Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2016 | Nov. 02, 2016 | |
Document and Entity Information | ||
Entity Registrant Name | AxoGen, Inc. | |
Entity Central Index Key | 805,928 | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2016 | |
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 | 32,898,115 | |
Document Fiscal Year Focus | 2,016 | |
Document Fiscal Period Focus | Q3 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) | Sep. 30, 2016 | Dec. 31, 2015 |
Current assets: | ||
Cash and cash equivalents | $ 16,003,245 | $ 25,909,500 |
Accounts receivable, net of allowance for doubtful accounts of approximately $249,000 and $192,000 respectively | 7,004,756 | 4,782,989 |
Inventory | 4,970,819 | 3,933,960 |
Prepaid expenses and other | 685,711 | 424,925 |
Total current assets | 28,664,531 | 35,051,374 |
Property and equipment, net | 1,320,711 | 970,870 |
Intangible assets | 787,523 | 678,082 |
Total Assets | 30,772,765 | 36,700,326 |
Current liabilities: | ||
Accounts payable and accrued expenses | 4,559,394 | 3,695,127 |
Current deferred revenue | 36,032 | 14,118 |
Total current liabilities | 4,595,426 | 3,709,245 |
Note Payable - Revenue Interest Purchase Agreement | 24,996,070 | 24,701,693 |
Long Term Deferred Revenue | 77,610 | 93,797 |
Total liabilities | 29,669,106 | 28,504,735 |
Shareholders' equity: | ||
Common stock, $0.01 par value per share; 50,000,000 shares authorized; 30,209,036 and 29,984,591 shares issued and outstanding | 302,090 | 299,846 |
Additional paid-in capital | 113,058,408 | 111,368,424 |
Accumulated deficit | (112,256,839) | (103,472,679) |
Total shareholders' equity (deficit) | 1,103,659 | 8,195,591 |
Total Liabilities and Shareholders' equity | $ 30,772,765 | $ 36,700,326 |
CONDENSED CONSOLIDATED BALANCE3
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) | Sep. 30, 2016 | Dec. 31, 2015 |
Condensed Consolidated Balance Sheets | ||
Accounts receivable, allowance for doubtful accounts | $ 249,000 | $ 192,000 |
Common stock, Par value | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 50,000,000 | 50,000,000 |
Common stock, shares issued | 30,209,036 | 29,984,591 |
Common stock, shares outstanding | 30,209,036 | 29,984,591 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Condensed Consolidated Statements of Operations | ||||
Revenues | $ 11,205,224 | $ 8,153,675 | $ 29,698,866 | $ 19,522,244 |
Cost of goods sold | 1,697,443 | 1,410,416 | 4,637,446 | 3,433,138 |
Gross profit | 9,507,781 | 6,743,259 | 25,061,420 | 16,089,106 |
Costs and expenses: | ||||
Sales and marketing | 7,090,059 | 5,512,613 | 20,076,297 | 14,257,397 |
Research and development | 1,118,358 | 936,015 | 3,033,521 | 2,343,450 |
General and administrative | 2,481,051 | 2,212,457 | 7,362,063 | 6,103,058 |
Total costs and expenses | 10,689,468 | 8,661,085 | 30,471,881 | 22,703,905 |
Loss from operations | (1,181,687) | (1,917,826) | (5,410,461) | (6,614,799) |
Other income (expense): | ||||
Interest expense | (1,089,134) | (1,042,258) | (3,255,574) | (3,060,779) |
Interest expense-deferred financing costs | (31,748) | (31,419) | (95,254) | (96,375) |
Other income (expense) | (2,804) | 12,645 | (22,871) | 27,021 |
Total other income (expense) | (1,123,686) | (1,061,032) | (3,373,699) | (3,130,133) |
Net Loss | $ (2,305,373) | $ (2,978,858) | $ (8,784,160) | $ (9,744,932) |
Weighted Average Common Shares outstanding - basic and diluted | 30,152,279 | 26,841,060 | 30,075,715 | 24,778,123 |
Loss Per Common share - basic and diluted (in dollars per share) | $ (0.08) | $ (0.11) | $ (0.29) | $ (0.39) |
CONDENSED CONSOLIDATED STATEME5
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) | 9 Months Ended | |
Sep. 30, 2016 | Sep. 30, 2015 | |
Cash flows from operating activities: | ||
Net loss | $ (8,784,160) | $ (9,744,932) |
Adjustments to reconcile net loss to net cash used for operating activities: | ||
Depreciation | 263,133 | 142,038 |
Amortization of intangible assets | 48,050 | 34,009 |
Amortization of deferred financing costs | 95,253 | 96,375 |
Provision for bad debt | 80,934 | |
Stock-based compensation | 1,046,364 | 1,031,218 |
Interest added to note payable | 199,124 | 451,590 |
Change in assets and liabilities: | ||
Accounts receivable | (2,302,701) | (1,770,494) |
Inventory | (1,036,859) | (488,135) |
Prepaid expenses and other | (260,786) | (180,862) |
Accounts payable and accrued expenses | 864,267 | 1,655,114 |
Deferred revenue | 5,727 | (16,187) |
Net cash used for operating activities | (9,781,654) | (8,790,266) |
Cash flows from investing activities: | ||
Purchase of property and equipment | (612,974) | (353,093) |
Acquisition of intangible assets | (157,491) | (92,184) |
Net cash used for investing activities | (770,465) | (445,277) |
Cash flows from financing activities: | ||
Proceeds from issuance of common stock | 30,970,735 | |
Debt issuance costs | (180,142) | |
Proceeds from exercise of stock options | 645,864 | 164,626 |
Net cash provided by (used in) financing activities | 645,864 | 30,955,219 |
Net increase / (decrease) in cash and cash equivalents | (9,906,255) | 21,719,676 |
Cash and cash equivalents, beginning of year | 25,909,500 | 8,215,791 |
Cash and cash equivalents, end of period | 16,003,245 | 29,935,467 |
Supplemental disclosures of cash flow activity: | ||
Cash paid for interest | $ 3,031,528 | $ 1,949,381 |
Basis of Presentation
Basis of Presentation | 9 Months Ended |
Sep. 30, 2016 | |
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 September 30, 2016 and December 31, 2015 and for the three and nine month periods ended September 30, 2016 and 2015. The Company’s condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) and should be read in conjunction with the audited financial statements of the Company for the year ended December 31, 2015, which are included in the Company’s Annual Report on Form 10-K as of and for the year ended December 31, 2015. 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 | 9 Months Ended |
Sep. 30, 2016 | |
Organization and Business | |
Organization and Business | 2. Organization and Business Business Summary We are a global leader in innovative surgical solutions for peripheral nerve injuries. Our portfolio of products includes Avance ® Nerve Graft, an off-the-shelf processed human nerve allograft for bridging severed nerves without the comorbidities associated with a second surgical site, AxoGuard ® Nerve Connector, a porcine submucosa extracellular matrix ("ECM") coaptation aid for tensionless repair of severed nerves, and 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. Along with these core surgical products, AxoGen also offers AxoTouch TM Two-Point Discriminator and AcroVal TM Neurosensory & Motor Testing System. These evaluation and measurement tools assist healthcare professionals in detecting changes in sensation, assessing return of sensory, grip and pinch function, evaluating effective treatment interventions, and providing feedback to patients on nerve function. The AxoGen portfolio of products is available in the United States, Canada, the United Kingdom and several European and international countries. 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. The AcroVal™ Neurosensory and Motor Testing System and AxoTouch™ Two Point Discriminator are contract manufactured by Viron Technologies, LLC. (formerly Cybernetics Research Laboratories) (“Viron”) Tucson, Arizona. Viron supplies the AcroVal™ and AxoTouch™ unpackaged and they are packaged at AxoGen’s distribution facility in Burleson, Texas. AxoGen maintains its corporate offices in Alachua, Florida and is the parent company of its wholly owned operating subsidiary, AC. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2016 | |
