Document and Entity Information
Document and Entity Information - USD ($) | 12 Months Ended | ||
Dec. 31, 2019 | Feb. 21, 2020 | Jun. 30, 2019 | |
Document and Entity Information | |||
Document Type | 10-K | ||
Document Annual Report | true | ||
Document Period End Date | Dec. 31, 2019 | ||
Document Transition Report | false | ||
Entity File Number | 001-36046 | ||
Entity Registrant Name | AXOGEN, INC. | ||
Entity Incorporation, State or Country Code | MN | ||
Entity Tax Identification Number | 41-1301878 | ||
Entity Address, Address Line One | 13631 Progress Blvd., Suite 400 | ||
Entity Address, City or Town | Alachua | ||
Entity Address, State or Province | FL | ||
Entity Address, Postal Zip Code | 32615 | ||
City Area Code | 386 | ||
Local Phone Number | 462-6800 | ||
Entity Current Reporting Status | Yes | ||
Entity Interactive Data Current | Yes | ||
Entity Filer Category | Large Accelerated Filer | ||
Entity Small Business | false | ||
Entity Emerging Growth Company | false | ||
Entity Shell Company | false | ||
Entity Common Stock, Shares Outstanding | 39,731,078 | ||
Entity Central Index Key | 0000805928 | ||
Current Fiscal Year End Date | --12-31 | ||
Document Fiscal Year Focus | 2019 | ||
Document Fiscal Period Focus | FY | ||
Amendment Flag | false | ||
Entity Voluntary Filers | No | ||
Entity Well-known Seasoned Issuer | Yes | ||
Entity Public Float | $ 539,757,783 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Current assets: | ||
Cash and cash equivalents | $ 35,724 | $ 24,294 |
Restricted cash | 6,000 | 6,000 |
Investments | 60,786 | 92,311 |
Accounts receivable, net of allowance for doubtful accounts of $1,092 and $1,117, respectively | 16,944 | 15,321 |
Inventory | 13,861 | 11,982 |
Prepaid expenses and other | 1,706 | 1,045 |
Total current assets | 135,021 | 150,953 |
Property and equipment, net | 14,887 | 8,039 |
Operating lease right-of-use assets | 3,133 | |
Finance lease right-of-use assets | 87 | |
Intangible assets | 1,515 | 1,181 |
Total assets | 154,643 | 160,173 |
Current liabilities: | ||
Accounts payable and accrued expenses | 19,130 | 12,998 |
Current maturities of long term obligations | 1,736 | 28 |
Contract liabilities, current | 14 | 18 |
Total current liabilities | 20,880 | 13,044 |
Long Term Obligations, net of current maturities | 1,595 | 35 |
Other long-term liabilities | 70 | |
Contract liabilities | 15 | 42 |
Total liabilities | 22,490 | 13,191 |
Commitments and contingencies - see Note 14 | ||
Shareholders' equity: | ||
Common stock, $0.01 par value per share; 100,000,000 shares authorized; 39,589,755 and 38,900,875 shares issued and outstanding | 396 | 389 |
Additional paid-in capital | 311,618 | 297,319 |
Accumulated deficit | (179,861) | (150,726) |
Total shareholders' equity | 132,153 | 146,982 |
Total liabilities and shareholders' equity | $ 154,643 | $ 160,173 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Consolidated Balance Sheets | ||
Accounts receivable, allowance for doubtful accounts | $ 1,092 | $ 1,117 |
Common stock, par value | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 100,000,000 | 100,000,000 |
Common stock, shares issued | 39,589,755 | 38,900,875 |
Common stock, shares outstanding | 39,589,755 | 38,900,875 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Consolidated Statements of Operations | |||
Revenues | $ 106,712 | $ 83,937 | $ 60,426 |
Cost of goods sold | 17,349 | 12,923 | 9,311 |
Gross profit | 89,363 | 71,014 | 51,115 |
Costs and expenses: | |||
Sales and marketing | 71,950 | 56,617 | 37,636 |
Research and development | 17,514 | 11,773 | 6,699 |
General and administrative | 31,305 | 23,124 | 14,731 |
Total costs and expenses | 120,769 | 91,514 | 59,066 |
Loss from operations | (31,406) | (20,500) | (7,951) |
Other income (expense): | |||
Investment income | 2,364 | 1,525 | |
Interest expense | (40) | (1,127) | (2,217) |
Interest expense - deferred financing costs | (81) | (246) | |
Loss on extinguishment of debt | (2,186) | ||
Other expense | (53) | (28) | (31) |
Total other income (expense), net | 2,271 | (1,897) | (2,494) |
Net Loss | $ (29,135) | $ (22,397) | $ (10,445) |
Weighted average common shares outstanding - basic and diluted | 39,235 | 37,127 | 33,323 |
Loss per common share - basic and diluted | $ (0.74) | $ (0.60) | $ (0.31) |
CONSOLIDATED STATEMENTS OF CHAN
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY - USD ($) $ in Thousands | Common Stock [Member] | Additional Paid-in Capital [Member] | Accumulated Deficit [Member] | Total |
Beginning Balance at Dec. 31, 2016 | $ 330 | $ 132,475 | $ (117,884) | $ 14,921 |
Beginning Balance (in shares) at Dec. 31, 2016 | 33,009,000 | |||
Increase (Decrease) in Stockholders' Equity | ||||
Net Loss | (10,445) | (10,445) | ||
Issuance of common stock | $ 8 | 15,655 | 15,663 | |
Issuance of common shares (in shares) | 805,000 | |||
Stock-based compensation | 3,609 | 3,609 | ||
Exercise of stock options | $ 5 | 1,429 | 1,434 | |
Exercise of stock options (in shares) | 536,000 | |||
Ending Balance at Dec. 31, 2017 | $ 343 | 153,168 | (128,329) | 25,182 |
Ending Balance (in shares) at Dec. 31, 2017 | 34,350,000 | |||
Increase (Decrease) in Stockholders' Equity | ||||
Net Loss | (22,397) | (22,397) | ||
Issuance of common stock | $ 35 | 132,672 | 132,707 | |
Issuance of common shares (in shares) | 3,450,000 | |||
Stock-based compensation | 7,606 | 7,606 | ||
Exercise of stock options | $ 11 | 3,873 | 3,884 | |
Exercise of stock options (in shares) | 1,101,000 | |||
Ending Balance at Dec. 31, 2018 | $ 389 | 297,319 | (150,726) | $ 146,982 |
Ending Balance (in shares) at Dec. 31, 2018 | 38,901,000 | 38,900,875 | ||
Increase (Decrease) in Stockholders' Equity | ||||
Net Loss | (29,135) | $ (29,135) | ||
Stock-based compensation | 10,304 | 10,304 | ||
Exercise of stock options and employee stock purchase plan | $ 7 | 3,995 | 4,002 | |
Exercise of stock options and employee stock purchase plan (in shares) | 689,000 | |||
Ending Balance at Dec. 31, 2019 | $ 396 | $ 311,618 | $ (179,861) | $ 132,153 |
Ending Balance (in shares) at Dec. 31, 2019 | 39,590,000 | 39,589,755 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Cash flows from operating activities: | |||
Net loss | $ (29,135) | $ (22,397) | $ (10,445) |
Adjustments to reconcile net loss to net cash used in operating activities: | |||
Depreciation | 933 | 774 | 488 |
Amortization of right-of-use assets | 1,821 | ||
Amortization of intangible assets | 123 | 77 | 79 |
Impairment loss on intangible assets | 104 | ||
Amortization of deferred financing costs | 81 | 246 | |
Loss on disposal of equipment | 1 | ||
Loss on extinguishment of debt | 2,186 | ||
Provision for bad debt | 514 | 852 | 223 |
Provision for inventory writedown | 1,887 | 1,343 | 1,438 |
Changes in investment gains and losses | (972) | (721) | |
Share-based compensation | 10,304 | 7,606 | 3,609 |
Change in operating assets and liabilities: | |||
Accounts receivable | (2,136) | (5,108) | (3,236) |
Inventory | (3,767) | (6,009) | (3,295) |
Prepaid expenses and other | (661) | (192) | (342) |
Accounts payable and accrued expenses | 2,920 | 3,711 | 1,927 |
Operating lease obligations | (1,773) | ||
Cash paid for interest portion of finance leases | (4) | ||
Contract and other liabilities | (30) | (66) | 70 |
Net cash used in operating activities | (19,872) | (17,862) | (9,238) |
Cash flows from investing activities: | |||
Purchase of property and equipment | (4,664) | (6,282) | (1,105) |
Purchase of investments | (121,074) | (114,736) | |
Proceeds from sale of investments | 153,571 | 23,146 | |
Cash payments for intangible assets | (562) | (321) | (187) |
Net cash provided by / (used for) investing activities | 27,271 | (98,193) | (1,292) |
Cash flows from financing activities: | |||
Proceeds from issuance of common stock | 132,964 | 15,891 | |
Cash paid for equity offering | (257) | (228) | |
Borrowing on revolving loan | 26,253 | 57,599 | |
Payments on revolving loan and prepayment penalties | (30,489) | (57,624) | |
Repayments of long-term debt and prepayment penalties | (22,513) | (21) | |
Cash paid for debt portion of finance leases | 29 | ||
Proceeds from exercise of stock options | 4,002 | 3,884 | 1,434 |
Net cash provided by financing activities | 4,031 | 109,842 | 17,022 |
Net increase in cash, cash equivalents, and restricted cash | 11,430 | (6,213) | 6,492 |
Cash, cash equivalents, and restricted cash, beginning of period | 30,294 | 36,507 | 30,015 |
Cash, cash equivalents and restricted cash, end of period | 41,724 | 30,294 | 36,507 |
Supplemental disclosures of cash flow activity: | |||
Cash paid for interest | 34 | 1,325 | 2,198 |
Supplemental disclosure of non-cash investing and financing activities: | |||
Acquisition of fixed assets in accounts payable and accrued expenses | 3,212 | $ 335 | 55 |
Capital lease additions | $ 62 | ||
Right-of-use asset and operating lease liability | $ 26 |
Basis of Presentation
Basis of Presentation | 12 Months Ended |
Dec. 31, 2019 | |
Basis of Presentation | |
Basis of Presentation | 1. Basis of Presentation The accompanying consolidated financial statements include the accounts of Axogen, Inc. (the “Company” or “Axogen”) and its wholly owned subsidiaries, Axogen Corporation (“AC”), Axogen Processing Corporation (“APC”) and Axogen Europe GmbH, as of December 31, 2019 and December 31, 2018 and for the three years ended December 31, 2019. The Company’s consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America. All intercompany accounts and transactions have been eliminated in consolidation. |
Organization and Business
Organization and Business | 12 Months Ended |
Dec. 31, 2019 | |
Organization and Business | |
Organization and Business | 2. Organization and Business Axogen is a global provider of innovative surgical solutions for physical damage or transection to peripheral nerves. Axogen is focused specifically on the science, development and commercialization of technologies for peripheral nerve regeneration and repair. Axogen’s products are designed to restore nerve function and are used to treat patients with physical damage or transection to peripheral nerves by providing innovative, clinically proven and economically effective repair solutions for surgeons and health care providers. Peripheral nerves provide the pathways for both motor and sensory signals throughout the body. Physical damage to a peripheral nerve or the inability to properly reconnect peripheral nerves can result in the loss of muscle or organ function, the loss of sensory feeling, or the initiation of pain. Axogen’s portfolio of products includes Avance Nerve Graft, an off-the-shelf processed human nerve allograft for bridging severed peripheral nerves without the comorbidities associated with a second surgical site, Axoguard Nerve Connector, a porcine submucosa extracellular matrix (“ECM”) coaptation aid for tensionless repair of severed peripheral nerves, Axoguard Nerve Protector, a porcine submucosa ECM product used to wrap and protect injured peripheral nerves and reinforce the nerve reconstruction while preventing soft tissue attachments, Axoguard ® Along with these core surgical products, Axogen also offers the Axotouch Two-Point Discriminator a measurement tool for use by healthcare professionals detect changes in sensation. The Company’s portfolio of products is available in the United States, Canada, Germany, South Korea and other European and international countries. Avance Nerve Graft and Avive Soft Tissue Membrane are processed in the United States by Axogen at its processing facility in Dayton, Ohio. is manufactured by Cook Biotech in the United States for sale by Axogen and Axoguard Nerve Connector and Axoguard Nerve Protector are manufactured in the United States by Cook Biotech and are distributed worldwide exclusively by Axogen. The Axotouch Two Point Discriminator is contract manufactured by Viron Technologies, LLC (formerly Cybernetics Research Laboratories) (“Viron”) Tucson, Arizona. Viron supplies the Axotouch unpackaged and they are packaged at Axogen’s distribution facility in Burleson, Texas. Axogen maintains its corporate offices in Alachua, Florida and is the parent company of its wholly owned operating subsidiaries, AC, APC and Axogen Europe GmbH. |
Summary of Significant Accounti
Summary of Significant Accounting Policies | 12 Months Ended |
Dec. 31, 2019 | |
Summary of Significant Accounting Policies | |
Summary of Significant Accounting Policies | 3. Summary of Significant Accounting Policies Cash and Cash Equivalents and Concentration The Company considers highly liquid investments with maturities of three months or less at the date of acquisition as cash equivalents in the accompanying consolidated financial statements. The Company has not experienced any losses related to these balances; however, as of December 31, 2019, of the cash and cash equivalents balance was in excess of FDIC limits. As of December 31, 2019 and 2018, the Company had restricted cash balances of as collateral for an irrevocable standby letter of credit. The following table provides a reconciliation of cash, cash equivalents and restricted cash reported within the consolidated balance sheet that sum to the total of the same amounts shown in the statement of cash flows: December 31, December 31, 2019 2018 Cash and cash equivalents $ 35,724 $ 24,294 Restricted cash 6,000 6,000 Total cash, cash equivalents, and restricted cash shown in the statement of cash flows $ 41,724 $ 30,294 Investments The Company invests primarily in U.S. Government securities, corporate bonds, commercial paper and asset-backed securities and classifies all investments as available-for-sale. Investments are recorded at fair value. The Company has elected the fair value option (FVO) for all of its available-for-sale investments. The FVO election results in all changes in unrealized gains and losses being included in investment income in the Consolidated Statements of Operations. Revenue Recognition On January 1, 2018, the Company adopted Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) No. 606, “Revenue from Contracts with Customers”, utilizing the modified retrospective method applied to contracts that were not completed. The adoption of the standard did not have a material impact on the timing and amounts of the Company’s revenue, processes or internal controls. Upon adoption, the Company did not have any material remaining performance obligations, significant judgements, or material costs to obtain or fulfill contracts with its customers. The Company enters into contracts to sell and distribute products and services to hospitals and surgical facilities for use in caring for patients with peripheral nerve damage or transection. Revenue is recognized when the Company has met its performance obligations pursuant to its contracts with its customers in an amount that the Company expects to be entitled to in exchange for the transfer of control of the products and services to the Company’s customers. In the case of products or services sold to a customer under a distribution or purchase agreement, the customers are granted exclusive distribution rights to sell the implants internationally in a territory defined by the contract. These international distributor agreements contain provisions that allow the Company to terminate the distribution agreement with the distributor, and upon termination, the right to repurchase inventory from the distributor at the distributor’s cost. The Company has determined that its contractual rights to repurchase distributor inventory upon termination of the distributor agreement are not substantive and do not impact the timing of when control transfers; and, therefore, the Company has determined it is appropriate to recognize revenue when: i) the product is shipped via common carrier; or ii) the product is delivered to the customer or distributor, depending on the terms of the agreement. Determining the timing of revenue recognition for such contracts is subject to significant judgment, because an evaluation must be made regarding the distributor’s ability to direct the use of, and obtain substantially all of the remaining benefits from, the implants received from the Company. Changes in these assessments could have a significant impact on the timing of revenue recognition from sales to distributors. A portion of the Company's product revenue is generated from consigned inventory maintained at hospitals and independent sales agencies, and also from inventory physically held by field sales representatives. For these types of products sales, the Company retains control until the product has been used or implanted, at which time revenue is recognized. The Company elected to account for shipping and handling activities as a fulfillment cost rather than a separate performance obligation. Amounts billed to customers for shipping and handling are included as part of the transaction price and recognized as revenue when control of the underlying products is transferred to the customer. The related shipping and freight charges incurred by the Company are included in cost of sales. The Company operates in a single reportable segment of peripheral nerve repair, offers similar products to its customers, and enters into consistently structured arrangements with similar types of customers. As such, the Company does not disaggregate revenue from contracts with customers as the nature, amount, timing and uncertainty of revenue and cash flows does not materially differ within and among the contracts with customers. The contract with the customer states the final terms of the sale, including the description, quantity, and price of each implant distributed. The payment terms and conditions in the Company’s contracts vary; however, as a common business practice, payment terms are typically due in full within 30 to 60 days of delivery. Since the customer agrees to a stated price in the contract that does not vary over the contract term, the contracts do not contain any material types of variable consideration, and contractual rights of return are not material. The Company has several contracts with distributors in international markets which include consideration paid to the customer in exchange for distinct marketing and other services. The Company records such consideration paid to the customer as a reduction to revenue from the contracts with those distributor customers. In connection with the Acroval Neurosensory and Motor Testing System, the Company sold extended warranty and service packages to some of its customers who purchase this evaluation and measurement tool, and the prepayment of these extended warranties represent contract liabilities until the performance obligations are satisfied