Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2015 | Aug. 05, 2015 | |
Document and Entity Information | ||
Entity Registrant Name | AxoGen, Inc. | |
Entity Central Index Key | 805,928 | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2015 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 24,932,392 | |
Document Fiscal Year Focus | 2,015 | |
Document Fiscal Period Focus | Q2 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) | Jun. 30, 2015 | Dec. 31, 2014 |
Current assets: | ||
Cash and cash equivalents | $ 15,622,932 | $ 8,215,791 |
Accounts receivable, net of allowance for doubtful accounts of approximately $101,000 and $94,000, respectively | 3,838,023 | 2,872,308 |
Inventory | 3,539,957 | 3,213,620 |
Prepaid expenses and other | 241,108 | 109,369 |
Total current assets | 23,242,020 | 14,411,088 |
Property and equipment, net | 663,910 | 619,028 |
Intangible assets | 608,539 | 577,174 |
Deferred financing costs | 908,684 | 793,499 |
Total Assets | 25,423,153 | 16,400,789 |
Current liabilities: | ||
Accounts payable and accrued expenses | 3,408,122 | 2,431,194 |
Current Deferred Revenue | 14,118 | 14,118 |
Total current liabilities | 3,422,240 | 2,445,312 |
Note Payable - Revenue Interest Purchase Agreement | 25,426,647 | 25,085,777 |
Long Term Deferred Revenue | 104,589 | 115,380 |
Total liabilities | 28,953,476 | 27,646,469 |
Shareholders' equity (deficit): | ||
Common stock, $.01 par value; 50,000,000 shares authorized; 24,932,392 and 19,488,814 shares issued and outstanding | 249,323 | 194,888 |
Additional paid-in capital | 93,102,681 | 78,675,686 |
Accumulated deficit | (96,882,327) | (90,116,254) |
Total shareholders' equity (deficit) | (3,530,323) | (11,245,680) |
Total Liabilities and Shareholders' equity | $ 25,423,153 | $ 16,400,789 |
Condensed Consolidated Balance3
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) | Jun. 30, 2015 | Dec. 31, 2014 |
Condensed Consolidated Balance Sheets | ||
Accounts receivable, allowance for doubtful accounts | $ 148,000 | $ 94,000 |
Common stock, Par value | $ 0.01 | |
Common stock, shares authorized | 50,000,000 | |
Common stock, shares issued | 24,932,392 | 19,488,814 |
Common stock, shares outstanding | 24,932,392 | 19,488,814 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Condensed Consolidated Statements of Operations | ||||
Revenues | $ 6,417,253 | $ 4,214,193 | $ 11,368,569 | $ 7,352,449 |
Cost of goods sold | 1,039,841 | 887,820 | 2,022,722 | 1,589,121 |
Gross profit | 5,377,412 | 3,326,373 | 9,345,847 | 5,763,328 |
Costs and expenses: | ||||
Sales and marketing | 4,812,262 | 3,354,912 | 8,744,783 | 6,075,619 |
Research and development | 736,399 | 555,758 | 1,407,435 | 1,368,373 |
General and administrative | 1,982,020 | 1,713,447 | 3,890,602 | 3,608,222 |
Total costs and expenses | 7,530,681 | 5,624,117 | 14,042,820 | 11,052,214 |
Loss from operations | (2,153,269) | (2,297,744) | (4,696,973) | (5,288,886) |
Other income (expense): | ||||
Interest expense | (1,023,774) | (1,392,098) | (2,018,522) | (2,583,415) |
Interest expense-deferred financing costs | (31,210) | (52,217) | (64,956) | (103,432) |
Other income (expense) | 17,380 | 588 | 14,378 | (5,303) |
Total other income (expense) | (1,037,604) | (1,443,727) | (2,069,100) | (2,692,150) |
Net Loss | $ (3,190,873) | $ (3,741,471) | $ (6,766,073) | $ (7,981,036) |
Weighted Average Common Shares outstanding - basic and diluted | 24,928,435 | 17,461,332 | 23,729,558 | 17,422,773 |
Loss Per Common share - basic and diluted (in dollars per share) | $ (0.13) | $ (0.21) | $ (0.29) | $ (0.46) |
Condensed Consolidated Stateme5
Condensed Consolidated Statements of Cash Flows - USD ($) | 6 Months Ended | |
Jun. 30, 2015 | Jun. 30, 2014 | |
Cash flows from operating activities: | ||
Net loss | $ (6,766,073) | $ (7,981,036) |
Adjustments to reconcile net loss to net cash used for operating activities: | ||
Depreciation | 87,610 | 67,887 |
Amortization of intangible assets | 22,710 | 22,099 |
Amortization of deferred financing costs | 64,957 | 103,432 |
Share-based compensation | 696,625 | 474,144 |
Stock grants | 60,125 | |
Interest added to note | 340,870 | 1,878,894 |
Change in assets and liabilities: | ||
Accounts receivable | (965,715) | (633,254) |
Inventory | (326,337) | (12,004) |
Prepaid expenses and other | (131,739) | 151,744 |
Accounts payable and accrued expenses | 976,928 | 155,113 |
Deferred revenue | (10,791) | (7,143) |
Net cash used for operating activities | (6,010,955) | (5,719,999) |
Cash flows from investing activities: | ||
Purchase of property and equipment | (132,492) | (283,476) |
Acquisition of intangible assets | (54,075) | (30,305) |
Net cash used for investing activities | (186,567) | (313,781) |
Cash flows from financing activities: | ||
Proceeds from exercise of stock options | 14,071 | 134,362 |
Proceeds from issuance of common stock | 13,770,734 | |
Debt issuance costs | (180,142) | |
Net cash provided by financing activities | 13,604,663 | 134,362 |
Net increase/(decrease) in cash and cash equivalents | 7,407,141 | (5,899,418) |
Cash and cash equivalents, beginning of year | 8,215,791 | 20,069,750 |
Cash and cash equivalents, end of period | 15,622,932 | 14,170,332 |
Supplemental disclosures of cash flow activity: | ||
Cash paid for interest | $ 1,649,881 | $ 664,546 |
Basis of Presentation
Basis of Presentation | 6 Months Ended |
Jun. 30, 2015 | |
Basis of Presentation | |
Basis of Presentation | 1. Basis of Presentation The accompanying condensed consolidated financial statements include the accounts of AxoGen, Inc. (the “Company” or “AxoGen”) and its wholly owned subsidiary AxoGen Corporation (“AC”) as of June 30, 2015 and December 31, 2014 and for the three and six month periods ended June 30, 2015 and 2014. The Company’s condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America and should be read in conjunction with the audited financial statements of the Company for the year ended December 31, 2014, which are included in the Annual Report on Form 10-K as of and for the year ended December 31, 2014. The interim condensed consolidated financial statements are unaudited and in the opinion of management, reflect all adjustments necessary for a fair presentation of results for the periods presented. Results for interim periods are not necessarily indicative of results for the full year. All significant intercompany accounts and transactions have been eliminated in consolidation. |
Organization and Business
Organization and Business | 6 Months Ended |
Jun. 30, 2015 | |
Organization and Business | |
Organization and Business | 2. Organization and Business Business Summary AxoGen, Inc. is a leading medical technology company dedicated to peripheral nerve repair. The company has created and licensed a unique combination of patented nerve repair technologies to change the standard of care for patients with peripheral nerve injuries. AxoGen’s portfolio of regenerative medicine products is available in the United States, Canada and several other countries and includes Avance® Nerve Graft, an off-the-shelf commercially available processed human nerve allograft for bridging severed nerves without the comorbidities associated with an additional surgical site, AxoGuard® Nerve Connector, a porcine submucosa extracellular matrix (“ECM”) coaptation aid for tensionless repair of severed nerves, AxoGuard® Nerve Protector, a porcine submucosa ECM product used to wrap and protect injured peripheral nerves and reinforce the nerve reconstruction while preventing soft tissue attachments and the AxoTouch™ Two-Point Discriminator, a tool useful for measuring sensation after a nerve injury, following the progression of a repaired nerve, and during the evaluation of a person with a possible nerve injury, such as nerve division or nerve compression. Avance® Nerve Graft is processed in the United States by AxoGen. AxoGuard® Nerve Connector and AxoGuard® Nerve Protector are manufactured in the United States by Cook Biotech Incorporated, and are distributed worldwide exclusively by AxoGen. AxoGen maintains its corporate offices in Alachua, Florida and is the parent of its wholly owned operating subsidiary, AxoGen Corporation. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 6 Months Ended |
Jun. 30, 2015 | |
Summary of Significant Accounting Policies | |