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 shipment 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. Fees charged to customers for shipping are recognized as revenues when products are shipped to the customer, distributor or end user. In the case of revenues from consigned sales, revenue is determined when the product is utilized in a surgical procedure. 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 $249,000 and $192,000 at September 30, 2016 and December 31, 2015, 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: September 30, December 31, 2016 2015 Finished goods $ $ Work in process Raw materials $ $ Inventories were net of reserve of approximately $858,000 and $711,000 at September 30, 2016 and December 31, 2015, 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 a 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, 2012 through 2015; 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 (the “2002 Plan”) and AxoGen 2010 Stock Incentive Plan (the “2010 Plan” and, together with the 2002 Plan, the “Plans”) (see Note 8) 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 Plans 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 there being a market for the Company’s common stock, and based on the Company’s common stock for periods subsequent to having an established market for the stock. 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, is restricted from paying dividends pursuant to its debt commitments 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 nine months ended September 30: Nine months ended September 30, 2016 2015 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 nine months ended September 30, 2016 and 2015 as they were deemed insignificant. 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 and the 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 May 2014, the Financial Accounting Standards Board, or 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 was scheduled to become 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. 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 became effective for annual reporting periods and interim periods within those annual periods beginning after December 15, 2015. The Company has one such stock option grant that is based on quarterly performance conditions and the vesting and compensation expense is measured subsequent to the end of each quarter over a two year period. If the performance condition is met the vesting and compensation expense is recognized on the measurement date. In April 2015, the FASB issued Accounting Standard Update (“ASU”) 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 became effective for public companies during interim and annual reporting periods beginning after December 15, 2015. Early adoption is permitted. The Company adopted this standard in the first quarter of 2016 on a retrospective basis. (See note 7) In November 2015, the FASB issued an ASU to simplify the presentation of deferred income taxes. The amendments in this ASU require that deferred tax liabilities and assets be classified as noncurrent in a classified statement of financial position. The amendments in these ASU may be applied either prospectively to all deferred tax liabilities and assets or retrospectively to all periods presented and are effective for interim and annual reporting periods beginning after December 15, 2016. Earlier application is permitted for all entities as of the beginning of an interim or annual reporting period. We are currently evaluating the impact this standard will have on our consolidated financial statements. In January 2016, the FASB, issued ASU 2016-01 “Recognition and Measurement of Financial Assets and Financial Liabilities,” which requires that most equity instruments be measured at fair value, with subsequent changes in fair value recognized in net income. The pronouncement also impacts the financial liabilities under the fair value option and the presentation and disclosure requirements for financial instruments. The ASU does not apply to equity method investments or investments in consolidated subsidiaries. The new standard will be effective for us for the year ending December 31, 2017, with early adoption permitted and amendments to be applied as a cumulative-effect adjustment to the balance sheet in the year of adoption. We are currently evaluating the impact this standard will have on our consolidated financial statements. In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842)”. This update will increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. This update is effective for annual and interim reporting periods beginning after December 15, 2018, including interim periods within those fiscal years. Early adoption is permitted. We are currently evaluating the impact this standard will have on our consolidated financial statements. In March 2016, the FASB issued ASU No. 2016-09, Compensation - Stock Compensation (Topic 718), Improvements to Employee Share-Based Payment Accounting. The ASU was issued as part of the FASB Simplification Initiative and involves several aspects of accounting for shared-based payment transactions, including the income tax consequences, options to elect forfeiture accounting policy either by the number of awards that are expected to vest (current GAAP) or account for forfeitures when they occur, and classification on the statement of cash flows. The guidance is effective for annual periods beginning after December 15, 2016, and interim periods within those annual periods. Early adoption is permitted for any entity in any interim or annual period. If an entity early adopts the amendments in an interim period, any adjustments should be reflected as of the beginning of the fiscal year that includes that interim period. An entity that elects early adoption must adopt all of the amendments in the same period. We are currently evaluating the impact this standard will have on our consolidated financial statements. In August 2016, the FASB issued ASU No. 2016-15, Classification of Certain Cash Receipts and Cash Payments (Topic 230). The ASU was issued intended to reduce diversity in practice in how certain cash receipts and cash payments are presented and classified in the Consolidated Statement of Cash Flows by providing guidance on eight specific cash flow issues. The new guidance is effective for fiscal years and interim periods within those years beginning after December 15, 2017 with early adoption permitted. 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 we 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 | 9 Months Ended |
Sep. 30, 2016 | |
Property and Equipment | |
Property and Equipment | 4. Property and Equipment Property and equipment consist of the following: September 30, December 31, 2016 2015 Furniture and equipment $ $ Leasehold improvements Processing equipment Less: accumulated depreciation and amortization Property and equipment, net $ $ |
Intangible Assets
Intangible Assets | 9 Months Ended |
Sep. 30, 2016 | |
Intangible Assets | |