ratably over the term of the contract. The sale of the aforementioned extended warranty represents the only performance obligation the Company satisfies over time and creates the contract liability disclosed below. The opening and closing balances of the Company’s contract receivables and liabilities are as follows: Contract Balances Net Receivables Contract Liabilities, Current Contract Liabilities, Long-Term Opening, January 1, 2018 $ 11,065 32 69 Closing, December 31, 2018 15,321 18 42 Increase (decrease) 4,256 (14) (27) Opening, January 1, 2019 $ 15,321 18 42 Closing, December 31, 2019 16,944 14 15 Increase (decrease) 1,623 (4) (27) Allowance for Doubtful Accounts Receivable and Concentration of Credit Risk The Company evaluates the collectability of accounts receivable to determine the appropriate allowance for doubtful accounts. In determining the amount of the allowance, the Company considers aging of account balances, historical credit losses, customer-specific information and other relevant factors. An increase to the allowance for doubtful accounts results in a corresponding increase in general and administrative expense. The Company reviews accounts receivable and adjusts the allowance based on current circumstances and charges off uncollectible receivables against the allowance when all attempts to collect the receivable have failed. The Company’s history of write-offs has not been significant. The allowance for doubtful accounts balance was approximately Concentrations of credit risk with respect to accounts receivable are limited because a large number of geographically diverse customers make up the Company’s customer base, thus spreading the trade credit risk. The Company also controls credit risk through credit approvals and monitoring procedures. Inventories Inventories are comprised of unprocessed tissue, work-in-process, Avance Nerve Graft, Axoguard Nerve Connector, Axoguard Nerve Protector, Axoguard Nerve Cap, Avive Soft Tissue Membrane, Acroval Neurosensory and Motor Testing System, Axotouch Two-Point Discriminator and supplies and are valued at the lower of cost (first-in, first-out) or net realizable value. The Company monitors the shelf life of its products and historical expiration and spoilage trends, and writes-off inventory based on the estimated amount of inventory that will not be distributed before expiration or spoilage. To estimate the amount of inventory that will expire prior to being sold, the Company reviews inventory quantities on hand, historical and projected sales, and historical expiration trends. The Company’s calculation of the amount of inventory that will expire prior to sale has two components: 1) a demand or consumption based component that compares projected sales to inventory quantities on hand; and 2) an expiring inventory component that assesses the risk related to inventory that is near expiration by analyzing historical expiration trends to project inventory that will expire prior to being sold. The Company’s model assumes that inventory will be sold on a first-in-first-out basis. Due to the nature of the inventory (surgical implants with expiration dates) and the fact that a significant portion of the Company’s inventory is at medical facility consignment locations, estimating the amount of inventory that will expire and the amount of inventory that should be written-down involves significant judgments and estimates. Leases The Company adopted Accounting Standards Update (“ASU”) No. 2016-02—Leases (Topic 842) (“ASU 2016.02”), as of January 1, 2019, (the “Application Date”) using the modified retrospective approach. The Company will continue to report financial information for fiscal years prior to 2019 under the previous lease accounting standards. The modified retrospective approach provides a method for recording on the balance sheet as of January 1, 2019, leases that have commenced on or before the Application Date. The Company elected the package of practical expedients permitted under the transition guidance, which allowed us to not reassess whether any existing contracts contain a lease, to not reassess historical lease classification as operating or finance leases, and to not reassess initial direct costs. The Company also elected the practical expedient allowing us to not separate the lease and non-lease components for all classes of underlying assets, apart from equipment. The Company did not elect the practical expedient to use hindsight to determine the lease term for leases at January 1, 2019. The Company made an accounting policy election to not recognize right-to-use assets and lease liabilities that arise from short term leases, which are defined as leases with a lease term of 12 months or less at the lease commencement date. Adoption of the new standard resulted in the recording of right-to-use assets and lease liabilities of approximately $3,786 and $3,823, respectively, and the derecognition of capital lease assets, capital lease liabilities, and operating lease deferred rent of $96, $63, and $70, respectively, as of January 1, 2019 with zero cumulative-effect adjustment to retained earnings. The new standard did not materially impact our consolidated net earnings. Net Loss Per Share Basic and diluted net loss per share is computed in accordance with FASB ASC 260, “Earnings Per Share” (ASC 260), by dividing the net loss by the weighted average number of common shares outstanding during the period. Since the Company has experienced net losses for all periods presented, options and awards of 1,556,818 , Research and Development Costs Research and development costs are expensed as incurred and were $17,514, $11,773 and $6,699 for the years ended December 31, 2019, 2018 and 2017, respectively. Stock-Based Compensation The Company measures all employee stock-based compensation awards using the fair value, including stock options, restricted stock, performance stock and stock purchases related to an employee stock purchase plan. The share-based compensation recognized under ASC 718 for years ended December 31, 2019, 2018 and 2017 was ASC 718 requires companies to estimate the fair value of share-based payment awards on the date of grant using an option-pricing model. The value of the portion of the award that is ultimately expected to vest is recognized as expense over the requisite service periods in the Company’s consolidated statements of operations. The expense has been reduced for forfeitures as they occur. The Company estimates the fair value of time-based options on the date of grant using the Multi-Point Black-Scholes option-pricing model (Black-Scholes model). The Company’s determination of fair value is affected by the Company’s stock price, as well as assumptions regarding several subjective variables. These variables include, but are not limited to, the Company’s expected stock price volatility over the term of the awards. The Company estimates the fair value of restricted stock based upon the grant date closing market price of the Company’s common stock. The Company also has an employee stock purchase plan (ESPP) which is available to all eligible employees as defined by the plan document. Under the ESPP, shares of the Company’s common stock may be purchased at a discount. The Company estimates the number of shares to be purchased under the ESPP at the beginning of each purchase period based upon the fair value of the stock at the beginning of the purchase period using the Black-Scholes model and records estimated compensation expense during the period. Expense is adjusted at the time of stock purchase. With respect to performance stock units (“PSUs”), the number of shares that vest and are issued to the recipient is based upon the Company’s performance as measured against specified targets over the measurement period. The fair value of the PSUs is based on the Company’s closing stock price on the grant date and its estimate of achieving such performance targets. For further discussion and disclosures, see Note 11 – Equity Compensation Plans. Use of Estimates The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Management believes the critical accounting policies regarding revenue recognition, allowance for uncollectible accounts receivable, investments, inventories and share-based employee compensation affect our more significant judgments and estimates used in the preparation of the Company’s consolidated financial statements. Actual results could differ materially from those estimates. Recent Accounting Pronouncements In February 2016, the FASB issued ASU 2016-02. This update will increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. This update is effective for annual and interim reporting periods beginning after December 15, 2018, including interim periods within those fiscal years. Early adoption is permitted. In July 2018, the FASB issued ASU No. 2018-11, Targeted Improvements to ASC 842, Leases (“ASU 2018-11”). ASU 2018-11 provided entities with an alternative modified transition method to elect not to recast the comparative periods presented when adopting ASC 842. The impact of the adoption is disclosed in the Leases section of Note 3, Summary of Significant Accounting Policies. In August 2018, the FASB issued ASU No. 2018-15, Guidance on Cloud Computing Arrangements (“ASU 2018-15”). ASU 2018-15 provides guidance on implementation costs incurred in a cloud computing arrangement (CCA) that is a service contract and aligns the accounting for such costs with the guidance on capitalizing costs associated with developing or obtaining internal-use software. Specifically, the ASU amends ASC 350 to include in its scope implementation costs of a CCA that is a service contract and clarifies that a customer should apply ASC 350-40 to determine which implementation costs should be capitalized. This update is effective for annual and interim reporting periods beginning after December 15, 2019, including interim periods within those fiscal years. Early adoption is permitted. The Company is currently evaluating the impact this standard will have on the Company’s consolidated financial statements. In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments – Credit Losses (Topic326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”). The guidance is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. Early adoption is permitted. We will adopt ASU 2016-13 as of January 1, 2020. We are currently evaluating the impact the standard may have on our consolidated financial statements. In May 2019, the FASB issued ASU No. 2019-04, Codification Improvements to Topic 326, Financial Instruments – Credit Losses, Topic 815, Derivatives and Hedging and Topic 825, Financial Instruments (“ASU 2019-04”). ASU 2019-04 clarifies certain aspects of accounting for credit losses, hedging activities, and financial instruments. This update is effective fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. Early adoption is permitted. The Company is currently assessing the impact the guidance will have on its consolidated financial statements. In May 2019, the FASB issued ASU No. 2019-05, Targeted Transition Relief (“ASU 2019-05”). ASU 2019-05 provides transition relief for entities adopting ASU 2016-13, Measurement of Credit Losses on Financial Instruments. The amendment allows entities to irrevocably elect, upon adoption of ASU 2016-13, the fair value option on financial instruments that (1) were previously recorded at amortized costs and (2) are within the scope of ASC 326-20, Financial Instruments – Credit Losses: Measured at Amortized Costs, if the instruments are eligible for the fair value option under ASC 825-10, Financial Instruments: Overall. This update is effective fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. Early adoption is permitted. The Company is currently assessing the impact the guidance will have on its consolidated financial statements. In November 2019, the FASB issued ASU No. 2019-11, Credit Losses (Topic 326), Codification Improvements to Topic 326, Financial Instruments – Credit Losses. This amendment amends certain aspects of the new credit loss standard, ASU 2016-13 (ASC 326). As the Company has not adopted ASU 2016-13, the effective date of this amendment is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. Early adoption is permitted. We will adopt ASU 2016-13 as of January 1, 2020. The Company is currently assessing the impact the guidance will have on its consolidated financial statements. In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740) (“ASU 2019-12”), Simplifying the Accounting for Income Taxes. This amendment simplifies the by clarifying and amending existing guidance. This update is effective for annual and interim reporting periods beginning after December 15, 2020. Early adoption is permitted but requires simultaneous adoption of all provisions of ASU 2019-12. The Company’s management has reviewed and considered all other recent accounting pronouncements and believe there are none that could potentially have a material impact on the Company’s consolidated financial condition, results of operations, or disclosures. |
Inventories
Inventories | 12 Months Ended |
Dec. 31, 2019 | |
Inventories | |
Inventories | 4. Inventories Inventories are comprised of unprocessed tissue, work-in-process, Avance Nerve Graft, Axoguard Nerve Connector, Axoguard Nerve Protector, Avive Soft Tissue Membrane, Axoguard Nerve Cap, Acroval Neurosensory and Motor Testing System, Axotouch Two-Point Discriminator and supplies and are valued at the lower of cost (first-in, first-out) or net realizable value and consist of the following: December 31, December 31, 2019 2018 Finished goods $ 10,403 $ 9,194 Work in process 730 454 Raw materials 2,728 2,334 Inventories $ 13,861 $ 11,982 For the years ended December 31, 2019, 2018 and 2017, the Company had recorded a provision for inventory write-downs of $1,887, $1,343 and $1,438, respectively, primarily relating to product expiration. |
Fair Value of Investments
Fair Value of Investments | 12 Months Ended |
Dec. 31, 2019 | |
Fair Value of Investments | |
Fair Value of Investments | 5. Fair Value of Investments The Company has elected the FVO for all investments in debt securities. Fair value is defined as the price that would be received upon the sale of an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement date. Valuation techniques used to measure fair value maximize the use of observable inputs and minimize the use of unobservable inputs. The fair value hierarchy defines a three-level valuation hierarchy for classification and disclosure of fair value measurements as follows: Level 1 – Quoted prices in active markets for identical assets or liabilities. Level 2 – Inputs other than Level 1 that are observable, either directly or indirectly, such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; 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 – Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. The Company classifies cash and investments in U.S. government securities as Level 1 within the fair value hierarchy. Accounts receivable, short-term other assets, accounts payable and accrued liabilities are also classified as Level 1. The carrying amounts of these assets and liabilities approximate their fair values due to their relatively short-term nature. Investments in corporate bonds and commercial paper are classified as Level 2 within the fair value hierarchy. The fair value of long-term debt is estimated by calculating the net present value of future debt payments at current market interest rates and is classified as Level 2. The following table represents the Company’s fair value hierarchy for its financial assets measured at fair value on a recurring basis as of December 31, 2019: (Level 1) (Level 2) (Level 3) Total December 31, 2019 Assets: Money market funds $ 26,812 $ — $ — $ 26,812 U.S. government securities 4,544 — — 4,544 Corporate bonds — 17,754 — 17,754 Commercial paper — 24,679 — 24,679 Asset-backed securities — 13,808 — 13,808 Total assets $ 31,356 $ 56,241 $ — $ 87,597 (Level 1) (Level 2) (Level 3) Total December 31, 2018 Assets: Money market funds $ 12,947 $ — $ — $ 12,947 U.S. government securities 15,923 — — 15,923 Corporate bonds — 31,495 — 31,495 Commercial paper — 27,869 — 27,869 Asset-backed securities — 17,025 — 17,025 Total assets $ 28,870 $ 76,389 $ — $ 105,259 There were no changes in the levels or methodology of the measurement of financial assets or liabilities during the year ended December 31, 2019 and December 31, 2018. The maturity date of all of the Company’s investments is less than one year. |
Property and Equipment
Property and Equipment | 12 Months Ended |
Dec. 31, 2019 | |
Property and Equipment | |
Property and Equipment | 6. Property and Equipment Property and equipment consist of the following: December 31, December 31, 2019 2018 Furniture and equipment $ 2,059 $ 1,763 Leasehold improvements 2,203 1,151 Processing equipment 2,772 2,349 Land 731 731 Projects in process 10,886 4,906 Property and equipment, at cost 18,651 10,900 Less: accumulated depreciation and amortization (3,764) (2,861) Property and equipment, net $ 14,887 $ 8,039 Depreciation expense for the years ended December 31, 2019, 2018 and 2017 was $933, $774 and $488, respectively. |
Intangible Assets
Intangible Assets | 12 Months Ended |
Dec. 31, 2019 | |
Intangible Assets | |
