Cover Page
Cover Page - shares | 6 Months Ended | |
Jun. 30, 2020 | Jul. 28, 2020 | |
Cover [Abstract] | ||
Entity Registrant Name | Inspire Medical Systems, Inc. | |
Entity Central Index Key | 0001609550 | |
Document Type | 10-Q | |
Amendment Flag | false | |
Document Quarterly Report | true | |
Document Period End Date | Jun. 30, 2020 | |
Current Fiscal Year End Date | --12-31 | |
Document Fiscal Year Focus | 2020 | |
Document Fiscal Period Focus | Q2 | |
Document Transition Report | false | |
Entity File Number | 001-38468 | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 26-1377674 | |
Entity Address, Address Line One | 5500 Wayzata Blvd. | |
Entity Address, Address Line Two | Suite 1600 | |
Entity Address, City or Town | Golden Valley | |
Entity Address, State or Province | MN | |
Entity Address, Postal Zip Code | 55416 | |
City Area Code | 844 | |
Local Phone Number | 672-4357 | |
Title of 12(b) Security | Common Stock, $0.001 par value per share | |
Trading Symbol | INSP | |
Security Exchange Name | NYSE | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding (in shares) | 26,800,071 |
BALANCE SHEETS
BALANCE SHEETS - USD ($) $ in Thousands | Jun. 30, 2020 | Dec. 31, 2019 |
Current assets: | ||
Cash and cash equivalents | $ 211,237 | $ 22,860 |
Investments, short-term | 31,322 | 126,605 |
Accounts receivable, net of allowance for credit losses of $34 and $48, respectively | 10,235 | 13,131 |
Inventories | 9,966 | 5,834 |
Prepaid expenses and other current assets | 4,348 | 2,206 |
Total current assets | 267,108 | 170,636 |
Investments, long-term | 0 | 6,276 |
Property and equipment, net | 3,307 | 3,045 |
Operating lease right-of-use asset | 424 | 915 |
Other non-current assets | 469 | 381 |
Total assets | 271,308 | 181,253 |
Current liabilities: | ||
Accounts payable | 5,103 | 4,459 |
Accrued expenses | 7,939 | 12,397 |
Total current liabilities | 13,042 | 16,856 |
Notes payable | 24,632 | 24,522 |
Other non-current liability | 40 | 40 |
Total liabilities | 37,714 | 41,418 |
Stockholders' equity: | ||
Preferred Stock, $0.001 par value, 10,000,000 shares authorized; no shares issued and outstanding at June 30, 2020 and December 31, 2019 | 0 | 0 |
Common Stock, $0.001 par value per share; 200,000,000 shares authorized; 26,751,091 and 24,107,350 issued and outstanding at June 30, 2020 and December 31, 2019, respectively | 27 | 24 |
Additional paid-in capital | 452,891 | 319,865 |
Accumulated other comprehensive income | 154 | 102 |
Accumulated deficit | (219,478) | (180,156) |
Total stockholders' equity | 233,594 | 139,835 |
Total liabilities and stockholders' equity | $ 271,308 | $ 181,253 |
BALANCE SHEETS (Parenthetical)
BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Jun. 30, 2020 | Dec. 31, 2019 |
Statement of Financial Position [Abstract] | ||
Allowance for credit loss | $ 34 | $ 48 |
Allowance for credit loss | $ 0 | |
Preferred shares, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Preferred shares, authorized (in shares) | 10,000,000 | 10,000,000 |
Preferred shares, issued (in shares) | 0 | 0 |
Preferred stock, outstanding (in shares) | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, authorized (in shares) | 200,000,000 | 200,000,000 |
Common stock, issued (in shares) | 26,751,091 | 24,107,350 |
Common stock, outstanding (in shares) | 26,751,091 | 24,107,350 |
STATEMENTS OF OPERATIONS AND CO
STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (Unaudited) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Income Statement [Abstract] | ||||
Revenue | $ 12,183,000 | $ 18,032,000 | $ 33,530,000 | $ 34,282,000 |
Cost of goods sold | 1,954,000 | 3,094,000 | 5,251,000 | 5,948,000 |
Gross profit | 10,229,000 | 14,938,000 | 28,279,000 | 28,334,000 |
Operating expenses: | ||||
Research and development | 6,062,000 | 2,846,000 | 11,500,000 | 5,449,000 |
Selling, general and administrative | 26,981,000 | 20,268,000 | 56,033,000 | 39,838,000 |
Total operating expenses | 33,043,000 | 23,114,000 | 67,533,000 | 45,287,000 |
Operating loss | (22,814,000) | (8,176,000) | (39,254,000) | (16,953,000) |
Other (income) expense: | ||||
Interest income | (248,000) | (1,036,000) | (890,000) | (2,122,000) |
Interest expense | 526,000 | 523,000 | 1,051,000 | 1,060,000 |
Other (income) expense, net | (3,000) | (13,000) | (81,000) | 25,000 |
Total other (income) expense | 275,000 | (526,000) | 80,000 | (1,037,000) |
Loss before income taxes | (23,089,000) | (7,650,000) | (39,334,000) | (15,916,000) |
Income taxes | 0 | 0 | 0 | 0 |
Net loss | (23,089,000) | (7,650,000) | (39,334,000) | (15,916,000) |
Other comprehensive loss: | ||||
Unrealized (loss) gain on investments | (141,000) | 35,000 | 52,000 | 103,000 |
Total comprehensive loss | $ (23,230,000) | $ (7,615,000) | $ (39,282,000) | $ (15,813,000) |
Net loss per share, basic and diluted (in dollars per share) | $ (0.88) | $ (0.32) | $ (1.56) | $ (0.67) |
Weighted average common shares used to compute net loss per share, basic and diluted (in shares) | 26,289,272 | 23,753,647 | 25,227,574 | 23,598,466 |
STATEMENTS OF STOCKHOLDERS' EQU
STATEMENTS OF STOCKHOLDERS' EQUITY (Unaudited) - USD ($) $ in Thousands | Total | Revision of Prior Period, Accounting Standards Update, Adjustment | Follow-on Offering | Common Stock | Common StockFollow-on Offering | Additional Paid-In Capital | Additional Paid-In CapitalFollow-on Offering | Accumulated Other Comprehensive (Loss) Income | Accumulated Deficit | Accumulated DeficitRevision of Prior Period, Accounting Standards Update, Adjustment |
Beginning balance (in shares) at Dec. 31, 2018 | 23,401,675 | |||||||||
Beginning balance at Dec. 31, 2018 | $ 163,999 | $ 23 | $ 310,941 | $ (52) | $ (146,913) | |||||
Stockholders' Equity [Roll Forward] | ||||||||||
Stock options exercised (in shares) | 100,089 | |||||||||
Stock options exercised | 166 | $ 1 | 165 | |||||||
Issuance of common stock (in shares) | 1,246 | |||||||||
Issuance of common stock | 58 | 58 | ||||||||
Stock-based compensation expense | 1,391 | 1,391 | ||||||||
Other comprehensive income (loss) | 68 | 68 | ||||||||
Net loss | (8,266) | (8,266) | ||||||||
Ending balance (in shares) at Mar. 31, 2019 | 23,503,010 | |||||||||
Ending balance at Mar. 31, 2019 | 157,416 | $ 24 | 312,555 | 16 | (155,179) | |||||
Beginning balance (in shares) at Dec. 31, 2018 | 23,401,675 | |||||||||
Beginning balance at Dec. 31, 2018 | $ 163,999 | $ 23 | 310,941 | (52) | (146,913) | |||||
Ending balance (in shares) at Dec. 31, 2019 | 24,107,350 | 24,107,350 | ||||||||
Ending balance at Dec. 31, 2019 | $ 139,835 | $ 12 | $ 24 | 319,865 | 102 | (180,156) | $ 12 | |||
Stockholders' Equity [Roll Forward] | ||||||||||
Accounting Standards Update [Extensible List] | us-gaap:AccountingStandardsUpdate201613Member | |||||||||
Beginning balance (in shares) at Mar. 31, 2019 | 23,503,010 | |||||||||
Beginning balance at Mar. 31, 2019 | $ 157,416 | $ 24 | 312,555 | 16 | (155,179) | |||||
Stockholders' Equity [Roll Forward] | ||||||||||
Stock options exercised (in shares) | 378,490 | |||||||||
Stock options exercised | 604 | 604 | ||||||||
Issuance of common stock (in shares) | 1,043 | |||||||||
Issuance of common stock | 58 | 58 | ||||||||
Issuance of common stock for employee stock purchase plan (in shares) | 18,187 | |||||||||
Issuance of common stock for employee stock purchase plan | 637 | 637 | ||||||||
Stock-based compensation expense | 1,389 | 1,389 | ||||||||
Other comprehensive income (loss) | 35 | 35 | ||||||||
Net loss | (7,650) | (7,650) | ||||||||
Ending balance (in shares) at Jun. 30, 2019 | 23,900,730 | |||||||||
Ending balance at Jun. 30, 2019 | $ 152,489 | $ 24 | 315,243 | 51 | (162,829) | |||||
Beginning balance (in shares) at Dec. 31, 2019 | 24,107,350 | 24,107,350 | ||||||||
Beginning balance at Dec. 31, 2019 | $ 139,835 | 12 | $ 24 | 319,865 | 102 | (180,156) | 12 | |||
Stockholders' Equity [Roll Forward] | ||||||||||
Stock options exercised (in shares) | 254,142 | |||||||||
Stock options exercised | 787 | 787 | ||||||||
Issuance of common stock (in shares) | 897 | |||||||||
Issuance of common stock | 72 | 72 | ||||||||
Stock-based compensation expense | 2,749 | 2,749 | ||||||||
Other comprehensive income (loss) | 193 | 193 | ||||||||
Net loss | (16,245) | (16,245) | ||||||||
Ending balance (in shares) at Mar. 31, 2020 | 24,362,389 | |||||||||
Ending balance at Mar. 31, 2020 | $ 127,403 | $ 24 | 323,473 | 295 | (196,389) | |||||
Beginning balance (in shares) at Dec. 31, 2019 | 24,107,350 | 24,107,350 | ||||||||
Beginning balance at Dec. 31, 2019 | $ 139,835 | $ 12 | $ 24 | 319,865 | 102 | (180,156) | $ 12 | |||
Stockholders' Equity [Roll Forward] | ||||||||||
Stock options exercised (in shares) | 324,995 | |||||||||
Ending balance (in shares) at Jun. 30, 2020 | 26,751,091 | 26,751,091 | ||||||||
Ending balance at Jun. 30, 2020 | $ 233,594 | $ 27 | 452,891 | 154 | (219,478) | |||||
Beginning balance (in shares) at Mar. 31, 2020 | 24,362,389 | |||||||||
Beginning balance at Mar. 31, 2020 | 127,403 | $ 24 | 323,473 | 295 | (196,389) | |||||
Stockholders' Equity [Roll Forward] | ||||||||||
Stock options exercised (in shares) | 70,853 | |||||||||
Stock options exercised | 732 | 732 | ||||||||
Issuance of common stock (in shares) | 1,119 | 2,300,000 | ||||||||
Issuance of common stock | 73 | $ 124,654 | $ 3 | 73 | $ 124,651 | |||||
Issuance of common stock for employee stock purchase plan (in shares) | 16,730 | |||||||||
Issuance of common stock for employee stock purchase plan | 1,059 | 1,059 | ||||||||
Stock-based compensation expense | 2,903 | 2,903 | ||||||||
Other comprehensive income (loss) | (141) | (141) | ||||||||
Net loss | $ (23,089) | (23,089) | ||||||||
Ending balance (in shares) at Jun. 30, 2020 | 26,751,091 | 26,751,091 | ||||||||
Ending balance at Jun. 30, 2020 | $ 233,594 | $ 27 | $ 452,891 | $ 154 | $ (219,478) |
STATEMENTS OF CASH FLOWS (Unaud
STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2020 | Jun. 30, 2019 | |
Operating activities | ||
Net loss | $ (39,334) | $ (15,916) |
Adjustments to reconcile net loss: | ||
Depreciation and amortization | 375 | 209 |
Accretion of investment discount | (88) | (609) |
Accretion of debt discount | 110 | 161 |
Non-cash lease expense | 491 | 433 |
Stock-based compensation expense | 5,652 | 2,780 |
Non-cash stock issuance for services rendered | 145 | 116 |
Other, net | (98) | (141) |
Changes in operating assets and liabilities: | ||
Accounts receivable | 2,905 | (2,801) |
Inventories | (4,131) | (894) |
Prepaid expenses and other current assets | (2,233) | (4,284) |
Accounts payable | 639 | (745) |
Accrued expenses and other liabilities | (4,459) | (2,135) |
Net cash used in operating activities | (40,026) | (23,826) |
Investing activities | ||
Purchases of property and equipment | (636) | (1,233) |
Purchases of investments | (14,907) | (101,037) |
Proceeds from sales or maturities of investments | 116,703 | 79,204 |
Net cash provided by (used in) investing activities | 101,160 | (23,066) |
Financing activities | ||
Payment of debt fees | 0 | (531) |
Proceeds from the exercise of stock options | 1,519 | 769 |
Proceeds from the sale of common stock | 124,654 | 0 |
Proceeds from issuance of common stock from employee stock purchase plan | 1,059 | 637 |
Net cash provided by financing activities | 127,232 | 875 |
Effect of exchange rate on cash | 11 | (3) |
Increase (decrease) in cash and cash equivalents | 188,377 | (46,020) |
Cash and cash equivalents at beginning of period | 22,860 | 97,288 |
Cash and cash equivalents at end of period | 211,237 | 51,268 |
Supplemental cash flow information | ||
Cash paid for interest | $ 947 | $ 1,087 |
Organization
Organization | 6 Months Ended |
Jun. 30, 2020 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization | Organization Description of Business Inspire Medical Systems, Inc. is a medical technology company focused on the development and commercialization of innovative and minimally invasive solutions for patients with obstructive sleep apnea ("OSA"). Our proprietary Inspire system is the first and only United States ("U.S.") Food and Drug Administration ("FDA") approved neurostimulation technology that provides a safe and effective treatment for moderate to severe OSA. Inspire therapy received premarket approval ("PMA") from the FDA in April 2014 and has been commercially available in certain European markets since November 2011. In June 2018, Japan's Ministry of Health, Labour and Welfare approved Inspire therapy to treat moderate to severe OSA, and we are currently seeking reimbursement coverage in Japan. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 6 Months Ended |
