10-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-K

(Mark One)

þ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2014

OR

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from                     to                     .

Commission file number: 001-36545

INTERSECT ENT, INC.

(Exact name of registrant as specified in its charter)

Delaware	20-0280837
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
1555 Adams Drive Menlo Park, CA	94025
(Address of principal executive offices)	(zip code)

Registrant’s telephone number, including area code:

(650) 641-2100

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class	Name of Exchange on Which Registered
Common Stock, $0.001 par value	The NASDAQ Global Market

Securities registered pursuant to Section 12(g) of the Act:

None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.    Yes  ¨    No  þ

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.    Yes  ¨    No  þ

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  þ    No  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  þ    No  ¨

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  þ

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act:

Large accelerated filer	¨		Accelerated filer	¨
Non-accelerated filer	þ	(Do not check if a smaller reporting company)	Smaller reporting company	¨

Indicate by check mark whether the registrant is a shell company (as defined in Exchange Act Rule 12b-2).    Yes  ¨    No  þ

As of June 30, 2014, the last business day of the registrant’s most recently completed second fiscal quarter, there was no established public market for the registrant’s common stock. The registrant’s common stock began trading on The NASDAQ Global Market on July 24, 2014.

The number of shares of common stock outstanding as of February 28, 2015 was 23,498,856.

Documents Incorporated by Reference

Portions of the registrant’s definitive Proxy Statement for its 2015 Annual Stockholders’ Meeting are incorporated by reference into Part III of this Annual Report on Form 10-K, to be filed within 120 days of the registrant’s fiscal year ended December 31, 2014.

INTERSECT ENT, INC.

Annual Report on Form 10-K

For the Fiscal Year Ended

December  31, 2014

TABLE OF CONTENTS

		Page
PART I
Item 1.	Business		1
Item 1A.	Risk Factors		18
Item 1B.	Unresolved Staff Comments		48
Item 2.	Properties		48
Item 3.	Legal Proceedings		48
Item 4.	Mine Safety Disclosures		48
PART II
Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities		49
Item 6.	Selected Financial Data		52
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		53
Item 7A.	Quantitative and Qualitative Disclosure About Market Risk		61
Item 8.	Financial Statements and Supplementary Data		62
Item 9.	Changes in and Disagreements With Accountants on Accounting and Financial Disclosure		62
Item 9A.	Controls and Procedures		62
Item 9B.	Other Information		63
PART III
Item 10.	Directors, Executive Officers and Corporate Governance		64
Item 11.	Executive Compensation		64
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters		64
Item 13.	Certain Relationships and Related Transactions and Director Independence		64
Item 14.	Principal Accountant Fees and Services		64
PART IV
Item 15.	Exhibits and Financial Statement Schedules		65
Signatures			66
Financial Statements			F-1

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CAUTIONARY INFORMATION REGARDING FORWARD-LOOKING STATEMENTS

This Annual Report on Form 10-K for the year ended December 31, 2014, or “Form 10-K,” contains forward-looking statements concerning our business, operations, and financial performance and condition as well as our plans, objectives, and expectations for business operations and financial performance and condition. Any statements contained herein that are not of historical facts may be deemed to be forward-looking statements. You can identify these statements by words such as “anticipate,” “assume,” “believe,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “should,” “will,” “would,” and other similar expressions that are predictions of or indicate future events and future trends. These forward-looking statements are based on current expectations, estimates, forecasts, and projections about our business and the industry in which we operate and management’s beliefs and assumptions and are not guarantees of future performance or development and involve known and unknown risks, uncertainties, and other factors that are in some cases beyond our control. As a result, any or all of our forward-looking statements in this Form 10-K may turn out to be inaccurate. Factors that could materially affect our business operations and financial performance and condition include, but are not limited to, those risks and uncertainties described herein under “Item 1A—Risk Factors.” You are urged to consider these factors carefully in evaluating the forward-looking statements and are cautioned not to place undue reliance on the forward-looking statements. The forward-looking statements are based on information available to us as of the filing date of this Form 10-K. Unless required by law, we do not intend to publicly update or revise any forward-looking statements to reflect new information or future events or otherwise. You should, however, review the factors and risks we describe in the reports we will file from time to time with the Securities and Exchange Commission, or SEC, after the date of this Form 10-K.

PART I

Item 1. Business

Overview

We are a commercial stage drug-device company committed to improving the quality of life for patients with ear, nose and throat conditions. We have developed a drug releasing bioabsorbable implant technology that enables targeted and sustained release of therapeutic agents. This targeted drug delivery technology is designed to allow ear, nose and throat, or ENT, physicians to improve patient care. Our approved and in-development products are designed to treat the spectrum of needs among the estimated 3.5 million U.S. patients who are managed by ENT physicians for chronic sinusitis, one of the most prevalent chronic diseases in the United States and one of the most costly conditions for U.S. employers. Chronic sinusitis patients range from those needing and electing surgery, those not having had sinus surgery and those that have had one or more surgeries but continue to suffer symptoms. To address these patient groups, we are:

• Marketing PROPEL^® and PROPEL mini, the first and only steroid releasing implants approved by the U.S. Food and Drug Administration, or FDA, for use in patients undergoing surgery for chronic sinusitis. PROPEL and PROPEL mini have been proven clinically in a meta-analysis of prospective, multicenter, randomized, controlled, double-blind clinical studies to improve surgical outcomes, including a 35% reduction in the need for postoperative oral steroid and surgical intervention. Inserted by a physician into the ethmoid sinuses during sinus surgery, the self-expanding implants are designed to conform to and hold open the surgically enlarged sinus, while gradually releasing an anti-inflammatory steroid over a period of 30 days, before being fully absorbed into the body.

• Conducting a clinical trial designed to demonstrate the benefit of PROPEL mini when placed in the frontal sinuses during surgery and to support an expanded indication for this approved product.

• Conducting clinical trials of RESOLVE, a steroid releasing implant designed to provide a cost-effective, less invasive solution for patients that have had ethmoid sinus surgery yet suffer from recurrent sinus obstruction due to polyps. The RESOLVE device is designed to be implanted in the sinus in a procedure conducted in the physician’s office as an alternative to revision surgery. We have

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completed three studies of RESOLVE in a total of 117 patients and are currently conducting the RESOLVE II trial, a phase III double-blinded evaluation enrolling 300 patients to assess the safety and efficacy of the product.

• Conducting clinical trials of NOVA, a steroid releasing implant designed to provide a cost-effective, less invasive solution for patients with primary chronic sinusitis, those that have had not had sinus surgery. NOVA was designed to fit in the ostia of the dependent sinuses following sinus dilation, which is typically performed using a balloon in the physician’s office. We recently completed a 15 patient study to assess the feasibility of implant placement and outcomes measured through three months. Our next step in the development of NOVA is to work with the FDA to align on further clinical trial study design.

According to the Centers for Disease Control and Prevention, or CDC, approximately 12% of the U.S. adult population, or 29 million people, are affected by chronic sinusitis, making it more prevalent than heart disease and asthma. Chronic sinusitis is an inflammatory condition in which the sinus lining becomes swollen and inflamed, leading to significant patient morbidity. Chronic sinusitis significantly impacts the quality of life of patients, including difficulty breathing, chronic headaches, recurrent infections, bodily pain and loss of sense of smell and taste. These persistent symptoms can severely impact a patient’s day-to-day well-being, resulting in frequent doctor visits and lost work productivity and can lead to chronic fatigue and depression. Chronic sinusitis is managed by a combination of medical management and surgical intervention. The first line of therapy is medical management involving antibiotics, anti-inflammatory steroids and decongestants. Despite limited efficacy of the use of antibiotics in this patient population and the consequence of increasing bacterial resistance, there is pervasive overuse of these drugs, which could lead to patient resistance and has resulted in sinusitis being identified as a major target in national efforts to reduce unnecessary medical intervention. Sinusitis is the most common reason for adult outpatient antibiotic use in the United States, comprising 11% of all antibiotic prescriptions. Patients whose symptoms persist despite medical management, are recommended to undergo functional endoscopic sinus surgery, or FESS. FESS is performed in the operating room to open the blocked sinus pathways by removing inflamed tissue and bone using surgical tools. Although sinus surgery can be effective, a majority of patients experience recurrent symptoms which commonly necessitate additional treatment with medications and surgery.

Our target market consists of more than 3.5 million people with chronic sinusitis in the United States who are managed by ENT physicians and who we believe could benefit from products that incorporate our drug releasing bioabsorbable implant technology. Approximately 540,000 patients undergo sinus surgery for chronic sinusitis each year in the United States. This includes patients who are under the age of 18 and surgeries on the frontal sinuses, both of which represent potential expanded future indications for PROPEL and PROPEL mini and would require FDA approval.

While our current commercial focus is the U.S. market, we plan to initiate efforts that will allow for future expansion into international geographies. We estimate the annual total addressable market for PROPEL and PROPEL mini in these regions to be greater than $1.0 billion and the global annual total addressable market for our products and products in clinical development for chronic sinusitis patients to exceed $6.0 billion.

PROPEL mini is designed for patients requiring less extensive surgery and those who have smaller anatomy, thus expanding the treatable patient population. In the first half of 2013, we began scaling our U.S. direct commercial presence. As of December 31, 2014, we estimate that over 1,200 accounts are stocking PROPEL for use by the ENT surgeon. Based on the number of units shipped as of December 31, 2014, we estimate that physicians have treated over 50,000 patients with PROPEL and PROPEL mini. For the years ended December 31, 2014, 2013 and 2012, we generated revenue of $38.6 million, $17.9 million and $5.9 million, respectively, and had a net loss of $18.4 million, $18.4 million and $16.4 million, for each respective year. As of December 31, 2014, we had an accumulated deficit of $96.6 million.

We have expanded our sales organization to include 52 territory managers as of December 31, 2014, an expansion of 68% from our 31 territory managers as of December 31, 2013. We intend to continue to grow our sales force in order to expand our communication of the benefits of our steroid releasing implants to our existing and additional physician customers. Approximately 85% of our 2014 revenue came from reordering customers.

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Overview of Sinusitis

The sinuses are a system of connected air-filled cavities located within the bones around the nose and eyes that allow for natural ventilation and drainage of mucus. There are four sinus cavities: ethmoid, frontal, maxillary and sphenoid. One of each type of sinus lies on either side of the face. The sinuses are lined with soft, pink tissue called mucosa, which serves to constantly cleanse the sinuses of impurities such as dust, dirt, allergens, pollutants and bacteria. To clear these inhaled pathogens, the sinus lining secretes mucus which is then cleared away by small, hair-like structures called cilia, which act in coordination to sweep the mucus through the sinus pathways and out through the back of the throat.

The ethmoid sinuses, which lie between the eyes, are a series of small cells with multiple, often interconnected openings in a honeycomb-like formation. These sinuses serve as the central aeration and drainage pathway for all other sinuses. The frontal, maxillary and sphenoid sinuses are known as dependent sinuses, as they each consist of one large cell that drains through an opening, or ostium, into the ethmoid sinus.

Chronic sinusitis is an inflammatory condition in which the sinus lining becomes swollen and inflamed, leading to significant patient morbidity including difficulty breathing, chronic headaches, recurrent infections, bodily pain and loss of sense of smell and taste. These persistent symptoms can severely impact a patient’s day-to-day well-being, resulting in frequent doctor visits and can lead to chronic fatigue and depression. The condition significantly reduces work productivity from absenteeism and reduced on-the-job effectiveness, especially meaningful given the average chronic sinusitis patient age of approximately 37 years.

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The debilitating patient symptoms and quality of life impairments attributed to chronic sinusitis create a significant healthcare burden to patients, insurers and employers.

Current Treatments for Chronic Sinusitis and Their Limitations

The treatment of chronic sinusitis often entails a combination of medical management and surgical intervention to treat the underlying inflammation of the sinus lining, while addressing the secondary symptoms caused by obstruction of the natural drainage pathways.

Medical Management

The first line of therapy for chronic sinusitis is medical management, which typically includes prescribed antibiotics, anti-inflammatory steroids and decongestants. Despite limited efficacy of use of antibiotics in this patient population and the consequence of increasing bacterial resistance, there is pervasive overuse of these drugs, which could lead to patient resistance and has resulted in sinusitis being identified as a major target in national efforts to reduce unnecessary medical intervention. Sinusitis is the most common reason for adult outpatient antibiotic use in the United States, comprising 11% of all antibiotic prescriptions. In addition, physicians often prescribe decongestants and other drugs to target mucus accumulation.

Steroids are prescribed in two forms, oral steroid pills and nasal steroid sprays, both of which have serious limitations. Oral steroid therapy is effective at reaching the sinus lining, but it does so by means of systemic exposure and therefore carries the risk of serious side effects, including glaucoma, bone loss, weight gain, psychosis and difficulty in controlling blood glucose levels in patients with diabetes. Nasal steroid sprays, commonly indicated for rhinitis, or inflammation of the nasal passage, are routinely prescribed for chronic sinusitis patients. While nasal steroid sprays avoid systemic exposure and thus lack such serious side effects, an estimated 70% of the drug is swallowed and the remainder is directed to the nasal passages, instead of the sinuses, which limits efficacy. In a published study, the fraction of drug deposited in the sinuses from a nasal steroid spray was measured to be less than 2%. Poor patient compliance further limits the effectiveness of nasal steroid sprays. Although medical management can reduce symptoms, an estimated 20% or more of chronic sinusitis patients who receive medical therapy are unresponsive.

Medical management is not only used as a first line of therapy for patients afflicted with primary chronic sinusitis, situations in which patients have not had sinus surgery, but also for patients who have recurrent symptoms despite having sinus surgery. Patients in both stages of the condition are managed medically and hence are subject to the limitations described above.

Sinus Surgery

In cases where patients are symptomatic despite medical management, a physician may recommend FESS. In the FESS procedure, the physician enlarges the inflamed and obstructed sinus pathways by removing inflamed tissue and bone in order to facilitate normal sinus drainage and aeration. First introduced in the United States in the 1980s, FESS is considered the standard of care for surgical intervention to treat chronic sinusitis. During the procedure, the honeycomb-like cells of the ethmoid sinuses are removed, resulting in one large open cavity. Given their essential role in sinus function, the ethmoid sinuses are opened in over 85% of FESS procedures. The dependent sinuses each drain into the ethmoid sinuses through ostia, which may be enlarged by either surgically removing tissue or via balloon sinuplasty.

FESS is typically performed under general anesthesia in an operating room. During the procedure, a physician inserts an endoscope into the nasal cavity to provide visualization of the patient’s anatomy. Surgical instruments, powered cutting tools and balloon sinuplasty devices are used to remove or dilate obstructive tissue and bone. Following the surgical intervention, physicians often pack the newly opened ethmoid sinuses with gauze or other obstructive sinus packing materials to hold the sinus cavities open. A follow-up office visit is

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required several days after the procedure to remove the sinus packing materials and an additional one to two follow-up visits typically occur over the first four to six weeks following surgery to monitor for and treat complications. A typical FESS procedure is paid at a Medicare rate of approximately $10,000. Private insurer payment rates average 139% of Medicare rates nationally.

Since the introduction of FESS, several new technologies, such as image-guided surgical navigation systems, powered surgical instruments and balloon sinus dilation devices have expanded the addressable patient population who can benefit from FESS. For instance, balloon sinus dilation devices were developed to be used in combination with traditional surgical instruments during FESS to treat the dependent sinuses and have now allowed for treatment of patients in the physician office setting.

While FESS is the standard of care for treating chronic sinusitis, it has several limitations:

• Limited effectiveness. Inflammation and scarring in the postoperative period are common and can compromise the surgical result by negatively impacting the ability of the sinuses to heal. This increases the need for continued medical management and additional surgical procedures. Within the first year after surgery, approximately 64% of patients experience recurrent symptoms.

• Limited ability to address postoperative inflammation. While oral steroids prescribed postoperatively can be effective at addressing inflammation and scarring, the required doses are significant and can result in serious systemic side effects, including glaucoma, bone loss, weight gain, and psychosis. Further, they have restricted use in diabetic individuals, patients with glaucoma and certain psychological disorders. We believe, as a result, only 20% of physicians prescribe them routinely after surgery. The absence of anti-inflammatory steroid therapy leaves the surgical wound susceptible to postoperative complications.

• Pain and discomfort during postoperative period. During surgery, an ENT physician typically places sinus packing materials into the ethmoid sinuses to physically separate tissues in an attempt to prevent scarring and adhesions. Following surgery, physicians see patients two to three times in order to monitor for and, if necessary, to treat complications as well as remove these sinus packing materials. The sinus packing materials are removed by pulling or suctioning them from the newly opened cavity, a painful and time-consuming process, often necessitating pain medication. Moreover, the use of sinus packing materials obstructs the newly opened sinuses, leading to patient symptoms of congestion and discomfort. Despite the use of packing materials, scarring and adhesions are common, necessitating painful removal of additional tissue during postoperative treatments.

• Potential for revision surgery. Within the first year after FESS, approximately 10% of patients will return to the operating room to undergo a revision procedure, while additional patients will return for a revision procedure after one year. We believe the risk of potential revision surgery is a significant deterrent to some patients that would otherwise undergo FESS for chronic sinusitis.