Intangible Assets | 5. Intangible Assets The Company’s intangible assets consist of the following: September 30, December 31, 2016 2015 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 September 30, 2016, the patents were fully amortized, and the remaining patents of $311,812 were pending patent costs and were not amortizable. Amortization expense was approximately $16,000 and $11,000 for the three months ended September 30, 2016 and 2015, respectively, and approximately $48,000 and $34,000 for the nine months ended September 30, 2016 and 2015, respectively. As of September 30, 2016, future amortization of license agreements for the remainder of this year and the next seven years is expected to be $16,000 for 2016, $64,000 for 2017 through 2022 and $75,000 for 2023. License Agreements The Company has entered into multiple license agreements (the “License Agreements”) with the University of Florida Research Foundation and the University of Texas at Austin. 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 sub-licensee 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 the University of Texas at Austin’s agreement, 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. A milestone fee to the University of Florida Research Foundation of $2,000 is due if AxoGen receives FDA approval of its Avance ® Nerve Graft, a milestone fee of $25,000 is due upon the first commercial use of certain licensed technology to provide services to manufacture products for third parties and a milestone fee of $10,000 is due upon the first use to manufacture products that utilize certain technology that is not currently incorporated into AxoGen products. Royalty fees were approximately $214,000 and $162,000 during the three months ended September 30, 2016 and 2015, respectively, and approximately $583,000 and $379,000 for the nine months ended September 30, 2016 and 2015, 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 | 9 Months Ended |
Sep. 30, 2016 | |
Accounts Payable and Accrued Expenses | |
Accounts Payable and Accrued Expenses | 6. Accounts Payable and Accrued Expenses Accounts payable and accrued expenses consist of the following: September 30, December 31, 2016 2015 Accounts payable $ $ Miscellaneous accruals Accrued compensation Accounts Payable and Accrued Expenses $ $ |
Term Loan Agreement
Term Loan Agreement | 9 Months Ended |
Sep. 30, 2016 | |
Term Loan Agreement | |
Term Loan Agreement | 7. Term Loan Agreement Term Loan Agreement consists of the following: September 30, December 31, 2016 2015 Term Loan and Revenue Interest Agreement with Three Peaks Capital S.a.r.l. 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 September 30, 2016 and December 31, 2015 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 $ $ In the first quarter of 2016, the Company adopted ASU 2015-03, “Simplifying the Presentation of Debt Issuance Costs.” ASU 2015-03 requires debt issuance costs related to recognized debt liabilities to be presented in the balance sheet as a direct deduction from the debt liability rather than an asset. Accordingly, as of September 30, 2016, approximately $750,000 of deferred debt issuance costs were presented as a direct deduction within Long-Term Debt on the Company’s Condensed Consolidated Balance Sheets. Furthermore, the Company reclassified approximately $846,000 of deferred debt issuance costs from Other Assets – Deferred Financing Costs to Long-Term Debt as of December 31, 2015. 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 thereto. Under the Term Loan Agreement, Three Peaks provided to AxoGen a term loan of $25 million (the “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 Closing Date”) resulted in a 10% interest rate. AxoGen has to comply with certain covenants including limiting new indebtedness, restricting the payment of dividends and maintaining 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 (the “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. AxoGen has to comply with 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 a 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 AC, its wholly owned subsidiary, 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 its 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, prior to November 12, 2016, we sell 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. See Note 12 Subsequent Events “Debt Refinancing” |
Stock Options
Stock Options | 9 Months Ended |
Sep. 30, 2016 | |
Stock Options. | |
Stock Options | 8. Stock Options The Company granted stock options to purchase 542,250 shares of its common stock pursuant to the 2010 Plan for the nine months ended September 30, 2016. Stock-based compensation expense was $293,575 and $334,593 for the three months ended September 30, 2016 and 2015, respectively and $1,046,364 and $1,031,218 for the nine months ended September 30, 2016 and 2015, respectively. From August 2015 through March 2016, we issued 739,000 stock options to certain officers, directors and employees under the 2010 Plan. The options were subject to shareholder approval to increase the number of shares authorized under the plan. On May 26, 2016, the shareholder approval was obtained and as a result we recognized stock-based compensation of $272,240 related to these options for the three months ended June 30, 2016. Total future stock compensation expense related to nonvested awards is expected to be approximately $2,761,000 at September 30, 2016. |
Public Offering of Common Stock
Public Offering of Common Stock | 9 Months Ended |
Sep. 30, 2016 | |
Shareholders' Equity (Deficit) and Temporary Equity | |
Public Offering of Common Stock | 9. Public Offerings of Common Stock On February 5, 2015, AxoGen entered into an underwriting agreement (the “2015 Underwriting Agreement”) with Wedbush Securities Inc. (the “2015 Underwriter”) in connection with the offering, issuance and sale (the “February 2015 Offering”) of 4,728,000 shares of the Company’s common stock, at a price to the public of $2.75 per share. The Company also granted to the 2015 Underwriter a 30-day option to purchase up to an aggregate of 709,200 additional shares of the Company’s common stock to cover over-allotments, if any, which option the 2015 Underwriter exercised in full. As of February 13, 2015, the February 2015 Offering was completed with the sale of 5,437,200 shares of the Company’s common stock, which included the full exercise of the over-allotment option, at $2.75 per share, resulting in gross proceeds to AxoGen from the February 2015 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 shares of Company common stock were listed on the NASDAQ Capital Market. The February 2015 Offering was made pursuant to the Company’s effective shelf registration statement on Form S-3 (Registration No. 333-195588) previously filed with the SEC on April 30, 2014, and pursuant to the prospectus supplement and the accompanying prospectus describing the terms of the February 2015 Offering, dated February 5, 2015. On August 26, 2015, the Company entered into a purchase agreement (the “Purchase Agreement”) with Essex Woodlands Fund IX, L.P. (“Essex”) for the purchase of 4,861,111 shares of the Company’s common stock at a public offering price of $3.60 per share, raising approximately $17.5 million in gross proceeds (the “August 2015 Offering”). The expenses directly related to the August 2015 Offering were approximately $300,000 and were all paid as of December 31, 2015 by the Company. Such expenses include the Company’s legal and accounting fees, printing expenses, transfer agent fees and miscellaneous fees and costs related to the August 2015 Offering. Proceeds from the August 2015 Offering are being used for sales and marketing and general working capital purposes. The Company has provided certain demand and “piggy-back” registration rights in connection with this sale of its common stock. The August 2015 Offering was made pursuant to the Company’s effective shelf registration statement on Form S-3 (Registration No. 333-195588) previously filed with the SEC on April 30, 2014 and pursuant to the prospectus supplement and the accompanying prospectus describing the terms of the August 2015 Offering, dated August 26, 2015. The August 2015 Offering was made pursuant to the Company’s effective shelf registration statement on Form S-3 (Registration No. 333-195588) previously filed with the SEC on April 30, 2014, and pursuant to the prospectus supplement and the accompanying prospectus describing the terms of the Offering, dated August 26, 2015. |
