if such conditions to draw the Additional Term Loan have been satisfied, until November 17, 2025. The “Term SOFR Rate” is subject to a floor of 2.75%. The agreement governing the SWK Loan Facility also includes an exit fee equal to 6.5% of the aggregate principal amount funded prior to termination and prepayment penalties equal to: (i) if such prepayment occurs prior to the first anniversary of the Closing Date, 2% of the aggregate principal amount funded prior to the termination plus remaining unpaid interest payments scheduled to be paid during the first year of the loan or (ii) if such prepayment occurs after the first anniversary of the Closing Date but prior to the second anniversary of the Closing Date, 2% of the aggregate principal amount funded prior to the termination. The weighted average interest rate on the SWK Loan Facility was 13.7% for the three months ended March 31, 2023. On August 10, 2022, the Company issued to SWK Funding LLC a warrant (the “Warrant”) to purchase, in the aggregate, up to 187,969 shares of Class A common stock of the Company, $0.001 par value per share at an exercise price of $6.65 per share. The Warrant is immediately exercisable for up to 187,969 shares of Class A common stock from time to time on or after the Closing Date. The exercise price and number of shares of Class A common stock issuable upon exercise of the Warrant are subject to adjustment in the event of stock dividends, stock splits and certain other events affecting the Class A common stock. Unless earlier exercised or terminated in accordance with its terms, the Warrant will expire on the seventh anniversary of the Closing Date. Upon issuance, the Company valued the Warrant at approximately $0.6 million using the Black-Scholes model. The recognition of the Warrant as well as deferred financing costs of approximately $0.5 million incurred in securing the SWK Loan Facility served to reduce the recorded value of the associated debt. The debt discount and deferred financing costs will be recognized as interest expense through the maturity of the loan. The SWK Loan Facility Agreement requires certain mandatory prepayments, subject to certain exceptions, with: (1) 100% of any net casualty proceeds in excess of $250,000 and (2) for non-ordinary course asset sales, an amount equal to the difference between (x) the proportion of divested gross profit (as defined in the SWK Loan Facility Agreement) to the Company’s total gross profit (as defined in the SWK Loan Facility Agreement) multiplied by the outstanding loans under the SWK Loan Facility and (y) the difference between $1,000,000 and the aggregate sale proceeds of any assets previously sold during the fiscal year. No such mandatory prepayments were required during the three months ended March 31, 2023. The Company used $16 million of the proceeds of the SWK Loan Facility to repay all outstanding obligations on the MidCap Loan Facility and MidCap Credit Facility. On May 12, 2023, the Company with SWK and the other lenders party thereto Long-term debt was comprised of the following (in thousands): March 31, December 31, 2023 2022 Term Loan Facility, net of unamortized discount and deferred financing costs $ 24,589 $ 24,260 Current Portion — — Long-Term Debt $ 24,589 $ 24,260 The fair value of all debt instruments, which is based on inputs considered to be Level 2 under the fair value hierarchy, approximates the respective carrying values as of March 31, 2023 and December 31, 2022. |
Revenue Interest Obligation
Revenue Interest Obligation | 3 Months Ended |
Mar. 31, 2023 | |
Revenue Interest Obligation | |
Revenue Interest Obligation | Note 7. Revenue Interest Obligation On May 31, 2017, the Company completed an asset purchase agreement with CorMatrix Cardiovascular, Inc. (“CorMatrix”) and acquired all CorMatrix commercial assets and related intellectual property (the “CorMatrix Acquisition”). As part of the CorMatrix Acquisition, the Company assumed a restructured, long-term obligation (the “Revenue Interest Obligation”) to Ligand Pharmaceuticals (“Ligand”) with an estimated present value on the acquisition date of $27.7 million. Subject to annual minimum payments of $2.75 million per year, the terms of the Revenue Interest Obligation require Aziyo to pay Ligand, 5% of future sales of the products Aziyo acquired from CorMatrix, including CanGaroo, ProxiCor, Tyke and VasCure, as well as products substantially similar to those products, such as the version of CanGaroo Aziyo is currently developing that is designed to include antibiotics. Furthermore, a $5.0 million payment will be due to Ligand if cumulative sales of these products exceed $100 million and a second $5.0 million will be due if cumulative sales exceed $300 million during the ten-year term of the agreement which expires on May 31, 2027. The Company recorded the present value of the estimated total future payments under the Revenue Interest Obligation as a long-term obligation, with the annual minimum payments, along with the expected payment timing of the first $5.0 million sales milestone payment noted above, serving to establish the short-term portion. At each reporting period, the value of the Revenue Interest Obligation is re-measured based on current estimates of future payments, with changes to be recorded in the condensed consolidated statements of operations using the catch-up method. There was no change to estimated future payments during the three months ended March 31, 2023 and 2022, and thus, no re-measurement gain or loss was recognized. |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Mar. 31, 2023 | |
Commitments and Contingencies. | |
Commitments and Contingencies | Note 8. Commitments and Contingencies Cook Biotech License and Supply Agreements Aziyo has entered into a license agreement with Cook Biotech (“Cook”) for an exclusive, worldwide license to the porcine tissue for use in the Company’s Cardiac Patch and CanGaroo products, subject to certain co-exclusive rights retained by Cook (the “Cook License Agreement”). The term of such license is through the date of the last to expire of the licensed Cook patents, which is anticipated to be July 2031. Along with this license agreement, Aziyo entered into a supply agreement whereby Cook would be the exclusive supplier to Aziyo of the licensed porcine tissue. Under certain limited circumstances, Aziyo has the right to manufacture the licensed product and pay Cook a royalty of 3% of sales of the Aziyo-manufactured tissue. The supply agreement expires on the same date as the related license agreement. No royalties were paid to Cook during the three months ended March 31, 2023 or 2022. Aziyo has also entered into an amendment to the Cook License Agreement (the “Cook Amendment”) in order to add fields of exclusive use. Specifically, the Cook Amendment provides for a worldwide exclusive license to the porcine tissue for use with neuromodulation devices in addition to cardiovascular devices. The Cook Amendment includes license fee payments of $0.1 million per year in each of the years 2021 through 2026. Such license payments would accelerate if a change in control, as defined in the Cook Amendment, occurs within Aziyo. The Company, in its sole discretion, can terminate the Cook License Agreement at any time. Legal Proceedings From time to time, the Company may be involved in claims and proceedings arising in the course of the Company’s business. The outcome of any such claims or proceedings, regardless of the merits, is inherently uncertain. The Company records accruals for contingencies when it is probable that a liability has been incurred and the amount can be reasonably estimated. These accruals are adjusted periodically as