Trend for treatment in the physician’s office

As mentioned above, balloon sinus dilation devices along with other technological advances have expanded the treatable chronic sinusitis patient population. Sinus dilation is now being utilized by physicians in their offices to treat patients with mild chronic sinusitis who may not be willing to undergo or are not candidates for sinus surgery performed under general anesthesia in the operating room setting. The ability to treat patients in the office with sinus dilation has spurred interest amongst the ENT physician community for additional products that facilitate treatment of additional patients in the office setting.

We believe that because of the limitations of medical management and lack of disease resolution after FESS, many chronic sinusitis patients remain undertreated. We estimate that only a third of patients recommended for sinus surgery proceed with the potentially beneficial procedure, which we believe is due to its limitations and high risk for additional medical management and surgical revision. While balloon sinuplasty has

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been introduced to open frontal, maxillary and sphenoid sinuses, or dependent sinuses, in a less invasive manner, it cannot treat disease in the most commonly involved sinuses, the ethmoids, and does not address the underlying inflammation associated with chronic sinusitis. We believe that an opportunity exists to reach these undertreated patients by providing a more effective option to address their inflammatory disease, while improving the overall outcomes of FESS.

Our Solution

We have designed a drug releasing implant that consists of bioabsorbable polymers that control drug release and provide structural support to adjacent tissues during the healing process, while the implant is gradually and fully absorbed into the body. We believe the development, manufacturing, and regulatory approval for products incorporating this technology requires capabilities in polymer science, drug delivery, analytical testing and combination products. These competencies allow our technical team to tailor drug formulation, polymer design, drug release duration, implant radial strength and degradation period to meet different clinical needs. This expertise has been utilized in the development of PROPEL and PROPEL mini and is currently being leveraged in the development of our pipeline products. Any new products we develop, or changes that we make in the therapeutic agent used in our PROPEL or PROPEL mini, will require FDA approval prior to commercialization in the United States.

Our PROPEL implants are designed to improve the outcomes of sinus surgery by holding open the sinus passageways, reducing postoperative inflammation and scarring. They are inserted by a physician under endoscopic visualization during sinus surgery in the ethmoids. Once inserted, the self-expanding implants conform to and hold open the surgically enlarged sinus, while gradually releasing an anti-inflammatory steroid, mometasone furoate, directly to the sinus lining over a period of 30 days. Mometasone furoate, which is available generically and has been approved by the FDA for use in PROPEL and PROPEL mini, is the active ingredient in NASONEX, a nasal spray used to treat allergic rhinitis and other indications. The implants fully absorb into the body over a period of four to six weeks or are removed at the discretion of a physician during a routine office visit. Once absorbed or removed, the implant no longer provides structural support. The graphic below illustrates the operation of PROPEL and PROPEL mini in the sinuses:

We believe the principal benefits of our steroid releasing implants are:

• Improved surgical outcomes. Our PROPEL implants have been clinically proven to improve FESS results by reducing postoperative inflammation and scarring. In a meta-analysis of prospective, multicenter, randomized, controlled, double-blind clinical studies, our PROPEL implants provided a 46% relative reduction in inflammation and a 70% relative reduction in scarring compared to the control implant. The control implant was identical to the PROPEL implant in composition, size, structure and mode of insertion but lacked the mometasone furoate coating. Our PROPEL implants also demonstrated a significant reduction in postoperative complications, including severe inflammation, such as polyps, and scarring, which are both common reasons for FESS failure.

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• Targeted steroid therapy to address postoperative inflammation. Our PROPEL implants are the first and only drug releasing bioabsorbable sinus implants. They deliver postoperatively an anti-inflammatory steroid directly to the sinus lining in a controlled fashion over a period of 30 days, which helps in the wound healing process. In a meta-analysis of prospective, multicenter, randomized, controlled, double-blind clinical studies, our PROPEL implants reduced the need for oral steroids by 40% compared to the control implant.

• Reduced pain and discomfort during postoperative period. Our PROPEL implants improve postoperative care. Once inserted, the self-expanding implants are designed to conform to and hold open the surgically enlarged ethmoid sinuses until fully absorbed into the body, which improves wound healing without obstructing the sinuses and causing congestion. Our steroid releasing implants are designed to obviate the need for sinus packing materials, which can be a significant source of postoperative pain and discomfort. Our PROPEL implants significantly reduce scarring and adhesions, which reduces the potential for pain in postoperative treatments.

• Reduced surgical revisions. In clinical studies, our PROPEL implants demonstrated a significant reduction in need for postoperative surgical intervention. In a meta-analysis of prospective, multicenter, randomized, controlled, double-blind clinical studies, our PROPEL implants provided a 35% relative reduction in the need for postoperative oral steroid and surgical intervention compared to the control implant. We believe that patients who have been deterred by the high revision rates associated with FESS may now consider surgical intervention to treat their chronic sinusitis condition.

We believe these benefits will help expand the size of the FESS market as referring physicians increase their prescription of surgical intervention for chronic sinusitis and more patients elect to undergo sinus surgery to treat their condition.

Our Technology Platform

Our drug releasing bioabsorbable implant technology consists of a polymer-based implant that is coated with a drug and polymer matrix. In fabricating the implant, we use polymers that are bioabsorbable and, over time, gradually and fully absorb into the body. The polymers chosen are materials with established safety profiles and have been used in medical devices for over 30 years. Individual polymer properties can further enhance biocompatibility in the sinus anatomy. For example, the polyethylene glycol used in the drug coating for PROPEL and PROPEL mini has been proven to be an anti-inflammatory, protein-resistant barrier.

Our innovative design process enables us to develop the mechanical and drug delivery features independently, lending to our customization capability. Our highly specialized bioabsorbable polymer engineering capability, allows us to design the implant with various physical characteristics depending on the size, radial strength and other attributes that are appropriate to enable treatment of the underlying disease in its location. Our implants are designed to be self-expanding, which facilitates insertion when compressed, and expand to conform to the surrounding anatomy after insertion. The ability to control radial strength is important in enabling us to address different diseases at different states. For example, in some instances an implant may be used to maintain an already open passageway. In other situations, an implant with significantly greater strength may mechanically dilate a diseased passageway.

Our expertise in drug delivery allows us to effectively pair appropriate polymer delivery matrices with desired therapeutic agents. This allows us to select the therapeutic agent based on its clinical effectiveness and tailor the platform accordingly. In the case of PROPEL, we considered the wide range of off-patent corticosteroids, chose the one best suited for treatment of sinus inflammation, then customized the polymer delivery. Once a drug is selected, our specialized capability in drug formulation allow us to control the speed at which the drug elutes, allowing us to design implants from which the drug is released over a matter of weeks to even longer durations. As a result, we have the flexibility to select the type of drug to be used on the implant and then engineer the implant to control the amount, timing and delivery of the drug.

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Our Commercial and Clinical Stage Products

We currently have two commercial products, PROPEL and PROPEL mini. We are also developing PROPEL mini for use in frontal sinus surgery and are conducting clinical trials to evaluate two products, RESOLVE and NOVA, for treatment of patients in the physician’s office.

PROPEL

Our steroid releasing implants are the first and only FDA-approved drug releasing implants for chronic sinusitis sufferers. They are indicated for use in patients 18 years or older following ethmoid sinus surgery to maintain patency.

The PROPEL implant is formed from a bioabsorbable polymer fiber, poly-(L-lactide-co-glycolide), or PLG, a material that has been used in medical devices for 30 years. The implant is coated with a drug releasing coating containing 370 micrograms of mometasone furoate, a corticosteroid with anti-inflammatory properties, in a polymer matrix containing PLG and polyethylene glycol, or PEG. Because of its bioabsorbable nature, the implant will be fully and gradually absorbed into the body over a period of four to six weeks, or it may be removed prior to such time at the discretion of the physician. The implant is designed to accommodate the size and variability of the surgically enlarged ethmoid sinus anatomy and features a nominal expanded implant length of 23 millimeters. PROPEL is delivered using a one-handed ergonomically designed delivery system that provides access to the ethmoid sinuses using endoscopic visualization. The delivery system is comprised of a sheath with a curved distal tip, inside which the implant is housed for deployment. A funnel tool is included in the product kit and is attached to the distal tip of the delivery system to assist in the loading of the implant into the delivery system.

We designed the steroid drug release of PROPEL for a duration of 30 days to match the postoperative healing cycle characterized in published medical literature. We selected mometasone furoate as the anti-inflammatory agent among numerous evaluated compounds based on three important characteristics: absorbability, binding affinity and low systemic bioavailability. The compound preferentially absorbs into the sinus lining instead of the surrounding mucous fluid. The drug has the highest glucocorticoid receptor binding affinity, making it highly potent in preventing inflammation once within tissue. Glucocorticoid receptors are the molecules in the surface membranes of cells throughout the body to which corticosteroids chemically bind. Additionally, the compound has low systemic bioavailability, meaning that it has negligible systemic safety side effects.

PROPEL and PROPEL mini steroid releasing implants PROPEL and PROPEL mini implant delivery systems

PROPEL Mini

The PROPEL mini implant, is a smaller version of PROPEL and is manufactured from the same bioabsorbable polymer fiber and with the same drug releasing coating and other design characteristics. The nominal expanded implant length of the PROPEL mini is 16 millimeters. The profile of the delivery system is

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smaller, facilitating treatment of smaller anatomy. The distal tip is curved to allow for treatment of additional sinuses as future indications are obtained. A crimper, loading tool and funnel are provided in the product kit to assist in the crimping and loading of the implant into the delivery system.

RESOLVE

Our steroid releasing implants are clinically proven to improve surgical results for patients undergoing FESS, reducing the need for postoperative surgical and steroid intervention. However, given the underlying chronic inflammation associated with this condition, recurrent obstruction of the sinus cavity can occur over time following sinus surgery, especially in patients afflicted with polyps, a sign of severe inflammation. Improving care of such chronic patients holds meaningful opportunity to significantly reduce healthcare costs by preventing revision surgery. We are developing the RESOLVE steroid releasing implant as an alternative treatment option for patients who are candidates for revision surgery that can be placed in the physician office setting during a routine visit. The implant is based on the same drug releasing bioabsorbable implant technology as PROPEL, but is designed to have greater radial strength in order to dilate an obstructed, polyp-filled sinus cavity, and deliver drug for an extended period of time. RESOLVE is subject to regulation as a drug product and will require the submission to the FDA of a New Drug Application, or NDA, and approval of the NDA before we can make RESOLVE commercially available. We intend to pursue the NDA for this implant under Section 505(b)(2) of the FDCA. Section 505(b)(2) would enable us to rely, in part, on the FDA’s findings of safety and efficacy for an existing product, or published literature, in support of our NDA, which could expedite the development program of this implant by potentially decreasing the amount of clinical data that we would need to generate in order to obtain FDA approval.

NOVA

We are also developing NOVA, a steroid releasing implant designed to fit the openings of the frontal and maxillary sinuses following ostial dilation using balloon sinuplasty. This implant will allow treatment of patients, who have not yet had surgery in the physician office setting. We believe this product will further expand the addressable patient population to those that are either indicated for sinus surgery and choose not to proceed or those with less severe disease that would otherwise be treated with medical management.

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Other Products

Beyond chronic sinusitis, we may apply our drug releasing bioabsorbable implant technology to a variety of other ENT conditions, such as conditions affecting the ear and throat. We believe there are many opportunities to replace medical management and improve current surgical interventions with targeted drug releasing implants. In addition to building our product offering through internal product development efforts, we may selectively license or acquire complementary products and technologies, leveraging our experience at bringing new products to market and our commercial channel.

Clinical Trial Findings and In-Process Studies

PROPEL and PROPEL mini

The safety and efficacy of PROPEL has been studied in three prospective, multicenter clinical trials conducted in the United States enrolling a total of 205 patients. The principal safety and efficacy information is derived from the ADVANCE II randomized clinical trial and is supported by the ADVANCE clinical trial and an initial pilot study. A meta-analysis that pooled data from the ADVANCE II study and the initial pilot study provides further evidence of efficacy. In all three studies, implants were placed following ethmoid sinus surgery, or ethmoidectomy, which entails removal of the honeycomb-like partitions between the ethmoid sinuses in order to create larger sinus cavities. Based on the number of units shipped between the initial FDA approval in August 2011, and December 31, 2014, we estimate that physicians have treated over 50,000 patients with PROPEL and PROPEL mini.

All three studies were designed to measure PROPEL’s ability to improve the outcomes of sinus surgery. This included measuring the need for postoperative interventions such as adhesion lysis, which is a procedure to separate scar tissue and adhesions within the sinus cavity, and the need to prescribe oral steroids to treat inflammation. The studies also measured the impact of PROPEL on other postoperative complications, such as occurrence of polyposis and middle turbinate lateralization. Prevention of these complications contributes to the long-term success of sinus surgery. Polyposis represents a higher level inflammatory disease. The middle turbinate is a bony structure in the middle of the sinus, responsible for filtration, heating, and humidification of nasal air flow. Middle turbinate lateralization is an undesired complication where this structure curves towards the outer, or lateral, wall of the nose resulting in blockage of the ethmoid sinus passage.

In a meta-analysis, the two prospective, multicenter, randomized, controlled, double-blind studies enrolled a total of 143 patients utilizing an intra-patient control design. The results of these two trials, the ADVANCE II study and the initial Pilot study, were then pooled which represents the first and only Level 1a evidence for any devices used in sinus surgery today. Level 1a evidence is the highest level of evidence according to the criteria of the Centre for Evidence-Based Medicine at the University of Oxford. For evidence Level 1a, a meta-analysis of multiple randomized controlled trials is required.

Compared to the control implant, the drug releasing implant provided a 35% relative reduction in postoperative interventions, a 51% relative reduction in adhesion lysis and a 40% relative reduction in oral steroid intervention. The relative reduction in frank polyposis was 46%. Additional efficacy endpoints of significant, or severe, adhesions and middle turbinate lateralization, determined by clinical investigators at the study centers, were reduced by 70% (p=0.0013) and 75% (p=0.0225), respectively.

Principal Efficacy Results at Day 30 as graded by independent, blinded panel of physicians
Outcome Measure	Evaluable Patients*		Treatment Sides (n=143) No. (%)			Control Sides (n=143) No. (%)			Relative Reduction (%)		P Value
Postoperative intervention		128		42	(32.8)		65	(50.8)		-35		0.0008
Adhesion lysis		134		19	(14.2)		39	(29.1)		-51		0.0016
Oral steroid intervention		113		25	(22.1)		42	(37.2)		-40		0.0023
Frank polyposis		111		22	(19.8)		41	(36.9)		-46		<0.0001

* Evaluable subjects were those with gradable sinuses on both sides

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PROPEL mini Frontal Sinus Study. We are also conducting a prospective, randomized blinded multi-center clinical trial to support an expanded indication for placement of PROPEL mini in the frontal sinuses. PROPEL mini is currently indicated for placement in the ethmoid sinuses. As many as one in four patients undergoing sinus surgery for chronic sinusitis suffers from frontal sinus disease. We plan to enroll approximately 80 patients in the study using an intra-patient control design to assess both safety and efficacy of PROPEL mini when placed following surgery of the frontal sinus, compared to surgery alone. The primary efficacy endpoint is the reduction in need for postoperative interventions such as the need for surgical intervention or oral steroids.

RESOLVE

We are developing RESOLVE, a steroid releasing implant for refractory disease for the treatment of patients in the physician office setting. This product’s primary mode of action is as a drug, and for this reason will require NDA approval from the FDA, rather than PMA approval. In order to support an NDA application with the FDA, we are sponsoring four studies of this product candidate: a pilot study, a pharmacokinetic study, RESOLVE and RESOLVE II.

Pilot Study. We sponsored an initial pilot study which was a prospective, multicenter feasibility study that enrolled 12 adult patients who had prior FESS, but experienced recurrent polyposis refractory to medical management at four study sites in the United States in November 2011. Implants were delivered under topical or anesthesia in a physician’s office. Reductions in mean bilateral polyp grade as well as patient reported symptoms were demonstrated over 30 days and were sustained through six months. At six months follow-up, 64% of patients were no longer revision FESS candidates. No serious adverse events occurred.

This study provided initial clinical evidence of the feasibility, safety, and efficacy of in-office drug releasing implant placement in chronic sinusitis patients with recurrent polyposis after FESS. Based on these study results, we designed the RESOLVE study program.

Pharmacokinetic Study. A single-center pharmacokinetic study was conducted in 2013. The protocol required five patients to undergo serial blood sampling for one month following bilateral implant placement. The implant placement success rate was 100%. There was negligible systemic exposure to mometasone furoate delivered by the implant and no adrenal suppression nor serious adverse events.

The RESOLVE Study. We have completed the RESOLVE study, a Phase II prospective, randomized, blinded, multi-center clinical trial to study the safety and efficacy of the RESOLVE implant when placed in the office setting. The study enrolled 100 patients who suffer from chronic sinusitis due to recurrent ethmoid sinus obstruction so severe that revision surgery is indicated. The study met its primary safety endpoints, with 100% implant placement success, no ocular issues observed and no device-related serious adverse events. In addition, findings through the first 90 days of the six-month study demonstrated:

• Statistically significant reductions in clinicians’ endoscopic scoring of bilateral nasal polyp burden and ethmoid sinus obstruction in the treatment group, as compared to the control group through 90 days.