Commitments and Contingencies
Commitments and Contingencies | 9 Months Ended |
Sep. 30, 2016 | |
Commitments and Contingencies. | |
Commitments and Contingencies | 10. Commitments and Contingencies Commercial Lease On March 16, 2016, AC entered into the Fourth Amendment to Lease (“Fourth Amendment”) with SNH Medical Office Properties Trust, a Maryland real estate investment trust (“SNH”). SNH is the landlord of AC’s currently leased 11,761 square foot corporate headquarters facility in Alachua, Florida (the “Current Premises”) pursuant to that certain lease dated as of February 6, 2007, as amended (the “Lease”). The Fourth Amendment expands the Current Premises by 7,050 square feet (the “Expansion Premises”). The Fourth Amendment also provides that the Expiration Date (as defined in the Fourth Amendment) of the Lease will be extended to approximately five years from the Occupancy Date (as defined in the Fourth Amendment) of the Expansion Premises, which Occupancy Date occurred in June 2016. The original expiration date of the Current Premises remains unchanged; provided, however, that AC shall have the right to extend the Current Premises Term (as defined in the Fourth Amendment) for three additional periods (the “Current Premises Extended Term”), the first such Current Premises Extended Term to commence on November 1, 2018 and end on October 31, 2019, the second such Current Premises Extended Term to commence on November 1, 2019 and end on October 31, 2020, and the third such Current Premises Extended Term to commence on November 1, 2020 and end on the Expiration Date. AC also has the right to extend the term of the then current Leased Premises (as defined in the Fourth Amendment) for an additional period of five years commencing on the day immediately after the Expiration Date. AC’s additional annual cost of the Expansion Premises will be approximately $123,000, $127,000, $131,000, $135,000 and $139,000 for years one through five, respectively, of the Lease, with year one commencing on the Occupancy Date. Processing Agreement Until February 2016, the Company was party to that certain Amended and Restated Nerve Tissue Processing Agreement (the “LifeNet Agreement”) with LifeNet Health (“LifeNet”), whereby the Company processed and packaged Avance ® Nerve Graft using its employees and equipment located at LifeNet in Virginia Beach, Virginia (the “Virginia Beach Facility”). As a result of business requirements of LifeNet and their need for additional space, on April 16, 2015 LifeNet notified the Company that it would need to transition out of the Virginia Beach Facility and the LifeNet Agreement was terminated effective February 27, 2016. A s a result of the termination of the LifeNet Agreement, on August 6, 2015 the Company entered into a License and Services Agreement (the “CTS Agreement”) with Community Blood Center (d/b/a Community Tissue Services) (“CTS”) whose headquarters are located in Dayton, Ohio. The CTS facility and CTS Agreement provides the Company a cost effective, quality controlled and licensed facility to process and package its Avance ® Nerve Graft using the Company’s employees and processing equipment. The processing that was performed at the Virginia Beach Facility has been transferred in its entirety to the CTS facility. The CTS Agreement is for a five-year term, subject to earlier termination by either party for cause, or after the two-year anniversary of the CTS Agreement without cause, upon 18 months notice. Under the CTS Agreement, the Company pays CTS a facility fee for clean room/processing, storage and office space and CTS provides services in support of the Company’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. However, AxoGen could reproduce a manufacturing space that would meet its needs if it no longer continued its relationship with CTS. AxoGen’s processing methods and process controls have been developed and validated to ensure product uniformity and quality. Pursuant to the CTS Agreement, AxoGen pays license fees on a monthly basis to CTS which total an annual amount of approximately $416,000. |
Retirement Plan
Retirement Plan | 9 Months Ended |
Sep. 30, 2016 | |
Retirement Plan | |
Retirement Plan | 11. Retirement Plan AxoGen 401(k) Plan The Company adopted the AxoGen 401(k) plan (the “401(k) Plan”) in December 2015 with contributions starting in January 2016. All full-time employees who have attained the age of 18 are eligible to participate in the 401(k) Plan. Eligibility is immediate upon employment and enrollment is available any time during employment. Participating employees may make annual pretax contributions to their accounts up to a maximum amount as limited by law. The 401(k) Plan requires the Company to make matching contributions of 100% on the first 3% of the employee’s annual salary and 50% of the next 2% of the employee’s annual salary as long as the employee participates in the 401(k) Plan and contributes at least 5% of the annual salary. Both employee contributions and Company contributions vest immediately. Employer contributions to the 401(k) Plan for the three and nine months ending September 30, 2016, were approximately $76,000 and $247,000, respectively. |
Subsequent Events
Subsequent Events | 9 Months Ended |
Sep. 30, 2016 | |
Subsequent Event | |
Subsequent Events | 12. Subsequent Events Public Offering On October 7, 2016, the Company entered into an underwriting agreement (the “2016 Underwriting Agreement”) with JMP Securities LLC, as representative of the several underwriters (collectively, the “2016 Underwriters”), to issue and sell 2,333,334 shares of the Company’s common stock in an underwritten registered public offering (the “2016 Offering”) at an offering price of $7.50 per share of common stock. Pursuant to the 2016 Underwriting Agreement, the Company also granted the 2016 Underwriters a 30-day option to purchase up to an additional 350,000 shares of common stock, which the 2016 Underwriters exercised in full on October 7, 2016. Five of the Company’s directors and officers purchased an aggregate of approximately 32,666 shares of the Company’s common stock in the 2016 Offering and such purchases were made on the same terms and conditions as purchases by the public in the 2016 Offering. The 2016 Offering closed on October 13, 2016, and the Company received net proceeds of approximately $18.62 million from the sale of 2,683,334 shares of its common stock, which includes the additional 350,000 shares pursuant to the over-allotment option, after deducting the underwriting discounts and commissions and estimated offering expenses. The Company intends to use the net proceeds from the 2016 Offering for general working capital purposes and expanded development of nerve repair markets. However, the Company’s management will retain broad discretion over the allocation of the net proceeds. Burleson Texas Lease Amendment On October 25, 2016, AC entered into Commercial Lease Amendment 2 (the “Amendment”), to the Commercial Lease dated April 1, 2016, with Ja-Cole L.P. dated October 25, 2016, as amended. Under the terms of the Amendment, AC leased an additional 2,500 square