Intangible Assets | 7. Intangible Assets The Company’s intangible assets consist of the following: December 31, December 31, 2019 2018 License agreements $ 1,067 $ 1,034 Less: accumulated amortization (647) (553) License agreements, net $ 420 $ 481 Trademarks 334 255 Patents 845 500 Less: accumulated amortization (84) (55) Patents, net $ 761 $ 445 Intangible assets, net $ 1,515 $ 1,181 License agreements are being amortized over periods ranging from seventeen to twenty years . Patents are being amortized over periods up to twenty years . Amortization expense for 2019, 2018 and 2017 was approximately $123 , $77 and $79 , respectively. In January 2019, the Company rebranded its logo and product name designs, as a result the Company recorded a $104 charge related to the previous logo and product design names. This charge is recorded in the “General and Administrative” in the Statement of Operations. As of December 31, 2019, future amortization of patents and license agreements are as follows: Year Ending December 31, 2020 137 2021 137 2022 138 2023 119 2024 47 Thereafter 603 TOTAL 1,181 License Agreements The Company has entered into multiple license agreements with the University of Florida Research Foundation and the University of Texas at Austin (together, the “License Agreements”). Under the terms of the License Agreements, the Company acquired exclusive worldwide licenses for underlying technology used in repairing and regenerating nerves. The licensed technologies include the rights to issued patents and patents pending in the United States and international markets. The effective term of the License Agreements extends through the term of the related patents and the agreements may be terminated by the Company with 60 days prior written notice. Additionally, in the event of default, licensors may terminate an agreement if the Company fails to cure a breach after written notice. The License Agreements contain the key terms listed below: ● Axogen pays royalty fees ranging from 1% to 3% under the License Agreements based on net sales of licensed products. One of the agreements also contains a minimum royalty of $13 per quarter, which may include a credit in future quarters in the same calendar year for the amount the minimum royalty exceeds the royalty fees. Also, when Axogen pays royalties to more than one licensor for sales of the same product, a royalty stack cap applies, capping total royalties at 3.75% ; ● If Axogen sublicenses technologies covered by the License Agreements to third parties, Axogen would pay a percentage of sublicense fees received from the third party to the licensor. Currently, Axogen does not sublicense any technologies covered by License Agreements. The Company is not considered a sub- licensee under the License Agreements and does not owe any sub-licensee fees for its own use of the technologies; ● Axogen reimburses the licensors for certain legal expenses incurred for patent prosecution and defense of the technologies covered by the License Agreements; and ● Currently, under the University of Texas at Austin’s agreement, Axogen would owe a $15 milestone fee upon receiving a Phase II Small Business Innovation Research or Phase II Small Business Technology Transfer grant involving the licensed technology. The Company has not received either grant and does not owe such a milestone fee. A milestone fee to the University of Florida Research Foundation of $2 is due if Axogen receives FDA approval of its Avance Nerve Graft, a milestone fee of $25 is due upon the first commercial use of certain licensed technology to provide services to manufacture products for third parties and a milestone fee of $10 is due upon the first use to manufacture products that utilize certain technology that is not currently incorporated into Axogen products. Royalty fees were $2,119, $1,661 and $1,195 for the years ended December 31, 2019, 2018 and 2017, respectively, and are included in sales and marketing expense on the accompanying consolidated statements of operations. |
Accounts Payable and Accrued Ex
Accounts Payable and Accrued Expenses | 12 Months Ended |
Dec. 31, 2019 | |
Accounts Payable and Accrued Expenses | |
Accounts Payable and Accrued Expenses | 8. Accounts Payable and Accrued Expenses Accounts payable and accrued expenses consists of the following: December 31, December 31, 2019 2018 Accounts payable $ 8,262 $ 4,517 Accrued expenses 3,237 2,004 Accrued compensation 7,631 6,477 Accounts Payable and Accrued Expenses $ 19,130 $ 12,998 |
Term Loan Agreements and Long-T
Term Loan Agreements and Long-Term Debt | 12 Months Ended |
Dec. 31, 2019 | |
Term Loan Agreements and Long-Term Debt | |
Term Loan Agreements and Long-Term Debt | 9. Term Loan Agreements and Long-Term Debt Term Loan Agreement and Long-Term Debt consist of the following: December 31, December 31, 2019 2018 Equipment Lease Agreement with Cisco Capital for a total lease amount of $59 which has a 36 month term and requires no lease payments for the first three months of the lease and 33 equal payments of principal and interest until the end of the term. Interest on the lease is payable monthly at 3.5% per annum. — 15 Equipment Lease Agreement with Raymond Leasing Corporation for a total lease amount of $30 which has a 48 month term with equal payments for principal and interest until the end of the term. Interest on the lease is payable monthly at 6.7% per annum. — 22 Equipment Lease Agreement with B&B Office Systems for a total lease amount of $32 which has a 60 month term with equal payments for principal and interest until the end of the term. Interest on the lease is payable monthly at 8.5% per annum. — 26 Total — 63 Less current revolving loan — — Less current maturities of long-term debt — (28) Long-term portion $ — $ 35 Credit Facilities MidCap Term Loan Agreement On October 25, 2016, the Company entered into Term Loan and a Revolving Loan with MidCap Financial Trust (“MidCap”) maturing on May 1, 2021. The Company had the option at any time to prepay the Term Loan in whole or in part, subject to payment of a prepayment fee and an exit fee. On May 22, 2018, the Company exercised its option and paid . In addition, on May 22, 2018, the Company charged to interest expense the unamortized deferred financing costs associated with the Term Loan of The Company also had the option to terminate or permanently reduce the Revolving Loan prior to the maturity date subject to its payment of a deferred origination fee. On May 22, 2018, the Company exercised its option to terminate and paid $2,958 to prepay the Revolving Loan in full, which amount included fees of $236. |
Public Offering of Common Stock
Public Offering of Common Stock | 12 Months Ended |
Dec. 31, 2019 | |
Public Offering of Common Stock | |
Public Offering of Common Stock | 10. Public Offering of Common Stock Axogen, Inc. Classes of Stock Axogen, Inc.’s authorized capital stock consists of 100,000,000 shares of common stock, par value $0.01 per share. The authorized capital stock is divisible into the classes and series, has the designation, voting rights, and other rights and preferences and is subject to the restrictions that the Axogen Board of Directors may establish from time to time. Unless otherwise designated by the Axogen Board of Directors, all shares are common stock. Axogen has not designated any shares other than common stock. Public Offerings On May 8, 2018, the Company entered into an underwriting agreement with Jefferies LLC and Leerink Partners LLC, as representatives of the several underwriters named therein (collectively, the “2018 Offering Underwriters”), pursuant to which the Company agreed to issue and sell 3,000,000 shares of the Company’s common stock in an underwritten registered public offering at an offering price of $41.00 per share (the “2018 Offering”). The Company granted the 2018 Offering Underwriters a 30 -day option to purchase up to an aggregate of 450,000 additional shares of common stock, at the public offering price, less the underwriting discounts and commissions, which was exercised in full on May 9, 2018. The 2018 Offering closed on May 11, 2018, and the Company received proceeds of approximately $132,707 from the sale of the shares (including the sale of 450,000 additional shares issued upon exercise of the 2018 Offering Underwriters’ overallotment option), after deducting the underwriting discounts and commissions and estimated offering expenses. |
Equity Compensation Plans
Equity Compensation Plans | 12 Months Ended |
Dec. 31, 2019 | |
Equity Compensation Plans | |
Equity Compensation Plans | 11. Equity Compensation Plans The Company maintains two share-based incentive plans: the Axogen 2017 Stock Incentive Plan, as amended (“2017 Plan”), and the Axogen 2017 Employee Stock Purchase Plan (“2017 ESPP”). Stock Incentive Plan At the 2019 Annual Meeting of Shareholders held on August 14, 2019, the shareholders approved the Axogen 2019 Long-Term Incentive Plan (the “New Axogen Plan”), which allows for issuance of incentive stock options, non-qualified stock options, performance stock units (“PSUs”) and restricted stock units (“RSUs”) to employees, directors and consultants at exercise prices not less than the fair market value at the date of grant. The number of shares of common stock authorized for issuance under the New Axogen Plan is (A) unallocated shares of common stock available for issuance as of August 14, 2019 pursuant to the Company’s 2010 Stock Incentive Plan, as amended and restated (the “Prior Axogen Plan”), that were not then subject to outstanding awards; plus (B) shares under the Prior Axogen Plan and the New Axogen Plan that are cancelled, forfeited, expired, unearned or settled in cash, in any such case that does not result in the issuance of common stock. Following shareholder approval of the New Axogen Plan, no future awards will be made under the Prior Axogen Plan. As of December 31, 2019, The options granted to employees prior to July 1, 2017 typically vest 25% one year after the grant date and 12.5% every six months thereafter for the remaining three-year period until fully vested after four years . The options granted to employees after July 1, 2017 typically vest 50% two years after the grant date and 12.5% every six months thereafter for the remaining two-year period until fully vested after four years . The options granted to directors and certain options granted from time to time to certain executive officers have vested ratably over three years , 25% per quarter over one year or had no vesting period. Options typically have terms ranging from seven to ten years . The Company recognized stock-based compensation expense, which consisted of compensation expense related to employee stock options, PSUs, RSUs and the 2017 ESPP based on the value of share-based payment awards that are ultimately expected to vest during the period, of approximately $10,304, $7,606 and $3,609 for the fiscal year ended December 31, 2019, 2018, and 2017, respectively. The Company estimates the fair value of each option award issued under such plans on the date of grant using a Multiple Point Black-Scholes option-pricing model which uses a weighted average of historical volatility and peer company volatility. The Company determines the expected life of each award giving consideration to the contractual terms, vesting schedules and post-vesting forfeitures. The Company uses the risk-free interest rate on the implied yield currently available on U.S. Treasury issues with an equivalent remaining term approximately equal to the expected life of the award. Activity under the Prior Axogen Plan and the New Axogen Plan during 2019 and 2018 was as follows: Weighted Weighted Average Number of Average Remaining Aggregate Shares Exercise Contractual Intrinsic Time-Based Stock Options Outstanding Price Term(Years) Value Outstanding at December 31, 2017: 4,304,201 $ 7.28 5.39 $ 90,473 Granted 656,250 29.48 Forfeited (40,473) 9.56 Exercised (1,026,807) 3.72 Outstanding at December 31, 2018: 3,893,171 $ 11.94 5.95 $ 41,020 Granted 344,176 18.07 Forfeited (287,609) 22.75 Exercised (529,557) 5.21 Outstanding at December 31, 2019 3,420,181 $ 12.69 5.70 $ 26,074 Vested and expected to vest 3,420,181 $ 12.69 5.68 $ 26,074 Exercisable at December 31, 2019 2,099,616 $ 7.90 4.10 $ 22,712 Weighted Number of Average Shares Grant Date Restricted and Performance Stock Units Outstanding Fair Value Outstanding at December 31, 2017: 610,730 $ 21.14 Granted 516,433 23.34 Released (7,150) 8.95 Forfeited (13,650) 25.89 Outstanding at December 31, 2018: 1,106,363 22.18 Granted 217,146 17.60 Released (86,405) 16.77 Forfeited (123,407) 22.97 Outstanding at December 31, 2019 1,113,697 21.62 The intrinsic value of equity awards exercised during the years ended December 31, 2019, 2018 and 2017 was $9,553, $34,229 and $7,783 , respectively. As a result of the Company’s full valuation allowance on its net deferred tax assets, no tax benefit was recognized related to the exercises of stock options. The exercise price per share of each option is equal to the fair market value of the underlying share on the date of grant. For 2019, 2018 and 2017, , respectively, in cash proceeds were included in the Company’s Consolidated Statements of Cash Flows as a result of the exercise of stock options. The total fair value of restricted stock vested during 2019, 2018 and 2017 was . The Company issues registered shares of common stock to satisfy stock option exercises and restricted stock grants. As of December 31, 2019, there was $19,460 of unrecognized compensation costs related to non-vested stock options and restricted stock awards. This cost is expected to be recognized over a weighted-average period of 2.14 years for stock options and 2.63 years for restricted stock awards. On December 18, 2017, December 27, 2018 and December 17, 2019, the Compensation Committee of the Board of Directors also approved PSU awards to certain employees related to their work on the Company’s BLA. The PSU awards consist of a targeted total award of shares. The number of shares are allocated to certain milestones related to the BLA submission to and approval by the FDA. The performance measure is based upon achieving each of the specific milestones and will vest upon achieving each of the milestones and 50% one year later. The Company estimated the fair value of the PSUs based on its closing stock price at the time of grant and its estimate of achieving such performance target and will record compensation expense as the milestones are achieved. Over the performance period, the number of shares of common stock that will ultimately vest and be issued and the related compensation expense will be adjusted based upon the Company’s estimate of achieving such performance target. The number of shares delivered to recipients and the related compensation cost recognized as an expense will be based on the actual performance metrics as set forth in the applicable PSU award agreement. The amount actually awarded will be based upon achievement of the performance measures and can range from shares. The fair value of the common stock on the grant date was on December 18, 2017. The total unrecognized future compensation expense related to this PSU, assuming achievement of Employee Stock Purchase Plan The 2017 ESPP, which was effective as of January 1, 2018, allows for eligible employees to acquire shares of our common stock through payroll deductions at a discount from market value (currently 15% ) of the lesser of the closing price of the Company’s common stock on the first day or last day of the offering period. The offering period is currently six months , and the offering prices are subject to change. Participants may not purchase more than $25 of the Company’s common stock in a calendar year. As of December 31, 2019 , there were 600,000 shares of common stock authorized for issuance under the 2017 ESPP and 450,305 were available for future issuance. Valuation and Expense Information Under FASB ASC 718 The Company estimates the fair value of each option grant using a Multiple Point Black-Scholes option-pricing model which uses a weighted average of historical volatility and peer company volatility. The Company determines the expected life giving consideration to the contractual terms, vesting schedules and post-vesting forfeitures. The Company uses the risk-free interest rate on the implied yield currently available on U.S. Treasury issues with an equivalent remaining term approximately equal to the expected life of the award. The Company used the following weighted-average assumptions for stock options granted during the year ended December 31: Year ended December 31, 2019 2018 2017 Expected term (in years) 5.76 6.22 6.16 Expected volatility 54.97 % 50.99 % 50.43 % Risk free rate 1.71 % 2.70 % 2.12 % Expected dividends — % — % — % The fair value of restricted stock awards is based on the market value of the Company’s common stock on the date of the awards. Based on the assumptions noted above, the weighted average estimated grant date fair value per share of the stock options and restricted stock granted for the years ended December 31, 2019, 2018 and 2017, respectively, was as follows: 2019 2018 2017 Stock options $ 18.07 $ 15.05 $ 8.41 Restricted and performance stock units 17.60 23.34 26.24 |
Income Taxes
Income Taxes | 12 Months Ended |
Dec. 31, 2019 | |
Income Taxes | |
Income Taxes | 12. Income Taxes The Company has temporary differences between the carrying amount of assets and liabilities for financial reporting purposes and their respective income tax basis, as measured by enacted state and federal rates as follows: December 31 2019 2018 2017 Deferred tax assets: Net operating loss carryforwards $ 36,250 $ 30,588 $ 27,578 Inventory write down 317 273 206 Depreciation 136 117 — Amortization — — 23 Interest limitation — 336 — Allowance for doubtful accounts 274 285 117 Right-of-use liability 837 — — Stock-based compensation 3,140 2,335 520 Total deferred tax assets 40,954 33,934 28,444 Deferred tax liabilities: Depreciation — — (81) Amortization (206) (43) — Right-of-use asset (809) — — Contract liabilities (7) (15) (6) Net deferred tax assets 39,932 33,876 28,357 Valuation allowance $ (39,932) $ (33,876) $ (28,357) The difference between the financial statement income tax and the income tax benefit using statutory rates is primarily due to the increase in the valuation allowance. The Company’s effective income tax rate differs from the statutory federal income tax rate as follows for the years ended December 31, 2019 and 2018: Year Ended December 31, 2019 2018 Federal tax rate 21.0 % 21.0 % State Taxes - Net of Federal Benefit 4.1 4.1 Permanent items and other deductions (4.3) (0.5) Valuation allowance (20.8) (24.6) Effective income tax rate — % — % As of December 31, 2019 and 2018, management assessed the realizability of deferred tax assets. Management evaluated the need for an amount of any valuation allowance for deferred tax assets on a jurisdictional basis. This evaluation utilizes the framework contained in ASC 740, Income Taxes In concluding on the evaluation, management placed significant emphasis on guidance in ASC 740, which states that “a cumulative loss in recent years is a significant piece of negative evidence that is difficult to overcome.” Based upon available evidence, it was concluded on a more-likely-than-not basis that all deferred tax assets were not realizable as of December 31, 2019. The valuation allowance increased by during 2019 and 2018, primarily as a result of current year increase in the net operating loss carry forward. During 2017, the valuation allowance decreased by As of December 31, 2019, the Company had tax-effected net operating loss carry forwards of approximately $36,250 to offset future taxable income which expire in various years through 2039. Federal net operating losses incurred in tax years beginning on or after January 1, 2018 are carried forward indefinitely. A portion of the net operating loss carry forwards may expire due to limitations imposed by section 382 of the Internal Revenue Code. The Company files U.S. federal and state income tax returns in jurisdictions with varying statutes of limitations. In the normal course of business the Company is subject to examination by taxing authorities throughout the country. These audits could include examining the timing and amount of deductions, the allocation of income among various tax jurisdictions and compliance with federal, state and local laws. The Company’s tax years since 2017 remain subject to examination by federal, state and foreign tax authorities. The Company adopted Accounting Standards Codification (“ASC”) Topic 842 – Leases, on January 1, 2019. Under Topic 842, the Company is required to recognize the assets and liabilities that arise from most operating leases on the balance sheet. Upon adoption, no change in retained earnings was recorded related to income taxes as the Company maintains a full valuation allowance. As of the implementation date, an adjustment of $951 was recorded as a deferred tax liability and an adjustment of $961 was recorded as a deferred tax asset. See above for more information about the non-income tax impact of the adoption of the new leasing standard. Legislation enacted in 2017, informally titled the Tax Cuts and Jobs Act of 2017, subjects a U.S. shareholder to tax on global intangible low-taxed income (“GILTI”) earned by certain foreign subsidiaries. The FASB Staff Q&A, Topic 740, No. 5, Accounting for Global Intangible Low-Taxed Income, states that an entity can make an accounting policy election to either recognize deferred taxes for temporary basis differences expected to reverse as GILTI in future years or to provide for the tax expense related to GILTI in the year the tax is incurred as a period expense only. The Company has elected to account for GILTI in the year the tax is incurred. The Company had no income tax expense or income tax benefit for 2017, 2018 and 2019 due to incurrence of net operating losses. The Company does not believe there are any additional tax refund opportunities currently available. |