assessments change or additional information becomes available. FiberCel Litigation In June 2021, the Company announced a voluntary recall of a single lot of FiberCel fiber viable bone matrix. Since September 2021, 71 lawsuits (73 plaintiffs) in Indiana, Delaware, Florida, Maryland, Colorado, Michigan, Ohio, Kentucky, Oregon, North Carolina, Louisiana, Illinois, Virginia, California and Arizona have been filed against Aziyo Biologics Inc., certain Medtronic entities, and others alleging that the plaintiffs were exposed to and/or contracted tuberculosis and/or suffered substantial symptoms and complications following the implantation of FiberCel during spinal fusion operations. Such lawsuits were filed in Indiana state court (collectively, the “Indiana State Complaints”); the Superior Court of the State of Delaware (collectively, the “Delaware State Complaints”); the Circuit Court of Maryland (collectively, the “Maryland State Complaints”); the Court of Common Pleas of Ohio (“Ohio State Complaint”); the Northern District of Ohio (“Ohio Federal Complaint”); the U.S. District Court for the Western District of North Carolina (“North Carolina Federal Complaint”); the U.S. District Court for the Northern District of Florida (“Florida Federal Complaint”); the U.S. District Court for the Eastern District of Michigan (collectively “the Michigan Federal Complaints.”); the U.S. District Court for the District of Colorado (“Colorado Federal Complaint”); the U.S. District Court for the District of Oregon (“Oregon Federal Complaint”); the Fayette, Kentucky Circuit Court and the U.S. District Court for the Eastern District of Kentucky (collectively, “Kentucky Complaints.”); the U.S. District Court for the Western District of Louisiana (“Louisiana Federal Complaint”) and the Circuit Court of Cook County, Illinois (“Illinois State Complaint”); Loudon County Virginia Circuit Court (“Virginia State Complaint”); the U.S. District Court for the Central District of California (“California Federal Complaint”) and the U.S. District Court for the District of Arizona (“Arizona Federal Complaint.”) Plaintiffs in the Indiana State Complaints allege a cause of action under Indiana’s Product Liability Act, citing manufacturing defects, defective design and failure to properly warn and instruct, and several of the complaints allege loss of consortium. Plaintiffs in these actions assert that the defendants are strictly liable or have breached the duty of care owed to plaintiffs by failing to exercise reasonable care in designing, manufacturing, marketing and labeling FiberCel and are seeking various types of damages, including economic damages, non-economic damages and loss of consortium. Plaintiffs in one of the Indiana State Complaints allege causes of action for product liability, negligence, breach of express and implied warranties, and punitive damages. Each of the plaintiffs in the Delaware State Complaints alleges negligence, breach of implied warranty, breach of express warranty, and medical monitoring and punitive damages, and two also allege loss of consortium. Plaintiffs in the Delaware State Complaints are seeking economic, consequential, and punitive damages. The Maryland State Complaints assert claims of negligence, breach of implied warranty, breach of express warranty, medical monitoring, and loss of consortium. The Florida Federal Complaint contains three strict liability claims for defective design, defective manufacture, and failure to warn. A claim for punitive damages is also pled. The Ohio State Complaint alleges causes of action for product liability and negligence and seeks compensatory damages. The Colorado Federal Complaint asserts causes of action for strict product liability, misrepresentation, negligence, breach of express warranty, and breach of implied warranty of merchantability. The Michigan Federal Complaints assert causes of action for negligence, gross negligence breach of implied warranty, breach of express warranty, intentional infliction of emotional distress, and liability under the res ipsa loquitur doctrine. The Michigan Federal Complaints seek compensatory damages and punitive damages. The North Carolina Federal Complaint alleges causes of action for negligence, defective design, breach of implied warranty, breach of express warranty, and loss of consortium, and seeks both compensatory and punitive damages. The Oregon Federal Complaint asserts strict liability claims for defective design, defective manufacture, and failure to warn, and seeks compensatory damages. The Ohio Federal Complaint asserts strict liability claims for defective manufacturing, inadequate warning, nonconformance with representations, and also alleges loss of consortium and seeks compensatory damages. The Kentucky Complaints assert strict liability claims based on manufacturing defect, design defect, failure to warn, negligence, breach of implied warranty, breach of express warranty, and seek recovery for medical monitoring, loss of consortium, compensatory damages, and punitive damages. The Louisiana Federal Complaint asserts claims of violation of the Louisiana products liability act, negligence and gross negligence, breach of implied warranty, breach of express warranty and seek recovery for medical monitoring. The Illinois State Complaints contain claims of strict liability- defective design and manufacturing, breach of express warranty, breach of implied warranty and negligence and seek compensatory damages. The Virginia State Complaint asserts causes of action for negligent failure to warn, negligence, breach of implied warranty, breach of express warranty and seeks recovery for medical monitoring, compensatory damages and punitive damages. The California Federal Complaint advances claims of strict liability (defective design and manufacture), negligence and breach of implied warranty and seeks compensatory damages and recovery for medical monitoring. The Arizona Federal Complaint asserts strict product liability claims for defective design, manufacture and failure to warn, negligence, breach of implied warranty and breach of express warranty and seeks recovery for medical monitoring, loss of consortium, compensatory damages, and punitive damages. In addition to the above, there are 36 claims related to the FiberCel recall that have not yet resulted in a lawsuit. The Company refers to all of the aforementioned litigation, or claim notices, collectively as the “FiberCel Litigation.” Since August 2022, the Company has engaged in a process to negotiate and attempt to resolve many of the cases in the FiberCel Litigation. In total, Aziyo’s liability in 26 of the cases was settled for a total of approximately $7.3 million. Of these settled matters, 21 cases were both settled and paid as of March 31, 2023 for a total cash outlay of $6.2 million. For the remaining 83 cases for which settlements have not been reached, the Company estimated a probable loss related to each case and has recorded a liability at an estimated amount of $13.2 million bringing the total estimated liability at March 31, 2023 to $14.3 million, which is recorded as Contingent Liability for FiberCel Litigation in the accompanying consolidated balance sheets. Although the Company believes there is a possibility that a loss in excess of the amount recognized exists, the Company is unable to estimate the possible loss or range of loss in excess of the amount recognized at this time. In order to reasonably estimate the liability for the unsettled FiberCel Litigation cases, the Company, along with outside legal counsel, has assessed a variety of factors, including (i) the extent of the injuries incurred, (ii) recent experience on the settled claims, (iii) settlement