• Clinically meaningful, two-fold greater improvement in patient symptoms measured by nasal obstruction/congestion score for the treatment group, as compared to controls at 90 days. This difference was statistically significant for patients (n=74) who had a higher polyp burden at baseline.

• 52% of patients in the treatment arm were no longer indicated for sinus surgery, compared with 22% of the patients in the control arm, demonstrating a clinically meaningful reduction in the need for revision surgery.

The results observed at the six month time point were consistent with those observed at earlier time points. Statistically significant reductions in both nasal polyp burden and percent sinus obstruction were observed by the clinical investigators and the improvement in nasal obstruction/congestion score in the treatment group continued to be twice as large as that of the control group.

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RESOLVE II Study. We have initiated the RESOLVE II study, a pivotal Phase III clinical trial enrolling 300 patients at up to 45 U.S. centers. Primary study endpoints include assessment of improvements in both patient-reported symptoms and objective endoscopic outcomes as determined by clinical investigators and by an independent panel of surgeons. The RESOLVE II study builds upon our recently completed RESOLVE clinical study and is designed to provide safety and efficacy data to support the NDA.

NOVA

We are also developing NOVA, a steroid releasing implant designed to fit the openings of the dependent sinuses following surgical enlargement either during a primary sinus surgery or a revision. This implant will also allow treatment of patient in the physician office setting. A 15 patient multi-center, non-randomized clinical study to assess the feasibility of this implant was recently completed. Our next step in the development of NOVA is to work with the FDA to align on further clinical trial study design.

Competition

Our industry is highly competitive, subject to change and significantly affected by new product introductions and other activities of industry participants. Many of the companies developing or marketing ENT products are publicly traded or are divisions of publicly-traded companies, and these companies enjoy several competitive advantages, including:

• greater financial and human capital resources;

• significantly greater name recognition;

• established relationships with ENT physicians, referring physicians, customers and third-party payors;

• additional lines of products, and the ability to offer rebates or bundle products to offer greater discounts or incentives to gain a competitive advantage; and

• established sales, marketing and worldwide distribution networks.

Because of the size of the market opportunity for the treatment of chronic sinusitis, potential competitors have historically dedicated and will continue to dedicate significant resources to aggressively promote their products or develop new products. New product developments that could compete with us more effectively are possible because of the prevalence of chronic sinusitis and the extensive research efforts and technological progress that exist within the market. Large medical device companies with ENT divisions, such as Medtronic, also have capability in drug releasing stents.

Our commercially available products are designed to be used following sinus surgery. If another company successfully develops a surgical approach to the treatment of sinusitis that would not benefit from the use of our steroid releasing implants, if another company develops a device to treat the inflammation and scarring associated with sinus surgery that is more efficacious than our steroid releasing implants or if a pharmaceutical company successfully develops a drug that addresses chronic sinusitis without the need for surgical intervention, sales of our products would be significantly and adversely affected.

The alternative to delivering steroids to the sinuses post-operatively with PROPEL is the prescription of oral steroids. While oral steroids prescribed postoperatively can be effective at addressing inflammation and scarring, the required doses are significant and can result in serious systemic side effects, including glaucoma, bone loss, weight gain and psychosis. Further, oral steroids have restricted use in diabetic individuals, patients with glaucoma and some psychological disorders. We believe, as a result, only 20% of physicians prescribe them routinely after surgery. Additionally, there are commercially available packing materials on the market that provide a spacing function and are less expensive than PROPEL. During surgery, approximately 60% of ENT physicians place sinus packing materials, either absorbable or non-absorbable, into the ethmoid sinuses to physically separate tissues in an attempt to prevent scarring and adhesions. Sinus packing materials are not

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placed in the frontal sinuses. Following surgery, the sinus packing materials are removed by pulling or suctioning them from the newly opened cavity, a painful and time-consuming process, often necessitating pain medication. Despite the use of packing materials, scarring and adhesions are common, necessitating painful removal of additional tissue during postoperative treatments. Some physicians choose to soak these packing materials with steroid in liquid form in an effort to deliver steroid to the sinus. This practice is off-label and is not supported by clinical data. However, although we believe PROPEL and PROPEL mini have significant advantages over sinus packing materials and other treatment options, they are expensive relative to packing materials and may not be reimbursed by third-party payors. As a result, ENT physicians may choose to use oral steroid delivery or packing materials or a combination of the two, which are less expensive, in lieu of PROPEL or PROPEL mini.

We believe that our continued ability to compete favorably depends on:

• successfully expanding our commercial operations;

• continuing to innovate and maintain scientifically-advanced technology;

• developing technologies for applications in the sinuses and other areas of ENT;

• attracting and retaining skilled personnel;

• obtaining patents or other intellectual property protection for our products; and

• conducting clinical studies and obtaining and maintaining regulatory approvals.

Intellectual Property

As of December 31, 2014, we owned 51 issued patents globally, of which 28 were issued U.S. patents, and we owned 39 pending patent applications globally, of which 13 were pending patent applications in the United States. Subject to payments of required maintenance fees, annuities and other charges, our issued U.S. patents have expiration dates between 2017 and 2032, of which one will expire before 2020, 13 will expire between 2021 and 2025, and the remaining 14 will expire after 2025.

As of December 31, 2014, our trademark portfolio contains 23 trademark registrations, four of which are U.S. trademark registrations, as well as five pending foreign trademark applications.

We also rely upon trade secrets, know-how, continuing technological innovation, and may rely upon licensing opportunities in the future, to develop and maintain our competitive position. We protect our proprietary rights through a variety of methods, including confidentiality agreements and proprietary information agreements with suppliers, employees, consultants and others who may have access to proprietary information.

Manufacturing and Supply

We manufacture our steroid releasing implants at our facility in Menlo Park, California with components supplied by external suppliers. We perform inspections of these components before use in our manufacturing operations. Using these components, we assemble, inspect, test and package our implants, and send them to a third-party sterilization vendor. After sterilization, we perform inspections of the finished implants internally and via third party laboratories to determine compliance with our specifications, release the lot to inventory and then ship the finished product to customers.

The active pharmaceutical ingredient, or API, and a number of our critical components used in our implants are supplied to us from single source suppliers. We rely on single source suppliers for some of our polymer materials, some extrusions and molded components, some off-the-shelf components and for finished goods testing. Our ability to commercially supply our products and to develop our product candidates depends, in part, on our ability to obtain successfully the API and polymer materials used in these products in accordance with regulatory requirements and in sufficient quantities for commercialization and clinical testing. We have entered

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into manufacturing, supply or quality agreements with a number of our single source suppliers pursuant to which they supply the API and components we need. We generally acquire our single source components pursuant to purchase orders placed in the ordinary course of business. However, we are not certain that our single source suppliers will be able to meet our demand for their products, whether because of the nature of our agreements with those suppliers, our limited experience with those suppliers or our relative importance as a customer to those suppliers. It may be difficult for us to assess their ability to timely meet our demand in the future based on past performance. To date, we have not experienced any significant supply constraints or delays in procuring components and materials and while our suppliers have generally met our demand for their products on a timely basis in the past, they may subordinate our needs in the future to the needs of their other customers.

We are currently improving our manufacturing capabilities and increasing capacity as we increase the extent of our commercialization efforts. We believe our manufacturing operations are in compliance with regulations mandated by the FDA. We are an FDA-registered medical device manufacturer and we were granted PMA approval for PROPEL in August 2011. Our manufacturing facilities and processes are subject to periodic inspections and audits by various federal, state and foreign regulatory agencies. For example, our facilities were inspected by the FDA in April and May 2011, December 2012, March 2013 and June 2014. The State of California regulatory authority audited our manufacturing facility in connection with granting a California Device Manufacturing License to us in August 2009. Our facility was last inspected in October 2013 by the European Notified Body in Ireland, National Standards Authority of Ireland, and no major nonconformance reports were issued as a result of that inspection.

We have manufacturing, supply or quality agreements with a number of our single source suppliers:

• In April 2014, we entered into an agreement with Hovione Inter Ltd., or Hovione, pursuant to which we are required to purchase 80% of our API from Hovione, in quantities to be specified in 12-month forecasts provided by us and updated on a quarterly basis. This agreement extends until April 2019. Either we or Hovione may terminate the agreement prior to that date for uncured material breach by or insolvency of the other party. We may also terminate the agreement in the event Hovione loses any required FDA approval rendering it unable to fulfill its contractual obligations, or if Hovione is engaged in felonious or fraudulent activities. Either we or Hovione may terminate the Agreement in the event regulatory agencies require changes to the product specifications that materially affect Hovione’s cost of production and we are unable to reach an agreement with Hovione regarding an equitable pricing adjustment.

• In April 2014, we entered into an agreement with Polymer Solutions Incorporated, or PSI, pursuant to which PSI supplies us with analytical testing services for our polymer materials. The agreement has an indefinite term, but may be terminated by us at any time upon 30 days’ notice to PSI or immediately upon written notice in the event of an uncured material breach by PSI.

• In January 2014, we entered into an agreement with AIM Plastics, Inc., or AIM, pursuant to which AIM provides us with injection molded components in quantities to be specified in rolling quarterly forecasts provided by us. The agreement extends for an initial period of one year from its effective date, with automatic one-year renewal periods applying thereafter unless we or AIM provide written notice of non-renewal at least 30 days prior to the end of the then-current term. Either we or AIM may terminate the agreement for an uncured material breach by the other party. We may also terminate the agreement upon 12 months written notice in the event of a change in control of AIM.

• In December 2013, we entered into an agreement with Exova Group Limited, or Exova, pursuant to which Exova supplies us with analytical testing services for our finished product. The agreement extends until December 2015.

• In November 2013, we entered into an agreement with Stephen Gould Corporation, or SGC, pursuant to which SGC supplies us with packaging components in accordance with a rolling quarterly forecast provided by us. The agreement extends for an initial period of two years from the effective date, with

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automatic one-year renewal periods applying thereafter unless we or SGC provide written notice of intent not to renew at least 30 days prior to the end of the then current term. Either we or SGC may terminate the agreement for uncured material breach by the other party. We may also terminate the agreement at will upon 90 days prior written notice to SGC, or upon 12 months prior written notice in the event of a change in control of SGC.

Each of these suppliers manufactures the components they produce for us or tests our components and devices to our specifications. We expect to be able to negotiate new agreements with these vendors in advance of the expiration of the current agreements. We intend to maintain sufficient supplies of the API and components from these single source suppliers in the event that our agreements with one or more of these suppliers were to terminate to enable us to continue to manufacture our implants for a sufficient amount of time necessary to obtain another source of API or components.

Government Regulation

United States Regulation of Medical Devices and Drugs

Our products and product candidates are drug releasing bioabsorbable implants that are regulated as combination products by the FDA. FDA’s Office of Combination Products designates a primary mode of action for such drug-device combination products, with the respective primary Center within the FDA leading the regulatory review for the product, in consultation with the secondary designated Center. FDA determined that the primary mode of action for PROPEL and PROPEL mini was that of a medical device, so these products have been approved and are regulated in the United States as medical devices. Our product candidate for the physician office setting, however, was designated as having a drug primary mode of action, and thus our RESOLVE trials are and will be conducted under an Investigational New Drug, or IND, application, and if successful, this product candidate will need to be approved under the NDA pathway.

Medical Devices

Our PROPEL implants are regulated in the United States as Class III medical devices by the FDA under the Federal Food, Drug and Cosmetic Act, or FDCA. The FDA classifies medical devices into one of three classes based upon controls the FDA considers necessary to reasonably ensure their safety and effectiveness. Class I devices are subject to general controls such as labeling, adherence to good manufacturing practices and maintenance of product complaint records, but are usually exempt from premarket notification requirements. Class II devices are subject to the same general controls and also are subject to special controls such as performance standards, and FDA guidelines, and may also require clinical testing prior to approval. Class III devices are subject to the highest level of controls and require rigorous clinical testing prior to their approval and generally require a PMA, or a PMA supplement approval prior to their sale.

Manufacturers must file an Investigational Device Exemption, or IDE, application if human clinical studies of a device are required and if the investigational use of the device represents a potential for significant risk to the patient. The IDE application must be supported by data, typically including the results of animal and engineering testing of the device. If the IDE application is approved by the FDA, human clinical studies may begin at a specific number of investigational sites with a maximum number of patients, as approved by the FDA. The clinical studies must be conducted under the review of an independent institutional review board to ensure the protection of the patients’ rights.

Generally, upon completion of these human clinical studies, a manufacturer seeks approval of a Class III medical device from the FDA by submitting a PMA application. A PMA application must be supported by extensive data, including the results of the clinical studies, as well as testing and literature to establish the safety and effectiveness of the device. PMA approval may be conditioned upon the conduct of certain post-approval studies, such as long term follow-up studies.

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FDA regulations require us to register as a medical device manufacturer with the FDA. Additionally, the California Department of Health Services, or CDHS, requires us to register as a medical device manufacturer within the state. Because of this, the FDA and the CDHS inspect us on a routine basis for compliance with the current good manufacturing practice. These regulations require that we manufacture our products and maintain related documentation in a prescribed manner with respect to manufacturing, testing and control activities, and product release for distribution. We have undergone and expect to continue to undergo regular current good manufacturing practice inspections in connection with the manufacture of our products at our facility.

Drugs

The clinical testing, manufacturing, labeling, storage, distribution, record keeping, advertising, promotion, import, export and marketing, among other things, of our product candidates that are subject to FDA’s drug authority are governed by extensive regulation by governmental authorities in the United States and other countries. The FDA, under the FDCA, regulates pharmaceutical products in the United States. The steps required before a drug may be approved for marketing in the United States generally include:

• preclinical laboratory tests and animal tests conducted under Good Laboratory Practices, or GLP;

• the submission to the FDA of an IND application for human clinical testing, which must become effective before human clinical trials commence;

• adequate and well-controlled human clinical trials to establish the safety and efficacy of the product and conducted in accordance with Good Clinical Practices, or GCP;

• the submission to the FDA of an NDA;

• FDA acceptance, review and approval of the NDA; and

• satisfactory completion of an FDA inspection of the manufacturing facilities at which the product is made to assess compliance with current Good Manufacturing Practices, or cGMPs.

Research and Development

Our research and development expenses totaled $10.3 million, $9.5 million and $9.3 million in the years ended December 31, 2014, 2013 and 2012, respectively. For more information, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

Employees

As of December 31, 2014, we had 212 employees, consisting of 54 in manufacturing, 40 in research and development and 118 in sales, general and administrative.

Information about Segment and Geographic Revenue

Information about segment and geographic revenue is set forth in Note 2 to the Financial Statements included in this Annual Report.

Corporate Information

We were incorporated in Delaware in October 2003 as Sinexus, Inc. We changed our name to Intersect ENT, Inc. in November 2009. Our offices are located at 1555 Adams Drive, Menlo Park, California 94025 and our telephone number is (650) 641-2100. Our website is www.intersectent.com. We completed our initial public offering in July 2014, and our common stock is listed on The NASDAQ Global Market under the symbol “XENT.”

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Our periodic and current reports, registration statements, proxy and information statements and other information are available for inspection and copying at the SEC’s Public Reference Room at 100 F Street, NE, Washington, DC 20549 or may be obtained by calling the SEC at 1-800-SEC-0330. The SEC also maintains a website containing such information available free of charge to the public at www.sec.gov.

We are an “emerging growth company,” as defined in the Jumpstart Our Business Startups Act of 2012. As such, we are eligible for exemptions from various reporting requirements applicable to other public companies that are not emerging growth companies, including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act of 2002 and reduced disclosure obligations regarding executive compensation. We will remain an emerging growth company until the earlier of (1) December 31, 2019, (2) the last day of the fiscal year (a) in which we have total annual gross revenue of at least $1.0 billion or (b) in which we are deemed to be a large accelerated filer, which means the market value of our common stock that is held by non-affiliates exceeds $700 million as of the prior June 30th, and (3) the date on which we have issued more than $1.0 billion in non-convertible debt securities during the prior three-year period.

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Item 1A. Risk Factors

RISK FACTORS

Before deciding to invest in us or to maintain or increase your investment, you should carefully consider the risks described below, in addition to the other information contained in this Annual Report on Form 10-K and in our other filings with the SEC. Additional risks and uncertainties not presently known to us or that we currently deem immaterial may also affect our business. If any of these known or unknown risks or uncertainties actually occurs, our business, financial condition and results of operations could be seriously harmed. In that event, the market price for our common stock could decline and you may lose your investment.

Risks Related to Our Business

We have incurred significant operating losses since inception and may not be able to achieve profitability.