Jun. 30, 2020 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | Summary of Significant Accounting Policies Basis of Presentation The accompanying financial statements have been prepared without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). The financial statements may not include all disclosures required by U.S. generally accepted accounting principles ("U.S. GAAP"); however, we believe that the disclosures are adequate to make the information presented not misleading. These unaudited financial statements should be read in conjunction with the audited financial statements and the notes thereto included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2019. In the opinion of management, all adjustments, consisting of only normal recurring adjustments that are necessary to present fairly the financial position, results of operations, and cash flows for the interim periods, have been made. The results of operations for the interim periods are not necessarily indicative of the operating results for the full fiscal year or any future periods. Certain prior period amounts have been reclassified to conform to the current presentation. These reclassifications had no material effect on the reported results of operations. Follow-On Public Offering On April 16, 2020, we completed a follow-on offering that included our offer and sale of 2,300,000 shares of common stock at a public offering price of $58.00 per share. We received net proceeds of approximately $124.7 million after deducting underwriting discounts and commissions and offering expenses. Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts and disclosures reported in the financial statements. We use significant judgment when making estimates related to the allowance for credit losses, inventory reserves, warranty reserves, and the valuation of stock-based awards. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results could differ from those estimates. Cash and Cash Equivalents We consider all highly liquid securities, readily convertible to cash, that mature within 90 days or less from the date of purchase to be cash equivalents. The carrying amount reported in the balance sheets for cash is cost, which approximates fair value. Foreign Currency Sales and expenses denominated in foreign currencies are translated at average exchange rates in effect throughout the year. Foreign currency transaction gains and losses are included in other (income) expense, net in the statements of operations and comprehensive loss. Assets and liabilities of foreign operations are remeasured at period-end exchange rates with the impacts of foreign currency remeasurement recognized in other (income) expense, net in the statements of operations and comprehensive loss. Investments At June 30, 2020 and December 31, 2019, our short-term investments consisted of commercial paper, corporate bonds, asset-backed securities, and U.S. government securities which are classified as available-for-sale and had maturities less than one year. Our long-term investments consisted of corporate bonds. Investments are reported at their estimated fair market value which are based on quoted, active or inactive market prices when available. Any unrealized gains and losses due to interest rate fluctuations and other external factors are reported as a separate component of accumulated other comprehensive income. We had $0.2 million and $0.1 million of unrecognized income in accumulated other comprehensive income at June 30, 2020 and December 31, 2019, respectively. Any realized gains and losses are calculated on the specific identification method and reported net in other (income) expense. For both the three months ended June 30, 2020 and 2019, we recognized no realized gains, net. For the six months ended June 30, 2020 and 2019, we recognized $0.1 million and $0 of realized gains, net, respectively. We recognize expected credit losses on investments in accordance with Accounting Standards Update ("ASU"), ASU 2016-13, Financial Instruments - Credit Losses ("ASU 2016-13"), which we adopted effective January 1, 2020 using the modified retrospective approach. The adoption of ASU 2016-13 did not have a material impact on the amount and timing of credit losses recognized in our financial statements. We reassess our estimated credit losses on investments each reporting period. U.S. government securities and cash equivalents are under a "zero-loss exception" for credit losses, meaning no credit loss risk calculation is necessary on those instruments due to the exceptionally low rate of default, which continues to decrease as the securities approach maturity, which for us is no longer than two years. For non-U.S. government securities, we use a discounted cash flow approach to calculate expected credit losses using estimated default rates based upon historical loss data, current conditions, as well as expectations of future economic conditions. We record changes in the allowance for credit losses for available-for-sale debt securities with a corresponding adjustment in credit loss expense on the statement of operations and comprehensive loss. No reversal of a previously recorded allowance for credit losses may be made to an amount below zero. The total allowance for credit losses was $0 at June 30, 2020. Fair Value of Financial Instruments We measure certain financial assets and liabilities at fair value on a recurring basis, including cash equivalents and investments. Fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or a liability. A three-tier fair value hierarchy is established as a basis for considering such assumptions and for inputs used in the valuation methodologies in measuring fair value: Level 1—Observable inputs, such as quoted prices (unadjusted) for identical assets or liabilities in active markets. Level 2—Other inputs that are based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant inputs are observable in the market or can be derived from observable market data. Where applicable, these models project future cash flows and discount the future amounts to a present value using market-based observable inputs, including interest rate curves, foreign exchange rates, and credit ratings. Level 3—Unobservable inputs that are supported by little or no market activities, which would require us to develop our own assumptions. We use the methods and assumptions described below in determining the fair value of our financial instruments. Money market funds: Fair values of money market funds are based on quoted market prices in active markets. These are included as Level 1 measurements in the tables below. Commercial paper: Short-term, highly liquid investments are included as a Level 2 measurement in the tables below. Corporate bonds: Consists of short- and long-term notes and bonds with various yields. These are included as a Level 2 measurement in the tables below. Asset-backed securities: Consists of short-term, securitized investments backed by pools of credit card receivables. These are included as a Level 2 measurement in the tables below. U.S. government securities: Consists of U.S. government Treasury bills and notes with original maturities of less than two years. These are included as a Level 1 measurement in the table below. The following tables sets forth by level within the fair value hierarchy our assets that are measured on a recurring basis and reported at fair value as of June 30, 2020 and December 31, 2019. Assets are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. Fair Value Measurements as of June 30, 2020 Estimated Level 1 Level 2 Level 3 Cash equivalents: Money market funds $ 209,830 $ 209,830 $ — $ — Total cash equivalents 209,830 209,830 — — Investments: Asset-backed securities $ 6,112 $ — $ 6,112 $ — U.S. government securities 25,210 25,210 — — Total investments 31,322 25,210 6,112 — Total cash equivalents and investments $ 241,152 $ 235,040 $ 6,112 $ — Fair Value Measurements as of December 31, 2019 Estimated Level 1 Level 2 Level 3 Cash equivalents: Money market funds $ 18,429 $ 18,429 $ — $ — Total cash equivalents 18,429 18,429 — — Investments: Commercial paper $ 14,214 $ — $ 14,214 $ — Corporate bonds 32,485 — 32,485 — Asset-backed securities 8,100 — 8,100 — U.S. government securities 78,082 78,082 — — Total investments 132,881 78,082 54,799 — Total cash equivalents and investments $ 151,310 $ 96,511 $ 54,799 $ — There were no transfers between levels during the periods ended June 30, 2020 and December 31, 2019. Concentration of Credit Risk Financial instruments, which potentially subject us to concentrations of credit risk, consist principally of cash equivalents, investments, and accounts receivable. Our investment policy limits investments to certain types of debt securities issued by the U.S. government and its agencies, corporations with investment-grade credit ratings, or commercial paper and money market funds issued by the highest quality financial and non-financial companies. We place restrictions on maturities and concentration by type and issuer. We are exposed to credit risk in the event of a default by the issuers of these securities to the extent recorded on the balance sheets. However, as of June 30, 2020 and December 31, 2019, we limited our credit risk associated with cash equivalents by placing investments with banks we believe are highly creditworthy. We believe that the credit risk in our accounts receivable is mitigated by our credit evaluation process, relatively short collection terms, and dispersion of our customer base. We generally do not require collateral, and losses on accounts receivable have historically been within management's expectations. Accounts Receivable and Allowance for Expected Credit Losses Trade accounts receivable are recorded at the invoiced amount and do not bear interest. Customer credit terms are established prior to shipment with the general standard being net 30 days. Collateral or any other security to support payment of these receivables generally is not required. We recognize expected credit losses on accounts receivable in accordance with Accounting Standards Update ("ASU"), ASU 2016-13, Financial Instruments - Credit Losses ("ASU 2016-13"), which we adopted effective January 1, 2020 using the modified retrospective approach through a cumulative-effect adjustment to retained earnings. The adoption of ASU 2016-13 did not have a material impact on the amount and timing of credit losses recognized in our financial statements. Each reporting period, we estimate the credit loss related to accounts receivable based on a migration analysis of accounts grouped by individual receivables delinquency status, and apply our historic loss rate adjusted for management's assumption of future market conditions. Any change in the allowance subsequent to the effective date of January 1, 2020 from new receivables acquired, or changes due to credit deterioration on previously existing receivables, is recorded in selling, general and administrative expenses. Write-offs of receivables considered uncollectible, and any related subsequent recoveries of previously written off receivables, are deducted from the allowance. Specific accounts receivable are written-off once a determination is made that the amount is uncollectible. The write-off is recorded in the period in which the account receivable is deemed uncollectible. Recoveries are recognized when received and as a direct credit to earnings or as a reduction to the allowance for credit losses (which would indirectly reduce earnings by decreasing bad debt expense). Inventories Inventories are valued at the lower of cost or net realizable value, computed on a first-in, first-out basis and consisted of the following: June 30, 2020 December 31, 2019 Raw materials $ 1,070 $ 781 Finished goods 8,896 5,053 Total inventories, net of reserves $ 9,966 $ 5,834 We regularly review inventory quantities on-hand for excess and obsolete inventory and, when circumstances indicate, incur charges to write down inventories to their net realizable value. The determination of a reserve for excess and obsolete inventory involves management exercising judgment to determine the required reserve, considering future demand, product life cycles, introduction of new products and current market conditions. The reserve for excess and obsolete inventory was less than $0.1 million as of both June 30, 2020 and December 31, 2019. Property and Equipment Property and equipment are stated at cost, less accumulated depreciation and amortization and consisted of the following: June 30, 2020 December 31, 2019 Computer equipment and software $ 1,306 $ 790 Manufacturing equipment 1,319 1,050 Other equipment 96 68 Leasehold improvements 192 192 Construction in process 1,774 1,950 Property and equipment, cost 4,687 4,050 Less: accumulated depreciation and amortization (1,380) (1,005) Property and equipment, net $ 3,307 $ 3,045 Depreciation is determined using the straight-line method over the estimated useful lives of the respective assets, generally three Impairment of Long-lived Assets Long-lived assets consist primarily of property and equipment and are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If circumstances require that an asset be tested for possible impairment, we compare the undiscounted cash flows expected to be generated by the asset to the carrying amount of the asset. If the carrying amount of the asset is not recoverable on an undiscounted cash flow basis, we determine the fair value of the asset and recognize an impairment loss to the extent the carrying amount of the asset exceeds its fair