Document and Entity Information
Document and Entity Information - USD ($) $ in Millions | 12 Months Ended | |||
Dec. 31, 2022 | Dec. 31, 2021 | Mar. 10, 2023 | Jun. 30, 2022 | |
Document and Entity Information | ||||
Document Type | 10-K | |||
Document Annual Report | true | |||
Document Transition Report | false | |||
Document Period End Date | Dec. 31, 2022 | |||
Entity File Number | 001-37717 | |||
Entity Registrant Name | SENSEONICS HOLDINGS, INC. | |||
Entity Incorporation, State or Country Code | DE | |||
Entity Tax Identification Number | 47-1210911 | |||
Entity Address, Address Line One | 20451 Seneca Meadows Parkway | |||
Entity Address, City or Town | Germantown | |||
Entity Address, State or Province | MD | |||
Entity Address, Postal Zip Code | 20876-7005 | |||
City Area Code | 301 | |||
Local Phone Number | 515-7260 | |||
Title of 12(b) Security | Common Stock, par value $0.001 per share | |||
Trading Symbol | SENS | |||
Security Exchange Name | NYSEAMER | |||
Entity Well-known Seasoned Issuer | Yes | |||
Entity Voluntary Filers | No | |||
Entity Current Reporting Status | Yes | |||
Entity Interactive Data Current | Yes | |||
Entity Filer Category | Non-accelerated Filer | |||
Entity Small Business | true | |||
Entity Emerging Growth Company | false | |||
Entity Shell Company | false | |||
Entity Common Stock, Shares Outstanding | 479,780,414 | |||
Entity Central Index Key | 0001616543 | |||
Current Fiscal Year End Date | --12-31 | |||
Document Fiscal Year Focus | 2022 | |||
Document Fiscal Period Focus | FY | |||
Amendment Flag | false | |||
Entity Public Float | $ 463 | |||
ICFR Auditor Attestation Flag | false | |||
Auditor Name | KPMG LLP | Ernst & Young LLP | ||
Auditor Firm ID | 185 | 42 | ||
Auditor Location | McLean, Virginia | Tysons, Virginia |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Current assets: | ||
Cash and cash equivalents | $ 35,793 | $ 33,461 |
Short term investments, net | 108,222 | 96,445 |
Accounts receivable, net | 127 | 205 |
Accounts receivable, net - related parties | 2,324 | 1,768 |
Inventory, net | 7,306 | 6,316 |
Prepaid expenses and other current assets | 7,428 | 6,218 |
Total current assets | 161,200 | 144,413 |
Option | 239 | |
Deposits and other assets | 3,108 | 1,086 |
Long term investments, net | 12,253 | 51,882 |
Property and equipment, net | 1,112 | 1,308 |
Total assets | 177,673 | 198,928 |
Current liabilities: | ||
Accounts payable | 419 | 1,204 |
Accrued expenses and other current liabilities | 14,616 | 10,667 |
Accrued expenses and other current liabilities- related parties | 837 | 3,597 |
Note payable, current portion, net | 15,579 | |
Derivative liability, current portion | 20 | |
Term Loans, net | 2,926 | |
Total current liabilities | 31,471 | 18,394 |
Long-term debt and notes payables, net | 56,383 | 59,798 |
Derivative liabilities | 52,050 | 236,291 |
Option | 69,401 | |
Other liabilities | 2,689 | 579 |
Total liabilities | 142,593 | 384,463 |
Commitments and contingencies | ||
Preferred stock and additional paid-in-capital, subject to possible redemption: $0.001 par value per share; 12,000 shares and 0 shares issued and outstanding as of December 31, 2022 and December 31, 2021 | 37,656 | |
Total temporary equity | 37,656 | |
Stockholders' deficit: | ||
Common stock, $0.001 par value per share; 900,000,000 shares authorized as of December 31, 2022 and December 31, 2021; 479,637,138 shares and 447,282,263 shares issued and outstanding as of December 31, 2022 and December 31, 2021 | 480 | 447 |
Additional paid-in capital | 806,488 | 765,215 |
Accumulated other comprehensive loss | (678) | (212) |
Accumulated deficit | (808,866) | (950,985) |
Total stockholders' deficit | (2,576) | (185,535) |
Total liabilities, temporary equity and stockholders' deficit | $ 177,673 | $ 198,928 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parentheticals) - $ / shares | Dec. 31, 2022 | Dec. 31, 2021 |
Class of stock information | ||
Temporary equity, par or stated value per share | $ 0.001 | $ 0.001 |
Temporary equity, shares issued | 12,000 | 0 |
Temporary equity, shares outstanding | 12,000 | 0 |
Common stock, par value per share (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized | 900,000,000 | 900,000,000 |
Common stock, shares issued | 479,637,138 | 447,282,263 |
Common stock, shares outstanding | 479,637,138 | 447,282,263 |
Consolidated Statements of Oper
Consolidated Statements of Operations and Comprehensive Loss - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Consolidated Statements of Operations and Comprehensive Loss | |||
Revenue, net | $ 656 | $ 1,394 | $ 1,368 |
Revenue, net - related parties | 15,733 | 12,281 | 3,581 |
Total revenue | 16,389 | 13,675 | 4,949 |
Cost of sales | 13,663 | 14,486 | 22,315 |
Gross profit (loss) | 2,726 | (811) | (17,366) |
Expenses: | |||
Research and development expenses | 39,719 | 27,217 | 20,413 |
Selling, general and administrative expenses | 31,634 | 29,154 | 41,351 |
Operating loss | (68,627) | (57,182) | (79,130) |
Other income (expense), net: | |||
Interest income | 1,824 | 243 | 175 |
Gain (Loss) on fair value adjustment of option | 43,745 | (53,152) | (30,721) |
Gain (Loss) on extinguishment of debt and option | (101) | 330 | (21,112) |
Loss on issuance of debt & other issuance costs | (12,706) | ||
Interest expense | (18,703) | (16,720) | (16,167) |
Debt issuance costs | (1,216) | ||
Gain (Loss) on change in fair value of derivatives | 184,221 | (174,173) | (11,641) |
Impairment cost | (138) | (1,647) | (2,339) |
Other expense | (102) | (173) | (311) |
Total other income (expense), net | 210,746 | (245,292) | (96,038) |
Net Income (Loss) | 142,119 | (302,474) | (175,168) |
Other comprehensive income (loss) | |||
Unrealized gain (loss) on marketable securities | (466) | (212) | |
Total other comprehensive gain (loss) | (466) | (212) | |
Total comprehensive income (loss) | $ 141,653 | $ (302,686) | $ (175,168) |
Basic net income (loss) per common share | $ 0.30 | $ (0.72) | $ (0.77) |
Basic weighted-average shares outstanding | 467,952,475 | 422,321,023 | 227,912,358 |
Diluted net income (loss) per common share | $ (0.11) | $ (0.72) | $ (0.77) |
Diluted weighted-average shares outstanding | 618,205,605 | 422,321,023 | 227,912,358 |
Consolidated Statements of Chan
Consolidated Statements of Changes in Stockholders' (Deficit) - USD ($) $ in Thousands | Preferred Stock Series A Preferred Stock | Preferred Stock Series B Preferred Stock | Common Stock | Additional Paid-In Capital | Accumulated Other Comprehensive Loss | Accumulated Deficit | Total |
Balance at Dec. 31, 2019 | $ 203 | $ 464,491 | $ (473,343) | $ (8,649) | |||
Balance (in shares) at Dec. 31, 2019 | 203,453 | ||||||
Changes in Stockholders' Equity (Deficit) | |||||||
Issuance of common stock, net of issuance costs | (26) | (26) | |||||
Issuance of common stock, net of issuance costs (in shares) | 329 | ||||||
Exercise of stock options and warrants | $ 3 | 573 | 576 | ||||
Exercise of stock options and warrants (in shares) | 3,329 | ||||||
Exchange and conversion of convertible notes, net | $ 60 | 27,199 | 27,259 | ||||
Exchange and conversion of convertible notes, net (in shares) | 58,470 | ||||||
Stock-based compensation expense and vesting of RSUs | 7,314 | 7,314 | |||||
Issuance of warrants related to debt | 4,611 | 4,611 | |||||
Net Income (Loss) | (175,168) | (175,168) | |||||
Balance at Dec. 31, 2020 | $ 266 | 504,162 | (648,511) | (144,083) | |||
Balance (in shares) at Dec. 31, 2020 | 265,581 | ||||||
Increase (Decrease) in Temporary Equity | |||||||
Issuance of convertible preferred stock, net of issuance costs | $ 2,811 | ||||||
Temporary Equity, Ending Balance at Dec. 31, 2020 | 2,811 | ||||||
Changes in Stockholders' Equity (Deficit) | |||||||
Conversion of preferred stock | (45,567) | $ 54 | 45,511 | 45,565 | |||
Conversion of preferred stock (in shares) | 54,166 | ||||||
Issuance of common stock, net of issuance costs | $ 113 | 200,252 | 200,365 | ||||
Issuance of common stock, net of issuance costs (in shares) | 112,571 | ||||||
Exercise of stock options and warrants | $ 5 | 4,988 | 4,993 | ||||
Exercise of stock options and warrants (in shares) | 5,732 | ||||||
Exchange and conversion of convertible notes, net | $ 5 | 6,496 | 6,501 | ||||
Exchange and conversion of convertible notes, net (in shares) | 4,925 | ||||||
Issuance of common stock for vested RSUs and ESPP purchase | $ 6 | 68 | 74 | ||||
Issuance of common stock for vested RSUs and ESPP purchase (in shares) | 5,816 | ||||||
Stock-based compensation expense | 9,029 | 9,029 | |||||
Shares withheld related to net share settlement of equity awards | $ (2) | (5,291) | (5,293) | ||||
Shares withheld related to net share settlement of equity awards (in shares) | (1,509) | ||||||
Net Income (Loss) | (302,474) | (302,474) | |||||
Other comprehensive income (loss) | $ (212) | (212) | |||||
Balance at Dec. 31, 2021 | $ 447 | 765,215 | (212) | (950,985) | (185,535) | ||
Balance (in shares) at Dec. 31, 2021 | 447,282 | ||||||
Increase (Decrease) in Temporary Equity | |||||||
Issuance of convertible preferred stock, net of issuance costs | $ 42,756 | ||||||
Issuance of common stock, net of issuance costs | $ 15 | 34,159 | 34,174 | ||||
Issuance of common stock, net of issuance costs (in shares) | 15,161 | ||||||
Exercise of stock options and warrants | $ 10 | 941 | 951 | ||||
Exercise of stock options and warrants (in shares) | 9,892 | ||||||
Issuance of common stock for vested RSUs and ESPP purchase | $ 10 | 123 | 133 | ||||
Issuance of common stock for vested RSUs and ESPP purchase (in shares) | 9,507 | ||||||
Stock-based compensation expense | 8,618 | 8,618 | |||||
Shares withheld related to net share settlement of equity awards | $ (2) | (2,568) | (2,570) | ||||
Shares withheld related to net share settlement of equity awards (in shares) | (2,205) | ||||||
Net Income (Loss) | 142,119 | 142,119 | |||||
Other comprehensive income (loss) | (466) | (466) | |||||
Balance at Dec. 31, 2022 | $ 480 | $ 806,488 | $ (678) | $ (808,866) | $ (2,576) | ||
Balance (in shares) at Dec. 31, 2022 | 479,637 | ||||||
Increase (Decrease) in Temporary Equity | |||||||
Issuance of convertible preferred stock, net of issuance costs | $ 37,656 | ||||||
Temporary Equity, Ending Balance at Dec. 31, 2022 | $ 37,656 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Cash flows from operating activities | |||
Net income (loss) | $ 142,119 | $ (302,474) | $ (175,168) |
Adjustments to reconcile net loss to net cash used in operating activities: | |||
Depreciation and ROU amortization expense | 985 | 1,239 | 1,141 |
Non-cash interest expense (debt discount and deferred costs) | 12,164 | 8,462 | 10,977 |
Change in fair value of derivatives | (184,221) | 174,173 | 11,641 |
(Gain) Loss on fair value adjustment of option | (43,745) | 53,152 | 30,721 |
(Gain) Loss on extinguishment of option | 101 | (330) | 21,112 |
Loss on issuance of debt & other issuance costs | 12,706 | ||
Impairment of right-of-use asset | 518 | ||
Impairment of option | 138 | 1,647 | 2,339 |
Stock-based compensation expense | 8,618 | 9,029 | 7,314 |
Loss on disposal of assets | 10 | 181 | |
Changes in assets and liabilities: | |||
Accounts receivable | (478) | 1,013 | 7,393 |
Prepaid expenses and other current assets | (1,210) | (2,444) | 737 |
Inventory | (989) | (1,036) | 11,648 |
Deposits and other assets | 381 | (164) | 117 |
Accounts payable | (785) | (559) | (2,522) |
Accrued expenses and other liabilities | 1,462 | 2,218 | (6,585) |
Accrued interest | (95) | 372 | (379) |
Operating lease liabilities | (757) | (904) | (795) |
Net cash used in operating activities | (66,312) | (56,078) | (67,422) |
Cash flows from investing activities | |||
Capital expenditures | (312) | (210) | (181) |
Purchase of marketable securities | (104,706) | (154,514) | |
Proceeds from sale and maturity of marketable securities | 131,900 | 5,975 | |
Net cash provided by (used in) investing activities | 26,882 | (148,749) | (181) |
Cash flows from financing activities | |||
Proceeds from issuance of common stock and warrants, net | 34,174 | 200,365 | (26) |
Proceeds from exercise of stock options, RSU, ESPP & Warrants | 1,084 | 5,066 | 576 |
Taxes paid related to net share settlement of equity awards | (2,570) | (5,293) | |
Proceeds from debt issuance, net | 55,971 | ||
Note issuance costs | (601) | ||
Proceeds from issuance of preferred stock, net | 12,000 | 22,783 | |
Repayment of term loans | (2,926) | (2,838) | (66,050) |
Net cash provided by (used in) financing activities | 41,762 | 220,083 | (10,130) |
Net increase (decrease) in cash and cash equivalents | 2,332 | 15,256 | (77,733) |
Cash and cash equivalents, at beginning of period | 33,461 | 18,205 | 95,938 |
Cash and cash equivalents, at ending of period | 35,793 | 33,461 | 18,205 |
Supplemental disclosure of cash flow information | |||
Cash paid during the period for interest | 6,568 | 7,822 | 4,726 |
Lease liabilities arising from obtaining right-of-use assets | 2,689 | ||
Supplemental disclosure of non-cash investing and financing activities | |||
Property and equipment purchases included in accounts payable and accrued expenses | 30 | ||
Conversion of options into redeemable convertible preferred stock | $ 25,656 | 19,973 | |
Issuance of common stock converted from preferred shares | 54,166 | ||
Issuance of common stock converted from notes payables | $ 4,925 | 227 | |
Issuance of common stock and warrants - Highbridge transactions | 55,303 | ||
Issuance of warrants - Energy Capital | 3,399 | ||
Exchange of 2025 Notes for Second Lien Notes | (24,000) | ||
Issuance of Second Lien Notes | $ 15,675 |
Organization
Organization | 12 Months Ended |
Dec. 31, 2022 | |
Organization | |
Organization | 1. Organization Senseonics Holdings, Inc., a Delaware corporation, is a medical technology company focused on the development and manufacturing of long-term, implantable continuous glucose monitoring system to improve the lives of people with diabetes by enhancing their ability to manage their disease with relative ease and accuracy. Senseonics, Incorporated is a wholly owned subsidiary of Senseonics Holdings, Inc. and was originally incorporated on October 30, 1996 and commenced operations on January 15, 1997. Senseonics Holdings, Inc. and Senseonics, Incorporated are hereinafter collectively referred to as the “Company” unless otherwise indicated or the context otherwise requires. |
Liquidity and Capital Resources
Liquidity and Capital Resources | 12 Months Ended |
Dec. 31, 2022 | |
Liquidity and Capital Resources | |
Liquidity and Capital Resources | 2. Liquidity and Capital Resources The Company’s operations are subject to certain risks and uncertainties including, among others, current and potential competitors with greater resources, lack of operating history and uncertainty of future profitability. Since inception, the Company has suffered substantial operating losses, principally from expenses associated with the Company’s research and development programs and commercial launch of the Eversense® E3 CGM System (for use up to six months) in both the United States and Europe, and the launch of our legacy versions, including Eversense CGM System in the United States (for use up to 90 days) and the Eversense CGM and Eversense XL CGM Systems (for use up to six months) in Europe, the Middle East, and Africa. The Company has not generated significant profit from the sale of products and its ability to generate revenue and achieve profitability largely depends on the Company’s ability to successfully expand the commercialization of Eversense, continue the development of its products and product upgrades, and to obtain necessary regulatory approvals or certifications for the sale of those products. These activities will require significant uses of working capital through 2022 and beyond. The Company generated total gross profit of In November 2021, the Company entered into an Open Market Sale Agreement (the “2021 Sales Agreement”) with Jefferies LLC (“Jefferies”), under which the Company could offer and sell, from time to time, at its sole discretion, shares of its common stock having an aggregate offering price of up to $150.0 million through Jefferies as the sales agent in an “at the market” offering. Jefferies will receive a commission up to 3.0% of the gross proceeds of any common stock sold through Jefferies under the 2021 Sales Agreement. For the twelve months ending December 31, 2022, the Company received $34.2 million in net proceeds from the sale of 15,160,899 shares of its common stock under the 2021 Sales Agreement. In November 2019, the Company entered into an Open Market Sale Agreement (the “2019 Sales Agreement”) with Jefferies, under which the Company could offer and sell, from time to time at its sole discretion, shares of its common stock having an aggregate offering price of up to $50.0 million through Jefferies as the sales agent in an “at the market” offering. In June 2021, the Company received $48.4 million in net proceeds from the sale of 12,830,333 shares of its common stock utilizing the full capacity under the 2019 Sales Agreement. On January 21, 2021, the Company entered into an underwriting agreement, which was subsequently amended and restated on the same day (the “Underwriting Agreement”) with H.C. Wainwright & Co., LLC, as representative of the underwriters (the “Underwriters”), to issue and sell 51,948,052 shares of common stock, in an underwritten public offering pursuant to effective registration statements on Form S-3, including and a related prospectus and prospectus supplement, in each case filed with the Securities and Exchange Commission (“the SEC”) (the “2021 Public Offering”). The price to the public in the 2021 Public Offering was $1.925 per share of common stock. The Underwriters agreed to purchase the shares from the Company pursuant to the Underwriting Agreement at a price of $1.799875 per share and the Company also agreed to reimburse them for customary fees and expenses. The initial closing of the 2021 Public Offering occurred on January 26, 2021. Subsequent to the initial closing, the Underwriters exercised their option to purchase an additional 7,792,207 shares of Common Stock. Total net proceeds from the 2021 Public Offering were $106.1 million after deducting underwriting discounts and commissions and estimated offering expenses. On January 17, 2021, the Company entered into a Securities Purchase Agreement with certain institutional purchasers (the “Purchasers”), pursuant to which the Company sold to the Purchasers, in a registered direct offering (the “Registered Direct Offering”), an aggregate of 40,000,000 shares (the “Shares”) of common stock, $0.001 par value per share. The Shares were sold at a purchase price of $1.25 per share for aggregate gross proceeds to the Company of $50 million, before deducting fees to the placement agent and other estimated offering expenses payable by the Company. The Shares were offered and sold by the Company pursuant to an effective shelf registration statement on Form S-3, which was originally filed with the SEC on November 27, 2019. The net proceeds to the Company from the Registered Direct Offering, after deducting fees and expenses and the estimated offering expenses payable by the Company, were approximately $46.1 million. On November 9, 2020, the Company entered into an Equity Line Agreement (the “Equity Line Agreement”) with Energy Capital, LLC, a Florida limited liability company (“Energy Capital”), which provided that, upon the terms and subject to the conditions and limitations set forth therein, Energy Capital was committed to purchase up to an aggregate of $12.0 million of shares of the Company’s newly designated series B convertible preferred stock (the “Series B Preferred Stock”) at the Company’s request from time to time during the 24-month term of the Equity Line Agreement. Under the Equity Line Agreement, beginning January 21, 2021, subject to the satisfaction of certain conditions, including that the Company have less than $8.0 million of cash, cash equivalents and other available credit (aside from availability under the Equity Line Agreement), the Company had the right, at its sole discretion, to present Energy Capital with a purchase notice (each, a “Regular Purchase Notice”) directing Energy Capital (as principal) to purchase shares of Series B Preferred Stock at a price of $1,000 per share (not to exceed $4.0 million worth of shares) once per month, up to an aggregate of $12.0 million of the Company’s Series B Preferred Stock at a per share price (the “Purchase Price”) equal to $1,000 per share of Series B Preferred Stock, with each share of Series B Preferred Stock initially convertible into common stock, beginning six months after the date of its issuance, at a conversion price of $0.3951 per share, subject to customary anti-dilution adjustments, including in the event of any stock split. The Equity Line Agreement provided that the Company was not permitted to affect any Regular Purchase Notice under the Equity Line Agreement on any date where the closing price of the Company’s common stock on the NYSE American is less than $0.25 without the approval of Energy Capital. In addition, beginning on January 1, 2022, since there had been no sales of the Series B Preferred Stock pursuant to the Equity Line Agreement, Energy Capital had the right, at its sole discretion, by its delivery to the Company of a Regular Purchase Notice, to purchase up to the $12.0 million of Series B Preferred Stock under the Equity Line Agreement at the Purchase Price. On November 7, 2022, Energy Capital exercised in full its right to purchase $12.0 million of shares of Series B Preferred Stock. The excess of the Purchase Price and the fair value of the Energy Capital option in the total amount of $37.6 million was recorded in additional-paid-in-capital. Additionally, on August 9, 2020, the Company entered into a Stock Purchase Agreement with Masters Special Solutions, LLC and certain affiliates thereof (collectively, “Masters”), pursuant to which the Company issued and sold to Masters 3,000 shares of convertible preferred stock, designated as Series A Preferred Stock (the “Series A Preferred Stock”), at a price of $1,000 per share in an initial closing. Masters also had the option to purchase up to an additional 27,000 shares of Series A Preferred Stock at a price of $1,000 per share in subsequent closings, subject to the terms and conditions of the Stock Purchase Agreement, as amended, through January 11, 2021. In January 2021, Masters and its assignees purchased in aggregate an additional 22,783 shares of Series A Preferred Stock, resulting in additional gross proceeds of $22.8 million. The excess of the purchase price and the fair value of the Masters option in the total amount of $42.8 million was recorded in additional-paid-in-capital. Each share of Series A Preferred Stock is initially convertible into a number of shares of common stock equal to $1,000 divided by the conversion price of $0.476 per share, subject to customary anti-dilution adjustments, including in the event of any stock split. All shares of Series A Preferred Stock have been converted to common stock as of December 31, 2021. The Company believes that these agreements provide the financial resources and mutual commitment to support the growth of the new Eversense E3 product and subsequent product versions. The timing and success of these collaborations and financings are dependent on certain events occurring in accordance with the Company’s plans, and may be influenced by uncontrollable external factors. Management has concluded that based on the Company’s current operating plans, its existing cash and cash equivalents will be sufficient to meet the Company’s anticipated operating needs through 2024. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2022 | |
Summary of Significant Accounting Policies | |