We have incurred net losses since our inception in 2003. For the years ended December 31, 2014 and 2013, we had net losses of $18.4 million for each year. As of December 31, 2014, we had an accumulated deficit of $96.6 million. To date, we have financed our operations primarily through private placements of our equity securities, certain debt-related financing arrangements and from sales of our approved products. We have devoted substantially all of our resources to research and development of our products, sales and marketing activities and clinical and regulatory initiatives to obtain approvals for our products. Our ability to generate sufficient revenue from our existing products or from any of our product candidates in development, and to transition to profitability and generate consistent positive cash flows is uncertain. We expect that our operating expenses will continue to increase as we continue to build our commercial infrastructure, develop, enhance and commercialize new products and incur additional operational and reporting costs associated with being a public company. As a result, we expect to continue to incur operating losses for the foreseeable future and may never achieve profitability.

All of our revenue is generated from our PROPEL and PROPEL mini steroid releasing implants and we are completely dependent on the success of these products, which have a limited commercial history. If these products fail to gain widespread market acceptance, our business will suffer.

We started selling PROPEL in August 2011 and PROPEL mini in November 2012. We expect that sales of these products will account for substantially all of our revenue for the foreseeable future and therefore our ability to become profitable will depend upon the commercial success of these products. Because of their recent commercial introduction, PROPEL and PROPEL mini have limited product and brand recognition. We market these products primarily to ear, nose and throat, or ENT, physicians and believe they may be slow or fail to adopt our products for a variety of reasons, including, among others:

• lack of experience with our products;

• lack of availability of adequate coverage and reimbursement for hospitals, ambulatory surgery centers and physicians;

• lack of evidence supporting cost benefits or cost effectiveness of our products over existing alternatives;

• lack of clinical data supporting patient benefits beyond six months;

• perception that our products are unproven, investigational or experimental;

• liability risks generally associated with the use of new products and procedures; and

• training required to use new products.

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If we are unable to effectively demonstrate to ENT physicians the benefits of our products when used during sinus surgery and our products fail to achieve market acceptance, our future revenue will be adversely impacted. In addition, we believe recommendations and support of our products by influential ENT physicians are essential for market acceptance and adoption. If we do not receive support from these influential ENT physicians, ENT physicians in general may not use our products and our future revenue will be harmed.

Because of the numerous risks and uncertainties associated with our commercialization efforts, we are unable to predict the extent to which we will continue to generate revenue from our products or the timing for when or the extent to which we will become profitable. Even if we do achieve profitability, we may not be able to sustain or increase profitability on an ongoing basis.

Pricing pressure from our hospital and ambulatory surgery center customers due to limited coverage and reimbursement for our products may impact our ability to sell our products at prices necessary to support our current business strategies.

Hospital and other healthcare provider customers, including ambulatory surgery center customers, that purchase our products typically bill various third-party payors to cover all or a portion of the costs and fees associated with the sinus surgery procedures in which our products are used and bill patients for any deductibles or co-payments. Because there is often no separate reimbursement for supplies used in surgical procedures, the additional cost associated with the use of our steroid releasing implants can impact the profit margin of the hospital or surgery center where the sinus surgery is performed. Some of our target customers may be unwilling to adopt our steroid releasing implants in light of the additional associated cost. Further, any decline in the amount payors are willing to reimburse our customers for sinus surgery procedures could make it difficult for existing customers to continue using, or adopt, our steroid releasing implants and could create additional pricing pressure for us. If we are forced to lower the price we charge for our products, our gross margins will decrease, which will adversely affect our ability to invest in and grow our business.

We are actively seeking new billing codes for our products and the procedure associated with their use, including codes that are established by the Centers for Medicare & Medicaid Services, or CMS, and the American Medical Association, or AMA. Our ability to obtain new billing codes will depend, in part, on support from the ENT community and physician acceptance of our technology. Although obtaining billing codes may result in payment amounts that better reflect the costs and resources of our products and related procedure, there is a possibility that they may not do so.

We cannot assure you that we will be successful in garnering the necessary support for new codes from the ENT community or from third-party payors, who are responsible for determining which billing codes are to be used for procedures performed on their insured population. Even if we are able to establish reimbursement codes for our products, we will continue to be subject to significant pricing pressure, which could harm our business, results of operations, financial condition and prospects.

Our future growth depends on physician awareness and adoption of our steroid releasing implants.

We focus our sales, marketing and education efforts primarily on ENT physicians. We train physicians on the patient population that would benefit from our steroid releasing implants. This patient population is based on those included in our clinical studies and includes, for example, patients with or without polyps as well as patients undergoing either primary or revision surgery. Some physicians may choose to utilize our products on a subset of their patients such as patients with severe polyp disease that they deem at higher risk for postoperative complications. If we are not able to effectively demonstrate to those physicians that our products are beneficial in a broad range of patients on which they operate, their adoption of our products will be limited.

We train our physician customers on the proper techniques in using our devices to achieve the intended outcome. The successful use of our steroid releasing implants depends in large part on the physician’s adherence

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to the techniques that they are provided in training by our sales representatives. In the event that physicians do not adhere to these techniques or if they perceive that our products are too cumbersome for them to use, we may have difficulty facilitating adoption. Additionally, physicians may develop their own techniques for use of our products during insertion and during the period in which the drug is delivered and is bioabsorbed. For example, we are aware some physicians are removing our steroid releasing implants before all of the drug has eluted into the surrounding tissue. While physicians were allowed to remove the implant at any time at their discretion in our clinical studies, early removal could lead to suboptimal outcomes. In addition, if physicians utilize our products in a manner that is inconsistent with how they were studied clinically, their outcomes may not be consistent with the outcomes achieved in our clinical studies, which may impact their perception of patient benefit and limit their adoption of our products.

In addition, the initial point of contact for many patients suffering from chronic sinusitis may be primary care physicians or other referring medical professionals who commonly treat patients experiencing sinus-related symptoms or complications. We believe that we must educate these primary care physicians and other referring medical professionals about our steroid releasing implants in order to grow the market beyond the over 3.5 million patients with chronic sinusitis who are currently managed by ENT physicians. If we fail to do so, these primary care physicians and other referring medical professionals may not refer patients to an ENT physician who will perform sinus surgery and use our steroid releasing implants. As a result, those patients may go untreated, attempt to manage their sinusitis through medical management alone or seek alternative surgical procedures. If we are not successful in educating primary care physicians and other referring medical professionals about our steroid releasing implants, our ability to increase our revenue may be impaired.

We have limited experience marketing and selling our steroid releasing implants, and if we are unable to expand, manage and maintain our direct sales and marketing organizations we may not be able to generate anticipated revenue.

We started selling our first approved product, PROPEL, on a limited basis in August 2011. We subsequently started selling PROPEL mini in November 2012, and in the first half of 2013 we began to expand and scale our direct sales and marketing organizations in the United States. As a result, we have limited experience marketing and selling our steroid releasing implants. As of December 31, 2014, our direct sales organization, including marketing, customer service and reimbursement, consisted of 97 employees, having increased from 21 employees as of December 31, 2012. Our operating results are directly dependent upon the sales and marketing efforts of our employees. If our direct sales representatives fail to adequately promote, market and sell our products, our sales may suffer.

In order to generate our anticipated sales, we will need to expand the size and geographic scope of our direct sales organization. As a result, our future success will depend largely on our ability to continue to hire, train, retain and motivate skilled regional sales managers and direct sales representatives with significant technical knowledge of ENT. Because of the competition for their services, we cannot assure you we will be able to hire and retain additional direct sales representatives on favorable or commercially reasonable terms, if at all. Failure to hire or retain qualified sales representatives would prevent us from expanding our business and generating sales. Additionally, new hires require training and take time before they achieve full productivity. If we fail to train new hires adequately, new hires may not become as productive as may be necessary to maintain or increase our sales.

If we are unable to expand our sales and marketing capabilities, we may not be able to effectively commercialize our products, which would adversely affect our business, results of operations and financial condition.

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Our clinical studies were designed to demonstrate the safety and efficacy of our steroid releasing implants based on FDA requirements and may not be seen as compelling to physicians. Any subsequent clinical studies that are conducted and published may not be positive or consistent with our existing data, which would affect the rate of adoption of our products.

Our success depends on the medical community’s acceptance of our steroid releasing implants as tools that are useful to ENT physicians treating patients with chronic sinusitis. We have sponsored three multi-center, prospective studies of over 200 patients to track outcomes of treatment with our steroid releasing implants, which clinical data has resulted in the highest level of evidence generated for any product used in sinus surgery. The principal safety and efficacy information of our steroid releasing implants is derived from the ADVANCE II study, a prospective, multicenter, randomized controlled, double-blind, pivotal study that was completed in September 2010. We also sponsored the ADVANCE study, a prospective, multicenter, single-cohort, open-label trial completed in December 2009 and the PROPEL Pilot Study, a prospective, multicenter, randomized, controlled, double-blind feasibility study completed in April 2009. While the results of these three studies collectively indicate a favorable safety and efficacy profile, the study designs and results may not be viewed as compelling to our physician customers. If physicians do not find our data compelling, they may choose not to use our products or limit their use. Our PROPEL Pilot study and ADVANCE II study incorporated an intra-patient control design comparing PROPEL to a non-drug releasing control version of the implant in order to maintain blinding. Primary efficacy endpoints for these two studies were measured at 30 days after placement as we believe that proper healing in the immediate postoperative period is indicative of long-term outcomes. Additionally, it was important to allow for medical intervention after day 30 given one sinus side of each patient had the control device. Clinical efficacy demonstrated at this short-term endpoint does not guarantee long-term clinical benefits. Our ADVANCE study measured patient symptom improvements out to six months. The long-term effects of sinus surgery in conjunction with our steroid releasing implants beyond six months are not known. Certain ENT physicians, hospitals and surgery centers may prefer to see longer term efficacy data than we have produced. We cannot assure you that any data that we or others generate will be consistent with that observed in these studies or meet the endpoints, nor that the results will be maintained beyond the time points studied. We also cannot assure you that any data that may be collected will be compelling to the medical community because the data may not be scientifically meaningful and may not demonstrate that sinus surgery using our steroid releasing implants is an attractive procedure when compared against data from alternative treatments.

Each ENT physician’s individual experience with our steroid releasing implants will vary, and we believe that physicians will compare actual long-term outcomes in their own practices using our steroid releasing implants against sinus surgery used in conjunction with traditional sinus packing techniques. A long-term, adequately-controlled clinical study comparing sinus surgery performed in conjunction with our steroid releasing implants against sinus surgery performed in conjunction with the variety of traditional sinus packing techniques incorporated by physicians would be expensive and time-consuming and we have not conducted, and are not currently planning to conduct, such a study. If the experience of physicians indicates that the use of our steroid releasing implants in FESS is not as safe or efficacious as other treatment options or does not provide a lasting solution to patients with chronic sinusitis, adoption of our products may suffer and our business would be harmed.

We utilize third-party, single source suppliers and service providers for many of the components, materials and services used in the production of our steroid releasing implants, and the loss of or disruption by any of these suppliers or service providers could harm our business.

The active pharmaceutical ingredient, or API, and a number of our critical components used in our steroid releasing implants are supplied to us from single source suppliers. We rely on single source suppliers for some of our polymer materials, some extrusions and molded components, some off-the-shelf components and for finished goods testing. If a supplier delivers products of insufficient quality, it could lead to lot issues, failures or recalls. Our ability to supply our products commercially and to develop our product candidates depends, in part, on our

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ability to obtain these components in accordance with regulatory requirements and in sufficient quantities and quality for commercialization and clinical testing. We have entered into manufacturing, supply or quality agreements with a number of our single source suppliers pursuant to which they supply the components we need. We are not certain that our single source suppliers will be able to meet our demand for their products, either because of the nature of our agreements with those suppliers, our limited experience with those suppliers or our relative importance as a customer to those suppliers. It may be difficult for us to assess their ability to timely meet our demand in the future based on past performance. While our suppliers have generally met our demand for their products on a timely basis in the past, they may subordinate our needs in the future to their other customers.

Establishing additional or replacement suppliers for the API or any of the components or processes used in our products, if required, may not be accomplished quickly. If we are able to find a replacement supplier, the replacement supplier would need to be qualified and may require additional regulatory authority approval, which could result in further delay. For example, the U.S. Food and Drug Administration, or FDA, could require additional supplemental data if we rely upon a new supplier for the API used in PROPEL and PROPEL mini. While we seek to maintain adequate inventory of the single source components and materials used in our products, any interruption or delay in the supply of components or materials, or our inability to obtain components or materials from alternate sources at acceptable prices in a timely manner, could impair our ability to meet the demand of our customers and cause them to cancel orders.

If our third-party suppliers fail to deliver the required commercial quantities of materials, on a timely basis and at commercially reasonable prices, and we are unable to find one or more replacement suppliers capable of production at a substantially equivalent cost in substantially equivalent volumes and quality, and on a timely basis, the continued commercialization of our products and the development of our product candidates would be impeded, delayed, limited or prevented, which could harm our business, results of operations, financial condition and prospects.

It is difficult to forecast future performance, which may cause our financial results to fluctuate unpredictably.

Our limited operating history and commercial experience make it difficult for us to predict future performance. As we gain additional commercial experience, a number of factors over which we have limited control may contribute to fluctuations in our financial results, such as seasonal variations in revenue. In the first quarter, our results can be impacted by adverse weather and by resetting of annual patient healthcare insurance plan deductibles, both of which may cause patients to delay elective procedures such as FESS. In the second quarter, demand may be impacted by the seasonal nature of allergies and the resultant onset of sinus-related symptoms. In the third quarter, the number of FESS procedures nationwide is historically lower than other quarters throughout the year, which we believe is attributable to the summer vacations of ENT physicians and their patients. In the fourth quarter, demand may be impacted by the onset of the cold and flu season and related symptoms, as well as the desire of patients to spend their remaining balances in flexible-spending accounts or because they have met their annual deductibles under their health insurance plans. Other factors that may impact our quarterly results include:

• ENT physician adoption of our steroid releasing implants;

• unanticipated pricing pressure;

• the hiring, retention and continued productivity of our sales representatives;

• our ability to expand the geographic reach of our sales and marketing efforts;

• our ability to obtain regulatory clearance or approval for our products in development or for our current products outside the United States;

• our ability to maintain intellectual property protection for our products and our competitors being granted patents for competing products;

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• results of clinical research and trials on our existing products and products in development;

• delays in receipt of anticipated purchase orders;

• timing of new product offerings, acquisitions, licenses or other significant events by us or our competitors;

• delays in, failure of, or quality issues with, component and raw material deliveries by our suppliers or service providers;

• manufacturing issues or lot failures; and

• positive or negative coverage in the media or clinical publications of our steroid releasing implants or products of our competitors or our industry.

In the event our actual revenue and operating results do not meet our forecasts for a particular period, the market price of our common stock may decline substantially.

Our long-term growth depends on our ability to develop and commercialize additional ENT products.

It is important to our business that we continue to build a more complete product offering within the ENT market. We are using our drug releasing bioabsorbable technology to develop new products for use in the physician office setting. Developing additional products is expensive and time-consuming and could divert management’s attention away from our current sinus surgery products and harm our business. Even if we are successful in developing additional products, including those currently in development for use in the physician office setting, the success of any new product offering or enhancement to an existing product will depend on several factors, including our ability to:

• properly identify and anticipate ENT physician and patient needs;

• develop and introduce new products or product enhancements in a timely manner;

• avoid infringing upon the intellectual property rights of third parties;

• demonstrate, if required, the safety and efficacy of new products with data from preclinical studies and clinical trials;

• obtain the necessary regulatory clearances or approvals for new products or product enhancements;

• be fully FDA-compliant with marketing of new devices or modified products;

• provide adequate training to potential users of our products;

• receive adequate coverage and reimbursement for procedures performed with our products; and

• develop an effective and FDA-compliant, dedicated sales and marketing team.

If we are unsuccessful in developing and commercializing additional products in other areas of ENT, our ability to increase our revenue may be impaired.

If clinical studies of our future products or product indications do not produce results necessary to support regulatory clearance or approval in the United States or, with respect to our current or future products, elsewhere, we will be unable to commercialize these products.

We will likely need to conduct additional clinical studies in the future to support new product or product indication approvals, or for the approval of the use of our products in some foreign countries. Clinical testing takes many years, is expensive and carries uncertain outcomes. The initiation and completion of any of these studies may be prevented, delayed, or halted for numerous reasons, including, but not limited to, the following:

• the FDA, institutional review boards or other regulatory authorities do not approve a clinical study protocol, force us to modify a previously approved protocol, or place a clinical study on hold;

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• patients do not enroll in, or enroll at a lower rate than we expect, or do not complete a clinical study;

• patients or investigators do not comply with study protocols;

• patients do not return for post-treatment follow-up at the expected rate;

• patients experience unexpected adverse event or side effects for a variety of reasons that may or may not be related to our products;

• sites participating in an ongoing clinical study withdraw, requiring us to engage new sites;

• difficulties or delays associated with establishing additional clinical sites;

• third-party clinical investigators decline to participate in our clinical studies, do not perform the clinical studies on the anticipated schedule, or are inconsistent with the investigator agreement, clinical study protocol, good clinical practices or other agency requirements;

• third-party organizations do not perform data collection and analysis in a timely or accurate manner;

• regulatory inspections of our clinical studies or manufacturing facilities require us to undertake corrective action or suspend or terminate our clinical studies;

• changes in federal, state, or foreign governmental statutes, regulations or policies;

• interim results are inconclusive or unfavorable as to immediate and long-term safety or efficacy;

• the study design is inadequate to demonstrate safety and efficacy; or

• the study does not meet the statistical endpoints.