feet of warehouse/office space in Burleson, Texas (the “Burleson Facility”). The Burleson Facility will now comprise a total of 10,000 square feet, all of which, pursuant to the Amendment, will be leased until March 31, 2019. The annual rental cost of the entire Burleson Facility is now approximately $88,000. The Burleson Facility houses raw material storage and product distribution. Debt Refinancing Term Loan On October 25, 2016 (the "Closing Date"), AxoGen and AC, each as borrowers, entered into a Credit and Security Agreement (Term Loan) (the ''MidCap Term Loan Agreement") with the lenders party thereto and MidCap Financial Trust (“MidCap”), as administrative agent and a lender. Under the MidCap Term Loan Agreement, MidCap has agreed to lend to the Company a term loan in the aggregate principal amount of $21 million (the " MidCap Term Loan") which has a maturity date of May 1, 2021 and requires interest only payments through December 1, 2018, and thereafter, 30 monthly payments of principal and interest resulting in the MidCap Term Loan being fully paid by the maturity date. Interest is payable monthly at 8.00% per annum plus the greater of LIBOR or 0.5%, which, as of the Closing Date, resulted in an 8.5% rate. In addition to the interest charged on the MidCap Term Loan, the Company is also obligated to pay certain fees, including an annual agency fee of one quarter of one percent (0.25%) of the aggregate principal amount of the Term Loan. Under the MidCap Term Loan Agreement, the Company has the option at any time to prepay the MidCap Term Loan in whole or in part, provided that prepayments shall be: (i) in an amount equal to $2,500,000 or a higher integral multiple of $1,000,000; and (ii) accompanied by certain prepayment and exit fees. There can be no more than three (3) partial voluntary prepayments allowed during the term of the MidCap Term Loan Agreement. MidCap and certain of the lenders have the right to demand prepayment, along with prepayment and exit fees upon an event of default which includes, but is not limited to: (i) default of the Revolving Loan as defined below; (ii) a change of control of the Company; (iii) sale of the majority of the Company's assets; or (iv) a material adverse change to the Company. The prepayment fee is determined by multiplying the amount being prepaid by the following applicable percentage amount: (a) three percent (3.0%) during the first year following the Closing Date; (b) two percent (2.0%) during the second year following the Closing Date, and (c) one percent (1.0%) thereafter. No Prepayment Fee is due in the event the prepayment is a result of refinancing the MidCap Term Loan and Revolving Loan with MidCap or an affiliate of MidCap. Upon any repayment of any portion of the MidCap Term Loan (whether voluntary, involuntary or mandatory), other than scheduled amortization payments, and on the final payment of principal of the MidCap Term Loan, an exit fee of five percent (5.0%) of the principal amount of the MidCap Term Loan is also owed based on the portion of any prepayment made and at maturity upon the original principal amount less any prepayments of the MidCap Term Loan. The Company must maintain certain covenants including limiting new indebtedness, restrictions on the payment of dividends and maintaining certain levels of revenue. MidCap, on behalf of the lenders under the MidCap Term Loan Agreement, has a perfected security interest in the assets of the Company to guarantee the payment in full of the MidCap Term Loan. Upon the payment in full to MidCap and the lenders of the MidCap Term Loan, the Company would have no further obligations to MidCap or the lenders under the MidCap Term Loan Agreement. Revolving Loan On the Closing Date, AxoGen and AC, each as borrowers, also entered into a Credit and Security Agreement (Revolving Loan) (the ''Revolving Loan Agreement") with the lenders party thereto and MidCap, as administrative agent and a lender. Under the Revolving Loan Agreement, MidCap has agreed to lend to the Company up to $10 million under a revolving credit facility (the "Revolving Loan") which amount may be drawn down by the Company based upon an available borrowing base which includes certain accounts receivable and inventory. The Revolving Loan may be increased to up to $15 million at the Company’s request and with the approval of MidCap. As of the Closing Date, the Company’s borrowing base under the Revolving Loan provided availability of approximately $5.4 million of which the Company borrowed $4 million. The maturity date of the Revolving Loan is May 1, 2021. Interest is payable monthly at 4.5% per annum plus the greater of LIBOR or 0.5% on outstanding advances, which, as of the Closing Date, resulted in an 5.0% rate. In addition to the interest charged on the Revolving Loan, the Company is also obligated to pay certain fees, including a collateral management fee of one-half percent (0.5%) per annum of the principal amount outstanding on the Revolving Loan from time to time and an unused line fee of one-half percent (0.5%) per annum on the difference between the average amount outstanding on the Revolving Loan minus the total amount of the Revolving Loan commitment amount. The Revolving Loan is subject to a minimum balance, such that the Company pays the greater of: (i) interest accrued on the actual amount drawn under the Revolving Loan Facility; and (ii) interest accrued on 30% of the average Borrowing Base. If the Revolving Loan is terminated or permanently reduced prior to the maturity date, MidCap is owed a deferred revolving loan origination fee determined by multiplying the agreed total lending amount by the following applicable percentage amount: (a) three percent (3.0%) during the first year following the Closing Date; (b) two percent (2.0%) during the second year following the Closing Date, and (c) one percent (1.0%) thereafter. No deferred revolving loan origination fee is due in the event the Revolving Loan is paid in full or the termination of the revolving credit facility is a result of refinancing the MidCap Term Loan and Revolving Loan with MidCap or an affiliate of MidCap. Termination of the Revolving Loan may occur, at the option of MidCap and certain of the lenders, upon an event of default which includes, but is not limited to: (i) default in payment of the MidCap Term Loan; (ii) a change of control of the Company; (iii) sale of the majority of the Company's assets; or (iv) a material adverse change to the Company. The Company must maintain certain covenants including limiting new indebtedness, restrictions on the payment of dividends and maintaining certain levels of revenue. MidCap, on behalf of the lenders under the Revolving Loan Agreement, has a first perfected security interest in the assets of the Company to guarantee the payment in full of the Revolving Loan. Upon the payment in full to MidCap and the lenders of the Revolving Loan, the Company would have no further obligations to MidCap or the lenders under the Revolving Loan or the Revolving Loan Agreement. Use of Proceeds The Company used the aggregate proceeds of $25 million from the MidCap Term Loan and the Revolving Loan to pay the outstanding indebtedness owed to Three Peaks and the other lenders to terminate the Term Loan Agreement and the Revenue Interest Agreement. Expenses and fees of approximately $700,000 to complete the negotiation and documentation of the MidCap Term Loan and the Revolving Loan and prepayment fees of approximately $2.3 million owed to Three Peaks were paid from the Company’s own funds. Pro Forma After giving effect to the 2016 Offering and Midcap debt refinancing, the pro forma cash and debt, excluding accounts payable, of the Company as of September 30, 2016 was approximately $31.7 million and $25 million, respectively. This unaudited pro forma financial information of the Company is derived from applying the net proceeds from the 2016 Offering, Term Loan and Revolving Loan as described above, to the balance sheet of the Company as of September 30, 2016. In the opinion of the Company's management, all adjustments necessary to present fairly such unaudited pro forma financial information have been made based on the terms and structure of the transactions and in certain cases the estimated expenses of such transactions. This pro forma information is presented for illustrative purposes only and is not necessarily indicative of the actual results that would have occurred had the transactions taken place at September 30, 2016 |
