Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2016 | Feb. 28, 2017 | Jun. 30, 2016 | |
Document and Entity Information | |||
Entity Registrant Name | AxoGen, Inc. | ||
Entity Central Index Key | 805,928 | ||
Document Type | 10-K | ||
Document Period End Date | Dec. 31, 2016 | ||
Amendment Flag | false | ||
Current Fiscal Year End Date | --12-31 | ||
Entity Well-known Seasoned Issuer | No | ||
Entity Voluntary Filers | No | ||
Entity Current Reporting Status | Yes | ||
Entity Filer Category | Smaller Reporting Company | ||
Entity Public Float | $ 154,307,062 | ||
Entity Common Stock, Shares Outstanding | 33,013,676 | ||
Document Fiscal Year Focus | 2,016 | ||
Document Fiscal Period Focus | FY |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) | Dec. 31, 2016 | Dec. 31, 2015 |
Current assets: | ||
Cash and cash equivalents | $ 30,014,405 | $ 25,909,500 |
Accounts receivable, net of allowance for doubtful accounts of approximately $272,000 and $192,000 respectively | 8,052,203 | 4,782,989 |
Inventory | 5,458,840 | 3,933,960 |
Prepaid expenses and other | 511,804 | 424,925 |
Total current assets | 44,037,252 | 35,051,374 |
Property and equipment, net | 1,494,247 | 970,870 |
Intangible assets | 828,979 | 678,082 |
Total Assets | 46,360,478 | 36,700,326 |
Current liabilities: | ||
Borrowings under revolving loan agreement | 4,025,023 | |
Accounts payable and accrued expenses | 7,002,165 | 3,695,127 |
Current maturities of long term obligations | 20,899 | |
Deferred revenue, current | 33,282 | 14,118 |
Total current liabilities | 11,081,369 | 3,709,245 |
Long Term Debt, net of current maturities, net | 20,265,745 | 24,701,693 |
Long Term Deferred Revenue | 92,215 | 93,797 |
Total liabilities | 31,439,329 | 28,504,735 |
Shareholders' equity: | ||
Common stock, $0.01 par value per share; 50,000,000 shares authorized; 33,008,865 and 29,984,591 shares issued and outstanding | 330,088 | 299,846 |
Additional paid-in capital | 132,474,884 | 111,368,424 |
Accumulated deficit | (117,883,823) | (103,472,679) |
Total shareholders' equity | 14,921,149 | 8,195,591 |
Total Liabilities and Shareholders' equity | $ 46,360,478 | $ 36,700,326 |
CONDENSED CONSOLIDATED BALANCE3
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) | Dec. 31, 2016 | Dec. 31, 2015 |
Condensed Consolidated Balance Sheets | ||
Accounts receivable, allowance for doubtful accounts | $ 272,000 | $ 192,000 |
Common stock, Par value | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 50,000,000 | 50,000,000 |
Common stock, shares issued | 33,008,865 | 29,984,591 |
Common stock, shares outstanding | 33,008,865 | 29,984,591 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Condensed Consolidated Statements of Operations | ||
Revenues | $ 41,107,538 | $ 27,331,092 |
Cost of goods sold | 6,467,250 | 4,848,396 |
Gross profit | 34,640,288 | 22,482,696 |
Costs and expenses: | ||
Sales and marketing | 28,425,503 | 20,089,369 |
Research and development | 4,212,023 | 3,237,171 |
General and administrative | 10,132,624 | 8,422,866 |
Total costs and expenses | 42,770,150 | 31,749,406 |
Loss from operations | (8,129,862) | (9,266,710) |
Other income (expense): | ||
Interest expense | (5,386,268) | (3,988,619) |
Interest expense-deferred financing costs | (875,389) | (127,912) |
Other income (expense) | (19,625) | 26,816 |
Total other income (expense) | (6,281,282) | (4,089,715) |
Net Loss | $ (14,411,144) | $ (13,356,425) |
Weighted Average Common Shares outstanding - basic and diluted | 30,702,164 | 26,075,670 |
Loss Per Common share - basic and diluted (in dollars per share) | $ (0.47) | $ (0.51) |
CONSOLIDATED STATEMENTS OF STOC
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIT) - USD ($) | Common Stock [Member] | Additional Paid-in Capital [Member] | Retained Earnings [Member] | Total |
Beginning Balance at Dec. 31, 2014 | $ 194,888 | $ 78,675,686 | $ (90,116,254) | $ (11,245,680) |
Beginning Balance (in shares) at Dec. 31, 2014 | 19,488,814 | |||
Increase (Decrease) in Stockholders' Equity | ||||
Stock-based compensation | 1,316,509 | 1,316,509 | ||
Exercise of stock options | $ 1,975 | 510,826 | 512,801 | |
Exercise of stock options (in shares) | 197,466 | |||
Issuance of common shares | $ 102,983 | 30,865,403 | 30,968,386 | |
Issuance of common shares (in shares) | 10,298,311 | |||
Net loss | (13,356,425) | (13,356,425) | ||
Ending Balance at Dec. 31, 2015 | $ 299,846 | 111,368,424 | (103,472,679) | $ 8,195,591 |
Ending Balance (in shares) at Dec. 31, 2015 | 29,984,591 | 29,984,591 | ||
Increase (Decrease) in Stockholders' Equity | ||||
Stock-based compensation | 1,390,277 | $ 1,390,277 | ||
Exercise of stock options | $ 3,409 | 1,074,924 | 1,078,333 | |
Exercise of stock options (in shares) | 340,940 | |||
Issuance of common shares | $ 26,833 | 18,641,259 | 18,668,092 | |
Issuance of common shares (in shares) | 2,683,334 | |||
Net loss | (14,411,144) | (14,411,144) | ||
Ending Balance at Dec. 31, 2016 | $ 330,088 | $ 132,474,884 | $ (117,883,823) | $ 14,921,149 |
Ending Balance (in shares) at Dec. 31, 2016 | 33,008,865 | 33,008,865 |
CONDENSED CONSOLIDATED STATEME6
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Cash flows from operating activities: | ||
Net loss | $ (14,411,144) | $ (13,356,425) |
Adjustments to reconcile net loss to net cash used for operating activities: | ||
Depreciation | 361,617 | 203,140 |
Amortization of intangible assets | 74,871 | 45,828 |
Amortization of deferred financing costs | 124,915 | 127,913 |
Write off of deferred financing costs | 750,474 | |
Provision for bad debt | 79,593 | 125,371 |
Stock-based compensation | 1,390,277 | 1,316,509 |
Interest added to note payable | 1,924,279 | 461,643 |
Change in assets and liabilities: | ||
Accounts receivable | (3,348,807) | (2,036,052) |
Inventory | (1,524,880) | (720,340) |
Prepaid expenses and other | (86,879) | (315,556) |
Accounts payable and accrued expenses | 3,443,660 | 1,117,733 |
Deferred revenue | 17,582 | (21,583) |
Net cash used for operating activities | (11,204,442) | (13,051,819) |
Cash flows from investing activities: | ||
Purchase of property and equipment | (963,787) | (408,782) |
Acquisition of intangible assets | (225,768) | (146,736) |
Net cash used for investing activities | (1,189,555) | (555,518) |
Cash flows from financing activities: | ||
Proceeds from issuance of common stock | 18,668,092 | 30,968,386 |
Borrowings on revolving loan | 6,684,894 | |
Payments on revolving loan | (6,684,894) | |
Repayments of long-term debt | (2,446,676) | |
Debt issuance costs | (800,847) | (180,139) |
Proceeds from exercise of stock options | 1,078,333 | 512,799 |
Net cash provided by (used in) financing activities | 16,498,902 | 31,301,046 |
Net increase / (decrease) in cash and cash equivalents | 4,104,905 | 17,693,709 |
Cash and cash equivalents, beginning of year | 25,909,500 | 8,215,791 |
Cash and cash equivalents, end of period | 30,014,405 | 25,909,500 |
Supplemental disclosures of cash flow activity: | ||
Cash paid for interest | 5,769,372 | 3,525,978 |
Supplemental disclosure of non-cash investing and financing activities: | ||
Payments of fixed assets in accounts payable | 32,153 | $ 168,775 |
Payments of long term debt with proceeds from term loan of $21,000,000 and revolver loan of $4,000,000 | $ 25,000,000 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS (Parenthetical) | 12 Months Ended |
Dec. 31, 2016USD ($) | |
Condensed Consolidated Statements of Cash Flows | |
Term loan assumed in payment of long term debt | $ 21,000,000 |
Revolver loan assumed in payment of long term debt | $ 4,000,000 |
Basis of Presentation
Basis of Presentation | 12 Months Ended |
Dec. 31, 2016 | |
Basis of Presentation | |
Basis of Presentation | 1. Basis of Presentation The accompanying consolidated financial statements include the accounts of AxoGen, Inc. (the “Company” or “AxoGen”) and its wholly owned subsidiaries, AxoGen Corporation (“AC”) and AxoGen Europe GmbH, established in the fourth quarter of 2016, as of December 31, 2016 and December 31, 2015 and for the years then ended. The Company’s consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America. All significant intercompany accounts and transactions have been eliminated in consolidation. |
Organization and Business
Organization and Business | 12 Months Ended |
Dec. 31, 2016 | |
Organization and Business | |
Organization and Business | 2. Organization and Business We are a global leader in innovative surgical solutions for peripheral nerve injuries. We provide products and education to improve surgical treatment algorithms 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, AxoGuard ® Nerve Protector, a porcine submucosa ECM product used to wrap and protect injured peripheral nerves and reinforce the nerve reconstruction while preventing soft tissue attachments and Avive TM Soft Tissue Membrane is minimally processed human umbilical cord membrane that may be used as a resorbable soft tissue covering to separate tissues and modulate inflammation in the surgical bed. Along with these core surgical products, we also offer the AxoTouch TM Two-Point Discriminator and AcroVal TM Neurosensory and 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. Our portfolio of products is available in the United States, Canada, the United Kingdom and several European and other international countries. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 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 delivered to the customer or distributor, at which time title passes to the customer or distributor, provided, however, that in the case of revenues from consigned sales delivery is determined when the product is utilized in a surgical procedure. Once a product is delivered, the Company has no further performance obligations. Delivery is defined as delivery 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. 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 any 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 receivables due to our past successful experience in collectability. Specific accounts that are deemed uncollectible are reserved at 100% of their outstanding balance. 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 $272,000 and $192,000 at December 31, 2016 and 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 and monitoring procedures. Inventories Inventories are comprised of unprocessed tissue, work-in-process, Avance ® Nerve Graft, AxoGuard ® Nerve Connector, AxoGuard ® Nerve Protector, Avive TM Soft Tissue Membrane, AcroVal TM Neurosensory and Motor Testing System, AxoTouch TM Two-Point Discriminator and supplies and are valued at the lower of cost (first-in, first-out) or market. We regularly review the inventory status to determine the expected reserve level required. The Company policy is to monitor the shelf life of its products and reserve amounts based on the expiration date of the finished goods inventory. We also reserve a portion of raw materials based on our historical experience of tissue that fails during the inspection and debridement stage due to medical history, serology compliance or poor quality. Property and Equipment Depreciation and amortization is computed using the straight-line method over the estimated useful lives of the assets as follows: Furniture and equipment - 5 years Leasehold improvements years (or lease term if less) Processing equipment - 7 years Major additions and improvements are capitalized, while replacements, maintenance and repairs, which do not improve or extend the life of the respective assets, are expensed as incurred. When assets are retired or otherwise disposed of, related costs and accumulated depreciation and amortization are removed and any gain or loss is reported as other income or expense. Intangible Assets Intangible assets consist primarily of license agreements for exclusive rights to use various patented and patent-pending technologies described in Note 5 and other costs related to the license