Clinical failure can occur at any stage of the testing. Our clinical studies may produce negative or inconclusive results, and we may decide, or regulators may require us, to conduct additional clinical and non-clinical testing in addition to those we have planned. Our failure to adequately demonstrate the safety and efficacy of any of our devices would prevent receipt of regulatory clearance or approval and, ultimately, the commercialization of that device or indication for use. Even if our future products are approved in the United States, commercialization of our products in foreign countries would require approval by regulatory authorities in those countries. Approval procedures vary among jurisdictions and can involve requirements and administrative review periods different from, and greater than, those in the United States, including additional preclinical studies or clinical trials. Any of these occurrences may harm our business, results of operations, financial condition and prospects.

Consolidation in the healthcare industry could lead to demands for price concessions, which may impact our ability to sell our products at prices necessary to support our current business strategies.

Healthcare costs have risen significantly over the past decade, which has driven numerous cost reform initiatives by legislators, regulators and third-party payors. A typical FESS procedure is paid at a Medicare rate of approximately $10,000. Private insurer payment rates average 139 percent of Medicare rates nationally. Cost reform has elicited a consolidation trend in the healthcare industry to aggregate purchasing power, which may create more requests for pricing concessions in the future. Additionally, group purchasing organizations, independent delivery networks and large single accounts may continue to use their market power to consolidate purchasing decisions for hospitals and ambulatory surgery centers. We expect that market demand, government regulation, third-party coverage and reimbursement policies and societal pressures will continue to change the healthcare industry worldwide, resulting in further business consolidations and alliances among our customers, which may exert further downward pressure on the prices of our products and may adversely impact our business, results of operations, financial condition and prospects.

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We compete or may compete in the future against other companies, some of which have longer operating histories, more established products and greater resources, which may prevent us from achieving significant market penetration or improved operating results.

Our industry is highly competitive, subject to change and significantly affected by new product introductions and other activities of industry participants. Many of the companies developing or marketing ENT products are publicly-traded companies, including Medtronic, Olympus, Johnson & Johnson, Stryker and Smith & Nephew. These companies enjoy several competitive advantages, including:

• greater financial and human capital resources;

• significantly greater name recognition;

• established relationships with ENT physicians, referring physicians, customers and third-party payors;

• additional lines of products, and the ability to offer rebates or bundle products to offer greater discounts or incentives to gain a competitive advantage; and

• established sales, marketing and worldwide distribution networks.

Because of the size of the market opportunity for the treatment of chronic sinusitis, we believe potential competitors have historically dedicated and will continue to dedicate significant resources to aggressively promote their products or develop new products. New product developments that could compete more effectively with our products are possible because of the prevalence of chronic sinusitis and the extensive research efforts and technological progress that exist within the market. Large medical device companies with ENT divisions, such as Medtronic, also have capability in drug releasing stents and smaller companies may develop competing products. Though we are not aware of any such products to date, these or other companies may develop drug releasing products that could compete with our products.

Our commercially available products are designed to be used during sinus surgery. If another company successfully develops an approach for the treatment of chronic sinusitis that would not benefit from the use of our steroid releasing implants, if another company develops a device to treat the inflammation and scarring associated with sinus surgery that is more efficacious than our steroid releasing implants, or if a pharmaceutical company successfully develops a drug that addresses chronic sinusitis without the need for surgical intervention, sales of our products would be significantly and adversely affected.

We may be unable to manage our growth effectively.

Our past growth has provided, and our future growth may create, challenges to our organization. From December 31, 2012, to December 31, 2014, the number of our employees increased from 75 to 212. In the future, we expect to hire and train new personnel as we continue to grow and expand our operations. As a public company, we will need to further expand our scientific, sales and marketing, managerial, operational, financial and other resources to support our planned research, development and commercialization activities. This growth may place significant strain on our management, financial and operational resources. Successful growth is also dependent upon our ability to implement appropriate financial and management controls, systems and procedures and securing a sufficient amount of office space for additional personnel. If we fail to manage these challenges effectively, our business could be harmed.

We face the risk of product liability claims that could be expensive, divert management’s attention and harm our reputation and business. We may not be able to maintain adequate product liability insurance.

Our business exposes us to the risk of product liability claims that are inherent in the testing, manufacturing and marketing of medical devices and drug products. This risk exists even if a device or product is approved for commercial sale by the FDA and manufactured in facilities licensed and regulated by the FDA, such as the case

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with PROPEL and PROPEL mini, or an applicable foreign regulatory authority. Our products and product candidates are designed to affect important bodily functions and processes. Any side effects, manufacturing defects, misuse or abuse associated with our products or our product candidates could result in patient injury or death. The medical device industry has historically been subject to extensive litigation over product liability claims, and we cannot offer any assurance that we will not face product liability suits. We may be subject to product liability claims if our steroid releasing implants cause, or merely appear to have caused, patient injury or death. In addition, an injury that is caused by the activities of our suppliers, such as those who provide us with components and raw materials, may be the basis for a claim against us. Product liability claims may be brought against us by consumers, health care providers or others selling or otherwise coming into contact with our products or product candidates, among others. If we cannot successfully defend ourselves against product liability claims, we will incur substantial liabilities and reputational harm. In addition, regardless of merit or eventual outcome, product liability claims may result in:

• costs of litigation;

• distraction of management’s attention from our primary business;

• the inability to commercialize our products or, if approved, our product candidates;

• decreased demand for our products or, if approved, product candidates;

• impairment of our business reputation;

• product recall or withdrawal from the market;

• withdrawal of clinical trial participants;

• substantial monetary awards to patients or other claimants; or

• loss of revenue.

While we may attempt to manage our product liability exposure by proactively recalling or withdrawing from the market any defective products, any recall or market withdrawal of our products may delay the supply of those products to our customers and may impact our reputation. We can provide no assurance that we will be successful in initiating appropriate market recall or market withdrawal efforts that may be required in the future or that these efforts will have the intended effect of preventing product malfunctions and the accompanying product liability that may result. Such recalls and withdrawals may also be used by our competitors to harm our reputation for safety or be perceived by patients as a safety risk when considering the use of our products, either of which could have an adverse effect on our business.

In addition, although we have product liability and clinical study liability insurance that we believe is appropriate, this insurance is subject to deductibles and coverage limitations. Our current product liability insurance may not continue to be available to us on acceptable terms, if at all, and, if available, coverage may not be adequate to protect us against any future product liability claims. If we are unable to obtain insurance at an acceptable cost or on acceptable terms with adequate coverage or otherwise protect against potential product liability claims, we will be exposed to significant liabilities, which may harm our business. A product liability claim, recall or other claim with respect to uninsured liabilities or for amounts in excess of insured liabilities could have a material adverse effect on our business, financial condition and results of operations.

The misuse or off-label use of our products may harm our image in the marketplace, result in injuries that lead to product liability suits or result in costly investigations and sanctions by regulatory bodies if we are deemed to have engaged in the promotion of these uses, any of which could be costly to our business.

The products we currently market have been approved by the FDA for specific treatments. We train our marketing and direct sales force to not promote our products for uses outside of the FDA-approved indications for use, known as “off-label uses.” We cannot, however, prevent a physician from using our products off-label,

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when in the physician’s independent professional medical judgment he or she deems it appropriate. There may be increased risk of injury to patients if physicians attempt to use our products off-label. Furthermore, the use of our products for indications other than those approved by the FDA or any foreign regulatory body may not effectively treat such conditions, which could harm our reputation in the marketplace among physicians and patients.

Physicians may also misuse our products or use improper techniques if they are not adequately trained, potentially leading to injury and an increased risk of product liability. If our products are misused or used with improper technique, we may become subject to costly litigation by our customers or their patients. Product liability claims could divert management’s attention from our core business, be expensive to defend, and result in sizable damage awards against us that may not be covered by insurance. In addition, if the FDA or any foreign regulatory body determines that our promotional materials or training constitute promotion of an off-label use, it could request that we modify our training or promotional materials or subject us to regulatory or enforcement actions, including the issuance of an untitled letter, a warning letter, injunction, seizure, civil fine or criminal penalties. It is also possible that other federal, state or foreign enforcement authorities might take action if they consider our business activities to constitute promotion of an off-label use, which could result in significant penalties, including, but not limited to, criminal, civil and administrative penalties, damages, fines, disgorgement, exclusion from participation in government healthcare programs, and the curtailment of our operations. Any of these events could significantly harm our business and results of operations and cause our stock price to decline.

Our ability to maintain our competitive position depends on our ability to attract and retain highly qualified personnel.

We believe that our continued success depends to a significant extent upon the efforts and abilities of our key executives. All of our executive officers and other employees are at-will employees, and therefore may terminate employment with us at any time with no advance notice. The replacement of any of our key personnel likely would involve significant time and costs and may significantly delay or prevent the achievement of our business objectives and would harm our business.

Our future success also depends on our ability to continue to attract and retain our executive officers and other key employees. Many of our employees have become or will soon become vested in a substantial amount of stock or number of stock options. Our employees may be more likely to leave us if the shares they own or the shares underlying their vested options have significantly appreciated in value relative to the original purchase prices of the shares or the exercise prices of the options, or if the exercise prices of the options that they hold are significantly below the market price of our common stock. Further, our employees’ ability to exercise those options and sell their stock in a public market may result in a higher than normal turnover rate. We do not carry any “key person” insurance policies.

If our facilities or the facility of a supplier or customer become inoperable, we will be unable to continue to research, develop, manufacture, commercialize and sell our products and, as a result, our business will be harmed until we are able to secure a new facility.

We do not have redundant facilities. We perform substantially all of our research and development, manufacturing and commercialization activity and maintain all our raw material and finished goods inventory in a single location in Menlo Park, California. Menlo Park is situated on or near earthquake fault lines. Our facility and equipment would be costly to replace and could require substantial lead time to repair or replace. The facility may be harmed or rendered inoperable by natural or man-made disasters, including, but not limited to, earthquakes, flooding, fire, water shortages and power outages, which may render it difficult or impossible for us to perform our research, development, manufacturing and commercialization activities for some period of time. The inability to perform those activities, combined with our limited inventory of reserve raw materials and finished product, may result in the inability to continue manufacturing our products during such periods and the loss of customers or harm to our reputation. Although we possess insurance for damage to our property and the

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disruption of our business, this insurance may not be sufficient to cover all of our potential losses and this insurance may not continue to be available to us on acceptable terms, or at all. The occurrence of natural disasters or acts of terrorism could also cause delays in our customers supply chain, causing them to delay their requirements for our products until they resolve shortages from their other suppliers. Any such occurrences of natural disasters or acts of terrorism could have a material adverse effect on our business, our results of operations and our financial condition.

We expect to incur significant additional costs as a result of being a public company, which may adversely affect our operating results and financial condition.

We expect to incur costs associated with corporate governance requirements, including requirements under the Sarbanes-Oxley Act, as well as rules implemented by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, or the Dodd-Frank Act, the Securities and Exchange Commission, or the SEC, and NASDAQ. These rules and regulations are expected to increase our accounting, legal and financial compliance costs and make some activities more time-consuming and costly. In addition, we will incur additional costs associated with our public company reporting requirements and we expect those costs to increase in the future. However, because these rules and regulations are often subject to varying interpretations, it is difficult to accurately estimate or predict the amount or timing of these additional costs. Further, the lack of specificity of many of the rules and regulations may result in an application in practice that may evolve over time as new guidance is provided by regulatory and governing bodies. This could result in continuing uncertainty regarding compliance matters and higher costs necessitated by ongoing revisions to disclosure and governance practices.

We also expect these rules and regulations to make it more expensive for us to maintain directors’ and officers’ liability insurance and we may be required to accept reduced policy limits and coverage or incur substantially higher costs to obtain the same or similar coverage. As a result, it may be more difficult for us to attract and retain qualified persons to serve on our board of directors, our board committees, or as executive officers. Increases in costs incurred as a result of becoming a publicly traded company may adversely affect our operating results and financial condition.

If we experience significant disruptions in our information technology systems, our business may be adversely affected.

We depend on our information technology systems for the efficient functioning of our business, including accounting, data storage, compliance, purchasing and inventory management. Our current systems provide virtual redundancy but are operated from one physical location in Menlo Park. However, we are in the process of upgrading the level of redundancy for our IT systems. We expect these upgrades to take one to two years to complete. While we will attempt to mitigate interruptions, we may experience difficulties in implementing some upgrades which could impact our business operations, or experience difficulties in operating our business during the upgrade, either of which could disrupt our operations, including our ability to timely ship and track product orders, project inventory requirements, manage our supply chain and otherwise adequately service our customers. In the event we experience significant disruptions, such as natural disasters or security breaches, as a result of the current implementation of our information technology systems, we may not be able to repair our systems in an efficient and timely manner. Accordingly, such events may disrupt or reduce the efficiency of our entire operation and have a material adverse effect on our results of operations and cash flows.

We are increasingly dependent on sophisticated information technology for our infrastructure. Our information systems require an ongoing commitment of significant resources to maintain, protect and enhance existing systems. Failure to maintain or protect our information systems and data integrity effectively could have a materially adverse effect on our business. For example, third parties may attempt to hack into our information systems and may obtain our proprietary information.

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Fluctuations in insurance costs and availability could adversely affect our profitability or our risk management profile.

We hold a number of insurance policies, including product liability insurance, directors’ and officers’ liability insurance, general liability insurance, property insurance and workers’ compensation insurance. If the costs of maintaining adequate insurance coverage increase significantly in the future, our operating results could be materially adversely affected. Likewise, if any of our current insurance coverage should become unavailable to us or become economically impractical, we would be required to operate our business without indemnity from commercial insurance providers. If we operate our business without insurance, we could be responsible for paying claims or judgments against us that would have otherwise been covered by insurance, which could adversely affect our results of operations or financial condition.

Risks Relating to Regulatory Matters

The existence of adequate coverage and reimbursement is important for sales of our products. Inadequate coverage and reimbursement policies for procedures using our steroid releasing implants could affect the adoption of our products and our future revenue.

Successful sales of our steroid releasing implants depend on the availability of adequate coverage and reimbursement from third-party payors for either the products specifically, the procedures associated with the use of the products, or both. Providers that purchase our products generally rely on third-party payors to reimburse all or part of the costs and fees associated with the procedures performed with these medical devices or the devices themselves. Adequate coverage and reimbursement from third-party payors, including governmental payors, such as Medicare and Medicaid, therefore, is important for obtaining product acceptance and widespread adoption in the marketplace.

In the United States, coverage and reimbursement for medical devices vary among payors. In addition, payors continually review new technologies for possible coverage and can, without notice, deny coverage for these new products and procedures. We estimate that private payors covering a significant number of U.S. covered lives currently have non-coverage policies with respect to PROPEL and PROPEL mini and they consider these products investigational or experimental. Some governmental and private third-party payors do not currently cover or reimburse our products because they have determined insufficient evidence of favorable clinical outcomes is available. Although they consider the steroid releasing implants investigational or experimental at this time, these payors may in the future determine sufficient evidence has been developed to cover and reimburse our products and related procedures. We are actively working to reverse these non-coverage decisions but cannot provide assurance that we will be successful in these efforts. If we are not successful in reversing existing non-coverage policies, or if other third-party payors issue similar policies, this could have a material adverse effect on our business and operations. Further, third-party payors who currently cover and reimburse customers for procedures using our products may in the future choose to decrease current levels of reimbursement or eliminate reimbursement altogether, either of which will cause our business to suffer.

To contain costs of new technologies, governmental healthcare programs and third-party payors are increasingly scrutinizing new and even existing treatments by requiring extensive evidence of favorable clinical outcomes and cost effectiveness before extending or continuing coverage, respectively. Such evidence generally must be derived from well-designed independent studies and published in peer-reviewed journals. Payors also may be influenced by positive position statements on the value of this technology issued by medical specialty societies. For example, payors may be persuaded to extend coverage by positive clinical data demonstrating the long-term safety and efficacy of FESS performed with our steroid releasing implants against FESS alone. A long-term clinical study randomizing FESS using our products against FESS alone would require an extremely large patient population to demonstrate these differences, and would be expensive and time-consuming. We have not conducted and are not currently planning to conduct such a study. Further, even positive study results do not guarantee adequate third-party payor coverage and reimbursement. Although the American Rhinologic Society has issued a positive position statement regarding the use of our steroid releasing implants, if the society changes

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its position in an unfavorable manner, third-party payors may reverse existing favorable coverage and reimbursement policies or otherwise decline to adopt favorable policies for our products, either of which will cause our business to suffer.