Employee Benefit Plan
Employee Benefit Plan | 12 Months Ended |
Dec. 31, 2019 | |
Employee Benefit Plan | |
Employee Benefit Plan | 13. Employee Benefit Plan The Company sponsors the Axogen 401(k) plan (the 401(k) Plan), a defined contribution plan covering substantially all employees of the Company. All full-time employees who have attained the age of of the employee’s annual salary as long as the employee participates in the 401(k) Plan. Both employee contributions and Company contributions vest immediately. The Company contributed |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Dec. 31, 2019 | |
Commitments and Contingencies | |
Commitments and Contingencies | 14. Commitments and Contingencies We lease office space, medical lab and research space, a distribution center, a tissue processing center and equipment. Leases with an initial term of 12 months or less are not recorded on the balance sheet; we recognize lease expense for these leases on a straight-line basis over the lease term. Certain of our leases include options for the Company to extend the lease term. None of the options were reasonably certain of exercise and therefore are not included in the measure of our lease obligations and right-to-use assets. Certain of our lease agreements include provisions for the Company to reimburse the lessor for common area maintenance, real estate taxes, and insurance, which the Company accounts for as variable lease costs. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants. The Company and SNH Medical Office Properties Trust, a Maryland real estate investment trust (“SNH”), are parties to that certain lease dated as of February 6, 2007, as amended, (the “Primary Lease”) pursuant to which the Company leases its approximately nineteen thousand square foot corporate headquarters facility in the Progress Center at 13631 Progress Boulevard, Alachua, Florida 32615 (the “Primary Premises”). The annual cost for the Primary Premises ranges from $353 to $363 through the end of the term of the lease, which expires on October 31, 2021. On January 23, 2017 the Company entered into a lease (the “First Expansion Lease”) with SNH for one thousand four hundred square feet at 13709 Progress Boulevard, Alachua, Florida 32615 (this property was purchased by Nucleic Acids Licensing, LLC in February 2019) (the “First Expansion Premises”) adjacent to the Primary Premises. The Company has entered into the Second Expansion Lease and Third Expansion Lease, as defined below, which relate to properties that are adjacent to the Primary Premises and First Expansion Premises resulting in the Company having approximately twenty thousand square feet for its corporate headquarters and certain research space in the Progress Center in Alachua, Florida. On November 19, 2018, the Company entered into a Lease (the “Second Expansion Lease”) with SNH for two thousand eight hundred square feet at 13709 Progress Boulevard, Suites S-160, S-162 and S-164, Alachua, Florida 32615 (the “Second Expansion Premises”). Pursuant to the Second Expansion Lease, AC is to use the Second Expansion Premises for general office uses. The Second Expansion Lease commenced December 1, 2018 and expires November 30, 2020. The annual cost of the Second Expansion Premises is approximately $45 for the first twelve months of the term and $46 for the final twelve months. The Company is also obligated to pay for certain taxes, insurance costs and electricity costs incurred by SNH. On November 19, 2018, AC entered into a Lease (the “Third Expansion Lease”) with SNH for two thousand square feet at 13709 Progress Boulevard, Suites S-175, S-177 and S-179, Alachua, Florida 32615 (the “Third Expansion Premises”). Pursuant to the Third Expansion Lease, the Company is to use the Third Expansion Premises for general office and biomedical research uses. The Third Expansion Lease commenced December 1, 2018 and its term expires November 30, 2020. The annual cost of the Third Expansion Premises is approximately On November 21, 2018, the Company, entered into Commercial Lease Amendment 3 (the “Burleson Amendment”), to the Commercial Lease dated April 21, 2015, as amended, with Ja-Cole L.P. Under the terms of the Burleson Amendment, the Company leased an additional two thousand five hundred square feet of warehouse/office space in Burleson, Texas (collectively with the space leased under the Commercial Lease with Ja-Cole L.P. prior to the effectiveness of the Burleson Amendment, the “Burleson Facility”). The Burleson Facility will now comprise a total of twelve thousand five hundred square feet, all of which, pursuant to the Burleson Amendment, will be leased until April 30, 2022. The annual rental cost of the entire Burleson Facility is now approximately $113 through December 31, 2020, $116 for the calendar year 2021 and until April 2022. The Burleson Facility houses raw material storage and product distribution while allowing same day order fulfillment for both the east and west coasts of the United States. On October 26, 2018, the Company entered into a Lease (the “Ashley Avenue Lease”) with Ashley Avenue Associates I, LLC., a Delaware limited liability company (“Ashley”), for the lease by the Company of approximately fifteen thousand square feet of office space on the second floor of the building located at 1000 N. Ashley Drive, Tampa, Florida 33602 (the “Ashley Avenue Premises”). Pursuant to the Ashley Avenue Lease, the Company will use the Ashley Avenue Premises for general office purposes. The initial term of the Ashley Avenue Lease commenced on December 1, 2018 and expires on November 30, 2020. The Company has an option to terminate the lease after eighteen months by providing Ashley with four months advance written notice. The rental cost for the Ashley Avenue Premises will be $381 for the first twelve month period, and $360 for the final eleven month period. The Company will also be obligated to pay for its pro rata share of the building’s property taxes, utilities, administrative costs, common area maintenance and management fees, excluding any capital improvements or any damage due to fire, hurricane or other casualty. On September 20, 2018, the Company entered into an agreement with Heights Union, LLC, a Florida limited liability company (“Heights Union”), for the lease of seventy-five thousand square feet of office space (the “Heights Union Premises”) in a one hundred and fifty thousand square foot office building that Heights Union intends to construct and complete on or before September 30, 2020, on an area of land in Tampa, Florida. Pursuant to the Heights Union lease, the Company will use the Heights Union Premises for general office, medical laboratory, training and meeting purposes. The annual costs of the Heights Union Premises ranges from $2,400 to $3,308 during the term of the lease. Axogen believes it can obtain certain economic incentives from state authorities associated with the employment at the facility; such incentives are not expected to be a material offset to the expenses of the project as a whole. In addition, Axogen leases space and maintains records at certain other facilities, including the Company’s prior corporate headquarters at 1407 South Kings Highway, Texarkana, Texas 75501. The components of total lease expense for the year ended December 31, 2019 were as follows: Amount For the Fiscal Year Ended December 31, 2019: Finance lease costs Amortization of right-to-use assets $ 22 Interest on lease liabilities 4 Operating lease costs 1,910 Short term lease costs 41 Variable lease costs 17 Total lease cost $ 1,994 The short-term lease cost shown above reasonably reflects the Company’s ongoing short-term lease commitment. Supplemental balance sheet information related to leases as of December 31, 2019 was as follows: Amount Operating Leases Operating lease right-of-use assets $ 3,133 Current maturities of long-term obligations $ 1,719 Long term obligations $ 1,565 Finance Leases Finance lease right-of-use assets $ 87 Current maturities of long-term obligations $ 17 Long term obligations $ 30 Other information related to leases was as follows: Amount Cash paid for amounts included in the measurement of operating lease liabilities $ 1,773 Right-to-use assets obtained in exchange for new finance lease liabilities $ 16 Weighted-average remaining lease term - finance leases 3 Weighted-average remaining lease term - operating leases 2 Weighted-average discount rate - finance leases 7.28% Weighted-average discount rate - operating leases 6.28% The weighted-average discount rate for the majority of the Company’s leases is based on the Company’s estimated incremental borrowing rate since the rates implicit in the leases were not determinable. The Company’s incremental borrowing rate is based on Management’s estimate of the rate of interest the Company would have to pay to borrow on a fully collateralized basis over a similar term an amount equal to the lease payments. Future minimum lease payments under non-cancellable leases as of December 31, 2019 were as follows: Operating Finance Year Ending December 31, Leases Leases 2020 2,664 19 2021 4,007 19 2022 2,573 10 2023 2,581 3 2024 2,644 1 Thereafter 27,251 — Total Future Minimum Lease Payments $ 41,720 $ 52 Less future payments for leases that have not yet commenced (38,246) — Less imputed interest on commenced leases (190) (5) Total Lease Liability $ 3,284 $ 47 The lease for office space in Tampa, Florida with Heights Union, LLC, a Florida limited liability company, has not commenced and is therefore not included in the measurement of right-to-use assets and lease liabilities. As previously disclosed in our 2018 Annual Report on Form 10-K, which followed the lease accounting guidance prior to our adoption of ASC 842, future commitments relating to noncancelable operating and capital leases as of December 31, 2018 were as follows: Year Ending December 31, Operating Capital 2019 1,866 28 2020 2,540 13 2021 3,970 15 2022 2,518 7 2023 2,574 — Thereafter 30,111 — Total $ 43,579 $ 63 Total rent expense for the Company’s leased office and lab space for the years ended December 31, 2019, 2018 and 2017 was $516, $484 and $494, respectively. Service Agreements On August 6, 2015, Axogen entered into a License and Services Agreement with Community Blood Center (d/b/a Community Tissue Services) (“CTS”), Dayton, Ohio, an FDA registered tissue establishment. Processing of the Avance Nerve Graft pursuant to the CTS agreement began in February 2016. Subsequent to the year ended December 31, 2018, on February 22, 2019, Axogen Corporation and CTS entered into a fourth amendment to the License and Services Agreement wherein the term of the agreement was extended such that the Occupancy Date in section 12.01 of the agreement shall end on December 31, 2021, subject to earlier termination by either party at any time for cause (subject to the non-terminating party’s right to cure, in certain circumstances), or by Axogen without cause upon six months’ prior notice, . Under the CTS agreement Axogen pays CTS a facility fee for clean room/manufacturing, storage and office space, which has been determined to be an embedded operating lease. CTS also provides services in support of Axogen’s manufacturing such as routine sterilization of daily supplies, providing disposable supplies, microbial services and office support. In December 2011, the Company also entered into a Master Services Agreement for Clinical Research and Related Services. The Company was required to pay upon execution of this agreement and the remainder monthly based on activities associated with the execution of Axogen’s phase 3 pivotal clinical trial to support a BLA for Avance Nerve Graft. In August 2008, the Company entered into an agreement to distribute the Axoguard Nerve Connector and Nerve Protector products worldwide in the field of peripheral nerve repair, and the parties subsequently amended the agreement on February 26, 2018. Pursuant to the February 2018 amendment, the agreement expires on June 30, 2027. The Cook Biotech Distribution Agreement also requires certain minimum purchases, although through mutual agreement the parties have not established such minimums and to date have not enforced such provision, and establishes a formula for the transfer cost of the Axoguard products. Under the Distribution Agreement, Axogen provides purchase orders to Cook Biotech, and Cook Biotech fulfills the purchase orders. In June 27, 2017, the Company entered into the Nerve End Cap Supply Agreement with Cook Biotech whereby Cook Biotech is the exclusive contract manufacturer of the Axoguard Nerve Cap and both parties have provided the other party the necessarily licenses to their technologies for operation of the Supply Agreement. The Supply Agreement has a term through August 27, 2027, provided, however, that after June 27, 2022, either party may terminate the Supply Agreement upon 90 days written notice. Under the Supply Agreement Axogen provides purchase orders to Cook Biotech and Cook Biotech fulfills the purchase orders. Certain executive officers of the Company are parties to employment contracts. Such contracts have severance payments for certain conditions including change of control. Concentrations Vendor Substantially all of Axogen’s revenue is currently derived from four products, Avance Nerve Graft, Axoguard Nerve Protector, Axoguard Nerve Connector and Avive Soft Tissue Membrane. Axogen has an exclusive distribution agreement with Cook Biotech for the purchase of Axoguard Nerve Connector and Axoguard Nerve Protector which expires The Cook Biotech Distribution Agreement also requires certain minimum purchases, although through mutual agreement the parties have not established such minimums and to date have not enforced such provision, and establishes a formula for the transfer cost of the Axoguard Nerve Connector and Axoguard Nerve Protector. The agreement allows for termination provisions for both parties. Although there are products that Axogen believes it could develop or obtain that would replace the Axoguard products, the loss of the ability to sell the Axoguard products could have a material adverse effect on Axogen’s business until other replacement products would be available. Processor Axogen is highly dependent on the continued availability of its processing facilities at CTS and could be harmed if the physical infrastructure of this facility is unavailable for any prolonged period of time. In addition, disruptions could lead to significant costs and reductions in revenues, as well as a potential harm to the Axogen’s business reputation and financial results. The CTS agreement terminates December 31, 2021, subject to earlier termination by either party at any time for cause (subject to the non-terminating party’s right to cure, in certain circumstances), or by Axogen without cause, upon 6 months’ prior notice, . Although Axogen believes it can find and make operational a new facility in less than six months if required. In addition, Axogen acquired property which is located near the CTS facility and it is expected that renovations will be completed by the termination date of the CTS Agreement to provide a new processing facility that can be included in our BLA for the Avance Nerve Graft. However, the regulatory process for approval of facilities whether licensed or owned is time-consuming and unpredictable. Axogen’s ability to license, renovate, rebuild or find acceptable service facilities takes a considerable amount of time and expense and could cause a significant disruption in service to its customers if it were to lose the availability of it production or distribution facilities. In July 2018, Axogen purchased a facility (the “APC”) in Vandalia, Ohio, located near the CTS processing facility where Avance Nerve Graft and Avive Soft Tissue Membrane are currently processed. The APC, when and if operational, will be biologic product. The APC acres of land. The Company paid for the land and is recorded as Land within our property and equipment account on our balance sheet. The Company paid On July 9, 2019, Axogen entered into a Standard Form of Agreement Between Owner and Design-Builder (the “Design-Build Agreement”) with CRB Builders, L.L.C., a Missouri limited liability company (“CRB”), pursuant to which CRB will renovate and retrofit the APC. The Design-Build Agreement contains several design phase milestones that began in July 2019 and sets the date for Substantial Completion (as defined in the Design-Build Agreement) in the third quarter of 2020, subject to adjustment in accordance with the terms of the Design-Build Agreement. The estimated cost pursuant