Summary of Significant Accounting Policies | 3. Summary of Significant Accounting Policies Revenue Recognition Revenue is recognized when persuasive evidence of an arrangement exists, the price is fixed and determinable, delivery has occurred and there is a reasonable assurance of collection of the sales proceeds. Revenues for manufactured products and products sold to a customer or under a distribution agreement are recognized when the product is shipped to the customer or distributor, at which time title passes to the customer or distributor . Once a product is shipped , the Company has no further performance obligations. Shipped product is defined as product being shipped from our facility via courier to a customer location or segregation of product into a contracted distribution location. At such time, this product cannot be sold to any other customer. I n the case of revenues from consigned sales delivery is determined when the product is utilized in a surgical procedure. Fees charged to customers for shipping are recognized as revenues when products are shipped to the customer, distributor or end user. Revenues from research grants are recognized in the period the associated costs are incurred. Cash and Cash Equivalents and Concentration For purposes of the statement of cash flows, the Company considers all highly liquid debt instruments purchased with a maturity of three months or less to be cash equivalents. Cash and cash equivalents are maintained at financial institutions and, at times, balances may exceed federally insured limits. The Company has never experienced any losses related to these balances and does not believe it is exposed to any significant credit risk on cash and cash equivalents. Accounts Receivable and Concentration of Credit Risk Accounts receivable are carried at the original invoice amount less an estimate made for doubtful accounts based on a review of all outstanding amounts on a monthly basis. Management determines the allowance for doubtful accounts by regularly evaluating individual customer receivables and considering a customer’s financial condition, credit history and current economic conditions. Accounts receivable are written off when deemed uncollectible. Recoveries of accounts receivable previously written off are recorded when received. We regularly review all accounts that exceed 60 days from the invoice date and based on an assessment of current credit worthiness, estimate the portion, if any, of the balance that will not be collected. The analysis excludes certain government related receivables due to our past successful experience in collectability. Specific accounts that are deemed uncollectible are reserved at 100% of their outstanding balance. The remaining balances outstanding over 60 days have a percentage applied by aging category ( 5% for balances 61 - 90 days and 20% for balances over 90 days aged), based on a historical valuation that allows us to calculate the total reserve required. The reserve balance was determined by applying a percentage to the cumulative balance between 60 and 90 days and a higher percentage to the balance over 90 days. In the event that we exhaust all collection efforts and deem an account uncollectible, we would subsequently write off the account. The write off process involves approval by senior management based on the write off amount. The allowance for doubtful accounts reserve balance was approximately $148,000 and $94,000 at June 30, 2015 and December 31, 2014, respectively. Concentrations of credit risk with respect to accounts receivable are limited because a large number of geographically diverse customers make up the Company’s customer base, thus spreading the trade credit risk. The Company also controls credit risk through credit approvals, credit limits and monitoring procedures. Inventories Inventories are comprised of implantable tissue, nerve grafts, Avance ® Nerve Graft, AxoGuard ® Nerve Connector, AxoGuard ® Nerve Protector, and supplies that are valued at the lower of cost (first-in, first-out) or market and consist of the following: June 30, December 31, 2015 2014 Finished goods $ $ Work in process Raw materials $ $ Inventories were net of reserve of approximately $653,000 and $404,000 at June 30, 2015 and December 31, 2014, respectively. Income Taxes The Company has not recorded current income tax expense due to the generation of net operating losses. Deferred income taxes are accounted for using the balance sheet approach which requires recognition of deferred tax assets and liabilities for the expected future consequences of temporary differences between the financial reporting basis and the tax basis of assets and liabilities. A valuation allowance is provided when it is more likely than not that a deferred tax asset will not be realized. A full valuation allowance has been established on the deferred tax asset as it is more likely than not that future tax benefit will not be realized. In addition, future utilization of the available net operating loss carryforward may be limited under Internal Revenue Code Section 382 as a result of changes in ownership. The Company identifies and evaluates uncertain tax positions, if any, and recognizes the impact of uncertain tax positions for which there is a less than more-likely-than-not probability of the position being upheld when reviewed by the relevant taxing authority. Such positions are deemed to be unrecognized tax benefits and a corresponding liability is established on the balance sheet. The Company has not recognized a liability for uncertain tax positions. If there were an unrecognized tax benefit, the Company would recognize interest accrued related to unrecognized tax benefits in interest expense and penalties in operating expenses. The Company’s remaining open tax years subject to examination by the Internal Revenue Service include the years ended December 31, 2011 through 2014; there currently are no examinations in process. Fair Value of Financial Instruments The respective carrying value of certain on-balance-sheet financial instruments approximated their fair values due to the short-term nature of these instruments. These financial instruments include cash, accounts receivable, accounts payable and accrued expenses. The fair value of the Company’s long-term debt approximates its carrying value based upon current rates available to the Company. Share-Based Compensation Stock-based compensation cost related to stock options granted under the AC 2002 Stock Option Plan and AxoGen 2010 Stock Incentive Plan is measured at grant date, based on the fair value of the award, and is recognized as an expense over the employee’s requisite service period. The Company estimates the fair value of each option award issued under the Plan on the date of grant using a Black-Scholes-Merton option-pricing model that uses the assumptions noted in the table below. The Company estimates the volatility of its common stock at the date of grant based on the volatility of comparable peer companies which are publicly traded, for the periods prior to the October 2011 merger of LecTec, Inc. and AxoGen Corporation, and based on the Company’s common stock for periods subsequent to such merger. The Company determines the expected life based on historical experience with similar awards, giving consideration to the contractual terms, vesting schedules and post-vesting forfeitures. The Company uses the risk-free interest rate on the implied yield currently available on U.S. Treasury issues with an equivalent remaining term approximately equal to the expected life of the award. The Company has never paid any cash dividends on its common stock and does not anticipate paying any cash dividends in the foreseeable future. The Company used the following weighted-average assumptions for options granted during the six months ended June 30: Six months ended June 30, 2015 2014 Expected term (in years) Expected volatility % % Risk free rate % % Expected dividends — % — % The Company estimates forfeitures when recognizing compensation expense and this estimate of forfeitures is adjusted over the requisite service period based on the extent to which actual forfeitures differ, or are expected to differ, from such estimates. Changes in estimated forfeitures are recognized through a cumulative catch-up adjustment, which is recognized in the period of change, and also impact the amount of unamortized compensation expense to be recognized in future periods. The Company did not apply a forfeiture allocation to its unvested options outstanding during the six months ended June 30, 2015 and 2014 as they were deemed insignificant. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Recent Accounting Pronouncements In April 2015, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update No. 2015-03, "Simplifying the Presentation of Debt Issuance Costs" ("ASU 2015-03") which changes the presentation of debt issuance costs in financial statements to present such costs as a direct deduction from the related debt liability rather than as an asset. ASU 2015-03 will become effective for public companies during interim and annual reporting periods beginning after December 15, 2015. Early adoption is permitted. We do not expect the adoption of this standard will have a material impact on our consolidated financial statements. In February 2015, the FASB issued Accounting Standards Update No. 2015-02, "Consolidation (Topic 810): Amendments to the Consolidation Analysis" ("ASU 2015-02") which updates the considerations on whether an entity should consolidate certain legal entities. The update removes the indefinite deferral of specialized guidance for certain investment funds and changes the way that entities evaluate limited partnerships and fees paid to service providers in the consolidation determination. ASU 2015-02 will become effective for public companies during interim and annual reporting periods beginning after December 15, 2015. Early adoption is permitted. We are currently evaluating the impact of the adoption of this standard on our consolidated financial statements. In January 2015, the FASB issued guidance, which completely eliminates all references to and guidance concerning the concept of an extraordinary item from GAAP. The updated guidance is effective for annual reporting periods and interim periods within those annual periods beginning after December 15, 2015. Earlier adoption is permitted but we do not anticipate electing early adoption. We do not expect the adoption of this guidance to have a material impact on our consolidated financial statements. In June 2014, the FASB issued updated guidance related to stock compensation. The amendment requires that a performance target that affects vesting and that could be achieved after the requisite period, be treated as a performance condition. The updated guidance is effective for annual reporting periods and interim periods within those annual periods beginning after December 15, 2015. Earlier adoption is permitted but we do not anticipate electing early adoption. We do not expect the adoption of this guidance to have a material impact on our consolidated financial statements. In May 2014, the FASB issued a new standard on revenue recognition which outlines a single comprehensive model to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance. The core principle of the revenue model is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The standard is designed to create greater comparability for financial statement users across industries and jurisdictions and also requires enhanced disclosures. The guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2016; however, on July 9, 2015, the FASB decided to delay the effective date of the new revenue standard by one year . The proposed deferral may permit early adoption, but would not allow adoption any earlier than the original effective date of the standard. We are currently evaluating the impact this standard will have on our consolidated financial statements. The Company’s management has reviewed and considered all other recent accounting pronouncements and believe there are none that could potentially have a material impact on the Company’s consolidated financial condition, results of operations, or disclosures. |
Property and Equipment
Property and Equipment | 6 Months Ended |
Jun. 30, 2015 | |
Property and Equipment | |
Property and Equipment | 4. Property and Equipment Property and equipment consist of the following: June 30, December 31, 2015 2014 (unaudited) Furniture and equipment $ $ Leasehold improvements Processing equipment Less: accumulated depreciation and amortization Property and equipment $ $ |
Intangible Assets
Intangible Assets | 6 Months Ended |
Jun. 30, 2015 | |
Intangible Assets | |
Intangible Assets | 5. Intangible Assets The Company’s intangible assets consist of the following: June 30, December 31, 2015 2014 (unaudited) License agreements $ $ Patents Less: accumulated amortization Intangible assets, net $ $ License agreements are being amortized over periods ranging from 17 - 20 years. Patent costs were being amortized over three years. As of June 30, 2015 , the patents were fully amortized, and the remaining patents of $124,924 were pending patent costs and were not amortizable. Amortization expense was approximately $11,000 and $11,000 for the three months ended June 30, 2015 and 2014, respectively , and approximately $ 23 ,000 and $22,000 for the six months ended June 30, 2015 and 2014, respectively. As of June 30, 2015, future amortization of license agreements for the next five years is expected to be $25,000 for the remainder of 2015 and $48,000 for 2016 through 2020 . License Agreements The Company has entered into multiple license agreements (the “License Agreements”) with the University of Florida Research Foundation (“UFRF”) and University of Texas at Austin (“UTA”). Under the terms of the License Agreements, the Company acquired exclusive worldwide licenses for underlying technology used in repairing and regenerating nerves. The licensed technologies include the rights to issued patents and patents pending in the United States and international markets. The effective term of the License Agreements extends through the term of the related patents and the agreements may be terminated by the Company with 60 days prior written notice. Additionally, in the event of default, licensors may terminate an agreement if the Company fails to cure a breach after written notice. The License Agreements contain the key terms listed below: · AxoGen pays royalty fees ranging from 1% to 3% under the License Agreements based on net sales of licensed products. One of the agreements also contains a minimum royalty of $12,500 per quarter, which may include a credit in future quarters in the same calendar year for the amount the minimum royalty exceeds the royalty fees. Also, when AxoGen pays royalties to more than one licensor for sales of the same product, a royalty stack cap applies, capping total royalties at 3.75%; · If AxoGen sublicenses technologies covered by the License Agreements to third parties, AxoGen would pay a percentage of sublicense fees received from the third party to the licensor. Currently, AxoGen does not sublicense any technologies covered by License Agreements. The Company is not considered a sub-licensee under the License Agreements and does not owe any sublicensee fees for its own use of the technologies; · AxoGen reimburses the licensors for certain legal expenses incurred for patent prosecution and defense of the technologies covered by the License Agreements; and · Currently, under one of the License Agreements, AxoGen would owe a $15,000 milestone fee upon receiving a Phase II Small Business Innovation Research or Phase II Small Business Technology Transfer grant involving the licensed technology. The Company has not received either grant and does not owe such a milestone fee. Other milestone fees are due if AxoGen develops certain pharmaceutical or medical device products under the License Agreements. No such products are currently under development. Royalty fees were approximately $121,000 and $85,000 during the three months ended June 30, 2015 and 2014, respectively , and were $217,000 and $145,000 for the six months ended June 30, 2015 and 2014, respectively, and are included in sales and marketing expense on the accompanying condensed consolidated statements of operations. |
Accounts Payable and Accrued Ex
Accounts Payable and Accrued Expenses | 6 Months Ended |
Jun. 30, 2015 | |
Accounts Payable and Accrued Expenses | |
Accounts Payable and Accrued Expenses | 6. Accounts Payable and Accrued Expenses Accounts payable and accrued expenses consists of the following: June 30, December 31, 2015 2014 Accounts payable $ $ Miscellaneous accruals Accrued compensation Accounts Payable and Accrued Expenses $ $ |