value. We determine fair value using the income approach based on the present value of expected future cash flows or other appropriate measures of estimated fair value. Our cash flow assumptions consider historical and forecasted revenue and operating costs and other relevant factors. We did not record any impairment charges on long-lived assets during either of the six months ended June 30, 2020 or 2019. Accrued Expenses Accrued expenses consisted of the following: June 30, 2020 December 31, 2019 Payroll related $ 6,968 $ 10,304 Interest 155 160 Current operating lease liability 338 828 Other accrued expenses 478 1,105 Total accrued expenses $ 7,939 $ 12,397 Revenue Recognition We recognize revenue in accordance with Accounting Standards Codification ("ASC") Topic 606, Revenue from Contracts with Customers ("ASC 606"). Revenues from product sales are recognized when the customer obtains control of the product, which occurs at a point in time, either upon shipment of the product or receipt of the product, depending on shipment terms. Our standard shipping terms are free on board shipping point, unless the customer requests that control and title to the inventory transfer upon delivery. In those cases where shipping and handling costs are billed to customers, we classify the amounts billed as a component of cost of goods sold. Revenue is measured as the amount of consideration we expect to receive, adjusted for any applicable estimates of variable consideration and other factors affecting the transaction price, which is based on the invoiced price, in exchange for transferring products. All revenue is recognized when we satisfy our performance obligations under the contract. The majority of our contracts have a single performance obligation and are short term in nature. Sales taxes and value added taxes in foreign jurisdictions that are collected from customers and remitted to governmental authorities are accounted for on a net basis and therefore are excluded from net sales. Shipping and handling costs associated with outbound freight after control over a product has transferred to a customer are accounted for as a fulfillment cost and are included in cost of goods sold. Variable consideration related to certain customer sales incentives is estimated based on the amounts expected to be paid based on the agreement with the customer using probability assessments. We offer customers a limited right of return for our product in case of non-conformity or performance issues. We estimate the amount of our product sales that may be returned by our customers based on historical sales and returns. As our historical product returns to date have been immaterial, we have not recorded a reduction in revenue related to variable consideration for product returns. See Note 9 for disaggregated revenue by geographic area. Cost of Goods Sold Cost of goods sold consists primarily of acquisition costs for the components of the Inspire system, overhead costs, scrap and inventory obsolescence, as well as distribution-related expenses such as logistics and shipping costs, net of costs charged to customers. The overhead costs include the cost of material procurement, depreciation expense for production equipment, warranty replacement costs, and operations supervision and management personnel, including employee compensation, stock-based compensation, supplies, and travel. Research and Development Research and development expenses consist primarily of product development, clinical and regulatory affairs, quality assurance, consulting services, and other costs associated with products and technologies in development. These expenses include employee compensation, stock-based compensation, supplies, travel, and facility costs. Clinical expenses include clinical trial design, clinical site reimbursement, data management, travel expenses, and the cost of manufacturing products for clinical trials. Stock-Based Compensation We maintain an equity incentive plan to provide long-term incentives for eligible employees, consultants, and members of the board of directors. The plan allows for the issuance of non-statutory and incentive stock options to employees and non-statutory stock options to consultants and directors. We also offer an employee stock purchase plan which allows participating employees to purchase shares of our common stock at a discount through payroll deductions. We recognize equity-based compensation expense for awards of equity instruments to employees and directors based on the grant date fair value of those awards in accordance with ASC Topic 718, Stock Compensation ("ASC 718"). ASC 718 requires all equity-based compensation awards to employees and directors, including grants of restricted shares and stock options, to be recognized as expense in the statements of operations and comprehensive loss based on their grant date fair values. We estimate the fair value of stock options using the Black-Scholes option pricing model. The fair value of each purchase under the employee stock purchase plan is estimated at the beginning of the offering period using the Black-Scholes option pricing model. We have not granted any restricted shares. We have not granted any stock-based awards to our consultants. The Black-Scholes option pricing model requires the input of certain subjective assumptions, including (i) the expected share price volatility, (ii) the expected term of the award, (iii) the risk-free interest rate and (iv) the expected dividend yield. Due to the lack of a public market for the trading of our common stock and a lack of company-specific historical and implied volatility data, we have based our estimate of expected volatility on the historical volatility of a group of similar companies that are publicly traded. The historical volatility is calculated based on a period of time commensurate with the expected term assumption. The group of representative companies have characteristics similar to us, including stage of product development and focus on the life science industry. We use the simplified method, which is the average of the final vesting tranche date and the contractual term, to calculate the expected term for options granted to employees and directors as we do not have sufficient historical exercise data to provide a reasonable basis upon which to estimate the expected term. The risk-free interest rate is based on a U.S. government Treasury instrument whose term is consistent with the expected term of the stock options. We use an assumed dividend yield of zero as we have never paid dividends and have no current plans to pay any dividends on our common stock. We expense the fair value of our equity-based compensation awards granted to employees and directors on a straight-line basis over the associated service period, which is generally the period in which the related services are received. We account for award forfeitures as they occur. Advertising Expenses We expense the costs of advertising, including promotional expenses, as incurred. Advertising expenses were $5.0 million and $4.4 million during the three months ended June 30, 2020 and 2019, and $11.4 million and $7.9 million during the six months ended June 30, 2020 and 2019, respectively. Leases Operating leases are included in operating lease right-of-use ("ROU") assets and current operating lease liabilities in our balance sheets. ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. In determining the present value of lease payments, we use our incremental borrowing rate based on the information available at the lease commencement date as the rate implicit in the lease is not readily determinable. The determination of our incremental borrowing rate requires management judgment based on information available at lease commencement. The operating lease ROU assets also include adjustments for prepayments, accrued lease payments and exclude lease incentives. Our lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise such options. Operating lease cost is recognized on a straight-line basis over the expected lease term. Lease agreements that include lease and non-lease components are accounted for as a single lease component. Lease agreements with a noncancelable term of less than 12 months are not recorded on our balance sheets. Income Taxes We account for income taxes using the liability method. Under this method, deferred tax assets and liabilities are determined based on the differences between the financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates that will be in effect when the differences are expected to reverse. Valuation allowances against deferred tax assets are established, when necessary, to reduce deferred tax assets to the amounts expected to be realized. As we have historically incurred operating losses, we have recorded a full valuation allowance against our net deferred tax assets, and there is no provision for income taxes other than the accrual for uncertain tax benefits. Our policy is to record interest and penalties expense related to uncertain tax positions as other expense in the statements of operations and comprehensive loss. Comprehensive Loss Comprehensive loss consists of net loss and changes in unrealized gains and losses due to interest rate fluctuations and other external factors on investments classified as available-for-sale. Accumulated other comprehensive income is presented in the accompanying balance sheets as a component of stockholders' equity. Loss Per Share Basic net loss per share is computed by dividing the net loss by the weighted average number of shares of common stock outstanding during the period. Diluted net loss per share is computed by dividing the net loss by the weighted average number of shares of common stock and dilutive potential shares of common stock outstanding during the period. Because we have reported a net loss for all periods presented, diluted net loss per share is the same as basic net loss per share for those periods as all potentially dilutive shares consisting of stock options and warrants were antidilutive in those periods. Recent Accounting Pronouncements We have reviewed and considered all other recent accounting pronouncements that have not yet been adopted and believe there are none that could potentially have a material impact on our business practices, financial condition, results of operations, or disclosures. |
Investments
Investments | 6 Months Ended |
Jun. 30, 2020 | |
Investments, Debt and Equity Securities [Abstract] | |
Investments | Investments Our investments are classified as available-for-sale and consist of the following: June 30, 2020 Unrealized Cost Gains Losses Fair Value Short-Term: Asset-backed securities $ 6,100 $ 12 $ — $ 6,112 U.S. government securities 25,068 142 — 25,210 Short-term investments $ 31,168 $ 154 $ — $ 31,322 December 31, 2019 Unrealized Cost Gains Losses Fair Value Short-Term: Commercial paper $ 14,214 $ — $ — $ 14,214 Corporate bonds 26,194 16 (2) 26,208 Asset-backed securities 8,097 5 (1) 8,101 U.S. government securities 78,017 65 — 78,082 Short-term investments $ 126,522 $ 86 $ (3) $ 126,605 Long-Term: Corporate bonds $ 6,258 $ 18 $ — $ 6,276 Long-term investments $ 6,258 $ 18 $ — $ 6,276 As of June 30, 2020 and December 31, 2019, we had no investments with a contractual maturity of greater than two years. Currently, we do not intend to sell the investments and it is not more likely than not that we will be required to sell the investments before recovery of their amortized cost bases, which may be maturity. We do not consider those investments to be other-than-temporarily impaired at June 30, 2020. At the end of each reporting period, we evaluate potential credit impairment on available-for-sale securities in an unrealized loss position, based on the expected cash flows to be collected and the yield-to-maturity on those securities. Securities with a valuation allowance for expected credit losses and deemed uncollectible are permanently written-down, and a reversal out of the valuation allowance occurs. |
Leases
Leases | 6 Months Ended |
Jun. 30, 2020 | |
Leases [Abstract] | |