to the Design-Build Agreement is $29,000. Additional costs associated with the renovation, purchasing of furniture and equipment, validation and certification of the APC are estimated to be $14,400. These capital expenditure costs will be incurred as they arise until the anticipated full transition of material processing to the APC by early 2022. As of December 31, 2019, the Company has recorded Axogen expects to receive certain economic development grants from state and local authorities totaling up to $2,685 including $1,250 of cash grants to offset costs to acquire and develop the APC. The economic development grants are subject to certain job creation milestones by 2023 and related contingencies. As previously disclosed the Company previously entered into an agreement with Heights Union, LLC, a Florida limited liability company (“Heights Union”), for the lease of seventy-five thousand square feet of office space. Pursuant to the Heights Union lease, the Company will use the Heights Union Premises for general office, medical laboratory, training and meeting purposes. The Company anticipates occupying the premises by the second quarter of 2020. Associated with the lease, the Company anticipates spending up to $9,833 for leasehold improvements, equipment and furniture and fixtures. As of December 31, 2019, the Company has recorded $441 of leasehold improvements to the new facility. Litigation On January 9, 2019, Plaintiff Neil Einhorn, on behalf of himself and others similarly situated, filed a putative class action complaint in the United Stated District Court for the Middle District of Florida alleging violations of the federal securities laws against Axogen, Inc., certain of its directors and officers (“Individual Defendants”), and Axogen’s 2017 Offering Underwriters and 2018 Offering Underwriters (collectively, with the Individual Defendants, the “Defendants”), captioned Einhorn v. Axogen, Inc., et al., No. 8:19-cv-00069 (M.D. Fla.). Plaintiff asserts that Defendants made false or misleading statements in connection with the Company’s November 2017 registration statement issued regarding its secondary public offering in November 2017 and May 2018 registration statement issued regarding its secondary public offering in May 2018, and during a class period of August 7, 2017 to December 18, 2018. In particular, Plaintiff asserts that Defendants issued false and misleading statements and failed to disclose to investors: (1) that the Company aggressively increased prices to mask lower sales; (2) that the Company’s pricing alienated customers and threatened the Company’s future growth; (3) that ambulatory surgery centers form a significant part of the market for the Company’s products; (4) that such centers were especially sensitive to price increases; (5) that the Company was dependent on a small number of surgeons whom the Company paid to generate sales; (6) that the Company’s consignment model for inventory was reasonably likely to lead to channel stuffing; (7) that the Company offered purchase incentives to sales representatives to encourage channel stuffing; (8) that the Company’s sales representatives were encouraged to backdate revenue to artificially inflate metrics; (9) that the Company lacked adequate internal controls to prevent such channel stuffing and backdating of revenue; (10) that the Company’s key operating metrics, such as number of active accounts, were overstated; and (11) that, as a result of the foregoing, Defendants’ positive statements about the Company’s business, operations, and prospects, were materially misleading and/or lacked a reasonable basis. Axogen was served on January 15, 2019. On February 4, 2019, the court granted the parties’ stipulated motion which provided that Axogen is not required to file a response to the complaint until thirty days after Plaintiff files a consolidated amended complaint. On June 19, 2019, Plaintiff filed an Amended Class Action Complaint, and on July 22, 2019, Defendants filed a motion to dismiss. Plaintiff filed opposing papers on August 12, 2019. The Court held a status hearing on September 11, 2019 and stayed all deadlines regarding the parties’ obligations to file a case management report. On December 4, 2019 the parties’ presented oral arguments and are currently awaiting the court’s ruling. Plaintiff is seeking compensatory damages, reimbursement of expenses and costs, including counsel and expert fees and such other relief as the court deems just and proper. The Company and Individual Defendants dispute the allegations and intend to vigorously defend against the Complaint. The amount of loss, if any, cannot be reasonably estimated at this time. Jackson v. Zaderej, et al., No. 8:19-cv-01976 U.S. District Court (M.D. FL). On August 12, 2019, Plaintiff Harvey Jackson, derivatively on behalf of Axogen, filed a verified shareholder derivative complaint for violations of securities laws, breach of fiduciary duty, waste of corporate assets and unjust enrichment against Quentin S. Blackford, Gregory G. Freitag, Mark Gold, Jamie M. Grooms, Alan M. Levine, Peter J. Mariani, Guido Neels, Robert J. Rudelius, Amy Wendell, and Karen Zaderej (the “Individual Defendants”) and Nominal Defendant Axogen, Inc. (“Axogen”) (collectively, “Defendants”). Plaintiff asserts that the Individual Defendants, who are current or former Axogen officers or directors, issued a false proxy statement for the election of directors in violation of Section 14(a) of the Securities Exchange Act of 1934, breached their fiduciary duties, wasted corporate assets and were unjustly enriched by allowing Axogen to make false public statements to investors based on the same claims in the report issued December 18, 2018 by Seligman Investments (the same allegations that form the basis for the Einhorn matter and the Bussey shareholder demand). Plaintiff demands judgment in the Company’s favor against all Individual Defendants as follows: (A) declaring that Plaintiff may maintain this action on behalf of Axogen, and that Plaintiff is an adequate representative of Company; (B) declaring that the Individual Defendants have breached and/or aided and abetted the breach of their fiduciary duties to Axogen; (C) determining and awarding to Axogen the damages sustained by it because of the violations set forth above from each of the Individual Defendants, jointly and severally, together with pre- and post-judgment interest thereon; (D) directing Axogen and the Individual Defendants to take all necessary actions to reform and improve its corporate governance and internal procedures to comply with applicable laws and protect Axogen and its shareholders from a repeat of the damaging events described therein, including, but not limited to, putting forward for shareholder vote the following resolutions for amendments to the Company’s Bylaws or Articles of Incorporation and the following actions as may be necessary to ensure proper corporate governance policies: (i) a proposal to strengthen the Board’s supervision of operations and develop and implement procedures for greater shareholder input into the policies and guidelines of the Board, (ii) a provision to permit the shareholders of Axogen to nominate at least six candidates for election to the Board; and (iii) a proposal to ensure the establishment of effective oversight of compliance with applicable laws, rules, and regulations; (E) awarding Axogen restitution from Individual Defendants, and each of them; (F) awarding Plaintiff the costs and disbursements of this action, including reasonable attorneys’ and experts’ fees, costs, and expenses; and (G) granting such other and further relief as the Court may deem just and proper. The Defendants filed a motion to dismiss on October 22, 2019. In response, Plaintiffs voluntarily withdrew their complaint and the matter was dismissed without prejudice by the court on November 5, 2019. Novitzki v. Zaderej, et al, 19-CA-11745 DIV L (13th Judicial Circuit, Hillsborough Cnty., Fl.). On November 11, 2019, Plaintiff Joseph Novitzki, derivatively on behalf of Axogen, filed a verified stockholder derivative complaint for breach of fiduciary duty, waste of corporate assets and unjust enrichment against Karen Zaderej, Gregory G. Freitag, Peter J. Mariani, Amy Wendell, Robert J. Rudelius, Mark Gold, Guido Neels, and Jamie M. Grooms (the “Individual Defendants”) and Nominal Defendant Axogen, Inc. (“Axogen”) (collectively, “Defendants”). Plaintiff asserts that the Individual Defendants, who are current or former Axogen officers or directors, breached their fiduciary duties, wasted corporate assets and were unjustly enriched by allowing Axogen to make false public statements to investors based on the same claims in the report issued December 18, 2018 by Seligman Investments (the same allegations that form the basis for the Einhorn matter and the Bussey shareholder demand). Plaintiff demands judgment in the Company’s favor against all Individual Defendants as follows: (a) against all of the defendants and in favor of the Company for the amount of damages sustained by the Company as a result of the defendants' breaches of fiduciary duties, waste of corporate assets, and unjust enrichment; (B) directing Axogen to take all necessary actions to reform and improve its corporate governance and internal procedures to comply with applicable laws and to protect Axogen and its stockholders from a repeat of the damaging events described herein, including, but not limited to, putting forward for stockholder vote, resolutions for amendments to the Company's Bylaws or Articles of Incorporation and taking such other action as may be necessary to place before stockholders for a vote of the following corporate governance policies: (1) directing Axogen to employ an independent, third-party expert to calculate the Company's market size (including the dollar values of Axogen's total addressable market and portion of the market relating to extremity trauma and OMF); (2) a provision to control insider selling; (3) a proposal to strengthen Axogen's oversight of its disclosure procedures; (4) a proposal to strengthen the Company's controls over financial reporting; (5) a proposal to strengthen the Board's supervision of operations and develop and implement procedures for greater stockholder input into the policies and guidelines of the Board; and (6) a provision to permit the stockholders of Axogen to nominate at least three candidates for election to the Board; (C) extraordinary equitable and/or injunctive relief as permitted by law, equity, and state statutory provisions sued hereunder, including attaching, impounding, imposing a constructive trust on, or otherwise restricting the proceeds of defendants' trading activities or their other assets so as to assure that plaintiff on behalf of Axogen has an effective remedy; (D) Awarding to Axogen restitution from defendants, and each of them, and ordering disgorgement of all profits, benefits, and other compensation obtained by the defendants, including all ill-gotten gains from insider selling by defendants; (E) awarding to plaintiff the costs and disbursements of the action, including reasonable attorneys' fees, accountants' and experts' fees, costs, and expenses; and (F) granting such other and further relief as the Court deems just and proper. After Defendants’ counsel had multiple discussions with Plaintiff’s counsel pointing out that it’s complaint was deficient for the same reasons argued in Jackson, the Plaintiff agreed to voluntarily dismiss the complaint without prejudice, which the court so-ordered on January 24, 2020. These matters are subject to various uncertainties and it is possible that it may be resolved unfavorably to the Company. However, while it in not possible to predict with certainty the outcome of the matter, the Company and the Individual Defendants dispute the allegations and intend to vigorously defend themselves. |
Quarterly Results of Operations
Quarterly Results of Operations (Unaudited) | 12 Months Ended |
Dec. 31, 2019 | |
Quarterly Results of Operations (Unaudited) | |
Quarterly Results of Operations (Unaudited) | 15. Quarterly Results of Operations (Unaudited) The following is a summary of the quarterly results of operations for the years ended December 31, 2019 and 2018: Quarter First Second Third Fourth Total 2019 Revenues $ 23,285 $ 26,701 $ 28,564 $ 28,162 $ 106,712 Gross profit 19,571 22,457 24,054 23,281 89,363 Net loss (9,504) (7,022) (5,571) (7,038) (29,135) Loss per common share - basic and diluted (0.24) (0.18) (0.14) (0.18) (0.74) 2018 Revenues $ 17,260 $ 20,584 $ 22,660 $ 23,433 $ 83,937 Gross profit 14,547 17,478 19,196 19,793 71,014 Net loss (5,644) (7,427) (4,102) (5,224) (22,397) Loss per common share - basic and diluted (0.16) (0.20) (0.11) (0.13) (0.60) |
Schedule II - Valuation and Qua
Schedule II - Valuation and Qualifying Accounts | 12 Months Ended |
Dec. 31, 2019 | |
Schedule II - Valuation and Qualifying Accounts | |
Schedule II - Valuation and Qualifying Accounts | Schedule II – Valuation and Qualifying Accounts AXOGEN, INC. SCHEDULE II – VALUATION AND QUALIFYING ACCOUNTS THREE YEARS ENDED DECEMBER 31, 2019, 2018 AND 2017 Balance at Beginning of Year Additions Deductions (Chargeoffs) Balance at End of Year Allowance for doubtful accounts 2017 272 223 (34) 461 2018 461 852 (196) 1,117 2019 1,117 514 (539) 1,092 Valuation allowance for deferred tax assets 2017 39,111 — (10,754) 28,357 2018 28,357 5,519 — 33,876 2019 33,876 5,977 — 39,853 |
Summary of Significant Accoun_2
Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Dec. 31, 2019 | |
Summary of Significant Accounting Policies | |
Cash and Cash Equivalents and Concentration | Cash and Cash Equivalents and Concentration The Company considers highly liquid investments with maturities of three months or less at the date of acquisition as cash equivalents in the accompanying consolidated financial statements. The Company has not experienced any losses related to these balances; however, as of December 31, 2019, of the cash and cash equivalents balance was in excess of FDIC limits. As of December 31, 2019 and 2018, the Company had restricted cash balances of as collateral for an irrevocable standby letter of credit. |
Investments | Investments The Company invests primarily in U.S. Government securities, corporate bonds, commercial paper and asset-backed securities and classifies all investments as available-for-sale. Investments are recorded at fair value. The Company has elected the fair value option (FVO) for all of its available-for-sale investments. The FVO election results in all changes in unrealized gains and losses being included in investment income in the Consolidated Statements of Operations. |
Revenue Recognition | Revenue Recognition On January 1, 2018, the Company adopted Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) No. 606, “Revenue from Contracts with Customers”, utilizing the modified retrospective method applied to contracts that were not completed. The adoption of the standard did not have a material impact on the timing and amounts of the Company’s revenue, processes or internal controls. Upon adoption, the Company did not have any material remaining performance obligations, significant judgements, or material costs to obtain or fulfill contracts with its customers. The Company enters into contracts to sell and distribute products and services to hospitals and surgical facilities for use in caring for patients with peripheral nerve damage or transection. Revenue is recognized when the Company has met its performance obligations pursuant to its contracts with its customers in an amount that the Company expects to be entitled to in exchange for the transfer of control of the products and services to the Company’s customers. In the case of products or services sold to a customer under a distribution or purchase agreement, the customers are granted exclusive distribution rights to sell the implants internationally in a territory defined by the contract. These international distributor agreements contain provisions that allow the Company to terminate the distribution agreement with the distributor, and upon termination, the right to repurchase inventory from the distributor at the distributor’s cost. The Company has determined that its contractual rights to repurchase distributor inventory upon termination of the distributor agreement are not substantive and do not impact the timing of when control transfers; and, therefore, the Company has determined it is appropriate to recognize revenue when: i) the product is shipped via common carrier; or ii) the product is delivered to the customer or distributor, depending on the terms of the agreement. Determining the timing of revenue recognition for such contracts is subject to significant judgment, because an evaluation must be made regarding the distributor’s ability to direct the use of, and obtain substantially all of the remaining benefits from, the implants received from the Company. Changes in these assessments could have a significant impact on the timing of revenue recognition from sales to distributors. A portion of the Company's product revenue is generated from consigned inventory maintained at hospitals and independent sales agencies, and also from inventory physically held by field sales representatives. For these types of products sales, the Company retains control until the product has been used or implanted, at which time revenue is recognized. The Company elected to account for shipping and handling activities as a fulfillment cost rather than a separate performance obligation. Amounts billed to customers for shipping and handling are included as part of the transaction price and recognized as revenue when control of the underlying products is transferred to the customer. The related shipping and freight charges incurred by the Company are included in cost of sales. The Company operates in a single reportable segment of peripheral nerve repair, offers similar products to its customers, and enters into consistently structured arrangements with similar types of customers. As such, the Company does not disaggregate revenue from contracts with customers as the nature, amount, timing and uncertainty of revenue and cash flows does not materially differ within and among the contracts with customers. The contract with the customer states the final terms of the sale, including the description, quantity, and price of each implant distributed. The payment terms and conditions in the Company’s contracts vary; however, as a common business practice, payment terms are typically due in full within 30 to 60 days of delivery. Since the customer agrees to a stated price in the contract that does not vary over the contract term, the contracts do not contain any material types of variable consideration, and contractual rights of return are not material. The Company has several contracts with distributors in international markets which include consideration paid to the customer in exchange for distinct marketing and other services. The Company records such consideration paid to the customer as a reduction to revenue from the contracts with those distributor customers. In connection with the Acroval Neurosensory and Motor Testing System, the Company sold extended warranty and service packages to some of its customers who purchase this evaluation and measurement tool, and the prepayment of these extended warranties represent contract liabilities until the performance obligations are satisfied ratably over the term of the contract. The sale of the aforementioned extended warranty represents the only performance obligation the Company satisfies over time and creates the contract liability disclosed below. The opening and closing balances of the Company’s contract receivables and liabilities are as follows: Contract Balances Net Receivables Contract Liabilities, Current Contract Liabilities, Long-Term Opening, January 1, 2018 $ 11,065 32 69 Closing, December 31, 2018 15,321 18 42 Increase (decrease) 4,256 (14) (27) Opening, January 1, 2019 $ 15,321 18 42 Closing, December 31, 2019 16,944 14 15 Increase (decrease) 1,623 (4) (27) |