agreements, including patent prosecution and protection costs. Such costs are capitalized and amortized on a straight-line basis over the underlying terms of the license agreements or estimated useful life of patents, ranging from 5 to 20 years. Impairment of Long-lived Assets, Including License Agreements The Company reviews its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future undiscounted cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. For the years ended December 31, 2016 and 2015, the Company did not record any impairment loss. Deferred Financing Costs The Company records as a discount to debt all third party costs incurred, including equity-based payments, associated with the issuance of long-term debt. The costs are amortized to interest expense over the term of the debt using the effective interest method. Effective lnterest Rate on Term Loan Agreement AxoGen borrowed $25 million under the term loan agreement (the “Three Peaks Term Loan Agreement”) dated November 12, 2014, by and among AxoGen, as borrower, AC, as guarantor, 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, as administrative and collateral agent for the lenders. In addition, on November 12, 2014, AxoGen also entered into a ten-year Revenue Interest Agreement (the “Revenue Interest Agreement”) with Three Peaks. Royalty payments were 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. The Three Peaks Term Loan Agreement and Revenue Interest Agreement were used in calculating the effective interest rate. AxoGen recorded interest using its best estimate of the effective interest rate. This estimate took into account both the rate on the Three Peaks Term Loan Agreement and the rate associated with the Revenue Interest Agreement. The effective interest rate was based on actual payments to date, projected future revenues and the projected royalty payments and the quarterly interest payments due on the Three Peaks Term Loan Agreement. On October 26, 2016, the Three Peak Loan Agreement and Revenue Interest Agreement were paid in full and the Company had no further obligations pursuant to such agreements. From time to time, AxoGen reevaluated the expected cash flows and adjusted the effective interest rate. Determining the effective interest rate required judgment and was based on significant assumptions related to estimates of the amounts and timing of future revenue streams. Determination of these assumptions was highly subjective and different assumptions could have led to materially different outcomes. On October 26, 2016, the Three Peaks Loan Agreement and Revenue Interest Agreement were paid in full and the Company had no further obligations pursuant to such agreements. Advertising Advertising costs are expensed as incurred. Advertising costs were $40,000 and $31,000 for the years ended December 31, 2016 and 2015, respectively, and are included in sales and marketing expense on the accompanying consolidated statements of operations. Research and Development Costs Research and Development costs are expensed as incurred and were approximately $4,212,000 and $3,237,000 for the years ended December 31, 2016 and 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 the 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, 2013 through 2016; 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. Stock-Based Compensation The Company measures all employee stock-based compensation awards using a fair value method and records such expense in its consolidated financial statements. The estimated value of the portion of the award that is ultimately expected to vest, taking into consideration estimated forfeitures based on the Company’s historical forfeiture rate, is recognized as expense over the requisite service periods in the Company’s consolidated statements of operations. The Company estimates the grant date fair value of stock option awards generally on the date of grant using the Black-Scholes option pricing models. With respect to performance stock units (“PSUs”), the number of shares that vest and are issued to the recipient is based upon the Company’s performance as measured against specified targets over the measurement period. The fair value of the PSUs is based on the Company’s closing stock price on the grant date and its estimate of achieving such performance targets. See further discussion and disclosures in Note 10, “Stock Incentive Plan.” Earnings (Loss) Per Share of Common Stock Earnings (loss) per share of common stock (EPS) is calculated for basic EPS by dividing net income (loss) available to common stockholders by the weighted average number of shares of common stock outstanding during the period. There were no dilutive instruments as of December 31, 2016 and 2015. The basic and diluted weighted average shares outstanding were 30,702,164 and 26,075,670 for the years ended December 31, 2016 and 2015, respectively. Basic and diluted net loss per commons share for all periods presented is computed by dividing the net loss attributable to common shareholders by the weighted-average number of common shares outstanding and common share equivalents outstanding, when dilutive. Potentially dilutive common share equivalents include common shares which would potentially be issued pursuant to stock warrants and stock options. Common share equivalents are not included in determining the fully diluted loss per share if their effect is antidilutive. Use of Estimates The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated 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 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 will be effective for the Company beginning on January 1, 2018. The standard may be applied retrospectively to each prior period presented or retrospectively with the cumulative effect recognized as of the adoption date. 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, 2016. The adoption of this guidance did not have a material impact on our consolidated financial statements. In April 2015, the FASB issued Accounting Standard Update (“ASU”) No. 2015-03, Simplifying the Presentation of Debt Issuance Costs, 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. During the first quarter of 2016, we retrospectively adopted this guidance. The implementation of this accounting standard resulted in a reduction of other noncurrent assets and long-term debt of approximately $846,000 in the Consolidated Balance Sheet as of December 31, 2015. 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 method of adoption and the impact of the provisions of the ASU. 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. 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. In November 2016, the FASB issued ASU No. 2016-18, Statement of Cash Flows (Topic 230), guidance that a statement of cash flows explains the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. The new guidance is effective for fiscal years beginning after December 15, 2017 with early adoption permitted. We are currently evaluating the impact of adoption of this guidance on our Statement of Cash Flows. The Company’s management has reviewed and considered all other recent accounting pronouncements and believe there are none that could potentially have a material impact on the Company’s consolidated financial condition, results of operations, or disclosures. |
Inventories
Inventories | 12 Months Ended |
Dec. 31, 2016 | |
Inventory Disclosure [Abstract] | |
Inventories | 4. Inventories Inventories are comprised of unprocessed tissue, work-in-process, Avance ® Nerve Graft, AxoGuard ® Nerve Connector, AxoGuard ® Nerve Protector, Avive TM Soft Tissue Membrane, AcroVal TM Neurosensory and Motor Testing System, AxoTouch TM Two-Point Discriminator and supplies and are valued at the lower of cost (first-in, first-out) or market and consist of the following: December 31, December 31, 2016 2015 Finished goods $ $ Work in process Raw materials Inventory, net $ $ Inventories are net of reserve of approximately $960,000 and $711,000 at December 31, 2016 and 2015, respectively. |
Property and Equipment
Property and Equipment | 12 Months Ended |
Dec. 31, 2016 | |
Property and Equipment | |
Property and Equipment | 5. Property and Equipment Property and equipment consist of the following: December 31, December 31, 2016 2015 Furniture and equipment $ $ Leasehold improvements Processing equipment Less: accumulated depreciation and amortization Property and equipment, net $ $ |
Intangible Assets
Intangible Assets | 12 Months Ended |
Dec. 31, 2016 | |
Intangible Assets | |
Intangible Assets | 6. Intangible Assets The Company’s intangible assets consist of the following: December 31, 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 December 31, 2016, the patents were fully amortized, the remaining patents of $308,212 are pending patent costs and are not amortized until approved. Amortization expense for 2016 and 2015 was approximately $75,000 and $46,000, respectively. As of December 31, 2016, future amortization of license agreements is expected to be $70,000 for 2017 through 2023 and $56,000 for 2024. License Agreements The Company has entered into license agreements (the “License Agreements”) with the University of Florida Research Foundation (“UFRF”) and University of Texas at Austin (“UTA”). Under the terms of the License Agreements, the Company acquired exclusive worldwide licenses for underlying technology used in repairing and regenerating nerves. The licensed technologies include the rights to issued patents and patents pending in the United States and international markets. The effective term of the License Agreements extends through the term of the related patents and the agreements may be terminated by the Company with 60 days prior written notice. Additionally, in the event of default, licensors may terminate an agreement if the Company fails to cure a breach after written notice. The License Agreements contain the key terms listed below: · AxoGen pays royalty fees ranging from 1% to 3% under the License Agreements based on net sales of licensed products. One of the agreements also contains a minimum royalty of $12,500 per quarter, which may include a credit in future quarters in the same calendar year for the amount the minimum royalty exceeds the royalty fees. Also, when AxoGen pays royalties to more than one licensor for sales of the same product, a royalty stack cap applies, capping total royalties at 3.75%; · If AxoGen sublicenses technologies covered by the License Agreements to third parties, AxoGen would pay a percentage of sublicense fees received from the third party to the licensor. Currently, AxoGen does not sublicense any technologies covered by License Agreements. The Company is not considered a sub-licensee under the License Agreements and does not owe any 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 one of the License Agreements, AxoGen would owe a $15,000 milestone fee upon receiving a Phase II Small Business Innovation Research or Phase II Small Business Technology Transfer grant involving the licensed technology. The Company has not received either grant and does not owe such a milestone fee. 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 $812,000 and $526,000 during 2016 and 2015 and are included in sales and marketing expense on the accompanying consolidated statements of operations. |
Accounts Payable and Accrued Ex
Accounts Payable and Accrued Expenses | 12 Months Ended |
Dec. 31, 2016 | |
Accounts Payable and Accrued Expenses | |
Accounts Payable and Accrued Expenses | 7. Accounts Payable and Accrued Expenses Accounts payable and accrued expenses consists of the following: December 31, December 31, 2016 2015 Accounts Payable and Accrued Expenses $ $ Accrued compensation Accounts Payable and Accrued Expenses $ $ |
Term Loan Agreements and Long T
Term Loan Agreements and Long Term Debt | 12 Months Ended |
Dec. 31, 2016 | |
Term Loan Agreement | |