Summary of Significant Accoun18
Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2016 | |
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 shipment 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. Fees charged to customers for shipping are recognized as revenues when products are shipped to the customer, distributor or end user. In the case of revenues from consigned sales, revenue is determined when the product is utilized in a surgical procedure. 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 $249,000 and $192,000 at September 30, 2016 and December 31, 2015, 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: September 30, December 31, 2016 2015 Finished goods $ $ Work in process Raw materials $ $ Inventories were net of reserve of approximately $858,000 and $711,000 at September 30, 2016 and December 31, 2015, 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 a 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, 2012 through 2015; 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 (the “2002 Plan”) and AxoGen 2010 Stock Incentive Plan (the “2010 Plan” and, together with the 2002 Plan, the “Plans”) (see Note 8) 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 Plans 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 there being a market for the Company’s common stock, and based on the Company’s common stock for periods subsequent to having an established market for the stock. 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, is restricted from paying dividends pursuant to its debt commitments 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 nine months ended September 30: Nine months ended September 30, 2016 2015 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 nine months ended September 30, 2016 and 2015 as they were deemed insignificant. |
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 and the 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 May 2014, the Financial Accounting Standards Board, or 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 was scheduled to become 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. 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 became effective for annual reporting periods and interim periods within those annual periods beginning after December 15, 2015. The Company has one such stock option grant that is based on quarterly performance conditions and the vesting and compensation expense is measured subsequent to the end of each quarter over a two year period. If the performance condition is met the vesting and compensation expense is recognized on the measurement date. In April 2015, the FASB issued Accounting Standard Update (“ASU”) 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 became effective for public companies during interim and annual reporting periods beginning after December 15, 2015. Early adoption is permitted. The Company adopted this standard in the first quarter of 2016 on a retrospective basis. (See note 7) In November 2015, the FASB issued an ASU to simplify the presentation of deferred income taxes. The amendments in this ASU require that deferred tax liabilities and assets be classified as noncurrent in a classified statement of financial position. The amendments in these ASU may be applied either prospectively to all deferred tax liabilities and assets or retrospectively to all periods presented and are effective for interim and annual reporting periods beginning after December 15, 2016. Earlier application is permitted for all entities as of the beginning of an interim or annual reporting period. We are currently evaluating the impact this standard will have on our consolidated financial statements. In January 2016, the FASB, issued ASU 2016-01 “Recognition and Measurement of Financial Assets and Financial Liabilities,” which requires that most equity instruments be measured at fair value, with subsequent changes in fair value recognized in net income. The pronouncement also impacts the financial liabilities under the fair value option and the presentation and disclosure requirements for financial instruments. The ASU does not apply to equity method investments or investments in consolidated subsidiaries. The new standard will be effective for us for the year ending December 31, 2017, with early adoption permitted and amendments to be applied as a cumulative-effect adjustment to the balance sheet in the year of adoption. We are currently evaluating the impact this standard will have on our consolidated financial statements. In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842)”. This update will increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. This update is effective for annual and interim reporting periods beginning after December 15, 2018, including interim periods within those fiscal years. Early adoption is permitted. We are currently evaluating the impact this standard will have on our consolidated financial statements. In March 2016, the FASB issued ASU No. 2016-09, Compensation - Stock Compensation (Topic 718), Improvements to Employee Share-Based Payment Accounting. The ASU was issued as part of the FASB Simplification Initiative and involves several aspects of accounting for shared-based payment transactions, including the income tax consequences, options to elect forfeiture accounting policy either by the number of awards that are expected to vest (current GAAP) or account for forfeitures when they occur, and classification on the statement of cash flows. The guidance is effective for annual periods beginning after December 15, 2016, and interim periods within those annual periods. Early adoption is permitted for any entity in any interim or annual period. If an entity early adopts the amendments in an interim period, any adjustments should be reflected as of the beginning of the fiscal year that includes that interim period. An entity that elects early adoption must adopt all of the amendments in the same period. We are currently evaluating the impact this standard will have on our consolidated financial statements. In August 2016, the FASB issued ASU No. 2016-15, Classification of Certain Cash Receipts and Cash Payments (Topic 230). The ASU was issued intended to reduce diversity in practice in how certain cash receipts and cash payments are presented and classified in the Consolidated Statement of Cash Flows by providing guidance on eight specific cash flow issues. The new guidance is effective for fiscal years and interim periods within those years beginning after December 15, 2017 with early adoption permitted. 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 we 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 Accoun19