offers made to the other parties to the litigation and (iv) any other factors that may have a material effect on the FiberCel Litigation. While the Company believes its estimated liability to be reasonable, the actual loss amounts are highly variable and turn on a case-by-case analysis of the relevant facts. As more information is learned about asserted claims and potential future trends, adjustments may be made to this Contingent Liability for FiberCel Litigation as appropriate. Defense costs are recognized in the accompanying consolidated statements of operations as incurred. The Company has purchased insurance coverage that, subject to common contract exclusions, provided coverage for the FiberCel Litigation product liability losses as well as legal defense costs. Additionally, the Company has various potential indemnity and/or contribution rights against third party sources with respect to certain product liability losses. When settlements are reached and/or amounts are recorded in the related Contingent Liability for FiberCel Litigation, the Company calculates amounts due to be reimbursed pursuant to the terms of the coverage and related agreements, and pursuant to other indemnity or contribution claims, in respect of product liability losses and related defense costs. The amounts probable of reimbursement or recovery from this calculation are recorded as receivables. The determination that the recorded receivables are probable of collection is based on the terms of agreements reached in respect of indemnity and contribution claims as well as the advice of the Company’s outside legal counsel. These receivables at March 31, 2023 totaled $10.9 million and are recorded as Receivables of FiberCel Litigation Costs in the accompanying consolidated balance sheets. The indemnity and contribution receivables amount at March 31, 2023 represents amounts that are not believed to be subject to any current dispute. At March 31, 2023, the Company continues to pursue up to $3.8 million or more in additional amounts in respect of such indemnity and contribution claims and as such, has not been reflected as part of this receivable. The Company will vigorously pursue its position with respect to this amount. As of both March 31, 2023 and 2022, the Company was not a party to, or aware of, any legal matters or claims with material financial exposure, except for the FiberCel Litigation. |
Net Loss Per Share Attributable
Net Loss Per Share Attributable to Common Stockholders | 3 Months Ended |
Mar. 31, 2023 | |
Net Loss Per Share Attributable to Common Stockholders | |
Net Loss Per Share Attributable to Common Stockholders | Note 9. Net Loss Per Share Attributable to Common Stockholders Three Months Ended (in thousands, except share and per share data) March 31, 2023 2022 Numerator: Net loss $ (7,974) $ (8,149) Denominator: Weighted average number of common shares - basic and diluted 16,149,567 13,574,058 Net loss per share - basic and diluted $ (0.49) $ (0.60) The Company’s potential dilutive securities have been excluded from the computation of diluted net loss per share as the effect would be anti-dilutive. Therefore, the weighted average number of common shares outstanding used to calculate both basic and diluted net loss per share attributable to common stockholders is the same. The Company excluded the following potential common shares, presented based on amounts outstanding at period end, from the computation of diluted net loss per share attributable to common stockholders: March 31, 2023 2022 Options to purchase common stock 1,569,869 1,857,091 Restricted stock units 326,859 564,159 Class A common stock warrants 187,969 — Total 2,084,697 2,421,250 |
Segment Information
Segment Information | 3 Months Ended |
Mar. 31, 2023 | |
Segment Information | |
Segment Information | Note The Company operates in four segments. These segments are based on financial information that is utilized by the Company’s CODM to assess performance and allocate resources. The Company determined its operating and reportable segments to be consistent with its major product groupings – Device Protection, Women’s Health, Orthobiologics and Cardiovascular. For the three months ended March 31, 2023 and 2022, the Company’s net sales disaggregated by segment were as follows (in thousands): Three Months Ended March 31, 2023 2022 Net sales: Device protection $ 2,350 $ 2,053 Women's health 2,295 1,634 Orthobiologics 6,658 6,243 Cardiovascular 1,747 1,565 Total Net Sales $ 13,050 $ 11,495 For the three months ended March 31, 2023 and 2022, the Company’s gross profit disaggregated by segment were as follows (in thousands): Three Months Ended March 31, 2023 2022 Gross profit: Device protection $ 1,796 $ 1,319 Women's health 1,052 674 Orthobiologics 2,957 1,903 Cardiovascular 1,375 1,234 Gross profit, excluding intangible asset amortization 7,180 5,130 Intangible asset amortization expense 849 849 Gross profit $ 6,331 $ 4,281 The following table is a reconciliation of segment gross profit to the consolidated loss before provision for income taxes for the three months ended March 31, 2023 and 2022 (in thousands): Three Months Ended March 31, 2023 2022 Gross profit $ 6,331 $ 4,281 Adjustments: Sales and marketing (5,356) (4,818) General and administrative (3,679) (4,025) Research and development (1,803) (2,272) FiberCel litigation costs (1,911) (88) Loss from operations (6,418) (6,922) Interest expense 1,544 1,215 Loss before provision for income taxes $ (7,962) $ (8,137) |
Subsequent Event
Subsequent Event | 3 Months Ended |
Mar. 31, 2023 | |
Subsequent Event | |
Subsequent Event | Note 11. Subsequent Event On May 12, 2023, the Company |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2023 | |
Summary of Significant Accounting Policies | |
Basis of Presentation and Liquidity | Basis of Presentation and Liquidity The unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all the information and footnotes required by GAAP for complete financial statements and should be read in conjunction with the Company’s consolidated financial statements and accompanying notes included in the Company's annual report on Form 10-K (“Annual Report”) for the fiscal year ended December 31, 2022. The financial information as of March 31, 2023 and for the three months ended March 31, 2023 and 2022 is unaudited, but in the opinion of management, all adjustments considered necessary for a fair statement of the results for these interim periods have been included. The condensed consolidated balance sheet data as of December 31, 2022 was derived from audited financial statements but does not include all disclosures required by GAAP. The results of the Company’s operations for any interim period are not necessarily indicative of the results that may be expected for any other interim period or any future year or period. The condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries. Intercompany accounts and transactions have been eliminated in consolidation. In accordance with Accounting Standards Update (“ASU”) 2014-15, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern (Subtopic 205-40) In order to mitigate the current and potential future liquidity issues caused by the matters noted above, the Company may seek to raise capital through the issuance of common stock or debt, restructure its Revenue Interest Obligation (as such term is defined, and further described, in Note 7), or pursue asset sale or other transactions. However, such transactions may not be successful and the Company may not be able to raise additional equity or debt, restructure its Revenue Interest Obligation, or sell or license assets on acceptable terms, or at all. As such, based on its current operating plans, the Company believes there is uncertainty as to whether its future cash flows along with its existing cash, issuances of additional equity and cash generated from expected future sales will be sufficient to meet the Company’s anticipated operating needs through twelve months from the financial statement issuance date. Due to these factors, there is substantial doubt about the Company’s ability to continue as a going concern within one year after the issuance of the financial statements. The accompanying consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty. That is, the accompanying financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates continuity of operations, realization of assets, and satisfaction of liabilities in the ordinary course of business. |