Allowance for Doubtful Accounts Receivable and Concentration of Credit Risk | Allowance for Doubtful Accounts Receivable and Concentration of Credit Risk The Company evaluates the collectability of accounts receivable to determine the appropriate allowance for doubtful accounts. In determining the amount of the allowance, the Company considers aging of account balances, historical credit losses, customer-specific information and other relevant factors. An increase to the allowance for doubtful accounts results in a corresponding increase in general and administrative expense. The Company reviews accounts receivable and adjusts the allowance based on current circumstances and charges off uncollectible receivables against the allowance when all attempts to collect the receivable have failed. The Company’s history of write-offs has not been significant. The allowance for doubtful accounts balance was approximately Concentrations of credit risk with respect to accounts receivable are limited because a large number of geographically diverse customers make up the Company’s customer base, thus spreading the trade credit risk. The Company also controls credit risk through credit approvals and monitoring procedures. |
Inventories | Inventories Inventories are comprised of unprocessed tissue, work-in-process, Avance Nerve Graft, Axoguard Nerve Connector, Axoguard Nerve Protector, Axoguard Nerve Cap, Avive Soft Tissue Membrane, Acroval Neurosensory and Motor Testing System, Axotouch Two-Point Discriminator and supplies and are valued at the lower of cost (first-in, first-out) or net realizable value. The Company monitors the shelf life of its products and historical expiration and spoilage trends, and writes-off inventory based on the estimated amount of inventory that will not be distributed before expiration or spoilage. To estimate the amount of inventory that will expire prior to being sold, the Company reviews inventory quantities on hand, historical and projected sales, and historical expiration trends. The Company’s calculation of the amount of inventory that will expire prior to sale has two components: 1) a demand or consumption based component that compares projected sales to inventory quantities on hand; and 2) an expiring inventory component that assesses the risk related to inventory that is near expiration by analyzing historical expiration trends to project inventory that will expire prior to being sold. The Company’s model assumes that inventory will be sold on a first-in-first-out basis. Due to the nature of the inventory (surgical implants with expiration dates) and the fact that a significant portion of the Company’s inventory is at medical facility consignment locations, estimating the amount of inventory that will expire and the amount of inventory that should be written-down involves significant judgments and estimates. |
Leases | Leases The Company adopted Accounting Standards Update (“ASU”) No. 2016-02—Leases (Topic 842) (“ASU 2016.02”), as of January 1, 2019, (the “Application Date”) using the modified retrospective approach. The Company will continue to report financial information for fiscal years prior to 2019 under the previous lease accounting standards. The modified retrospective approach provides a method for recording on the balance sheet as of January 1, 2019, leases that have commenced on or before the Application Date. The Company elected the package of practical expedients permitted under the transition guidance, which allowed us to not reassess whether any existing contracts contain a lease, to not reassess historical lease classification as operating or finance leases, and to not reassess initial direct costs. The Company also elected the practical expedient allowing us to not separate the lease and non-lease components for all classes of underlying assets, apart from equipment. The Company did not elect the practical expedient to use hindsight to determine the lease term for leases at January 1, 2019. The Company made an accounting policy election to not recognize right-to-use assets and lease liabilities that arise from short term leases, which are defined as leases with a lease term of 12 months or less at the lease commencement date. Adoption of the new standard resulted in the recording of right-to-use assets and lease liabilities of approximately $3,786 and $3,823, respectively, and the derecognition of capital lease assets, capital lease liabilities, and operating lease deferred rent of $96, $63, and $70, respectively, as of January 1, 2019 with zero cumulative-effect adjustment to retained earnings. The new standard did not materially impact our consolidated net earnings. |
Net Loss Per Share | Net Loss Per Share Basic and diluted net loss per share is computed in accordance with FASB ASC 260, “Earnings Per Share” (ASC 260), by dividing the net loss by the weighted average number of common shares outstanding during the period. Since the Company has experienced net losses for all periods presented, options and awards of 1,556,818 , |
Research and Development Costs | Research and Development Costs Research and development costs are expensed as incurred and were $17,514, $11,773 and $6,699 for the years ended December 31, 2019, 2018 and 2017, respectively. |
Stock-Based Compensation | Stock-Based Compensation The Company measures all employee stock-based compensation awards using the fair value, including stock options, restricted stock, performance stock and stock purchases related to an employee stock purchase plan. The share-based compensation recognized under ASC 718 for years ended December 31, 2019, 2018 and 2017 was ASC 718 requires companies to estimate the fair value of share-based payment awards on the date of grant using an option-pricing model. The value of the portion of the award that is ultimately expected to vest is recognized as expense over the requisite service periods in the Company’s consolidated statements of operations. The expense has been reduced for forfeitures as they occur. The Company estimates the fair value of time-based options on the date of grant using the Multi-Point Black-Scholes option-pricing model (Black-Scholes model). The Company’s determination of fair value is affected by the Company’s stock price, as well as assumptions regarding several subjective variables. These variables include, but are not limited to, the Company’s expected stock price volatility over the term of the awards. The Company estimates the fair value of restricted stock based upon the grant date closing market price of the Company’s common stock. The Company also has an employee stock purchase plan (ESPP) which is available to all eligible employees as defined by the plan document. Under the ESPP, shares of the Company’s common stock may be purchased at a discount. The Company estimates the number of shares to be purchased under the ESPP at the beginning of each purchase period based upon the fair value of the stock at the beginning of the purchase period using the Black-Scholes model and records estimated compensation expense during the period. Expense is adjusted at the time of stock purchase. With respect to performance stock units (“PSUs”), the number of shares that vest and are issued to the recipient is based upon the Company’s performance as measured against specified targets over the measurement period. The fair value of the PSUs is based on the Company’s closing stock price on the grant date and its estimate of achieving such performance targets. For further discussion and disclosures, see Note 11 – Equity Compensation Plans. |
Use of Estimates | Use of Estimates The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Management believes the critical accounting policies regarding revenue recognition, allowance for uncollectible accounts receivable, investments, inventories and share-based employee compensation affect our more significant judgments and estimates used in the preparation of the Company’s consolidated financial statements. Actual results could differ materially from those estimates. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In February 2016, the FASB issued ASU 2016-02. This update will increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. This update is effective for annual and interim reporting periods beginning after December 15, 2018, including interim periods within those fiscal years. Early adoption is permitted. In July 2018, the FASB issued ASU No. 2018-11, Targeted Improvements to ASC 842, Leases (“ASU 2018-11”). ASU 2018-11 provided entities with an alternative modified transition method to elect not to recast the comparative periods presented when adopting ASC 842. The impact of the adoption is disclosed in the Leases section of Note 3, Summary of Significant Accounting Policies. In August 2018, the FASB issued ASU No. 2018-15, Guidance on Cloud Computing Arrangements (“ASU 2018-15”). ASU 2018-15 provides guidance on implementation costs incurred in a cloud computing arrangement (CCA) that is a service contract and aligns the accounting for such costs with the guidance on capitalizing costs associated with developing or obtaining internal-use software. Specifically, the ASU amends ASC 350 to include in its scope implementation costs of a CCA that is a service contract and clarifies that a customer should apply ASC 350-40 to determine which implementation costs should be capitalized. This update is effective for annual and interim reporting periods beginning after December 15, 2019, including interim periods within those fiscal years. Early adoption is permitted. The Company is currently evaluating the impact this standard will have on the Company’s consolidated financial statements. In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments – Credit Losses (Topic326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”). The guidance is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. Early adoption is permitted. We will adopt ASU 2016-13 as of January 1, 2020. We are currently evaluating the impact the standard may have on our consolidated financial statements. In May 2019, the FASB issued ASU No. 2019-04, Codification Improvements to Topic 326, Financial Instruments – Credit Losses, Topic 815, Derivatives and Hedging and Topic 825, Financial Instruments (“ASU 2019-04”). ASU 2019-04 clarifies certain aspects of accounting for credit losses, hedging activities, and financial instruments. This update is effective fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. Early adoption is permitted. The Company is currently assessing the impact the guidance will have on its consolidated financial statements. In May 2019, the FASB issued ASU No. 2019-05, Targeted Transition Relief (“ASU 2019-05”). ASU 2019-05 provides transition relief for entities adopting ASU 2016-13, Measurement of Credit Losses on Financial Instruments. The amendment allows entities to irrevocably elect, upon adoption of ASU 2016-13, the fair value option on financial instruments that (1) were previously recorded at amortized costs and (2) are within the scope of ASC 326-20, Financial Instruments – Credit Losses: Measured at Amortized Costs, if the instruments are eligible for the fair value option under ASC 825-10, Financial Instruments: Overall. This update is effective fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. Early adoption is permitted. The Company is currently assessing the impact the guidance will have on its consolidated financial statements. In November 2019, the FASB issued ASU No. 2019-11, Credit Losses (Topic 326), Codification Improvements to Topic 326, Financial Instruments – Credit Losses. This amendment amends certain aspects of the new credit loss standard, ASU 2016-13 (ASC 326). As the Company has not adopted ASU 2016-13, the effective date of this amendment is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. Early adoption is permitted. We will adopt ASU 2016-13 as of January 1, 2020. The Company is currently assessing the impact the guidance will have on its consolidated financial statements. In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740) (“ASU 2019-12”), Simplifying the Accounting for Income Taxes. This amendment simplifies the by clarifying and amending existing guidance. This update is effective for annual and interim reporting periods beginning after December 15, 2020. Early adoption is permitted but requires simultaneous adoption of all provisions of ASU 2019-12. The Company’s management has reviewed and considered all other recent accounting pronouncements and believe there are none that could potentially have a material impact on the Company’s consolidated financial condition, results of operations, or disclosures. |
Summary of Significant Accoun_3
Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Summary of Significant Accounting Policies | |
Reconciliation of cash, cash equivalents and restricted cash | December 31, December 31, 2019 2018 Cash and cash equivalents $ 35,724 $ 24,294 Restricted cash 6,000 6,000 Total cash, cash equivalents, and restricted cash shown in the statement of cash flows $ 41,724 $ 30,294 |
Schedule of balances of contract receivables and liabilities | Contract Balances Net Receivables Contract Liabilities, Current Contract Liabilities, Long-Term Opening, January 1, 2018 $ 11,065 32 69 Closing, December 31, 2018 15,321 18 42 Increase (decrease) 4,256 (14) (27) Opening, January 1, 2019 $ 15,321 18 42 Closing, December 31, 2019 16,944 14 15 Increase (decrease) 1,623 (4) (27) |
Inventories (Tables)
Inventories (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Inventories | |
Schedule of inventories | December 31, December 31, 2019 2018 Finished goods $ 10,403 $ 9,194 Work in process 730 454 Raw materials 2,728 2,334 Inventories $ 13,861 $ 11,982 |
Fair Value of Investments (Tabl
Fair Value of Investments (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Fair Value of Investments | |
Summary of fair value financial assets measured on a recurring basis | (Level 1) (Level 2) (Level 3) Total December 31, 2019 Assets: Money market funds $ 26,812 $ — $ — $ 26,812 U.S. government securities 4,544 — — 4,544 Corporate bonds — 17,754 — 17,754 Commercial paper — 24,679 — 24,679 Asset-backed securities — 13,808 — 13,808 Total assets $ 31,356 $ 56,241 $ — $ 87,597 (Level 1) (Level 2) (Level 3) Total December 31, 2018 Assets: Money market funds $ 12,947 $ — $ — $ 12,947 U.S. government securities 15,923 — — 15,923 Corporate bonds — 31,495 — 31,495 Commercial paper — 27,869 — 27,869 Asset-backed securities — 17,025 — 17,025 Total assets $ 28,870 $ 76,389 $ — $ 105,259 |
Property and Equipment (Tables)
Property and Equipment (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Property and Equipment | |
Schedule of property and equipment | December 31, December 31, 2019 2018 Furniture and equipment $ 2,059 $ 1,763 Leasehold improvements 2,203 1,151 Processing equipment 2,772 2,349 Land 731 731 Projects in process 10,886 4,906 Property and equipment, at cost 18,651 10,900 Less: accumulated depreciation and amortization (3,764) (2,861) Property and equipment, net $ 14,887 $ 8,039 |
Intangible Assets (Tables)
Intangible Assets (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Intangible Assets | |
Schedule of intangible assets | December 31, December 31, 2019 2018 License agreements $ 1,067 $ 1,034 Less: accumulated amortization (647) (553) License agreements, net $ 420 $ 481 Trademarks 334 255 Patents 845 500 Less: accumulated amortization (84) (55) Patents, net $ 761 $ 445 Intangible assets, net $ 1,515 $ 1,181 |
Schedule of future amortization | Year Ending December 31, 2020 137 2021 137 2022 138 2023 119 2024 47 Thereafter 603 TOTAL 1,181 |
Accounts Payable and Accrued _2
Accounts Payable and Accrued Expenses (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Accounts Payable and Accrued Expenses | |
Schedule of accounts payable and accrued expenses | December 31, December 31, 2019 2018 Accounts payable $ 8,262 $ 4,517 Accrued expenses 3,237 2,004 Accrued compensation 7,631 6,477 Accounts Payable and Accrued Expenses $ 19,130 $ 12,998 |
Term Loan Agreements and Long_2
Term Loan Agreements and Long-Term Debt (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Term Loan Agreements and Long-Term Debt | |
Schedule of long-term obligations | December 31, December 31, 2019 2018 Equipment Lease Agreement with Cisco Capital for a total lease amount of $59 which has a 36 month term and requires no lease payments for the first three months of the lease and 33 equal payments of principal and interest until the end of the term. Interest on the lease is payable monthly at 3.5% per annum. — 15 Equipment Lease Agreement with Raymond Leasing Corporation for a total lease amount of $30 which has a 48 month term with equal payments for principal and interest until the end of the term. Interest on the lease is payable monthly at 6.7% per annum. — 22 Equipment Lease Agreement with B&B Office Systems for a total lease amount of $32 which has a 60 month term with equal payments for principal and interest until the end of the term. Interest on the lease is payable monthly at 8.5% per annum. — 26 Total — 63 Less current revolving loan — — Less current maturities of long-term debt — (28) Long-term portion $ — $ 35 |