Notes Payable
Notes Payable | 6 Months Ended |
Jun. 30, 2015 | |
Notes Payable | |
Notes Payable | 7. Notes Payable Notes Payable consists of the following: June 30, December 31, 2015 2014 Term Loan and Revenue Interest Agreement with Three Peaks Capital S.a.r.l. (“Three Peaks”) for a total term loan amount of $25,000,000 which has a six year term and requires interest only payments and a final principal payment due at the end of the term. Interest is payable quarterly at 9.00% per annum plus the greater of LIBOR or 1.0% which as of June 30, 2015 and December 31, 2014 resulted in a 10% rate. The Revenue Interest Agreement is for a period of ten years. Royalty payments are based on a royalty rate of 3.75% of revenues up to a maximum of $30 million in revenues in any 12 month period. $ $ Long-term portion $ $ Note Payable On October 5, 2012, AxoGen entered into a Revenue Interests Purchase Agreement (the “Royalty Contract”) with PDL BioPharma, Inc. (“PDL”), pursuant to which the Company sold to PDL the right to receive royalties equal to 9.95% of the Company’s Net Revenues (as defined in the Royalty Contract) generated by the sale, distribution or other use of AxoGen’s products Avance® Nerve Graft, AxoGuard® Nerve Connector and AxoGuard® Nerve Protector. The Royalty Contract had a term of eight years. Under the Royalty Contract, PDL received royalty payments based on a royalty rate of 9.95% of the Company’s Net Revenues, subject to certain agreed upon minimum payment requirements, which were anticipated to be approximately $1.3 million to $2.5 million per quarter to begin in the fourth quarter of 2014 through the third quarter of 2020 as provided in the Royalty Contract. The Company recorded interest using its best estimate of the effective interest rate accruing interest using the specified internal rate of return of the Put Option of 20% . The total consideration PDL paid to the Company was $20,800,000 (the “Funded Amount”), which included $19,050,000 PDL paid to the Company on October 5, 2012, and $1,750,000 PDL paid to the Company on August 14, 2012 pursuant to an Interim Revenue Interest Purchase Agreement between the Company and PDL, dated August 14, 2012 (the “Interim Royalty Contract”). Upon the closing (the “Closing”) of PDL’s purchase of the specified royalties described above, which was concurrent with the execution of the Royalty Contract, the Interim Royalty Contract was terminated. On November 12, 2014, the Company paid PDL $30.3 million to fully extinguish the Royalty Contract. The Company has no further obligations under the Royalty Contract. On November 12, 2014, the Company sold 643,382 shares of common stock for a total of $1.75 million to PDL (“PDL Equity Sale”) at a price of $2.72 per share pursuant to a Securities Purchase Agreement by and between the Company and PDL. The Company intends to use the proceeds from the PDL Equity Sale for general corporate purposes. Term Loan Agreement and Revenue Interest Agreement On November 12, 2014, (the “Signing Date”), AxoGen, as borrower, and AC, as guarantor, entered into a term loan agreement (the “Term Loan Agreement”) with the lenders party thereto and Three Peaks Capital S.a.r.l. (“Three Peaks”), an indirect wholly-owned subsidiary of Oberland Capital Healthcare Master Fund LP (“Oberland”), as administrative and collateral agent for the lenders. Under the Term Loan Agreement, Three Peaks has agreed to lend to AxoGen a term loan of $25 million (the “Initial Term Loan”) which has a six year term and requires interest only payments and a final principal payment due at the end of the term. Interest is payable quarterly at 9.00% per annum plus the greater of LIBOR or 1.0% which as of November 13, 2014 (“the Initial Closing Date”) resulted in a 10% rate. Under certain conditions, AxoGen has the option to draw an additional $7 million (“Subsequent Borrowing” and, together with the Initial Term Loan, the “Term Loan”) during the period of April 1, 2016 through June 29, 2016 (the closing date of each such Subsequent Borrowing, a (“Subsequent Closing Date” and, together with the Initial Closing Date, the “Closing Dates”) under similar terms and conditions. AxoGen has to maintain certain covenants including limiting new indebtedness, restriction of the payment of dividends and maintain certain levels of revenue. Three Peaks has a first perfected security interest in the assets of AxoGen. In addition, AxoGen entered into a 10 year Revenue Interest Agreement (“Revenue Interest Agreement”) with Three Peaks. Royalty payments are based on a royalty rate of 3.75% of AxoGen’s revenues up to a maximum of $30 million in revenues in any 12 month period. In the event the Subsequent Borrowing is drawn, the royalty rate increases proportionally up to a maximum of 4.80% AxoGen has to maintain certain covenants including those covenants under the Term Loan. Under the Term Loan Agreement, AxoGen has the option at any time to prepay the Term Loan, in whole or in part, and the Royalty Interest Agreement, defined below, by making the following payment, and Three Peaks has the right to demand the following payment upon a change of control of AxoGen, sale of the majority of AxoGen’s assets or a material adverse change to AxoGen: (i) on or prior to the first anniversary of the applicable Closing Date, 120% of the outstanding principal amount of the Term Loan or any portion being prepaid; (ii) after the first anniversary but no later than the second anniversary of the applicable Closing Date, 135% of the outstanding principal amount of the Term Loan or any portion being prepaid; (iii) after the second anniversary but no later than the third anniversary of the applicable Closing Date, 150% of the outstanding principal amount of the Term Loan or any portion being prepaid; or (iv) after the third anniversary of the applicable Closing Date, an amount generating an Internal Rate of Return of 16.25% of the outstanding principal amount of the Term Loan or any portion being prepaid. In all cases, the amount due is reduced by the sum of interest and principal previously paid and all amounts received under the Revenue Interest Agreement. In each such case AxoGen will also owe an additional 3% of the originally advanced Term Loan amount. Upon payment to Three Peaks, AxoGen would have no further obligations to Three Peaks under the Term Loan or the Revenue Interest Agreement. In connection with the Term Loan Agreement, on the Signing Date, the Company and its wholly owned subsidiary, AC entered into a Security Agreement (the “Security Agreement”) with Three Peaks, pursuant to which each of the Company and AC grants to Three Peaks a security interest in certain collateral as specified in the Security Agreement to guarantee the payment in full when due of the Secured Obligations. In the event of default per the terms of the Term Loan Agreement Three Peaks would have the ability to foreclose on the pledged collateral and the Company and AC would not be able to continue its current business if such foreclosure occurred. Also in connection with the above transaction, the Company sold 1,375,969 shares of common stock to Three Peaks for a total of $3.55 million (“Three Peaks Equity Sale”) at a price of $2.58 per share. Pursuant to the equity purchase provisions in the Three Peaks Term Loan Agreement, in the event that we sell prior to November 12, 2016 our securities at a lower price per share than the $2.58 per share paid by Three Peaks, or where the terms of such subsequent sale are otherwise more favorable, then in such case we have agreed to match the more favorable terms of such subsequent sale with respect to the shares purchased by Three Peaks. A subsequent sale does not include the issuance of securities or options to our employees, officers, directors or consultants pursuant to our approved employee option pool or any other employee stock purchase or option plan existing as of November 12, 2014. The Company records interest using its best estimate of the effective interest rate. This estimate takes into account both the rate on the Term Loan Agreement and the rate associated with the 10 year Revenue Interest Agreement with Three Peaks. The effective interest rate is based on actual payments to date, projected future revenues and the projected royalty payments and the quarterly interest payments due on the Term Loan Agreement. From time to time, AxoGen will reevaluate the expected cash flows and may adjust the effective interest rate. Determining the effective interest rate requires judgment and is based on significant assumptions related to estimates of the amounts and timing of future revenue streams. Determination of these assumptions is highly subjective and different assumptions could lead to materially different outcomes. |