Term Loan Agreements and Long Term Debt | 8. Term Loan Agreements and Long-Term Debt Term Loan Agreements and Long Term Debt consist of the following: December 31, December 31, 2016 2015 Term Loan Agreement and Revenue Interest Agreement with Three Peaks Capital S.a.r.l., net of $845,727 of deferred financing fees at December 31, 2015, for a total term loan amount of $25,000,000 which had a six year term and required interest only payments and a final principal payment due at the end of the term. Interest was 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 was for a period of ten years. Royalty payments were based on a royalty rate of 3.75% of revenues up to a maximum of $30 million in revenues in any 12 month period. On October 26, 2016, the Three Peaks Term Loan Agreement and Revenue Interest Agreement were paid in full and the Company had no further obligations pursuant to such agreements. $ — $ Term Loan Agreement with MidCap Financial for a total of $21,000,000, net of $771,185 of deferred financing fees at December 31, 2016, which has a fifty four month term and requires interest only payments for the first twenty four months, and thereafter, thirty monthly payments of principal and interest until the end of the term. Interest is payable monthly at 8.00% per annum plus the greater of LIBOR or 0.5% which as of December 31, 2016 resulted in a 8.5% rate. In addition to the interest charged on the Term Loan, the Company is also obligated to pay certain fees, including an annual agency fee of 0.25% of the aggregate principal amount of the Term Loan. — Revolving Loan Agreement with MidCap Financial for up to $10,000,000 with borrowings based upon eligible accounts receivable and inventory. Interest is payable monthly at 4.50% per annum plus the greater of LIBOR or 0.5% which as of December 31, 2016 resulted in a 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 0.5% of the principal amount outstanding on the Revolving Loan and an unused line fee of 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. — Equipment Lease Agreement with Cisco Capital for a total lease amount of $58,875 which has a 36 month term and requires no lease payments for the first three months of the lease and thirty three equal payments of principal and interest until the end of the term. Interest on the lease is payable monthly at 3.50% per annum. — Total Less current revolving loan — Less current maturities of long term debt — Long-term portion $ $ Term Loans Three Peaks Term Loan Agreement and Revenue Interest Agreement On November 12, 2014, AxoGen, as borrower, and AC, as guarantor, entered into the Three Peaks Term Loan Agreement. Under the Three Peaks Term Loan Agreement, Three Peaks provided AxoGen a term loan of $25 million which had a six year term and required interest only payments and a final principal payment due at the end of the term. Interest was payable quarterly at 9.00% per annum plus the greater of LIBOR or 1.0% which as of November 13, 2014 resulted in a 10% rate. In addition, on November 12, 2014, AxoGen entered into the Revenue Interest Agreement. Royalty payments were 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. On October 26, 2016, the Three Peaks Term Loan Agreement and Revenue Interest Agreement were paid in full and the Company had no further obligations pursuant to such agreements. MidCap Term Loan Agreement On October 25, 2016 (the "Closing Date"), AxoGen and AC, each as borrowers, entered into a Credit and Security Agreement (the ''MC Term Loan Agreement") with the lenders party thereto and MidCap Financial Trust (“MidCap”), as administrative agent and a lender. Under the MC Term Loan Agreement, MidCap provided the Company a term loan in the aggregate principal amount of $21 million (the "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 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 Term Loan, the Company is also obligated to pay certain fees, including an annual agency fee of 0.25% of the aggregate principal amount of the Term Loan. Under the MC Term Loan Agreement, the Company has the option at any time to prepay the 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 partial voluntary prepayments allowed during the term of the MC 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) 3.0% during the first year following the Closing Date; (b) 2.0% during the second year following the Closing Date, and (c) 1.0% thereafter. No prepayment fee is due in the event the prepayment is a result of refinancing the Term Loan and Revolving Loan with MidCap or an affiliate of MidCap. Upon any repayment of any portion of the Term Loan (whether voluntary, involuntary or mandatory), other than scheduled amortization payments, and on the final payment of principal of the Term Loan, an exit fee of 5.0% of the principal amount of the 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 Term Loan. MidCap Revolving Loan Agreement On the Closing Date, AxoGen and AC, each as borrowers, also entered into a Credit and Security Agreement (the ''Revolving Loan Agreement") with the lenders party thereto and MidCap, as administrative agent and a lender. Under the Revolving Loan Agreement, MidCap 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. As of December 31, 2016, the Company had borrowed $4,025,023 of the Revolving Loan. 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 and December 31, 2016, 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 0.5% per annum of the principal amount outstanding on the Revolving Loan from time to time and an unused line fee of 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. 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) 3.0% during the first year following the Closing Date; (b) 2.0% during the second year following the Closing Date, and (c) 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 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 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 MC Term Loan Agreement and the Revolving Loan Agreement each contain covenants that place restrictions on AxoGen’s operations, including, without limitation, covenants related to debt restrictions, investment restrictions, dividend restrictions, restrictions on transactions with affiliates and certain revenue covenants. MidCap, on behalf of the lenders under the agreements, has a first perfected security interest in the assets of the Company to guarantee the payment in full of the agreements. Upon the payment in full to MidCap and the lenders of the Term Loan Agreement and Revolving Loan Agreement, the Company would have no further obligations to MidCap or the lenders under the Term Loan Agreement or the Revolving Loan Agreement. The Company used the aggregate proceeds of $25 million from the Term Loan and the Revolving Loan to pay the outstanding indebtedness owed to Three Peaks and the other lenders to terminate the Three Peaks Term Loan Agreement and the Revenue Interest Agreement. Expenses and fees of approximately $800,000 to complete the negotiation and documentation of the 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. Interest expense for the year ended December 31, 2016 was approximately $5,386,000 compared to $3,989,000 for the year ended December 31, 2015. The 2016 amount includes a final payment to Three Peaks of approximately $2,447,000 inclusive of prepayment fees and accrued interest through October 25, 2016. In addition, as a result of the accounting treatment for the Three Peaks transaction, the Company had previously recorded a total of $747,000 of deferred interest charges which were offset against these prepayment fees. The net impact of these transactions resulted in a net interest charge of approximately $1,700,000 in the year which is included in interest expense for the year ended December 31, 2016. Additionally, as the result of the extinguishment of the debt facility with Three Peaks, the Company wrote off approximately $750,000 of prepaid financing fees to interest expense – deferred financing costs in 2016. Annual maturities of the Company’s long-term obligations are as follows: Year Ending December 31 Amount 2017 $ 2018 2019 2020 2021 Less unamortized debt issuance costs TOTAL $ |
Shareholders' Equity (Deficit)
Shareholders' Equity (Deficit) | 12 Months Ended |
Dec. 31, 2016 | |
Shareholders' Equity (Deficit) | |
Shareholders’ Equity (Deficit) | 9. Shareholders’ Equity (Deficit) AxoGen, Inc. Classes of Stock AxoGen, Inc.’s authorized capital stock consists of 50,000,000 shares of common stock, par value $0.01 per share. The authorized capital stock is divisible into the classes and series, has the designation, voting rights, and other rights and preferences and is subject to the restrictions that the AxoGen Board of Directors may from time to time establish. Unless otherwise designated by the AxoGen Board of Directors, all shares are common stock. AxoGen has not designated any shares other than common stock. Warrants Pursuant to a retired financing agreement, certain lenders received a ten-year warrant to purchase 89,686 shares of AxoGen’s common stock at $2.23 per share. The warrants have an effective date of September 30, 2011. On November 13, 2015, 44,843 of these warrants were exercised in a cashless exchange resulting in 25,903 shares being issued to the warrant holder. Public Offering On October 7, 2016, AxoGen entered into an underwriting agreement with JMP Securities LLC, as representative of the several underwriters (collectively, the “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. Pursuant to the underwriting agreement, the Company also granted the Underwriters a 30-day option to purchase up to an additional 350,000 shares of common stock, which the underwriters exercised in full on October 7, 2016. Five of the Company’s directors and officers purchased an aggregate of approximately 32,666 Shares 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 $18.67 million from the sale of 2,683,334 shares of common stock, which includes the additional 350,000 shares of common stock, after deducting the underwriting discounts and commissions and estimated offering expenses. |
Incentive Stock Plan
Incentive Stock Plan | 12 Months Ended |
Dec. 31, 2016 | |
Incentive Stock Plan | |