Generally, third-party payors currently reimburse hospitals and ambulatory surgery centers and physicians for the FESS procedures during which our technology is implanted using existing Category I Current Procedure Terminology, or CPT, codes relating to the FESS procedures performed. These CPT codes do not currently distinguish between procedures performed with or without our steroid releasing implants. The amount of reimbursement received by our customers from third-party payors is dependent generally on fee schedules established by these payors for the existing FESS CPT codes. For governmental payors, such as Medicare and Medicaid, the fee schedule amount is determined by statutory and regulatory formulas. For commercial payors, the reimbursement amount generally is dependent upon the specific contract terms between the provider and payor. We cannot provide assurance that government or private third-party payors will continue to reimburse for FESS with our products using the existing codes, nor can we provide assurance that the payment rates will be adequate. If providers and physicians are unable to obtain reimbursement for FESS with the use of our products at cost-effective levels, this could have a material adverse effect on our business and operations. Hospitals and ambulatory surgery centers are unlikely to purchase our products if they do not receive payment sufficient to cover the cost of our products and related procedures. In addition, in the event that the current coding and/or payment methodology for these procedures changes, this could have a material adverse effect on our business and business operations.

To secure separate payment for our products, whether for our currently marketed products or those under development, a unique billing code is required for either the implant, the procedure associated with use of our products, or both. Although a unique billing code currently exists for our marketed products it is not associated with payment by most payors and is not reportable to many payors, including Medicare. In March 2015, the American Medical Association announced the creation of Category III CPT codes for the placement of drug eluting implants as either a stand-alone procedure or in conjunction with sinus biopsy, polypectomy or debridement. These codes could ultimately facilitate payment to the physician when performed in an office setting. As such, these codes are primarily relevant to future in-office product candidates. Many third-party payors consider Category III codes non-covered. Therefore, third party payors may not cover these in-office products if they become commercially available unless the codes are graduated to Category I status. As of now, it is not possible to assess the full impact of product or procedure-specific codes on our business or results of operations or the likelihood of securing such specific codes. If new product or procedure-specific codes are adopted, and the levels of reimbursement declines significantly below current levels, our business and results of operations would be harmed and our stock price would likely decline.

Healthcare cost containment pressures and legislative or administrative reforms resulting in restrictive reimbursement practices of third-party payors could decrease the demand for our products, the prices that customers are willing to pay and the number of procedures performed using our steroid releasing implants, which could have an adverse effect on our business.

All third-party payors, whether governmental or commercial, whether inside the United States or outside, are developing increasingly sophisticated methods of controlling healthcare costs. These cost-control methods include prospective payment systems, bundled payment models, capitated arrangements, group purchasing, benefit redesign, pre-authorization processes, and requirements for second opinions prior to major surgery. These cost-control methods also potentially limit the amount that healthcare providers may be willing to pay for medical devices. Therefore, coverage or reimbursement for medical devices may decrease in the future.

Further, from time to time, typically on an annual basis, payment amounts are updated and revised by third-party payors. Because the cost of our products generally is recovered by the healthcare provider as part of the payment for performing a procedure and not separately reimbursed, these updates could directly impact the demand for our products. An example of payment updates is the Medicare program updates to physician

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payments, which is done on an annual basis using a prescribed statutory formula. In the past, when the application of the formula resulted in lower payment, Congress has passed interim legislation to prevent the reductions. Most recently, the Protecting Access to Medicare Act of 2014, signed into law in April 2014, provided for a 0.5% update from 2013 payment rates under the Medicare Physician Fee Schedule through 2014 and a 0% update from January 1 until April 1, 2015. If Congress fails to intervene to prevent the negative update factor in future years, the resulting decrease in payment may adversely affect our revenue and results of operations. In addition, the Medicare physician fee schedule has been adapted by some private payors into their plan-specific physician payment schedule. We cannot predict how pending and future healthcare legislation will impact our business, and any changes in coverage and reimbursement that further restricts coverage of our products or lowers reimbursement for procedures using our products could materially affect our business.

Reimbursement in international markets may require us to undertake country-specific reimbursement activities, including additional clinical studies, which could be time-consuming and expensive and may not yield acceptable reimbursement rates.

In international markets, market acceptance of our products will likely depend in large part on the availability of reimbursement within prevailing healthcare payment systems. Reimbursement and healthcare payment systems in international markets vary significantly by country, and by region in some countries, and include both government-sponsored healthcare and private insurance. We may not obtain international reimbursement approvals in a timely manner, if at all. In addition, even if we do obtain international reimbursement approvals, the level of reimbursement may not be enough to commercially justify expansion of our business into the approving jurisdiction. To the extent we or our customers are unable to obtain reimbursement for our steroid releasing implants in major international markets in which we seek to market and sell our products, our international revenue growth would be harmed, and our business and results of operations would be adversely affected.

Our products are subject to extensive regulation by the FDA, including the requirement to obtain premarket approval and the requirement to report adverse events. If we fail to obtain necessary FDA device or drug approvals for our products, or are subject to regulatory enforcement action as a result of our failure to properly report adverse events or otherwise comply with regulatory requirements, our commercial operations would be harmed.

Our steroid releasing implants are subject to extensive regulation by the FDA and various other federal, state and foreign governmental authorities. The PMA and New Drug Application, or NDA, approval processes can be expensive and lengthy. Despite the time, effort and cost required to obtain approval, there can be no assurance that any product that we intend to commercialize in the future will be approved by the FDA in a timely fashion, if at all. For example, we do not have any prior experience in obtaining approval of an NDA, and this lack of experience may delay or adversely affect our ability to obtain approval for our steroid releasing implant for refractory disease treated in the physician office setting, which will require NDA approval prior to commercialization in the United States.

Our marketed products are subject to Medical Device Reporting, or MDR, obligations, which require that we report to the FDA any incident in which our products may have caused or contributed to a death or serious injury, or in which our products malfunctioned and, if the malfunction were to recur, it could likely cause or contribute to a death or serious injury. We take a conservative approach in reporting MDRs and have had eight events occur postoperatively with PROPEL and PROPEL mini that we have reported to FDA as MDRs, six of which were for infections and two of which were for adhesions.

The FDA and state authorities have broad enforcement powers. Our failure to comply with applicable regulatory requirements could result in enforcement action by the FDA or state agencies, which may include any of the following sanctions:

• adverse publicity, warning letters, fines, injunctions, consent decrees and civil penalties;

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• repair, replacement, recall or seizure of our products;

• operating restrictions or partial suspension or total shutdown of production;

• delaying or refusing our requests for approval of new products, new intended uses or modifications to our existing products;

• refusal to grant export approval for our products;

• withdrawing PMAs that have already been granted; and

• criminal prosecution.

If any of these enforcement actions were to be taken by the government, our business could be harmed.

If we materially modify our FDA-approved products, we may need to seek and obtain new approvals, which, if not granted, would prevent us from selling our modified products.

A component of our strategy is to continue to modify and upgrade our steroid releasing implants. Medical devices can be marketed only for the indications for which they are approved. We have received a number of PMA supplement approvals since the original approvals of PROPEL and PROPEL mini. We may not be able to obtain additional regulatory approvals for new products or for modifications to, or additional indications for, our existing product in a timely fashion, or at all. Delays in obtaining future approvals would adversely affect our ability to introduce new or enhanced products in a timely manner, which in turn would harm our revenue and potential future profitability.

We may fail to obtain foreign regulatory approvals to market our products in other countries.

We do not have any sales outside the United States. Sales of our steroid releasing implants outside the United States are subject to foreign regulatory requirements that vary widely from country to country. In addition, the FDA regulates exports of medical devices from the United States. Complying with international regulatory requirements can be an expensive and time-consuming process and approval is not certain. The time required to obtain approvals, if required by other countries, may be longer than that required for FDA approvals, and requirements for such approvals may significantly differ from FDA requirements. In certain countries we may rely upon a third-party or third party distributors to obtain all required regulatory approvals, and these distributors may be unable to obtain or maintain such approvals. Our distributors in these countries may also incur significant costs in attempting to obtain and in maintaining foreign regulatory approvals or qualifications, which could increase the difficulty of attracting and retaining qualified distributors. If these distributors experience delays in receiving necessary qualifications, clearances or approvals to market our products outside the United States, or if they fail to receive those qualifications, clearances or approvals, we may be unable to market our products or enhancements in certain international markets effectively, or at all.

If we expand our operations outside the United States, we will need to expand our international marketing. International jurisdictions require separate regulatory approvals and compliance with numerous and varying regulatory requirements. The approval procedures vary among countries and may involve requirements for additional testing, and the time required to obtain approval may differ from country to country and from that required to obtain clearance or approval in the United States.

Approval in the United States does not ensure approval or certification by regulatory authorities in other countries or jurisdictions, and approval or certification by one foreign regulatory authority does not ensure approval or certification by regulatory authorities in other foreign countries or by the FDA. The foreign regulatory approval or certification process may include all of the risks associated with obtaining FDA approval. In addition, some countries only approve or certify a product for a certain period of time, and we are required to re-approve or re-certify our products in a timely manner prior to the expiration of our prior approval or

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certification. We may not obtain foreign regulatory approvals on a timely basis, if at all. We may not be able to file for regulatory approvals or certifications and may not receive necessary approvals to commercialize our products in any market. If we fail to receive necessary approvals or certifications to commercialize our products in foreign jurisdictions on a timely basis, or at all, or if we fail to have our products re-approved or re-certified, our business, results of operations and financial condition could be adversely affected.

These and other factors may have a material adverse effect on our international operations or on our business, results of operations and financial condition generally.

If we, our suppliers or service providers fail to comply with ongoing FDA or foreign regulatory authority requirements, or if we experience unanticipated problems with our products, these products could be subject to restrictions or withdrawal from the market.

Any product for which we obtain approval, and the manufacturing processes, reporting requirements, post-approval clinical data and promotional activities for such product, will be subject to continued regulatory review, oversight and periodic inspections by the FDA and other domestic and foreign regulatory bodies. In particular, we and our third-party suppliers are required to comply with the FDA’s current good manufacturing practice. These FDA regulations cover the methods and documentation of the design, testing, production, control, quality assurance, labeling, packaging, sterilization, storage and shipping of our products. Compliance with applicable regulatory requirements is subject to continual review and is monitored rigorously through periodic inspections by the FDA. If we, or our manufacturers, fail to adhere to current good manufacturing practice requirements in the United States, this could delay production of our products and lead to fines, difficulties in obtaining regulatory approvals, recalls, enforcement actions, including injunctive relief or consent decrees, or other consequences, which could, in turn, have a material adverse effect on our financial condition or results of operations.

In addition, the FDA audits compliance with the current good manufacturing practice through periodic announced and unannounced inspections of manufacturing and other facilities. The failure by us or one of our suppliers to comply with applicable statutes and regulations administered by the FDA, or the failure to timely and adequately respond to any adverse inspectional observations or product safety issues, could result in any of the following enforcement actions:

• untitled letters, warning letters, fines, injunctions, consent decrees and civil penalties;

• unanticipated expenditures to address or defend such actions;

• customer notifications or repair, replacement, refunds, recall, detention or seizure of our products;

• operating restrictions, partial suspension or total shutdown of production;

• refusing or delaying our requests for regulatory approvals of new products or modified products;

• withdrawing PMA approvals that have already been granted;

• refusal to grant export approval for our products; or

• criminal prosecution.

Any of these sanctions could have a material adverse effect on our reputation, business, results of operations and financial condition. Furthermore, our key component suppliers may not currently be or may not continue to be in compliance with all applicable regulatory requirements, which could result in our failure to produce our products on a timely basis and in the required quantities, if at all.

If we expand our operations outside the United States, our products and operations will be required to comply with standards set by foreign regulatory bodies, and those standards, types of evaluation and scope of review differ among foreign regulatory bodies. We intend to comply with the standards enforced by such foreign

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regulatory bodies as needed to commercialize our products. If we fail to comply with any of these standards adequately, a foreign regulatory body may take adverse actions similar to those within the power of the FDA. For example, if we seek to obtain CE marks permitting us to commercially distribute our products in Europe, we will be subject to a conformity assessment procedure under which a so-called Notified Body, an organization accredited by a member state of the European Economic Area, or EEA, will audit and examine our quality system for the manufacture, design, and release of our products and confirm adherence with applicable regulatory requirements. If we fail to obtain or maintain a CE mark in accordance with these requirements, we would be precluded from selling our products in the EEA. Any such action or circumstance may harm our reputation and business, and could have an adverse effect on our business, results of operations and financial condition.

Our products may in the future be subject to product recalls. A recall of our products, either voluntarily or at the direction of the FDA or another governmental authority, or the discovery of serious safety issues with our products, could have a significant adverse impact on us.

The FDA and similar foreign governmental authorities have the authority to require the recall of commercialized products in the event of material deficiencies or defects in design or manufacture. In the case of the FDA, the authority to require a recall must be based on an FDA finding that there is reasonable probability that the device would cause serious injury or death. In addition, foreign governmental bodies have the authority to require the recall of our products in their respective jurisdictions in the event of material deficiencies or defects in the design or manufacture of our products. We may, under our own initiative, recall a product if any material deficiency in our steroid releasing implants is found. The FDA requires that recalls be reported to the FDA within 10 working days after the recall is initiated. A government-mandated or voluntary recall by us or one of our international distributors could occur as a result of an unacceptable risk to health, component failures, malfunctions, manufacturing errors, design or labeling defects or other deficiencies and issues. Recalls of any of our products would divert managerial and financial resources and have an adverse effect on our reputation, results of operations and financial condition, which could impair our ability to produce our products in a cost- effective and timely manner in order to meet our customers’ demands. We may also be subject to liability claims, be required to bear other costs, or take other actions that may have a negative impact on our future sales and our ability to generate profits. Companies are required to maintain certain records of recalls, even if they are not reportable to the FDA. We may initiate voluntary recalls involving our products in the future that we determine do not require notification of the FDA. If the FDA disagrees with our determinations, they could require us to report those actions as recalls. A future recall announcement could harm our reputation with customers and negatively affect our sales. In addition, the FDA could take enforcement action for failing to report the recalls when they were conducted.

If the third parties on which we rely to conduct our clinical trials and to assist us with pre-clinical development do not perform as contractually required or expected, we may not be able to obtain regulatory approval for or commercialize our products.

We often must rely on third parties, such as medical institutions, clinical investigators, contract research organizations and contract laboratories to conduct our clinical trials and provide data or prepare deliverables for our PMA or NDA submissions. If these third parties do not successfully carry out their contractual duties or regulatory obligations or meet expected deadlines, if these third parties need to be replaced, or if the quality or accuracy of the data they obtain is compromised due to the failure to adhere to our clinical protocols or regulatory requirements or for other reasons, our pre-clinical development activities or clinical trials may be extended, delayed, suspended or terminated, and we may not be able to obtain regulatory approval for, or successfully commercialize, our products on a timely basis, if at all, and our business, operating results and prospects may be adversely affected. Furthermore, our third-party clinical trial investigators may be delayed in conducting our clinical trials for reasons outside of their control.

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We may be subject to enforcement action if we engage in improper marketing or promotion of our products.

Our promotional materials and training methods must comply with FDA and other applicable laws and regulations, including the prohibition of the promotion of unapproved, or off-label, use. Physicians may use our products off-label, as the FDA does not restrict or regulate a physician’s choice of treatment within the practice of medicine. However, if the FDA determines that our promotional materials or training constitutes promotion of an off-label use, it could request that we modify our training or promotional materials or subject us to regulatory or enforcement actions, including the issuance of an untitled letter, a warning letter, injunction, seizure, civil fine or criminal penalties. It is also possible that other federal, state or foreign enforcement authorities might take action if they consider our promotional or training materials to constitute promotion of an off-label use, which could result in significant fines or penalties under other statutory authorities, such as laws prohibiting false claims for reimbursement. In that event, our reputation could be damaged and adoption of the products could be impaired. Although our policy is to refrain from statements that could be considered off-label promotion of our products, the FDA or another regulatory agency could disagree and conclude that we have engaged in off-label promotion. In addition, the off-label use of our products may increase the risk of product liability claims. Product liability claims are expensive to defend and could divert our management’s attention, result in substantial damage awards against us, and harm our reputation.

If we fail to comply with U.S. federal and state healthcare regulatory laws, we could be subject to penalties, including, but not limited to, administrative, civil and criminal penalties, damages, fines, disgorgement, exclusion from participation in governmental healthcare programs, and the curtailment of our operations, any of which could adversely impact our reputation and business operations.