Stock Options
Stock Options | 6 Months Ended |
Jun. 30, 2015 | |
Stock Options | |
Stock Options | 8. Stock Options The Company granted stock options to purchase 295,500 shares of common stock pursuant to its 2010 Stock Incentive Plan for the six months ended June 30, 2015. Stock-based compensation expense was $328,376 and $216,602 for the three months ended June 30, 2015 and 2014, respectively and $696,625 and $474,144 for the six months ended June 30, 2015 and 2014, respectively. Total future stock compensation expense related to nonvested awards is expected to be approximately $1,996,000 at June 30, 2015. |
Public Offering of Common Stock
Public Offering of Common Stock | 6 Months Ended |
Jun. 30, 2015 | |
Public Offering of Common Stock | |
Public Offering of Common Stock | 9. Public Offering of Common Stock On February 5, 2015, AxoGen entered into the Underwriting Agreement with the Underwriter, in connection with the offering, issuance and sale (the “Offering”) of 4,728,000 shares of the Company’s common shares, par value $0.01 per share (the “Common Shares”), at a price to the public of $2.75 per share. The Company also granted to the Underwriter a 30 -day option to purchase up to an aggregate of 709,200 additional Common Shares to cover over-allotments, if any. The Offering was made pursuant to the Company’s effective shelf registration statement on Form S-3 (Registration No. 333-195588) previously filed with the Securities and Exchange Commission, and pursuant to the prospectus supplement and the accompanying prospectus describing the terms of the Offering, dated February 5, 2015. As of February 13, 2015, the Offering was completed with the sale of 5,437,200 Common Shares, which included the exercise of the over-allotment option, at $2.75 per share resulting in gross proceeds to AxoGen from the Offering of approximately $15.0 million, before deducting underwriting discounts and commissions and other estimated offering expenses payable by AxoGen estimated at approximately $1.4 million. The Common Shares were listed on the NASDAQ Capital Market. |
Commitments and Contingencies
Commitments and Contingencies | 6 Months Ended |
Jun. 30, 2015 | |
Commitments and Contingencies. | |
Commitments and Contingencies | 10. Commitments and Contingencies Commercial Lease On April 21, 2015, AxoGen Corporation, a wholly owned subsidiary of AxoGen, Inc. (“AxoGen” or the “Company”), entered into a Commercial Lease with Ja-Cole, L.P. (the “New Lease”) for property located in Burleson, Texas. The New Lease supersedes and replaces a current lease with Ja-Cole. Under the terms of the New Lease, AxoGen leased an additional 2,100 square feet of warehouse space that will be combined with its current 5,400 square feet of warehouse/office space in Burleson, Texas. The New Lease is for a three year term expiring April 21, 2018, renewable thereafter by agreement of the parties, at an annual cost of $60,000 per year. The expanded Burleson facility will house raw material storage and product distribution and allow expansion space as required for AxoGen operations. Processing Agreement Under an Amended and Restated Nerve Tissue Processing Agreement (the “ LifeNet Agreement”) with LifeNet Health, AxoGen processes and packages Avance® Nerve Graft using its employees and equipment located at LifeNet Health, Virginia Beach, Virginia. As a result of business requirements of LifeNet Health and their need for additional space , on April 16, 2015 they notified AxoGen that it will need to transition out of the Virginia Beach facility on or before February 27, 2016 and therefore is terminating the LifeNet Agreement effective February 27, 2016. AxoGen has entered into an agreement with Community Blood Center (d/b/a Community Tissue Services) (“CTS”) as a result this termination. |
Subsequent Events
Subsequent Events | 6 Months Ended |
Jun. 30, 2015 | |
Subsequent Event | |
Subsequent Events | 1 1 . Subsequent Events License and Services Agreement On August 6 , 2015, AxoGen Corporation (“AxoGen”) entered into a License and Services Agreement (the “Agreement”) with CTS. Headquartered in Dayton, Ohio , CTS is a nonprofit quality, ethical provider of services to recipients, donor families, medical communities, and community partners through the respectful recovery, processing and distribution of tissue grafts. CTS, an accredited member of the AATB, is one of the largest nonprofit tissue banks in the United States having in 2014 distributed more than 355,000 tissue grafts to over 5,000 hospitals, physicians and surgeons. Pursuant to the Agreement, AxoGen will process and package its Avance ® Nerve Graft using its employees and equipment located at CTS. It is anticipated that processing currently being performed at LifeNet Health, will be transferred completely to the CTS facility by the end of first quarter of 2016. The Agreement is for a 5 year term, subject to earlier termination by either party for cause, or after the two year anniversary of the Agreement without cause, upon 180 days’ notice. Under the Agreement AxoGen pays CTS a facility fee for clean room/ processing , storage and office space. CTS also provides services in support of AxoGen’s processing such as routine sterilization of daily supplies, providing disposable supplies, microbial services and office support. The service fee is based on a per donor batch rate. It is anticipated that the Company will have approximately $400,000 of capital expenditures for the placement of equipment and build-out at this facility. |
Summary of Significant Accoun17
Summary of Significant Accounting Policies (Policies) | 6 Months Ended |
Jun. 30, 2015 | |
Summary of Significant Accounting Policies | |
Revenue Recognition | Revenue Recognition Revenue is recognized when persuasive evidence of an arrangement exists, the price is fixed and determinable, delivery has occurred and there is a reasonable assurance of collection of the sales proceeds. Revenues for manufactured products and products sold to a customer or under a distribution agreement are recognized when the product is shipped to the customer or distributor, at which time title passes to the customer or distributor . Once a product is shipped , the Company has no further performance obligations. Shipped product is defined as product being shipped from our facility via courier to a customer location or segregation of product into a contracted distribution location. At such time, this product cannot be sold to any other customer. I n the case of revenues from consigned sales delivery is determined when the product is utilized in a surgical procedure. Fees charged to customers for shipping are recognized as revenues when products are shipped to the customer, distributor or end user. Revenues from research grants are recognized in the period the associated costs are incurred. |
Cash and Cash Equivalents and Concentration | Cash and Cash Equivalents and Concentration For purposes of the statement of cash flows, the Company considers all highly liquid debt instruments purchased with a maturity of three months or less to be cash equivalents. Cash and cash equivalents are maintained at financial institutions and, at times, balances may exceed federally insured limits. The Company has never experienced any losses related to these balances and does not believe it is exposed to any significant credit risk on cash and cash equivalents. |