Incentive Stock Plan | 10. Stock Incentive Plan The Company maintains the AxoGen 2010 Stock Incentive Plan, as amended (the “AxoGen Plan”), which allows for issuance of incentive stock options, non-qualified stock options, performance stock units (PSU) and restricted stock awards (RSU) to employees, directors and consultants at exercise prices not less than the fair market value at the date of grant. At the 2016 Annual Meeting of Shareholders the AxoGen Plan was amended to increase the number of shares of common stock authorized for issuance under the AxoGen Plan to 5,500,000 shares. Under the terms of the Company’s merger with with LecTec Corporation in 2011 (the “Merger”), options granted under the AC 2002 Stock Option Plan (the “AC Plan”) were assumed by the Company so that each stock option pursuant to the AC Plan was converted to the AxoGen Plan at a ratio of 1.00 to 0.0372734 for both the number and exercise price of each stock option. The options to employees typically vest 25% one year after the grant date and 12.5% every six months thereafter for the remaining three-year period until fully vested after four years and those to directors and certain executive officers have vested 25% per quarter over one year or had no vesting period. Options issued to consultants have vesting provisions based on the engagement ranging from no vesting to vesting over the service period ranging from three to ten years. Options have terms ranging from seven to ten years. The Company recognized stock-based compensation expense of $1,390,277 and $1,316,509 for the years ended December 31, 2016 and 2015, respectively, which consisted of compensation expense related to employee stock options based on the value of share-based payment awards that are ultimately expected to vest during the period. The Company estimates the fair value of each option award issued under such plans on the date of grant using a Black-Scholes-Merton option-pricing models that use the assumptions noted in the table below. The Company estimates the volatility of its common stock at the date of grant based on the volatility of comparable peer companies which are publicly traded, for the periods prior to the Merger, and based on the Company’s common stock for periods subsequent to the Merger. However for options granted on December 29, 2016 the Company began using a Multiple Point Black Scholes option-pricing model which uses a weighted average of historical volatility and peer company volatility. The Company determines the expected life 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 used the following weighted-average assumptions for options granted during the year ended December 31: Year ended December 31, 2016 2015 Expected term (in years) Expected volatility % % Risk free rate % % Expected dividends — % — % The average fair value of options granted at market during 2016 and 2015 was $7.67 and $4.31 per option, respectively The following is a summary of stock option activity: Weighted Average Weighted Remaining Average Contractual Options Exercise Price Term(Years) Outstanding at December 31, 2014: Granted Forfeited Exercised Outstanding at December 31, 2015: Granted* Forfeited Exercised Outstanding at December 31, 2016 Exercisable at December 31, 2016 *Includes 25,000 options granted during the year ended December 31, 2016 which are contingent upon Optionee’s re-election to the Company’s Board of Directors at the 2017 Annual Meeting of Shareholders. The intrinsic value of options exercised during the years ended December 31, 2016 and 2015 was approximately $1,496,000 and $370,000, respectively. The intrinsic value of options outstanding at December 31, 2016 and 2015 was approximately $17,729,000 and $5,167,000, respectively. The intrinsic value of options exercisable at December 31, 2016 and 2015 was approximately $12,894,000 and $4,265,000, respectively. Total future compensation expense related to nonvested awards is expected to be approximately $5,800,000 at December 31, 2016 which is expected to be recognized over a weighted average period of 2.71 years. The following table represents non-vested share-based payment activity with employees for the years ended December 31, 2016 and 2015: Weighted Average Number of Options Exercise Price Nonvested options - December 31, 2014: Granted Vested Forfeited Nonvested options - December 31, 2015: Granted* Vested Forfeited Nonvested options - December 31, 2016: On December 29, 2016, the Compensation Committee of the Board of Directors approved a PSU to certain Company’s officers, excluding the Vice President of Sales who received a separate PSU award. The performance measure is based on achieving 2018 specified revenues and the PSUs vest one-third each February 15, 2019, 2020 and 2021. The PSUs have payout opportunities of between 0% and 150%. The performance measure is a target revenue amount for the year ended December 31, 2018. The Company estimated the fair value of the PSUs based on its closing stock price at the time of grant and its estimate of achieving such performance target and records compensation expense on a graded vesting attribution method, which recognizes compensation cost on a straight-line basis over each separately vesting portion of the award. Over the performance period, the number of shares of common stock that will ultimately vest and be issued and the related compensation expense is adjusted based upon the Company’s estimate of achieving such performance target. The number of shares delivered to recipients and the related compensation cost recognized as an expense will be based on the actual performance metrics as set forth in the applicable PSU award agreement. The December 29, 2016 PSU awards consisted of a total target award of 133,500 shares. The amount actually awarded will be based upon achievement of the performance measure and can range from 0 to 200,250, or up to 150% of the target award. The grant date fair value of the common stock on December 29, 2016 was $8.95. The total unrecognized future compensation expense related to this PSU assuming achievement of 100% of the target award is $1,194,825. Assuming the minimum of 0% and the maximum of 150% payout opportunity for the PSU, the range of total future compensation expense related to this PSU award is between $0 and $1,792,238 as of December 31, 2016. On December 29, 2016, the Compensation Committee of the Board of Directors approved a separate PSU award to the Company’s Vice President of Sales. This award amounted to a target payout of 28,600 shares. The grant date fair value of the common stock on December 29, 2016 was $8.95. The amount actually awarded will be based upon achievement of certain quarterly revenue targets in 2017. Assuming a minimum of 0% and a maximum of 100% payout opportunity for the PSU, the range of future compensation expense related to this PSU award is between $0 and $255,970. Also on December 29, 2016, the Compensation Committee of the Board of Directors approved a RSU grant consisting of 40,000 shares to the Company’s CEO. The shares will vest upon the CEO’s continuous employment through January 1, 2020. The Company estimates the fair value of the RSU based on its closing stock price at the time of grant, which was $8.95. The future compensation expense related to this RSU is $358,000 and will be recorded as compensation expense on a straight line basis over the three years ended December 31, 2019. |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2016 | |
Income Taxes | |
Income Taxes | 11. Income Taxes The Company has temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and their respective income tax basis, as measured by enacted state and federal rates as follows: December 31 2016 2015 Deferred tax assets: Net operating loss carryforwards $ $ Charitable contributions Inventory reserves Amortization Allowance for doubtful accounts Stock-based compensation Total deferred tax assets Deferred tax liabilities: Depreciation Net deferred tax assets Valuation allowance $ $ As of December 31, 2016, the Company had net operating loss carry forwards of approximately $101.3 million to offset future taxable income which expire in various years through 2036. A valuation allowance is recorded to reduce the deferred tax assets reported if, based on the weight of the evidence, it is more likely than not that a portion or none of the deferred tax assets will be realized. After consideration of all the evidence, including reversal of deferred tax liabilities, future taxable income and other factors, management has determined that a full valuation allowance is necessary as of December 31, 2016 and 2015. The valuation allowance increased by $5,096,900 and $4,452,000 during 2016 and 2015, respectively, to offset the deferred tax benefit in the respective years. The difference between the financial statement income tax and the income tax benefit using statutory rates is primarily due to the increase in the valuation allowance. The Company had no income tax expense or income tax benefit for 2015 and 2016 due to incurrence of net operating losses. The Company does not believe there are any additional tax refund opportunities currently available. |
Employee Benefit Plan
Employee Benefit Plan | 12 Months Ended |
Dec. 31, 2016 | |
Retirement Plan | |
Employee Benefit Plan | 12. Employee Benefit Plan The Company adopted the AxoGen Simple IRA plan (the “IRA Plan”) in 2007. All full-time employees who attained the age of 18 were eligible to participate in the Plan. Eligibility was immediate upon employment and enrollment was available any time during employment. Participating employees could make annual pretax contributions to their accounts up to a maximum amount as limited by law. The IRA Plan required the Company to make matching contributions of between 1% and 3% of the employee’s annual salary as long as the employee participated in the IRA Plan. Additionally, the matching was to be at least 3% for three of the first five years of the IRA Plan. Both employee contributions and Company contributions vested immediately. In 2015, the Company match was 3% of the participating employee’s annual salary. The Company contributed $172,089 in matching funds during 2015. The Company terminated this IRA Plan in December 2015. 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 3% on the first 3% of the employee’s annual salary and 1% of the next 2% of the employee’s annual salary as long as the employee participates in the 401(k) Plan. Both employee contributions and Company contributions vest immediately. The Company contributed $334,092 in matching funds during 2016. |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2016 | |
Commitments and Contingencies. | |
Commitments and Contingencies | 13. Commitments and Contingencies Operating Leases On March 16, 2016 AxoGen entered into the Fourth Amendment to Lease (“Fourth Amendment”) with SNH Medical Office Properties Trust (“SNH”). SNH is the landlord of AC’s currently leased 11,761 square foot corporate headquarters facility at 13631 Progress Boulevard, Suite 400, Alachua, Florida 32615 (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) which was 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. AxoGen’s annual cost of such property ranges from approximately $248,000 to $332,000 per year. On October 25, 2013, AC entered into a commercial lease with Ja-Cole L.P. (“Ja-Cole”). Under the terms of the commercial lease, AxoGen occupied 5,400 square feet of warehouse/office space in its Burleson, Texas Distribution Facility until November 30, 2016 at an annual cost of $43,200. On April 21, 2015, AxoGen entered into a new commercial lease, as amended by the addendum on such date (as amended, the “Commercial Lease”), with Ja-Cole. The new commercial lease superseded and replaced the original lease with Ja-Cole dated October 25, 2013. Under the terms of the Commercial Lease, AxoGen leased an additional 2,100 square feet of warehouse space at the Distribution Facility. The Commercial Lease is for a three-year term expiring April 21, 2018. On October 25, 2016, AC entered into Commercial Lease Amendment 2 (the “Ja-Cole Amendment”) to the Commercial Lease. Under the terms of the Ja-Cole Amendment, AxoGen leased an additional 2,500 square feet of warehouse/office space at the Distribution Facility. The Distribution Facility now comprises a total of 10,000 square feet, all of which, pursuant to the Ja-Cole Amendment, will be leased until March 31, 2019. The annual rental cost of the entire Distribution Facility is now approximately $88,000. On January 23, 2017 AC entered into a lease (the “SHN Lease”) with SNH Medical Office Properties Trust, a Maryland real estate investment trust (“SNH”), for 1,431 square feet at 13709 Progress Boulevard, Alachua, Florida 32615. Pursuant to the Lease, AC is to use the space for general office and biomedical research uses. SNH is the landlord of AC’s currently leased corporate headquarters facility at 13631 Progress Boulevard, Alachua, Florida 32615. The SHN Lease has a term of approximately five years with rent payments commencing on the earlier of April 1, 2017 or the “Substantial Completion Date” (as defined in the Lease). AC’s additional annual cost of the Premises will range from approximately $25,800 to $29,000 over the life of the lease. The expanded Burleson facility will house raw material storage and product distribution and allow expansion space as required for AxoGen operations. The Burleson facility houses raw material storage and product distribution, allowing AxoGen to fulfill same day orders for both coasts of the United States. In addition, AxoGen leases space and maintains records at certain other facilities, including the Company’s