Reclassifications | Reclassifications Certain reclassifications have been made to prior year amounts to conform to current year financial statement presentation. The reclassifications relate to the separate presentation of prior year costs related to the FiberCel Litigation. Such costs were formerly shown as a component of general and administrative expenses in the accompanying consolidated statements of operations. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Estimates and assumptions relating to inventories, receivables, long-lived assets, the valuation of stock-based awards, the valuation of the revenue interest obligation, the contingent liability for the FiberCel Litigation and deferred income taxes are made at the end of each financial reporting period by management. Management continually re-evaluates its estimates, judgments and assumptions, and management's evaluation could change. Actual results could differ from those estimates. |
Net Loss per Share Attributable to Common Stockholders | Net Loss per Share Attributable to Common Stockholders Our common stock has a dual class structure, consisting of Class A common stock, $0.001 par value per share (the “Class A common stock”) and Class B common stock, $0.001 par value per share (the “Class B common stock”). Other than voting rights, the Class B common stock has the same rights as the Class A common stock, and therefore both are treated as the same class of stock for purposes of the earnings per share calculation. Basic net loss per share attributable to common stockholders is calculated by dividing the net loss attributable to common stockholders by the weighted-average shares outstanding during the period. For purposes of the diluted net income (loss) per share attributable to common stockholders calculation, stock options, restricted stock units (“RSUs”) and warrants are considered to be common stock equivalents. All common stock equivalents have been excluded from the calculation of diluted net loss per share attributable to common stockholders, as their effect would be anti-dilutive for all periods presented. Therefore, basic and diluted net loss per share were the same for both periods presented. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. To increase the comparability of fair value measures, the following hierarchy prioritizes the inputs to valuation methodologies used to measure fair value: Level 1 - Level 2 - Level 3 - The estimated fair value of financial instruments disclosed in the financial statements has been determined by using available market information and appropriate valuation methodologies. The carrying value of all current assets and current liabilities approximates fair value because of their short-term nature. |
Cash and Restricted Cash | Cash The Company maintains its cash balances at banks and financial institutions. The balances are insured up to the legal limit. The Company maintains cash balances that may, at times, exceed this insured limit. |
Accounts Receivable and Allowances | Accounts receivable in the accompanying balance sheets are presented net of allowances for credit losses. The Company grants credit to customers in the normal course of business, but generally does not require collateral or any other security to support its receivables. The Company evaluates the collectability of accounts receivable based on a combination of factors. In circumstances where a specific customer is unable to meet its financial obligations to the Company, a provision to the allowance for doubtful accounts is recorded to reduce the net recognized receivable to the amount that is reasonably expected to be collected. For all other customers, a provision to the allowance for credit losses is recorded based on factors including the length of time the receivables are past due, the current business environment and the Company’s historical experience. Provisions to the allowance for doubtful accounts are recorded to general and administrative expenses. Account balances are charged off against the allowance when it is probable that the receivable will not be recovered. |
Inventory | Inventory Inventory, consisting of purchased materials, direct labor and manufacturing overhead, is stated at the lower of cost or net realizable value, with cost determined generally using the average cost method. Inventory write-downs for unprocessed and certain processed donor tissue are recorded based on the estimated amount of inventory that will not pass the quality control process based on historical data. At each balance sheet date, the Company also evaluates inventory for excess quantities, obsolescence or shelf life expiration. This evaluation includes analysis of the Company’s current and future strategic plans, historical sales levels by product, projections of future demand, the risk of technological or competitive obsolescence for products, general market conditions and a review of the shelf life expiration dates for products. To the extent that management determines there is excess or obsolete inventory or quantities with a shelf life that is too near its expiration for the Company to reasonably expect that it can sell those products prior to their expiration, the Company adjusts the carrying value to estimated net realizable value. |
Property and Equipment | Property and Equipment Property and equipment are stated at cost less accumulated depreciation. Depreciation is computed on the straight-line method over the following estimated useful lives of the assets: Processing and research equipment 5 to 10 years Office equipment and furniture 3 to 5 years Computer hardware and software 3 years Leasehold improvements are amortized on the straight-line method over the shorter of the lease term or the estimated useful life of the asset. Repairs and maintenance costs are expensed as incurred. |
Leases | Leases In February 2016, the FASB issued ASU No 2016-02 “Leases” to increase the transparency and comparability about leases among entities. ASU 2016-02 and certain additional ASUs are now codified as Accounting Standards Codification Standard 842 - “Leases” (“ASC 842”). ASC 842 supersedes the lease accounting guidance in Accounting Standards Codification 840 “Leases” (“ASC 840”) and requires lessees to recognize a lease liability and a corresponding lease asset for virtually all lease contracts. The Company determines if an arrangement contains a lease at inception. Right-of-use (“ROU”) assets represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make lease payments arising from that lease. For leases with a term greater than 12 months, ROU assets and liabilities are recognized at the lease commencement date based on the estimated present value of lease payments over the lease term. The lease term includes the option to extend the lease when it is reasonably certain the Company will exercise that option. When available, the Company uses the rate implicit in the lease to discount lease payments to present value. In the case the implicit rate is not available, the Company uses its incremental borrowing rate based on information available at the lease commencement date, including publicly available data for instruments with similar characteristics, to determine the present value of lease payments. The Company combines lease and non-lease elements for office leases. |