Summary of Significant Accounting Policies | 3. Summary of Significant Accounting Policies Basis of Presentation The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The consolidated financial statements reflect the accounts of Senseonics Holdings and its wholly owned subsidiary Senseonics. All intercompany balances and transactions have been eliminated in consolidation. The Company views its operations and manages its business in one segment, glucose monitoring products. Operating segments are defined as components of an enterprise about which separate discrete information is available for evaluation by the chief operating decision maker, or decision-making group, in deciding how to allocate resources and in assessing performance. Use of Estimates The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the reported amounts of revenue and expenses during the reporting period. In the accompanying consolidated financial statements, estimates are used for, but not limited to, stock-based compensation, recoverability of long-lived assets, deferred taxes and valuation allowances, derivative assets and liabilities, obsolete inventory, warranty obligations, variable consideration related to revenue, depreciable lives of property and equipment, and accruals for clinical study costs, which are accrued based on estimates of work performed under contract. The Company bases these estimates on historical and anticipated results, trends, and various other assumptions that it believes are reasonable, including assumptions as to future events. These estimates form the basis for making judgments about the carrying values of assets and liabilities and recorded revenues and expenses. Actual results could differ from those estimates; however, management does not believe that such differences would be material. Cash and Cash Equivalents and Concentration of Credit Risk The Company considers highly liquid investments with original maturities of three months or less from the date of purchase to be cash equivalents. These investments are carried at cost, which approximates fair value. Cash, cash equivalents and restricted cash consisted of the following (in thousands): December 31, December 31, 2022 2021 Cash ⁽ ¹ ⁾ $ 1,135 $ 4,264 Money market funds 34,658 29,197 Cash and cash equivalents $ 35,793 $ 33,461 (1) Includes overnight repurchase agreements. There was no restricted cash held as of December 31, 2022 and December 31, 2021. Marketable Securities Marketable securities consist of commercial paper, corporate debt securities, asset backed securities and government and agency securities. The Company’s investments are classified as available for sale. Such securities are carried at fair value, with any unrealized holding gains or losses reported, net of any tax effects reported, as accumulated other comprehensive income. Realized gains and losses and declines in value judged to be other-than-temporary, if any, are included in consolidated results of operations. A decline in the market value of any available for sale security below cost that is deemed to be other-than-temporary results in a reduction in fair value, which is charged to earnings in that period, and a new cost basis for the security is established. Dividend and interest income is recognized when earned. The cost of securities sold is calculated using the specific identification method. We classify all available-for-sale marketable securities with maturities greater than one year from the balance sheet date as non-current assets. We do not generally intend to sell these 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 at maturity. Inventory and Obsolescence Inventory is valued at the lower of cost or net realizable value. Cost is determined using the standard cost method that approximates first in, first out. The Company records an adjustment to reduce the value of inventory for items that are potentially obsolete, where standard costs require adjustment to the net realizable value, and are in excess of future demand taking into consideration the product shelf life. The sensor manufacturing process can span several months, involves various contract manufacturers and includes raw components with long lead times, often resulting in significant work-in-progress inventory. However, expiry does not commence until the chemistry is applied to the sensor. The Company is able to isolate pre-chemistry sensor inventory in progress from post-chemistry sensor inventory in progress and finished goods to assess against demand forecasts and customer dating requirements for potential excess or obsolete inventory. The Company’s estimates are based on information known as of the balance sheet date and include factors such as anticipated future usage and sales, potential for external unfavorable conditions such as import holds or quality issues, and planned product upgrades. However, if actual product quality or conditions differ from the Company’s assumptions, additional inventory adjustments that would increase cost of sales could be required. Accounts Receivable The Company grants credit to various customers in the normal course of business. Accounts receivable consist of amounts due from distributors and are reduced by an allowance for doubtful accounts at the time potential collection risk is identified. Uncollectible accounts are written off against the allowance after appropriate collection efforts have been exhausted and when it is deemed that a balance is uncollectible. The Company does not have a history of collectability concerns, and no allowance for uncollectible accounts was recorded as of December 31, 2022 and December 31, 2021. Property and Equipment, net Property and equipment are stated at cost and depreciated using the straight-line method over the estimated useful lives of the assets, which is generally between three Leases The Company recognizes a ROU operating lease asset and liability as of the lease commencement date at the present value of the lease payments over the lease term. If the discount rate in the lease agreement is not implicit, the Company estimates the incremental borrowing rate based on the rate of interest the Company would have to pay to borrow a similar amount on a collateralized basis over a similar term. Lease and non-lease components are accounted for as a single component for facility leases. Leases with an initial term of 12 months or less are expensed to rent expense over the related term. Impairment of Long-lived Assets Management reviews long-lived assets, including property and equipment and right-of-use assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of the long-lived asset is measured by a comparison of the carrying amount of the asset to future undiscounted net cash flows expected to be generated by the asset. If the undiscounted cash flows are less than the carrying amount, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the estimated fair value of the assets. Management identified indicators of impairment on right-of-use assets in 2021. There were no impairment indicators in 2022. Derivative Financial Instruments The Company accounts for conversion options embedded in convertible notes in accordance with ASC Topic 815, Derivatives and Hedging. ASC Topic 815 generally requires companies to bifurcate conversion options embedded in convertible notes from their host instruments and to account for them as free standing derivative financial instruments. We review the terms of convertible debt issues to determine whether there are embedded derivative instruments, including embedded conversion options, which are required to be bifurcated and accounted for separately as derivative financial instruments. In circumstances where the host instrument contains more than one embedded derivative instrument, including the conversion option, that is required to be bifurcated, the bifurcated derivative instruments are accounted for as separate derivative instruments. The fair value of the embedded features are accounted for as a derivative liability in the Company’s consolidated balance sheets and adjusted to fair value each reporting period. The change in fair value of derivatives is recorded as a component of other income (expense) in the Company’s consolidated statements of operations and comprehensive loss. When the equity or convertible debt instruments contain embedded derivative instruments that are to be bifurcated and accounted for as liabilities, the total proceeds received are first allocated to the fair value of all the bifurcated derivative instruments. The remaining proceeds, if any, are then allocated to the host instruments themselves, usually resulting in those instruments being recorded at a discount from their face value. The discount from the face value of the convertible debt, together with the stated interest on the instrument, is amortized over the term of the instrument as interest expense. Product Warranty Obligations The Company provides a warranty of one year on its smart transmitters. Additionally, the Company may also replace Eversense system components that do not function in accordance with the product specifications. Estimated replacement costs are recorded at the time of shipment as a charge to cost of sales in the consolidated statement of operations and are developed by analyzing product performance data and historical replacement experience, including comparing actual return management authorizations to revenue. At December 31, 2022 and December 31, 2021, the warranty reserve was $0.8 million and $0.7 million, respectively. The following table provides a reconciliation of the change in estimated warranty liabilities for the years ended December 31, 2022 and 2021 (in thousands): December 31, December 31, 2022 2021 Balance at beginning of the period $ 723 $ 646 Provision for warranties during the period 166 781 Settlements made during the period (108) (704) Balance at end of the period $ 781 $ 723 Revenue Recognition We generate product revenue from sales of the Eversense system and related components and supplies to Ascensia, through the Commercialization Agreement, third-party distributors in the European Union and to strategic fulfillment partners in the United States (collectively “Customers”), who then resell the products to health care providers and patients. The Company is paid for its sales directly to the Customers, regardless of whether or not the Customers resell the products to health care providers and patients. Revenue from product sales is recognized at a point in time when the Customers obtain control of our product based upon the delivery terms as defined in the contract at an amount that reflects the consideration which we expect to receive in exchange for the product. Contracts with our distributors contain performance obligations, mostly for the supply of goods, and is typically satisfied upon transfer of control of the product. Customer contracts do not include the right to return unless there is a product issue, in which case we may provide replacement product. Product conformity guarantees do not create additional performance obligations and are accounted for as warranty obligations in accordance with guarantee and loss contingency accounting guidance. Our contracts may contain some form of variable consideration such as prompt-pay discounts, tier-volume price discounts and for the Ascensia commercial agreement, revenue share. Variable consideration, such as discounts and prompt-pay incentives, are treated as a reduction in revenue and variable considerations, such as revenue share, is treated as an addition in revenue when the product sale is recognized. The amount of variable consideration that is included in the transaction price may be constrained and is included in revenue only to the extent that it is probable that a significant reversal in the amount of the cumulative revenue recognized will not occur in a future period, when the uncertainty associated with the variable consideration is subsequently resolved. Estimating variable consideration and the related constraint requires the use of management judgment. Depending on the variable consideration, we develop estimates for the expected value based on the terms of the agreements, historical data, geographic mix, reimbursement rates and market conditions. Contract assets consist of unbilled receivables from customers and are recorded at net realizable value and relate to the revenue share variable consideration from the Ascensia Commercialization Agreement. Cost of Sales The Company uses third-party contract manufacturers to manufacture Eversense and related components and supplies. Cost of sales includes raw materials, contract manufacturing service fees, expected warranty costs, recall costs, product obsolescence, scrap, third-party warehousing, shipping and handling expenses associated with product delivery, and employee-related costs of the internal supply chain and manufacturing team. Research and Development Expenses Research and development expenses consist of expenses incurred in performing research and development activities in developing Eversense, including clinical trials and feasibility studies, and partnerships for strategic initiatives including insulin delivery and new indications. Research and development expenses include compensation and benefits for research and development employees including stock-based compensation, cost of laboratory supplies, clinical trial and related clinical manufacturing expenses, costs related to regulatory operations, fees paid to contract research organizations and other consultants, and other outside expenses. Research and development expenses are expensed as incurred. Selling, General and Administrative Expenses Selling, general and administrative expenses consist primarily of salaries, commissions, and other related costs, including stock-based compensation, for personnel in the Company’s sales and marketing, executive, finance, accounting, business development, information technology, and human resources functions. Other significant costs include information technology, website design and advertising, educational and promotional materials, tradeshow expenses, marketing programs, facility costs, legal fees relating to patent and corporate matters, and fees for accounting and consulting services. Stock-Based Compensation The Company accounts for stock-based compensation related to stock option grants and restricted stock units under stock incentive plans, purchases under the employee stock purchase plan, as well as inducement stock grants, based on the fair value of those awards at the date of grant. The estimated fair value of stock options on the date of grant is amortized on a straight-line basis over the requisite service period of the individual award, which typically equals the vesting period. Forfeitures are accounted for in the period in which they occur. The Company uses the Black-Scholes-Merton option pricing model (“Black-Scholes Model”) to determine the fair value of stock-option awards. Valuation of stock awards requires management to make assumptions and to apply judgment to determine the fair value of the awards. These assumptions and judgments include estimating the fair value of the Company’s common stock, the risk-free interest rate, future volatility of the Company’s stock price, dividend yields, and the expected life of the stock-option awards. Changes in these assumptions can affect the fair value estimate. The risk-free interest rate assumption is based on observed interest rates for constant maturity U.S. Treasury securities consistent with the expected life of employee stock options. The expected life represents the period of time the stock options are expected to be outstanding and is based on the simplified method. Under the simplified method, the expected life of an option is presumed to be the mid-point between the vesting date and the end of the contractual term. The Company uses the simplified method due to the lack of sufficient historical exercise data to provide a reasonable basis upon which to otherwise estimate the expected life of the stock options. Expected volatility is based on the daily closing prices of a peer group of comparable publicly traded companies in similar stages of development. The Company has assumed no dividend yield because it does not expect to pay dividends in the future, which is consistent with its history of not paying dividends. Income Taxes The Company uses the asset and liability method of accounting for income taxes. Deferred tax assets and liabilities are determined based on differences between the financial reporting and tax basis of assets and liabilities and are measured using the enacted tax rates and laws that are in effect when the differences are expected to reverse. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the period that such tax rate changes are enacted. The measurement of a deferred tax asset is reduced, if necessary, by a valuation allowance if it is more likely than not that some portion or all of the deferred tax asset will not be realized. Management uses a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return, as well as guidance on derecognition, classification, interest and penalties and financial statement reporting disclosures. For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by taxing authorities. In the ordinary course of business, transactions occur for which the ultimate outcome may be uncertain. Management does not expect the outcome related to accrued uncertain tax provisions to have a material adverse effect on the Company’s financial position, results of operations or cash flows. The Company recognizes interest and penalties accrued on any unrecognized tax exposures as a component of income tax expense. The Company is subject to taxation in various jurisdictions in the United States and remains subject to examination by taxing jurisdictions for the year 2002 and all subsequent periods due to the availability of NOL carryforwards. In addition, all of the net operating losses and research and development credit carryforwards that may be used in future years are still subject to adjustment. Fair Value of Financial Instruments The carrying amounts of cash, cash equivalents, accounts receivable, accounts payable, and accrued expenses approximate fair value because of their short maturities. The Company’s term loan under the 2025 Notes, PHC Notes, 2023 Notes, and warrants are recorded at historical cost, net of discounts. The associated embedded conversion features in the Notes are derivative instruments and along with Options are remeasured at fair value each reporting period. Recent Accounting Pronouncements Recently Adopted Debt-Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contract in Entity’s Own Equity (Subtopic 815-40) . Not Yet Adopted In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses: Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”), which requires entities to record expected credit losses for certain financial instruments, including trade receivables, as an allowance that reflects the entity's current estimate of credit losses expected to be incurred. For available-for-sale debt securities in unrealized loss positions, the new standard requires allowances to be recorded instead of reducing the amortized cost of the investment. The Company currently holds investments in available-for sale securities. The Company has not historically experienced collection issues or bad debts with trade receivables. Accordingly, the Company does not expect this to have a significant impact on its consolidated financial statements and related disclosures at this time. The Company plans to adopt the guidance effective January 1, 2023. |
Revenue Recognition
Revenue Recognition | 12 Months Ended |
Dec. 31, 2022 | |
Revenue Recognition | |
Revenue Recognition | 4. Revenue Recognition Revenues by geographic region The following table sets forth net revenues derived from the Company’s two primary geographical markets, the United States and outside of the United States, based on the geographic location to which the Company delivers the product, for the years ended December 31, 2022, 2021 and 2020: December 31, 2022 December 31, 2021 December 31, 2020 % % % (Dollars in thousands) Amount of Total Amount of Total Amount of Total Revenue, net: Outside of the United States $ 8,877 54.2 % $ 11,117 81.3 % $ 3,821 77.2 % United States 7,512 45.8 2,558 18.7 1,128 22.8 Total $ 16,389 100.0 % $ 13,675 100.0 % $ 4,949 100.0 % Contract Assets Contract assets consist of unbilled receivables from customers and are recorded at net realizable value and relate to the revenue share variable consideration from the Ascensia Commercialization Agreement. Accounts receivable – related parties, net as of December 31, 2022, and December 31, 2021 included unbilled accounts receivable of $1.7 million and $1.8 million, respectively. The Company expects to invoice and collect all unbilled accounts receivable within 12 months. Concentration of Revenues and Customers Net revenue from the Company’s distribution arrangement with Ascensia, a related party, accounted for 96% of total net revenues for the year ended December 31, 2022. Ascensia accounted for 90% of total net revenues for the year ended December 31, 2021. Net revenue from distribution arrangement with Roche Diabetes Care GmbH, a related party, accounted for 72% of total net revenues for the year ended December 31, 2020. Revenue from distribution arrangement with Edwards Healthcare Centers, Advanced Diabetes Supply, and Solara Medical Supply, strategic fulfillment partners and supplier of CGM systems to diabetic patients in the United States, accounted for 19%, 15%, and 10%, respectively, of total net revenues for the year ended December 31, 2020. |
Net Income (Loss) per Share
Net Income (Loss) per Share | 12 Months Ended |
Dec. 31, 2022 | |
Net Income (Loss) per Share | |
Net Income (Loss) per Share | 5. Net Income (Loss) per Share attributable to common stockholders by the weighted-average number of common shares outstanding during the period. Diluted net income (loss) per share is computed using the weighted average number of common shares outstanding during the period and, when dilutive, potential common share equivalents. and exercise of stock options and warrants are determined using the average share price for each period under the treasury stock method. Potentially dilutive common shares issuable upon conversion of the Company’s convertible notes are determined using the if converted method. The if-converted method assumes conversion of convertible securities at the beginning of the reporting period. Interest expense, dividends, and the changes in fair value measurement recognized during the period are added back to the numerator. The denominator includes the common shares issuable upon conversion of convertible securities. 2022 2021 2020 Net income (loss) 142,119 (302,474) (175,168) Impact of conversion of dilutive securities (209,269) — — Dilutive Net income (loss) (67,150) (302,474) (175,168) Net income (loss) per share Basic 0.30 (0.72) (0.77) Diluted (0.11) (0.72) (0.77) Basic weighted average shares outstanding 467,952,475 422,321,023 227,912,358 Dilutive potential common stock outstanding Stock-based awards 6,000,572 — — 2023 Notes 4,617,646 — — 2025 Notes 39,689,142 — — PHC Notes 67,162,375 — — Energy Capital Option 30,372,058 — — Warrants 2,411,337 — — Diluted weighted average shares outstanding 618,205,605 422,321,023 227,912,358 Outstanding anti-dilutive securities not included in the diluted net income per share calculations were as follows: 2022 2021 2020 Stock-based awards 11,917,529 26,140,291 30,013,407 Masters preferred shares — — 6,302,521 2023 Notes — 4,617,646 6,672,500 2025 Notes — 39,689,142 44,728,676 PHC Notes — 65,757,177 68,222,412 Warrants 427,821 13,177,822 17,282,792 Total anti-dilutive shares outstanding 12,345,350 149,382,078 173,222,308 |
Marketable Securities
Marketable Securities | 12 Months Ended |
Dec. 31, 2022 | |
Marketable Securities | |
Marketable Securities | 6. Marketable Securities Marketable securities available for sale, were as follows (in thousands): December 31, 2022 Gross Gross Estimated Amortized Unrealized Unrealized Market Cost Gains Losses Value Commercial Paper $ 41,503 — — $ 41,503 Corporate debt securities $ 32,331 — (189) $ 32,142 Asset backed securities $ 8,363 — (103) $ 8,260 Government and agency securities $ 38,956 — (386) $ 38,570 Total $ 121,153 $ — $ (678) $ 120,475 December 31, 2021 Gross Gross Estimated Amortized Unrealized Unrealized Market Cost Gains Losses Value Commercial Paper $ 57,369 — — $ 57,369 Corporate debt securities $ 39,825 — (77) $ 39,748 Asset backed securities $ 26,736 — (29) $ 26,707 Government and agency securities $ 24,609 — (106) $ 24,503 Total $ 148,539 $ — $ (212) $ 148,327 The following are the scheduled maturities as of December 31, 2022 (in thousands): Net Fair Carrying Amount Value 2023 $ 108,797 $ 108,222 2024 5,620 5,608 2025 6,736 6,645 Total $ 121,153 $ 120,475 The Company periodically reviews its portfolio of debt securities to determine if any investment is impaired due to credit loss or other potential valuation concerns. For debt securities where the fair value of the investment is less than the amortized cost basis, the Company assesses at the individual security level, for various quantitative factors including, but not limited to, the nature of the investments, changes in credit ratings, interest rate fluctuations, industry analyst reports, and the severity of impairment. Unrealized losses on available-for-sale securities at December 31, 2022 were not significant and were primarily due to changes in interest rates and not due to increased credit risk associated with specific securities. The Company does not intend to sell these impaired 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 at maturity. |