Leases | Leases Adoption of ASC Topic 842, Leases On December 31, 2019, we adopted the new accounting standard ASC 842, Leases , which requires lessees to recognize a lease liability and a ROU asset for all leases with lease terms greater than 12 months. We used the effective date of this standard as the date of initial application, with no retrospective adjustments to prior comparative periods. We were an emerging growth company as defined by the JOBS Act until December 31, 2019 and therefore this guidance became effective for us in the Annual Report on Form 10-K for the fiscal year ended December 31, 2019 as we no longer qualify as an emerging growth company as of that date. The Statement of Cash Flows for the six months ended June 30, 2019 includes non-cash lease expense, which was reclassified to conform to the current presentation. Leases Overview We previously rented approximately 9,500 square feet of office space under an operating lease that expired on March 31, 2019. In September 2018, we entered into a non-cancelable operating lease agreement to sublease approximately 45,000 square feet of office space for our corporate headquarters, which included real estate taxes and operating expenses in the base rent. This lease commenced January 15, 2019 and expires November 30, 2020. We recognized an additional ROU asset and lease liability of $1.8 million each on January 15, 2019. In May 2019, we entered into a new, non-cancelable operating lease agreement for the same space directly with the landlord. The initial lease term commences on December 1, 2020 and expires May 31, 2028 with an option to renew for one additional period of five years at the then-prevailing market rate. The exercise of the lease renewal option is at our sole discretion and is not expected to be included in the lease term for the calculation of the ROU asset and lease liability when the lease commences on December 1, 2020 as it is not reasonably certain of exercise. Beginning December 1, 2020, in addition to base rent, we will also pay our proportionate share of the operating expenses, as defined in the lease. These payments will be made monthly, and will be adjusted annually to reflect actual charges incurred for operating expenses, such as common area maintenance, taxes and insurance. In conjunction with this new lease, the landlord agreed to provide Inspire with a $0.6 million rent abatement and a refurbishment allowance in the amount of the cost of any leasehold improvements, not to exceed approximately $1.1 million upon Inspire providing the necessary documentation evidencing the costs of the leasehold improvements that are completed by May 31, 2022. However, the lease allows us to allocate the refurbishment allowance against base rent instead of taking a tenant improvement reimbursement. At this time, we intend to allocate the full amount of the refurbishment allowance against base rent. The total minimum lease payments related to this forward-starting lease is $7.4 million. The following table presents the lease balances within the balance sheets: Leases Classification June 30, 2020 December 31, 2019 Assets Operating Operating lease right-of-use asset $ 424 $ 915 Liabilities Operating Accrued expenses $ 338 $ 828 As of June 30, 2020, the remaining lease term was 0.4 years and the discount rate was 8.0%. The operating cash outflows from our operating leases were $0.2 million and $0.3 million, for the three months ended June 30, 2020 and 2019, respectively, and $0.5 million for each of the six months ended June 30, 2020 and 2019. |
Long-Term Debt
Long-Term Debt | 6 Months Ended |
Jun. 30, 2020 | |
Long-term Debt, by Current and Noncurrent [Abstract] | |
Long-Term Debt | Long-Term Debt In August 2015, we entered into a loan and security agreement that initially provided for a term A loan facility in the amount of $15.5 million, which was fully funded on the closing date, and a term B loan facility in an amount between $3.5 million and $10.0 million, subject to our achievement of certain revenue milestones. We refer to our term A loan facility and our term loan B facility together as our credit facility. In February 2017, we amended the loan and security agreement to, among other things, increase borrowings under the term A loan facility by $1.0 million, for a total of $16.5 million outstanding under the credit facility, and reduced borrowings available under the term B loan facility to $9.0 million. On March 27, 2019, we amended the loan and security agreement. The amendment modified the terms of the loan and security agreement to: (1) extend the interest-only date from March 1, 2020 to April 1, 2022 and extend the maturity date from February 1, 2022 to March 1, 2024; (2) reduce the final payment percentage from 5.50% to 3.50%; (3) modify the basic rate to be a per annum rate of interest (based on a year of 360 days) equal to the sum of (i) the greater of (A) the 30 day U.S. LIBOR rate reported in The Wall Street Journal on the last business day of the month that immediately precedes the month in which the interest will accrue or (B) 2.50%, plus (ii) 5.10%; provided, however, under no circumstances will the basic rate be less than 7.60%; (4) provide a mechanism for determining an alternative interest rate to replace the U.S. LIBOR rate upon the occurrence of certain circumstances; and (5) revise the prepayment fee to be between 1.00% and 3.00% of the principal amount, depending on the timing of any prepayment. Upon closing the amendment to the loan and security agreement, payment of the previously accrued final payment under the credit facility was required. In addition to the principal and interest payments, under the credit facility, we are required to pay a final payment fee of 3.50% on all amounts outstanding, which is being accreted using the effective interest rate method over the term of the loan and security agreement and shall be due at the earlier of maturity or prepayment. Borrowings are prepayable at our option in whole, but not in part, together with all accrued and unpaid interest thereon and, if not previously made, the final payment, subject to a prepayment fee of 2.00% if such borrowings are prepaid prior to March 27, 2021 and 1.00% if such borrowings are prepaid on or after March 27, 2021. The credit facility includes affirmative and restrictive covenants and events of default, including the following events of default: payment defaults, breaches of covenants, judgment defaults, cross defaults to certain other contracts, certain events with respect to governmental approvals if such events could cause a material adverse change, a material impairment in the perfection or priority of the lender's security interest or in the value of the collateral, a material adverse change in the business, operations, or condition of us or any of our subsidiaries, and a material impairment of the prospect of repayment of the loans. Upon the occurrence of an event of default, a default increase in the interest rate of an additional 5.00% could be applied to the outstanding loan balance and the lender could declare all outstanding obligations immediately due and payable and take such other actions as set forth in the loan and security agreement. Our obligations under the credit facility are secured by a first priority security interest in substantially all of our assets, other than our intellectual property. There are no financial covenants contained in the loan and security agreement. We were in compliance with the affirmative and restrictive covenants as of June 30, 2020. Expected future principal payments for the credit facility are as follows: Year ending December 31 : 2020 (remaining) $ — 2021 — 2022 9,188 2023 12,250 2024 3,062 Total expected future principal payments $ 24,500 |
Employee Retirement Plan
Employee Retirement Plan | 6 Months Ended |
Jun. 30, 2020 | |
Retirement Benefits [Abstract] | |
Employee Retirement Plan | Employee Retirement PlanWe sponsor an employee retirement plan covering all of our full-time employees. The plan allows for eligible employees to defer a portion of their eligible compensation up to the maximum allowed by IRS Regulations. We may elect to make a voluntary contribution to the plan. We have not made contributions since inception. |
Stock-Based Compensation
Stock-Based Compensation | 6 Months Ended |
Jun. 30, 2020 | |
Share-based Payment Arrangement [Abstract] | |
Stock-Based Compensation | Stock-Based Compensation Stock Options We adopted the 2007 Stock Incentive Plan (the "2007 Plan") in November 2007, which terminated in accordance with its terms on November 28, 2017; however, the outstanding stock options may continue to be exercised in accordance with their terms. Immediately following the termination of the 2007 Plan, we adopted the 2017 Stock Incentive Plan (the "2017 Plan"), which contains substantially similar terms and conditions as the 2007 Plan. Upon the IPO, no further grants were made under the 2017 Plan and we adopted the 2018 Stock Incentive Plan (the "2018 Plan"). The purpose of the 2018 Plan is to promote the interest of our company and our stockholders by aiding in attracting and retaining employees, officers, consultants, contractors, and directors capable of assuring the future success of our business and to afford such persons an opportunity to acquire a proprietary interest in our company. The board of directors may amend, alter, suspend, discontinue, or terminate the 2018 Plan at any time with the approval of our stockholders. A total of 1,386,809 shares of common stock were initially reserved for issuance under the 2018 Plan, and this share reserve will automatically be supplemented each January 1, commencing on January 1, 2019 and ending on and including January 1, 2028, by an amount of shares equal to the lesser of: a) 739,631 shares, b) 4% of the shares outstanding on the final day of the immediately preceding fiscal year and c) such smaller number of shares as determined by the board of directors. As of June 30, 2020, there were 2,837,031 shares reserved for issuance under the 2018 Plan, of which 1,156,343 shares were available for issuance. Prior to the IPO, the exercise price of stock options represented fair value of the common stock at the time of issuance and was determined by the board of directors with the assistance of a third-party valuation specialist. Post-IPO, options are granted at the exercise price, which is equal to the closing price of our stock on the date of grant. The stock options granted to employees include a four one two three A summary of stock option activity and related information is as follows: Options Weighted Average Weighted average Aggregate intrinsic Outstanding at December 31, 2019 2,844,164 $ 30.41 7.9 $ 124,585 Granted 172,331 $ 77.12 Exercised (324,995) $ 4.67 $ 18,795 Forfeited (42,279) $ 36.03 Outstanding at June 30, 2020 2,649,221 $ 36.51 7.8 $ 133,806 Exercisable at June 30, 2020 1,132,084 $ 13.79 6.3 $ 82,906 Total stock-based compensation recognized, before taxes, during the three and six months ended June 30, 2020 and 2019, is as follows: Three Months Ended Six Months Ended June 30, June 30, 2020 2019 2020 2019 Cost of goods sold $ 33 $ 26 $ 86 $ 52 Research and development 372 161 717 324 Selling, general and administrative 2,498 1,202 4,849 2,404 Total stock-based compensation $ 2,903 $ 1,389 $ 5,652 $ 2,780 As of June 30, 2020, the amount of unearned stock-based compensation currently estimated to be expensed from now through the year 2024 related to unvested employee and non-employee director stock-based awards is $33.9 million, and the weighted average period over which the unearned stock-based compensation is expected to be recognized is 2.8 years. If there are any modifications or cancellations of the underlying unvested securities, we may be required to accelerate, increase, or cancel any remaining unearned stock compensation expense. Future stock-based compensation expense and unearned stock-based compensation will increase to the extent that we grant additional stock-based awards. We estimate the fair value of stock-based awards on the date of grant using the Black-Scholes option pricing model using the fair market value of our common stock on the date of grant and a number of other complex and subjective assumptions. These assumptions include, but are not limited to, estimates regarding the expected term of the awards, estimates of the stock volatility over a duration that approximates the expected term of the awards, estimates of the risk-free rate, and estimates of expected dividend rates. Due to our limited amount of historical exercise, forfeiture, and expiration activity, we have opted to use the "simplified method" for estimating the expected term of options, whereby the expected term equals the arithmetic average of the vesting terms and the original contractual term of the option. We will continue to analyze our expected term assumption as more historical data becomes available. Due to our limited operating history and a lack of company specific historical and implied volatility data, we have based our estimate of expected volatility on the historical volatility of a group of similar companies that are publicly traded. When selecting these public companies on which we have based our expected stock price volatility, we generally selected companies with comparable characteristics to it, including enterprise value, stages of clinical development, risk profiles, position within the industry, and with historical share price information sufficient to meet the expected life of the stock-based awards. The historical volatility data was computed using the weekly closing prices for the selected companies' shares over historical periods that approximate calculated expected term of our stock-based awards. We will continue to analyze the historical stock price volatility assumption as more historical data for our common stock becomes available. The risk-free rate assumption is based on the U.S. government Treasury instruments with maturities similar to the expected term of our stock options. The expected dividend assumption is based on our history of not paying dividends and our expectation that we will not declare dividends for the foreseeable future. The amount of stock-based compensation expense is recognized on a straight-line basis over the vesting term and is reduced by actual forfeitures as they occur. The fair value of options granted to employees and non-employee directors during the six months ended June 30, 2020 and 2019 was estimated as of the grant date using the Black-Scholes option pricing model using the following assumptions : Six Months Ended June 30, 2020 2019 Expected life (years) 5.50 - 6.25 5.50 - 6.25 Expected volatility 42.3 - 49.3% 47.7 - 50.6% Risk-free interest rate 0.36 - 1.42% 1.87 - 2.63% Dividend yield 0.0% 0.0% Weighted average fair value $35.10 $26.55 Employee Stock Purchase Plan Our employee stock purchase plan (“ESPP”) allows participating employees to purchase shares of our common stock at a discount through payroll deductions. The plan is available to all of our U.S.