Equity Compensation Plans (Tabl
Equity Compensation Plans (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Equity Compensation Plans | |
Summary of stock option activity | Weighted Weighted Average Number of Average Remaining Aggregate Shares Exercise Contractual Intrinsic Time-Based Stock Options Outstanding Price Term(Years) Value Outstanding at December 31, 2017: 4,304,201 $ 7.28 5.39 $ 90,473 Granted 656,250 29.48 Forfeited (40,473) 9.56 Exercised (1,026,807) 3.72 Outstanding at December 31, 2018: 3,893,171 $ 11.94 5.95 $ 41,020 Granted 344,176 18.07 Forfeited (287,609) 22.75 Exercised (529,557) 5.21 Outstanding at December 31, 2019 3,420,181 $ 12.69 5.70 $ 26,074 Vested and expected to vest 3,420,181 $ 12.69 5.68 $ 26,074 Exercisable at December 31, 2019 2,099,616 $ 7.90 4.10 $ 22,712 |
Summary of stock unit activity | Weighted Number of Average Shares Grant Date Restricted and Performance Stock Units Outstanding Fair Value Outstanding at December 31, 2017: 610,730 $ 21.14 Granted 516,433 23.34 Released (7,150) 8.95 Forfeited (13,650) 25.89 Outstanding at December 31, 2018: 1,106,363 22.18 Granted 217,146 17.60 Released (86,405) 16.77 Forfeited (123,407) 22.97 Outstanding at December 31, 2019 1,113,697 21.62 |
Schedule of weighted-average assumptions for options granted | Year ended December 31, 2019 2018 2017 Expected term (in years) 5.76 6.22 6.16 Expected volatility 54.97 % 50.99 % 50.43 % Risk free rate 1.71 % 2.70 % 2.12 % Expected dividends — % — % — % |
Summary of weighted average estimated grant date fair value per share | 2019 2018 2017 Stock options $ 18.07 $ 15.05 $ 8.41 Restricted and performance stock units 17.60 23.34 26.24 |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Income Taxes | |
Schedule of differences between the carrying amount of assets and liabilities for financial reporting purposes and their respective income tax basis | December 31 2019 2018 2017 Deferred tax assets: Net operating loss carryforwards $ 36,250 $ 30,588 $ 27,578 Inventory write down 317 273 206 Depreciation 136 117 — Amortization — — 23 Interest limitation — 336 — Allowance for doubtful accounts 274 285 117 Right-of-use liability 837 — — Stock-based compensation 3,140 2,335 520 Total deferred tax assets 40,954 33,934 28,444 Deferred tax liabilities: Depreciation — — (81) Amortization (206) (43) — Right-of-use asset (809) — — Contract liabilities (7) (15) (6) Net deferred tax assets 39,932 33,876 28,357 Valuation allowance $ (39,932) $ (33,876) $ (28,357) |
Schedule of effective income tax rate differs from the statutory federal income tax rate | Year Ended December 31, 2019 2018 Federal tax rate 21.0 % 21.0 % State Taxes - Net of Federal Benefit 4.1 4.1 Permanent items and other deductions (4.3) (0.5) Valuation allowance (20.8) (24.6) Effective income tax rate — % — % |
Commitments and Contingencies (
Commitments and Contingencies (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Commitments and Contingencies | |
Schedule of total lease expense | Amount For the Fiscal Year Ended December 31, 2019: Finance lease costs Amortization of right-to-use assets $ 22 Interest on lease liabilities 4 Operating lease costs 1,910 Short term lease costs 41 Variable lease costs 17 Total lease cost $ 1,994 |
Schedule of supplemental balance sheet information related to leases | Amount Operating Leases Operating lease right-of-use assets $ 3,133 Current maturities of long-term obligations $ 1,719 Long term obligations $ 1,565 Finance Leases Finance lease right-of-use assets $ 87 Current maturities of long-term obligations $ 17 Long term obligations $ 30 |
Schedule of other information related to leases | Amount Cash paid for amounts included in the measurement of operating lease liabilities $ 1,773 Right-to-use assets obtained in exchange for new finance lease liabilities $ 16 Weighted-average remaining lease term - finance leases 3 Weighted-average remaining lease term - operating leases 2 Weighted-average discount rate - finance leases 7.28% Weighted-average discount rate - operating leases 6.28% |
Schedule of future minimum lease payments | Operating Finance Year Ending December 31, Leases Leases 2020 2,664 19 2021 4,007 19 2022 2,573 10 2023 2,581 3 2024 2,644 1 Thereafter 27,251 — Total Future Minimum Lease Payments $ 41,720 $ 52 Less future payments for leases that have not yet commenced (38,246) — Less imputed interest on commenced leases (190) (5) Total Lease Liability $ 3,284 $ 47 |
Schedule of commitments relating to noncancelable operating and capital leases prior to adoption of ASC 842 | Year Ending December 31, Operating Capital 2019 1,866 28 2020 2,540 13 2021 3,970 15 2022 2,518 7 2023 2,574 — Thereafter 30,111 — Total $ 43,579 $ 63 |
Quarterly Results of Operatio_2
Quarterly Results of Operations (Unaudited) (Tables) | 12 Months Ended |
Dec. 31, 2019 | |
Quarterly Results of Operations (Unaudited) | |
Summary of quarterly results of operations | Quarter First Second Third Fourth Total 2019 Revenues $ 23,285 $ 26,701 $ 28,564 $ 28,162 $ 106,712 Gross profit 19,571 22,457 24,054 23,281 89,363 Net loss (9,504) (7,022) (5,571) (7,038) (29,135) Loss per common share - basic and diluted (0.24) (0.18) (0.14) (0.18) (0.74) 2018 Revenues $ 17,260 $ 20,584 $ 22,660 $ 23,433 $ 83,937 Gross profit 14,547 17,478 19,196 19,793 71,014 Net loss (5,644) (7,427) (4,102) (5,224) (22,397) Loss per common share - basic and diluted (0.16) (0.20) (0.11) (0.13) (0.60) |
Summary of Significant Accoun_4
Summary of Significant Accounting Policies (Details) - USD ($) $ in Thousands | Jan. 01, 2019 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 |
Cash and cash equivalents balance outside of FDIC limit | $ 35,224 | |||
Right-of-use assets recorded | 3,786 | |||
Lease liabilities recorded | 3,823 | |||
Derecognition of capital lease assets | $ 96 | |||
Derecognition of capital lease liabilities | 63 | |||
Derecognition of deferred rent | $ 70 | |||
Restricted cash | 6,000 | $ 6,000 | ||
Accounts receivable, allowance for doubtful accounts | $ 1,092 | $ 1,117 | ||
Anti-dilutive securities excluded from computation of net loss per share | 1,556,818 | 2,621,440 | 2,253,399 | |
Research and development | $ 17,514 | $ 11,773 | $ 6,699 | |
Share-based compensation | $ 10,304 | $ 7,606 | $ 3,609 | |
Minimum | ||||
Age of doubtful accounts | 30 days | |||
Maximum | ||||
Age of doubtful accounts | 60 days |
Summary of Significant Accoun_5
Summary of Significant Accounting Policies - Reconciliation of Cash (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 |
Summary of Significant Accounting Policies | ||||
Cash and cash equivalents | $ 35,724 | $ 24,294 | ||
Restricted cash | 6,000 | 6,000 | ||
Total cash, cash equivalents, and restricted cash shown in the statement of cash flows | $ 41,724 | $ 30,294 | $ 36,507 | $ 30,015 |
Summary of Significant Accoun_6
Summary of Significant Accounting Policies - Contract Balances (Details) - USD ($) $ in Thousands | 12 Months Ended | |
Dec. 31, 2019 | Dec. 31, 2018 | |
Summary of Significant Accounting Policies | ||
Net Receivables, Opening balance | $ 15,321 | $ 11,065 |
Net Receivables, Closing balance | 16,944 | 15,321 |
Increase/(decrease) | 1,623 | 4,256 |
Contract Liabilities, Current, Opening balance | 18 | 32 |
Contract Liabilities, Current, Closing balance | 14 | 18 |
Increase/(decrease) | (4) | (14) |
Contract Liabilities, Long-Term, Opening balance | 42 | 69 |
Contract Liabilities, Long-Term, Closing balance | 15 | 42 |
Increase/(decrease) | $ (27) | $ (27) |
Inventories (Details)
Inventories (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Inventories | |||
Finished goods | $ 10,403 | $ 9,194 | |
Work in process | 730 | 454 | |
Raw materials | 2,728 | 2,334 | |
Inventories | 13,861 | 11,982 | |
Inventory write-downs | $ 1,887 | $ 1,343 | $ 1,438 |
Fair Value of Investments (Deta
Fair Value of Investments (Details) - Recurring - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total assets | $ 87,597 | $ 105,259 |
Money market funds | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total assets | 26,812 | 12,947 |
U.S. government securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total assets | 4,544 | 15,923 |
Corporate bonds | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total assets | 17,754 | 31,495 |
Commercial paper | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total assets | 24,679 | 27,869 |
Asset-backed securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total assets | 13,808 | 17,025 |
Quoted Prices in Active Markets for Identical Assets (Level 1) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total assets | 31,356 | 28,870 |
Quoted Prices in Active Markets for Identical Assets (Level 1) | Money market funds | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total assets | 26,812 | 12,947 |
Quoted Prices in Active Markets for Identical Assets (Level 1) | U.S. government securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total assets | 4,544 | 15,923 |
Significant Other Observable Inputs (Level 2) | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total assets | 56,241 | 76,389 |
Significant Other Observable Inputs (Level 2) | Corporate bonds | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total assets | 17,754 | 31,495 |
Significant Other Observable Inputs (Level 2) | Commercial paper | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total assets | 24,679 | 27,869 |
Significant Other Observable Inputs (Level 2) | Asset-backed securities | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total assets | $ 13,808 | $ 17,025 |
Property and Equipment (Details
Property and Equipment (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Property and equipment | |||
Property and equipment, at cost | $ 18,651 | $ 10,900 | |
Less: accumulated depreciation and amortization | (3,764) | (2,861) | |
Property and equipment, net | 14,887 | 8,039 | |
Depreciation expense | 933 | 774 | $ 488 |
Furniture and equipment | |||
Property and equipment | |||
Property and equipment, at cost | 2,059 | 1,763 | |
Leasehold improvements | |||
Property and equipment | |||
Property and equipment, at cost | 2,203 | 1,151 | |
Processing equipment | |||
Property and equipment | |||
Property and equipment, at cost | 2,772 | 2,349 | |
Land | |||
Property and equipment | |||
Property and equipment, at cost | 731 | 731 | |
Projects in process | |||
Property and equipment | |||
Property and equipment, at cost | $ 10,886 | $ 4,906 |
Intangible Assets - Components
Intangible Assets - Components of Intangible Assets (Details) - USD ($) $ in Thousands | 1 Months Ended | 12 Months Ended | ||
Jan. 31, 2019 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Intangible assets consist of: | ||||
Intangible assets, net | $ 1,515 | $ 1,181 | ||
Cost of goods sold | 17,349 | 12,923 | $ 9,311 | |
Amortization of intangible assets | $ 104 | 123 | 77 | $ 79 |
Future amortization of patents and license agreements | ||||
Intangible assets, net | 1,515 | 1,181 | ||
License Agreements | ||||
Intangible assets consist of: | ||||
Finite-lived intangible assets, gross | 1,067 | 1,034 | ||
Less: accumulated amortization | (647) | (553) | ||
Intangible assets, net | 420 | 481 | ||
Future amortization of patents and license agreements | ||||
Intangible assets, net | $ 420 | 481 | ||
License Agreements | Minimum | ||||
Intangible assets consist of: | ||||
Amortization period of intangible assets | 17 years | |||
License Agreements | Maximum | ||||
Intangible assets consist of: | ||||
Amortization period of intangible assets | 20 years | |||
Patents | ||||
Intangible assets consist of: | ||||
Finite-lived intangible assets, gross | $ 845 | 500 | ||
Less: accumulated amortization | (84) | (55) | ||
Intangible assets, net | 761 | 445 | ||
Future amortization of patents and license agreements | ||||
Intangible assets, net | $ 761 | 445 | ||
Patents | Maximum | ||||
Intangible assets consist of: | ||||
Amortization period of intangible assets | 20 years | |||
Trademarks | ||||
Intangible assets consist of: | ||||
Finite-lived intangible assets, gross | $ 334 | $ 255 | ||
Patents And License Agreements | ||||
Intangible assets consist of: | ||||
Intangible assets, net | 1,181 | |||
Future amortization of patents and license agreements | ||||
2020 | 137 | |||
2021 | 137 | |||
2022 | 138 | |||
2023 | 119 | |||
2024 | 47 | |||
Thereafter | 603 | |||
Intangible assets, net | $ 1,181 |
Intangible Assets - License Agr
Intangible Assets - License Agreements (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Sales and Marketing Expense | |||
Intangible assets | |||
Royalty fees included in sales and marketing expense | $ 2,119 | $ 1,661 | $ 1,195 |
License Agreements | |||
Intangible assets | |||
Notice period for termination of license agreements | 60 days | ||
Minimum royalty of agreements | $ 13 | ||
Milestone fee upon receiving a Phase II Small Business Innovation Research | 15 | ||
Milestone fee upon FDA approval | 2 | ||
Milestone fee upon first commercial use of certain licensed technology | 25 | ||
Milestone fee upon first use to manufacture products that utilize certain technology not currently incorporated into AxoGen products | $ 10 | ||
License Agreements | Minimum | |||
Intangible assets | |||
Royalty fees range under the license agreements | 1.00% | ||
License Agreements | Maximum | |||
Intangible assets | |||
Royalty fees range under the license agreements | 3.00% | ||
Royalty stack cap for royalties paid to more than one licensor for sales of the same product | 3.75% |
Accounts Payable and Accrued _3
Accounts Payable and Accrued Expenses (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Accounts Payable and Accrued Liabilities | ||
Accounts payable | $ 8,262 | $ 4,517 |
Accrued expenses | 3,237 | 2,004 |
Accrued compensation | 7,631 | 6,477 |
Accounts Payable and Accrued Expenses | $ 19,130 | $ 12,998 |
Term Loan Agreements and Long_3
Term Loan Agreements and Long-Term Debt - Schedule of Debt (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 |
Note Payable | ||
Long-term obligations | $ 63 | |
Less current maturities of long-term obligations | $ (1,736) | (28) |
Long-term portion | $ 1,595 | 35 |
Long-term portion | 35 | |
Equipment Lease Agreement | Cisco Capital | ||
Note Payable | ||
Long-term obligations | 15 | |
Equipment Lease Agreement | Raymond Leasing Corporation | ||
Note Payable | ||
Long-term obligations | 22 | |
Equipment Lease Agreement | B&B Office Systems | ||
Note Payable | ||
Long-term obligations | $ 26 |
Term Loan Agreements and Long_4
Term Loan Agreements and Long-Term Debt - Schedule of Debt - Terms (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Note Payable | |||
Interest expense | $ 40 | $ 1,127 | $ 2,217 |
Equipment Lease Agreement | Cisco Capital | |||
Note Payable | |||
Face amount | $ 59 | $ 59 | |
Interest payable, percent | 3.50% | 3.50% | |
Term of debt | 36 months | 36 months | |
No payments required, term | 3 months | 3 months | |
Interest and principal payments, term | 33 months | 33 months | |
Equipment Lease Agreement | Raymond Leasing Corporation | |||
Note Payable | |||
Face amount | $ 30 | $ 30 | |
Interest payable, percent | 6.70% | 6.70% | |
Term of debt | 48 months | 48 months | |
Equipment Lease Agreement | B&B Office Systems | |||
Note Payable | |||
Face amount | $ 32 | $ 32 | |
Interest payable, percent | 8.50% | 8.50% | |
Term of debt | 60 months | 60 months |
Term Loan Agreements and Long_5
Term Loan Agreements and Long-Term Debt - Narrative (Details) - USD ($) $ in Thousands | May 22, 2018 | Dec. 31, 2018 | Dec. 31, 2017 |
Debt Instrument [Line Items] | |||
Repayment of long-term obligations | $ 22,599 | $ 22,513 | $ 21 |
Exit and/or prepayment fees paid | 1,470 | ||
Unamortized deferred financing costs | 473 | ||
Revolving Loan Agreement | |||
Debt Instrument [Line Items] | |||
Repayment of long-term obligations | 2,958 | ||
Exit and/or prepayment fees paid | $ 236 |
Public Offering of Common Sto_2
Public Offering of Common Stock (Details) - USD ($) $ / shares in Units, $ in Thousands | May 11, 2018 | May 08, 2018 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2019 |
Common stock, shares authorized | 100,000,000 | 100,000,000 | |||
Common stock, par value | $ 0.01 | $ 0.01 | |||
Shares of common stock sold | 38,900,875 | 39,589,755 | |||
Proceeds from issuance of common stock | $ 132,964 | $ 15,891 | |||
May 2018 Offering | |||||
Shares of common stock sold | 3,000,000 | ||||
Public offering price (in dollars per share) | $ 41 | ||||
Proceeds from issuance of common stock | $ 132,707 | ||||
May 2018 Offering | Underwriter | |||||
Shares of common stock sold | 450,000 | ||||
Number of days to underwriter to purchase additional common shares | 30 days |
Public Offering of Common Sto_3
Public Offering of Common Stock - Public Offering (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2019 | |
Public Offering of Common Stock | |||
Shares of common stock sold | 38,900,875 | 39,589,755 | |
Par value of common stock | $ 0.01 | $ 0.01 | |
Net proceeds from issuance of common stock | $ 132,964 | $ 15,891 | |
Offering expenses paid | $ 257 | $ 228 |
Equity Compensation Plans - Nar
Equity Compensation Plans - Narrative (Details) - USD ($) $ / shares in Units, $ in Thousands | Aug. 14, 2019 | Dec. 18, 2017 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | Dec. 17, 2019 | Dec. 27, 2018 |
Stock Option Disclosures | |||||||
Proceeds from exercise of stock options | $ 4,002 | $ 3,884 | $ 1,434 | ||||
Share-based compensation | 10,304 | 7,606 | 3,609 | ||||
Total fair value of restricted stock vested | 1,467 | 196 | 108 | ||||
Share-based compensation expense | $ 10,304 | 7,606 | 3,609 | ||||
Directors and Officers Stock Options [Member] | Per Quarter, Over One Year | |||||||
Stock Option Disclosures | |||||||
Vesting percentage | 25.00% | ||||||
Vesting period (in years) | 1 year | ||||||
PSU - BLA Milestones [Member] | |||||||
Stock Option Disclosures | |||||||
Shares authorized for issuance | 200,000 | ||||||
Vesting percentage | 50.00% | ||||||
Grant date fair value | $ 27 | $ 16.88 | $ 19.17 | ||||
Assumed achievement percentage of PSUs to calculate unrecognized cost | 100.00% | ||||||
PSU - BLA Milestones [Member] | Minimum | |||||||
Stock Option Disclosures | |||||||
Number of shares available for issuance | 0 | ||||||
Payout opportunity | 0.00% | ||||||
Unrecognized compensation expense related to PSUs | $ 0 | ||||||
PSU - BLA Milestones [Member] | Maximum | |||||||
Stock Option Disclosures | |||||||
Number of shares available for issuance | 200,000 | ||||||
Payout opportunity | 100.00% | ||||||
Unrecognized compensation expense related to PSUs | $ 17,682 | ||||||
AxoGen 2010 Stock Incentive Plan [Member] | |||||||