Inventory, net
Inventory, net | 12 Months Ended |
Dec. 31, 2022 | |
Inventory, net | |
Inventory, net | 7. Inventory, net Inventory, net consisted of the following (in thousands): December 31, 2022 2021 Finished goods $ 1,697 $ 1,012 Work-in-process 4,057 3,770 Raw materials 1,552 1,534 Total $ 7,306 $ 6,316 The Company recorded $1.4 million, $2.4 million and $15.1 million in cost of sales for the years ended December 31, 2022, 2021 and 2020, respectively, to reduce the value of inventory for items that are potentially obsolete, to adjust costs to their net realizable value, and for inventory in excess of product demand. |
Prepaid expenses and other curr
Prepaid expenses and other current assets | 12 Months Ended |
Dec. 31, 2022 | |
Prepaid expenses and other current assets | |
Prepaid expenses and other current assets | 8. Prepaid expenses and other current assets Prepaid expenses and other current assets consisted of the following as of December 31, 2022 and 2021 (in thousands): December 31, 2022 2021 Contract manufacturing⁽¹⁾ $ 4,097 $ 5,036 Insurance 1,243 74 Clinical and Preclinical 924 142 Interest receivable 336 443 Accounting and Audit 270 — IT and software 189 225 Sales and Marketing 158 98 Rent and utilities 132 105 Research and development 67 39 Other 12 56 Total prepaid expenses and other current assets $ 7,428 $ 6,218 (1) Includes deposits to contract manufacturers for manufacturing process. |
Property and Equipment, net
Property and Equipment, net | 12 Months Ended |
Dec. 31, 2022 | |
Property and Equipment, net | |
Property and Equipment, net | 9. Property and Equipment, net December 31, 2022 2021 Machinery and laboratory equipment $ 2,668 $ 2,357 Office furniture and equipment 354 354 Leasehold improvements 128 127 3,150 2,838 Less: Accumulated depreciation (2,038) (1,530) Property and equipment, net $ 1,112 $ 1,308 Depreciation expense for the years ended December 31, 2022, 2021, and 2020 was $0.5 million, $0.5 million, and $0.4 million, respectively. There was no property and equipment disposed during 2022. The Company disposed of $0.1 million and $0.3 million of property and equipment in 2021 and 2020 respectively. |
Accrued Expenses and Other Curr
Accrued Expenses and Other Current Liabilities | 12 Months Ended |
Dec. 31, 2022 | |
Accrued Expenses and Other Current Liabilities | |
Accrued Expenses and Other Current Liabilities | 10. Accrued Expenses and Other Current Liabilities Accrued expenses and other current liabilities consisted of the following as of December 31, 2022 and 2021 (in thousands): December 31, 2022 2021 Compensation and benefits $ 4,699 $ 3,484 Research and development 3,502 2,145 Contract manufacturing 2,480 914 Interest on notes payable 2,050 2,144 Professional and administration services 1,053 1,011 Product warranty and replacement obligations 781 1,697 Operating lease 725 904 Sales and marketing services 149 1,962 Other 14 3 Total accrued expenses and other current liabilities $ 15,453 $ 14,264 |
Leases
Leases | 12 Months Ended |
Dec. 31, 2022 | |
Leases | |
Leases | 11. Leases The Company leases approximately 33,000 square feet of research and office space for its corporate headquarters under a non-cancelable operating lease expiring in 2028. In June 2022, the Company extended our lease for an additional five-year term through 2028. The lease does not include additional extension options. We recorded a modification to our right-of-use asset and lease liability for the additional lease term, resulting in a remeasurement of the existing right-of-use asset and lease liability. On July 31, 2019, the Company entered into a non-cancellable operating lease agreement for approximately 30,500 square feet of office space commencing on September 2, 2019 and expiring in 2023. The Company did not have the option to renew the lease for an additional term. The Company did not have any lease related payments made to the lessor before the commitment date, lease incentives received from the lessor or initial direct cost adjustments to be added to the initial measurement of the liability. This facility was decommissioned in 2021 and the Company will continue making lease payments until the lease expires. An impairment charge of $0.5 million was recorded during the twelve months ended December 31, 2021. Operating lease expense for the year ended December 31, 2022, 2021 and 2020 was $0.7 million, 0.9 million, and $0.9 million, respectively. The following table summarizes the lease assets and liabilities as of December 31, 2022 and 2021 (in thousands): December 31, Operating Lease Assets and Liabilities Balance Sheet Classification 2022 2021 Assets Operating lease ROU assets Deposits and other assets $ 3,032 821 Liabilities Current operating lease liabilities Accrued expenses and other current liabilities $ 725 904 Non-current operating lease liabilities Other non-current liabilities 2,689 579 Total operating lease liabilities $ 3,414 1,483 The following table summarizes the maturity of undiscounted payments due under operating lease liabilities and the present value of those liabilities as of December 31, 2022 (in thousands): 2023 1,006 2024 709 2025 730 2026 752 2027 774 2028 327 Total 4,298 Present value adjustment (884) Present value of lease liabilities $ 3,414 The following table summarizes the weighted-average lease term and weighted-average discount rate as of December 31, 2022 and 2021: Remaining lease term (years) 2022 2021 Operating leases 5.0 1.6 Discount rate Operating leases 9.1 % 9.1 % During the year ended December 31, 2022, the Company made cash payments of $1.0 million included in the measurement of its operating lease liabilities. |
401(k) Plan
401(k) Plan | 12 Months Ended |
Dec. 31, 2022 | |
401(k) Plan | |
401(k) Plan | 12. 401(k) Plan The Company has a defined contribution 401(k) plan available to all full-time employees. Employee contributions are voluntary and are determined on an individual basis subject to the maximum allowable under federal income tax regulations. Participants are fully vested in their contributions. The Company has provided a discretionary match of up to 3% of the participant’s contributions. Employer match expenses during the years ended December 31, 2022, 2021, and 2020 were $0.4 million, $0.3 million, and $0.1 million, respectively. Administrative expenses for the plan, which are paid by the Company, were not material in 2022, 2021 or 2020. |
Notes Payable, Preferred Stock
Notes Payable, Preferred Stock and Stock Purchase Warrants | 12 Months Ended |
Dec. 31, 2022 | |
Notes Payable, Preferred Stock and Stock Purchase Warrants | |
Notes Payable, Preferred Stock and Stock Purchase Warrants | 13. Notes Payable, Preferred Stock and Stock Purchase Warrants Term Loans PPP Loan On April 22, 2020, the Company received $5.8 million in loan funding from the PPP pursuant to the CARES Act, as amended by the Flexibility Act, and administered by the Small Business Administration (“SBA”). The unsecured loan (the “PPP Loan”) is evidenced by the PPP Note dated April 21, 2020 (the “PPP Note”) in the principal amount of $5.8 million with Silicon Valley Bank (“SVB.”) Under the terms of the PPP Note and the PPP Loan, interest accrued on the outstanding principal at a rate of 1.0% per annum. The term of the PPP Note was two years. In April 2022, the Company repaid the outstanding principal and accrued interest in full. Convertible Preferred Stock and Warrants On November 9, 2020, the Company entered into an equity line agreement with Energy Capital, which provides that, upon the terms and subject to the conditions and limitations set forth therein, Energy Capital is committed to purchase up to an aggregate of $12.0 million of shares of the Company’s newly designated Series B Preferred Stock at the Company’s request from time to time during the 24-month The Company accounted for the Equity Line Agreement as a put/call option (the “Energy Capital Option”). This put/call option was classified as a liability in accordance with ASC 480 on the Company’s balance sheet and was recorded at the estimated fair value of $4.2 million upon issuance. In connection with the issuance of the Equity Line Agreement, the Company incurred and expensed $7.6 million in debt issuance costs in fiscal year 2020. The put/call option was required to be remeasured to fair value at each reporting period with the change recorded in change in fair value of derivatives that is a component of other income (expense). The fair value of the Energy Capital Option as of December 31, 2021 was $69.4 million. The Company adjusted the Energy Capital Option to its fair value of $25.7 million on the exercise date, recognizing a fair value adjustment gain of $43.7 million. Concurrently with entry into the Equity Line Agreement, the Company issued a warrant to Energy Capital, exercisable beginning on May 9, 2021, to purchase up to 10,000,000 shares of common stock at an exercise price of $0.3951 per share (the “Warrant”). The Warrant was exercised on a net basis in February 2022 and Energy Capital received 8,917,535 shares of common stock upon the net exercise of the Warrants. On August 9, 2020, the Company entered into a Stock Purchase Agreement with Masters, pursuant to which the Company issued and sold to Masters 3,000 shares of Series A Preferred Stock, at a price of $1,000 per share in an initial closing. Masters also had the option to purchase up to an additional 27,000 shares of Series A Preferred Stock at a price of $1,000 per share in a subsequent closing, subject to the terms and conditions of the Stock Purchase Agreement, as amended, through January 11, 2021. In January 2021, Masters and its assignees purchased in aggregate an additional 22,783 shares of Series A Preferred Stock, resulting in additional gross proceeds to the Company of $22.8 million. Each share of Series A Preferred Stock was initially convertible into a number of shares of common stock equal to $1,000 divided by the conversion price of $0.476 per share, subject to customary anti-dilution adjustments, including in the event of any stock split. All shares of Series A Preferred Stock have been converted to common stock as of December 31, 2021. Masters’ option to purchase the remaining unissued shares of Series A Preferred Stock expired on January 11, 2021, resulting in a gain on extinguishment of $3.5 million. Convertible Notes PHC Notes On August 9, 2020, the Company entered into a Note Purchase Agreement (the “Note Purchase Agreement”) with PHC, as the purchaser (together with the other purchasers from time to time party thereto, the “Note Purchasers”) and Alter Domus (US) LLC, as collateral agent. Pursuant to the Note Purchase Agreement, the Company borrowed $35.0 million in aggregate principal through the issuance and sale of PHC Notes on August 14, 2020 (the “Closing Date”). The Company also issued 2,941,176 shares of its common stock, $0.001 par value per share to PHC as a financing fee (the “Financing Fee Shares”) on the Closing Date. The Financing Fee Shares were recorded as debt discount in the amount of $1.5 million. The PHC Notes are senior secured obligations of the Company and will be guaranteed on a senior secured basis by the Company’s wholly owned subsidiary, Senseonics, Incorporated. Interest at the annual rate of 9.5% is payable semi-annually in cash or, at the Company’s option, payment in kind. The interest rate decreased to 8.0% in April 2022 as a result of the Company having obtained FDA approval for the 180-day E3 Eversense system for marketing in the United States. The maturity date for the PHC Notes is October 31, 2024 (the “Maturity Date”). The obligations under the PHC Notes are secured by substantially all of the Company’s and its subsidiary’s assets. Each $1,000 of principal of the PHC Notes (including any interest added thereto as payment in kind) is convertible into 1,901.7956 of shares of the Company’s stock, equivalent to a conversion price of approximately $0.53 per share, subject to specified anti-dilution adjustments, including adjustments for the Company’s issuance of equity securities on or prior to April 30, 2022 below the conversion price. In addition, following a notice of redemption or certain corporate events that occur prior to the maturity date, the Company will, in certain circumstances, increase the conversion rate for a holder who elects to convert its PHC Notes in connection with such notice of redemption or corporate event. In certain circumstances, the Company will be required to pay cash in lieu of delivering make whole shares unless the Company obtains stockholder approval to issue such shares. Subject to specified conditions, on or after October 31, 2022, the PHC Notes are redeemable by the Company if the closing sale price of the common stock exceeds 275% of the conversion price for a specified period of time and subject to certain conditions upon 10 days prior written notice at a cash redemption price equal to the then outstanding principal amount (including any payment in kind interest which has been added to such amount), plus any accrued but unpaid interest. On or after October 31, 2023, the PHC Notes are redeemable by the Company upon 10 days prior written notice at a cash redemption price equal to the then outstanding principal amount (including any payment in kind interest which has been added to such amount), plus any accrued but unpaid interest, plus a call premium of 130% if redeemed at least six months prior to the Maturity Date or a call premium of 125% if redeemed within six months of the Maturity Date. The Note Purchase Agreement contains customary terms and covenants, including financial covenants, such as operating within an approved budget and achieving minimum revenue and liquidity targets, and negative covenants, such as limitations on indebtedness, liens, mergers, asset transfers, certain investing activities and other matters customarily restricted in such agreements. Most of these restrictions are subject to certain minimum thresholds and exceptions. The Note Purchase Agreement also contains customary events of default, after which the PHC Notes be due and payable immediately, including defaults related to payment compliance, material inaccuracy of representations and warranties, covenant compliance, material adverse changes, bankruptcy and insolvency proceedings, cross defaults to certain other agreements, judgments against the Company, change of control or delisting events, termination of any guaranty, governmental approvals, and lien priority. The Company also has the option to sell and issue PHC up to $15.0 million of convertible preferred stock on or before December 31, 2022 (the “PHC Option”), which was initially contingent upon obtaining FDA approval for the 180-day Eversense E3 product for marketing in the United States before such date, and which the Company successfully obtained in February 2022. The Company developed an estimated fair value at December 31, 2021 to be $0.2 million, and an impairment loss of $1.6 million was recognized in net income as the difference between the fair value of the investment and its carrying amount. The PHC option was not exercised and expired on December 31, 2022 and the Company recognized a loss on extinguishment of $0.1 million. The Note Purchase Agreement also contained several provisions requiring bifurcation as a separate derivative liability including an embedded conversion feature, mandatory prepayment upon event of default that constitutes a breach of the minimum revenue financial covenant, optional redemption upon an event of default, change in interest rate after PMA approval and default interest upon an event of default. The Company recorded the fair value of the embedded features in the amount of $25.8 million as a derivative liability in the Company’s consolidated balance sheets in accordance with ASC Topic 815, Derivatives and Hedging. The derivative is adjusted to fair value at each reporting period, with the change in the fair value recorded in change in fair value of derivatives that is a component of other income (expense) in the Company’s consolidated statement of operations and comprehensive loss. The fair value of the derivative as of December 31, 2022 was $44.2 million. In connection with the issuance of the Note Purchase Agreement, the Company incurred $2.9 million in debt issuance costs and debt discounts. The associated debt issuance costs were recorded as a contra liability in the amount of $1.4 million and are deferred and amortized as additional interest expense over the term of the notes. The PHC Notes do not have current observable inputs such as recent trading prices (Level 3) and are measured at fair value using the binomial option pricing model and incorporate management’s assumptions for probabilities of conversion occurrence through maturity, stock price, volatility, risky (bond) rate, credit spread and recovery rates. The fair value of the Company’s PHC Notes, excluding the embedded features, was $32.2 million as of December 31, 2022 and $15.3 million as of December 31, 2021. 2025 Notes In July 2019, the Company issued $82.0 million in aggregate principal amount of 2025 Notes. The 2025 Notes are general, unsecured, senior subordinated obligations of the Company and bear interest at a rate of 5.25% per year, payable semiannually in arrears on January 15 and July 15 of each year, beginning on January 15, 2020. The 2025 Notes will mature on January 15, 2025, unless earlier repurchased or converted. The Company used $37.9 million of the net proceeds from the issuance of the 2025 Notes to repurchase $37.0 million aggregate principal amount of the Company’s outstanding 2023 Notes, at a purchase price equal to the principal amount thereof, plus accrued and unpaid interest thereon. The 2025 Notes are convertible, at the option of the holders, into shares of the Company’s common stock, at an initial conversion rate of 757.5758 shares per $1,000 principal amount of the 2025 Notes (equivalent to an initial conversion price of approximately $1.32 per share). The Company may redeem for cash all or part of the 2025 Notes, at its option, if (1) the last reported sale price of the Company’s common stock has been at least 150% of the conversion price then in effect for at least 20 30 If the Company undergoes a fundamental change, such as a merger, sale, greater than 50% ownership change, liquidation, dissolution or delisting, holders may require the Company to repurchase for cash all or any portion of their 2025 Notes at a fundamental change repurchase price equal to 100% of the principal amount of the 2025 Notes to be repurchased, plus accrued and unpaid interest to, but excluding, the fundamental change repurchase date. In addition, following a notice of redemption or certain corporate events that occur prior to the maturity date, the Company will, in certain circumstances, increase the conversion rate for a holder who elects to convert its 2025 Notes in connection with such notice of redemption or corporate event. In certain circumstances, the Company will be required to pay cash in lieu of delivering make whole shares unless the Company obtains stockholder approval to issue shares. The 2025 Notes are guaranteed on a senior unsecured basis by the Company’s wholly owned subsidiary, Senseonics, Incorporated, and may be guaranteed by certain future subsidiaries. The subsidiary guarantor is 100% owned, the guarantee is full and unconditional and joint and several and the parent company has no independent assets or operations and any subsidiaries of the parent company other than the subsidiary guarantor are minor. In connection with the issuance of the 2025 Notes, the Company incurred $4.3 million in debt issuance costs and debt discounts. Several note holders of the 2025 Notes were also note holders of the 2023 Notes, and as a result, these transactions qualified as loan modifications. The associated debt issuance costs were allocated between the portion of 2025 Notes purchased by new note holders, and of 2025 Notes purchased by existing 2023 Note holders. Loan modifications require third-party debt related costs to be expensed immediately, whereas fees paid to lenders of the modified loans are deferred. The third-party costs associated with the new note holders are also deferred as discounts that are amortized as additional interest expense over the term of the notes. Of the $4.3 million, $3.3 million were expensed for loan modifications were recorded within other income (expense) on the consolidated statement of operations and comprehensive loss and $1.0 million were deferred as discounts to the debt in 2019. The 2025 Notes also contained an embedded conversion option requiring bifurcation as a separate derivative liability, along with the fundamental change make-whole provision and the cash settled fundamental make-whole shares provision. The Company recorded the fair value of the embedded features in the amount of $38.3 million as a debt discount and derivative liability in the Company’s consolidated balance sheets in accordance with ASC Topic 815, Derivatives and Hedging The 2025 Notes do not have current observable inputs such as recent trading prices (Level 3) and are measured at fair value using the binomial option pricing model and incorporate management’s assumptions for probabilities of conversion occurrence through maturity, stock price, volatility, risky (bond) rate, credit spread and recovery rates. The fair value of the Company’s 2025 Notes, excluding the embedded features, was $41.3 million as of December 31, 2022 and $30.3 million at December 31, 2021. On April 21, 2020, $24.0 million in principal on the 2025 Notes were settled pursuant to an exchange agreement. Between September 3, 2020 and January 27, 2021, $6.8 million in aggregate principal on the 2025 Notes were converted into 5,152,259 shares of common stock. For the twelve months ended December 31, 2022, there were no conversions of outstanding principal for shares of common stock. 2023 Notes In January 2018, the Company issued $50.0 million in aggregate principal amount of the 2023 Notes. In February 2018, the Company issued an additional $3.0 million in aggregate principal amount of the 2023 Notes, pursuant to the partial exercise of the overallotment option by the underwriter. The 2023 Notes are general, unsecured, senior subordinated obligations and bear interest at a rate of 5.25% per year, payable semiannually in arrears on February 1 and August 1 of each year. The net proceeds from the issuance of the 2023 Notes, after deducting transaction costs, were $50.7 million. The 2023 Notes are general, unsecured, senior subordinated obligations of the Company. The Company pays interest semiannually in arrears on February 1 and August 1 of each year, beginning on August 1, 2018. In July 2019, the Company used the net proceeds from the issuance of the 2025 Notes to repurchase $37.0 million aggregate principal amount of the outstanding 2023 Notes. As the 2023 Notes have a maturity date of February 1, 2023, they are classified as a short-term liability on the Company’s consolidated balance sheet at December 31, 2022. Each $1,000 of principal of the 2023 Notes is initially convertible into 294.1176 shares of the Company’s common stock, which is equivalent to an initial conversion price of approximately $3.40 per share, subject to adjustment upon the occurrence of specified events. Holders may convert at any time prior to February 1, 2023. Holders who convert on or after the date that is six months after the last date of original issuance of the 2023 Notes but prior to February 1, 2021, may also be entitled to receive, under certain circumstances, an interest make-whole payment payable in shares of common stock. If specific corporate events occur prior to the maturity date, the Company will increase the conversion rate pursuant to the make-whole fundamental change provision for a holder who elects to convert their 2023 Notes in connection with such an event in certain circumstances. Additionally, if a fundamental change occurs prior to the maturity date, holders of the 2023 Notes may require the Company to repurchase all or a portion of their 2023 Notes for cash at a repurchase price equal to 100% of the principal amount plus any accrued and unpaid interest. The Company bifurcated the embedded conversion option, along with the interest make-whole provision and make-whole fundamental change provision, and in January 2018 recorded the embedded features as a debt discount and derivative liability in the Company’s consolidated balance sheets at its initial fair value of $17.3 million. Additionally, the Company incurred transaction costs of $2.2 million. The debt discount and transaction costs are being amortized to interest expense over the term of the 2023 Notes at an effective interest rate of 9.30%. The derivative is adjusted to fair value at each reporting period, with the change in the fair value recorded to other income (expense) in the Company’s consolidated statement of operations and comprehensive loss. The fair value of the Company’s 2023 Notes, excluding the embedded features, was $15.5 million as of December 31, 2022 and $14.2 million at December 31, 2021. There were no conversions of 2023 Notes in the years ended December 31, 2022 or 2021. The following carrying amounts are outstanding under the Company’s notes payable as of December 31, 2022 and December 31, 2021 (in thousands): December 31, 2022 Principal ($) Debt Discount ($) Issuance Costs ($) Carrying Amount ($) 2023 Notes 15,700 (121) - 15,579 2025 Notes 51,199 (15,029) (252) 35,918 PHC Notes 35,000 (13,698) (837) 20,465 December 31, 2021 Principal ($) Debt Discount ($) Issuance Costs ($) Carrying Amount ($) 2023 Notes 15,700 (1,499) - 14,201 2025 Notes 51,199 (20,535) (344) 30,320 PHC Notes 35,000 (18,587) (1,136) 15,277 PPP Loan 2,926 - - 2,926 Interest expense related to the notes payable for the periods presented below is as follows (in thousands): Year Ended December 31, 2022 Interest Rate Interest ($) Debt Discount and Fees ($) Issuance Costs ($) Loss on Extinguishment ($) Total Interest Expense ($) 2023 Notes 5.25% 824 1,378 - - 2,202 2025 Notes 5.25% 2,674 5,506 92 - 8,272 PHC Notes 8.00% 3,035 4,889 299 - 8,223 PPP Loan 1.00% 6 - - - 6 Total 6,539 11,773 391 - 18,703 Year Ended December 31, 2021 Interest Rate Interest ($) Debt Discount and Fees ($) Issuance Costs ($) Loss on Extinguishment ($) Total Interest Expense ($) 2023 Notes 5.25% 824 1,256 - - 2,080 2025 Notes 5.25% 2,717 4,569 76 3,183 10,545 PHC Notes 9.50% 3,287 3,650 223 - 7,160 PPP Loan 1.00% 54 - - - 54 Total 6,882 9,475 299 3,183 19,839 The following are the scheduled maturities of the outstanding debt, including the 2025 Notes, PHC Notes, and 2023 Notes as of December 31, 2022: 2023 $ 15,700 2024 35,000 2025 51,199 Total $ 101,899 |