-based full-time employees. Participating employees may purchase common stock, on a voluntary after-tax basis, at a price equal to 85% of the lower of the closing market price per share of our common stock on the first or last trading day of each stock purchase period. The plan provides for six-month purchase periods, beginning on January 1 and July 1 of each calendar year. A total of 277,362 shares of common stock were initially reserved for issuance under the ESPP, and this share reserve will automatically be supplemented each January 1, commencing on January 1, 2019 and ending on and including January 1, 2028, by an amount of shares equal to the lesser of: a) 184,908 shares, b) 1% of the shares outstanding on the final day of the immediately preceding calendar year and c) such smaller number of shares as the board of directors may determine. On June 30, 2020, 16,730 shares were purchased under the ESPP, utilizing $1.1 million of employee contributions. As of June 30, 2020, 598,698 shares were available for future issuance under the ESPP. The current purchase period under the ESPP began on July 1, 2020 and ends December 31, 2020. We recognized stock-based compensation expense associated with the ESPP of $0.2 million and $0.1 million for the three months ended June 30, 2020 and 2019, respectively, and $0.3 million and $0.2 million for the six months ended June 30, 2020 and 2019, respectively. |
Income Taxes
Income Taxes | 6 Months Ended |
Jun. 30, 2020 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes During the three and six months ended June 30, 2020 and 2019, we did not record an income tax benefit related to our loss before income taxes in the statement of operations and comprehensive loss because a valuation allowance has been required to be established for all deferred tax assets due to our cumulative net loss position. As of December 31, 2019, our gross federal net operating loss carryforwards of $160.9 million will expire at various dates beginning in 2028. In addition, net operating loss carryforwards for state income tax purposes of $347.1 million that include net operating losses that will begin to expire in 2028. We also have gross research and development credit carryforwards of $2.5 million as of December 31, 2019, which will expire at various dates beginning in 2033. Utilization of the net operating loss carryforwards may be subject to an annual limitation due to the ownership change limitations provided by Section 382 of the Internal Revenue Code of 1986 and similar state provisions. We have not performed a detailed analysis to determine whether an ownership change has occurred. Such a change of ownership would limit our utilization of the net operating losses and could be triggered by subsequent sales of securities by us or our stockholders. Realization of the deferred tax assets is dependent upon the generation of future taxable income, if any, the amount and timing of which are uncertain. Based on available objective evidence and cumulative losses, we believe it is more likely than not that the deferred tax assets are not recognizable and will not be recognizable until we have sufficient taxable income. Accordingly, the net deferred tax assets have been fully offset by a valuation allowance. We had less than $0.1 million of gross unrecognized tax benefits as of June 30, 2020 and December 31, 2019. We file income tax returns in the applicable jurisdictions. The 2015 to 2018 tax years remain open to examination by the major taxing authorities to which we are subject. We do not expect a significant change to our unrecognized tax benefits over the next 12 months. |
Segment Reporting and Revenue D
Segment Reporting and Revenue Disaggregation | 6 Months Ended |
Jun. 30, 2020 | |
Segment Reporting [Abstract] | |
Segment Reporting and Revenue Disaggregation | Segment Reporting and Revenue Disaggregation We operate our business as one reporting segment. An operating segment is defined as a component of an enterprise for which separate discrete financial information is available and evaluated regularly by the chief operating decision maker, or decision-making group, in deciding how to allocate resources and in assessing performance. Segment information is consistent with how management reviews the business, makes investing and resource allocation decisions and assesses operating performance. We sell our Inspire system to hospitals and ambulatory surgery centers in the U.S. and in select countries in Europe through a direct sales organization. Revenue by geographic region is as follows: Three Months Ended Six Months Ended June 30, June 30, 2020 2019 2020 2019 United States $ 10,984 $ 15,754 $ 30,258 $ 30,109 Europe 1,199 2,278 3,272 4,173 Total revenue $ 12,183 $ 18,032 $ 33,530 $ 34,282 All of our long-lived assets are located in the U.S. |
Loss Per Share
Loss Per Share | 6 Months Ended |
Jun. 30, 2020 | |
Earnings Per Share [Abstract] | |
Loss Per Share | Loss Per Share Basic net loss per share is computed by dividing the net loss by the weighted average number of shares of common stock outstanding during the period. Diluted net loss per share is computed by dividing the net loss by the weighted average number of shares of common stock and dilutive potential shares of common stock outstanding during the period. Because we have reported a net loss for all periods presented, diluted net loss per share is the same as basic net loss per share for those periods as all potentially dilutive shares consisting of common stock warrants and common stock options were antidilutive in those periods. The following potentially dilutive securities outstanding at the end of the periods presented have been excluded from the computations of diluted shares outstanding because such securities have an antidilutive impact due to losses reported: June 30, 2020 2019 Common stock warrants — 6,595 Common stock options outstanding 2,649,221 2,365,059 Total 2,649,221 2,371,654 |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 6 Months Ended |
Jun. 30, 2020 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The accompanying financial statements have been prepared without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). The financial statements may not include all disclosures required by U.S. generally accepted accounting principles ("U.S. GAAP"); however, we believe that the disclosures are adequate to make the information presented not misleading. These unaudited financial statements should be read in conjunction with the audited financial statements and the notes thereto included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2019. In the opinion of management, all adjustments, consisting of only normal recurring adjustments that are necessary to present fairly the financial position, results of operations, and cash flows for the interim periods, have been made. The results of operations for the interim periods are not necessarily indicative of the operating results for the full fiscal year or any future periods. Certain prior period amounts have been reclassified to conform to the current presentation. These reclassifications had no material effect on the reported results of operations. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts and disclosures reported in the financial statements. We use significant judgment when making estimates related to the allowance for credit losses, inventory reserves, warranty reserves, and the valuation of stock-based awards. We base our estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results could differ from those estimates. |
Cash and Cash Equivalents | Cash and Cash Equivalents We consider all highly liquid securities, readily convertible to cash, that mature within 90 days or less from the date of purchase to be cash equivalents. The carrying amount reported in the balance sheets for cash is cost, which approximates fair value. |
Foreign Currency | Foreign CurrencySales and expenses denominated in foreign currencies are translated at average exchange rates in effect throughout the year. Foreign currency transaction gains and losses are included in other (income) expense, net in the statements of operations and comprehensive loss. Assets and liabilities of foreign operations are remeasured at period-end exchange rates with the impacts of foreign currency remeasurement recognized in other (income) expense, net in the statements of operations and comprehensive loss. |
Investments | InvestmentsAt June 30, 2020 and December 31, 2019, our short-term investments consisted of commercial paper, corporate bonds, asset-backed securities, and U.S. government securities which are classified as available-for-sale and had maturities less than one year. Our long-term investments consisted of corporate bonds. Investments are reported at their estimated fair market value which are based on quoted, active or inactive market prices when available. Any unrealized gains and losses due to interest rate fluctuations and other external factors are reported as a separate component of accumulated other comprehensive income. We had $0.2 million and $0.1 million of unrecognized income in accumulated other comprehensive income at June 30, 2020 and December 31, 2019, respectively. Any realized gains and losses are calculated on the specific identification method and reported net in other (income) expense. For both the three months ended June 30, 2020 and 2019, we recognized no realized gains, net. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments We measure certain financial assets and liabilities at fair value on a recurring basis, including cash equivalents and investments. Fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or a liability. A three-tier fair value hierarchy is established as a basis for considering such assumptions and for inputs used in the valuation methodologies in measuring fair value: Level 1—Observable inputs, such as quoted prices (unadjusted) for identical assets or liabilities in active markets. Level 2—Other inputs that are based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant inputs are observable in the market or can be derived from observable market data. Where applicable, these models project future cash flows and discount the future amounts to a present value using market-based observable inputs, including interest rate curves, foreign exchange rates, and credit ratings. Level 3—Unobservable inputs that are supported by little or no market activities, which would require us to develop our own assumptions. We use the methods and assumptions described below in determining the fair value of our financial instruments. Money market funds: Fair values of money market funds are based on quoted market prices in active markets. These are included as Level 1 measurements in the tables below. Commercial paper: Short-term, highly liquid investments are included as a Level 2 measurement in the tables below. Corporate bonds: Consists of short- and long-term notes and bonds with various yields. These are included as a Level 2 measurement in the tables below. Asset-backed securities: Consists of short-term, securitized investments backed by pools of credit card receivables. These are included as a Level 2 measurement in the tables below. U.S. government securities: Consists of U.S. government Treasury bills and notes with original maturities of less than two years. These are included as a Level 1 measurement in the table below. The following tables sets forth by level within the fair value hierarchy our assets that are measured on a recurring basis and reported at fair value as of June 30, 2020 and December 31, 2019. Assets are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. Fair Value Measurements as of June 30, 2020 Estimated Level 1 Level 2 Level 3 Cash equivalents: Money market funds $ 209,830 $ 209,830 $ — $ — Total cash equivalents 209,830 209,830 — — Investments: Asset-backed securities $ 6,112 $ — $ 6,112 $ — U.S. government securities 25,210 25,210 — — Total investments 31,322 25,210 6,112 — Total cash equivalents and investments $ 241,152 $ 235,040 $ 6,112 $ — Fair Value Measurements as of December 31, 2019 Estimated Level 1 Level 2 Level 3 Cash equivalents: Money market funds $ 18,429 $ 18,429 $ — $ — Total cash equivalents 18,429 18,429 — — Investments: Commercial paper $ 14,214 $ — $ 14,214 $ — Corporate bonds 32,485 — 32,485 — Asset-backed securities 8,100 — 8,100 — U.S. government securities 78,082 78,082 — — Total investments 132,881 78,082 54,799 — Total cash equivalents and investments $ 151,310 $ 96,511 $ 54,799 $ — There were no transfers between levels during the periods ended June 30, 2020 and December 31, 2019. |