Long-Lived Assets | Long-Lived Assets Purchased intangible assets with finite lives are carried at acquired fair value, less accumulated amortization. Amortization is computed over the estimated useful lives of the respective assets. The Company periodically evaluates the period of depreciation or amortization for long-lived assets to determine whether current circumstances warrant revised estimates of useful lives. The Company reviews its property and equipment and intangible assets for impairment whenever events or changes in circumstances indicate the carrying value of an asset may not be recoverable. Impairment exists when the carrying value of the company’s asset exceeds the related estimated undiscounted future cash flows expected to be derived from the asset. If impairment exists, the carrying value of that asset is adjusted to its fair value. A discounted cash flow analysis is used to estimate an asset’s fair value, using assumptions that market participants would apply. The results of impairment tests are subject to management’s estimates and assumptions of projected cash flows and operating results. Changes in assumptions or market conditions could result in a change in estimated future cash flows and could result in a lower fair value and therefore an impairment, which could impact reported results. There were no impairment losses for the three months ended March 31, 2023 or 2022. |
Revenue Recognition | Revenue Recognition The Company’s revenue is generated from contracts with customers in accordance with ASC 606. The core principle of ASC 606 is that the Company recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services. The ASC 606 revenue recognition model consists of the following five steps: (1) identify the contracts with a customer, (2) identify the performance obligations in the contract, (3) determine the transaction price, (4) allocate the transaction price to the performance obligations in the contract and (5) recognize revenue when (or as) the entity satisfies a performance obligation. As noted above, the Company enters into contracts to primarily (i) sell and distribute products to healthcare providers or commercial partners, or (ii) produce and sell products under contract manufacturing arrangements with corporate customers, which are billed under ship and bill contract terms. Revenue is recognized when the Company has met its performance obligations pursuant to its contracts with its customers in an amount that the Company expects to be entitled to in exchange for the transfer of control of the products to the Company’s customers. For all product sales, the Company has no further performance obligations and revenue is recognized at the point control transfers which occurs either when: i) the product is shipped via common carrier; or ii) the product is delivered to the customer or distributor, in accordance with the terms of the agreement. A portion of the Company’s product revenue is generated from consigned inventory maintained at hospitals and from inventory physically held by distributors and direct sales representatives. For these types of products sales, the Company retains control until the product has been used or implanted, at which time revenue is recognized. The Company elected to account for shipping and handling activities as a fulfillment cost rather than a separate performance obligation. Amounts billed to customers for shipping and handling are included as part of the transaction price and recognized as revenue when control of the underlying products is transferred to the customer. The related shipping and freight charges incurred by the Company are included in sales and marketing costs. Contracts with customers state the final terms of the sale, including the description, quantity, and price of each implant distributed. The payment terms and conditions in the Company’s contracts vary; however, as a common business practice, payment terms are typically due in full within 30 The Company permits returns of its products in accordance with the terms of contractual agreements with customers. Allowances for returns are provided based upon analysis of the Company’s historical patterns of returns matched against the revenues from which they originated. The Company records estimated returns as a reduction of revenue in the same period revenue is recognized. |
Stock-Based Compensation Plans | Stock-Based Compensation Plans The Company accounts for its stock-based compensation plans in accordance with FASB ASC 718, Accounting for Stock Compensation |
Research and Development Costs | Research and Development Costs Research and development costs, which include mainly salaries, outside services and supplies, are expensed as incurred. |
Concentration of Credit Risk | Concentration of Credit Risk Financial instruments that potentially subject the Company to significant concentrations of credit risk consist primarily of cash. At March 31, 2023, the Company maintained $11.7 million in bank deposit accounts that are in excess of the $0.25 million insurance provided by the Federal Deposit Insurance Corporation in one federally insured financial institution. Market conditions can impact the viability of these institutions. In the event of failure of any of the financial institutions where we maintain our cash, the Company could lose its deposits in excess of the federally insured or protected amounts and there can be no assurance that we will be able to access uninsured funds in a timely manner or at all. The Company has not experienced any losses in such accounts. |
Comprehensive Income (Loss) | Comprehensive Income (Loss) Comprehensive income (loss) comprises net income (loss) and other changes in equity that are excluded from net income (loss). For the three months ended March 31, 2023 and 2022, the Company’s net loss equaled its comprehensive loss and accordingly, no additional disclosure is presented. |
Income Taxes | Income Taxes The Company uses the asset and liability method of accounting for income taxes. Deferred income taxes are recorded to reflect the tax consequences on future years for differences between the tax basis of assets and liabilities and their financial reporting amounts at each year-end based on enacted tax laws and statutory tax rates applicable to the periods in which the differences are expected to affect taxable income. Valuation allowances are established when necessary to reduce deferred tax assets to amounts that are more likely than not to be realized. The Company is subject to income taxes in the federal and state jurisdictions. Tax regulations within each jurisdiction are subject to the interpretation of the related tax laws and regulations and require significant judgment to apply. In accordance with the authoritative guidance on accounting for uncertainty in income taxes, the Company recognizes tax liabilities for uncertain tax positions when it is more likely than not that a tax position will not be sustained upon examination and settlement with various taxing authorities. Liabilities for uncertain tax positions are measured based upon the largest amount of benefit that is more likely than not (greater than 50%) of being realized upon settlement. The Company’s policy is to recognize interest and/or penalties related to income tax matters in income tax expense. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Summary of Significant Accounting Policies | |