Stockholders' Deficit
Stockholders' Deficit | 12 Months Ended |
Dec. 31, 2022 | |
Stockholders' Deficit | |
Stockholders' Deficit | 14. Stockholders’ Deficit In connection with the Company’s acquisition of Senseonics, Incorporated in December 2015 (the “Acquisition”), (1) all outstanding shares of common stock of Senseonics, $0.01 par value per share, were exchanged for 1,955,929 shares of the Company's common stock, $0.001 par value per share (reflecting an exchange ratio of 2.0975), (2) all outstanding shares of preferred stock were converted into shares of common stock of Senseonics, and exchanged into 55,301,674 shares of the Company’s common stock, $0.001 par value per share, and (3) all outstanding options and warrants to purchase shares of common stock of Senseonics were exchanged for or replaced with options and warrants to acquire shares of the Company’s common stock using the same exchange ratio. Common Stock As of December 31, 2022 and December 31, 2021, the Company’s authorized capital stock included 900,000,000 shares of common stock, par value $0.001 per share. The Company had 479,637,138 and 447,282,263 shares of common stock issued outstanding Preferred Stock As of December 31, 2022 and 2021, the Company’s authorized capital stock included 5,000,000 shares of undesignated preferred stock, par value $0.001 per share. The Company had 12,000 shares of Series B Preferred Stock outstanding as of December 31, 2022 and 0 shares of preferred stock outstanding as of December 31, 2021. Voting Rights The holders of Series B Preferred Stock generally are entitled to vote with the holders of the shares of common stock on all matters submitted for a vote of holders of shares of common stock (voting together with the holders of shares of common stock as one class) on an as-converted basis and shall be entitled to a number of votes per share equal to $1,000 divided by $1.24, subject to a cap of 29.0% of total voting power. Dividends The Series B Preferred Stock is not entitled to dividends. Conversion Rights Each share of Series B Preferred Stock is initially convertible into the number of shares of the common stock of the Company, $0.001 par value per share, equal to $1,000 divided by the conversion price of $0.3951 per share, subject to customary anti-dilution adjustments, including in the event of any stock split. Stock Purchase Warrants On June 30, 2016, the Company issued the Oxford/SVB Warrants to purchase an aggregate of 116,581, 63,025 and 80,645 shares of common stock at an exercise price of $3.86, $2.38 and $1.86 per share, respectively. The warrants were recorded within equity based on their fair value of $0.5 million. These warrants expire on June 30, 2026, November 22, 2026, and March 29, 2027, respectively, and are classified in equity. On July 16, 2019, the Company issued the Solar Warrants to purchase an aggregate of 1,125,000 shares of the Company’s common stock with an exercise price of $1.20 per share. The Solar Warrants are exercisable until July 25, 2029. The warrants were recorded within equity based on their fair value of $0.7 million. In February 2021, the Solar Warrants were exercised in full, on a net basis and the lenders received 868,833 shares of common stock upon the net exercise of the warrants. On April 24, 2020, the Company issued the Highbridge Warrants to purchase an aggregate of 4,500,000 shares of the Company’s common stock with an exercise price of $0.66 per share. The Highbridge Warrants are exercisable until April 24, 2023. The warrants were recorded within equity based on their fair value of $1.3 million. During the year ended December 31, 2021, the warrant holders exercised 1,750,000 warrants and the Company received $1.16 million in cash proceeds for the exercise. There were no warrants exercised for the year ended December 31, 2022. On November 9, 2020, the Company issued the Energy Capital Warrants to purchase an aggregate of 10,000,000 shares of the Company’s common stock with an exercise price of $0.3951 per share. The Energy Capital Warrants are exercisable until November 9, 2030. The warrants were recorded within equity based on their fair value of $3.4 million. In February 2022, the Energy Capital Warrants were exercised in full, on a net basis and Energy Capital received 8,917,535 shares of common stock upon the net exercise of the warrants. |
Stock-Based Compensation
Stock-Based Compensation | 12 Months Ended |
Dec. 31, 2022 | |
Stock-Based Compensation | |
Stock-Based Compensation | 15. Stock-Based Compensation 2015 Plan In December 2015, the Company adopted the 2015 Equity Incentive Plan (the “2015 Plan”), under which incentive stock options and non-qualified stock options may be granted to the Company’s employees and certain other persons in accordance with the 2015 Plan provisions. In February 2016, the Company’s board of directors adopted and the Company’s stockholders approved an Amended and Restated 2015 Equity Incentive Plan (the “amended and restated 2015 Plan”), which became effective on February 20, 2016. The Company’s board of directors may terminate the amended and restated 2015 Plan at any time. Options granted under the amended and restated 2015 Plan expire ten years after the date of grant. Pursuant to the amended and restated 2015 Plan, the number of shares of the Company’s common stock reserved for issuance will automatically increase on January 1 of each year, beginning on January 1, 2017 and ending on January 1, 2026, by 3.5% of the total number of shares of its common stock outstanding on December 31 of the preceding calendar year, or a lesser number of shares as may be determined by its board of directors. As of December 31, 2022, 22,366,134 shares remained available for grant under the amended and restated 2015 Plan. Effective January 1, 2023, by virtue of the automatic increase described above, the total number of shares remaining available for grant under the amended and restated 2015 Plan was increased to 39,153,434 shares. Inducement Plan On May 30, 2019, the Company adopted the Senseonics Holdings, Inc. Inducement Plan (the “Inducement Plan”) pursuant to which the Company reserved 1,800,000 shares of the Company’s common stock for issuance. The only persons eligible to receive grants of awards under the Inducement Plan are individuals who satisfy the standards for inducement grants in accordance with NYSE American Company Guide Section 711(a), including individuals who were not previously an employee or director of the Company, or following a bona fide period of non-employment, as an inducement material to such persons entering into employment with the Company. An “Award” is any right to receive the Company’s common stock pursuant to the Inducement Plan, consisting of non-statutory options, restricted stock unit awards and other equity incentive awards. As of December 31, 2022, 684,473 shares remained available for grant under the Inducement Plan. 2016 Employee Stock Purchase Plan In February 2016, the Company adopted the 2016 Employee Stock Purchase Plan (the “2016 ESPP”). The 2016 ESPP became effective on March 17, 2016. The maximum number of shares of common stock that may be issued under the 2016 ESPP was initially 800,000 shares and will automatically increase on January 1 of each year, beginning on January 1, 2017 and ending on and including January 1, 2026, by 1.0% of the total number of shares of common stock outstanding on December 31 of the preceding calendar year; provided, however, the Board of Directors may act prior to the first day of any calendar year to provide that there will be no January 1 increase in the share reserve for such calendar year or that the increase in the share reserve for such calendar year will be a lesser number of shares of common stock. At December 31, 2022 there were 13,050,523 shares of common stock available for issuance under the 2016 ESPP. Effective January 1, 2023, by virtue of the automatic increase described above, the total number of shares remaining available for issuance under the 2016 ESPP was increased to 17,846,894 shares. The 2016 ESPP permits participants to purchase shares of the Company’s common stock through payroll deductions of up to 15% of their earnings. Unless otherwise determined by the administrator, the purchase price of the shares will be 85% of the lower of the fair market value of common stock on the first day of an offering or on the date of purchase. Participants may end their participation at any time. The Company initiated its first 2016 ESPP offering period on August 1, 2019. On February 1, 2022, there were 28,944 shares purchased in connection with the offering period. On August 1, 2022, there were 64,109 shares purchased in connection with the offering period. The 2016 ESPP is considered compensatory for financial reporting purposes. 1997 Plan On May 8, 1997, the Company adopted the 1997 Stock Option Plan (the “1997 Plan”), under which incentive stock options, non-qualified stock options, and restricted stock awards may be granted to the Company’s employees and certain other persons in accordance with the 1997 Plan provisions. All awards issued under the 1997 plan are fully vested. Approximately 1,223,273 shares of the Company’s common stock underlying remain outstanding under the 1997 Plan. Upon the effectiveness of the 2015 Plan, the Company no longer grants any awards under the 1997 Plan. Stock Options The Company recognizes the cost of employee services received in exchange for awards of equity instruments, such as stock options, based on the fair value of those awards at the date of grant. The estimated fair value of stock options on the date of grant is amortized on a straight-line basis over the requisite service period for each separately vesting portion of the award for those awards with service conditions only. For awards that also contain performance conditions, expense is recognized beginning at the time the performance condition is considered probable of being met over the remaining vesting period. Stock option activity under the Plans during the years ended December 31, 2022, 2021 and 2020 is as follows: Weighted- Weighted- Average Number of Average Remaining Shares in Exercise Contractual (in thousands) Price Life (in years) Options outstanding as of December 31, 2020 15,775 $ 2.16 Granted 224 $ 2.98 Exercised (2,355) $ 1.61 Cancelled/forfeited (260) $ 3.06 Options outstanding as of December 31, 2021 13,384 5.71 Granted 449 $ 1.48 Exercised (974) $ 0.98 Cancelled/forfeited (1,080) $ 2.52 Options outstanding as of December 31, 2022 11,779 5.07 Options vested and exercisable as of December 31, 2022 11,138 $ 2.48 4.87 The weighted average grant-date fair value of stock option awards granted in 2022, 2021 and 2020 was $1.04, $1.97, and $0.33 per share, respectively. For the years ended December 31, 2022, 2021 and 2020, 974,285, 2,354,566, and 201,447, options were exercised, respectively, with an aggregate intrinsic value at the time of exercise of $1.0 million, $4.4 million, and $0.1 million, respectively. The total fair value of options that vested during 2022 and 2021 were approximately $2.1 million and $3.1 million, respectively. The aggregate intrinsic value of the options currently exercisable at December 31, 2022 was $0.4 million. The aggregate intrinsic value of stock options outstanding at December 31, 2022 was $0.4 million, which approximated the aggregate intrinsic value of options vested and expected to vest as of December 31, 2022. The weighted average grant date fair value of the unvested stock option awards outstanding at December 31, 2022 and 2021 was $1.29 and $1.58 per share, respectively. The weighted average grant date fair value of the stock option awards vested, exercised, and forfeited/cancelled for the year ended December 31, 2022 were $1.63, $0.59 and $1.06 per share, respectively. Fair value is estimated at each grant date under the plans using the Black-Scholes Model with assumptions summarized in the following table: For the year ended December 31, 2022 2021 2020 Expected term of options (in years) 6.5 6.5 6.5 Expected volatility rate 71.20 - 92.61 % 69.93 - 73.32 % 66.50 - 67.41 % Risk-free interest rate 0.57 - 3.84 % 0.59 - 1.25 % 0.41 - 1.80 % Expected dividend yield 0 % 0 % 0 % The risk-free interest rate assumption is based upon observed U.S. treasury yields for a period consistent with the expected term of the Company’s employee stock options. The expected term is the period of time for which the stock-based options are expected to be outstanding. The expected term is determined using the “simplified method” which is defined as the mid-point between the vesting date and the end of the contractual term. The Company does not pay a dividend, and is not expected to pay a dividend in the foreseeable future. The Company utilizes comparable public companies’ volatility rates as a proxy of its expected volatility for purposes of the Black-Scholes Model. Stock-based compensation expense is recorded monthly and is adjusted periodically for actual forfeitures as they occur. Employee stock-based compensation expense for employee granted stock options was $2.1 million, $3.2 million and $5.2 million, for the years ended December 31, 2022 and 2021 and 2020, respectively, classified as follows (in thousands): December 31, 2022 2021 2020 Cost of sales $ 41 30 59 Sales and marketing 302 545 1,570 Research and development 712 1,112 1,189 General and administrative 1,078 1,517 2,349 Total stock-based compensation $ 2,133 $ 3,204 $ 5,167 As of December 31, 2022, there was $0.7 million of total unrecognized compensation cost related to non-vested employee stock option awards, which is expected to be recognized over a weighted average period of 2.28 years. Restricted Stock Units The Company issued 156,272 and 117,290 restricted stock units in lieu of cash payment for board and director fees to members of the Board of Directors during 2022 and 2021, respectively. These restricted stock units were immediately vested upon issuance. The Company also issued 7,707,027 and 4,603,440 restricted stock units to members of the Board of Directors as equity compensation under the Company’s non-employee director compensation policy and to employees of the Company during 2022 and 2021, respectively, as incentive compensation. Restricted stock units granted annually to members of the Board of Directors vest one year after the grant date. New members of the Board of Directors are granted initial restricted stock units which vest monthly over a three-year period. There were no new members of the Board of Directors during 2022. Restricted stock units granted to employees in 2022 and 2021 vest in eight equal installments beginning with an initial accelerated vesting tranche in the month following the grant, followed by seven vesting dates every six months. Restricted stock units activity under the Plans during the years ended December 31, 2022, 2021 and 2020 is as follows: Weighted- Weighted- Average Number of Average Remaining Shares in Exercise Contractual (in thousands) Price Life (in years) RSU's outstanding as of December 31, 2020 14,238 $ 0.45 Granted 4,603 1.80 Vested (5,816) 0.71 Forfeited (270) 0.56 RSU's outstanding as of December 31, 2021 12,756 2.44 Granted 7,863 1.17 Vested (9,414) 0.77 Forfeited (1,426) 1.08 RSU's outstanding as of December 31, 2022 9,779 2.19 For the years ended December 31, 2022 and 2021, 9,414, and 5,816, restricted stock units were vested, respectively, with an aggregate intrinsic value at the time of vest of $20.3 million and $15.9 million, respectively. The total fair value of the restricted stock units that vested during 2022 and 2021 were approximately $7.3 million and $4.1 million, respectively. The aggregate intrinsic value of the restricted stock units currently outstanding at December 31, 2022 was $10.1 million. Employee stock-based compensation expense for employee granted restricted stock units was $6.5 million, $5.8 million and $2.1 million, for the years ended December 31, 2022 and 2021 and 2020, respectively, classified as follows (in thousands): December 31, 2022 2021 2020 Cost of sales $ 31 14 8 Sales and marketing 454 548 338 Research and development 1,128 1,483 290 General and administrative 4,872 3,780 1,452 Total stock-based compensation $ 6,485 $ 5,825 $ 2,088 As of December 31, 2022, there was $9.4 million of total unrecognized compensation cost related to non-vested restricted stock units, which is expected to be recognized over a weighted average period of 2.19 years. |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2022 | |
Income Taxes | |
Income Taxes | 16. Income Taxes No provision for U.S. federal or state income taxes has been recorded as the Company has incurred net operating losses since inception and provides a full valuation allowance against its net deferred income tax assets. The tax effect of temporary differences that give rise to the net deferred income tax asset at December 31, 2022 and 2021 is as follows (in thousands): December 31, Deferred income tax assets (liabilities ) 2022 2021 Deferred Tax Assets: Net operating loss carryforwards $ 133,031 125,242 Capitalized start-up costs 6,538 7,315 Research and development credit carryforwards 13,121 11,251 Research and development expenditures 8,853 — Stock-based compensation 1,695 2,061 Fair value of derivative liability 5,136 8,853 Other 2,143 912 Gross total deferred tax asset 170,517 155,634 Valuation allowance (163,255) (146,463) Total net deferred tax assets $ 7,262 $ 9,171 Deferred tax liabilities: Right of use amortization (896) (318) Amortization of debt discount (6,366) (8,853) Total deferred tax liability (7,262) (9,171) Net deferred tax assets $ — $ — The net change in valuation allowance for the years ended December 31, 2022 and 2021 was a net increase of $16.8 million and a net increase of $10.4 million, respectively. The increase in valuation allowance is primarily due to deferred tax assets generated from net operating losses incurred in 2022. This increase in valuation allowance is based on management's assessment that it is more likely than not that the Company will not realize these deferred tax assets. At December 31, 2022, the Company had NOL carryforwards of $621.5 million and research and experimental credit carryforwards of $13.1 million. Research and experimental credit carryforwards will expire in varying amounts between 2023 and 2042. NOL carryforwards in the amount of $197.5 million will expire in varying amounts between 2023 and 2037. NOL carryforwards incurred in tax years 2018 and forward have an indefinite carryforward period. Under the provisions of the Internal Revenue Code, certain substantial changes in the Company’s ownership may result in a limitation on the amount of NOL carryforwards and research and development credit carryforwards which can be available in future years. A reconciliation of the Company’s estimated U.S. federal statutory rate to the Company’s effective income tax rate for the years ended December 31, 2022, 2021 and 2020 is as follows: Year Ended December 31, 2022 2021 2020 Tax at U.S. Federal Statutory rate 21.00 % 21.00 % 21.00 % State taxes, net 0.40 1.60 2.32 Research and development credit (1.32) 0.34 0.46 State tax rates changes — (2.18) (0.85) Convertible debt transactions (31.68) (17.09) (11.15) Equity based compensation (2.00) 1.01 — Officers compensation 1.68 (0.96) — Other non-deductible items 0.21 (0.50) (0.44) Increase (decrease) in valuation allowance 11.71 (3.22) (11.34) Effective income tax rate 0.00 % 0.00 % 0.00 % Deferred income taxes reflect temporary differences in the recognition of revenue and expense for tax reporting and financial statement purposes. Deferred tax liabilities and assets are adjusted for changes in tax laws or tax rates of the various tax jurisdictions as of the enacted date. The federal tax rate remained unchanged at 21% for the 2022 tax year. The change in state tax rate from 2020 to 2021 and from 2021 to 2022 is primarily due to changes in applicable state apportionment factors and change in jurisdictions. A breakdown of the Company’s uncertain tax position during 2022, 2021 and 2020 is as follows (in thousands): 2022 2021 2020 Gross unrecognized tax benefit at beginning of year $ 2,813 2,552 2,351 Increase from tax positions taken in prior years — — — Increase from tax positions in current year 505 267 201 Lapse of statute of limitations / expiration (38) (6) — Gross unrecognized tax benefit at end of year $ 3,280 $ 2,813 $ 2,552 In 2022 and 2021, the Company incurred minor penalties for filed tax returns. The Company did not incur any penalties or interest payable to taxing authorities in 2020. If recognized, the entire amount of gross unrecognized tax benefit would favorably affect the effective income tax rate, although, due to the Company’s valuation allowance there would be no net impact. The Company does not expect a significant change in its unrecognized tax positions to occur in the next twelve months. The Company’s U.S. Federal and state income tax returns from 2002 to 2022 remain subject to examination by the tax authorities. The Company’s prior tax years remain open for examination, even though the statute of limitations has expired, due to the net operating losses and credits carried forward for use in prospective years. |
Related Party Transactions
Related Party Transactions | 12 Months Ended |
Dec. 31, 2022 | |
Related Party Transactions | |
Related Party Transactions | 17. Related Party Transactions PHC has a noncontrolling ownership interest in the Company. In addition, PHC has representation on the Company’s board of directors. The Company entered into a financing agreement with PHC on August 9, 2020 (see Note 13 for further discussion of the PHC Notes). Ascensia, through the ownership interests of its parent company, PHC is a related party. For the year ended December 31, 2022, revenue from Ascensia was $15.7 million and the amount due from Ascensia was $2.3 million. At December 31, 2022, the Company had estimated replacement obligations under warranties in the amount of $0.8 million and other amounts due to Ascensia of less than $0.1 million. For the year ended December 31, 2021, revenue from Ascensia was $12.3 million and the amount due from Ascensia was $1.8 million. At December 31, 2021, the Company had estimated replacement obligations under warranties in the amount of $0.7 million and marketing campaign support obligations in the amount of $1.8 million. For the year ended December 31, 2020, revenues from Ascensia and amounts due to and from them were immaterial. Roche Holding AG, through its ownership interests in Roche Finance Ltd, has a noncontrolling ownership interest in the Company. There were no revenues or amounts due from Roche for the year ended December 31, 2022. For the year ended December 31, 2021 revenues from Roche were less than $0.1 million, and there were no amounts due from them. For the year ended December 31, 2020, revenues from Roche were $3.6 million and amounts due from them were $2.4 million. |