There are numerous U.S. federal and state healthcare regulatory laws, including, but not limited to, anti-kickback laws, false claims laws, privacy laws, and transparency laws. Our relationships with healthcare providers and entities, including but not limited to, physicians, hospitals, ambulatory surgery centers, group purchasing organizations and our international distributors are subject to scrutiny under these laws. Violations of these laws can subject us to penalties, including, but not limited to, administrative, civil and criminal penalties, damages, fines, disgorgement, imprisonment, exclusion from participation in federal and state healthcare programs, including the Medicare, Medicaid and Veterans Administration health programs, and the curtailment of our operations. Healthcare fraud and abuse regulations are complex, and even minor irregularities can potentially give rise to claims that a statute or prohibition has been violated. The laws that may affect our ability to operate include, but are not limited to:

• the federal Anti-Kickback Statute, which prohibits, among other things, persons and entities from knowingly and willfully soliciting, receiving, offering, or paying remuneration, directly or indirectly, in cash or in kind, in exchange for or to induce either the referral of an individual for, or the purchase, lease, order or recommendation of, any good, facility, item or service for which payment may be made, in whole or in part, under federal healthcare programs such as Medicare and Medicaid;

• the federal civil False Claims Act, which prohibits, among other things, individuals or entities from knowingly presenting, or causing to be presented, claims for payment from Medicare, Medicaid or other third-party payors that are false or fraudulent; knowingly making using, or causing to be made our used, a false record or statement to get a false or fraudulent claim paid or approved by the government; or knowingly making, using, or causing to be made or used, a false record or statement to avoid, decrease or conceal an obligation to pay money to the federal government;

• the federal criminal False Claims Act, which imposes criminal fines or imprisonment against individuals or entities who make or present a claim to the government knowing such claim to be false, fictitious or fraudulent;

• the civil monetary penalties statute, which imposes penalties against any person or entity who, among other things, is determined to have presented or caused to be presented, a claim to a federal healthcare program that the person knows, or should know, is for an item or service that was not provided as claimed or is false or fraudulent;

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• the federal Health Insurance Portability and Accountability Act of 1996, as amended, which created federal criminal laws that prohibit executing a scheme to defraud any healthcare benefit program or making false statements relating to healthcare matters;

• HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act of 2009, or HITECH, and their respective implementing regulations, which impose requirements on certain covered healthcare providers, health plans and healthcare clearinghouses as well as their business associates that perform services for them that involve individually identifiable health information, relating to the privacy, security and transmission of individually identifiable health information without appropriate authorization, including mandatory contractual terms as well as directly applicable privacy and security standards and requirements;

• the Federal Trade Commission Act and similar laws regulating advertisement and consumer protections;

• the federal Foreign Corrupt Practices Act of 1997, which prohibits corrupt payments, gifts or transfers of value to foreign officials; and

• foreign or U.S. state law equivalents of each of the above federal laws, such as anti-kickback and false claims laws which may apply to items or services reimbursed by any third-party payor, including commercial insurers.

Further, the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Reconciliation Act of 2010, or, collectively, the Affordable Care Act, among other things, amends the intent requirements of the federal Anti-Kickback Statute and certain criminal statutes governing healthcare fraud. A person or entity can now be found guilty of violating the statute without actual knowledge of the statute or specific intent to violate it. In addition, the Affordable Care Act provides that the government may assert that a claim including items or services resulting from a violation of the federal Anti-Kickback Statute constitutes a false or fraudulent claim for purposes of the federal False Claims Act. Moreover, while we do not submit claims and our customers make the ultimate decision on how to submit claims, from time-to-time, we may provide reimbursement guidance to our customers. If a government authority were to conclude that we provided improper advice to our customers or encouraged the submission of false claims for reimbursement, we could face action against us by government authorities. Any violations of these laws, or any action against us for violation of these laws, even if we successfully defend against it, could result in a material adverse effect on our reputation, business, results of operations and financial condition.

We have entered into consulting agreements with physicians, including some who influence the ordering of and use our products in procedures they perform. While we believe these transactions were structured to comply with all applicable laws, including state and federal anti-kickback laws, to the extent applicable, regulatory agencies may view these transactions as prohibited arrangements that must be restructured, or discontinued, or for which we could be subject to other significant penalties. We could be adversely affected if regulatory agencies interpret our financial relationships with ENT physicians who influence the ordering of and use our products to be in violation of applicable laws. This could subject us to the penalties described above.

Because of the breadth of these laws and the narrowness of the statutory exceptions and regulatory safe harbors available under such laws, it is possible that some of our business activities, including our relationships with healthcare providers and entities, including, but not limited to, physicians, hospitals, ambulatory surgery centers, group purchasing organizations and our independent distributors and certain sales and marketing practices, including the provision of certain items and services to our customers, could be subject to challenge under one or more of such laws.

To enforce compliance with the healthcare regulatory laws, federal and state enforcement bodies have recently increased their scrutiny of interactions between healthcare companies and healthcare providers, which has led to a number of investigations, prosecutions, convictions and settlements in the healthcare industry.

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Responding to investigations can be time-and resource-consuming and can divert management’s attention from the business. Additionally, as a result of these investigations, healthcare providers and entities may have to agree to additional onerous compliance and reporting requirements as part of a consent decree or corporate integrity agreement. Any such investigation or settlement could increase our costs or otherwise have an adverse effect on our business.

In certain cases, federal and state authorities pursue actions for false claims on the basis that manufacturers and distributors are promoting off-label uses of their products. Pursuant to FDA regulations, we can only market our products for cleared or approved uses. Although physicians are permitted to use medical devices for indications other than those cleared or approved by the FDA in their professional medical judgment, we are prohibited from promoting products for off-label uses. We market our products and provide promotional materials and training programs to physicians regarding the use of our products. If it is determined that our business activities, including our marketing, promotional materials or training programs constitute promotion of unapproved uses, we could be subject to significant fines in addition to regulatory enforcement actions, including the issuance of a warning letter, injunction, seizure and criminal penalty.

In addition, there has been a recent trend of increased federal and state regulation of payments and transfers of value provided to healthcare professionals or entities. On February 8, 2013, the Centers for Medicare & Medicaid Services, or CMS, released its final rule implementing section 6002 of the Affordable Care Act known as the Physician Payment Sunshine Act that imposes new annual reporting requirements on device manufacturers for payments and other transfers of value provided by them, directly or indirectly, to physicians and teaching hospitals, as well as ownership and investment interests held by physicians and their family members. A manufacturer’s failure to submit timely, accurately and completely the required information for all payments, transfers of value or ownership or investment interests may result in civil monetary penalties of up to an aggregate of $150,000 per year, and up to an aggregate of $1.0 million per year for “knowing failures.” The period between August 1, 2013 and December 31, 2013, was the first reporting period, for which manufacturers were required to report aggregate payment data to CMS by March 31, 2014. Manufacturers also will be required to report to CMS detailed payment and transfers of value data and submit legal attestation to the accuracy of such data during Phase 2 of the program, which is expected to begin in May 2014 and extends for at least 30 days. Thereafter, manufacturers must submit reports by the 90th day of each subsequent calendar year. Due to the difficulty in complying with the Physician Payment Sunshine Act, we cannot assure you that we will successfully report all payments and transfers of value provided by us, and any failure to comply could result in significant fines and penalties. Some states, such as California and Connecticut, also mandate implementation of commercial compliance programs, and other states, such as Massachusetts and Vermont, impose restrictions on device manufacturer marketing practices and tracking and reporting of gifts, compensation and other remuneration to healthcare professionals and entities. The shifting commercial compliance environment and the need to build and maintain robust and expandable systems to comply with different compliance and reporting requirements in multiple jurisdictions increase the possibility that a healthcare company may fail to comply fully with one or more of these requirements.

Although compliance programs can mitigate the risk of investigation and prosecution for violations of these laws, the risks cannot be entirely eliminated. Any action against us for violation of these laws, even if we successfully defend against it, could cause us to incur significant legal expenses and divert our management’s attention from the operation of our business.

Most of these laws apply to not only the actions taken by us, but also actions taken by our distributors. We have limited knowledge and control over the business practices of our distributors, and we may face regulatory action against us as a result of their actions which could have a material adverse effect on our reputation, business, results of operations and financial condition.

In addition, the scope and enforcement of these laws is uncertain and subject to rapid change in the current environment of healthcare reform, especially in light of the lack of applicable precedent and regulations. Federal

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or state regulatory authorities might challenge our current or future activities under these laws. Any such challenge could have a material adverse effect on our reputation, business, results of operations and financial condition. Any state or federal regulatory review of us, regardless of the outcome, would be costly and time-consuming. Additionally, we cannot predict the impact of any changes in these laws, whether or not retroactive.

Legislative or regulatory healthcare reforms may make it more difficult and costly for us to obtain regulatory approval of our products and to produce, market and distribute our products after approval is obtained.

FDA regulations and guidance are often revised or reinterpreted by the FDA in ways that may significantly affect our business and our products. Any new regulations or revisions or reinterpretations of existing regulations may impose additional costs or lengthen review times of our products. Delays in receipt of, or failure to receive, regulatory approvals for our new products would have a material adverse effect on our business, results of operations and financial condition.

Federal and state governments in the United States have recently enacted legislation to overhaul the nation’s healthcare system. While the goal of healthcare reform is to expand coverage to more individuals, it also involves increased government price controls, additional regulatory mandates and other measures designed to constrain medical costs. The Affordable Care Act significantly impacts the medical device industry. Among other things, the Affordable Care Act:

• imposes an annual excise tax of 2.3% on any entity that manufactures or imports medical devices offered for sale in the United States beginning in 2013;

• establishes a new Patient-Centered Outcomes Research Institute to oversee and identify priorities in comparative clinical effectiveness research in an effort to coordinate and develop such research;

• implements payment system reforms including a national pilot program on payment bundling to encourage hospitals, physicians and other providers to improve the coordination, quality and efficiency of certain healthcare services through bundled payment models; and

• creates an independent payment advisory board that will submit recommendations to reduce Medicare spending if projected Medicare spending exceeds a specified growth rate.

In addition, other legislative changes have been proposed and adopted since the Affordable Care Act was enacted. On August 2, 2011, President Obama signed into law the Budget Control Act of 2011, which, among other things, created the Joint Select Committee on Deficit Reduction to recommend to Congress proposals in spending reductions. The Joint Select Committee did not achieve a targeted deficit reduction of at least $1.2 trillion for the years 2013 through 2021, triggering the legislation’s automatic reduction to several government programs. This includes reductions to Medicare payments to providers of 2% per fiscal year, which went into effect in April 2013 and will stay in effect through 2024, unless additional congressional action is taken. On January 2, 2013, President Obama signed into law the American Taxpayer Relief Act of 2012, or the ATRA, which, among other things, further reduced Medicare payments to several providers, including hospitals, imaging centers and cancer treatment centers and increased the statute of limitations period for the government to recover overpayments to providers from three to five years. We expect that additional state and federal healthcare reform measures will be adopted in the future, any of which could limit the amounts that federal and state governments will pay for healthcare products and services, which could result in reduced demand for our products or additional pricing pressure.

Our financial performance may be adversely affected by medical device tax provisions in the healthcare reform laws.

The Affordable Care Act imposes, among other things, an excise tax of 2.3% on any entity that manufactures or imports specified medical devices offered for sale in the United States beginning in 2013. Under these provisions, the Congressional Research Service predicts that the total cost to the medical device industry

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may be up to $29 billion over the next decade. The Internal Revenue Service issued final regulations implementing the tax in December of 2012 which requires, among other things, bi-monthly payments and quarterly reporting. We anticipate that primarily all sales of our products in the United States will be subject to this 2.3% excise tax. During the years ended December 31, 2014 and 2013, we recognized $0.7 million and $0.3 million, respectively, in tax expense associated with the medical device tax in the United States which is included in selling, general and administrative expenses.

Our operations involve the use of hazardous and toxic materials, and we must comply with environmental laws and regulations, which can be expensive, and may affect our business and operating results.

We are subject to a variety of federal, state and local regulations relating to the use, handling, storage, disposal and human exposure to hazardous materials. Liability under environmental laws can be joint and several and without regard to comparative fault, and environmental laws could become more stringent over time, imposing greater compliance costs and increasing risks and penalties associated with violations, which could harm our business. Although we believe that our activities conform in all material respects with environmental laws, there can be no assurance that violations of environmental and health and safety laws will not occur in the future as a result of human error, accident, equipment failure or other causes. The failure to comply with past, present or future laws could result in the imposition of fines, third-party property damage and personal injury claims, investigation and remediation costs, the suspension of production, or a cessation of operations. We also expect that our operations will be affected by other new environmental and health and safety laws on an ongoing basis. Although we cannot predict the ultimate impact of any such new laws, they will likely result in additional costs, and may require us to change how we manufacture our products, which could have a material adverse effect on our business.

Failure to comply with the United States Foreign Corrupt Practices Act, or the FCPA, and similar laws associated with any activities outside the United States could subject us to penalties and other adverse consequences.

We are subject to the FCPA and other anti-bribery legislation around the world. The FCPA generally prohibits covered entities and their intermediaries from engaging in bribery or making other prohibited payments, offers or promises to foreign officials for the purpose of obtaining or retaining business or other advantages. In addition, the FCPA imposes recordkeeping and internal controls requirements on publicly traded corporations and their foreign affiliates, which are intended to, among other things, prevent the diversion of corporate funds to the payment of bribes and other improper payments, and to prevent the establishment of “off books” slush funds from which such improper payments can be made. Although we do not currently have any operations outside the United States, in the future we may face significant risks if we fail to comply with the FCPA and other laws that prohibit improper payments, offers or promises of payment to foreign governments and their officials and political parties by us and other business entities for the purpose of obtaining or retaining business or other advantages. In many foreign countries, particularly in countries with developing economies, some of which represent significant markets for us, it may be a local custom that businesses operating in such countries engage in business practices that are prohibited by the FCPA or other laws and regulations. Although we have implemented a company policy requiring our employees and consultants to comply with the FCPA and similar laws, such policy may not be effective at preventing all potential FCPA or other violations. There can be no assurance that none of our employees and agents, or those companies to which we outsource certain of our business operations will not take actions that violate our policies or applicable laws, for which we may be ultimately held responsible. As a result of our focus on managing our growth, our development of infrastructure designed to identify FCPA matters and monitor compliance is at an early stage. Any violation of the FCPA and related policies could result in severe criminal or civil sanctions, which could have a material and adverse effect on our reputation, business, operating results and financial condition.

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Risks Relating to Intellectual Property Matters

Intellectual property rights may not provide adequate protection, which may permit third parties to compete against us more effectively.

Our success depends significantly on our ability to protect our proprietary rights to the technologies and inventions used in, or embodied by, our products. To protect our proprietary technology, we rely on patent protection, as well as a combination of copyright, trade secret and trademark laws, as well as nondisclosure, confidentiality and other contractual restrictions in our consulting and employment agreements. However, these legal means afford only limited protection and may not adequately protect our rights or permit us to gain or keep any competitive advantage.

Patents

The process of applying for patent protection itself is time consuming and expensive and we cannot assure you that all of our patent applications will issue as patents or that, if issued, they will issue in a form that will be advantageous to us. The rights granted to us under our patents, including prospective rights sought in our pending patent applications, may not be meaningful or provide us with any commercial advantage and they could be opposed, contested or circumvented by our competitors or be declared invalid or unenforceable in judicial or administrative proceedings.

We own numerous issued patents and pending patent applications that relate to the sinus delivery of sustained release therapeutics, sinus delivery of implants, implant designs as well as individual components of our steroid releasing systems. The API contained in our steroid releasing implants is generic and is not the subject of independent patent protection. If any of our patents are challenged, invalidated or legally circumvented by third parties, and if we do not own other enforceable patents protecting our products, competitors could market products and use processes that are substantially similar to, or superior to, ours, and our business may suffer. In addition, the patents we own may not be of sufficient scope or strength to provide us with any meaningful protection or commercial advantage, and competitors may be able to design around our patents or develop products that provide outcomes comparable to ours without infringing on our intellectual property rights.

Recent patent reform legislation may increase the uncertainties and costs surrounding the prosecution of our patent applications and the enforcement or defense of our issued patents. On September 16, 2011, the Leahy-Smith America Invents Act, or the Leahy-Smith Act, was signed into law. The Leahy-Smith Act includes a number of significant changes to U.S. patent law. These include provisions that affect the way patent applications are prosecuted, redefine prior art, may affect patent litigation, and switch the U.S. patent system from a “first-to-invent” system to a “first-to-file” system. Under a “first-to-file” system, assuming the other requirements for patentability are met, the first inventor to file a patent application generally will be entitled to the patent on an invention regardless of whether another inventor had made the invention earlier. The U.S. Patent and Trademark Office, or USPTO, recently developed new regulations and procedures to govern administration of the Leahy-Smith Act, and many of the substantive changes to patent law associated with the Leahy-Smith Act, and in particular, the first-to-file provisions, only became effective on March 16, 2013. Accordingly, it is not clear what, if any, impact the Leahy-Smith Act will have on the operation of our business. However, the Leahy-Smith Act and its implementation may increase the uncertainties and costs surrounding the prosecution of our patent applications and the enforcement or defense of our issued patents, all of which may have a material adverse effect on our business and financial condition. In addition, patent reform legislation may pass in the future that may lead to additional uncertainties and increased costs surrounding the prosecution, enforcement, and defense of our patents and applications.

We may be subject to a third-party preissuance submission of prior art to the USPTO, or become involved in opposition, derivation, reexamination, inter partes review, post-grant review, or other patent office proceedings or litigation, in the United States or elsewhere, challenging our patent rights. An adverse determination in any such submission, proceeding or litigation may reduce the scope of, or invalidate, our patent rights, allow third

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parties to commercialize our technology or products and compete directly with us, without payment to us, or result in our inability to manufacture or commercialize products without infringing third-party patent rights.