Accounts Receivable and Concentration of Credit Risk | Accounts Receivable and Concentration of Credit Risk Accounts receivable are carried at the original invoice amount less an estimate made for doubtful accounts based on a review of all outstanding amounts on a monthly basis. Management determines the allowance for doubtful accounts by regularly evaluating individual customer receivables and considering a customer’s financial condition, credit history and current economic conditions. Accounts receivable are written off when deemed uncollectible. Recoveries of accounts receivable previously written off are recorded when received. We regularly review all accounts that exceed 60 days from the invoice date and based on an assessment of current credit worthiness, estimate the portion, if any, of the balance that will not be collected. The analysis excludes certain government related receivables due to our past successful experience in collectability. Specific accounts that are deemed uncollectible are reserved at 100% of their outstanding balance. The remaining balances outstanding over 60 days have a percentage applied by aging category ( 5% for balances 61 - 90 days and 20% for balances over 90 days aged), based on a historical valuation that allows us to calculate the total reserve required. The reserve balance was determined by applying a percentage to the cumulative balance between 60 and 90 days and a higher percentage to the balance over 90 days. In the event that we exhaust all collection efforts and deem an account uncollectible, we would subsequently write off the account. The write off process involves approval by senior management based on the write off amount. The allowance for doubtful accounts reserve balance was approximately $148,000 and $94,000 at June 30, 2015 and December 31, 2014, respectively. Concentrations of credit risk with respect to accounts receivable are limited because a large number of geographically diverse customers make up the Company’s customer base, thus spreading the trade credit risk. The Company also controls credit risk through credit approvals, credit limits and monitoring procedures. |
Inventories | Inventories Inventories are comprised of implantable tissue, nerve grafts, Avance ® Nerve Graft, AxoGuard ® Nerve Connector, AxoGuard ® Nerve Protector, and supplies that are valued at the lower of cost (first-in, first-out) or market and consist of the following: June 30, December 31, 2015 2014 Finished goods $ $ Work in process Raw materials $ $ Inventories were net of reserve of approximately $653,000 and $404,000 at June 30, 2015 and December 31, 2014, respectively. |
Income Taxes | Income Taxes The Company has not recorded current income tax expense due to the generation of net operating losses. Deferred income taxes are accounted for using the balance sheet approach which requires recognition of deferred tax assets and liabilities for the expected future consequences of temporary differences between the financial reporting basis and the tax basis of assets and liabilities. A valuation allowance is provided when it is more likely than not that a deferred tax asset will not be realized. A full valuation allowance has been established on the deferred tax asset as it is more likely than not that future tax benefit will not be realized. In addition, future utilization of the available net operating loss carryforward may be limited under Internal Revenue Code Section 382 as a result of changes in ownership. The Company identifies and evaluates uncertain tax positions, if any, and recognizes the impact of uncertain tax positions for which there is a less than more-likely-than-not probability of the position being upheld when reviewed by the relevant taxing authority. Such positions are deemed to be unrecognized tax benefits and a corresponding liability is established on the balance sheet. The Company has not recognized a liability for uncertain tax positions. If there were an unrecognized tax benefit, the Company would recognize interest accrued related to unrecognized tax benefits in interest expense and penalties in operating expenses. The Company’s remaining open tax years subject to examination by the Internal Revenue Service include the years ended December 31, 2011 through 2014; there currently are no examinations in process. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments The respective carrying value of certain on-balance-sheet financial instruments approximated their fair values due to the short-term nature of these instruments. These financial instruments include cash, accounts receivable, accounts payable and accrued expenses. The fair value of the Company’s long-term debt approximates its carrying value based upon current rates available to the Company. |
Share-Based Compensation | Share-Based Compensation Stock-based compensation cost related to stock options granted under the AC 2002 Stock Option Plan and AxoGen 2010 Stock Incentive Plan is measured at grant date, based on the fair value of the award, and is recognized as an expense over the employee’s requisite service period. The Company estimates the fair value of each option award issued under the Plan on the date of grant using a Black-Scholes-Merton option-pricing model that uses the assumptions noted in the table below. The Company estimates the volatility of its common stock at the date of grant based on the volatility of comparable peer companies which are publicly traded, for the periods prior to the October 2011 merger of LecTec, Inc. and AxoGen Corporation, and based on the Company’s common stock for periods subsequent to such merger. The Company determines the expected life based on historical experience with similar awards, giving consideration to the contractual terms, vesting schedules and post-vesting forfeitures. The Company uses the risk-free interest rate on the implied yield currently available on U.S. Treasury issues with an equivalent remaining term approximately equal to the expected life of the award. The Company has never paid any cash dividends on its common stock and does not anticipate paying any cash dividends in the foreseeable future. The Company used the following weighted-average assumptions for options granted during the six months ended June 30: Six months ended June 30, 2015 2014 Expected term (in years) Expected volatility % % Risk free rate % % Expected dividends — % — % The Company estimates forfeitures when recognizing compensation expense and this estimate of forfeitures is adjusted over the requisite service period based on the extent to which actual forfeitures differ, or are expected to differ, from such estimates. Changes in estimated forfeitures are recognized through a cumulative catch-up adjustment, which is recognized in the period of change, and also impact the amount of unamortized compensation expense to be recognized in future periods. The Company did not apply a forfeiture allocation to its unvested options outstanding during the six months ended June 30, 2015 and 2014 as they were deemed insignificant. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In April 2015, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update No. 2015-03, "Simplifying the Presentation of Debt Issuance Costs" ("ASU 2015-03") which changes the presentation of debt issuance costs in financial statements to present such costs as a direct deduction from the related debt liability rather than as an asset. ASU 2015-03 will become effective for public companies during interim and annual reporting periods beginning after December 15, 2015. Early adoption is permitted. We do not expect the adoption of this standard will have a material impact on our consolidated financial statements. In February 2015, the FASB issued Accounting Standards Update No. 2015-02, "Consolidation (Topic 810): Amendments to the Consolidation Analysis" ("ASU 2015-02") which updates the considerations on whether an entity should consolidate certain legal entities. The update removes the indefinite deferral of specialized guidance for certain investment funds and changes the way that entities evaluate limited partnerships and fees paid to service providers in the consolidation determination. ASU 2015-02 will become effective for public companies during interim and annual reporting periods beginning after December 15, 2015. Early adoption is permitted. We are currently evaluating the impact of the adoption of this standard on our consolidated financial statements. In January 2015, the FASB issued guidance, which completely eliminates all references to and guidance concerning the concept of an extraordinary item from GAAP. The updated guidance is effective for annual reporting periods and interim periods within those annual periods beginning after December 15, 2015. Earlier