Concentration of Credit Risk | Concentration of Credit Risk Financial instruments, which potentially subject us to concentrations of credit risk, consist principally of cash equivalents, investments, and accounts receivable. Our investment policy limits investments to certain types of debt securities issued by the U.S. government and its agencies, corporations with investment-grade credit ratings, or commercial paper and money market funds issued by the highest quality financial and non-financial companies. We place restrictions on maturities and concentration by type and issuer. We are exposed to credit risk in the event of a default by the issuers of these securities to the extent recorded on the balance sheets. However, as of June 30, 2020 and December 31, 2019, we limited our credit risk associated with cash equivalents by placing investments with banks we believe are highly creditworthy. We believe that the credit risk in our accounts receivable is mitigated by our credit evaluation process, relatively short collection terms, and dispersion of our customer base. We generally do not require collateral, and losses on accounts receivable have historically been within management's expectations. |
Accounts Receivable and Allowance for Expected Credit Losses | Accounts Receivable and Allowance for Expected Credit Losses Trade accounts receivable are recorded at the invoiced amount and do not bear interest. Customer credit terms are established prior to shipment with the general standard being net 30 days. Collateral or any other security to support payment of these receivables generally is not required. We recognize expected credit losses on accounts receivable in accordance with Accounting Standards Update ("ASU"), ASU 2016-13, Financial Instruments - Credit Losses ("ASU 2016-13"), which we adopted effective January 1, 2020 using the modified retrospective approach through a cumulative-effect adjustment to retained earnings. The adoption of ASU 2016-13 did not have a material impact on the amount and timing of credit losses recognized in our financial statements. Each reporting period, we estimate the credit loss related to accounts receivable based on a migration analysis of accounts grouped by individual receivables delinquency status, and apply our historic loss rate adjusted for management's assumption of future market conditions. Any change in the allowance subsequent to the effective date of January 1, 2020 from new receivables acquired, or changes due to credit deterioration on previously existing receivables, is recorded in selling, general and administrative expenses. Write-offs of receivables considered uncollectible, and any related subsequent recoveries of previously written off receivables, are deducted from the |
Inventories | We regularly review inventory quantities on-hand for excess and obsolete inventory and, when circumstances indicate, incur charges to write down inventories to their net realizable value. The determination of a reserve for excess and obsolete inventory involves management exercising judgment to determine the required reserve, considering future demand, product life cycles, introduction of new products and current market conditions. |
Property and Equipment | Depreciation is determined using the straight-line method over the estimated useful lives of the respective assets, generally three |
Impairment of Long-lived Assets | Impairment of Long-lived Assets Long-lived assets consist primarily of property and equipment and are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If circumstances require that an asset be tested for possible impairment, we compare the undiscounted cash flows expected to be generated by the asset to the carrying amount of the asset. If the carrying amount of the asset is not recoverable on an undiscounted cash flow basis, we determine the fair value of the asset and recognize an impairment loss to the extent the carrying amount of the asset exceeds its fair value. We determine fair value using the income approach based on the present value of expected future cash flows or other appropriate measures of estimated fair value. Our |
Revenue Recognition | Revenue Recognition We recognize revenue in accordance with Accounting Standards Codification ("ASC") Topic 606, Revenue from Contracts with Customers ("ASC 606"). Revenues from product sales are recognized when the customer obtains control of the product, which occurs at a point in time, either upon shipment of the product or receipt of the product, depending on shipment terms. Our standard shipping terms are free on board shipping point, unless the customer requests that control and title to the inventory transfer upon delivery. In those cases where shipping and handling costs are billed to customers, we classify the amounts billed as a component of cost of goods sold. Revenue is measured as the amount of consideration we expect to receive, adjusted for any applicable estimates of variable consideration and other factors affecting the transaction price, which is based on the invoiced price, in exchange for transferring products. All revenue is recognized when we satisfy our performance obligations under the contract. The majority of our contracts have a single performance obligation and are short term in nature. Sales taxes and value added taxes in foreign jurisdictions that are collected from customers and remitted to governmental authorities are accounted for on a net basis and therefore are excluded from net sales. Shipping and handling costs associated with outbound freight after control over a product has transferred to a customer are accounted for as a fulfillment cost and are included in cost of goods sold. Variable consideration related to certain customer sales incentives is estimated based on the amounts expected to be paid based on the agreement with the customer using probability assessments. We offer customers a limited right of return for our product in case of non-conformity or performance issues. We estimate the amount of our product sales that may be returned by our customers based on historical sales and returns. As our historical product returns to date have been immaterial, we have not recorded a reduction in revenue related to variable consideration for product returns. |
Cost of Goods Sold | Cost of Goods Sold Cost of goods sold consists primarily of acquisition costs for the components of the Inspire system, overhead costs, scrap and inventory obsolescence, as well as distribution-related expenses such as logistics and shipping costs, net of costs charged to customers. The overhead costs include the cost of material procurement, depreciation expense for production equipment, warranty replacement costs, and operations supervision and management personnel, including employee compensation, stock-based compensation, supplies, and travel. |
Research and Development | Research and Development Research and development expenses consist primarily of product development, clinical and regulatory affairs, quality assurance, consulting services, and other costs associated with products and technologies in development. These expenses include employee compensation, stock-based compensation, supplies, travel, and facility costs. Clinical expenses include clinical trial design, clinical site reimbursement, data management, travel expenses, and the cost of manufacturing products for clinical trials. |
Stock-Based Compensation | Stock-Based Compensation We maintain an equity incentive plan to provide long-term incentives for eligible employees, consultants, and members of the board of directors. The plan allows for the issuance of non-statutory and incentive stock options to employees and non-statutory stock options to consultants and directors. We also offer an employee stock purchase plan which allows participating employees to purchase shares of our common stock at a discount through payroll deductions. We recognize equity-based compensation expense for awards of equity instruments to employees and directors based on the grant date fair value of those awards in accordance with ASC Topic 718, Stock Compensation ("ASC 718"). ASC 718 requires all equity-based compensation awards to employees and directors, including grants of restricted shares and stock options, to be recognized as expense in the statements of operations and comprehensive loss based on their grant date fair values. We estimate the fair value of stock options using the Black-Scholes option pricing model. The fair value of each purchase under the employee stock purchase plan is estimated at the beginning of the offering period using the Black-Scholes option pricing model. We have not granted any restricted shares. We have not granted any stock-based awards to our consultants. The Black-Scholes option pricing model requires the input of certain subjective assumptions, including (i) the expected share price volatility, (ii) the expected term of the award, (iii) the risk-free interest rate and (iv) the expected dividend yield. Due to the lack of a public market for the trading of our common stock and a lack of company-specific historical and implied volatility data, we have based our estimate of expected volatility on the historical volatility of a group of similar companies that are publicly traded. The historical volatility is calculated based on a period of time commensurate with the expected term assumption. The group of representative companies have characteristics similar to us, including stage of product development and focus on the life science industry. We use the simplified method, which is the average of the final vesting tranche date and the contractual term, to calculate the expected term for options granted to employees and directors as we do not have sufficient historical exercise data to provide a reasonable basis upon which to estimate the expected term. The risk-free interest rate is based on a U.S. government Treasury instrument whose term is consistent with the expected term of the stock options. We use an assumed dividend yield of zero as we have never paid dividends and have no current plans to pay any dividends on our common stock. We expense the fair value of our equity-based compensation awards granted to employees and directors on a straight-line basis over the associated service period, which is generally the period in which the related services are received. We account for award forfeitures as they occur. |
Advertising Expenses | Advertising ExpensesWe expense the costs of advertising, including promotional expenses, as incurred. |
Leases | Leases Operating leases are included in operating lease right-of-use ("ROU") assets and current operating lease liabilities in our balance sheets. ROU assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to make lease payments arising from the lease. Operating lease ROU assets and liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term. In determining the present value of lease payments, we use our incremental borrowing rate based on the information available at the lease commencement date as the rate implicit in the lease is not readily determinable. The determination of our incremental borrowing rate requires management judgment based on information available at lease commencement. The operating lease ROU assets also include adjustments for prepayments, accrued lease payments and exclude lease incentives. Our lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise such options. Operating lease cost is recognized on a straight-line basis over the expected lease term. Lease agreements that include lease and non-lease components are accounted for as a single lease component. Lease agreements with a noncancelable term of less than 12 months are not recorded on our balance sheets. |
Income Taxes | Income Taxes We account for income taxes using the liability method. Under this method, deferred tax assets and liabilities are determined based on the differences between the financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates that will be in effect when the differences are expected to reverse. Valuation allowances against deferred tax assets are established, when necessary, to reduce deferred tax assets to the amounts expected to be realized. As we have historically incurred operating losses, we have recorded a full valuation allowance against our net deferred tax assets, and there is no provision for income taxes other than the accrual for uncertain tax benefits. Our policy is to record interest and penalties expense related to uncertain tax positions as other expense in the statements of operations and comprehensive loss. |