Fair Value Measurements
Fair Value Measurements | 12 Months Ended |
Dec. 31, 2022 | |
Fair Value Measurements | |
Fair Value Measurements | 18. Fair Value Measurements The Company applies fair value accounting for all financial assets and liabilities and non-financial assets and liabilities that are recognized or disclosed at fair value in the financial statements on a recurring basis. The Company defines fair value as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities that are required to be recorded at fair value, the Company considers the principal or most advantageous market in which the Company would transact and the market-based risk measurements or assumptions that market participants would use to price the asset or liability, such as risks inherent in valuation techniques, transfer restrictions and credit risk. Fair value is estimated by applying the following hierarchy, which prioritizes the inputs used to measure fair value into three levels and bases the categorization within the hierarchy upon the lowest level of input that is available and significant to the fair value measurement: Level 1 - Quoted prices in active markets for identical assets or liabilities. Level 2 - Observable inputs other than quoted prices in active markets for identical assets and liabilities, quoted prices for identical or similar assets or liabilities in inactive markets, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities. Level 3 - Inputs that are generally unobservable and typically reflect management’s estimate of assumptions that market participants would use in pricing the asset or liability. Cash and Cash Equivalents The fair value of money market funds and other investments classified as cash and cash equivalents are based on period-end statements supplied by the various banks and brokers that hold the majority of the funds. Derivative Financial Instruments The valuation technique used to measure the fair value of the Company’s embedded derivative instruments is valued using the binomial lattice model to estimate the fair value of the notes. Using this lattice model, the Company values the embedded derivative using the “with” and “without” approach to determine the fair value of the embedded derivatives associated with the convertible note. Under this approach, the instrument is valued “with” and “without” the bifurcated feature and the fair value of the derivative is the difference in value between the two scenarios. The lattice model incorporates assumptions such as management’s assumptions for probabilities of conversion occurrence through maturity, stock price, volatility, risk-free rate, estimated credit spread, bond recovery rates and trade data when available. The following table represents the fair value hierarchy of the Company’s financial assets and liabilities measured at fair value on a recurring basis at December 31, 2022 and 2021 (in thousands): December 31, 2022 Total Level 1 Level 2 Level 3 Assets Money market funds⁽¹⁾ $ 34,658 $ 34,658 — — Commercial paper 41,503 — 41,503 — Corporate debt securities 32,142 — 32,142 — Asset backed securities 8,260 — 8,260 — Government and agency securities 38,570 31,627 6,943 — Liabilities Embedded features of the 2023 Notes $ 20 — 20 — Embedded features of the PHC Notes 44,191 — — 44,191 Embedded features of the 2025 Notes 7,859 — — 7,859 December 31, 2021 Total Level 1 Level 2 Level 3 Assets Money market funds⁽¹⁾ $ 29,197 $ 29,197 — — Commercial paper 57,369 — 57,369 — Corporate debt securities 39,748 — 39,748 — Asset backed securities 26,707 — 26,707 — Government and agency securities 24,503 19,957 4,546 — PHC Option 239 — — 239 Liabilities Energy Capital Option $ 69,401 $ — — 69,401 Embedded features of the 2023 Notes 5,817 — — 5,817 Embedded features of the PHC Notes 149,058 — — 149,058 Embedded features of the 2025 Notes 81,417 — 81,417 — (1) Classified as cash and cash equivalents due to their short-term maturity The following table provides a reconciliation of the beginning and ending balances of items measured at fair value on a recurring basis that used significant unobservable inputs (Level 3) (in thousands): Year ended December 31 2022 2021 Beginning Balance $ 224,037 $ 84,117 Conversion of financial instruments (25,656) (19,973) (Gain) Loss on fair value adjustment of option (43,745) 53,152 (Gain) Loss on change in fair value of derivatives (178,425) 108,606 (Gain) Loss on extinguishment of option 101 (3,513) Financial asset impairment cost, net 138 1,648 Transfers into Level 3 81,417 — Transfers out of Level 3 (5,817) — Ending balance $ 52,050 $ 224,037 The recurring Level 3 fair value measurements of the embedded features of the PHC Notes and 2025 Notes include the following significant unobservable inputs: PHC Notes 2025 Notes Unobservable Inputs Assumptions Assumptions Stock price volatility 99.0 % 110.0 % Probabilities of conversion provisions 5.0 - 10.0 % 5.0 - 10.0 % Credit spread 13.96 % 13.96 % Recovery rate -5.51 % -1.56 % Dividend yield — % — % Significant changes to these assumptions would result in increases/decreases to the fair value of the liability. The Company reviews the fair value hierarchy classification on a quarterly basis. Changes in the ability to observe valuation inputs may result in a reclassification of levels for certain financial instruments within the fair value hierarchy. The Company’s policy is to recognize transfers into and out of levels within the fair value hierarchy at the end of the fiscal quarter in which the actual event or change in circumstances that caused the transfer occurs. During the year ended December 31, 2022, transfers into Level 2 of liabilities previously classified in Level 3 were due to increased trade activity associated with these instruments providing better price transparency, permitting classification to Level 2. In addition, transfers into Level 3 of liabilities previously classified in Level 2 were an increase in unobservable inputs, permitting classification to Level 3. There were no transfers between Level 1 Level 2 Level 3 December 31, 202 |
Litigation
Litigation | 12 Months Ended |
Dec. 31, 2022 | |
Litigation | |
Litigation | 19. Litigation From time to time, the Company is subject to litigation and claims arising in the ordinary course of business. The Company accrues for litigation and claims when it is probable that a liability has been incurred and the amount of loss can be reasonably estimated. The Company has evaluated claims in accordance with the accounting guidance for contingencies that it deems both probable and reasonably estimable, and for the period ended December 31, 2022 and 2021 has no such contingencies. |
Reclassification of Prior Year
Reclassification of Prior Year Presentation | 12 Months Ended |
Dec. 31, 2022 | |
Reclassification of Prior Year Presentation | |
Reclassification of Prior Year Presentation | 20. Reclassification of Prior Year Presentation Certain prior year amounts have been reclassified for consistency with the current year presentation. These reclassifications had no effect on the reported results of operations or previously reported cash flows from operating activities. An adjustment has been made to the Consolidated Statements of Operations and Comprehensive Income (Loss) for the twelve months ended December 31, 2021 and December 31, 2020 to consolidate the separate line items Sales and marketing expenses and General and administrative expenses to the single line item Selling, general and administrative expenses. In addition, an adjustment has been made to the Consolidated Statements of Cash Flows for the twelve months ended December 31, 2020 |
Subsequent Events
Subsequent Events | 12 Months Ended |
Dec. 31, 2022 | |
Subsequent Events | |
Subsequent Events | 21. Subsequent Events The Company has evaluated all subsequent events through the filing date of this Form 10-K with the SEC, to ensure that this filing includes appropriate disclosure of events both recognized in the financial statements as of December 31, 2022, and events which occurred subsequently but were not recognized in the financial statements. Except as described below there were no other subsequent events which required recognition, adjustment to or disclosure in the financial statements. On January 30, 2023, the Company authorized 10,000,000 shares of common stock pursuant to the Senseonics Holdings, Inc. 2023 Commercial Equity Plan to provide the ability to grant equity incentive awards to employees of our global commercial partner, Ascensia. On January 31, 2023, the Company fully repaid the 2023 Notes, in the principal amount of $15.7 million and $0.4 million of accrued interest. On March 13, 2023, the Company entered into an Exchange Agreement (the “Exchange Agreement”) with PHC, pursuant to which PHC has agreed to exchange (the “Exchange”) the PHC Notes, including all accrued and unpaid interest thereon, for a warrant (the “Exchange Warrant”) to purchase up to 68,525,311 shares of common stock (the “Exchange Warrant Shares”). The Exchange Warrant is a “pre-funded” warrant with a nominal exercise price of $0.001 per Exchange Warrant Share. The Exchange is expected to close on or about April 1, 2023, subject to customary closing conditions for a transaction of this type. On March 13, 2023, the Company issued and sold to PHC in a private placement (the “Private Placement”) a warrant (the “Purchase Warrant”) to purchase an aggregate of 15,425,750 shares of common stock (the “Purchase Warrant Shares”) and the Company received aggregate gross proceeds of $15.0 million. The Purchase Warrant is a “pre-funded” warrant with a nominal exercise price of $0.001 per Purchase Warrant Share. The Company has a banking relationship with Silicon Valley Bridge Bank (formerly Silicon Valley Bank, or SVB). On March 10, 2023, less than one percent of the Company’s total cash and cash equivalents were held by SVB. On March 13, 2023, all operating accounts and funds held by SVB were made available to the Company. The Company has diversified its banking relationships and will continue to review its treasury operations. Based on the foregoing and the Company’s analysis of the components of its relationship with SVB, the Company does not expect recent events concerning SVB to have a material impact on the Company’s consolidated financial statements. |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2022 | |
Summary of Significant Accounting Policies | |
Basis of Presentation | Basis of Presentation The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). The consolidated financial statements reflect the accounts of Senseonics Holdings and its wholly owned subsidiary Senseonics. All intercompany balances and transactions have been eliminated in consolidation. The Company views its operations and manages its business in one segment, glucose monitoring products. Operating segments are defined as components of an enterprise about which separate discrete information is available for evaluation by the chief operating decision maker, or decision-making group, in deciding how to allocate resources and in assessing performance. |
Use of Estimates | Use of Estimates The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the reported amounts of revenue and expenses during the reporting period. In the accompanying consolidated financial statements, estimates are used for, but not limited to, stock-based compensation, recoverability of long-lived assets, deferred taxes and valuation allowances, derivative assets and liabilities, obsolete inventory, warranty obligations, variable consideration related to revenue, depreciable lives of property and equipment, and accruals for clinical study costs, which are accrued based on estimates of work performed under contract. The Company bases these estimates on historical and anticipated results, trends, and various other assumptions that it believes are reasonable, including assumptions as to future events. These estimates form the basis for making judgments about the carrying values of assets and liabilities and recorded revenues and expenses. Actual results could differ from those estimates; however, management does not believe that such differences would be material. |
Cash and Cash Equivalents and Concentration of Credit Risk | Cash and Cash Equivalents and Concentration of Credit Risk The Company considers highly liquid investments with original maturities of three months or less from the date of purchase to be cash equivalents. These investments are carried at cost, which approximates fair value. Cash, cash equivalents and restricted cash consisted of the following (in thousands): December 31, December 31, 2022 2021 Cash ⁽ ¹ ⁾ $ 1,135 $ 4,264 Money market funds 34,658 29,197 Cash and cash equivalents $ 35,793 $ 33,461 (1) Includes overnight repurchase agreements. There was no restricted cash held as of December 31, 2022 and December 31, 2021. |
Marketable Securities | Marketable Securities Marketable securities consist of commercial paper, corporate debt securities, asset backed securities and government and agency securities. The Company’s investments are classified as available for sale. Such securities are carried at fair value, with any unrealized holding gains or losses reported, net of any tax effects reported, as accumulated other comprehensive income. Realized gains and losses and declines in value judged to be other-than-temporary, if any, are included in consolidated results of operations. A decline in the market value of any available for sale security below cost that is deemed to be other-than-temporary results in a reduction in fair value, which is charged to earnings in that period, and a new cost basis for the security is established. Dividend and interest income is recognized when earned. The cost of securities sold is calculated using the specific identification method. We classify all available-for-sale marketable securities with maturities greater than one year from the balance sheet date as non-current assets. We do not generally intend to sell these 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 at maturity. |
Inventory and Obsolescence | Inventory and Obsolescence Inventory is valued at the lower of cost or net realizable value. Cost is determined using the standard cost method that approximates first in, first out. The Company records an adjustment to reduce the value of inventory for items that are potentially obsolete, where standard costs require adjustment to the net realizable value, and are in excess of future demand taking into consideration the product shelf life. The sensor manufacturing process can span several months, involves various contract manufacturers and includes raw components with long lead times, often resulting in significant work-in-progress inventory. However, expiry does not commence until the chemistry is applied to the sensor. The Company is able to isolate pre-chemistry sensor inventory in progress from post-chemistry sensor inventory in progress and finished goods to assess against demand forecasts and customer dating requirements for potential excess or obsolete inventory. The Company’s estimates are based on information known as of the balance sheet date and include factors such as anticipated future usage and sales, potential for external unfavorable conditions such as import holds or quality issues, and planned product upgrades. However, if actual product quality or conditions differ from the Company’s assumptions, additional inventory adjustments that would increase cost of sales could be required. |
Accounts Receivable | Accounts Receivable The Company grants credit to various customers in the normal course of business. Accounts receivable consist of amounts due from distributors and are reduced by an allowance for doubtful accounts at the time potential collection risk is identified. Uncollectible accounts are written off against the allowance after appropriate collection efforts have been exhausted and when it is deemed that a balance is uncollectible. The Company does not have a history of collectability concerns, and no allowance for uncollectible accounts was recorded as of December 31, 2022 and December 31, 2021. |
Property and Equipment, net | Property and Equipment, net Property and equipment are stated at cost and depreciated using the straight-line method over the estimated useful lives of the assets, which is generally between three |
Leases | Leases The Company recognizes a ROU operating lease asset and liability as of the lease commencement date at the present value of the lease payments over the lease term. If the discount rate in the lease agreement is not implicit, the Company estimates the incremental borrowing rate based on the rate of interest the Company would have to pay to borrow a similar amount on a collateralized basis over a similar term. Lease and non-lease components are accounted for as a single component for facility leases. Leases with an initial term of 12 months or less are expensed to rent expense over the related term. |
Impairment of Long-lived Assets | Impairment of Long-lived Assets Management reviews long-lived assets, including property and equipment and right-of-use assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of the long-lived asset is measured by a comparison of the carrying amount of the asset to future undiscounted net cash flows expected to be generated by the asset. If the undiscounted cash flows are less than the carrying amount, the impairment to be recognized is measured by the amount by which the carrying amount of the assets exceeds the estimated fair value of the assets. Management identified indicators of impairment on right-of-use assets in 2021. There were no impairment indicators in 2022. |
Derivative Financial Instruments | Derivative Financial Instruments The Company accounts for conversion options embedded in convertible notes in accordance with ASC Topic 815, Derivatives and Hedging. ASC Topic 815 generally requires companies to bifurcate conversion options embedded in convertible notes from their host instruments and to account for them as free standing derivative financial instruments. We review the terms of convertible debt issues to determine whether there are embedded derivative instruments, including embedded conversion options, which are required to be bifurcated and accounted for separately as derivative financial instruments. In circumstances where the host instrument contains more than one embedded derivative instrument, including the conversion option, that is required to be bifurcated, the bifurcated derivative instruments are accounted for as separate derivative instruments. The fair value of the embedded features are accounted for as a derivative liability in the Company’s consolidated balance sheets and adjusted to fair value each reporting period. The change in fair value of derivatives is recorded as a component of other income (expense) in the Company’s consolidated statements of operations and comprehensive loss. When the equity or convertible debt instruments contain embedded derivative instruments that are to be bifurcated and accounted for as liabilities, the total proceeds received are first allocated to the fair value of all the bifurcated derivative instruments. The remaining proceeds, if any, are then allocated to the host instruments themselves, usually resulting in those instruments being recorded at a discount from their face value. The discount from the face value of the convertible debt, together with the stated interest on the instrument, is amortized over the term of the instrument as interest expense. |
Product Warranty Obligations | Product Warranty Obligations The Company provides a warranty of one year on its smart transmitters. Additionally, the Company may also replace Eversense system components that do not function in accordance with the product specifications. Estimated replacement costs are recorded at the time of shipment as a charge to cost of sales in the consolidated statement of operations and are developed by analyzing product performance data and historical replacement experience, including comparing actual return management authorizations to revenue. At December 31, 2022 and December 31, 2021, the warranty reserve was $0.8 million and $0.7 million, respectively. The following table provides a reconciliation of the change in estimated warranty liabilities for the years ended December 31, 2022 and 2021 (in thousands): December 31, December 31, 2022 2021 Balance at beginning of the period $ 723 $ 646 Provision for warranties during the period 166 781 Settlements made during the period (108) (704) Balance at end of the period $ 781 $ 723 |
Revenue Recognition | Revenue Recognition We generate product revenue from sales of the Eversense system and related components and supplies to Ascensia, through the Commercialization Agreement, third-party distributors in the European Union and to strategic fulfillment partners in the United States (collectively “Customers”), who then resell the products to health care providers and patients. The Company is paid for its sales directly to the Customers, regardless of whether or not the Customers resell the products to health care providers and patients. Revenue from product sales is recognized at a point in time when the Customers obtain control of our product based upon the delivery terms as defined in the contract at an amount that reflects the consideration which we expect to receive in exchange for the product. Contracts with our distributors contain performance obligations, mostly for the supply of goods, and is typically satisfied upon transfer of control of the product. Customer contracts do not include the right to return unless there is a product issue, in which case we may provide replacement product. Product conformity guarantees do not create additional performance obligations and are accounted for as warranty obligations in accordance with guarantee and loss contingency accounting guidance. Our contracts may contain some form of variable consideration such as prompt-pay discounts, tier-volume price discounts and for the Ascensia commercial agreement, revenue share. Variable consideration, such as discounts and prompt-pay incentives, are treated as a reduction in revenue and variable considerations, such as revenue share, is treated as an addition in revenue when the product sale is recognized. The amount of variable consideration that is included in the transaction price may be constrained and is included in revenue only to the extent that it is probable that a significant reversal in the amount of the cumulative revenue recognized will not occur in a future period, when the uncertainty associated with the variable consideration is subsequently resolved. Estimating variable consideration and the related constraint requires the use of management judgment. Depending on the variable consideration, we develop estimates for the expected value based on the terms of the agreements, historical data, geographic mix, reimbursement rates and market conditions. Contract assets consist of unbilled receivables from customers and are recorded at net realizable value and relate to the revenue share variable consideration from the Ascensia Commercialization Agreement. |
Cost of Sales | Cost of Sales The Company uses third-party contract manufacturers to manufacture Eversense and related components and supplies. Cost of sales includes raw materials, contract manufacturing service fees, expected warranty costs, recall costs, product obsolescence, scrap, third-party warehousing, shipping and handling expenses associated with product delivery, and employee-related costs of the internal supply chain and manufacturing team. |
Research and Development Expenses | Research and Development Expenses Research and development expenses consist of expenses incurred in performing research and development activities in developing Eversense, including clinical trials and feasibility studies, and partnerships for strategic initiatives including insulin delivery and new indications. Research and development expenses include compensation and benefits for research and development employees including stock-based compensation, cost of laboratory supplies, clinical trial and related clinical manufacturing expenses, costs related to regulatory operations, fees paid to contract research organizations and other consultants, and other outside expenses. Research and development expenses are expensed as incurred. |