adoption is permitted but we do not anticipate electing early adoption. We do not expect the adoption of this guidance to have a material impact on our consolidated financial statements. In June 2014, the FASB issued updated guidance related to stock compensation. The amendment requires that a performance target that affects vesting and that could be achieved after the requisite period, be treated as a performance condition. The updated guidance is effective for annual reporting periods and interim periods within those annual periods beginning after December 15, 2015. Earlier adoption is permitted but we do not anticipate electing early adoption. We do not expect the adoption of this guidance to have a material impact on our consolidated financial statements. In May 2014, the FASB issued a new standard on revenue recognition which outlines a single comprehensive model to use in accounting for revenue arising from contracts with customers and supersedes most current revenue recognition guidance, including industry-specific guidance. The core principle of the revenue model is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The standard is designed to create greater comparability for financial statement users across industries and jurisdictions and also requires enhanced disclosures. The guidance is effective for fiscal years, and interim periods within those years, beginning after December 15, 2016; however, on July 9, 2015, the FASB decided to delay the effective date of the new revenue standard by one year . The proposed deferral may permit early adoption, but would not allow adoption any earlier than the original effective date of the standard. We are currently evaluating the impact this standard will have on our consolidated financial statements. The Company’s management has reviewed and considered all other recent accounting pronouncements and believe there are none that could potentially have a material impact on the Company’s consolidated financial condition, results of operations, or disclosures. |
Summary of Significant Accoun18
Summary of Significant Accounting Policies (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Summary of Significant Accounting Policies | |
Schedule of inventories | June 30, December 31, 2015 2014 Finished goods $ $ Work in process Raw materials $ $ |
Schedule of weighted-average assumptions for options granted | Six months ended June 30, 2015 2014 Expected term (in years) Expected volatility % % Risk free rate % % Expected dividends — % — % |
Property and Equipment (Tables)
Property and Equipment (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Property and Equipment | |
Schedule of Property and equipment | June 30, December 31, 2015 2014 (unaudited) Furniture and equipment $ $ Leasehold improvements Processing equipment Less: accumulated depreciation and amortization Property and equipment $ $ |
Intangible Assets (Tables)
Intangible Assets (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Intangible Assets | |
Schedule of intangible assets | June 30, December 31, 2015 2014 (unaudited) License agreements $ $ Patents Less: accumulated amortization Intangible assets, net $ $ |
Accounts Payable and Accrued 21
Accounts Payable and Accrued Expenses (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Accounts Payable and Accrued Expenses | |
Schedule of accounts payable and accrued expenses | June 30, December 31, 2015 2014 Accounts payable $ $ Miscellaneous accruals Accrued compensation Accounts Payable and Accrued Expenses $ $ |
Notes Payable (Tables)
Notes Payable (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
Notes Payable | |
Schedule of Notes payable | June 30, December 31, 2015 2014 Term Loan and Revenue Interest Agreement with Three Peaks Capital S.a.r.l. (“Three Peaks”) for a total term loan amount of $25,000,000 which has a six year term and requires interest only payments and a final principal payment due at the end of the term. Interest is payable quarterly at 9.00% per annum plus the greater of LIBOR or 1.0% which as of June 30, 2015 and December 31, 2014 resulted in a 10% rate. The Revenue Interest Agreement is for a period of ten years. Royalty payments are based on a royalty rate of 3.75% of revenues up to a maximum of $30 million in revenues in any 12 month period. $ $ Long-term portion $ $ |
Summary of Significant Accoun23
Summary of Significant Accounting Policies (Details) - USD ($) | 6 Months Ended | |
Jun. 30, 2015 | Dec. 31, 2014 | |
Accounts Receivable and Concentration of Credit Risk | ||
Reserve for accounts deemed uncollectible (as a percent) | 100.00% | |
Allowance for doubtful accounts reserve balance | $ 148,000 | $ 94,000 |
Minimum | ||
Accounts Receivable and Concentration of Credit Risk | ||
Age of doubtful accounts | 60 days | |
Age 61 to 90 Days | ||
Accounts Receivable and Concentration of Credit Risk | ||
Reserve for doubtful accounts (as a percent) | 5.00% | |
Age 61 to 90 Days | Minimum | ||
Accounts Receivable and Concentration of Credit Risk | ||
Age of doubtful accounts | 61 days | |
Age 61 to 90 Days | Maximum | ||
Accounts Receivable and Concentration of Credit Risk | ||
Age of doubtful accounts | 90 days | |
Age Over 90 Days | ||
Accounts Receivable and Concentration of Credit Risk | ||
Reserve for doubtful accounts (as a percent) | 20.00% | |
Age Over 90 Days | Minimum | ||
Accounts Receivable and Concentration of Credit Risk | ||
Age of doubtful accounts | 90 days |
Summary of Significant Accoun24
Summary of Significant Accounting Policies (Details) - USD ($) | Jun. 30, 2015 | Dec. 31, 2014 |
Summary of Significant Accounting Policies | ||
Finished goods | $ 2,403,791 | $ 2,072,235 |
Work in process | 240,054 | 331,891 |
Raw materials | 896,112 | 809,494 |
Inventory, Net | 3,539,957 | 3,213,620 |
Inventory valuation reserves | $ 653,000 | $ 404,000 |
Summary of Significant Accoun25
Summary of Significant Accounting Policies (Details) | 6 Months Ended | |
Jun. 30, 2015 | Jun. 30, 2014 | |
Summary of Significant Accounting Policies | ||
Expected term | 4 years | 4 years |
Expected volatility (as a percent) | 76.24% | 79.80% |
Risk free rate (as a percent) | 1.21% | 1.20% |
Property and Equipment (Details
Property and Equipment (Details) - USD ($) | Jun. 30, 2015 | Dec. 31, 2014 |
Property and equipment | ||
Less: accumulated depreciation and amortization | $ (1,822,815) | $ (1,735,205) |
Property and equipment | 663,910 | 619,028 |
Furniture and Office Equipment | ||
Property and equipment | ||
Property and equipment, Gross | 955,743 | 873,824 |
Leasehold Improvements | ||
Property and equipment | ||
Property and equipment, Gross | 300,697 | 285,697 |
Processing equipment | ||
Property and equipment | ||
Property and equipment, Gross | $ 1,230,285 | $ 1,194,712 |
Intangible Assets (Details)
Intangible Assets (Details) - USD ($) | 3 Months Ended | 6 Months Ended | 12 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | Dec. 31, 2014 | |
Intangible assets consist of: | |||||
Less: accumulated amortization | $ (376,391) | $ (376,391) | $ (353,681) | ||
Intangible assets, net | 608,539 | 608,539 | 577,174 | ||
Amortization of Intangible Assets | 11,000 | $ 11,000 | 22,710 | $ 22,099 | |
Licensing Agreements | |||||
Intangible assets consist of: | |||||
Finite-lived intangible assets, gross | 860,006 | $ 860,006 | 850,859 | ||
Licensing Agreements | Minimum | |||||
Intangible assets consist of: | |||||
Amortization period of intangible assets | 17 years | ||||
Licensing Agreements | Maximum | |||||
Intangible assets consist of: | |||||
Amortization period of intangible assets | 20 years | ||||
Patents | |||||
Intangible assets consist of: | |||||
Finite-lived intangible assets, gross | $ 124,924 | $ 124,924 | 79,996 | ||
Amortization period of intangible assets | 3 years | ||||
Non-amortizable pending costs | $ 124,924 |
Intangible Assets (Details)28
Intangible Assets (Details) | Jun. 30, 2015USD ($) |
Future amortization of license and patent agreements | |
Remainder of 2015 | $ 25,000 |
2,016 | 48,000 |
2,017 | 48,000 |
2,018 | 48,000 |
2,019 | 48,000 |
2,020 | $ 48,000 |
Intangible Assets (Details)29
Intangible Assets (Details) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2015USD ($) | Jun. 30, 2014USD ($) | Jun. 30, 2015USD ($)product | Jun. 30, 2014USD ($) | |
Sales and Marketing Expense | ||||
Intangible assets | ||||