Comprehensive Loss | Comprehensive Loss Comprehensive loss consists of net loss and changes in unrealized gains and losses due to interest rate fluctuations and other external factors on investments classified as available-for-sale. Accumulated other comprehensive income is presented in the accompanying balance sheets as a component of stockholders' equity. |
Loss Per Share | Loss Per Share Basic net loss per share is computed by dividing the net loss by the weighted average number of shares of common stock outstanding during the period. Diluted net loss per share is computed by dividing the net loss by the weighted average number of shares of common stock and dilutive potential shares of common stock outstanding during the period. Because we have reported a net loss for all periods presented, diluted net loss per share is the same as basic net loss per share for those periods as all potentially dilutive shares consisting of stock options and warrants were antidilutive in those periods. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements We have reviewed and considered all other recent accounting pronouncements that have not yet been adopted and believe there are none that could potentially have a material impact on our business practices, financial condition, results of operations, or disclosures. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Accounting Policies [Abstract] | |
Schedule of assets and liabilities measured at fair value on a recurring basis | The following tables sets forth by level within the fair value hierarchy our assets that are measured on a recurring basis and reported at fair value as of June 30, 2020 and December 31, 2019. Assets are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. Fair Value Measurements as of June 30, 2020 Estimated Level 1 Level 2 Level 3 Cash equivalents: Money market funds $ 209,830 $ 209,830 $ — $ — Total cash equivalents 209,830 209,830 — — Investments: Asset-backed securities $ 6,112 $ — $ 6,112 $ — U.S. government securities 25,210 25,210 — — Total investments 31,322 25,210 6,112 — Total cash equivalents and investments $ 241,152 $ 235,040 $ 6,112 $ — Fair Value Measurements as of December 31, 2019 Estimated Level 1 Level 2 Level 3 Cash equivalents: Money market funds $ 18,429 $ 18,429 $ — $ — Total cash equivalents 18,429 18,429 — — Investments: Commercial paper $ 14,214 $ — $ 14,214 $ — Corporate bonds 32,485 — 32,485 — Asset-backed securities 8,100 — 8,100 — U.S. government securities 78,082 78,082 — — Total investments 132,881 78,082 54,799 — Total cash equivalents and investments $ 151,310 $ 96,511 $ 54,799 $ — |
Schedule of inventory | Inventories are valued at the lower of cost or net realizable value, computed on a first-in, first-out basis and consisted of the following: June 30, 2020 December 31, 2019 Raw materials $ 1,070 $ 781 Finished goods 8,896 5,053 Total inventories, net of reserves $ 9,966 $ 5,834 |
Schedule of property and equipment | Property and equipment are stated at cost, less accumulated depreciation and amortization and consisted of the following: June 30, 2020 December 31, 2019 Computer equipment and software $ 1,306 $ 790 Manufacturing equipment 1,319 1,050 Other equipment 96 68 Leasehold improvements 192 192 Construction in process 1,774 1,950 Property and equipment, cost 4,687 4,050 Less: accumulated depreciation and amortization (1,380) (1,005) Property and equipment, net $ 3,307 $ 3,045 |
Schedule of accrued expenses | Accrued expenses consisted of the following: June 30, 2020 December 31, 2019 Payroll related $ 6,968 $ 10,304 Interest 155 160 Current operating lease liability 338 828 Other accrued expenses 478 1,105 Total accrued expenses $ 7,939 $ 12,397 |
Investments (Tables)
Investments (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Investments, Debt and Equity Securities [Abstract] | |
Short-term investments available-for-sale | Our investments are classified as available-for-sale and consist of the following: June 30, 2020 Unrealized Cost Gains Losses Fair Value Short-Term: Asset-backed securities $ 6,100 $ 12 $ — $ 6,112 U.S. government securities 25,068 142 — 25,210 Short-term investments $ 31,168 $ 154 $ — $ 31,322 December 31, 2019 Unrealized Cost Gains Losses Fair Value Short-Term: Commercial paper $ 14,214 $ — $ — $ 14,214 Corporate bonds 26,194 16 (2) 26,208 Asset-backed securities 8,097 5 (1) 8,101 U.S. government securities 78,017 65 — 78,082 Short-term investments $ 126,522 $ 86 $ (3) $ 126,605 Long-Term: Corporate bonds $ 6,258 $ 18 $ — $ 6,276 Long-term investments $ 6,258 $ 18 $ — $ 6,276 |
Leases (Tables)
Leases (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Leases [Abstract] | |
Assets and Liabilities, Lessee | The following table presents the lease balances within the balance sheets: Leases Classification June 30, 2020 December 31, 2019 Assets Operating Operating lease right-of-use asset $ 424 $ 915 Liabilities Operating Accrued expenses $ 338 $ 828 |
Long-Term Debt (Tables)
Long-Term Debt (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Long-term Debt, by Current and Noncurrent [Abstract] | |
Schedule of expected future principal payments for the credit facility | Expected future principal payments for the credit facility are as follows: Year ending December 31 : 2020 (remaining) $ — 2021 — 2022 9,188 2023 12,250 2024 3,062 Total expected future principal payments $ 24,500 |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Share-based Payment Arrangement [Abstract] | |
Summary of the company's stock option activity and related information | A summary of stock option activity and related information is as follows: Options Weighted Average Weighted average Aggregate intrinsic Outstanding at December 31, 2019 2,844,164 $ 30.41 7.9 $ 124,585 Granted 172,331 $ 77.12 Exercised (324,995) $ 4.67 $ 18,795 Forfeited (42,279) $ 36.03 Outstanding at June 30, 2020 2,649,221 $ 36.51 7.8 $ 133,806 Exercisable at June 30, 2020 1,132,084 $ 13.79 6.3 $ 82,906 |
Schedule of stock compensation recognized, before taxes | Total stock-based compensation recognized, before taxes, during the three and six months ended June 30, 2020 and 2019, is as follows: Three Months Ended Six Months Ended June 30, June 30, 2020 2019 2020 2019 Cost of goods sold $ 33 $ 26 $ 86 $ 52 Research and development 372 161 717 324 Selling, general and administrative 2,498 1,202 4,849 2,404 Total stock-based compensation $ 2,903 $ 1,389 $ 5,652 $ 2,780 |
Summary of weighted average assumptions for fair value of options granted | The fair value of options granted to employees and non-employee directors during the six months ended June 30, 2020 and 2019 was estimated as of the grant date using the Black-Scholes option pricing model using the following assumptions : Six Months Ended June 30, 2020 2019 Expected life (years) 5.50 - 6.25 5.50 - 6.25 Expected volatility 42.3 - 49.3% 47.7 - 50.6% Risk-free interest rate 0.36 - 1.42% 1.87 - 2.63% Dividend yield 0.0% 0.0% Weighted average fair value $35.10 $26.55 |
Segment Reporting and Revenue_2
Segment Reporting and Revenue Disaggregation (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Segment Reporting [Abstract] | |
Schedule of revenue by geographic region | Revenue by geographic region is as follows: Three Months Ended Six Months Ended June 30, June 30, 2020 2019 2020 2019 United States $ 10,984 $ 15,754 $ 30,258 $ 30,109 Europe 1,199 2,278 3,272 4,173 Total revenue $ 12,183 $ 18,032 $ 33,530 $ 34,282 |
Loss Per Share (Tables)
Loss Per Share (Tables) | 6 Months Ended |
Jun. 30, 2020 | |
Earnings Per Share [Abstract] | |
Schedule of dilutive securities excluded from computations of diluted weighted average shares outstanding | The following potentially dilutive securities outstanding at the end of the periods presented have been excluded from the computations of diluted shares outstanding because such securities have an antidilutive impact due to losses reported: June 30, 2020 2019 Common stock warrants — 6,595 Common stock options outstanding 2,649,221 2,365,059 Total 2,649,221 2,371,654 |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies - Follow-On Public Offering (Details) - Follow-on Offering $ / shares in Units, $ in Millions | Apr. 16, 2020USD ($)$ / sharesshares |
Subsidiary, Sale of Stock [Line Items] | |
Shares sold (in shares) | shares | 2,300,000 |
Sale of stock, price per share (in dollars per share) | $ / shares | $ 58 |
Proceeds from sale of stock | $ | $ 124.7 |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Investments (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | Dec. 31, 2019 | |
Accounting Policies [Abstract] | |||||
Accumulated other comprehensive income | $ 154 | $ 154 | $ 102 | ||
Realized gains | 0 | $ 0 | 100 | $ 0 | |
Allowance for credit loss | $ 0 | $ 0 |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies - Fair Value of Financial Instruments (Details) - USD ($) | Jun. 30, 2020 | Dec. 31, 2019 |
Investments: | ||
Total investments | $ 31,322,000 | $ 126,605,000 |
Fair value of assets transferred from Level 1 to Level 2 | 0 | 0 |
Fair value of assets transferred from Level 2 to Level 1 | 0 | 0 |
Fair value of liabilities transferred from Level 1 to Level 2 | 0 | 0 |
Fair value of liabilities transferred from Level 2 to Level 1 | 0 | 0 |
Recurring basis | ||
Cash equivalents: | ||
Money market funds | 209,830,000 | 18,429,000 |
Total cash equivalents | 209,830,000 | 18,429,000 |
Investments: | ||
Commercial paper | 14,214,000 | |
Corporate bonds | 32,485,000 | |
Asset-backed securities | 6,112,000 | 8,100,000 |
U.S. government securities | 25,210,000 | 78,082,000 |
Total investments | 31,322,000 | 132,881,000 |
Total cash equivalents and investments | 241,152,000 | 151,310,000 |
Level 1 | Recurring basis | ||
Cash equivalents: | ||
Money market funds | 209,830,000 | 18,429,000 |
Total cash equivalents | 209,830,000 | 18,429,000 |
Investments: | ||
Commercial paper | 0 | |
Corporate bonds | 0 | |
Asset-backed securities | 0 | 0 |
U.S. government securities | 25,210,000 | 78,082,000 |
Total investments | 25,210,000 | 78,082,000 |
Total cash equivalents and investments | 235,040,000 | 96,511,000 |
Level 2 | Recurring basis | ||
Cash equivalents: | ||
Money market funds | 0 | 0 |
Total cash equivalents | 0 | 0 |
Investments: | ||
Commercial paper | 14,214,000 | |
Corporate bonds | 32,485,000 | |
Asset-backed securities | 6,112,000 | 8,100,000 |
U.S. government securities | 0 | 0 |
Total investments | 6,112,000 | 54,799,000 |
Total cash equivalents and investments | 6,112,000 | 54,799,000 |
Level 3 | Recurring basis | ||
Cash equivalents: | ||
Money market funds | 0 | 0 |
Total cash equivalents | 0 | 0 |
Investments: | ||
Commercial paper | 0 | |
Corporate bonds | 0 | |
Asset-backed securities | 0 | 0 |
U.S. government securities | 0 | 0 |
Total investments | 0 | 0 |
Total cash equivalents and investments | $ 0 | $ 0 |
Summary of Significant Accoun_7
Summary of Significant Accounting Policies - Inventories (Details) - USD ($) $ in Thousands | Jun. 30, 2020 | Dec. 31, 2019 |
Accounting Policies [Abstract] | ||
Raw materials | $ 1,070 | $ 781 |
Finished goods | 8,896 | 5,053 |
Total inventories, net of reserves | 9,966 | 5,834 |
Reserve for excess and obsolete inventory (less than) | $ 100 | $ 100 |
Summary of Significant Accoun_8
Summary of Significant Accounting Policies - Property and Equipment (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | Dec. 31, 2019 | |
Property and Equipment | |||||
Property and equipment, cost | $ 4,687 | $ 4,687 | $ 4,050 | ||
Less: accumulated depreciation and amortization | (1,380) | (1,380) | (1,005) | ||
Property and equipment, net | 3,307 | 3,307 | 3,045 | ||
Depreciation and amortization expenses | 200 | $ 100 | 400 | $ 200 | |
Computer equipment and software | |||||
Property and Equipment | |||||
Property and equipment, cost | 1,306 | 1,306 | 790 | ||
Manufacturing equipment | |||||
Property and Equipment | |||||
Property and equipment, cost | 1,319 | 1,319 | 1,050 | ||
Other equipment | |||||
Property and Equipment | |||||
Property and equipment, cost | 96 | 96 | 68 | ||
Leasehold improvements | |||||
Property and Equipment | |||||
Property and equipment, cost | 192 | 192 | 192 | ||
Construction in process | |||||
Property and Equipment | |||||
Property and equipment, cost | $ 1,774 | $ 1,774 | $ 1,950 | ||
Minimum | |||||
Property and Equipment | |||||
Estimated useful lives | 3 years | ||||
Maximum | |||||
Property and Equipment | |||||
Estimated useful lives | 5 years |
Summary of Significant Accoun_9
Summary of Significant Accounting Policies - Accrued Expenses (Details) - USD ($) $ in Thousands | Jun. 30, 2020 | Dec. 31, 2019 |
Accounting Policies [Abstract] | ||
Payroll related | $ 6,968 | $ 10,304 |
Interest | 155 | 160 |
Current operating lease liability | 338 | 828 |
Other accrued expenses | 478 | 1,105 |
Total accrued expenses | $ 7,939 | $ 12,397 |
Summary of Significant Accou_10