Stock Option Disclosures | |||||||
Intrinsic value of options exercised | 9,553 | $ 34,229 | $ 7,783 | ||||
Unrecognized compensation costs related to non-vested stock options and restricted stock awards | $ 19,460 | ||||||
AxoGen 2010 Stock Incentive Plan [Member] | Minimum | |||||||
Stock Option Disclosures | |||||||
Vesting period (in years) | 7 years | ||||||
AxoGen 2010 Stock Incentive Plan [Member] | Maximum | |||||||
Stock Option Disclosures | |||||||
Vesting period (in years) | 10 years | ||||||
AxoGen 2010 Stock Incentive Plan [Member] | Directors and Officers Stock Options [Member] | |||||||
Stock Option Disclosures | |||||||
Weighted average period of recognition of unrecognized compensation expense | 2 years 1 month 20 days | ||||||
AxoGen 2010 Stock Incentive Plan [Member] | Stock Options | |||||||
Stock Option Disclosures | |||||||
Vesting period (in years) | 4 years | ||||||
AxoGen 2010 Stock Incentive Plan [Member] | Stock Options | One Year After Grant Date | |||||||
Stock Option Disclosures | |||||||
Vesting percentage | 25.00% | ||||||
Vesting period (in years) | 1 year | ||||||
AxoGen 2010 Stock Incentive Plan [Member] | Stock Options | Every Six Months | |||||||
Stock Option Disclosures | |||||||
Vesting percentage | 12.50% | ||||||
Vesting period (in years) | 3 years | ||||||
AxoGen 2010 Stock Incentive Plan [Member] | RSUs | |||||||
Stock Option Disclosures | |||||||
Weighted average period of recognition of unrecognized compensation expense | 2 years 7 months 17 days | ||||||
AxoGen 2017 Employee Stock Purchase Plan [Member] | |||||||
Stock Option Disclosures | |||||||
Shares authorized for issuance | 600,000 | ||||||
Number of additional shares authorized for future issuance | 450,305 | ||||||
Discount from market value on common stock | 15.00% | ||||||
Offering period | 6 months | ||||||
Maximum amount available to participants per year | $ 25 | ||||||
AxoGen 2017 Employee Stock Purchase Plan [Member] | Every Six Months | |||||||
Stock Option Disclosures | |||||||
Vesting period (in years) | 2 years | ||||||
AxoGen 2017 Employee Stock Purchase Plan [Member] | Directors and Officers Stock Options [Member] | |||||||
Stock Option Disclosures | |||||||
Vesting period (in years) | 3 years | ||||||
AxoGen 2017 Employee Stock Purchase Plan [Member] | Stock Options | |||||||
Stock Option Disclosures | |||||||
Vesting period (in years) | 4 years | ||||||
AxoGen 2017 Employee Stock Purchase Plan [Member] | Stock Options | Every Six Months | |||||||
Stock Option Disclosures | |||||||
Vesting percentage | 12.50% | ||||||
AxoGen 2017 Employee Stock Purchase Plan [Member] | Stock Options | Two Years After Grant Date | |||||||
Stock Option Disclosures | |||||||
Vesting percentage | 50.00% | ||||||
Vesting period (in years) | 2 years | ||||||
New Axogen Plan [Member] | |||||||
Stock Option Disclosures | |||||||
Shares authorized for issuance | 3,385,482 | 3,265,188 | |||||
Number of unallocated shares available for issuance | 385,482 | ||||||
Number of additional shares authorized for future issuance | 3,000,000 |
Equity Compensation Plans - Sto
Equity Compensation Plans - Stock Award Activity (Details) - USD ($) $ / shares in Units, $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Employee Consultants and Directors Stock Options [Member] | |||
Time-Based Stock Options | |||
Options, Outstanding at the beginning of the period (in shares) | 3,893,171 | 4,304,201 | |
Options, Granted (in shares) | 344,176 | 656,250 | |
Options, Forfeited (in shares) | (287,609) | (40,473) | |
Options, Exercised (in shares) | (529,557) | (1,026,807) | |
Options, Outstanding at the end of the period (in shares) | 3,420,181 | 3,893,171 | 4,304,201 |
Options, Vested and expected to vest | 3,420,181 | ||
Options, Exercisable (in shares) | 2,099,616 | ||
Weighted Average Exercise Price, Outstanding at the beginning of the period (in dollars per share) | $ 11.94 | $ 7.28 | |
Weighted Average Exercise Price, Granted (in dollars per share) | 18.07 | 29.48 | |
Weighted Average Exercise Price, Forfeited (in dollars per share) | 22.75 | 9.56 | |
Weighted Average Exercise Price, Exercised (in dollars per share) | 5.21 | 3.72 | |
Weighted Average Exercise Price, Outstanding at the end of the period (in dollars per share) | 12.69 | $ 11.94 | $ 7.28 |
Weighted Average Exercise Price, Vested and expected to vest | 12.69 | ||
Weighted Average Exercise Price, Exercisable (in dollars per share) | $ 7.90 | ||
Weighted Average Remaining Contractual Term, Outstanding | 5 years 8 months 12 days | 5 years 11 months 12 days | 5 years 4 months 20 days |
Weighted Average Remaining Contractual Term, Vested and expected to vest | 5 years 8 months 4 days | ||
Weighted Average Remaining Contractual Term, Exercisable | 4 years 1 month 6 days | ||
Aggregate Intrinsic Value, Outstanding | $ 26,074 | $ 41,020 | $ 90,473 |
Aggregate Intrinsic Value, Vested and expected to vest | 26,074 | ||
Aggregate Intrinsic Value, Exercisable | $ 22,712 | ||
Restricted and Performance Stock Units [Member] | |||
Restricted and Performance Stock Units | |||
Outstanding, Beginning Balance | 1,106,363 | 610,730 | |
Granted | 217,146 | 516,433 | |
Released | (86,405) | (7,150) | |
Forfeited | (123,407) | (13,650) | |
Outstanding, Ending Balance | 1,113,697 | 1,106,363 | 610,730 |
Outstanding, Weighted Average Grant Date Fair Value, Beginning Balance | $ 22.18 | $ 21.14 | |
Granted, Grant Date Fair Value (per share) | 17.60 | 23.34 | $ 26.24 |
Released, Grant Date Fair Value (per share) | 16.77 | 8.95 | |
Forfeited, Grant Date Fair Value (per share) | 22.97 | 25.89 | |
Outstanding, Weighted Average Grant Date Fair Value, Ending Balance | $ 21.62 | $ 22.18 | $ 21.14 |
Equity Compensation Plans - Sum
Equity Compensation Plans - Summary of Weighted-Average Assumptions Used (Details) | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Weighted-average assumptions | |||
Expected term (in years) | 5 years 9 months 3 days | 6 years 2 months 19 days | 6 years 1 month 28 days |
Expected volatility (as a percent) | 54.97% | 50.99% | 50.43% |
Risk free rate (as a percent) | 1.71% | 2.70% | 2.12% |
Equity Compensation Plans - Gra
Equity Compensation Plans - Grant Date Fair Value (Details) - $ / shares | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Employee Consultants and Directors Stock Options [Member] | |||
Stock Option Disclosures | |||
Weighted average estimated grant date fair value per share | $ 18.07 | $ 15.05 | $ 8.41 |
Restricted and Performance Stock Units [Member] | |||
Stock Option Disclosures | |||
Weighted average estimated grant date fair value per share | $ 17.60 | $ 23.34 | $ 26.24 |
Income Taxes - Temporary Differ
Income Taxes - Temporary Differences (Details) - USD ($) $ in Thousands | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 |
Deferred tax assets: | |||
Net operating loss carryforwards | $ 36,250 | $ 30,588 | $ 27,578 |
Inventory write down | 317 | 273 | 206 |
Depreciation | 136 | 117 | |
Amortization | 23 | ||
Interest limitation | 336 | ||
Allowance for doubtful accounts | 274 | 285 | 117 |
Right-of-use liability | 837 | ||
Stock-based compensation | 3,140 | 2,335 | 520 |
Total deferred tax assets | 40,954 | 33,934 | 28,444 |
Deferred tax liabilities: | |||
Depreciation | (81) | ||
Amortization | (206) | (43) | |
Contract liabilities | (7) | (15) | (6) |
Net deferred tax assets | 39,932 | 33,876 | 28,357 |
Valuation allowance | $ (39,932) | $ (33,876) | $ (28,357) |
Income Taxes - Effective Income
Income Taxes - Effective Income Tax Rate and Other information (Details) - USD ($) $ in Thousands | Jan. 01, 2019 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 |
Effective income tax rate | ||||
Federal tax benefit rate | 21.00% | 21.00% | ||
State Taxes - Net of Federal Benefit | 4.10% | 4.10% | ||
Permanent items and other deductions | (4.30%) | (0.50%) | ||
Valuation allowance | (20.80%) | (24.60%) | ||
Change in valuation allowance | $ 6,056 | $ 5,519 | $ (10,754) | |
Deferred tax asset | 837 | |||
Income tax (expense) benefit | $ 0 | $ 0 | $ 0 | |
ASU 2016-02 | ||||
Effective income tax rate | ||||
Change in retained earnings related to income taxes | $ 0 | |||
Deferred tax liability | 951 | |||
Deferred tax asset | $ 961 |
Employee Benefit Plan (Details)
Employee Benefit Plan (Details) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019USD ($)item | Dec. 31, 2018USD ($) | Dec. 31, 2017USD ($) | |
AxoGen 401K Plan | |||
Defined Benefit Plan | |||
Age limit for eligibility to participate in the plan | item | 21 | ||
Employer contributions | $ | $ 988 | $ 650 | $ 439 |
Axogen 401K Plan, employer's contribution on first 3% of employee contribution | |||
Defined Benefit Plan | |||
Matching contributions | 3.00% | ||
Employee contribution matched, percent | 3.00% | ||
Axogen 401K Plan, employer's contribution on next 2% of employee contribution | |||
Defined Benefit Plan | |||
Matching contributions | 1.00% | ||
Employee contribution matched, percent | 2.00% |
Commitments and Contingencies -
Commitments and Contingencies - Leases (Details) $ in Thousands | Nov. 19, 2018USD ($)ft² | Oct. 26, 2018ft² | Sep. 20, 2018USD ($)ft² | Dec. 31, 2019USD ($)ft² | Nov. 21, 2018ft² | Jul. 31, 2018ft² | Jan. 23, 2017ft² | Feb. 06, 2007ft² |
Commitments and Contingencies | ||||||||
Size of building space | ft² | 70,000 | |||||||
SNH | ||||||||
Commitments and Contingencies | ||||||||
Size of building space | ft² | 20,000 | 19,000 | ||||||
Additional leased office space in square feet | ft² | 1,400 | |||||||
SNH | Second Expansion Lease [Member] | ||||||||
Commitments and Contingencies | ||||||||
Additional leased office space in square feet | ft² | 2,800 | |||||||
SNH | Third Expansion Lease [Member] | ||||||||
Commitments and Contingencies | ||||||||
Additional leased office space in square feet | ft² | 2,000 | |||||||
SNH | Minimum | ||||||||
Commitments and Contingencies | ||||||||
Annual lease expense | $ 353 | |||||||
SNH | Minimum | Second Expansion Lease [Member] | ||||||||
Commitments and Contingencies | ||||||||
Annual lease expense | $ 45 | |||||||
SNH | Minimum | Third Expansion Lease [Member] | ||||||||
Commitments and Contingencies | ||||||||
Annual lease expense | 37 | |||||||
SNH | Maximum | ||||||||
Commitments and Contingencies | ||||||||
Annual lease expense | $ 363 | |||||||
SNH | Maximum | Second Expansion Lease [Member] | ||||||||
Commitments and Contingencies | ||||||||
Annual lease expense | 46 | |||||||
SNH | Maximum | Third Expansion Lease [Member] | ||||||||
Commitments and Contingencies | ||||||||
Annual lease expense | $ 35 | |||||||
Ja-Cole | ||||||||
Commitments and Contingencies | ||||||||
Size of building space | ft² | 12,500 | |||||||
Additional leased office space in square feet | ft² | 2,500 | |||||||
Ja-Cole | Minimum | ||||||||
Commitments and Contingencies | ||||||||
Annual lease expense | $ 113 | |||||||
Ja-Cole | Maximum | ||||||||
Commitments and Contingencies | ||||||||
Annual lease expense | 116 | |||||||
Ashley Avenue Lease | ||||||||
Commitments and Contingencies | ||||||||
Size of building space | ft² | 15,000 | |||||||
Right to early termination of lease | 18 months | |||||||
Notice period for termination of contract | 4 months | |||||||
Ashley Avenue Lease | Minimum | ||||||||
Commitments and Contingencies | ||||||||
Annual lease expense | 381 | |||||||
Ashley Avenue Lease | Maximum | ||||||||
Commitments and Contingencies | ||||||||
Annual lease expense | $ 360 | |||||||
Heights Union | ||||||||
Commitments and Contingencies | ||||||||
Size of building space | ft² | 1,500 | |||||||
Heights Union Premises | ||||||||
Commitments and Contingencies | ||||||||
Size of building space | ft² | 75,000 | |||||||
Heights Union Premises | Minimum | ||||||||
Commitments and Contingencies | ||||||||
Annual lease expense | $ 2,400 | |||||||
Heights Union Premises | Maximum | ||||||||
Commitments and Contingencies | ||||||||
Annual lease expense | $ 3,308 |
Commitments and Contingencies_2
Commitments and Contingencies - Lease Expense (Details) $ in Thousands | 12 Months Ended |
Dec. 31, 2019USD ($) | |
Finance lease costs | |
Amortization of right-of-use assets | $ 22 |
Interest on lease liabilities | 4 |
Operating lease costs | 1,910 |
Short term lease costs | 41 |
Variable lease costs | 17 |
Total lease cost | $ 1,994 |
Commitments and Contingencies_3
Commitments and Contingencies - Supplemental Balance Sheet Information Related to Leases (Details) $ in Thousands | Dec. 31, 2019USD ($) |
Operating Leases | |
Operating lease right-of-use assets | $ 3,133 |
Current maturities of long-term obligations | $ 1,719 |
Operating Lease, Liability, Current, Statement of Financial Position [Extensible List] | Long-term Debt, Current Maturities |
Long term obligations | $ 1,565 |
Operating Lease, Liability, Noncurrent, Statement of Financial Position [Extensible List] | Long-term Debt, Excluding Current Maturities |
Finance Leases | |
Finance lease right-of-use assets | $ 87 |
Current maturities of long-term obligations | 17 |
Long term obligations | $ 30 |
Commitments and Contingencies_4
Commitments and Contingencies - Other Information Related to Leases (Details) $ in Thousands | 12 Months Ended |
Dec. 31, 2019USD ($) | |
Commitments and Contingencies | |
Cash paid for amounts included in the measurement of operating lease liabilities | $ 1,773 |
Right-to-use assets obtained in exchange for new finance lease liabilities | $ 16 |
Weighted-average remaining lease term - finance leases | 3 years |
Weighted-average remaining lease term - operating leases | 2 years |
Weighted-average discount rate - finance leases | 7.28% |
Weighted-average discount rate - operating leases | 6.28% |
Commitments and Contingencies_5
Commitments and Contingencies - Future Minimum Lease Payments (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Operating Leases | |||
2020 | $ 2,664 | ||
2021 | 4,007 | ||
2022 | 2,573 | ||
2023 | 2,581 | ||
2024 | 2,644 | ||
Thereafter | 27,251 | ||
Total Future Minimum Lease Payments | 41,720 | ||
Less future payments for leases that have not yet commenced | (38,246) | ||
Less imputed interest on commenced leases | (190) | ||
Total Lease Liability | $ 3,284 | ||
Operating Lease, Liability, Statement of Financial Position [Extensible List] | us-gaap:LongTermDebtCurrent us-gaap:LongTermDebtNoncurrent | ||
Finance Leases | |||
2020 | $ 19 | ||
2021 | 19 | ||
2022 | 10 | ||
2023 | 3 | ||
2024 | 1 | ||
Total Future Minimum Lease Payments | 52 | ||
Less imputed interest on commenced leases | (5) | ||
Total Lease Liability | 47 | ||
Operating | |||
2019 | $ 1,866 | ||
2020 | 2,540 | ||
2021 | 3,970 | ||
2022 | 2,518 | ||
2023 | 2,574 | ||
Thereafter | 30,111 | ||
Total | 43,579 | ||
Capital | |||
2019 | 28 | ||
2020 | 13 | ||
2021 | 15 | ||
2022 | 7 | ||
Total | 63 | ||
Rent expense | $ 516 | $ 484 | $ 494 |
Commitments and Contingencies_6
Commitments and Contingencies - Service Agreements (Details) - USD ($) $ in Thousands | 1 Months Ended | 12 Months Ended | ||
Dec. 31, 2011 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Tissue Processing Agreement [Member] | ||||
Service Agreements | ||||
License fee amount | $ 2,148 | $ 1,931 | $ 1,409 | |
Master Services Agreement For Clinical Research and Related Services [Member] | ||||
Service Agreements | ||||
Service agreement amount paid upon execution of agreement | $ 151 |
Commitments and Contingencies_7
Commitments and Contingencies - Concentrations (Details) $ in Thousands | 1 Months Ended | 12 Months Ended | ||||
Jul. 31, 2018USD ($)aft² | Dec. 31, 2019USD ($)item | Jun. 30, 2020USD ($) | Jul. 09, 2019USD ($) | Sep. 30, 2018ft² | Sep. 20, 2018ft² | |
Concentrations | ||||||
Size of building space | ft² | 70,000 | |||||
Area of land where building resides | a | 8.6 | |||||
Payments to acquire Land | $ 731 | |||||
Payments to acquire Building | $ 4,300 | |||||
Design build agreement | ||||||
Concentrations | ||||||
Estimated cost relating to design build agreement | $ 29,000 | |||||
Additional costs associated with design build agreement | 14,400 | |||||
Expenses related to improvements | $ 6,066 | |||||
Maximum | Design build agreement | ||||||
Concentrations | ||||||
Receivable economic development grants from state and local authorities | 2,685 | |||||
Cash grants | $ 1,250 | |||||
Vendor | ||||||
Concentrations | ||||||
Number of products from which revenue is derived | item | 4 | |||||
Heights Union | ||||||
Concentrations | ||||||
Size of building space | ft² | 1,500 | |||||
Area of land where building resides | ft² | 75,000 | |||||
Expenses related to improvements | $ 441 | |||||
Heights Union | Expected | Maximum | ||||||
Concentrations | ||||||
Expenses related to improvements | $ 9,833 |
Commitments and Contingencies_8
Commitments and Contingencies - Litigation (Details) - individual | Feb. 04, 2019 | Nov. 11, 2019 | Aug. 12, 2019 |
Loss Contingencies [Line Items] | |||
Threshold period for not filing response to complaint | 30 days | ||
Case of Novitzki vs Zaderej | |||
Loss Contingencies [Line Items] | |||
Minimum number of candidates elected to board | 3 | 6 |
Quarterly Results of Operatio_3
Quarterly Results of Operations (Unaudited) (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended | |||||||||
Dec. 31, 2019 | Sep. 30, 2019 | Jun. 30, 2019 | Mar. 31, 2019 | Dec. 31, 2018 | Sep. 30, 2018 | Jun. 30, 2018 | Mar. 31, 2018 | Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Quarterly Results of Operations (Unaudited) | |||||||||||
Revenues | $ 28,162 | $ 28,564 | $ 26,701 | $ 23,285 | $ 23,433 | $ 22,660 | $ 20,584 | $ 17,260 | $ 106,712 | $ 83,937 | $ 60,426 |
Gross profit | 23,281 | 24,054 | 22,457 | 19,571 | 19,793 | 19,196 | 17,478 | 14,547 | 89,363 | 71,014 | 51,115 |
Net loss | $ (7,038) | $ (5,571) | $ (7,022) | $ (9,504) | $ (5,224) | $ (4,102) | $ (7,427) | $ (5,644) | $ (29,135) | $ (22,397) | $ (10,445) |
Loss per common share - basic and diluted | $ (0.18) | $ (0.14) | $ (0.18) | $ (0.24) | $ (0.13) | $ (0.11) | $ (0.20) | $ (0.16) | $ (0.74) | $ (0.60) | $ (0.31) |
Schedule II - Valuation and Q_2
Schedule II - Valuation and Qualifying Accounts (Details) - USD ($) $ in Thousands | 12 Months Ended | ||
Dec. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 | |
Allowance for doubtful accounts | |||
SEC Schedule, 12-09, Valuation and Qualifying Accounts Disclosure [Line Items] | |||
Balance | $ 1,117 | $ 461 | $ 272 |
Additions | 514 | 852 | 223 |
Deductions (Chargeoffs) | (539) | (196) | (34) |
Balance | 1,092 | 1,117 | 461 |
Valuation allowance for deferred tax assets | |||
SEC Schedule, 12-09, Valuation and Qualifying Accounts Disclosure [Line Items] | |||
Balance | 33,876 | 28,357 | 39,111 |
Additions | 5,977 | 5,519 | |
Deductions (Chargeoffs) | (10,754) | ||
Balance | $ 39,853 | $ 33,876 | $ 28,357 |