Selling, General and Administrative Expenses | Selling, General and Administrative Expenses Selling, general and administrative expenses consist primarily of salaries, commissions, and other related costs, including stock-based compensation, for personnel in the Company’s sales and marketing, executive, finance, accounting, business development, information technology, and human resources functions. Other significant costs include information technology, website design and advertising, educational and promotional materials, tradeshow expenses, marketing programs, facility costs, legal fees relating to patent and corporate matters, and fees for accounting and consulting services. |
Stock-Based Compensation | Stock-Based Compensation The Company accounts for stock-based compensation related to stock option grants and restricted stock units under stock incentive plans, purchases under the employee stock purchase plan, as well as inducement stock grants, based on the fair value of those awards at the date of grant. The estimated fair value of stock options on the date of grant is amortized on a straight-line basis over the requisite service period of the individual award, which typically equals the vesting period. Forfeitures are accounted for in the period in which they occur. The Company uses the Black-Scholes-Merton option pricing model (“Black-Scholes Model”) to determine the fair value of stock-option awards. Valuation of stock awards requires management to make assumptions and to apply judgment to determine the fair value of the awards. These assumptions and judgments include estimating the fair value of the Company’s common stock, the risk-free interest rate, future volatility of the Company’s stock price, dividend yields, and the expected life of the stock-option awards. Changes in these assumptions can affect the fair value estimate. The risk-free interest rate assumption is based on observed interest rates for constant maturity U.S. Treasury securities consistent with the expected life of employee stock options. The expected life represents the period of time the stock options are expected to be outstanding and is based on the simplified method. Under the simplified method, the expected life of an option is presumed to be the mid-point between the vesting date and the end of the contractual term. The Company uses the simplified method due to the lack of sufficient historical exercise data to provide a reasonable basis upon which to otherwise estimate the expected life of the stock options. Expected volatility is based on the daily closing prices of a peer group of comparable publicly traded companies in similar stages of development. The Company has assumed no dividend yield because it does not expect to pay dividends in the future, which is consistent with its history of not paying dividends. |
Income Taxes | Income Taxes The Company uses the asset and liability method of accounting for income taxes. Deferred tax assets and liabilities are determined based on differences between the financial reporting and tax basis of assets and liabilities and are measured using the enacted tax rates and laws that are in effect when the differences are expected to reverse. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in the period that such tax rate changes are enacted. The measurement of a deferred tax asset is reduced, if necessary, by a valuation allowance if it is more likely than not that some portion or all of the deferred tax asset will not be realized. Management uses a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return, as well as guidance on derecognition, classification, interest and penalties and financial statement reporting disclosures. For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination by taxing authorities. In the ordinary course of business, transactions occur for which the ultimate outcome may be uncertain. Management does not expect the outcome related to accrued uncertain tax provisions to have a material adverse effect on the Company’s financial position, results of operations or cash flows. The Company recognizes interest and penalties accrued on any unrecognized tax exposures as a component of income tax expense. The Company is subject to taxation in various jurisdictions in the United States and remains subject to examination by taxing jurisdictions for the year 2002 and all subsequent periods due to the availability of NOL carryforwards. In addition, all of the net operating losses and research and development credit carryforwards that may be used in future years are still subject to adjustment. |
Fair Value of Financial Instruments | Fair Value of Financial Instruments The carrying amounts of cash, cash equivalents, accounts receivable, accounts payable, and accrued expenses approximate fair value because of their short maturities. The Company’s term loan under the 2025 Notes, PHC Notes, 2023 Notes, and warrants are recorded at historical cost, net of discounts. The associated embedded conversion features in the Notes are derivative instruments and along with Options are remeasured at fair value each reporting period. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements Recently Adopted Debt-Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contract in Entity’s Own Equity (Subtopic 815-40) . Not Yet Adopted In June 2016, the FASB issued ASU 2016-13, Financial Instruments – Credit Losses: Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”), which requires entities to record expected credit losses for certain financial instruments, including trade receivables, as an allowance that reflects the entity's current estimate of credit losses expected to be incurred. For available-for-sale debt securities in unrealized loss positions, the new standard requires allowances to be recorded instead of reducing the amortized cost of the investment. The Company currently holds investments in available-for sale securities. The Company has not historically experienced collection issues or bad debts with trade receivables. Accordingly, the Company does not expect this to have a significant impact on its consolidated financial statements and related disclosures at this time. The Company plans to adopt the guidance effective January 1, 2023. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Summary of Significant Accounting Policies | |
Schedule of cash and cash equivalents | December 31, December 31, 2022 2021 Cash ⁽ ¹ ⁾ $ 1,135 $ 4,264 Money market funds 34,658 29,197 Cash and cash equivalents $ 35,793 $ 33,461 (1) Includes overnight repurchase agreements. |
Schedule of change in estimated warranty liabilities | December 31, December 31, 2022 2021 Balance at beginning of the period $ 723 $ 646 Provision for warranties during the period 166 781 Settlements made during the period (108) (704) Balance at end of the period $ 781 $ 723 |
Schedule of computation of basic and diluted net income per share | 2022 2021 2020 Net income (loss) 142,119 (302,474) (175,168) Impact of conversion of dilutive securities (209,269) — — Dilutive Net income (loss) (67,150) (302,474) (175,168) Net income (loss) per share Basic 0.30 (0.72) (0.77) Diluted (0.11) (0.72) (0.77) Basic weighted average shares outstanding 467,952,475 422,321,023 227,912,358 Dilutive potential common stock outstanding Stock-based awards 6,000,572 — — 2023 Notes 4,617,646 — — 2025 Notes 39,689,142 — — PHC Notes 67,162,375 — — Energy Capital Option 30,372,058 — — Warrants 2,411,337 — — Diluted weighted average shares outstanding 618,205,605 422,321,023 227,912,358 |
Schedule of anti-dilutive shares which have been excluded from the computation of diluted net loss per share | 2022 2021 2020 Stock-based awards 11,917,529 26,140,291 30,013,407 Masters preferred shares — — 6,302,521 2023 Notes — 4,617,646 6,672,500 2025 Notes — 39,689,142 44,728,676 PHC Notes — 65,757,177 68,222,412 Warrants 427,821 13,177,822 17,282,792 Total anti-dilutive shares outstanding 12,345,350 149,382,078 173,222,308 |
Revenue Recognition (Tables)
Revenue Recognition (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Revenue Recognition | |
Schedule of revenue by geographic region | December 31, 2022 December 31, 2021 December 31, 2020 % % % (Dollars in thousands) Amount of Total Amount of Total Amount of Total Revenue, net: Outside of the United States $ 8,877 54.2 % $ 11,117 81.3 % $ 3,821 77.2 % United States 7,512 45.8 2,558 18.7 1,128 22.8 Total $ 16,389 100.0 % $ 13,675 100.0 % $ 4,949 100.0 % |
Net Income (Loss) per Share (Ta
Net Income (Loss) per Share (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Net Income (Loss) per Share | |
Schedule of computation of basic and diluted net income per share | 2022 2021 2020 Net income (loss) 142,119 (302,474) (175,168) Impact of conversion of dilutive securities (209,269) — — Dilutive Net income (loss) (67,150) (302,474) (175,168) Net income (loss) per share Basic 0.30 (0.72) (0.77) Diluted (0.11) (0.72) (0.77) Basic weighted average shares outstanding 467,952,475 422,321,023 227,912,358 Dilutive potential common stock outstanding Stock-based awards 6,000,572 — — 2023 Notes 4,617,646 — — 2025 Notes 39,689,142 — — PHC Notes 67,162,375 — — Energy Capital Option 30,372,058 — — Warrants 2,411,337 — — Diluted weighted average shares outstanding 618,205,605 422,321,023 227,912,358 |
Schedule of anti-dilutive shares which have been excluded from the computation of diluted net loss per share | 2022 2021 2020 Stock-based awards 11,917,529 26,140,291 30,013,407 Masters preferred shares — — 6,302,521 2023 Notes — 4,617,646 6,672,500 2025 Notes — 39,689,142 44,728,676 PHC Notes — 65,757,177 68,222,412 Warrants 427,821 13,177,822 17,282,792 Total anti-dilutive shares outstanding 12,345,350 149,382,078 173,222,308 |
Marketable Securities (Tables)
Marketable Securities (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Marketable Securities | |
Schedule of marketable securities available for sale | December 31, 2022 Gross Gross Estimated Amortized Unrealized Unrealized Market Cost Gains Losses Value Commercial Paper $ 41,503 — — $ 41,503 Corporate debt securities $ 32,331 — (189) $ 32,142 Asset backed securities $ 8,363 — (103) $ 8,260 Government and agency securities $ 38,956 — (386) $ 38,570 Total $ 121,153 $ — $ (678) $ 120,475 December 31, 2021 Gross Gross Estimated Amortized Unrealized Unrealized Market Cost Gains Losses Value Commercial Paper $ 57,369 — — $ 57,369 Corporate debt securities $ 39,825 — (77) $ 39,748 Asset backed securities $ 26,736 — (29) $ 26,707 Government and agency securities $ 24,609 — (106) $ 24,503 Total $ 148,539 $ — $ (212) $ 148,327 |
Schedule of maturities of marketable securities | Net Fair Carrying Amount Value 2023 $ 108,797 $ 108,222 2024 5,620 5,608 2025 6,736 6,645 Total $ 121,153 $ 120,475 |
Inventory, net (Tables)
Inventory, net (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Inventory, net | |
Schedule of Inventory, net | Inventory, net consisted of the following (in thousands): December 31, 2022 2021 Finished goods $ 1,697 $ 1,012 Work-in-process 4,057 3,770 Raw materials 1,552 1,534 Total $ 7,306 $ 6,316 |
Prepaid expenses and other cu_2
Prepaid expenses and other current assets (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Prepaid expenses and other current assets | |
Schedule of prepaid expenses and other current assets | December 31, 2022 2021 Contract manufacturing⁽¹⁾ $ 4,097 $ 5,036 Insurance 1,243 74 Clinical and Preclinical 924 142 Interest receivable 336 443 Accounting and Audit 270 — IT and software 189 225 Sales and Marketing 158 98 Rent and utilities 132 105 Research and development 67 39 Other 12 56 Total prepaid expenses and other current assets $ 7,428 $ 6,218 (1) Includes deposits to contract manufacturers for manufacturing process. |
Property and Equipment, net (Ta
Property and Equipment, net (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Property and Equipment, net | |
Schedule of property and equipment, net | December 31, 2022 2021 Machinery and laboratory equipment $ 2,668 $ 2,357 Office furniture and equipment 354 354 Leasehold improvements 128 127 3,150 2,838 Less: Accumulated depreciation (2,038) (1,530) Property and equipment, net $ 1,112 $ 1,308 |
Accrued Expenses and Other Cu_2
Accrued Expenses and Other Current Liabilities (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Accrued Expenses and Other Current Liabilities | |
Schedule of accrued expenses and other current liabilities | Accrued expenses and other current liabilities consisted of the following as of December 31, 2022 and 2021 (in thousands): December 31, 2022 2021 Compensation and benefits $ 4,699 $ 3,484 Research and development 3,502 2,145 Contract manufacturing 2,480 914 Interest on notes payable 2,050 2,144 Professional and administration services 1,053 1,011 Product warranty and replacement obligations 781 1,697 Operating lease 725 904 Sales and marketing services 149 1,962 Other 14 3 Total accrued expenses and other current liabilities $ 15,453 $ 14,264 |
Leases (Tables)
Leases (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Leases | |
Summary of lease assets and liabilities | The following table summarizes the lease assets and liabilities as of December 31, 2022 and 2021 (in thousands): December 31, Operating Lease Assets and Liabilities Balance Sheet Classification 2022 2021 Assets Operating lease ROU assets Deposits and other assets $ 3,032 821 Liabilities Current operating lease liabilities Accrued expenses and other current liabilities $ 725 904 Non-current operating lease liabilities Other non-current liabilities 2,689 579 Total operating lease liabilities $ 3,414 1,483 |
Schedule of operating lease liabilities maturities | The following table summarizes the maturity of undiscounted payments due under operating lease liabilities and the present value of those liabilities as of December 31, 2022 (in thousands): 2023 1,006 2024 709 2025 730 2026 752 2027 774 2028 327 Total 4,298 Present value adjustment (884) Present value of lease liabilities $ 3,414 |
Schedule of lease term and discount rate | The following table summarizes the weighted-average lease term and weighted-average discount rate as of December 31, 2022 and 2021: Remaining lease term (years) 2022 2021 Operating leases 5.0 1.6 Discount rate Operating leases 9.1 % 9.1 % |
Notes Payable, Preferred Stoc_2
Notes Payable, Preferred Stock and Stock Purchase Warrants (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Notes Payable, Preferred Stock and Stock Purchase Warrants | |
Schedule of carrying amounts outstanding under the Company's notes payable | The following carrying amounts are outstanding under the Company’s notes payable as of December 31, 2022 and December 31, 2021 (in thousands): December 31, 2022 Principal ($) Debt Discount ($) Issuance Costs ($) Carrying Amount ($) 2023 Notes 15,700 (121) - 15,579 2025 Notes 51,199 (15,029) (252) 35,918 PHC Notes 35,000 (13,698) (837) 20,465 December 31, 2021 Principal ($) Debt Discount ($) Issuance Costs ($) Carrying Amount ($) 2023 Notes 15,700 (1,499) - 14,201 2025 Notes 51,199 (20,535) (344) 30,320 PHC Notes 35,000 (18,587) (1,136) 15,277 PPP Loan 2,926 - - 2,926 |
Schedule of interest expense related to the notes payable | Interest expense related to the notes payable for the periods presented below is as follows (in thousands): Year Ended December 31, 2022 Interest Rate Interest ($) Debt Discount and Fees ($) Issuance Costs ($) Loss on Extinguishment ($) Total Interest Expense ($) 2023 Notes 5.25% 824 1,378 - - 2,202 2025 Notes 5.25% 2,674 5,506 92 - 8,272 PHC Notes 8.00% 3,035 4,889 299 - 8,223 PPP Loan 1.00% 6 - - - 6 Total 6,539 11,773 391 - 18,703 Year Ended December 31, 2021 Interest Rate Interest ($) Debt Discount and Fees ($) Issuance Costs ($) Loss on Extinguishment ($) Total Interest Expense ($) 2023 Notes 5.25% 824 1,256 - - 2,080 2025 Notes 5.25% 2,717 4,569 76 3,183 10,545 PHC Notes 9.50% 3,287 3,650 223 - 7,160 PPP Loan 1.00% 54 - - - 54 Total 6,882 9,475 299 3,183 19,839 |
Schedule of future maturities | 2023 $ 15,700 2024 35,000 2025 51,199 Total $ 101,899 |
Stock-Based Compensation (Table
Stock-Based Compensation (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Schedule of stock option activity | Weighted- Weighted- Average Number of Average Remaining Shares in Exercise Contractual (in thousands) Price Life (in years) Options outstanding as of December 31, 2020 15,775 $ 2.16 Granted 224 $ 2.98 Exercised (2,355) $ 1.61 Cancelled/forfeited (260) $ 3.06 Options outstanding as of December 31, 2021 13,384 5.71 Granted 449 $ 1.48 Exercised (974) $ 0.98 Cancelled/forfeited (1,080) $ 2.52 Options outstanding as of December 31, 2022 11,779 5.07 Options vested and exercisable as of December 31, 2022 11,138 $ 2.48 4.87 |
Schedule of assumptions of Black-Scholes option pricing model | For the year ended December 31, 2022 2021 2020 Expected term of options (in years) 6.5 6.5 6.5 Expected volatility rate 71.20 - 92.61 % 69.93 - 73.32 % 66.50 - 67.41 % Risk-free interest rate 0.57 - 3.84 % 0.59 - 1.25 % 0.41 - 1.80 % Expected dividend yield 0 % 0 % 0 % |
Schedule of restricted stock award activity | Weighted- Weighted- Average Number of Average Remaining Shares in Exercise Contractual (in thousands) Price Life (in years) RSU's outstanding as of December 31, 2020 14,238 $ 0.45 Granted 4,603 1.80 Vested (5,816) 0.71 Forfeited (270) 0.56 RSU's outstanding as of December 31, 2021 12,756 2.44 Granted 7,863 1.17 Vested (9,414) 0.77 Forfeited (1,426) 1.08 RSU's outstanding as of December 31, 2022 9,779 2.19 |
Employee granted stock options | |
Schedule of employee stock-based compensation expense | Employee stock-based compensation expense for employee granted stock options was $2.1 million, $3.2 million and $5.2 million, for the years ended December 31, 2022 and 2021 and 2020, respectively, classified as follows (in thousands): December 31, 2022 2021 2020 Cost of sales $ 41 30 59 Sales and marketing 302 545 1,570 Research and development 712 1,112 1,189 General and administrative 1,078 1,517 2,349 Total stock-based compensation $ 2,133 $ 3,204 $ 5,167 |
Restricted Stock Award | |
Schedule of employee stock-based compensation expense | Employee stock-based compensation expense for employee granted restricted stock units was $6.5 million, $5.8 million and $2.1 million, for the years ended December 31, 2022 and 2021 and 2020, respectively, classified as follows (in thousands): December 31, 2022 2021 2020 Cost of sales $ 31 14 8 Sales and marketing 454 548 338 Research and development 1,128 1,483 290 General and administrative 4,872 3,780 1,452 Total stock-based compensation $ 6,485 $ 5,825 $ 2,088 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Income Taxes | |
Schedule of deferred income tax assets and liabilities | December 31, Deferred income tax assets (liabilities ) 2022 2021 Deferred Tax Assets: Net operating loss carryforwards $ 133,031 125,242 Capitalized start-up costs 6,538 7,315 Research and development credit carryforwards 13,121 11,251 Research and development expenditures 8,853 — Stock-based compensation 1,695 2,061 Fair value of derivative liability 5,136 8,853 Other 2,143 912 Gross total deferred tax asset 170,517 155,634 Valuation allowance (163,255) (146,463) Total net deferred tax assets $ 7,262 $ 9,171 Deferred tax liabilities: Right of use amortization (896) (318) Amortization of debt discount (6,366) (8,853) Total deferred tax liability (7,262) (9,171) Net deferred tax assets $ — $ — |
Schedule of reconciliation of U.S. federal statutory rate to Company's effective tax rate | Year Ended December 31, 2022 2021 2020 Tax at U.S. Federal Statutory rate 21.00 % 21.00 % 21.00 % State taxes, net 0.40 1.60 2.32 Research and development credit (1.32) 0.34 0.46 State tax rates changes — (2.18) (0.85) Convertible debt transactions (31.68) (17.09) (11.15) Equity based compensation (2.00) 1.01 — Officers compensation 1.68 (0.96) — Other non-deductible items 0.21 (0.50) (0.44) Increase (decrease) in valuation allowance 11.71 (3.22) (11.34) Effective income tax rate 0.00 % 0.00 % 0.00 % |
Schedule of uncertain tax positions | 2022 2021 2020 Gross unrecognized tax benefit at beginning of year $ 2,813 2,552 2,351 Increase from tax positions taken in prior years — — — Increase from tax positions in current year 505 267 201 Lapse of statute of limitations / expiration (38) (6) — Gross unrecognized tax benefit at end of year $ 3,280 $ 2,813 $ 2,552 |
Fair Value Measurements (Tables
Fair Value Measurements (Tables) | 12 Months Ended |
Dec. 31, 2022 | |
Fair Value Measurements | |
Schedule of fair value hierarchy of the Company's financial assets and liabilities measured at fair value on a recurring basis | The following table represents the fair value hierarchy of the Company’s financial assets and liabilities measured at fair value on a recurring basis at December 31, 2022 and 2021 (in thousands): December 31, 2022 Total Level 1 Level 2 Level 3 Assets Money market funds⁽¹⁾ $ 34,658 $ 34,658 — — Commercial paper 41,503 — 41,503 — Corporate debt securities 32,142 — 32,142 — Asset backed securities 8,260 — 8,260 — Government and agency securities 38,570 31,627 6,943 — Liabilities Embedded features of the 2023 Notes $ 20 — 20 — Embedded features of the PHC Notes 44,191 — — 44,191 Embedded features of the 2025 Notes 7,859 — — 7,859 |
Schedule of changes in the fair value of Level 3 derivative liability measured at fair value | The following table provides a reconciliation of the beginning and ending balances of items measured at fair value on a recurring basis that used significant unobservable inputs (Level 3) (in thousands): Year ended December 31 2022 2021 Beginning Balance $ 224,037 $ 84,117 Conversion of financial instruments (25,656) (19,973) (Gain) Loss on fair value adjustment of option (43,745) 53,152 (Gain) Loss on change in fair value of derivatives (178,425) 108,606 (Gain) Loss on extinguishment of option 101 (3,513) Financial asset impairment cost, net 138 1,648 Transfers into Level 3 81,417 — Transfers out of Level 3 (5,817) — Ending balance $ 52,050 $ 224,037 |
Schedule of assumptions used to determine fair value | PHC Notes 2025 Notes Unobservable Inputs Assumptions Assumptions Stock price volatility 99.0 % 110.0 % Probabilities of conversion provisions 5.0 - 10.0 % 5.0 - 10.0 % Credit spread 13.96 % 13.96 % Recovery rate -5.51 % -1.56 % Dividend yield — % — % |
Liquidity and Capital Resourc_2
Liquidity and Capital Resources (Details) | 1 Months Ended | 12 Months Ended | ||||||||||||
Nov. 07, 2022 USD ($) | Jan. 01, 2022 USD ($) shares | Jan. 27, 2021 USD ($) shares | Jan. 21, 2021 USD ($) $ / shares | Jan. 17, 2021 USD ($) $ / shares shares | Nov. 09, 2020 USD ($) | Aug. 09, 2020 USD ($) $ / shares shares | Nov. 30, 2021 USD ($) | Jun. 30, 2021 USD ($) shares | Jan. 31, 2021 USD ($) $ / shares shares | Nov. 30, 2019 USD ($) | Dec. 31, 2022 USD ($) item $ / shares shares | Dec. 31, 2021 USD ($) $ / shares | Dec. 31, 2020 USD ($) | |
Net Income (Loss) | $ 142,119,000 | $ (302,474,000) | $ (175,168,000) | |||||||||||
Gross profit | 2,726,000 | (811,000) | (17,366,000) | |||||||||||
Accumulated deficit | (808,866,000) | (950,985,000) | ||||||||||||
Issuance of common stock, net of issuance costs | 34,174,000 | $ 200,365,000 | $ (26,000) | |||||||||||
Cash, cash equivalents and marketable securities | $ 156,300,000 | |||||||||||||
Common stock, par value per share (in dollars per share) | $ / shares | $ 0.001 | $ 0.001 | ||||||||||||
Number of voting classes | item | 1 | |||||||||||||
Eversense E3 CGM System | ||||||||||||||
CGM systems monitoring and management period | 6 months | |||||||||||||
Eversense CGM System | ||||||||||||||
CGM systems monitoring and management period | 90 days | |||||||||||||
Eversense CGM and Eversense XL CGM Systems | ||||||||||||||
CGM systems monitoring and management period | 6 months | |||||||||||||
PHC Notes | ||||||||||||||
Aggregate principal amount | $ 35,000,000 | $ 35,000,000 | $ 35,000,000 | |||||||||||
Financing fee shares issued | shares | 2,941,176 | |||||||||||||
Amount of possible additional debt principal amount | $ 15,000,000 | |||||||||||||
Conversion price | $ / shares | $ 0.53 | |||||||||||||
Common stock, par value per share (in dollars per share) | $ / shares | $ 0.001 | |||||||||||||
Masters Capital | ||||||||||||||
Proceeds from issuance of stock | $ 22,800,000 | |||||||||||||
Ascensia | PHC Notes | ||||||||||||||
Aggregate principal amount | $ 35,000,000 | |||||||||||||
Convertible Preferred Equity | Masters Capital | ||||||||||||||
Issuance of common stock, net of issuance costs | $ 3,000 | |||||||||||||
Excess of the purchase price and fair value of option recorded in additional-paid-in-capital | $ 42,800,000 | |||||||||||||
Convertible Preferred Equity | Energy Capital, LLC | ||||||||||||||
Issuance of convertible preferred stock, net of issuance costs | $ 4,000,000 | $ 12,000,000 | ||||||||||||