prior corporate headquarters at 1407 South Kings Highway, Texarkana, Texas 75501. The Company leases its lab space on a month-to-month basis. Estimated future minimum rental payments on the leases are as follows: Year Ending December 31 Amount 2017 2018 2019 2020 2021 TOTAL $ Total rent expense for the Company’s leased office and lab space for the years ended December 31, 2016 and 2015 was approximately $433,000 and $351,000, respectively. Service Agreements From 2009 to February 2016, AxoGen processed and packaged Avance ® Nerve Graft using its employees and equipment located at LifeNet Health, Virginia Beach, Virginia (“LifeNet Health”). Business requirements of LifeNet Health led to their need for additional space and they notified AxoGen that AxoGen would need to transition out of the Virginia Beach facility on or before February 27, 2016. On August 6, 2015, AxoGen entered into a License and Services Agreement with Community Blood Center (d/b/a Community Tissue Services) (“CTS”), Dayton, Ohio, an FDA registered tissue establishment. Processing of the Avance ® Nerve Graft pursuant to the CTS agreement began in February 2016. The CTS agreement is for a five year term, subject to earlier termination by either party for cause, or after August 6, 2017 without cause, upon 18 months’ notice. Under the CTS agreement AxoGen pays CTS a facility fee for clean room/manufacturing, storage and office space. CTS also provides services in support of AxoGen’s manufacturing such as routine sterilization of daily supplies, providing disposable supplies, microbial services and office support. In August 2008, the Company entered into an agreement to distribute the AxoGuard ® product worldwide in the field of peripheral nerve repair, and the parties subsequently amended the agreement in March, 2012. The agreement expires in August 2022. The Cook Biotech agreement also requires certain minimum purchases, although through mutual agreement the parties have not established such minimums and to date have not enforced such provision, and establishes a formula for the transfer cost of the AxoGuard ® products. Under the agreement, AxoGen provides purchase orders to Cook Biotech, and Cook Biotech fulfills the purchase orders. In December 2011, the Company also entered into a Master Services Agreement for Clinical Research and Related Services. The Company was required to pay $151,318 upon execution of this agreement and the remainder monthly based on activities associated with the execution of AxoGen’s phase 3 pivotal clinical trial to support a BLA for Avance ® Nerve Graft. Certain executive officers of the Company are parties to employment contracts. Such contracts have severance payments for certain conditions including change of control. Concentrations Vendor Substantially all of AxoGen’s revenue is currently derived from three products, Avance ® Nerve Graft, AxoGuard ® Nerve Protector and AxoGuard ® Nerve Connector. AxoGen has an exclusive distribution agreement with Cook Biotech for the purchase of AxoGuard ® which expires August 27, 2022 The Cook Biotech agreement also requires certain minimum purchases, although through mutual agreement the parties have not established such minimums and to date have not enforced such provision, and establishes a formula for the transfer cost of the AxoGuard ® products. The agreement allows for termination provisions for both parties. Although there are products that AxoGen believes it could develop or obtain that would replace the AxoGuard ® products, the loss of the ability to sell the AxoGuard ® products could have a material adverse effect on AxoGen’s business until other replacement products would be available. Processor AxoGen is highly dependent on the continued availability of its processing facilities at CTS and could be harmed if the physical infrastructure of this facility is unavailable for any prolonged period of time. In addition, disruptions could lead to significant costs and reductions in revenues, as well as a potential harm to the AxoGen’s business reputation and financial results. The CTS agreement is for a five year term, subject to earlier termination by either party for cause, or after August 6, 2017 without cause, upon 18 months’ prior notice. Although AxoGen believes it can find and make operational a new facility in less than six months, the regulatory process for approval of facilities is time-consuming and unpredictable. AxoGen’s ability to rebuild or find acceptable lease facilities would take a considerable amount of time and expense and could cause a significant disruption in service to its customers. Although AxoGen has business interruption insurance which would, in instances other than lease termination, cover certain costs, it may not cover all costs nor help to regain AxoGen’s standing in the market. |
Summary of Significant Accoun21
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 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 delivered to the customer or distributor, at which time title passes to the customer or distributor, provided, however, that in the case of revenues from consigned sales delivery is determined when the product is utilized in a surgical procedure. Once a product is delivered, the Company has no further performance obligations. Delivery is defined as delivery 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. 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 any 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 receivables due to our past successful experience in collectability. Specific accounts that are deemed uncollectible are reserved at 100% of their outstanding balance. 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 $272,000 and $192,000 at December 31, 2016 and 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 and monitoring procedures. |
Inventories | Inventories Inventories are comprised of unprocessed tissue, work-in-process, Avance ® Nerve Graft, AxoGuard ® Nerve Connector, AxoGuard ® Nerve Protector, Avive TM Soft Tissue Membrane, AcroVal TM Neurosensory and Motor Testing System, AxoTouch TM Two-Point Discriminator and supplies and are valued at the lower of cost (first-in, first-out) or market. We regularly review the inventory status to determine the expected reserve level required. The Company policy is to monitor the shelf life of its products and reserve amounts based on the expiration date of the finished goods inventory. We also reserve a portion of raw materials based on our historical experience of tissue that fails during the inspection and debridement stage due to medical history, serology compliance or poor quality. |
Property and Equipment | Property and Equipment Depreciation and amortization is computed using the straight-line method over the estimated useful lives of the assets as follows: Furniture and equipment - 5 years Leasehold improvements years (or lease term if less) Processing equipment - 7 years Major additions and improvements are capitalized, while replacements, maintenance and repairs, which do not improve or extend the life of the respective assets, are expensed as incurred. When assets are retired or otherwise disposed of, related costs and accumulated depreciation and amortization are removed and any gain or loss is reported as other income or expense. |
Intangible Assets | Intangible Assets Intangible assets consist primarily of license agreements for exclusive rights to use various patented and patent-pending technologies described in Note 5 and other costs related to the license agreements, including patent prosecution and protection costs. Such costs are capitalized and amortized on a straight-line basis over the underlying terms of the license agreements or estimated useful life of patents, ranging from 5 to 20 years. |
Impairment of Long-lived Assets, Including License Agreements | Impairment of Long-lived Assets, Including License Agreements The Company reviews its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future undiscounted cash flows expected to be generated by the asset. If such assets are considered to be impaired, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the fair value of the assets. For the years ended December 31, 2016 and 2015, the Company did not record any impairment loss. |
Deferred Financing Costs | Deferred Financing Costs The Company records as a discount to debt all third party costs incurred, including equity-based payments, associated with the issuance of long-term debt. The costs are amortized to interest expense over the term of the debt using the effective interest method. |
Effective Interest Rate on Term Loan Agreement | Effective lnterest Rate on Term Loan Agreement AxoGen borrowed $25 million under the term loan agreement (the “Three Peaks Term Loan Agreement”) dated November 12, 2014, by and among AxoGen, as borrower, AC, as guarantor, 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, as administrative and collateral agent for the lenders. In addition, on November 12, 2014, AxoGen also entered into a ten-year Revenue Interest Agreement (the “Revenue Interest Agreement”) with Three Peaks. Royalty payments were 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. The Three Peaks Term Loan Agreement and Revenue Interest Agreement were used in calculating the effective interest rate. AxoGen recorded interest using its best estimate of the effective interest rate. This estimate took into account both the rate on the Three Peaks Term Loan Agreement and the rate associated with the Revenue Interest Agreement. The effective interest rate was based on actual payments to date, projected future revenues and the projected royalty payments and the quarterly interest payments due on the Three Peaks Term Loan Agreement. On October 26, 2016, the Three Peak Loan Agreement and Revenue Interest Agreement were paid in full and the Company had no further obligations pursuant to such agreements. From time to time, AxoGen reevaluated the expected cash flows and adjusted the effective interest rate. Determining the effective interest rate required judgment and was based on significant assumptions related to estimates of the amounts and timing of future revenue streams. Determination of these assumptions was highly subjective and different assumptions could have led to materially different outcomes. On October 26, 2016, the Three Peaks Loan Agreement and Revenue Interest Agreement were paid in full and the Company had no further obligations pursuant to such agreements. |
Advertising | Advertising Advertising costs are expensed as incurred. Advertising costs were $40,000 and $31,000 for the years ended December 31, 2016 and 2015, respectively, and are included in sales and marketing expense on the accompanying consolidated statements of operations. |
Research and Development Costs | Research and Development Costs Research and Development costs are expensed as incurred and were approximately $4,212,000 and $3,237,000 for the years ended December 31, 2016 and 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 the 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, 2013 through 2016; 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 | Stock-Based Compensation The Company measures all employee stock-based compensation awards using a fair value method and records such expense in its consolidated financial statements. The estimated value of the portion of the award that is ultimately expected to vest, taking into consideration estimated forfeitures based on the Company’s historical forfeiture rate, is recognized as expense over the requisite service periods in the Company’s consolidated statements of operations. The Company estimates the grant date fair value of stock option awards generally on the date of grant using the Black-Scholes option pricing models. With respect to performance stock units (“PSUs”), the number of shares that vest and are issued to the recipient is based upon the Company’s performance as measured against specified targets over the measurement period. The fair value of the PSUs is based on the Company’s closing stock price on the grant date and its estimate of achieving such performance targets. See further discussion and disclosures in Note 10, “Stock Incentive Plan.” |