Summary of estimated useful lives of the assets | Processing and research equipment 5 to 10 years Office equipment and furniture 3 to 5 years Computer hardware and software 3 years |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Stock-Based Compensation | |
Summary of stock options outstanding, exercisable and vested or expected to vest | Weighted- Average Weighted- Remaining Aggregate Average Contractual Intrinsic Exercise Term Value Number of Shares Price (years) (in thousands) Outstanding, December 31, 2022 1,864,739 $ 9.41 7.5 $ 8 Granted 20,000 $ 4.50 Exercised — $ — Forfeited (314,870) $ 9.75 Outstanding, March 31, 2023 1,569,869 $ 9.28 8.2 $ - Vested and exercisable, March 31, 2023 548,300 $ 11.25 6.9 $ - |
Summary of weighted-average assumptions were used to determine the fair value of options | Three Months Ended March 31, 2023 2022 Expected term (years) 6.0 6.2 Risk-free interest rate 4.3 % 1.8 % Volatility factor 63.8 % 63.8 % Dividend yield — — |
Schedule of RSU activity | Weighted- Average Number of Shares Grant Date Underlying RSUs Fair Value Unvested, December 31, 2022 372,307 $ 5.90 Granted — $ — Vested (12,070) $ 14.53 Forfeited (33,378) $ 4.45 Unvested, March 31, 2023 326,859 $ 5.66 |
Schedule of stock-based compensation expense recognized | Stock-based compensation expense recognized during the three months ended March 31, 2023 and 2022 was comprised of the following (in thousands): Three Months Ended March 31, 2023 2022 Sales and marketing $ 144 $ 195 General and administrative 454 682 Research and development 46 178 Cost of goods sold 40 50 Total stock-based compensation expense $ 684 $ 1,105 |
Inventory (Tables)
Inventory (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Inventory | |
Summary of inventory | Inventory was comprised of the following (in thousands): March 31, December 31, 2023 2022 Raw materials $ 1,705 $ 1,716 Work in process 737 623 Finished goods 8,613 7,713 Total $ 11,055 $ 10,052 |
Long-Term Debt (Tables)
Long-Term Debt (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Long-Term Debt | |
Summary of PPP loan recorded within long-term debt | Long-term debt was comprised of the following (in thousands): March 31, December 31, 2023 2022 Term Loan Facility, net of unamortized discount and deferred financing costs $ 24,589 $ 24,260 Current Portion — — Long-Term Debt $ 24,589 $ 24,260 |
Net Loss Per Share Attributab_2
Net Loss Per Share Attributable to Common Stockholders (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Net Loss Per Share Attributable to Common Stockholders | |
Schedule of net loss per share attributable to common stockholders | Three Months Ended (in thousands, except share and per share data) March 31, 2023 2022 Numerator: Net loss $ (7,974) $ (8,149) Denominator: Weighted average number of common shares - basic and diluted 16,149,567 13,574,058 Net loss per share - basic and diluted $ (0.49) $ (0.60) |
Schedule of potential common shares excluded from calculation, presented based on amounts outstanding at period end, from the computation of diluted net loss per share attributable to common stockholders | March 31, 2023 2022 Options to purchase common stock 1,569,869 1,857,091 Restricted stock units 326,859 564,159 Class A common stock warrants 187,969 — Total 2,084,697 2,421,250 |
Segment Information (Tables)
Segment Information (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Segment Information | |
Schedule of sales information | For the three months ended March 31, 2023 and 2022, the Company’s net sales disaggregated by segment were as follows (in thousands): Three Months Ended March 31, 2023 2022 Net sales: Device protection $ 2,350 $ 2,053 Women's health 2,295 1,634 Orthobiologics 6,658 6,243 Cardiovascular 1,747 1,565 Total Net Sales $ 13,050 $ 11,495 For the three months ended March 31, 2023 and 2022, the Company’s gross profit disaggregated by segment were as follows (in thousands): Three Months Ended March 31, 2023 2022 Gross profit: Device protection $ 1,796 $ 1,319 Women's health 1,052 674 Orthobiologics 2,957 1,903 Cardiovascular 1,375 1,234 Gross profit, excluding intangible asset amortization 7,180 5,130 Intangible asset amortization expense 849 849 Gross profit $ 6,331 $ 4,281 The following table is a reconciliation of segment gross profit to the consolidated loss before provision for income taxes for the three months ended March 31, 2023 and 2022 (in thousands): Three Months Ended March 31, 2023 2022 Gross profit $ 6,331 $ 4,281 Adjustments: Sales and marketing (5,356) (4,818) General and administrative (3,679) (4,025) Research and development (1,803) (2,272) FiberCel litigation costs (1,911) (88) Loss from operations (6,418) (6,922) Interest expense 1,544 1,215 Loss before provision for income taxes $ (7,962) $ (8,137) |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies - Basis of Presentation and Liquidity (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2023 | Mar. 31, 2022 | Dec. 31, 2022 | |
Summary of Significant Accounting Policies | |||
Net loss | $ 7,974 | $ 8,149 | |
Accumulated deficit | 145,962 | $ 137,988 | |
Cash used in operating activities | $ 5,166 | $ 7,350 |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Net Loss per Share (Details) - $ / shares | Mar. 31, 2023 | Dec. 31, 2022 |
Class A Common stock | ||
Net Loss per Share Attributable to Common Stockholders | ||
Common stock, par value (in dollar per share) | $ 0.001 | $ 0.001 |
Class B Common stock | ||
Net Loss per Share Attributable to Common Stockholders | ||
Common stock, par value (in dollar per share) | $ 0.001 | $ 0.001 |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies - Cash and Restricted Cash (Details) - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 | Mar. 31, 2022 | Dec. 31, 2021 |
Cash and Restricted Cash | ||||
Cash | $ 11,789 | $ 16,989 | ||
Total cash and restricted cash shown in statements of cash flows | $ 11,789 | $ 16,989 | $ 22,175 | $ 30,428 |
Summary of Significant Accoun_7
Summary of Significant Accounting Policies - Property and Equipment (Details) | 3 Months Ended |
Mar. 31, 2023 | |
Computer hardware and software | |
Property, Plant and Equipment [Line Items] | |
Estimated useful lives | 3 years |
Minimum | Processing and research equipment | |
Property, Plant and Equipment [Line Items] | |
Estimated useful lives | 5 years |
Minimum | Office equipment and furniture | |
Property, Plant and Equipment [Line Items] | |
Estimated useful lives | 3 years |
Maximum | Processing and research equipment | |
Property, Plant and Equipment [Line Items] | |
Estimated useful lives | 10 years |
Maximum | Office equipment and furniture | |
Property, Plant and Equipment [Line Items] | |
Estimated useful lives | 5 years |
Summary of Significant Accoun_8
Summary of Significant Accounting Policies - Long-Lived Assets (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Long-Lived Assets | ||
Impairment losses | $ 0 | $ 0 |
Summary of Significant Accoun_9
Summary of Significant Accounting Policies - Revenue Recognition (Details) | 3 Months Ended |
Mar. 31, 2023 | |
Minimum | |
Disaggregation of Revenue [Line Items] | |
Term of payment | 30 days |
Maximum | |
Disaggregation of Revenue [Line Items] | |
Term of payment | 60 days |
Summary of Significant Accou_10
Summary of Significant Accounting Policies - Concentration of Credit risk (Details) $ in Millions | Mar. 31, 2023 USD ($) |
Summary of Significant Accounting Policies | |
Bank deposit accounts | $ 11.7 |
Stock-Based Compensation - Rand
Stock-Based Compensation - Randal Mills (Details) - shares | 3 Months Ended | ||