Price per share (in dollars per share) | $ / shares | $ 1,000 | |||||||||||||
Collaboration and commercialization agreement term | 24 months | |||||||||||||
Cash and cash equivalents and other available credit | $ 8,000,000 | |||||||||||||
Threshold redemption period of temporary equity | 6 months | |||||||||||||
Regular Purchase, Shares Sold | shares | 0 | |||||||||||||
Conversion price | $ / shares | $ 0.3951 | |||||||||||||
Excess of the purchase price and fair value of option recorded in additional-paid-in-capital | $ 37,600,000 | |||||||||||||
Convertible Preferred Equity | Energy Capital, LLC | Maximum | ||||||||||||||
Issuance of convertible preferred stock, net of issuance costs | $ 12,000,000 | $ 12,000,000 | ||||||||||||
Share price | $ / shares | $ 0.25 | |||||||||||||
Series A Preferred Stock | Masters Capital | ||||||||||||||
Shares issued | shares | 22,783 | |||||||||||||
Price per share (in dollars per share) | $ / shares | $ 1,000 | $ 1,000 | ||||||||||||
Conversion price | $ / shares | $ 0.476 | |||||||||||||
Series A Preferred Stock | Masters Capital | Maximum | ||||||||||||||
Shares issued | shares | 27,000 | |||||||||||||
Series B Preferred Stock | Energy Capital, LLC | ||||||||||||||
Issuance of convertible preferred stock, net of issuance costs | $ 12,000,000 | |||||||||||||
Purchasers | ||||||||||||||
Shares issued | shares | 40,000,000 | |||||||||||||
Price per share (in dollars per share) | $ / shares | $ 1.25 | |||||||||||||
Common stock, par value per share (in dollars per share) | $ / shares | $ 0.001 | |||||||||||||
Net proceeds | $ 46,100,000 | |||||||||||||
Proceeds from issuance of stock | $ 50,000,000 | |||||||||||||
Overallotment | Purchasers | ||||||||||||||
Price per share (in dollars per share) | $ / shares | 1.925 | |||||||||||||
Underwriters Share Price | $ / shares | $ 1.799875 | |||||||||||||
Overallotment | 2021 Public Offering | ||||||||||||||
Issuance of common stock, net of issuance costs | $ 51,948,052 | |||||||||||||
Shares issued | shares | 7,792,207 | |||||||||||||
Net proceeds | $ 106,100,000 | |||||||||||||
Open Market Sale Agreement | ||||||||||||||
Shares issued | shares | 12,830,333 | 15,160,899 | ||||||||||||
Proceeds from issuance of stock | $ 48,400,000 | $ 34,200,000 | ||||||||||||
Open Market Sale Agreement | Maximum | ||||||||||||||
Issuance of common stock, net of issuance costs | $ 150,000,000 | $ 50,000,000 | ||||||||||||
Percentage of commission on proceeds from common stock | 3% |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies - Segment Information (Details) | 12 Months Ended |
Dec. 31, 2022 segment | |
Segment Information | |
Number of operating segments | 1 |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Cash and Cash Equivalents (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Cash and Cash Equivalents, at Carrying Value [Abstract] | ||
Cash | $ 1,135 | $ 4,264 |
Money market funds | 34,658 | 29,197 |
Restricted cash | 0 | 0 |
Cash and cash equivalents | 35,793 | 33,461 |
Unrealized gain (loss) on marketable securities | $ (466) | $ (212) |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies - Accounts Receivable (Details) $ in Millions | Dec. 31, 2022 USD ($) |
Accounts Receivable | |
Allowance for uncollectible accounts | $ 0 |
Summary of Significant Accoun_7
Summary of Significant Accounting Policies - Property and Equipment, net (Details) $ in Thousands | 12 Months Ended |
Dec. 31, 2022 USD ($) | |
Property and Equipment, net | |
Impairment | $ 0 |
Minimum | |
Property and Equipment, net | |
Useful lives | 3 years |
Maximum | |
Property and Equipment, net | |
Useful lives | 7 years |
Summary of Significant Accoun_8
Summary of Significant Accounting Policies - Product Warranty Obligations (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Summary of Significant Accounting Policies | ||
Warranty term | 1 year | |
Warranty reserve | $ 781 | $ 723 |
Reconciliation of the change in estimated warranty liabilities | ||
Balance at beginning of the period | 723 | 646 |
Provision for warranties during the period (reversals from prior period) | 166 | 781 |
Settlements made during the period | (108) | (704) |
Balance at end of the period | $ 781 | $ 723 |
Summary of Significant Accoun_9
Summary of Significant Accounting Policies - Stock-Based Compensation and Income Taxes (Details) | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Stock-Based Compensation | |||
Expected dividend yield | 0% | 0% | 0% |
Revenue Recognition - Revenue b
Revenue Recognition - Revenue by Geographic Region (Details) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 USD ($) item | Dec. 31, 2021 USD ($) item | Dec. 31, 2020 USD ($) item | |
Revenue, net: | |||
Revenue | $ 16,389 | $ 13,675 | $ 4,949 |
Percent of total revenue | 100% | 100% | 100% |
Number of geographical markets | item | 2 | 2 | 2 |
Outside of the United States | |||
Revenue, net: | |||
Revenue | $ 8,877 | $ 11,117 | $ 3,821 |
Percent of total revenue | 54.20% | 81.30% | 77.20% |
United States | |||
Revenue, net: | |||
Revenue | $ 7,512 | $ 2,558 | $ 1,128 |
Percent of total revenue | 45.80% | 18.70% | 22.80% |
Revenue Recognition - Contract
Revenue Recognition - Contract Assets (Details) - USD ($) $ in Millions | Dec. 31, 2022 | Dec. 31, 2021 |
Revenue Recognition | ||
Unbilled receivables from customers | $ 1.7 | $ 1.8 |
Revenue Recognition - Concentra
Revenue Recognition - Concentration of Revenue and Customers (Details) - Revenue - Customer concentration risk | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Ascensia | |||
Concentration Risk [Line Items] | |||
Concentration Risk, Percentage | 96% | 90% | |
Roche | |||
Concentration Risk [Line Items] | |||
Concentration Risk, Percentage | 72% | ||
Edwards Healthcare Centers | |||
Concentration Risk [Line Items] | |||
Concentration Risk, Percentage | 19% | ||
Advanced Diabetes Supply | |||
Concentration Risk [Line Items] | |||
Concentration Risk, Percentage | 15% | ||
Solara Medical Supply | |||
Concentration Risk [Line Items] | |||
Concentration Risk, Percentage | 10% |
Net Income (Loss) per Share - B
Net Income (Loss) per Share - Basic and Diluted Net Income Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Net Income (Loss) | $ 142,119 | $ (302,474) | $ (175,168) |
Impact of conversion of dilutive securities | (209,269) | ||
Dilutive Net income (loss) | $ (67,150) | $ (302,474) | $ (175,168) |
Net income (loss) per share | |||
Basic | $ 0.30 | $ (0.72) | $ (0.77) |
Diluted | $ (0.11) | $ (0.72) | $ (0.77) |
Basic weighted average shares outstanding | 467,952,475 | 422,321,023 | 227,912,358 |
Dilutive potential common stock outstanding | |||
Warrants | 2,411,337 | ||
Diluted weighted average shares outstanding | 618,205,605 | 422,321,023 | 227,912,358 |
Anti-dilutive shares outstanding | 12,345,350 | 149,382,078 | 173,222,308 |
Stock-based awards | |||
Dilutive potential common stock outstanding | |||
Stock-based awards | 6,000,572 | ||
Anti-dilutive shares outstanding | 11,917,529 | 26,140,291 | 30,013,407 |
2023 Notes | |||
Dilutive potential common stock outstanding | |||
Convertible Notes | 4,617,646 | ||
Anti-dilutive shares outstanding | 4,617,646 | 6,672,500 | |
2025 Notes | |||
Dilutive potential common stock outstanding | |||
Convertible Notes | 39,689,142 | ||
Anti-dilutive shares outstanding | 39,689,142 | 44,728,676 | |
PHC Notes | |||
Dilutive potential common stock outstanding | |||
Convertible Notes | 67,162,375 | ||
Anti-dilutive shares outstanding | 65,757,177 | 68,222,412 | |
Energy Capital Option | |||
Dilutive potential common stock outstanding | |||
Convertible Notes | 30,372,058 | ||
Master preferred shares | |||
Dilutive potential common stock outstanding | |||
Anti-dilutive shares outstanding | 6,302,521 | ||
Warrants | |||
Dilutive potential common stock outstanding | |||
Anti-dilutive shares outstanding | 427,821 | 13,177,822 | 17,282,792 |
Marketable Securities - AFS Deb
Marketable Securities - AFS Debt Securities (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Marketable securities available for sale, consisting of debt securities: | ||
Amortized Cost | $ 121,153 | $ 148,539 |
Gross Unrealized Losses | (678) | (212) |
Estimated Market Value | 120,475 | 148,327 |
Commercial paper | ||
Marketable securities available for sale, consisting of debt securities: | ||
Amortized Cost | 41,503 | 57,369 |
Estimated Market Value | 41,503 | 57,369 |
Corporate debt securities | ||
Marketable securities available for sale, consisting of debt securities: | ||
Amortized Cost | 32,331 | 39,825 |
Gross Unrealized Losses | (189) | (77) |
Estimated Market Value | 32,142 | 39,748 |
Asset backed Securities | ||
Marketable securities available for sale, consisting of debt securities: | ||
Amortized Cost | 8,363 | 26,736 |
Gross Unrealized Losses | (103) | (29) |
Estimated Market Value | 8,260 | 26,707 |
Government and agency securities | ||
Marketable securities available for sale, consisting of debt securities: | ||
Amortized Cost | 38,956 | 24,609 |
Gross Unrealized Losses | (386) | (106) |
Estimated Market Value | $ 38,570 | $ 24,503 |
Marketable Securities - AFS D_2
Marketable Securities - AFS Debt Securities - Maturities (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Net Carrying Amount | ||
2023 | $ 108,797 | |
2024 | 5,620 | |
2025 | 6,736 | |
Total | 121,153 | $ 148,539 |
Fair Value | ||
2023 | 108,222 | |
2024 | 5,608 | |
2025 | 6,645 | |
Total | $ 120,475 |
Inventory, net (Details)
Inventory, net (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Finished goods | $ 1,697 | $ 1,012 | |
Work-in-process | 4,057 | 3,770 | |
Raw materials | 1,552 | 1,534 | |
Total | 7,306 | 6,316 | |
Inventory Valuation and Obsolescence | |||
Inventory adjustments included in cost of sales | |||
Cost | $ 1,400 | $ 2,400 | $ 15,100 |
Prepaid expenses and other cu_3
Prepaid expenses and other current assets (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Prepaid expenses and other current assets | ||
Contract manufacturing | $ 4,097 | $ 5,036 |
Insurance | 1,243 | 74 |
Clinical and Preclinical | 924 | 142 |
Interest receivable | 336 | 443 |
Accounting and Audit | 270 | |
IT and software | 189 | 225 |
Sales and Marketing | 158 | 98 |
Rent and utilities | 132 | 105 |
Research and development | 67 | 39 |
Other | 12 | 56 |
Total prepaid expenses and other current assets | $ 7,428 | $ 6,218 |
Property and Equipment, net - C
Property and Equipment, net - Components (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Property and Equipment | ||
Property and Equipment | $ 3,150 | $ 2,838 |
Less: Accumulated depreciation | (2,038) | (1,530) |
Property and Equipment, net | 1,112 | 1,308 |
Machinery and laboratory equipment | ||
Property and Equipment | ||
Property and Equipment | 2,668 | 2,357 |
Office furniture and equipment | ||
Property and Equipment | ||
Property and Equipment | 354 | 354 |
Leasehold improvements | ||
Property and Equipment | ||
Property and Equipment | $ 128 | $ 127 |
Property and Equipment, net - D
Property and Equipment, net - Depreciation (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Property and Equipment - Other information | |||
Depreciation expense | $ 0.5 | $ 0.5 | $ 0.4 |
Disposals | $ 0 | $ 0.1 | $ 0.3 |
Accrued Expenses and Other Cu_3
Accrued Expenses and Other Current Liabilities (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 |
Accrued Expenses and Other Current Liabilities | ||
Compensation and benefits | $ 4,699 | $ 3,484 |
Research and development | 3,502 | 2,145 |
Contract manufacturing | 2,480 | 914 |
Interest on notes payable | 2,050 | 2,144 |
Professional and administration services | 1,053 | 1,011 |
Product warranty and replacement obligations | 781 | 1,697 |
Operating lease | $ 725 | $ 904 |
Operating Lease, Liability, Current, Statement of Financial Position [Extensible List] | Accrued Liabilities and Other Liabilities, Current | Accrued Liabilities and Other Liabilities, Current |
Sales and marketing services | $ 149 | $ 1,962 |
Other | 14 | 3 |
Total accrued expenses and other current liabilities | 15,453 | 14,264 |
Non-current operating lease liabilities | $ 2,689 | $ 579 |
Operating Lease, Liability, Noncurrent, Statement of Financial Position [Extensible List] | Other Liabilities, Noncurrent | Other Liabilities, Noncurrent |
Leases - (Details)
Leases - (Details) $ in Thousands | 12 Months Ended | ||||
Dec. 31, 2022 USD ($) ft² | Dec. 31, 2021 USD ($) | Dec. 31, 2020 USD ($) | Jun. 30, 2022 | Sep. 02, 2019 ft² | |
Lessee, Lease, Description [Line Items] | |||||
Operating lease ROU assets | $ 3,032 | $ 821 | |||
Operating Lease, Liability | 3,414 | 1,483 | |||
Operating lease expense | $ 700 | 900 | $ 900 | ||
Impairment charges | $ 500 | ||||
Office Space | |||||
Lessee, Lease, Description [Line Items] | |||||
Leased space, in square feet | ft² | 30,500 | ||||
Research and Office Space | |||||
Lessee, Lease, Description [Line Items] | |||||
Leased space, in square feet | ft² | 33,000 | ||||
Renewal term of lease | 5 years |
Leases - Assets and liabilities
Leases - Assets and liabilities (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Operating Lease Assets and Liabilities | ||
Operating lease ROU assets | $ 3,032 | $ 821 |
Operating Lease, Right-of-Use Asset, Statement of Financial Position [Extensible List] | Deposits and Other Assets, Noncurrent | Deposits and Other Assets, Noncurrent |
Current operating lease liabilities | $ 725 | $ 904 |
Operating Lease, Liability, Current, Statement of Financial Position [Extensible List] | Accrued Liabilities and Other Liabilities, Current | Accrued Liabilities and Other Liabilities, Current |
Non-current operating lease liabilities | $ 2,689 | $ 579 |
Operating Lease, Liability, Noncurrent, Statement of Financial Position [Extensible List] | Other Liabilities, Noncurrent | Other Liabilities, Noncurrent |
Present value of lease liabilities | $ 3,414 | $ 1,483 |
Operating Lease, Liability, Statement of Financial Position [Extensible List] | Other Liabilities, Noncurrent, Accrued Liabilities and Other Liabilities, Current | Other Liabilities, Noncurrent, Accrued Liabilities and Other Liabilities, Current |
Maturity of undiscounted payments | ||
2023 | $ 1,006 | |
2024 | 709 | |
2025 | 730 | |
2026 | 752 | |
2027 | 774 | |
2028 | 327 | |
Total | 4,298 | |
Present value adjustment | (884) | |
Present value of lease liabilities | $ 3,414 | $ 1,483 |
Remaining lease term (years) | 5 years | 1 year 7 months 6 days |
Discount rate | 9.10% | 9.10% |
Operating lease payments | $ 1,000 |
401(k) Plan (Details)
401(k) Plan (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
401(k) Plan | |||
Employer contributions to the 401(k) plan | $ 0.4 | $ 0.3 | $ 0.1 |
Maximum | |||
401(k) Plan | |||
Discretionary matching contribution | 3% |
Notes Payable, Preferred Stoc_3
Notes Payable, Preferred Stock and Stock Purchase Warrants (Details) | 1 Months Ended | 12 Months Ended | ||||||||||
Jan. 21, 2021 USD ($) $ / shares | Nov. 09, 2020 USD ($) $ / shares | Aug. 09, 2020 USD ($) $ / shares shares | Apr. 22, 2020 USD ($) | Jan. 31, 2021 USD ($) $ / shares shares | Dec. 31, 2022 USD ($) item $ / shares | Dec. 31, 2021 USD ($) $ / shares | Dec. 31, 2020 USD ($) | Nov. 07, 2022 USD ($) | Apr. 30, 2022 | Feb. 28, 2022 shares | May 09, 2021 $ / shares shares | |
Debt Instrument [Line Items] | ||||||||||||
Loss on extinguishment | $ (3,183,000) | |||||||||||
Notes payable | ||||||||||||
Derivative assets | 239,000 | |||||||||||
Derivative liabilities | $ 52,050,000 | $ 236,291,000 | ||||||||||
Common stock, par value per share (in dollars per share) | $ / shares | $ 0.001 | $ 0.001 | ||||||||||
Number of voting classes | item | 1 | |||||||||||
Gain (Loss) on fair value adjustment of option | $ 43,745,000 | $ (53,152,000) | $ (30,721,000) | |||||||||
PHC Notes | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Loss on extinguishment | 100,000 | |||||||||||
Notes payable | ||||||||||||
Principal amount | $ 35,000,000 | 35,000,000 | 35,000,000 | |||||||||
Interest rate (as a percent) | 9.50% | 8% | ||||||||||
Debt issuance costs and discounts | $ 1,400,000 | |||||||||||
Fair value of the embedded conversion option | $ 25,800,000 | 44,200,000 | ||||||||||
Fair value of notes excluding the derivative liability | 32,200,000 | 15,300,000 | ||||||||||
Financing fee shares issued | shares | 2,941,176 | |||||||||||
Common stock, par value per share (in dollars per share) | $ / shares | $ 0.001 | |||||||||||
Debt discount of financing fee shares | $ 1,500,000 | |||||||||||
Conversion rate | 1,901.7956 | |||||||||||
Conversion price | $ / shares | $ 0.53 | |||||||||||
Conversion of Stock, Amount Issued | $ 15,000,000 | |||||||||||
Issuance costs incurred | 2,900,000 | 837,000 | 1,136,000 | |||||||||
Amount of principal which is converted to shares | $ 1,000 | |||||||||||
PHC Notes | Debt Redemption on or After October 31, 2022 | ||||||||||||
Notes payable | ||||||||||||
Threshold percentage of stock trigger | 275% | |||||||||||
Notice period | 10 days | |||||||||||
PHC Notes | Debt Redemption on or After October 31, 2023 | ||||||||||||
Notes payable | ||||||||||||
Notice period | 10 days | |||||||||||
PHC Notes | Debt Redemption Six Months Prior to Maturity Date | ||||||||||||
Notes payable | ||||||||||||
Call premium percentage | 130% | |||||||||||
PHC Notes | Debt Redemption Within Six Months of Maturity Date | ||||||||||||
Notes payable | ||||||||||||
Call premium percentage | 125% | |||||||||||
PPP Loan | ||||||||||||
Notes payable | ||||||||||||
Amount received from loan funding | $ 5,800,000 | |||||||||||
Principal amount | 2,926,000 | |||||||||||
Interest rate (as a percent) | 1% | |||||||||||
Note term | 2 years | |||||||||||
PPP Loan | Silicon Valley Bank | ||||||||||||
Notes payable | ||||||||||||
Principal amount | $ 5,800,000 | |||||||||||
PHC Option | Put option | ||||||||||||
Notes payable | ||||||||||||
Derivative assets | 200,000 | |||||||||||
Gain on fair value adjustment of derivatives | (1,600,000) | |||||||||||
Energy Capital Facility | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Net exercise of warrants | shares | 8,917,535 | |||||||||||
Exercise price of warrant (in dollars per share) | $ / shares | $ 0.3951 | |||||||||||
Notes payable | ||||||||||||
Deferred issuance costs and debt discounts | $ 7,600,000 | |||||||||||
Period to purchase stock | 24 months | |||||||||||
Derivative liabilities | $ 4,200,000 | $ 69,400,000 | ||||||||||
Adjusted of option to fair value | 25,700,000 | |||||||||||
Gain (Loss) on fair value adjustment of option | 43,700,000 | |||||||||||
Energy Capital Facility | Maximum | ||||||||||||
Debt Instrument [Line Items] | ||||||||||||
Warrants to purchase shares | shares | 10,000,000 | |||||||||||
Notes payable | ||||||||||||
Share price for debt conversion | $ / shares | $ 0.25 | |||||||||||
Cash Cash Equivalents and Other Available Credit Threshold | $ 8,000,000 | |||||||||||
Series B Preferred Stock | Energy Capital Facility | ||||||||||||
Notes payable | ||||||||||||
Preferred stock value | $ 12,000,000 | |||||||||||
Share price for debt conversion | $ / shares | $ 1,000 | |||||||||||
Maximum amount of shares that can be purchased under the equity line agreement at purchase price | $ 12,000,000 | |||||||||||
Period to purchase stock | 6 months | |||||||||||
Daily limit | $ 4,000,000 | |||||||||||
Conversion price | $ / shares | $ 0.3951 | |||||||||||
Series A Preferred Stock | ||||||||||||
Notes payable | ||||||||||||
Gain on extinguishment | $ 3,500,000 | |||||||||||
Series A Preferred Stock | Masters Capital | ||||||||||||
Notes payable | ||||||||||||
Conversion price | $ / shares | $ 0.476 | |||||||||||
Amount of principal which is converted to shares | $ 1,000 | |||||||||||
Number of shares issued and sold | shares | 3,000 | |||||||||||
Price per share (in dollars per share) | $ / shares | $ 1,000 | $ 1,000 | ||||||||||
Additional shares issued | shares | 22,783 | |||||||||||
Gross proceeds from stock | $ 22,800,000 | |||||||||||
Series A Preferred Stock | Masters Capital | Maximum | ||||||||||||
Notes payable | ||||||||||||
Number of shares issued and sold | shares | 27,000 |
Notes Payable, Preferred Stoc_4
Notes Payable, Preferred Stock and Stock Purchase Warrants - Term Notes Payable (Details) | 1 Months Ended | 5 Months Ended | 12 Months Ended | ||||
Jul. 31, 2019 USD ($) $ / shares | Jan. 31, 2018 USD ($) $ / shares | Jan. 27, 2021 USD ($) shares | Dec. 31, 2022 USD ($) shares | Dec. 31, 2021 USD ($) | Apr. 21, 2020 USD ($) | Feb. 28, 2018 USD ($) | |
Long term debt | |||||||
Derivative liabilities | $ 52,050,000 | $ 236,291,000 | |||||
2023 Notes | |||||||
Long term debt | |||||||
Principal amount | $ 50,000,000 | 15,700,000 | 15,700,000 | $ 3,000,000 | |||
Interest rate (as a percent) | 5.25% | ||||||
Proceeds from issuance of notes | $ 50,700,000 | ||||||
Conversion rate (per $1,000 of principal) | 294.1176 | ||||||
Conversion price (in dollars per share) | $ / shares | $ 3.40 | ||||||
Conversion period | 6 months | ||||||
Repurchase price as a percent of principal amount | 100% | ||||||
Transaction costs | $ 2,200,000 | ||||||
Amortization percent | 9.30% | ||||||
Fair value of notes excluding the derivative liability | 15,500,000 | 14,200,000 | |||||
Repurchase amount | $ 37,000,000 | ||||||
Amount of principal which is converted to shares | $ 1,000 | ||||||
Original debt conversion amount | 0 | 0 | |||||
Derivative liabilities | $ 17,300,000 | ||||||
2025 Notes | |||||||
Long term debt | |||||||
Principal amount | $ 82,000,000 | $ 6,800,000 | 51,199,000 | 51,199,000 | $ 24,000,000 | ||
Interest rate (as a percent) | 5.25% | ||||||
Conversion rate (per $1,000 of principal) | 757.5758 | ||||||
Debt issuance costs and discounts | $ 4,300,000 | ||||||
Deferred discount | $ 1,000,000 | ||||||
Conversion price (in dollars per share) | $ / shares | $ 1.32 | ||||||
Conversion price percentage | 150% | ||||||
Number of trading days | 20 days | ||||||
Number of consecutive trading days | 30 days | ||||||
Repurchase price as a percent of principal amount | 100% | ||||||
Fair value of notes excluding the derivative liability | $ 41,300,000 | 30,300,000 | |||||
Amount of principal which is converted to shares | $ 1,000 | ||||||
Debt converted, Shares issued | shares | 5,152,259 | 0 | |||||
Gross proceeds | 37,900,000 | ||||||
Issuance costs incurred | 3,300,000 | $ 252,000 | $ 344,000 | ||||
Derivative liabilities | $ 38,300,000 | ||||||
Senseonics, Incorporated | |||||||
Long term debt | |||||||
Ownership of subsidiary guarantor (as a percent) | 100% |
Notes Payable, Preferred Stoc_5
Notes Payable, Preferred Stock and Stock Purchase Warrants - Carrying amount of notes payable (Details) - USD ($) $ in Thousands | Dec. 31, 2022 | Dec. 31, 2021 | Jan. 27, 2021 | Aug. 09, 2020 | Apr. 21, 2020 | Jul. 31, 2019 | Feb. 28, 2018 | Jan. 31, 2018 |
Debt Instrument [Line Items] | ||||||||
Carrying Amount | $ 56,383 | $ 59,798 | ||||||
2023 Notes | ||||||||
Debt Instrument [Line Items] | ||||||||
Principal | 15,700 | 15,700 | $ 3,000 | $ 50,000 | ||||
Debt Discount | (121) | (1,499) | ||||||
Carrying Amount | 15,579 | 14,201 | ||||||
2025 Notes | ||||||||
Debt Instrument [Line Items] | ||||||||
Principal | 51,199 | 51,199 | $ 6,800 | $ 24,000 | $ 82,000 | |||
Debt Discount | (15,029) | (20,535) | ||||||
Issuance Costs | (252) | (344) | $ (3,300) | |||||
Carrying Amount | 35,918 | 30,320 | ||||||
PHC Notes | ||||||||
Debt Instrument [Line Items] | ||||||||
Principal | 35,000 | 35,000 | $ 35,000 | |||||
Debt Discount | (13,698) | (18,587) | ||||||
Issuance Costs | (837) | (1,136) | $ (2,900) | |||||
Carrying Amount | $ 20,465 | 15,277 | ||||||
PPP Loan | ||||||||
Debt Instrument [Line Items] | ||||||||
Principal | 2,926 | |||||||
Carrying Amount | $ 2,926 |
Notes Payable, Preferred Stoc_6
Notes Payable, Preferred Stock and Stock Purchase Warrants - Interest expense (Details) - USD ($) | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Long term debt | ||
Interest | $ 6,539,000 | $ 6,882,000 |
Debt Discount and Fees | 11,773,000 | 9,475,000 |
Issuance Costs | 391,000 | 299,000 |
Loss on Extinguishment | 3,183,000 | |
Total Interest Expense | $ 18,703,000 | $ 19,839,000 |
2023 Notes | ||
Long term debt | ||
Interest Rate | 5.25% | 5.25% |
Interest | $ 824,000 | $ 824,000 |
Debt Discount and Fees | 1,378,000 | 1,256,000 |
Total Interest Expense | $ 2,202,000 | $ 2,080,000 |
2025 Notes | ||
Long term debt | ||
Interest Rate | 5.25% | 5.25% |
Interest | $ 2,674,000 | $ 2,717,000 |
Debt Discount and Fees | 5,506,000 | 4,569,000 |
Issuance Costs | 92,000 | 76,000 |
Loss on Extinguishment | (3,183,000) | |
Total Interest Expense | $ 8,272,000 | $ 10,545,000 |
PHC Notes | ||
Long term debt | ||
Interest Rate | 8% | 9.50% |
Interest | $ 3,035,000 | $ 3,287,000 |
Debt Discount and Fees | 4,889,000 | 3,650,000 |
Issuance Costs | 299,000 | 223,000 |