Summary of Significant Accounting Policies (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Summary of Significant Accounting Policies | |
Schedule of inventories | September 30, December 31, 2016 2015 Finished goods $ $ Work in process Raw materials $ $ |
Schedule of weighted-average assumptions for options granted | Nine months ended September 30, 2016 2015 Expected term (in years) Expected volatility % % Risk free rate % % Expected dividends — % — % |
Property and Equipment (Tables)
Property and Equipment (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Property and Equipment | |
Schedule of Property and equipment | September 30, December 31, 2016 2015 Furniture and equipment $ $ Leasehold improvements Processing equipment Less: accumulated depreciation and amortization Property and equipment, net $ $ |
Intangible Assets (Tables)
Intangible Assets (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Intangible Assets | |
Schedule of intangible assets | September 30, December 31, 2016 2015 License agreements $ $ Patents Less: accumulated amortization Intangible assets, net $ $ |
Accounts Payable and Accrued 22
Accounts Payable and Accrued Expenses (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Accounts Payable and Accrued Expenses | |
Schedule of accounts payable and accrued expenses | September 30, December 31, 2016 2015 Accounts payable $ $ Miscellaneous accruals Accrued compensation Accounts Payable and Accrued Expenses $ $ |
Term Loan Agreement (Tables)
Term Loan Agreement (Tables) | 9 Months Ended |
Sep. 30, 2016 | |
Term Loan Agreement | |
Schedule of Term Loan Agreement | September 30, December 31, 2016 2015 Term Loan and Revenue Interest Agreement with Three Peaks Capital S.a.r.l. 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 September 30, 2016 and December 31, 2015 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 Accoun24
Summary of Significant Accounting Policies - Accounts Receivable and Concentration of Credit Risk (Details) - USD ($) | 9 Months Ended | |
Sep. 30, 2016 | Dec. 31, 2015 | |
Accounts Receivable and Concentration of Credit Risk | ||
Reserve for accounts deemed uncollectible (as a percent) | 100.00% | |
Allowance for doubtful accounts reserve balance | $ 249,000 | $ 192,000 |
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 Accoun25
Summary of Significant Accounting Policies - Inventories (Details) - USD ($) | Sep. 30, 2016 | Dec. 31, 2015 |
Summary of Significant Accounting Policies | ||
Finished goods | $ 3,343,110 | $ 2,732,823 |
Work in process | 224,803 | 237,108 |
Raw materials | 1,402,906 | 964,029 |
Inventory, Net | 4,970,819 | 3,933,960 |
Inventory valuation reserves | $ 858,000 | $ 711,000 |
Summary of Significant Accoun26
Summary of Significant Accounting Policies - Stock-Based Compensation (Details) | 9 Months Ended | |
Sep. 30, 2016 | Sep. 30, 2015 | |
Summary of Significant Accounting Policies | ||
Expected term | 4 years | 4 years |
Expected volatility (as a percent) | 61.71% | 75.45% |
Risk free rate (as a percent) | 1.22% | 1.27% |
Property and Equipment (Details
Property and Equipment (Details) - USD ($) | Sep. 30, 2016 | Dec. 31, 2015 |
Property and equipment | ||
Less: accumulated depreciation and amortization | $ (2,201,479) | $ (1,938,346) |
Property and equipment, net | 1,320,711 | 970,870 |
Furniture and Office Equipment | ||
Property and equipment | ||
Property and equipment, Gross | 1,240,987 | 1,186,815 |
Leasehold Improvements | ||
Property and equipment | ||
Property and equipment, Gross | 490,214 | 346,642 |
Processing equipment | ||
Property and equipment | ||
Property and equipment, Gross | $ 1,790,989 | $ 1,375,759 |
Intangible Assets - Components
Intangible Assets - Components of Intangible Assets (Details) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | Dec. 31, 2015 | |
Intangible assets consist of: | |||||
Less: accumulated amortization | $ (447,558) | $ (447,558) | $ (399,509) | ||
Intangible assets, net | 787,523 | 787,523 | 678,082 | ||
Amortization of Intangible Assets | 16,000 | $ 11,000 | 48,050 | $ 34,009 | |
Licensing Agreements | |||||
Intangible assets consist of: | |||||
Finite-lived intangible assets, gross | 923,269 | $ 923,269 | 897,594 | ||
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 | $ 311,812 | $ 311,812 | $ 179,997 | ||
Amortization period of intangible assets | 3 years | ||||
Non-amortizable pending costs | $ 311,812 |
Intangible Assets - Future Amor
Intangible Assets - Future Amortization Expense (Details) | Sep. 30, 2016USD ($) |
Future amortization of license and patent agreements | |
Remainder of 2016 | $ 16,000 |
2,017 | 64,000 |
2,018 | 64,000 |
2,019 | 64,000 |
2,020 | 64,000 |
2,021 | 64,000 |
2,022 | 64,000 |
2,023 | $ 75,000 |
Intangible Assets - License Agr
Intangible Assets - License Agreements (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2016 | Sep. 30, 2015 | Sep. 30, 2016 | Sep. 30, 2015 | |
Sales and Marketing Expense | ||||
Intangible assets | ||||
Royalty fees included in sales and marketing expense | $ 214,000 | $ 162,000 | $ 583,000 | $ 379,000 |
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 | |||
Milestone fee upon FDA approval | 2,000 | |||
Milestone fee upon first commercial use of certain licensed technology | 25,000 | |||
Milestone fee upon first use to manufacture products that utilize certain technology not currently incorporated into AxoGen products | $ 10,000 | |||
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 31
Accounts Payable and Accrued Expenses (Details) - USD ($) | Sep. 30, 2016 | Dec. 31, 2015 |
Accounts Payable and Accrued Liabilities | ||
Accounts payable | $ 1,892,839 | $ 2,090,874 |
Miscellaneous accruals | 262,645 | 15,183 |
Accrued compensation | 2,403,910 | 1,589,070 |
Accounts Payable and Accrued Expenses | $ 4,559,394 | $ 3,695,127 |
Term Loan Agreement - Long-term
Term Loan Agreement - Long-term Portion (Details) - USD ($) | Sep. 30, 2016 | Dec. 31, 2015 |
Note Payable | ||
Total Debt | $ 24,996,070 | $ 24,701,693 |
Long-term Debt. | ASU 2015-03 | ||
Note Payable | ||
Deferred financing costs | 750,000 | 846,000 |
Other Assets | ASU 2015-03 | ||
Note Payable | ||
Deferred financing costs | (846,000) | |
Term Loan And Revenue Interest Purchase Agreement | ||
Note Payable | ||
Long-term Notes Payable | 24,996,070 | 24,701,693 |
Three Peaks | Term Loan | ||
Note Payable | ||
Long-term Notes Payable | $ 24,996,070 | $ 24,701,693 |
Note Payable and Term Loan Agre
Note Payable and Term Loan Agreement - Term Loan Agreement and Revenue Interest Agreement (Details) - USD ($) | Nov. 12, 2014 | Sep. 30, 2016 | Dec. 31, 2015 | Nov. 13, 2014 |
Debt Instrument [Line Items] | ||||
Shares of common stock sold | 30,209,036 | 29,984,591 | ||
Value of common stock sold | $ 302,090 | $ 299,846 | ||
Three Peaks | ||||
Debt Instrument [Line Items] | ||||
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 | ||||
Debt Instrument [Line Items] | ||||
Term | 6 years | |||
Interest payable | 9.00% | |||
Face amount | $ 25,000,000 | |||
Interest rate spread | 1.00% | |||
Effective interest rate (as a percent) | 10.00% | 10.00% | 10.00% | |
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 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 | Three Peaks | ||||
Debt Instrument [Line Items] | ||||
Term | 10 years | |||
Royalty percentage on net revenue | 3.75% | |||
Revenue Interest Purchase Agreement | Three Peaks | Maximum | ||||
Debt Instrument [Line Items] | ||||
Royalty revenue per year | $ 30,000,000 |
Stock Options (Details)
Stock Options (Details) - USD ($) | 3 Months Ended | 8 Months Ended | 9 Months Ended | |||