Jun. 21, 2022 | Mar. 31, 2023 | Oct. 07, 2020 | |
Stock-Based Compensation | |||
Options granted | 20,000 | ||
2020 Plan | |||
Stock-Based Compensation | |||
Shares reserved for future issuance | 1,630,411 | 1,636,000 | |
Options to purchase common stock | |||
Stock-Based Compensation | |||
Vesting term | 4 years | ||
Dr. Mills | |||
Stock-Based Compensation | |||
Employment agreement initial term | 90 days | ||
Dr. Mills | Options to purchase common stock | |||
Stock-Based Compensation | |||
Options granted | 456,278 | ||
Time-based awards percentage | 60% | ||
Performance-based awards percentage | 40% | ||
Dr. Mills | Time Based Options | Tranche one | |||
Stock-Based Compensation | |||
Percentage of vesting | 33% | ||
Vesting term | 49 days | ||
Dr. Mills | Time Based Options | Tranche Two | |||
Stock-Based Compensation | |||
Percentage of vesting | 66% | ||
Vesting term | 4 years | ||
Awards that vest on first anniversary | 25% | ||
Number of quarter of vesting | 12 | ||
Dr. Mills | Restricted stock units | |||
Stock-Based Compensation | |||
Time-based awards percentage | 60% | ||
Performance-based awards percentage | 40% | ||
Restricted stock units (RSU) granted | 224,734 | ||
Dr. Mills | Performance-Based RSU | |||
Stock-Based Compensation | |||
Share price threshold period | 20 days | ||
Dr. Mills | Time-Based RSU | Tranche one | |||
Stock-Based Compensation | |||
Percentage of vesting | 33% | ||
Vesting term | 0 days | ||
Dr. Mills | Time-Based RSU | Tranche Two | |||
Stock-Based Compensation | |||
Percentage of vesting | 66% | ||
Vesting term | 4 years |
Stock-Based Compensation - Stoc
Stock-Based Compensation - Stock Options Activity (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended |
Mar. 31, 2023 | Dec. 31, 2022 | |
Number of Shares | ||
Outstanding at the beginning | 1,864,739 | |
Granted | 20,000 | |
Forfeited | (314,870) | |
Outstanding at the end | 1,569,869 | 1,864,739 |
Vested and exercisable at the end | 548,300 | |
Weighted- Average Exercise Price | ||
Outstanding at the beginning (in dollars per share) | $ 9.41 | |
Granted (in dollars per share) | 4.50 | |
Forfeited (in dollars per share) | 9.75 | |
Outstanding at the end (in dollars per share) | 9.28 | $ 9.41 |
Vested and exercisable at the end (in dollars per share) | $ 11.25 | |
Weighted-Average Remaining Contractual Term (years) | ||
Outstanding (in years) | 8 years 2 months 12 days | 7 years 6 months |
Vested and exercisable (in years) | 6 years 10 months 24 days | |
Aggregate Intrinsic Value | ||
Aggregate Intrinsic Value (in dollars) | $ 8 | |
Other Disclosures | ||
Weighted average grant date fair value of options granted | $ 2.79 | |
Total unrecognized compensation expense | $ 3,400 | |
Options to purchase common stock | ||
Stock-Based Compensation | ||
Exercise price as a percentage of market value of share of common stock at closing on the date of the grant | 100% | |
Contractual term | 10 years | |
Vesting period | 4 years | |
Other Disclosures | ||
Weighted-average recognition period | 2 years 4 months 24 days |
Stock-Based Compensation - Opti
Stock-Based Compensation - Option Valuation Assumption (Details) | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Options to purchase common stock | ||
Weighted-average assumptions were used to determine the fair value of options | ||
Dividend yield assumption to estimate fair value | 0% | 0% |
Expected term (years) | 6 years | 6 years 2 months 12 days |
Risk-free interest rate | 4.30% | 1.80% |
Volatility factor | 63.80% | 63.80% |
Dividend yield | 0% | 0% |
Performance Based Options | ||
Weighted-average assumptions were used to determine the fair value of options | ||
Expected term (years) | 3 years |
Stock-Based Compensation - Rest
Stock-Based Compensation - Restricted Stock Units (Details) $ / shares in Units, $ in Millions | 3 Months Ended |
Mar. 31, 2023 USD ($) $ / shares shares | |
Restricted stock units | |
Weighted-Average Grant Date Fair Value | |
Unrecognized compensation costs | $ | $ 1.1 |
Weighted-average recognition period | 2 years |
Restricted stock units | Minimum | |
Weighted-Average Grant Date Fair Value | |
Vesting period | 3 years |
Restricted stock units | Maximum | |
Weighted-Average Grant Date Fair Value | |
Vesting period | 4 years |
Restricted stock units | 2020 Plan | |
Number of Shares Underlying RSUs | |
Unvested at the beginning | shares | 372,307 |
Vested | shares | (12,070) |
Forfeited | shares | (33,378) |
Outstanding at the end | shares | 326,859 |
Weighted-Average Grant Date Fair Value | |
Unvested at the beginning (in dollars per share) | $ / shares | $ 5.90 |
Vested (in dollars per share) | $ / shares | 14.53 |
Forfeited (in dollars per share) | $ / shares | 4.45 |
Unvested at the ending (in dollars per share) | $ / shares | $ 5.66 |
Performance-Based RSU | Minimum | |
Weighted-Average Grant Date Fair Value | |
Vesting period | 2 years |
Performance-Based RSU | Maximum | |
Weighted-Average Grant Date Fair Value | |
Vesting period | 3 years |
Stock-Based Compensation - Empl
Stock-Based Compensation - Employee Stock Purchase Plan (Details) - Employee Stock Purchase Plan | 3 Months Ended |
Mar. 31, 2023 shares | |
Stock-Based Compensation | |
Offering period | 6 months |
Price of the common stock purchased as percentage of fair market value of common stock | 85% |
Grant of equity awards authorized | 542,365 |
Awards available for grant | 399,436 |
Shares issued under ESPP | 41,277 |
Stock-Based Compensation - St_2
Stock-Based Compensation - Stock-Based Compensation Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Stock-Based Compensation | ||
Stock-based compensation expense | $ 684 | $ 1,105 |
Sales and marketing | ||
Stock-Based Compensation | ||
Stock-based compensation expense | 144 | 195 |
General and administrative | ||
Stock-Based Compensation | ||
Stock-based compensation expense | 454 | 682 |
Research and development | ||
Stock-Based Compensation | ||
Stock-based compensation expense | 46 | 178 |
Cost of goods sold | ||
Stock-Based Compensation | ||
Stock-based compensation expense | $ 40 | $ 50 |
Inventory (Details)
Inventory (Details) - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 |
Inventory | ||
Raw materials | $ 1,705 | $ 1,716 |
Work in process | 737 | 623 |
Finished goods | 8,613 | 7,713 |
Total | $ 11,055 | $ 10,052 |
Long-Term Debt - MidCap Loan an
Long-Term Debt - MidCap Loan and Credit Facilities (Details) $ in Millions | 1 Months Ended | 3 Months Ended | ||||
Aug. 10, 2022 USD ($) | May 31, 2017 USD ($) | Jul. 31, 2019 USD ($) | Feb. 28, 2018 USD ($) | Dec. 31, 2017 USD ($) | Mar. 31, 2022 | |
MidCap Loan Facility [Member] | ||||||
Long-Term Debt | ||||||
Face amount of debt | $ 12 | |||||
Proceeds from Issuance of Debt | $ 3.5 | $ 3 | $ 1.5 | |||
Total amount outstanding | $ 20 | |||||
Weighted average interest rate | 9.50% | |||||
Prepayment amount of loan | $ 16 | |||||
Interest rate | 2.25% | |||||
MidCap Loan Facility [Member] | LIBOR | ||||||
Long-Term Debt | ||||||
Basis spread on variable rate | 7.25% | |||||
Variable rate divider | 1 | |||||
MidCap Credit Facility [Member] | ||||||
Long-Term Debt | ||||||
Maximum borrowing capacity | $ 8 | |||||
Weighted average interest rate | 7.20% | |||||
Interest rate | 2.25% | |||||
MidCap Credit Facility [Member] | LIBOR | ||||||
Long-Term Debt | ||||||
Basis spread on variable rate | 4.95% |
Long-Term Debt - SWK Loan Facil
Long-Term Debt - SWK Loan Facility (Details) - USD ($) | 3 Months Ended | |||
Dec. 14, 2022 | Aug. 10, 2022 | Mar. 31, 2023 | Dec. 31, 2022 | |
SWK Loan Facility | ||||
Long-Term Debt | ||||
Maximum borrowing capacity | $ 25,000,000 | |||
Proceeds from Issuance of Debt | $ 4,000,000 | $ 21,000,000 | ||