Earnings (Loss) Per Common Share | Earnings (Loss) Per Share of Common Stock Earnings (loss) per share of common stock (EPS) is calculated for basic EPS by dividing net income (loss) available to common stockholders by the weighted average number of shares of common stock outstanding during the period. There were no dilutive instruments as of December 31, 2016 and 2015. The basic and diluted weighted average shares outstanding were 30,702,164 and 26,075,670 for the years ended December 31, 2016 and 2015, respectively. Basic and diluted net loss per commons share for all periods presented is computed by dividing the net loss attributable to common shareholders by the weighted-average number of common shares outstanding and common share equivalents outstanding, when dilutive. Potentially dilutive common share equivalents include common shares which would potentially be issued pursuant to stock warrants and stock options. Common share equivalents are not included in determining the fully diluted loss per share if their effect is antidilutive. |
Use of Estimates | Use of Estimates The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated 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 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 will be effective for the Company beginning on January 1, 2018. The standard may be applied retrospectively to each prior period presented or retrospectively with the cumulative effect recognized as of the adoption date. 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, 2016. The adoption of this guidance did not have a material impact on our consolidated financial statements. In April 2015, the FASB issued Accounting Standard Update (“ASU”) No. 2015-03, Simplifying the Presentation of Debt Issuance Costs, 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. During the first quarter of 2016, we retrospectively adopted this guidance. The implementation of this accounting standard resulted in a reduction of other noncurrent assets and long-term debt of approximately $846,000 in the Consolidated Balance Sheet as of December 31, 2015. 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 method of adoption and the impact of the provisions of the ASU. 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. 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. In November 2016, the FASB issued ASU No. 2016-18, Statement of Cash Flows (Topic 230), guidance that a statement of cash flows explains the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. The new guidance is effective for fiscal years beginning after December 15, 2017 with early adoption permitted. We are currently evaluating the impact of adoption of this guidance on our Statement of Cash Flows. The Company’s management has reviewed and considered all other recent accounting pronouncements and believe there are none that could potentially have a material impact on the Company’s consolidated financial condition, results of operations, or disclosures. |
Summary of Significant Accoun22
Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Summary of Significant Accounting Policies | |
Depreciation and amortization estimated useful life | Furniture and equipment - 5 years Leasehold improvements years (or lease term if less) Processing equipment - 7 years |
Inventories (Tables)
Inventories (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Inventory Disclosure [Abstract] | |
Schedule of inventories | December 31, December 31, 2016 2015 Finished goods $ $ Work in process Raw materials Inventory, net $ $ |
Property and Equipment (Tables)
Property and Equipment (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Property and Equipment | |
Schedule of Property and equipment | December 31, 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) | 12 Months Ended |
Dec. 31, 2016 | |
Intangible Assets | |
Schedule of intangible assets | December 31, December 31, 2016 2015 License agreements $ $ Patents Less: accumulated amortization Intangible assets, net $ $ |
Accounts Payable and Accrued 26
Accounts Payable and Accrued Expenses (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Accounts Payable and Accrued Expenses | |
Schedule of accounts payable and accrued expenses | December 31, December 31, 2016 2015 Accounts Payable and Accrued Expenses $ $ Accrued compensation Accounts Payable and Accrued Expenses $ $ |
Term Loan Agreements and Long27
Term Loan Agreements and Long Term Debt (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Term Loan Agreement | |
Schedule of Term Loan Agreements and Long Term Debt | December 31, December 31, 2016 2015 Term Loan Agreement and Revenue Interest Agreement with Three Peaks Capital S.a.r.l., net of $845,727 of deferred financing fees at December 31, 2015, for a total term loan amount of $25,000,000 which had a six year term and required interest only payments and a final principal payment due at the end of the term. Interest was 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 was for a period of ten years. Royalty payments were based on a royalty rate of 3.75% of revenues up to a maximum of $30 million in revenues in any 12 month period. On October 26, 2016, the Three Peaks Term Loan Agreement and Revenue Interest Agreement were paid in full and the Company had no further obligations pursuant to such agreements. $ — $ Term Loan Agreement with MidCap Financial for a total of $21,000,000, net of $771,185 of deferred financing fees at December 31, 2016, which has a fifty four month term and requires interest only payments for the first twenty four months, and thereafter, thirty monthly payments of principal and interest until the end of the term. Interest is payable monthly at 8.00% per annum plus the greater of LIBOR or 0.5% which as of December 31, 2016 resulted in a 8.5% rate. In addition to the interest charged on the Term Loan, the Company is also obligated to pay certain fees, including an annual agency fee of 0.25% of the aggregate principal amount of the Term Loan. — Revolving Loan Agreement with MidCap Financial for up to $10,000,000 with borrowings based upon eligible accounts receivable and inventory. Interest is payable monthly at 4.50% per annum plus the greater of LIBOR or 0.5% which as of December 31, 2016 resulted in a 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 0.5% of the principal amount outstanding on the Revolving Loan and an unused line fee of 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. — Equipment Lease Agreement with Cisco Capital for a total lease amount of $58,875 which has a 36 month term and requires no lease payments for the first three months of the lease and thirty three equal payments of principal and interest until the end of the term. Interest on the lease is payable monthly at 3.50% per annum. — Total Less current revolving loan — Less current maturities of long term debt — Long-term portion $ $ |
Schedule of Maturities of Long Term Debt | Year Ending December 31 Amount 2017 $ 2018 2019 2020 2021 Less unamortized debt issuance costs TOTAL $ |
Incentive Stock Plan (Tables)
Incentive Stock Plan (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Incentive Stock Plan | |
Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions [Table Text Block] | Year ended December 31, 2016 2015 Expected term (in years) Expected volatility % % Risk free rate % % Expected dividends — % — % |
Summary of stock option activity | Weighted Average Weighted Remaining Average Contractual Options Exercise Price Term(Years) Outstanding at December 31, 2014: Granted Forfeited Exercised Outstanding at December 31, 2015: Granted* Forfeited Exercised Outstanding at December 31, 2016 Exercisable at December 31, 2016 |
Schedule of non-vested share-based payment activity with employees | Weighted Average Number of Options Exercise Price Nonvested options - December 31, 2014: Granted Vested Forfeited Nonvested options - December 31, 2015: Granted* Vested Forfeited Nonvested options - December 31, 2016: |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Income Taxes | |
Schedule of differences between the carrying amount of assets and liabilities for financial reporting purposes and their respective income tax basis | December 31 2016 2015 Deferred tax assets: Net operating loss carryforwards $ $ Charitable contributions Inventory reserves Amortization Allowance for doubtful accounts Stock-based compensation Total deferred tax assets Deferred tax liabilities: Depreciation Net deferred tax assets Valuation allowance $ $ |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 12 Months Ended |
Dec. 31, 2016 | |
Commitments and Contingencies. | |
Schedule of estimated future minimum rental payments on the operating leases | Year Ending December 31 Amount 2017 2018 2019 2020 2021 TOTAL $ |
Summary of Significant Accoun31
Summary of Significant Accounting Policies - Accounts Receivable and Concentration of Credit Risk (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 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 | $ 272,000 | $ 192,000 |
Minimum | ||
Accounts Receivable and Concentration of Credit Risk | ||
Age of doubtful accounts | 60 days |
Summary of Significant Accoun32
Summary of Significant Accounting Policies - Inventories (Details) - USD ($) | Dec. 31, 2016 | Dec. 31, 2015 |
Summary of Significant Accounting Policies | ||
Finished goods | $ 4,132,036 | $ 2,732,823 |
Work in process | 205,116 | 237,108 |
Raw materials | 1,121,688 | 964,029 |
Inventory, net | 5,458,840 | 3,933,960 |
Inventory valuation reserves | $ 960,000 | $ 711,000 |
Summary of Significant Accoun33
Summary of Significant Accounting Policies - Property and Equipment (Details) | 12 Months Ended |
Dec. 31, 2016 | |
Furniture and Office Equipment | Minimum | |
Property and Equipment | |
Depreciation and amortization estimated useful life | 2 years |
Furniture and Office Equipment | Maximum | |
Property and Equipment | |
Depreciation and amortization estimated useful life | 5 years |
Leasehold Improvements | |
Property and Equipment | |
Depreciation and amortization estimated useful life | 5 years |
Processing equipment | Minimum | |
Property and Equipment | |
Depreciation and amortization estimated useful life | 5 years |
Processing equipment | Maximum | |
Property and Equipment | |
Depreciation and amortization estimated useful life | 7 years |
Summary of Significant Accoun34
Summary of Significant Accounting Policies - Intangible Assets, Long-lived Assets, Advertising and Research and Development Costs (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Intangible Asset disclosures | ||
Impairment charges of long lived assets | $ 0 | $ 0 |
Advertising costs | 40,000 | 31,000 |
Research and development | $ 4,212,023 | $ 3,237,171 |
Licensing Agreements and Patents [Member] | Minimum | ||
Intangible Asset disclosures | ||
Estimated useful life | 5 years | |
Licensing Agreements and Patents [Member] | Maximum | ||
Intangible Asset disclosures | ||
Estimated useful life | 20 years |
Summary of Significant Accoun35
Summary of Significant Accounting Policies - Note Payable (Details) - Three Peaks Loan - USD ($) | Nov. 12, 2014 | Dec. 31, 2015 |
Term Loan | ||
Note Payable | ||
Face amount | $ 25,000,000 | $ 25,000,000 |
Term of debt | 6 years | 6 years |
Maximum revenue subject to royalties payable calculation | $ 30,000,000 | |
Aggregate revenues subject to royalties payable, term | 12 months | |
Revenue Interest Purchase Agreement | ||
Note Payable | ||
Royalty percentage on net revenue | 3.75% | 3.75% |
Maximum revenue subject to royalties payable calculation | $ 30,000,000 | |
Aggregate revenues subject to royalties payable, term | 12 months | 10 years |