Summary of Significant Accounting Policies - Stock Based Compensation (Details) | 6 Months Ended |
Jun. 30, 2020 | |
Accounting Policies [Abstract] | |
Dividend yield | 0.00% |
Summary of Significant Accou_11
Summary of Significant Accounting Policies - Advertising Expenses (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Advertising Expenses | ||||
Advertising expenses | $ 5 | $ 4.4 | $ 11.4 | $ 7.9 |
Summary of Significant Accou_12
Summary of Significant Accounting Policies - Income Taxes (Details) - USD ($) | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Income Taxes | ||||
Provision for income taxes | $ 0 | $ 0 | $ 0 | $ 0 |
Investments (Details)
Investments (Details) - USD ($) | Jun. 30, 2020 | Dec. 31, 2019 |
Debt Securities, Available-for-sale [Line Items] | ||
Investments with maturity greater than one year | $ 0 | $ 0 |
Short-term Debt | ||
Debt Securities, Available-for-sale [Line Items] | ||
Cost | 31,168,000 | 126,522,000 |
Unrealized Gains | 154,000 | 86,000 |
Unrealized Losses | 0 | (3,000) |
Fair Value | 31,322,000 | 126,605,000 |
Long-term Debt | ||
Debt Securities, Available-for-sale [Line Items] | ||
Cost | 6,258,000 | |
Unrealized Gains | 18,000 | |
Unrealized Losses | 0 | |
Fair Value | 6,276,000 | |
Commercial paper | Short-term Debt | ||
Debt Securities, Available-for-sale [Line Items] | ||
Cost | 14,214,000 | |
Unrealized Gains | 0 | |
Unrealized Losses | 0 | |
Fair Value | 14,214,000 | |
Corporate bonds | Short-term Debt | ||
Debt Securities, Available-for-sale [Line Items] | ||
Cost | 26,194,000 | |
Unrealized Gains | 16,000 | |
Unrealized Losses | (2,000) | |
Fair Value | 26,208,000 | |
Corporate bonds | Long-term Debt | ||
Debt Securities, Available-for-sale [Line Items] | ||
Cost | 6,258,000 | |
Unrealized Gains | 18,000 | |
Unrealized Losses | 0 | |
Fair Value | 6,276,000 | |
Asset-backed securities | Short-term Debt | ||
Debt Securities, Available-for-sale [Line Items] | ||
Cost | 6,100,000 | 8,097,000 |
Unrealized Gains | 12,000 | 5,000 |
Unrealized Losses | 0 | (1,000) |
Fair Value | 6,112,000 | 8,101,000 |
U.S. government securities | Short-term Debt | ||
Debt Securities, Available-for-sale [Line Items] | ||
Cost | 25,068,000 | 78,017,000 |
Unrealized Gains | 142,000 | 65,000 |
Unrealized Losses | 0 | 0 |
Fair Value | $ 25,210,000 | $ 78,082,000 |
Leases - Overview (Details)
Leases - Overview (Details) $ in Thousands | 1 Months Ended | 3 Months Ended | 6 Months Ended | 18 Months Ended | |||||
May 31, 2019renewal_option | Jun. 30, 2020USD ($) | Jun. 30, 2019USD ($)ft² | Jun. 30, 2020USD ($) | Jun. 30, 2019USD ($)ft² | May 31, 2022USD ($) | Dec. 31, 2019USD ($) | Jan. 15, 2019USD ($) | Sep. 30, 2018ft² | |
Lessee, Lease, Description [Line Items] | |||||||||
Operating lease right-of-use asset | $ 424 | $ 424 | $ 915 | $ 1,800 | |||||
Operating lease liability | $ 1,800 | ||||||||
Minimum lease payments | $ 7,400 | $ 7,400 | |||||||
Remaining lease term | 4 months 24 days | ||||||||
Discount rate (as a percent) | 8.00% | 8.00% | |||||||
Operating lease payments | $ 200 | $ 300 | $ 500 | $ 500 | |||||
Forecast | |||||||||
Lessee, Lease, Description [Line Items] | |||||||||
Operating lease income | $ 600 | ||||||||
Leasehold improvements | $ 1,100 | ||||||||
Office Space Sublease | |||||||||
Lessee, Lease, Description [Line Items] | |||||||||
Operating lease sublease land agreement | ft² | 9,500 | 9,500 | 45,000 | ||||||
Number of renewal options | renewal_option | 1 | ||||||||
Renewal term | 5 years |
Leases - Assets and Liabilities
Leases - Assets and Liabilities (Details) - USD ($) $ in Thousands | Jun. 30, 2020 | Dec. 31, 2019 | Jan. 15, 2019 |
Assets | |||
Operating Lease, Right-of-Use Asset, Statement of Financial Position [Extensible List] | us-gaap:OperatingLeaseRightOfUseAsset | ||
Operating lease right-of-use asset | $ 424 | $ 915 | $ 1,800 |
Liabilities | |||
Operating Lease, Liability, Statement of Financial Position [Extensible List] | us-gaap:AccruedLiabilitiesCurrent | ||
Accrued expenses | $ 338 | $ 828 |
Long-Term Debt (Details)
Long-Term Debt (Details) - USD ($) | Mar. 27, 2019 | Jun. 30, 2020 | Mar. 26, 2019 | Feb. 28, 2017 | Aug. 31, 2015 |
Expected future principal payments | |||||
2020 (remaining) | $ 0 | ||||
2021 | 0 | ||||
2022 | 9,188,000 | ||||
2023 | 12,250,000 | ||||
2024 | 3,062,000 | ||||
Total expected future principal payments | $ 24,500,000 | ||||
March 2019 Amendment to Loan and Security Agreement | |||||
Credit Facility | |||||
Final payment percentage | 3.50% | ||||
Term loan facility | |||||
Credit Facility | |||||
Final payment percentage | 5.50% | ||||
Term loan facility | February 2017 Amendment to Loan and Security Agreement | |||||
Credit Facility | |||||
Outstanding credit facility amount | $ 16,500,000 | ||||
Term loan facility | March 2019 Amendment to Loan and Security Agreement | |||||
Credit Facility | |||||
Variable interest rate on credit facility | 5.10% | ||||
Final payment percentage | 3.50% | ||||
Variable interest rate | 2.50% | ||||
Term loan facility | Minimum | March 2019 Amendment to Loan and Security Agreement | |||||
Credit Facility | |||||
Basic interest rate | 7.60% | ||||
Prepayment fee | 1.00% | ||||
Term loan facility | Maximum | March 2019 Amendment to Loan and Security Agreement | |||||
Credit Facility | |||||
Prepayment fee | 3.00% | ||||
Term A loan facility | |||||
Credit Facility | |||||
Maximum borrowing amount under credit facility | $ 15,500,000 | ||||
Term A loan facility | February 2017 Amendment to Loan and Security Agreement | |||||
Credit Facility | |||||
Additional borrowing amount under credit facility | 1,000,000 | ||||
Term B loan facility | |||||
Credit Facility | |||||
Increase in interest rate in default | 5.00% | ||||
Term B loan facility | February 2017 Amendment to Loan and Security Agreement | |||||
Credit Facility | |||||
Outstanding credit facility amount | $ 9,000,000 | ||||
Term B loan facility | On or after March 27, 2019 but prior to March 27, 2020 / On or after March 27, 2020 but prior to March 27, 2021 | |||||
Credit Facility | |||||
Prepayment fee | 2.00% | ||||
Term B loan facility | On or after March 27, 2020 / On or after March 27, 2021 | |||||
Credit Facility | |||||
Prepayment fee | 1.00% | ||||
Term B loan facility | Minimum | |||||
Credit Facility | |||||
Outstanding credit facility amount | 3,500,000 | ||||
Term B loan facility | Maximum | |||||
Credit Facility | |||||
Outstanding credit facility amount | $ 10,000,000 |
Stock-Based Compensation - 2018
Stock-Based Compensation - 2018 Plan (Details) - shares | 6 Months Ended | ||
Jun. 30, 2020 | Dec. 31, 2019 | Jan. 01, 2019 | |
Options | |||
Stock Options | |||
Contractual life of stock options | 10 years | ||
Options | Directors | Minimum | |||
Stock Options | |||
Service period | 1 year | ||
Options | Directors | Weighted average | |||
Stock Options | |||
Service period | 2 years | ||
Options | Directors | Maximum | |||
Stock Options | |||
Service period | 3 years | ||
Options | Vesting after first year of service | |||
Stock Options | |||
Service period | 4 years | ||
Percentage of shares to vest | 25.00% | ||
Options | Vesting in years two through four | |||
Stock Options | |||
Vesting period | 36 months | ||
Stock Incentive Plan 2018 | |||
Stock Options | |||
Number of shares reserved for issuance (in shares) | 2,837,031 | 1,386,809 | |
Number of additional shares reserved for issuance, maximum (in shares) | 739,631 | ||
Number of additional shares reserved for issuance, percentage, maximum | 4.00% | ||
Number of shares available for issuance (in shares) | 1,156,343 |
Stock-Based Compensation - Stoc
Stock-Based Compensation - Stock Option Activity (Details) $ / shares in Units, $ in Thousands | 6 Months Ended | 12 Months Ended |
Jun. 30, 2020USD ($)$ / sharesshares | Dec. 31, 2019USD ($)$ / sharesshares | |
Options | ||
Outstanding at beginning of the year (in shares) | shares | 2,844,164 | |
Granted (in shares) | shares | 172,331 | |
Exercised (in shares) | shares | (324,995) | |
Forfeited (in shares) | shares | (42,279) | |
Outstanding at ending of the year (in shares) | shares | 2,649,221 | 2,844,164 |
Exercisable (in shares) | shares | 1,132,084 | |
Weighted Average Exercise Price | ||
Outstanding, beginning of the period (in dollars per share) | $ / shares | $ 30.41 | |
Granted (in dollars per share) | $ / shares | 77.12 | |
Exercised (in dollars per share) | $ / shares | 4.67 | |
Forfeited (in dollars per share) | $ / shares | 36.03 | |
Outstanding, end of the period (in dollars per share) | $ / shares | 36.51 | $ 30.41 |
Exercisable (in dollars per share) | $ / shares | $ 13.79 | |
Weighted average remaining contractual term | ||
Outstanding | 7 years 9 months 18 days | 7 years 10 months 24 days |
Exercisable | 6 years 3 months 18 days | |
Aggregate intrinsic value | ||
Outstanding | $ | $ 133,806 | $ 124,585 |
Exercised | $ | 18,795 | |
Exercisable | $ | $ 82,906 |
Stock-Based Compensation - Amou
Stock-Based Compensation - Amounts Recognized (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | |
Stock Options | ||||
Total stock-based compensation | $ 2,903 | $ 1,389 | $ 5,652 | $ 2,780 |
Unearned stock-based compensation | 33,900 | $ 33,900 | ||
Weighted average recognition period | 2 years 9 months 18 days | |||
Cost of goods sold | ||||
Stock Options | ||||
Total stock-based compensation | 33 | 26 | $ 86 | 52 |
Research and development | ||||
Stock Options | ||||
Total stock-based compensation | 372 | 161 | 717 | 324 |
Selling, general and administrative | ||||
Stock Options | ||||
Total stock-based compensation | $ 2,498 | $ 1,202 | $ 4,849 | $ 2,404 |
Stock-Based Compensation - Assu
Stock-Based Compensation - Assumptions Used to Calculate Fair Value of Options (Details) - $ / shares | 6 Months Ended | |
Jun. 30, 2020 | Jun. 30, 2019 | |
Weighted average assumptions | ||
Dividend yield | 0.00% | |
Options | ||
Weighted average assumptions | ||
Dividend yield | 0.00% | 0.00% |
Weighted average fair value (in dollars per share) | $ 35.10 | $ 26.55 |
Options | Minimum | ||
Weighted average assumptions | ||
Expected life | 5 years 6 months | 5 years 6 months |
Expected volatility | 42.30% | 47.70% |
Risk-free interest rate | 0.36% | 1.87% |
Options | Maximum | ||
Weighted average assumptions | ||
Expected life | 6 years 3 months | 6 years 3 months |
Expected volatility | 49.30% | 50.60% |
Risk-free interest rate | 1.42% | 2.63% |
Stock-Based Compensation - Empl
Stock-Based Compensation - Employee Stock Purchase Plan (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2020 | Jun. 30, 2019 | Jun. 30, 2020 | Jun. 30, 2019 | Jan. 01, 2019 | |
Stock Options | |||||
Issuance of common stock for employee stock purchase plan | $ 1,059 | $ 637 | |||
Total stock-based compensation | $ 2,903 | 1,389 | $ 5,652 | $ 2,780 | |
Employee Stock Purchase Plan | |||||
Stock Options | |||||
Employee stock purchase plan, percent | 85.00% | ||||
Number of shares reserved for issuance (in shares) | 598,698 | 598,698 | 277,362 | ||
Number of additional shares reserved for issuance, maximum (in shares) | 184,908 | ||||
Number of additional shares reserved for issuance, percentage, maximum | 1.00% | ||||
Issuance of common stock for employee stock purchase plan (in shares) | 16,730 | ||||
Issuance of common stock for employee stock purchase plan | $ 1,100 | ||||
Total stock-based compensation | $ 200 | $ 100 | $ 300 | $ 200 |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Millions | Jun. 30, 2020 | Dec. 31, 2019 |
Operating Loss Carryforwards [Line Items] | ||
Unrecognized tax benefits (less than) | $ 0.1 | $ 0.1 |
Federal | ||
Operating Loss Carryforwards [Line Items] | ||
Net operating loss carryforwards | 160.9 | |
State | ||
Operating Loss Carryforwards [Line Items] | ||
Net operating loss carryforwards | 347.1 | |
R&D credit | ||
Operating Loss Carryforwards [Line Items] | ||
Credit carryforwards | $ 2.5 |
Segment Reporting and Revenue_3
Segment Reporting and Revenue Disaggregation (Details) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2020USD ($) | Jun. 30, 2019USD ($) | Jun. 30, 2020USD ($)segment | Jun. 30, 2019USD ($) | |
Segment Reporting [Abstract] | ||||
Number of reporting segments | segment | 1 | |||
Segment Reporting and Significant Customers | ||||
Revenue | $ 12,183 | $ 18,032 | $ 33,530 | $ 34,282 |
United States | ||||
Segment Reporting and Significant Customers | ||||
Revenue | 10,984 | 15,754 | 30,258 | 30,109 |
Europe | ||||
Segment Reporting and Significant Customers | ||||
Revenue | $ 1,199 | $ 2,278 | $ 3,272 | $ 4,173 |
Loss Per Share (Details)
Loss Per Share (Details) - shares | 6 Months Ended | |
Jun. 30, 2020 | Jun. 30, 2019 | |
Loss Per Share | ||
Antidilutive securities excluded from computation of diluted weighted average shares outstanding (in shares) | 2,649,221 | 2,371,654 |
Common stock warrants | ||
Loss Per Share | ||
Antidilutive securities excluded from computation of diluted weighted average shares outstanding (in shares) | 0 | 6,595 |
Common stock options outstanding | ||
Loss Per Share | ||
Antidilutive securities excluded from computation of diluted weighted average shares outstanding (in shares) | 2,649,221 | 2,365,059 |