Royalty fees included in sales and marketing expense | $ 121,000 | $ 85,000 | $ 217,000 | $ 145,000 |
Licensing Agreements | ||||
Intangible assets | ||||
License agreements extended period | 60 days | |||
Minimum royalty of agreements | $ 12,500 | |||
Milestone fee upon receiving a Phase II Small Business Innovation Research | $ 15,000 | |||
Number of products under development | product | 0 | |||
Licensing Agreements | Minimum | ||||
Intangible assets | ||||
Royalty fees range under the license agreements | 1.00% | |||
Licensing Agreements | Maximum | ||||
Intangible assets | ||||
Royalty fees range under the license agreements | 3.00% | |||
Royalty stack cap for royalties paid to more than one licensor for sales of the same product | 3.75% |
Accounts Payable and Accrued 30
Accounts Payable and Accrued Expenses (Details) - USD ($) | Jun. 30, 2015 | Dec. 31, 2014 |
Accounts Payable and Accrued Liabilities | ||
Accounts payable | $ 1,838,425 | $ 1,160,859 |
Miscellaneous accruals | 205,809 | 105,315 |
Accrued compensation | 1,363,888 | 1,165,020 |
Accounts Payable and Accrued Expenses | $ 3,408,122 | $ 2,431,194 |
Notes Payable (Details)
Notes Payable (Details) - USD ($) | Jun. 30, 2015 | Dec. 31, 2014 |
Note Payable | ||
Total Debt | $ 25,426,647 | $ 25,085,777 |
Term Loan And Revenue Interest Purchase Agreement | ||
Note Payable | ||
Long-term Notes Payable | 25,426,647 | 25,085,777 |
Three Peaks | Term Loan | ||
Note Payable | ||
Long-term Notes Payable | $ 25,426,647 | $ 25,085,777 |
Notes Payable (Details)32
Notes Payable (Details) - USD ($) | Nov. 12, 2014 | Oct. 05, 2012 | Aug. 14, 2012 | Dec. 31, 2014 | Oct. 05, 2012 | Jun. 30, 2015 | Mar. 31, 2015 | Dec. 31, 2014 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | Nov. 13, 2014 |
Note Payable | ||||||||||||
Interest expense | $ 1,023,774 | $ 1,392,098 | $ 2,018,522 | $ 2,583,415 | ||||||||
Revenue Interest Purchase Agreement | Three Peaks | ||||||||||||
Note Payable | ||||||||||||
Royalty percentage on net revenue | 3.75% | |||||||||||
Minimum annual payment amounts | ||||||||||||
Term | 10 years | |||||||||||
Revenue Interest Purchase Agreement | Three Peaks | Maximum | ||||||||||||
Note Payable | ||||||||||||
Royalty percentage on net revenue | 4.80% | |||||||||||
Revenue Interest Purchase Agreement | PDL | ||||||||||||
Note Payable | ||||||||||||
Royalty percentage on net revenue | 9.95% | 9.95% | ||||||||||
Payment to extinguish royalty contract | $ 30,300,000 | |||||||||||
Obligation under royalty contract | $ 0 | $ 0 | ||||||||||
Minimum annual payment amounts | ||||||||||||
Term | 8 years | |||||||||||
Internal rate of return on funded amount | 20.00% | 20.00% | ||||||||||
Funded amount | $ 19,050,000 | $ 1,750,000 | $ 20,800,000 | |||||||||
Revenue Interest Purchase Agreement | PDL | Minimum | ||||||||||||
Note Payable | ||||||||||||
Payment amount | $ 1,300,000 | |||||||||||
Revenue Interest Purchase Agreement | PDL | Maximum | ||||||||||||
Note Payable | ||||||||||||
Payment amount | $ 2,500,000 | |||||||||||
Term Loan | Three Peaks | ||||||||||||
Note Payable | ||||||||||||
Total debt | $ 25,000,000 | |||||||||||
Interest rate stated (as a percent) | 9.00% | |||||||||||
Basis spread on fixed rate, option 1 | LIBOR | LIBOR | LIBOR | |||||||||
Basis spread on fixed rate, option 2 | 1.00% | |||||||||||
Effective interest rate (as a percent) | 10.00% | |||||||||||
Minimum annual payment amounts | ||||||||||||
Term | 6 years |
Notes Payable (Details)33
Notes Payable (Details) - USD ($) | Nov. 12, 2014 | Oct. 05, 2012 | Dec. 31, 2014 | Mar. 31, 2015 | Jun. 30, 2015 | Feb. 13, 2015 | Feb. 05, 2015 | Nov. 13, 2014 |
Credit facility disclosures | ||||||||
Shares of common stock sold | 19,488,814 | 24,932,392 | 5,437,200 | |||||
Value of common stock sold | $ 194,888 | $ 249,323 | ||||||
Public offering price (in dollars per share) | $ 2.75 | $ 2.75 | ||||||
PDL | ||||||||
Credit facility disclosures | ||||||||
Shares of common stock sold | 643,382 | |||||||
Value of common stock sold | $ 1,750,000 | |||||||
Public offering price (in dollars per share) | $ 2.72 | |||||||
Three Peaks | ||||||||
Credit facility disclosures | ||||||||
Shares of common stock sold | 1,375,969 | |||||||
Value of common stock sold | $ 3,550,000 | |||||||
Public offering price (in dollars per share) | $ 2.58 | |||||||
Term Loan | Three Peaks | ||||||||
Credit facility disclosures | ||||||||
Term | 6 years | |||||||
Interest payable | 9.00% | |||||||
Face amount | $ 25,000,000 | |||||||
Basis spread on fixed rate, option 1 | LIBOR | LIBOR | LIBOR | |||||
Basis spread on fixed rate, option 2 | 1.00% | |||||||
Effective interest rate (as a percent) | 10.00% | |||||||
Optional future additional borrowing | $ 7,000,000 | |||||||
Upon certain events, the percentage of outstanding principal amount of the Term Loan the Company has the option to prepay and the lender has a right to demand payment for on or prior to the first anniversary of the applicable Closing Date | 120.00% | |||||||
Upon certain events, the percentage of outstanding principal amount of the Term Loan the Company has the option to prepay and the lender has a right to demand payment for after the first anniversary but before the second anniversary of the applicable Closing Date | 135.00% | |||||||
Upon certain events, the percentage of outstanding principal amount of the Term Loan the Company has the option to prepay and the lender has a right to demand payment for after the second anniversary but before the third anniversary of the applicable Closing Date | 150.00% | |||||||
Upon certain events, the internal rate of return of the outstanding principal amount of the Term Loan the Company has the option to prepay and the lender has a right to demand after the third anniversary of the applicable Closing Date | 16.25% | |||||||
Upon certain events, the additional percentage of the originally advanced Term Loan amount owed | 3.00% | |||||||
Revenue Interest Purchase Agreement | PDL | ||||||||
Credit facility disclosures | ||||||||
Term | 8 years | |||||||
Royalty percentage on net revenue | 9.95% | |||||||
Revenue Interest Purchase Agreement | Three Peaks | ||||||||
Credit facility disclosures | ||||||||
Term | 10 years | |||||||
Royalty percentage on net revenue | 3.75% | |||||||
Revenue Interest Purchase Agreement | Three Peaks | Maximum | ||||||||
Credit facility disclosures | ||||||||
Royalty percentage on net revenue | 4.80% | |||||||
Royalty revenue per year | $ 30,000,000 |
Stock Options (Details)
Stock Options (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Stock Options | ||||
Stock options granted under 2010 Stock Incentive Plan (in shares) | 295,500 | |||
Stock-based compensation | $ 328,376 | $ 216,602 | $ 696,625 | $ 474,144 |
Total future stock compensation expense related to nonvested awards | $ 1,996,000 | $ 1,996,000 |
Public Offering of Common Sto35
Public Offering of Common Stock (Details) - USD ($) $ / shares in Units, $ in Millions | Feb. 13, 2015 | Feb. 05, 2015 | Jun. 30, 2015 | Dec. 31, 2014 |
Public Offering of Common Stock | ||||
Offering, issuance and sale of common shares under Underwriting Agreement | 4,728,000 | |||
Par value of common stock | $ 0.01 | $ 0.01 | ||
Shares of common stock sold | 5,437,200 | 24,932,392 | 19,488,814 | |
Public offering price (in dollars per share) | $ 2.75 | $ 2.75 | ||
Number of days to underwriter to sell additional common shares | 30 days | |||
Additional Common Shares to cover over-allotments | 709,200 | |||
Gross proceeds from issuance of common stock | $ 15 | |||
Underwriting discounts, commissions and other estimated offering expenses | $ 1.4 |
Commitments and Contingencies (
Commitments and Contingencies (Details) - Apr. 21, 2015 - Ja-Cole | USD ($)ft² |
Commitments and Contingencies | |
Additional leased office space in square feet | 2,100 |
Leased office space in square feet | 5,400 |
Term of agreement | 3 years |
Annual lease expense | $ | $ 60,000 |
Subsequent Events (Details)
Subsequent Events (Details) - Aug. 05, 2015 - License and Services Agreement - Subsequent Events | USD ($)item |
Subsequent Events | |
Term of agreement | 5 years |
Number of tissue grafts | 355,000 |
Number of hospitals | 5,000 |
Number of anniversary after which the agreement could be terminated | 2 |
Notice period for termination of contract | 180 days |
Forecast | |
Subsequent Events | |
Capital expenditures | $ | $ 400,000 |