Summary of Significant Accoun36
Summary of Significant Accounting Policies - Earnings (Loss) Per Share of Common Stock (Details) - shares | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Summary of basic loss attributable to common shareholders | ||
Earnings per share dilutive securities | 0 | 0 |
Weighted Average Common Shares outstanding - basic and diluted | 30,702,164 | 26,075,670 |
Summary of Significant Accoun37
Summary of Significant Accounting Policies - Recent Accounting Pronouncements (Details) - USD ($) | Dec. 31, 2016 | Dec. 31, 2015 |
Long-term portion | $ 20,265,745 | $ 24,701,693 |
ASU 2015-03 | ||
Other noncurrent assets | (846,000) | |
Long-term portion | $ (846,000) |
Inventories (Details)
Inventories (Details) - USD ($) | Dec. 31, 2016 | Dec. 31, 2015 |
Inventory Disclosure [Abstract] | ||
Finished goods | $ 4,132,036 | $ 2,732,823 |
Work in process | 205,116 | 237,108 |
Raw materials | 1,121,688 | 964,029 |
Inventory, net | 5,458,840 | 3,933,960 |
Inventory valuation reserves | $ 960,000 | $ 711,000 |
Property and Equipment (Details
Property and Equipment (Details) - USD ($) | Dec. 31, 2016 | Dec. 31, 2015 |
Property and equipment | ||
Less: accumulated depreciation and amortization | $ (1,801,137) | $ (1,938,346) |
Property and equipment, net | 1,494,247 | 970,870 |
Furniture and Office Equipment | ||
Property and equipment | ||
Property and equipment, Gross | 1,270,173 | 1,186,815 |
Leasehold Improvements | ||
Property and equipment | ||
Property and equipment, Gross | 447,650 | 346,642 |
Processing equipment | ||
Property and equipment | ||
Property and equipment, Gross | $ 1,577,561 | $ 1,375,759 |
Intangible Assets - Components
Intangible Assets - Components of Intangible Assets (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Intangible assets consist of: | ||
Less: accumulated amortization | $ (463,575) | $ (399,509) |
Intangible assets, net | 828,979 | 678,082 |
Amortization of Intangible Assets | 74,871 | 45,828 |
Impairment charges of long lived assets | 0 | 0 |
Licensing Agreements | ||
Intangible assets consist of: | ||
Finite-lived intangible assets, gross | $ 984,342 | 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 | $ 308,212 | $ 179,997 |
Amortization period of intangible assets | 3 years | |
Non-amortizable pending costs | $ 308,212 |
Intangible Assets - Future Amor
Intangible Assets - Future Amortization Expense (Details) | Dec. 31, 2016USD ($) |
Future amortization of license and patent agreements | |
2,017 | $ 70,000 |
2,018 | 70,000 |
2,019 | 70,000 |
2,020 | 70,000 |
2,021 | 70,000 |
2,022 | 70,000 |
2,023 | 70,000 |
2,024 | $ 56,000 |
Intangible Assets - License Agr
Intangible Assets - License Agreements (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Sales and Marketing Expense | ||
Intangible assets | ||
Royalty fees included in sales and marketing expense | $ 812,000 | $ 526,000 |
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 43
Accounts Payable and Accrued Expenses (Details) - USD ($) | Dec. 31, 2016 | Dec. 31, 2015 |
Accounts Payable and Accrued Liabilities | ||
Accounts payable | $ 4,418,706 | $ 2,106,057 |
Accrued compensation | 2,583,459 | 1,589,070 |
Accounts Payable and Accrued Expenses | $ 7,002,165 | $ 3,695,127 |
Term Loan Agreements and Long44
Term Loan Agreements and Long Term Debt - Long-term Portion (Details) - USD ($) | Dec. 31, 2016 | Dec. 31, 2015 |
Note Payable | ||
Long term debt | $ 24,311,667 | $ 24,701,693 |
Less current revolver loan | (4,025,023) | |
Less current maturities of long term debt | (20,899) | |
Long-term portion | 20,265,745 | 24,701,693 |
Equipment Lease Agreement | ||
Note Payable | ||
Long term debt | 57,829 | |
Three Peaks Loan | Term Loan And Revenue Interest Purchase Agreement | ||
Note Payable | ||
Long term debt | $ 24,701,693 | |
MidCap Loan | Term Loan Agreement. | ||
Note Payable | ||
Long term debt | 20,228,815 | |
MidCap Loan | Revolver Credit facility | ||
Note Payable | ||
Long term debt | $ 4,025,023 |
Term Loan Agreements and Long45
Term Loan Agreements and Long Term Debt - Long-term Portion (Parenthetical) (Details) - USD ($) | Oct. 25, 2016 | Nov. 12, 2014 | Dec. 31, 2016 | Dec. 31, 2015 | Sep. 30, 2015 | Nov. 13, 2014 |
Note Payable | ||||||
Deferred financing fees | $ 771,185 | |||||
Equipment Lease Agreement | ||||||
Note Payable | ||||||
Face amount | $ 58,875 | |||||
Term of debt | 36 months | |||||
Interest payable, percent | 3.50% | |||||
Interest and principal payments, term | 33 months | |||||
No payments required, term | 3 months | |||||
Three Peaks Loan | Revenue Interest Purchase Agreement | ||||||
Note Payable | ||||||
Effective interest rate (as a percent) | 10.00% | 10.00% | ||||
Royalty percentage on net revenue | 3.75% | 3.75% | ||||
Maximum revenue subject to royalties payable calculation | $ 30,000,000 | |||||
Aggregate revenues subject to royalties payable, term | 12 months | 10 years | ||||
Three Peaks Loan | Term Loan | ||||||
Note Payable | ||||||
Face amount | $ 25,000,000 | $ 25,000,000 | ||||
Term of debt | 6 years | 6 years | ||||
Interest payable, percent | 9.00% | 9.00% | ||||
Interest rate spread | 1.00% | 1.00% | ||||
Effective interest rate (as a percent) | 10.00% | |||||
Maximum revenue subject to royalties payable calculation | $ 30,000,000 | |||||
Aggregate revenues subject to royalties payable, term | 12 months | |||||
Deferred financing fees | $ 845,727 | |||||
MidCap Loan | Term Loan Agreement. | ||||||
Note Payable | ||||||
Face amount | $ 21,000,000 | $ 21,000,000 | ||||
Term of debt | 54 months | |||||
Interest payable, percent | 8.00% | 8.00% | ||||
Interest rate spread | 0.50% | 0.50% | ||||
Effective interest rate (as a percent) | 8.50% | 8.50% | ||||
Deferred financing fees | $ 771,185 | |||||
Interest only payments, term | 24 months | |||||
Interest and principal payments, term | 30 months | |||||
Annual agency fee, percent of aggregate principal amount | (0.25%) | 0.25% | ||||
MidCap Loan | Revolver Credit facility | ||||||
Note Payable | ||||||
Interest payable, percent | 4.50% | 4.50% | ||||
Interest rate spread | 0.50% | 0.50% | ||||
Effective interest rate (as a percent) | 5.00% | 5.00% | ||||
Maximum line of credit amount | $ 10,000,000 | $ 10,000,000 | ||||
Collateral management fee, percent | (0.50%) | 0.50% | ||||
Unused line fee, percent | 0.50% | 0.50% |
Term Loan Agreements and Long46
Term Loan Agreements and Long Term Debt - Term Loan Agreement and Revenue Interest Agreement (Details) - Three Peaks Loan - USD ($) | Nov. 12, 2014 | Dec. 31, 2015 | Sep. 30, 2015 | Nov. 13, 2014 |
Term Loan | ||||
Debt Instrument [Line Items] | ||||
Face amount | $ 25,000,000 | $ 25,000,000 | ||
Term of debt | 6 years | 6 years | ||
Interest payable, percent | 9.00% | 9.00% | ||
Interest rate spread | 1.00% | 1.00% | ||
Effective interest rate (as a percent) | 10.00% | |||
Maximum revenue subject to royalties payable calculation | $ 30,000,000 | |||
Aggregate revenues subject to royalties payable, term | 12 months | |||
Revenue Interest Purchase Agreement | ||||
Debt Instrument [Line Items] | ||||
Effective interest rate (as a percent) | 10.00% | 10.00% | ||
Royalty percentage on net revenue | 3.75% | 3.75% | ||
Maximum revenue subject to royalties payable calculation | $ 30,000,000 | |||
Aggregate revenues subject to royalties payable, term | 12 months | 10 years |
Term Loan Agreements and Long47
Term Loan Agreements and Long Term Debt - Term Loan Agreement and Revolving Loan (Details) | Oct. 26, 2016USD ($) | Oct. 25, 2016USD ($)item | Dec. 31, 2016USD ($) | Dec. 31, 2015USD ($) |
Debt Instrument [Line Items] | ||||
Exit fee percent | 5.00% | |||
Debt issuance costs | $ 800,847 | $ 180,139 | ||
Three Peaks Loan | ||||
Debt Instrument [Line Items] | ||||
Payments of Debt Extinguishment Costs | $ 2,300,000 | |||
MidCap Loan | ||||
Debt Instrument [Line Items] | ||||
Proceeds from issuance of debt | 25,000,000 | |||
Debt issuance costs | 800,000 | |||
Term Loan Agreement. | MidCap Loan | ||||
Debt Instrument [Line Items] | ||||
Face amount | $ 21,000,000 | $ 21,000,000 | ||
Number of months requiring principal and interest payments | item | 30 | |||
Interest payable, percent | 8.00% | 8.00% | ||
Interest rate spread | 0.50% | 0.50% | ||
Effective interest rate (as a percent) | 8.50% | 8.50% | ||
Annual agency fee, percent of aggregate principal amount | (0.25%) | 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% | |||
Revolver Credit facility | MidCap Loan | ||||
Debt Instrument [Line Items] | ||||
Interest payable, percent | 4.50% | 4.50% | ||
Interest rate spread | 0.50% | 0.50% | ||
Effective interest rate (as a percent) | 5.00% | 5.00% | ||
Prepayment fee percent, year one | 3.00% | |||
Prepayment fee percent, year two | 2.00% | |||
Prepayment fee percent, thereafter | 1.00% | |||
Maximum line of credit amount | $ 10,000,000 | $ 10,000,000 | ||
Borrowing amount available | $ 5,400,000 | |||
Amount drawn | $ 4,000,000 | $ 4,025,023 | ||
Collateral management fee, percent | (0.50%) | 0.50% | ||
Unused line fee, percent | 0.50% | 0.50% | ||
Percent of Borrowing Base which accrues interest | 30.00% | |||
Revolver Credit facility | MidCap Loan | Maximum | ||||
Debt Instrument [Line Items] | ||||
Maximum line of credit amount | $ 15,000,000 |
Term Loan Agreements and Long48
Term Loan Agreements and Long Term Debt - Additional Information (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Debt Instrument [Line Items] | ||
Interest Expense | $ 5,386,268 | $ 3,988,619 |
Repayments of Long-term Debt | 2,446,676 | |
Amortization of Financing Costs and Discounts | 875,389 | $ 127,912 |
Write Off Of Deferred Financing Costs | 750,474 | |
Three Peaks Loan | ||
Debt Instrument [Line Items] | ||
Interest Expense | 1,700,000 | |
Repayments of Long-term Debt | 2,447,000 | |
Amortization of Financing Costs and Discounts | 747,000 | |
Write Off Of Deferred Financing Costs | $ 750,000 |
Term Loan Agreements and Long49
Term Loan Agreements and Long Term Debt - Annual Maturities (Details) | Dec. 31, 2016USD ($) |
Minimum annual payment amounts | |
2,017 | $ 20,899 |
2,018 | 1,421,834 |
2,019 | 8,415,096 |
2,020 | 8,400,000 |
2,021 | 2,800,000 |
Total, before debt issuance costs | 21,057,829 |
Less unamortized debt issuance costs | (771,185) |
Total | $ 20,286,644 |
Shareholders' Equity (Deficit)
Shareholders' Equity (Deficit) - Class of Stock and Warrants (Details) - $ / shares | Nov. 13, 2015 | Sep. 30, 2011 | Dec. 31, 2016 | Dec. 31, 2015 |
Shareholders' Equity (Deficit) | ||||
Authorized capital stock | 50,000,000 | 50,000,000 | ||
Common stock, Par value | $ 0.01 | $ 0.01 | ||
Term of warrants | 10 years | |||
Lenders warrant purchase | 89,686 | |||
Exercise price | $ 2.23 | |||
Warrants exercised, in shares | 44,843 | |||
Shares issued to warrant holder upon exercise of warrants | 25,903 |
Stockholders' Equity (Deficit)
Stockholders' Equity (Deficit) - Public Offering (Details) | Oct. 13, 2016USD ($)shares | Oct. 07, 2016item$ / sharesshares | Dec. 31, 2016USD ($)shares | Dec. 31, 2015USD ($)shares |
Shares of common stock sold | 33,008,865 | 29,984,591 | ||
Net proceeds from issuance of common stock | $ | $ 18,668,092 | $ 30,968,386 | ||
October 2016 Offering | ||||
Shares of common stock sold | 2,333,334 | |||
Public offering price (in dollars per share) | $ / shares | $ 7.50 | |||
Number of days to underwriter to sell additional common shares | 30 days | |||
October 2016 Offering | Directors and officers | ||||
Shares of common stock sold | 32,666 | |||
Number of directors and officers who purchased common stock | item | 5 | |||
October 2016 Offering inclusive of over-allotment option | ||||
Shares of common stock sold | 2,683,334 | |||
Net proceeds from issuance of common stock | $ | $ 18,670,000 | |||
Underwriting Agreement | ||||
Shares of common stock sold | 350,000 | 350,000 |
Incentive Stock Plan - Incentiv
Incentive Stock Plan - Incentive Plan Information (Details) | 12 Months Ended | |
Dec. 31, 2016USD ($)shares | Dec. 31, 2015USD ($) | |