Sep. 30, 2016 | Jun. 30, 2016 | Sep. 30, 2015 | Mar. 31, 2016 | Sep. 30, 2016 | Sep. 30, 2015 | |
Stock-based compensation | $ 1,046,364 | $ 1,031,218 | ||||
Stock Options | ||||||
Stock options granted (in shares) | 542,250 | |||||
Stock-based compensation | $ 293,575 | $ 334,593 | $ 1,046,364 | $ 1,031,218 | ||
Total future stock compensation expense related to nonvested awards | $ 2,761,000 | $ 2,761,000 | ||||
Stock Options, Contingency Condition Approved | ||||||
Stock options granted (in shares) | 739,000 | |||||
Stock-based compensation | $ 272,240 |
Public Offering of Common Sto35
Public Offering of Common Stock (Details) - USD ($) | Aug. 26, 2015 | Feb. 13, 2015 | Feb. 05, 2015 | Sep. 30, 2016 | Dec. 31, 2015 |
Shares of common stock sold | 30,209,036 | 29,984,591 | |||
Par value of common stock | $ 0.01 | $ 0.01 | |||
February 2015 Offering | |||||
Shares of common stock sold | 4,728,000 | ||||
Public offering price (in dollars per share) | $ 2.75 | ||||
Underwriting Agreement | |||||
Shares of common stock sold | 709,200 | ||||
Number of days to underwriter to sell additional common shares | 30 days | ||||
February 2015 Offering inclusive of over-allotment option | |||||
Shares of common stock sold | 5,437,200 | ||||
Public offering price (in dollars per share) | $ 2.75 | ||||
Gross proceeds from issuance of common stock | $ 15,000,000 | ||||
Underwriting discounts, commissions and other estimated offering expenses | $ 1,400,000 | ||||
Securities Purchase Agreement | |||||
Offering expenses | $ 300,000 | ||||
ESSEX | Securities Purchase Agreement | |||||
Shares of common stock sold | 4,861,111 | ||||
Public offering price (in dollars per share) | $ 3.60 | ||||
Gross proceeds from issuance of common stock | $ 17,500,000 |
Commitments and Contingencies (
Commitments and Contingencies (Details) | Mar. 16, 2016ft² | Aug. 06, 2015 | Sep. 30, 2016USD ($) |
SNH | |||
Commitments and Contingencies | |||
Additional leased office space in square feet | ft² | 7,050 | ||
Leased office space in square feet | ft² | 11,761 | ||
Additional term of agreement, if extended | 3 years | ||
Additional extension term after expiration date | 5 years | ||
Estimated future minimum rental payments on the leases | |||
Year 1 | $ 123,000 | ||
Year 2 | 127,000 | ||
Year 3 | 131,000 | ||
Year 4 | 135,000 | ||
Year 5 | 139,000 | ||
License and Services Agreement | |||
Commitments and Contingencies | |||
Term of agreement | 5 years | ||
Number of anniversary after which the agreement could be terminated | 2 years | ||
Notice period for termination of contract | 18 months | ||
Estimated future minimum rental payments on the leases | |||
License fee | $ 416,000 |
Retirement Plan (Details)
Retirement Plan (Details) | 3 Months Ended | 9 Months Ended |
Sep. 30, 2016USD ($) | Sep. 30, 2016USD ($)item | |
AxoGen 401K Plan | ||
Defined Benefit Plan | ||
Age limit for eligibility to participate in the plan | item | 18 | |
Required minimum contribution | 5.00% | |
Employer contributions | $ | $ 76,000 | $ 247,000 |
Axogen 401K Plan, employee's contribution of first 3% of annual salary | ||
Defined Benefit Plan | ||
Matching contributions | 100.00% | |
Employee contribution matched, percent | 3.00% | |
Axogen 401K Plan, employee's contribution of next 2% of annual salary | ||
Defined Benefit Plan | ||
Matching contributions | 50.00% | |
Employee contribution matched, percent | 2.00% |
Subsequent Events (Details)
Subsequent Events (Details) | Oct. 25, 2016USD ($)ft²item | Oct. 13, 2016USD ($)itemshares | Oct. 07, 2016$ / sharesshares | Feb. 05, 2015shares | Sep. 30, 2015USD ($) | Sep. 30, 2016USD ($)$ / sharesshares | Dec. 31, 2015USD ($)$ / sharesshares | Dec. 31, 2014USD ($) |
Subsequent Events | ||||||||
Shares of common stock sold | shares | 30,209,036 | 29,984,591 | ||||||
Par value of common stock | $ / shares | $ 0.01 | $ 0.01 | ||||||
Net proceeds from issuance of common stock | $ 30,970,735 | |||||||
Debt Refinancing | ||||||||
Debt issuance costs | 180,142 | |||||||
Cash | $ 29,935,467 | $ 16,003,245 | $ 25,909,500 | $ 8,215,791 | ||||
Total Debt | 24,996,070 | $ 24,701,693 | ||||||
Pro Forma [Member] | ||||||||
Debt Refinancing | ||||||||
Cash | 31,700,000 | |||||||
Total Debt | $ 25,000,000 | |||||||
Underwriting Agreement | ||||||||
Subsequent Events | ||||||||
Shares of common stock sold | shares | 709,200 | |||||||
Number of days to underwriter to sell additional common shares | 30 days | |||||||
Subsequent Events | October 2016 Offering | ||||||||
Subsequent Events | ||||||||
Shares of common stock sold | shares | 2,333,334 | |||||||
Public offering price (in dollars per share) | $ / shares | $ 7.50 | |||||||
Subsequent Events | October 2016 Offering | Directors and officers | ||||||||
Subsequent Events | ||||||||
Shares of common stock sold | shares | 32,666 | |||||||
Number of directors and officers who purchased common stock | item | 5 | |||||||
Subsequent Events | Underwriting Agreement | ||||||||
Subsequent Events | ||||||||
Shares of common stock sold | shares | 350,000 | 350,000 | ||||||
Number of days to underwriter to sell additional common shares | 30 days | |||||||
Subsequent Events | October 2016 Offering inclusive of over-allotment option | ||||||||
Subsequent Events | ||||||||
Shares of common stock sold | shares | 2,683,334 | |||||||
Net proceeds from issuance of common stock | $ 18,620,000 | |||||||
Three Peaks Loan | Subsequent Events | ||||||||
Debt Refinancing | ||||||||
Payments of Debt Extinguishment Costs | $ 2,300,000 | |||||||
MidCap Loan | Subsequent Events | ||||||||
Debt Refinancing | ||||||||
Proceeds from issuance of debt | 25,000,000 | |||||||
Debt issuance costs | 700,000 | |||||||
MidCap Loan | Subsequent Events | Term Loan | ||||||||
Debt Refinancing | ||||||||
Debt Instrument, Face Amount | $ 21,000,000 | |||||||
Number of months requiring principal and interest payments | item | 30 | |||||||
Interest rate stated (as a percent) | 8.00% | |||||||
Interest rate spread | 0.50% | |||||||
Effective interest rate (as a percent) | 8.50% | |||||||
Annual agency fee, percent of aggregate principal amount | 0.25% | |||||||
Minimum prepayment amount | $ 2,500,000 | |||||||
Integral multiple of the minimum prepayment amount | $ 1,000,000 | |||||||
Maximum number of partial voluntary prepayments allowed | item | 3 | |||||||
Prepayment fee percent, year one | 3.00% | |||||||
Prepayment fee percent, year two | 2.00% | |||||||
Prepayment fee percent, thereafter | 1.00% | |||||||
Exit fee percent | 5.00% | |||||||
MidCap Loan | Subsequent Events | Revolving Line of Credit | ||||||||
Debt Refinancing | ||||||||
Interest rate stated (as a percent) | 4.50% | |||||||
Interest rate spread | 0.50% | |||||||
Effective interest rate (as a percent) | 5.00% | |||||||
Prepayment fee percent, year one | 3.00% | |||||||
Prepayment fee percent, year two | 2.00% | |||||||
Prepayment fee percent, thereafter | 1.00% | |||||||
Line of credit amount | $ 10,000,000 | |||||||
Amount drawn | 4,000,000 | |||||||
Borrowing amount available | $ 5,400,000 | |||||||
Collateral management fee, percent | 0.50% | |||||||
Unused line fee, percent | 0.50% | |||||||
Percent of Borrowing Base which accrues interest | 30.00% | |||||||
MidCap Loan | Subsequent Events | Maximum | Revolving Line of Credit | ||||||||
Debt Refinancing | ||||||||
Line of credit amount | $ 15,000,000 | |||||||
Ja-Cole | Subsequent Events | ||||||||
Subsequent Events | ||||||||
Additional leased office space in square feet | ft² | 2,500 | |||||||
Leased office space in square feet | ft² | 10,000 | |||||||
Annual lease expense | $ 88,000 |