Loss on Extinguishment | (100,000) | |
Total Interest Expense | $ 8,223,000 | $ 7,160,000 |
PPP Loan | ||
Long term debt | ||
Interest Rate | 1% | 1% |
Interest | $ 6,000 | $ 54,000 |
Total Interest Expense | $ 6,000 | $ 54,000 |
Notes Payable, Preferred Stoc_7
Notes Payable, Preferred Stock and Stock Purchase Warrants - Scheduled Maturities (Details) $ in Thousands | Dec. 31, 2022 USD ($) |
Scheduled maturities | |
2023 | $ 15,700 |
2024 | 35,000 |
2025 | 51,199 |
Total | $ 101,899 |
Stockholders' Deficit - Acquisi
Stockholders' Deficit - Acquisition transactions (Details) | 1 Months Ended | ||
Dec. 31, 2015 $ / shares shares | Dec. 31, 2022 $ / shares | Dec. 31, 2021 $ / shares | |
Class of stock information | |||
Common stock, par value | $ 0.001 | $ 0.001 | |
Senseonics Reverse Merger Agreement | Senseonics, Incorporated | Common Stock, Senseonics, Inc. | |||
Class of stock information | |||
Common stock, par value | $ 0.01 | ||
Senseonics Reverse Merger Agreement | ASN Technologies, Inc. | Common Stock | Common Stock, Senseonics, Inc. | Common Shares Exchanged in Reverse Capitalization | |||
Class of stock information | |||
Common stock, par value | $ 0.001 | ||
Shares issued | shares | 1,955,929 | ||
Exchange ratio | 2.0975 | ||
Senseonics Reverse Merger Agreement | ASN Technologies, Inc. | Common Stock | Preferred Stock, Senseonics, Inc. | Common Shares Exchanged in Reverse Capitalization | |||
Class of stock information | |||
Common stock, par value | $ 0.001 | ||
Shares issued | shares | 55,301,674 |
Stockholders' Deficit - Class o
Stockholders' Deficit - Class of Stock (Details) | 12 Months Ended | |
Dec. 31, 2022 item $ / shares shares | Dec. 31, 2021 $ / shares shares | |
Class of stock information | ||
Preferred stock, shares authorized | shares | 5,000,000 | 5,000,000 |
Preferred stock, par value per share (in dollars per share) | $ 0.001 | $ 0.001 |
Preferred stock, shares outstanding | shares | 12,000 | 0 |
Common stock, shares authorized | shares | 900,000,000 | 900,000,000 |
Common stock, par value per share (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, shares issued | shares | 479,637,138 | 447,282,263 |
Common stock, shares outstanding | shares | 479,637,138 | 447,282,263 |
Number of voting classes | item | 1 | |
Voting right per share price | $ 1,000 | |
Conversion price | 1.24 | |
Stock price per share | $ 0.001 | $ 0.001 |
Percentage of total voting power | 29% | |
Series B Preferred Stock. | ||
Class of stock information | ||
Voting right per share price | $ 1,000 | |
Conversion price | 0.3951 | |
Stock price per share | $ 0.001 |
Stockholders' Deficit - Stock P
Stockholders' Deficit - Stock Purchase Warrants (Details) - USD ($) | 12 Months Ended | |||||||
Nov. 09, 2020 | Apr. 24, 2020 | Jul. 16, 2019 | Dec. 31, 2022 | Dec. 31, 2021 | Feb. 28, 2022 | Feb. 28, 2021 | Jun. 30, 2016 | |
Solar Warrants | ||||||||
Stock Purchase Warrants | ||||||||
Exercise price of warrant (in dollars per share) | $ 1.20 | |||||||
Proceeds from issuance of warrants | $ 700,000 | |||||||
Net exercise of warrants | 1,125,000 | 868,833 | ||||||
Highbridge Warrant | ||||||||
Stock Purchase Warrants | ||||||||
Number of shares called by warrants | 4,500,000 | |||||||
Exercise price of warrant (in dollars per share) | $ 0.66 | |||||||
Proceeds from issuance of warrants | $ 1,300,000 | |||||||
Number of warrant exercised | 0 | 1,750,000 | ||||||
Cash proceeds for exercise | $ 1,160,000 | |||||||
Energy Capital Warrants | ||||||||
Stock Purchase Warrants | ||||||||
Number of shares called by warrants | 10,000,000 | |||||||
Exercise price of warrant (in dollars per share) | $ 0.3951 | |||||||
Proceeds from issuance of warrants | $ 3,400,000 | |||||||
Net exercise of warrants | 8,917,535 | |||||||
Amended and Restated Loan and Security Agreement | Term Notes Payable | Stock Purchase Warrants | Warrant liability | ||||||||
Stock Purchase Warrants | ||||||||
Cumulative fair value of warrants | $ 500,000 | |||||||
Amended and Restated Loan and Security Agreement | Term Notes Payable | Stock Purchase Warrants, $3.86 Exercise Price | Warrant liability | Common Stock | ||||||||
Stock Purchase Warrants | ||||||||
Number of shares called by warrants | 116,581 | |||||||
Exercise price of warrant (in dollars per share) | $ 3.86 | |||||||
Amended and Restated Loan and Security Agreement | Term Notes Payable | Stock Purchase Warrants, $2.38 Exercise Price | Warrant liability | Common Stock | ||||||||
Stock Purchase Warrants | ||||||||
Number of shares called by warrants | 63,025 | |||||||
Cumulative fair value of warrants | $ 2.38 | |||||||
Amended and Restated Loan and Security Agreement | Term Notes Payable | Stock Purchase Warrants, $1.86 Exercise Price | Warrant liability | Common Stock | ||||||||
Stock Purchase Warrants | ||||||||
Number of shares called by warrants | 80,645 | |||||||
Exercise price of warrant (in dollars per share) | $ 1.86 |
Stock-Based Compensation (Detai
Stock-Based Compensation (Details) - shares | 1 Months Ended | 12 Months Ended | |||||
Aug. 01, 2022 | Feb. 01, 2022 | Feb. 29, 2016 | Dec. 31, 2015 | Dec. 31, 2022 | Jan. 01, 2023 | May 30, 2019 | |
2015 Equity Incentive Plan | |||||||
Stock-based compensation | |||||||
Expiration period | 10 years | ||||||
Automatic annual increase in shares authorized, percent of common stock outstanding | 3.50% | ||||||
Shares available for grant | 22,366,134 | 39,153,434 | |||||
Inducement Plan | |||||||
Stock-based compensation | |||||||
Shares available for grant | 684,473 | ||||||
Total shares that may be issued | 1,800,000 | ||||||
2016 Employee Stock Purchase Plan | |||||||
Stock-based compensation | |||||||
Shares available for grant | 800,000 | 13,050,523 | 17,846,894 | ||||
Share increase (as a percent) | 1% | ||||||
Payroll deductions for ESPP participants (as a percent) | 15% | ||||||
Percentage on share price issued | 85% | ||||||
Stock issued | 64,109 | 28,944 | |||||
1997 Stock Option Plan | |||||||
Stock-based compensation | |||||||
Total shares that may be issued | 1,223,273 |
Stock-Based Compensation - Stoc
Stock-Based Compensation - Stock Option Activity (Details) - $ / shares | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Stock option activity | |||
Options outstanding- Beginning | 13,384,000 | 15,775,000 | |
Options granted | 449,000 | 224,000 | |
Options exercised | 974,285 | 2,354,566 | 201,447 |
Options cancelled/forfeited | (1,080,000) | (260,000) | |
Options outstanding- Ending | 11,779,000 | 13,384,000 | 15,775,000 |
Weighted Average Exercise Price Per Share | |||
Options outstanding- Beginning (in dollars per share) | $ 2.16 | ||
Options granted (in dollars per share) | $ 1.48 | 2.98 | |
Options exercised (in dollars per share) | 0.98 | 1.61 | |
Options cancelled/forfeited (in dollars per share) | $ 2.52 | $ 3.06 | |
Options outstanding- Ending (in dollars per share) | $ 2.16 | ||
Option awards - additional information | |||
Options vested and exercisable | 11,138,000 | ||
Weighted-average exercise price of options vested and exercisable | $ 2.48 | ||
Weighted-average remaining contractual life of outstanding stock options | 5 years 25 days | 5 years 8 months 15 days | |
Weighted-average remaining contractual life of options vested and exercisable | 4 years 10 months 13 days |
Stock-Based Compensation - St_2
Stock-Based Compensation - Stock Option Additional Information (Details) - USD ($) $ / shares in Units, $ in Millions | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Option awards - additional information | |||
Weighted average fair value of stock options granted | $ 1.04 | $ 1.97 | $ 0.33 |
Options exercised | 974,285 | 2,354,566 | 201,447 |
Aggregate intrinsic value of options exercised | $ 1 | $ 4.4 | $ 0.1 |
Total fair value of options vested | 2.1 | $ 3.1 | |
Aggregate intrinsic value of options currently exercisable | 0.4 | ||
Total intrinsic value of stock options outstanding | $ 0.4 | ||
Weighted average grant date fair value of the unvested stock option awards outstanding | $ 1.29 | $ 1.58 | |
Weighted average grant date fair value of stock options vested (in dollars per share) | 1.63 | ||
Weighted average grant date fair value of stock options exercised | 0.59 | ||
Weighted average grant date fair value of the stock option awards forfeited/cancelled | $ 1.06 |
Stock-Based Compensation - Blac
Stock-Based Compensation - Black-Scholes Option Pricing Assumptions (Details) | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Fair value of stock-option awards | |||
Expected term of options | 6 years 6 months | 6 years 6 months | 6 years 6 months |
Expected dividend yield | 0% | 0% | 0% |
Minimum | |||
Fair value of stock-option awards | |||
Expected volatility rate | 71.20% | 69.93% | 66.50% |
Risk-free interest rate | 0.57% | 0.59% | 0.41% |
Maximum | |||
Fair value of stock-option awards | |||
Expected volatility rate | 92.61% | 73.32% | 67.41% |
Risk-free interest rate | 3.84% | 1.25% | 1.80% |
Stock-Based Compensation - Comp
Stock-Based Compensation - Compensation Expense (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Employee granted stock options | |||
Compensation expense | |||
Stock-based compensation expense | $ 2,133 | $ 3,204 | $ 5,167 |
Unrecognized compensation cost | $ 700 | ||
Weighted average period expected to recognize unrecognized compensation cost | 2 years 3 months 10 days | ||
Restricted Stock Award | |||
Compensation expense | |||
Stock-based compensation expense | $ 6,485 | 5,825 | 2,088 |
Unrecognized compensation cost | $ 9,400 | ||
Weighted average period expected to recognize unrecognized compensation cost | 2 years 2 months 8 days | ||
Cost of sales | Employee granted stock options | |||
Compensation expense | |||
Stock-based compensation expense | $ 41 | 30 | 59 |
Cost of sales | Restricted Stock Award | |||
Compensation expense | |||
Stock-based compensation expense | 31 | 14 | 8 |
Sales and marketing expenses | Employee granted stock options | |||
Compensation expense | |||
Stock-based compensation expense | 302 | 545 | 1,570 |
Sales and marketing expenses | Restricted Stock Award | |||
Compensation expense | |||
Stock-based compensation expense | 454 | 548 | 338 |
Research and development | Employee granted stock options | |||
Compensation expense | |||
Stock-based compensation expense | 712 | 1,112 | 1,189 |
Research and development | Restricted Stock Award | |||
Compensation expense | |||
Stock-based compensation expense | 1,128 | 1,483 | 290 |
General and administrative | Employee granted stock options | |||
Compensation expense | |||
Stock-based compensation expense | 1,078 | 1,517 | 2,349 |
General and administrative | Restricted Stock Award | |||
Compensation expense | |||
Stock-based compensation expense | $ 4,872 | $ 3,780 | $ 1,452 |
Stock-Based Compensation - Rest
Stock-Based Compensation - Restricted Stock Awards (Details) - Restricted Stock Award $ / shares in Units, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 USD ($) D director installment $ / shares shares | Dec. 31, 2021 USD ($) $ / shares shares | Dec. 31, 2020 USD ($) $ / shares shares | |
Stock-based compensation | |||
Stock-based compensation expense | $ | $ 6,485 | $ 5,825 | $ 2,088 |
Restricted stock, nonvested, Number of Shares | |||
RSU's outstanding as of beginning balance | 12,756,000 | 14,238,000 | |
Granted | 7,863,000 | 4,603,000 | |
Vested | (9,414,000) | (5,816,000) | |
Forfeited | (1,426,000) | (270,000) | |
RSU's outstanding as of ending balance | 9,779,000 | 12,756,000 | 14,238,000 |
Restricted stock, nonvested, Weighted Average Grant Price | |||
RSU's outstanding exercise price as of beginning balance (in dollars per share) | $ / shares | $ 0.45 | ||
Granted (in dollars per share) | $ / shares | $ 1.17 | 1.80 | |
Vested (in dollars per share) | $ / shares | 0.77 | 0.71 | |
Forfeited (in dollars per share) | $ / shares | 1.08 | 0.56 | |
RSU's outstanding exercise price as of ending balance (in dollars per share) | $ / shares | $ 0.45 | ||
RSU's vested and expected to vest (in dollars per share) | $ / shares | $ 1.10 | $ 0.80 | |
Other information | |||
Weighted-Average Remaining Contractual Life (in years) | 2 years 2 months 8 days | 2 years 5 months 8 days | |
Aggregate intrinsic value, vested | $ | $ 20,300 | $ 15,900 | |
Fair value of the restricted stock units | $ | 7,300 | $ 4,100 | |
Aggregate intrinsic value as of outstanding | $ | $ 10,100 | ||
Eight installments | |||
Stock-based compensation | |||
Number of Installments | installment | 8 | ||
Vesting days | D | 7 | ||
Duration for vesting days | 6 months | ||
Board of directors | |||
Stock-based compensation | |||
Shares issued for services | 156,272 | 117,290 | |
Restricted stock issued | 7,707,027 | 4,603,440 | |
Vesting period | 1 year | ||
New members of Board of Directors | |||
Stock-based compensation | |||
Vesting period | 3 years | ||
Number of directors | director | 0 |
Income Taxes - Tax Provision (D
Income Taxes - Tax Provision (Details) | 12 Months Ended |
Dec. 31, 2022 USD ($) | |
Income Taxes | |
Income tax provision | $ 0 |
Income Taxes - Net Operating Lo
Income Taxes - Net Operating Loss and Tax Credit Carryforwards (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Carryforwards | ||
Increase (decrease) in valuation allowance | $ 16,800 | $ 10,400 |
Net operating loss carryforwards | 621,500 | |
Operating loss carryforwards subject to expiry | 197,500 | |
Deferred income tax assets (liabilities) | ||
Net operating loss carryforwards | 133,031 | 125,242 |
Capitalized start-up costs | 6,538 | 7,315 |
Research and development credit carryforwards | 13,121 | 11,251 |
Research and development expenditures | 8,853 | |
Stock-based compensation | 1,695 | 2,061 |
Fair value of derivative liability | 5,136 | 8,853 |
Other | 2,143 | 912 |
Gross total deferred tax asset | 170,517 | 155,634 |
Valuation allowance | (163,255) | (146,463) |
Total net deferred tax assets | 7,262 | 9,171 |
Right of use amortization | (896) | (318) |
Amortization of debt discount | (6,366) | (8,853) |
Total deferred tax liability | (7,262) | (9,171) |
Net deferred tax assets | 0 | $ 0 |
Research and Development Credit Carryforwards | ||
Carryforwards | ||
Tax credit carryforwards | $ 13,100 |
Income Taxes - Effective Income
Income Taxes - Effective Income Tax Rate Reconciliation (Details) | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Reconciliation of the estimated U.S. federal statutory rate to the Company's effective income tax rate | |||
Tax at U.S. Federal Statutory rate (as a percent) | 21% | 21% | 21% |
State taxes, net (as a percent) | 0.40% | 1.60% | 2.32% |
Research and development credit (as a percent) | (1.32%) | 0.34% | 0.46% |
State tax rate changes (as a percent) | (2.18%) | (0.85%) | |
Convertible debt transactions (as a percent) | (31.68%) | (17.09%) | (11.15%) |
Equity based compensation (as a percent) | (2.00%) | 1.01% | |
Officers compensation (as a percent) | 1.68% | (0.96%) | |
Other non-deductible items (as a percent) | 0.21% | (0.50%) | (0.44%) |
Increase (decrease) in valuation allowance (as a percent) | 11.71% | (3.22%) | (11.34%) |
Effective income tax rate (as a percent) | 0% | 0% | 0% |
Income Taxes - Tax Law Change (
Income Taxes - Tax Law Change (Details) | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Income Taxes | |||
Tax at U.S. Federal Statutory rate | 21% | 21% | 21% |
Income Taxes - Uncertain Tax Po
Income Taxes - Uncertain Tax Positions (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Change in uncertain tax positions | |||
Gross unrecognized tax benefit at beginning of year | $ 2,813 | $ 2,552 | $ 2,351 |
Increase from tax positions in current year | 505 | 267 | 201 |
Lapse of statute of limitations/expiration | (38) | (6) | |
Gross unrecognized tax benefit at end of year | $ 3,280 | $ 2,813 | $ 2,552 |
Related Party Transactions (Det
Related Party Transactions (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Related party transactions | |||
Revenue | $ 15,733 | $ 12,281 | $ 3,581 |
Due from related party | 2,324 | 1,768 | |
Due to related party | 837 | 3,597 | |
Ascensia | |||
Related party transactions | |||
Revenue | 15,700 | 12,300 | |
Due from related party | 2,300 | 1,800 | |
Replacement obligations | 800 | 700 | |
Marketing campaign support obligation | 1,800 | ||
Roche | |||
Related party transactions | |||
Revenue | 0 | 3,600 | |
Due from related party | 0 | 0 | $ 2,400 |
Maximum | Ascensia | |||
Related party transactions | |||
Due to related parties | $ 100 | ||
Maximum | Roche | |||
Related party transactions | |||
Revenue | $ 100 |
Fair Value Measurements - Recur
Fair Value Measurements - Recurring (Details) - USD ($) $ in Thousands | 12 Months Ended | ||||
Dec. 31, 2022 | Dec. 31, 2021 | Nov. 09, 2020 | Jul. 31, 2019 | Jan. 31, 2018 | |
Fair Value Measurements | |||||
Cash and cash equivalents | $ 35,793 | $ 33,461 | |||
Marketable securities | 120,475 | 148,327 | |||
Derivative liabilities | 52,050 | 236,291 | |||
Reconciliation of items measured at fair value on a recurring basis that used significant unobservable inputs (Level 3) | |||||
Balance at the beginning of the period | 224,037 | 84,117 | |||
Conversion of financial instruments | (25,656) | (19,973) | |||
(Gain) Loss on fair value adjustment of option | (43,745) | 53,152 | |||
(Gain) Loss on change in fair value of derivatives | $ (178,425) | $ 108,606 | |||
Fair Value, Liability, Recurring Basis, Unobservable Input Reconciliation, Gain (Loss), Statement of Income or Comprehensive Income [Extensible Enumeration] | Fair Value, Net Derivative Asset (Liability) Measured on Recurring Basis, Change in Unrealized Gain (Loss) | Fair Value, Net Derivative Asset (Liability) Measured on Recurring Basis, Change in Unrealized Gain (Loss) | |||
(Gain) Loss on extinguishment of option | $ 101 | $ (3,513) | |||
Financial asset impairment cost, net | 138 | 1,648 | |||
Transfers into Level 3 | 81,417 | 0 | |||
Transfers out of Level 3 | (5,817) | 0 | |||
Balance at the end of the period | 52,050 | 224,037 | |||
2023 Notes | |||||
Fair Value Measurements | |||||
Derivative liabilities | $ 17,300 | ||||
2025 Notes | |||||
Fair Value Measurements | |||||
Derivative liabilities | $ 38,300 | ||||
Energy Capital Facility | |||||
Fair Value Measurements | |||||
Derivative liabilities | 69,400 | $ 4,200 | |||
Recurring | Call Option | Energy Capital Facility | |||||
Fair Value Measurements | |||||
Derivative liabilities | 69,401 | ||||
Recurring | Embedded conversion option | 2023 Notes | |||||
Fair Value Measurements | |||||
Derivative liabilities | 20 | 5,817 | |||
Recurring | Embedded conversion option | PHC Notes | |||||
Fair Value Measurements | |||||
Derivative liabilities | 44,191 | 149,058 | |||
Recurring | Embedded conversion option | 2025 Notes | |||||
Fair Value Measurements | |||||
Derivative liabilities | 7,859 | 81,417 | |||
Recurring | Money market funds | |||||
Fair Value Measurements | |||||
Cash and cash equivalents | 34,658 | 29,197 | |||
Recurring | Corporate debt securities | |||||
Fair Value Measurements | |||||
Marketable securities | 32,142 | 39,748 | |||
Recurring | Commercial paper | |||||
Fair Value Measurements | |||||
Marketable securities | 41,503 | 57,369 | |||
Recurring | Asset backed Securities | |||||
Fair Value Measurements | |||||
Marketable securities | 8,260 | 26,707 | |||
Recurring | Government and agency securities | |||||
Fair Value Measurements | |||||
Marketable securities | 38,570 | 24,503 | |||
Recurring | PHC Option | |||||
Fair Value Measurements | |||||
Marketable securities | 239 | ||||
Recurring | Level 1 | Money market funds | |||||
Fair Value Measurements | |||||
Cash and cash equivalents | 34,658 | 29,197 | |||
Recurring | Level 1 | Government and agency securities | |||||
Fair Value Measurements | |||||
Marketable securities | 31,627 | 19,957 | |||
Recurring | Level 2 | Embedded conversion option | 2023 Notes | |||||
Fair Value Measurements | |||||
Derivative liabilities | 20 | ||||
Recurring | Level 2 | Embedded conversion option | 2025 Notes | |||||
Fair Value Measurements | |||||
Derivative liabilities | 81,417 | ||||
Recurring | Level 2 | Corporate debt securities | |||||
Fair Value Measurements | |||||
Marketable securities | 32,142 | 39,748 | |||
Recurring | Level 2 | Commercial paper | |||||
Fair Value Measurements | |||||
Marketable securities | 41,503 | 57,369 | |||
Recurring | Level 2 | Asset backed Securities | |||||
Fair Value Measurements | |||||
Marketable securities | 8,260 | 26,707 | |||
Recurring | Level 2 | Government and agency securities | |||||
Fair Value Measurements | |||||
Marketable securities | 6,943 | 4,546 | |||
Recurring | Level 3 | Call Option | Energy Capital Facility | |||||
Fair Value Measurements | |||||
Derivative liabilities | 69,401 | ||||
Recurring | Level 3 | Embedded conversion option | 2023 Notes | |||||
Fair Value Measurements | |||||
Derivative liabilities | 5,817 | ||||
Recurring | Level 3 | Embedded conversion option | PHC Notes | |||||
Fair Value Measurements | |||||
Derivative liabilities | 44,191 | 149,058 | |||
Recurring | Level 3 | Embedded conversion option | 2025 Notes | |||||
Fair Value Measurements | |||||
Derivative liabilities | $ 7,859 | ||||
Recurring | Level 3 | PHC Option | |||||
Fair Value Measurements | |||||
Marketable securities | $ 239 |
Fair Value Measurements - Valua
Fair Value Measurements - Valuation Assumptions (Details) - Recurring - Level 3 | Dec. 31, 2022 |
2025 Notes | Stock price volatility | |
Fair value valuation assumptions | |
Embedded Derivative Liability, Measurement Input | 110 |
2025 Notes | Probabilities of conversion provisions | Minimum | |
Fair value valuation assumptions | |
Embedded Derivative Liability, Measurement Input | 5 |
2025 Notes | Probabilities of conversion provisions | Maximum | |
Fair value valuation assumptions | |
Embedded Derivative Liability, Measurement Input | 10 |
2025 Notes | Credit spread | |
Fair value valuation assumptions | |
Embedded Derivative Liability, Measurement Input | 13.96 |
2025 Notes | Recovery rate | |
Fair value valuation assumptions | |
Embedded Derivative Liability, Measurement Input | (1.56) |
PHC Notes | Stock price volatility | |
Fair value valuation assumptions | |
Embedded Derivative Liability, Measurement Input | 99 |
PHC Notes | Probabilities of conversion provisions | Minimum | |
Fair value valuation assumptions | |
Embedded Derivative Liability, Measurement Input | 5 |
PHC Notes | Probabilities of conversion provisions | Maximum | |
Fair value valuation assumptions | |
Embedded Derivative Liability, Measurement Input | 10 |
PHC Notes | Credit spread | |
Fair value valuation assumptions | |
Embedded Derivative Liability, Measurement Input | 13.96 |
PHC Notes | Recovery rate | |
Fair value valuation assumptions | |
Embedded Derivative Liability, Measurement Input | (5.51) |
Fair Value Measurements - Trans
Fair Value Measurements - Transfers (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2022 | Dec. 31, 2021 | |
Fair Value Measurements | ||
Fair Value Assets, Level 1 to Level 2 Transfers | $ 0 | |
Fair Value Assets, Level 2 to Level 1 Transfers | 0 | |
Fair Value Liabilities, Level 1 to Level 2 Transfers | 0 | |
Fair Value Liabilities, Level 2 to Level 1 Transfers | 0 | |
Fair Value Measurement Liability Transfers Into Level 3 | 0 | |
Fair Value Measurement Liability Transfers out of Level 3 | 0 | |
Fair Value Measurement Asset Transfers Into Level 3 | $ 81,417 | 0 |
Transfers out of Level 3 | $ (5,817) | $ 0 |
Reclassification of Prior Yea_2
Reclassification of Prior Year Presentation (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2022 | Dec. 31, 2021 | Dec. 31, 2020 | |
Reclassification [Line Items] | |||
Inventory | $ 989 | $ 1,036 | $ (11,648) |
Revision of Prior Period, Reclassification, Adjustment | |||
Reclassification [Line Items] | |||
Provision for inventory obsolescence and net realizable value | (4,200) | ||
Inventory | $ (4,200) |
Subsequent Events - (Details)
Subsequent Events - (Details) - Subsequent Event - USD ($) $ / shares in Units, $ in Millions | Mar. 13, 2023 | Mar. 10, 2023 | Jan. 31, 2023 | Jan. 30, 2023 |
Subsequent Event [Line Items] | ||||
Percent of cash and cash equivalents held at SVB | 1% | |||
Exchange Warrant | ||||
Subsequent Event [Line Items] | ||||
Number of shares of common stock called by warrant | 68,525,311 | |||
Exercise price of warrant (in dollars per share) | $ 0.001 | |||
Purchase Warrant | ||||
Subsequent Event [Line Items] | ||||
Number of shares of common stock called by warrant | 15,425,750 | |||
Proceeds from issuance of warrants | $ 15 | |||
Exercise price of warrant (in dollars per share) | $ 0.001 | |||
2023 Commercial Equity Plan | ||||
Subsequent Event [Line Items] | ||||
Number of shares authorized | 10,000,000 | |||
2023 Notes | ||||
Subsequent Event [Line Items] | ||||
Repayment of notes payable | $ 15.7 | |||
Repayment of accrued interest | $ 0.4 |