Weighted-average assumptions | ||
Expected term | 4 years | |
Expected volatility (as a percent) | 69.08% | |
Risk free rate (as a percent) | 1.40% | |
AxoGen 2010 Stock Incentive Plan [Member] | ||
Stock Option disclosures | ||
Shares authorized for issuance | shares | 5,500,000 | |
AxoGen 2010 Stock Incentive Plan [Member] | Employee Consultants and Directors Stock Options [Member] | ||
Stock Option disclosures | ||
Stock option conversion ratio | 0.0372734 | |
Weighted-average assumptions | ||
Expected term | 4 years 7 months 6 days | |
Expected volatility (as a percent) | 59.58% | |
Risk free rate (as a percent) | 1.72% | |
AxoGen 2010 Stock Incentive Plan [Member] | Employee Consultants and Directors Stock Options [Member] | Minimum | ||
Stock Option disclosures | ||
Option term | 7 years | |
AxoGen 2010 Stock Incentive Plan [Member] | Employee Consultants and Directors Stock Options [Member] | Maximum | ||
Stock Option disclosures | ||
Option term | 10 years | |
AxoGen 2010 Stock Incentive Plan [Member] | Stock Options | ||
Stock Option disclosures | ||
Vesting period | 4 years | |
Share-based compensation expense | $ | $ 1,390,277 | $ 1,316,509 |
AxoGen 2010 Stock Incentive Plan [Member] | Stock Options | One Year After Grant Date | ||
Stock Option disclosures | ||
Vesting percentage | 25.00% | |
AxoGen 2010 Stock Incentive Plan [Member] | Stock Options | Every Six Months | ||
Stock Option disclosures | ||
Vesting percentage | 12.50% | |
Vesting period | 3 years | |
AxoGen 2010 Stock Incentive Plan [Member] | Directors and Officers Stock Options [Member] | ||
Stock Option disclosures | ||
Vesting percentage | 25.00% | |
Vesting period | 1 year | |
AxoGen 2010 Stock Incentive Plan [Member] | Consultant Stock Options [Member] | Minimum | ||
Stock Option disclosures | ||
Vesting period | 3 years | |
AxoGen 2010 Stock Incentive Plan [Member] | Consultant Stock Options [Member] | Maximum | ||
Stock Option disclosures | ||
Vesting period | 10 years |
Incentive Stock Plan - Stock Op
Incentive Stock Plan - Stock Option Activity (Details) - USD ($) | 12 Months Ended | ||
Dec. 31, 2016 | Dec. 31, 2015 | Dec. 31, 2014 | |
Additional option disclosures | |||
Total future stock compensation expense related to nonvested awards | $ 5,800,000 | ||
Weighted average period of recognition of future stock compensation expense | 2 years 8 months 16 days | ||
Employee Consultants and Directors Stock Options [Member] | |||
Stock option activity | |||
Options, Outstanding at the beginning of the period (in shares) | 3,228,027 | 2,743,818 | |
Options, Granted (in shares) | 1,529,850 | 946,250 | |
Options, Forfeited (in shares) | (75,938) | (290,478) | |
Options, Exercised (in shares) | (340,942) | (171,563) | |
Options, Outstanding at the end of the period (in shares) | 4,340,997 | 3,228,027 | 2,743,818 |
Options, Exercisable (in shares) | 2,219,671 | ||
Weighted Average Exercise Price, Outstanding at the beginning of the period (in dollars per share) | $ 3.40 | $ 3.03 | |
Weighted Average Exercise Price, Granted (in dollars per share) | 7.67 | 4.31 | |
Weighted Average Exercise Price, Forfeited (in dollars per share) | (3.74) | (3.12) | |
Weighted Average Exercise Price, Exercised (in dollars per share) | (3.16) | (2.99) | |
Weighted Average Exercise Price, Outstanding at the end of the period (in dollars per share) | 4.92 | $ 3.40 | $ 3.03 |
Weighted Average Exercise Price, Exercisable (in dollars per share) | $ 3.19 | ||
Weighted Average Remaining Contractual Term, Outstanding | 5 years 11 months 5 days | 5 years 5 months 5 days | 5 years 11 months 9 days |
Weighted Average Remaining Contractual Term, Exercisable | 7 years 9 months 29 days | ||
Additional option disclosures | |||
Average fair value of options granted | $ 7.67 | $ 4.31 | |
Intrinsic value of options exercised | $ 1,496,000 | $ 370,000 | |
Intrinsic value of options outstanding | 17,729,000 | 5,167,000 | |
Intrinsic value of options exercisable | $ 12,894,000 | $ 4,265,000 | |
Stock Options, Contingent Upon Optionee Re-election to Board of Directors [Member] | |||
Stock option activity | |||
Options, Granted (in shares) | 25,000 |
Incentive Stock Plan - Non-vest
Incentive Stock Plan - Non-vested Share-based Activity (Details) - Employee Consultants and Directors Stock Options [Member] - $ / shares | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Non-vested share-based payment activity with employees | ||
Number of non-vested options outstanding at the beginning of the period (in shares) | 1,179,969 | 1,159,486 |
Number of non-vested options granted (in shares) | 1,529,850 | 946,250 |
Number of options vested (in shares) | (512,562) | (635,289) |
Number of non-vested options forfeited (in shares) | (75,938) | (290,478) |
Number of non-vested options outstanding at the end of the period (in shares) | 2,121,319 | 1,179,969 |
Weighted average grant-date fair value of non-vested options outstanding at the beginning of the period (in dollars per share) | $ 4.21 | $ 3.37 |
Weighted average grant-date fair value of options granted (in dollars per share) | 7.67 | 4.31 |
Weighted average grant-date fair value of options vested (in dollars per share) | (4.21) | (3.32) |
Weighted average grant-date fair value of non-vested options forfeited (in dollars per share) | (3.74) | (3.12) |
Weighted average grant-date fair value of non-vested options outstanding at the end of the period (in dollars per share) | $ 6.72 | $ 4.21 |
Incentive Stock Plan - PSU and
Incentive Stock Plan - PSU and RSU Activity | Dec. 29, 2016USD ($)$ / sharesshares |
PSUs | Certain officers, exluding VP of Sales | |
Granted (in shares) | shares | 133,500 |
Grant date fair value (per share) | $ / shares | $ 8.95 |
Unrecognized compensation expense | $ 1,194,825 |
PSUs | Certain officers, exluding VP of Sales | Minimum | |
Payout opportunity | 0.00% |
Granted (in shares) | shares | 0 |
Unrecognized compensation expense | $ 0 |
PSUs | Certain officers, exluding VP of Sales | Maximum | |
Payout opportunity | 150.00% |
Granted (in shares) | shares | 200,250 |
Unrecognized compensation expense | $ 1,792,238 |
PSUs | Vice President of Sales | |
Granted (in shares) | shares | 28,600 |
Grant date fair value (per share) | $ / shares | $ 8.95 |
PSUs | Vice President of Sales | Minimum | |
Payout opportunity | 0.00% |
Unrecognized compensation expense | $ 0 |
PSUs | Vice President of Sales | Maximum | |
Payout opportunity | 100.00% |
Unrecognized compensation expense | $ 255,970 |
RSUs | Chief Executive Officer [Member] | |
Granted (in shares) | shares | 40,000 |
Grant date fair value (per share) | $ / shares | $ 8.95 |
Unrecognized compensation expense | $ 358,000 |
Term of awards | P3Y |
Income Taxes - Temporary Differ
Income Taxes - Temporary Differences (Details) - USD ($) | Dec. 31, 2016 | Dec. 31, 2015 |
Deferred tax assets: | ||
Net operating loss carryforwards | $ 38,299,400 | $ 33,424,100 |
Charitable contributions | 500 | 500 |
Inventory Reserves | 361,300 | 267,700 |
Amortization | 89,500 | 51,400 |
Allowance for doubtful accounts | 102,300 | 72,300 |
Stock-based compensation | 341,400 | 260,600 |
Total deferred tax assets | 39,194,400 | 34,076,600 |
Deferred tax liabilities: | ||
Depreciation | (83,300) | (62,400) |
Net deferred tax assets | 39,111,100 | 34,014,200 |
Valuation allowance | $ (39,111,100) | $ (34,014,200) |
Income Taxes - Net Operating Lo
Income Taxes - Net Operating Loss Carryforwards (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2016 | Dec. 31, 2015 | |
Income Taxes | ||
Net operating loss carryforwards | $ 101,300,000 | |
Valuation allowance | 5,096,900 | $ 4,452,000 |
Income tax (expense) benefit | $ 0 | $ 0 |
Employee Benefit Plan (Details)
Employee Benefit Plan (Details) | 1 Months Ended | 12 Months Ended | 24 Months Ended | ||
Dec. 31, 2016item | Dec. 31, 2015 | Dec. 31, 2016USD ($)item | Dec. 31, 2015USD ($) | Dec. 31, 2016 | |
AxoGen Simple IRA Plan | |||||
Defined Benefit Plan | |||||
Age limit for eligibility to participate in the plan | 18 | ||||
Matching contributions | 3.00% | 3.00% | |||
Required minimum contribution | 3.00% | ||||
Number of years during period specified | 3 | ||||
Period specified requiring minimum match of 3% | 5 years | ||||
Contributed matching funds | $ | $ 172,089 | ||||
AxoGen 401K Plan | |||||
Defined Benefit Plan | |||||
Age limit for eligibility to participate in the plan | 18 | ||||
Contributed matching funds | $ | $ 334,092 | ||||
Axogen 401K Plan, employee's contribution of first 3% of annual salary | |||||
Defined Benefit Plan | |||||
Matching contributions | 3.00% | ||||
Employee contribution matched, percent | 3.00% | ||||
Axogen 401K Plan, employee's contribution of next 2% of annual salary | |||||
Defined Benefit Plan | |||||
Matching contributions | 1.00% | ||||
Employee contribution matched, percent | 2.00% | ||||
Minimum | AxoGen Simple IRA Plan | |||||
Defined Benefit Plan | |||||
Matching contributions | 1.00% | ||||
Maximum | AxoGen Simple IRA Plan | |||||
Defined Benefit Plan | |||||
Matching contributions | 3.00% |
Commitments and Contingencies -
Commitments and Contingencies - Operating Leases (Details) | Jan. 23, 2017USD ($)ft² | Oct. 25, 2016USD ($)ft² | Mar. 16, 2016USD ($)ft² | Nov. 12, 2013 | Oct. 25, 2013USD ($)ft² | Dec. 31, 2016USD ($) | Dec. 31, 2015USD ($) |
Estimated future minimum rental payments on the leases | |||||||
2,017 | $ 439,082 | ||||||
2,018 | 437,900 | ||||||
2,019 | 182,251 | ||||||
2,020 | 165,116 | ||||||
2,021 | 86,638 | ||||||
TOTAL | 1,310,987 | ||||||
Total rent expense | $ 433,000 | $ 351,000 | |||||
SNH | 13631 Progress Boulevard, Suite 400, Alachua, Florida 32615 | |||||||
Commitments and Contingencies | |||||||
Leased office space in square feet | ft² | 11,761 | ||||||
Additional leased office space in square feet | ft² | 7,050 | ||||||
Term of Agreement | 5 years | ||||||
Agreement extension term | 5 years | 3 years | |||||
SNH | 13709 Progress Boulevard, Alachua, Florida 32615 | |||||||
Commitments and Contingencies | |||||||
Leased office space in square feet | ft² | 1,431 | ||||||
Term of Agreement | 5 years | ||||||
SNH | Minimum | 13631 Progress Boulevard, Suite 400, Alachua, Florida 32615 | |||||||
Commitments and Contingencies | |||||||
Annual lease expense | $ 248,000 | ||||||
SNH | Minimum | 13709 Progress Boulevard, Alachua, Florida 32615 | |||||||
Commitments and Contingencies | |||||||
Annual lease expense | $ 25,800 | ||||||
SNH | Maximum | 13631 Progress Boulevard, Suite 400, Alachua, Florida 32615 | |||||||
Commitments and Contingencies | |||||||
Annual lease expense | $ 332,000 | ||||||
SNH | Maximum | 13709 Progress Boulevard, Alachua, Florida 32615 | |||||||
Commitments and Contingencies | |||||||
Annual lease expense | $ 29,000 | ||||||
Ja-Cole | |||||||
Commitments and Contingencies | |||||||
Leased office space in square feet | ft² | 10,000 | 5,400 | |||||
Additional leased office space in square feet | ft² | 2,500 | 2,100 | |||||
Term of Agreement | 3 years | ||||||
Annual lease expense | $ 88,000 | $ 43,200 |
Commitments and Contingencies60
Commitments and Contingencies - Service Agreements (Details) - USD ($) | Aug. 06, 2015 | Dec. 31, 2016 | Dec. 31, 2011 |
Tissue Processing Agreement [Member] | |||
Service Agreements | |||
Term of agreement | 5 years | ||
Commitment extension period | 18 months | ||
Master Services Agreement For Clinical Research and Related Services [Member] | |||
Service Agreements | |||
Company is required to pay execution of the agreement | $ 151,318 |
Commitments and Contingencies61
Commitments and Contingencies - Concentrations (Details) | 12 Months Ended |
Dec. 31, 2016item | |
Vendor | Exclusive Distribution Agreement [Member] | |
Concentrations | |
Number of products from which revenue is derived | 3 |
Processor | |
Concentrations | |
Initial term of contract | 5 years |
Notice period for termination | 18 months |
Period within which new facility can be found and made operational | 6 months |