Quarterly principal amortization (percent) | 5% | |||
Interest in-kind spread basis | 4.50% | |||
Exit fee (as a percent) | 6.50% | |||
Prepayment penalty prior to first anniversary (as a percent) | 2% | |||
Prepayment penalty after first anniversary (as a percent) | 2% | |||
Weighted average interest rate | 13.70% | |||
Common stock, par value (in dollar per share) | $ 0.001 | |||
Exercise price (in dollar per share) | $ 6.65 | |||
Maximum shares issuable at closing | 187,969 | |||
Warrant value | $ 600,000 | |||
Deferred financing costs | $ 500,000 | |||
Percentage of casualty proceeds in excess of $250,000 to redeem loan balance | 100% | |||
Casualty proceeds threshold amount in excess of which is used to redeem loan balance | $ 250,000 | |||
Threshold amount in excess of which exempted from mandatory prepayment | $ 1,000,000 | |||
SWK Loan Facility | Maximum | ||||
Long-Term Debt | ||||
Warrants issued | 187,969 | |||
SWK Loan Facility | SOFR | ||||
Long-Term Debt | ||||
Basis spread on variable rate | 7.75% | |||
Interest in-kind spread basis | 3.75% | |||
SWK Loan Facility | SOFR | Minimum | ||||
Long-Term Debt | ||||
Basis spread on variable rate | 2.75% | |||
New Asset-Based Revolving Loan Facility | ||||
Long-Term Debt | ||||
Borrowing capacity | $ 8,000,000 |
Long-Term Debt - Long-Term Debt
Long-Term Debt - Long-Term Debt - Table (Details) - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 |
Contractual maturities of the long-term debt | ||
Long-term debt | $ 24,589 | $ 24,260 |
SWK/Term Loan Facility | ||
Contractual maturities of the long-term debt | ||
Total, net | $ 24,589 | $ 24,260 |
Revenue Interest Obligation - (
Revenue Interest Obligation - (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
May 31, 2017 | Mar. 31, 2023 | Mar. 31, 2022 | |
Debt Instrument [Line Items] | |||
Payments due based on cumulative sales | $ 5,000 | ||
Revenue Interest Obligation. | |||
Debt Instrument [Line Items] | |||
Interest expense related to revenue interest obligation | $ 500 | $ 700 | |
Ligand Pharmaceuticals | |||
Debt Instrument [Line Items] | |||
Estimated present value on the acquisition date | 27,700 | ||
Annual minimum sale | $ 2,750 | ||
Percentage of future sales | 5% | ||
Term of agreement | 10 years | ||
Cumulative sales of products exceed $100.0 | Ligand Pharmaceuticals | |||
Debt Instrument [Line Items] | |||
Payments due based on cumulative sales | $ 5,000 | ||
Cumulative sales | 100,000 | ||
Cumulative sales of products exceed $300.0 | Ligand Pharmaceuticals | |||
Debt Instrument [Line Items] | |||
Payments due based on cumulative sales | 5,000 | ||
Cumulative sales | $ 300,000 |
Commitments and Contingencies -
Commitments and Contingencies - License and Supply (Details) - License agreement with Cook Biotech - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Cook Biotech License and Supply Agreements | ||
Percentage of royalty on sales | 3% | |
Royalty expense | $ 0 | $ 0 |
License fee payments per year | $ 100 |
Commitments and Contingencies_2
Commitments and Contingencies - Legal Proceedings (Details) $ in Millions | 3 Months Ended |
Mar. 31, 2023 USD ($) case | |
FiberCel Litigation Product Lability [Member] | |
Legal Proceedings | |
Number of lawsuits filed | 71 |
Number of plaintiffs | 73 |
Number of claims not resulted lawsuit yet | 36 |
Number of cases settled | case | 26 |
Total amount of settlements | $ 7.3 |
Number of case settled and paid | case | 21 |
Legal settlement cash outlay | $ 6.2 |
Number of cases settlement not reached | case | 83 |
Estimated a probable loss recorded | $ 13.2 |
Total estimated liability | 14.3 |
Loss contingency receivable | 10.9 |
Additional loss contingency receivable not reflected as receivable | $ 3.8 |
INDIANA | FiberCel Litigation Product Lability, Negligence, Breach of Express and Implied warranties, and Punitive Damages [Member] | |
Legal Proceedings | |
Number of lawsuits filed | 1 |
DELAWARE | FiberCel Loss of Consortium [Member] | |
Legal Proceedings | |
Number of lawsuits filed | 2 |
FLORIDA | FiberCel Strict Liability Claims for Defective Design, Defective Manufacture, and Failure to Warn [Member] | |
Legal Proceedings | |
Number of lawsuits filed | 3 |
Net Loss Per Share Attributab_3
Net Loss Per Share Attributable to Common Stockholders (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Numerator: | ||
Net loss | $ (7,974) | $ (8,149) |
Denominator: | ||
Weighted average number of common shares, basic | 16,149,567 | 13,574,058 |
Weighted average number of common shares, diluted | 16,149,567 | 13,574,058 |
Net loss per share - basic (in dollar per share) | $ (0.49) | $ (0.60) |
Net loss per share - diluted (in dollar per share) | $ (0.49) | $ (0.60) |
Net Loss Per Share Attributab_4
Net Loss Per Share Attributable to Common Stockholders - Anti-dilutive securities (Details) - shares | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Anti-dilutive securities | 2,084,697 | 2,421,250 |
Options to purchase common stock | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Anti-dilutive securities | 1,569,869 | 1,857,091 |
Restricted stock units | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Anti-dilutive securities | 326,859 | 564,159 |
Class A common stock warrants | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Anti-dilutive securities | 187,969 |
Segment Information - Disaggreg
Segment Information - Disaggregation (Details) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 USD ($) segment | Mar. 31, 2022 USD ($) | |
Segment Reporting Information [Line Items] | ||
Number of operating segments | segment | 4 | |
Total sales | $ 13,050 | $ 11,495 |
Gross profit, excluding intangible asset amortization | 7,180 | 5,130 |
Intangible asset amortization expense | 849 | 849 |
Gross Profit | 6,331 | 4,281 |
Device Protection | ||
Segment Reporting Information [Line Items] | ||
Total sales | 2,350 | 2,053 |
Gross profit, excluding intangible asset amortization | 1,796 | 1,319 |
Women's Health | ||
Segment Reporting Information [Line Items] | ||
Total sales | 2,295 | 1,634 |
Gross profit, excluding intangible asset amortization | 1,052 | 674 |
Orthobiologics | ||
Segment Reporting Information [Line Items] | ||
Total sales | 6,658 | 6,243 |
Gross profit, excluding intangible asset amortization | 2,957 | 1,903 |
Cardiovascular | ||
Segment Reporting Information [Line Items] | ||
Total sales | 1,747 | 1,565 |
Gross profit, excluding intangible asset amortization | $ 1,375 | $ 1,234 |
Segment Information - Reconcili
Segment Information - Reconciliation of segment gross profit (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Reconciliation of segment gross profit to the consolidated loss from operations | ||
Gross Profit | $ 6,331 | $ 4,281 |
Adjustments: | ||
Sales and marketing | (5,356) | (4,818) |
General and administrative | (3,679) | (4,025) |
Research and development | (1,803) | (2,272) |
FiberCel litigation costs | (1,911) | (88) |
Loss from operations | (6,418) | (6,922) |
Interest expense | 1,544 | 1,215 |
Loss before provision for income taxes | $ (7,962) | $ (8,137) |
Subsequent Events (Details)
Subsequent Events (Details) - SWK Loan Facility | May 12, 2023 USD ($) item | Aug. 10, 2022 |
Subsequent Event | ||
Exit fee (as a percent) | 6.50% | |
Subsequent Events | ||
Subsequent Event | ||
Exit fee (as a percent) | 6.50% | |
Exit fee termination plus | $ 62,500 | |
Number of prior consecutive fiscal quarters operating cash burn added to fix amount of minimum liquidity | item | 2 | |
Subsequent Events | Until August 15, 2023 | ||
Subsequent Event | ||
Minimum liquidity to be maintained | $ 5,000,000 | |
Subsequent Events | After August 15, 2023 | ||
Subsequent Event | ||
Minimum liquidity to be maintained | $ 5,000,000 |