Moreover, the USPTO and various foreign governmental patent agencies require compliance with a number of procedural, documentary, fee payment and other similar provisions during the patent application process. In addition, periodic maintenance fees on issued patents often must be paid to the USPTO and foreign patent agencies over the lifetime of the patent. While an unintentional lapse can in many cases be cured by payment of a late fee or by other means in accordance with the applicable rules, there are situations in which noncompliance can result in abandonment or lapse of the patent or patent application, resulting in partial or complete loss of patent rights in the relevant jurisdiction. Non-compliance events that could result in abandonment or lapse of a patent or patent application include, but are not limited to, failure to respond to official actions within prescribed time limits, non-payment of fees and failure to properly legalize and submit formal documents. If we fail to maintain the patents and patent applications covering our products or procedures, we may not be able to stop a competitor from marketing products that are the same as or similar to our products, which may have a material adverse effect on our business.

Competing products may also be sold in other countries in which our patent coverage might not exist or be as strong. We do not have patent rights in certain foreign countries in which a market may exist in the future, and the laws of many foreign countries may not protect our intellectual property rights to the same extent as the laws of the United States. Thus, we may not be able to stop a competitor from marketing and selling in foreign countries products that are the same as or similar to our products.

Trademarks

We rely on our trademarks as one means to distinguish our products from the products of our competitors, and have registered or applied to register many of these trademarks. Our trademark applications may not be approved, however. Third parties may oppose our trademark applications, or otherwise challenge our use of the trademarks. In the event that our trademarks are successfully challenged, we may be forced to rebrand our products, which may result in loss of brand recognition and may require us to devote resources to advertising and marketing new brands. Our competitors may infringe our trademarks and we may not have adequate resources to enforce our trademarks.

Trade Secrets and Know-How

We may not be able to prevent the unauthorized disclosure or use of our technical knowledge or other trade secrets by consultants, vendors, former employees or current employees, despite the existence generally of confidentiality agreements and other contractual restrictions. Monitoring unauthorized uses and disclosures of our intellectual property is difficult, and we do not know whether the steps we have taken to protect our intellectual property will be effective.

Moreover, our competitors may independently develop equivalent knowledge, methods and know-how. Competitors could purchase our steroid releasing implants and attempt to replicate some or all of the competitive advantages we derive from our development efforts, willfully infringe our intellectual property rights, design around our protected technology or develop their own competitive technologies that fall outside of our intellectual property rights. If our intellectual property is not adequately protected so as to protect our market against competitors’ products and methods, our competitive position may be adversely affected, as may our business.

We may in the future be a party to patent and other intellectual property litigation and administrative proceedings that may be costly and may interfere with our ability to sell our steroid releasing implants.

The medical device industry has been characterized by frequent and extensive intellectual property litigation. Additionally, the ENT market is extremely competitive. Our competitors, such as Medtronic,

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Olympus, Johnson & Johnson, Stryker and Smith & Nephew, or other patent holders may assert that our steroid releasing implants and the methods employed in our steroid releasing implants are covered by their patents. If our steroid releasing implants or methods are found to infringe, we may be prevented from manufacturing or marketing our steroid releasing implants. In the event that we become involved in such a dispute, we may incur significant costs and expenses, may be prevented from marketing our products and may need to devote resources to resolving any claims, which would reduce the cash we have available for operations and may be distracting to management. If we lose a patent lawsuit, alleging our infringement of a competitor’s patents, we may be prevented from marketing our steroid releasing implants in one or more countries. We may also initiate litigation against third parties to protect our own intellectual property. Our intellectual property has not been tested in litigation. If we initiate litigation to protect our rights, we run the risk of having our patents invalidated, which may undermine our competitive position.

Litigation related to infringement and other intellectual property claims, with or without merit, is unpredictable, may be expensive and time-consuming and may divert management’s attention from our core business. If we lose this kind of litigation, a court may require us to pay substantial damages, treble damages and attorneys’ fees, and prohibit us from using technologies essential to our steroid releasing implants, any of which may have a material adverse effect on our business, results of operations and financial condition. If relevant patents are upheld as valid and enforceable and we are found to infringe, we may be prevented from selling our steroid releasing implants unless we can obtain licenses to use technology covered by such patents. We do not know whether any necessary licenses would be available to us on satisfactory terms, if at all. If we cannot obtain these licenses, we may be forced to design around those patents at additional cost or abandon our products altogether. As a result, our ability to grow our business and compete in the market may be harmed.

We may be subject to damages resulting from claims that we or our employees have wrongfully used or disclosed alleged trade secrets of our competitors or are in breach of non-competition or non-solicitation agreements with our competitors.

Many of our employees were previously employed at other medical device companies, including our competitors or potential competitors, in some cases until recently. We may in the future be subject to claims that we or our employees have inadvertently or otherwise used or disclosed alleged trade secrets or other proprietary information of these former employers or competitors. In addition, we have been and may in the future be subject to claims that we caused an employee to breach the terms of his or her non-competition or non-solicitation agreement. Litigation may be necessary to defend against these claims. Even if we are successful in defending against these claims, litigation may result in substantial costs and may be a distraction to management. If our defense to those claims fails, in addition to paying monetary damages, a court may prohibit us from using technologies or features that are essential to our products, if such technologies or features are found to incorporate or be derived from the trade secrets or other proprietary information of the former employers. An inability to incorporate technologies or features that are important or essential to our products may have a material adverse effect on our business, and may prevent us from selling our products. In addition, we may lose valuable intellectual property rights or personnel. Any litigation or the threat thereof may adversely affect our ability to hire employees or contract with independent sales representatives. A loss of key personnel or their work product may hamper or prevent our ability to commercialize our products, which may have an adverse effect on our business, results of operations and financial condition.

Risks Relating to Our Capital Requirements and Finances

We may need substantial additional funding and may be unable to raise capital when needed, which would force us to delay, reduce, eliminate or abandon our commercialization efforts or product development programs.

Our ability to continue as a going concern may require us to obtain additional financing to fund our operations. We may need to raise substantial additional capital to:

• expand the commercialization of our products;

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• fund our operations and clinical studies;

• continue our research and development activities;

• defend, in litigation or otherwise, any claims that we infringe third-party patents or other intellectual property rights;

• enforce our patent and other intellectual property rights;

• address legal or enforcement actions by the FDA or other governmental agencies and remediate underlying problems;

• commercialize our new products in development, if any such products receive regulatory clearance or approval for commercial sale; and

• acquire companies and in-license products or intellectual property.

We believe that our existing cash, cash equivalents and short-term investments, including the proceeds from our initial public offering of our common stock, or IPO, in July 2014, revenue, and available debt financing arrangements will be sufficient to meet our capital requirements and fund our operations at least through 2016. However, we have based these estimates on assumptions that may prove to be wrong, and we could spend our available financial resources much faster than we currently expect. Any future funding requirements will depend on many factors, including:

• market acceptance of our products;

• the scope, rate of progress and cost of our clinical studies;

• the cost of our research and development activities;

• the cost of filing and prosecuting patent applications and defending and enforcing our patent or other intellectual property rights;

• the cost of defending, in litigation or otherwise, any claims that we infringe third-party patents or other intellectual property rights;

• the cost and timing of additional regulatory clearances or approvals;

• the cost and timing of establishing additional sales, marketing and distribution capabilities;

• costs associated with any product recall that may occur;

• the effect of competing technological and market developments;

• the extent to which we acquire or invest in products, technologies and businesses, although we currently have no commitments or agreements relating to any of these types of transactions; and

• the costs of operating as a public company.

If we raise additional funds by issuing equity securities, our stockholders may experience dilution. Any future debt financing into which we enter may impose upon us covenants that restrict our operations, including limitations on our ability to incur liens or additional debt, pay dividends, repurchase our stock, make certain investments and engage in certain merger, consolidation or asset sale transactions. Any debt financing or additional equity that we raise may contain terms that are not favorable to us or our stockholders. If we raise additional funds through collaboration and licensing arrangements with third parties, it may be necessary to relinquish some rights to our technologies or our products, or grant licenses on terms that are not favorable to us. If we are unable to raise adequate funds, we may have to liquidate some or all of our assets, or delay, reduce the scope of or eliminate some or all of our development programs.

We cannot be certain that additional funding will be available on acceptable terms, if at all. If we do not have, or are not able to obtain, sufficient funds, we may have to delay development or commercialization of our

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products or license to third parties the rights to commercialize products or technologies that we would otherwise seek to commercialize. We also may have to reduce marketing, customer support or other resources devoted to our products or cease operations. Any of these factors could harm our operating results.

Our ability to use our net operating losses and research and development credit carryforwards to offset future taxable income may be subject to certain limitations.

In general, under Sections 382 and 383 of the Internal Revenue Code of 1986, as amended, or the Code, a corporation that undergoes an “ownership change,” generally defined as a greater than 50% change by value in its equity ownership over a three-year period, is subject to limitations on its ability to utilize its pre-change net operating losses, or NOLs, and its research and development credit carryforwards to offset future taxable income. Our existing NOLs and research and development credit carryforwards may be subject to limitations arising from previous ownership changes, and if we undergo an ownership change, our ability to utilize NOLs and research and development credit carryforwards could be further limited by Sections 382 and 383 of the Code. Future changes in our stock ownership, some of which might be beyond our control, could result in an ownership change under Section 382 of the Code. For these reasons, in the event we experience a change of control, we may not be able to utilize a material portion of the NOLs and research and development credit carryforwards, even if we attain profitability.

Risks Related to Our Common Stock

An active trading market may not be sustained.

Prior to our IPO in July 2014, there was no public market for our common stock. Although our stock is currently traded on the NASDAQ Global Market, an active trading market may not be sustained. The lack of an active market may impair the value of your shares and your ability to sell your shares at the time you wish to sell them. An inactive market may also impair our ability to both raise capital by selling shares and acquire other complementary products, technologies or businesses by using our shares as consideration.

We expect that the price of our common stock will fluctuate substantially.

The market price of our common stock has been, and is likely to continue to be, highly volatile. From our IPO in July 2014 through February 28, 2015, the price of our common stock has fluctuated from a low of $12.02 to a high of $26.87. The price of our common stock may continue to fluctuate substantially due to many factors, including:

• volume and timing of sales of our steroid releasing implants;

• the introduction of new products or product enhancements by us or others in our industry;

• disputes or other developments with respect to our or others’ intellectual property rights;

• our ability to develop, obtain regulatory clearance or approval for, and market new and enhanced products on a timely basis;

• product liability claims or other litigation;

• quarterly variations in our results of operations or those of others in our industry;

• sales of large blocks of our common stock, including sales by our executive officers and directors;

• media exposure of our steroid releasing implants or products of others in our industry;

• changes in governmental regulations or in the status of our regulatory approvals or applications;

• changes in earnings estimates or recommendations by securities analysts; and

• general market conditions and other factors, including factors unrelated to our operating performance or the operating performance of our competitors.

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In recent years, the stock markets generally have experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of those companies. Broad market and industry factors may significantly affect the market price of our common stock, regardless of our actual operating performance. These fluctuations may be even more pronounced in the trading market for our common stock.

In addition, in the past, class action litigation has often been instituted against companies whose securities have experienced periods of volatility in market price. Securities litigation brought against us following volatility in our stock price, regardless of the merit or ultimate results of such litigation, could result in substantial costs, which would hurt our financial condition and operating results and divert management’s attention and resources from our business.

These and other factors may make the price of our stock volatile and subject to unexpected fluctuation.

Securities analysts may not publish favorable research or reports about our business or may publish no information at all, which could cause our stock price or trading volume to decline.

The trading market for our common stock will be influenced to some extent by the research and reports that industry or financial analysts publish about us and our business. We do not control these analysts. As a newly public company, we may be slow to attract research coverage and the analysts who publish information about our common stock will have had relatively little experience with our company or industry, which could affect their ability to accurately forecast our results and could make it more likely that we fail to meet their estimates. In the event we obtain securities or industry analyst coverage, if any of the analysts who cover us provide inaccurate or unfavorable research or issue an adverse opinion regarding our stock price, our stock price could decline. If one or more of these analysts cease coverage of our company or fail to publish reports covering us regularly, we could lose visibility in the market, which in turn could cause our stock price or trading volume to decline.

We are an “emerging growth company” and we cannot be certain if the reduced disclosure requirements applicable to “emerging growth companies” will make our common stock less attractive to investors.

We are an “emerging growth company,” as defined in the Jumpstart Our Business Startups Act of 2012, or the JOBS Act, and we may take advantage of certain exemptions and relief from various reporting requirements that are applicable to other public companies that are not “emerging growth companies.” In particular, while we are an “emerging growth company” (1) we will not be required to comply with the auditor attestation requirements of Section 404(b) of the Sarbanes-Oxley Act, (2) we will be exempt from any rules that may be adopted by the Public Company Accounting Oversight Board requiring mandatory audit firm rotations or a supplement to the auditor’s report on financial statements, (3) we will be subject to reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and (4) we will not be required to hold nonbinding advisory votes on executive compensation or stockholder approval of any golden parachute payments not previously approved.

In addition, while we are an “emerging growth company” we will not be required to comply with any new financial accounting standard until such standard is generally applicable to private companies. As a result, our financial statements may not be comparable to companies that are not “emerging growth companies” or elect not to avail themselves of this provision.

We may remain an “emerging growth company” until as late as December 31, 2019, the fiscal year-end following the fifth anniversary of the completion of our IPO, though we may cease to be an “emerging growth company” earlier under certain circumstances, including (1) if the market value of our common stock that is held by nonaffiliates exceeds $700 million as of any June 30, in which case we would cease to be an “emerging growth company” as of the following December 31, or (2) if our gross revenue exceeds $1.0 billion in any fiscal year.

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The exact implications of the JOBS Act are still subject to interpretations and guidance by the SEC and other regulatory agencies, and we cannot assure you that we will be able to take advantage of all of the benefits of the JOBS Act. In addition, investors may find our common stock less attractive if we rely on the exemptions and relief granted by the JOBS Act. If some investors find our common stock less attractive as a result, there may be a less active trading market for our common stock and our stock price may decline or become more volatile.

A significant portion of our total outstanding shares are restricted from immediate resale but may be sold into the market in the near future. This could cause the market price of our common stock to drop significantly, even if our business is doing well.

Sales of a substantial number of shares of our common stock in the public market could occur at any time. These sales, or the perception in the market that the holders of a large number of shares intend to sell their shares, could result in a decrease in the market price of our common stock. As of December 31, 2014, we had outstanding 23,378,609 shares of common stock, 12,978,550 of which are currently restricted as a result of securities laws. Moreover, holders of a substantial number of shares of our common stock, including shares of our common stock issuable upon the exercise or, in certain cases, net exercise of outstanding warrants, have rights, subject to some conditions, to require us to file registration statements covering their shares or to include their shares in registration statements that we may file for ourselves or other stockholders. We have also registered all shares of common stock that we may issue under our equity compensation plans. These shares can be freely sold in the public market upon issuance, subject to volume limitations applicable to affiliates and the lock-up agreements described above.

Our directors, officers and principal stockholders have significant voting power and may take actions that may not be in the best interests of our other stockholders.

Our officers, directors and principal stockholders each holding more than 5% of our common stock, collectively, control approximately 60% of our outstanding common stock. As a result, these stockholders, if they act together, will be able to control the management and affairs of our company and most matters requiring stockholder approval, including the election of directors and approval of significant corporate transactions. This concentration of ownership may have the effect of delaying or preventing a change of control and might adversely affect the market price of our common stock. This concentration of ownership may not be in the best interests of our other stockholders.

If we experience material weaknesses in the future or otherwise fail to maintain an effective system of internal controls in the future, we may not be able to accurately report our financial condition or results of operations which may adversely affect investor confidence in us and, as a result, the value of our common stock.

As a result of being a public company, we will be required, under Section 404 of the Sarbanes-Oxley Act of 2002, or the Sarbanes-Oxley Act, to furnish a report by management on, among other things, the effectiveness of our internal control over financial reporting beginning with our Annual Report on Form 10-K for the year ended December 31, 2015. This assessment will need to include disclosure of any material weaknesses identified by our management in our internal control over financial reporting. A material weakness is a deficiency or combination of deficiencies in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of a company’s annual and interim financial statements will not be detected or prevented on a timely basis.

We are further enhancing internal controls, processes and related documentation necessary to perform the evaluation needed to comply with Section 404. We may not be able to complete our evaluation, testing and any required remediation in a timely fashion. During the evaluation and testing process, if we identify one or more material weaknesses in our internal control over financial reporting, we will be unable to assert that our internal controls are effective. The effectiveness of our controls and procedures may be limited by a variety of factors, including:

• faulty human judgment and simple errors, omissions or mistakes;

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• fraudulent action of an individual or collusion of two or more people;

• inappropriate management override of procedures; and

• the possibility that any enhancements to controls and procedures may still not be adequate to assure timely and accurate financial control.

When we cease to be an “emerging growth company” under the federal securities laws, our auditors will be required to express an opinion on the effectiveness of our internal controls. If we are unable to confirm that our internal control over financial reporting is effective, or if our auditors are unable to express an opinion on the effectiveness of our internal controls, we could lose investor confidence in the accuracy and completeness of our financial reports, which could cause the price of our common stock to decline.

Our disclosure controls and procedures may not prevent or detect all errors or acts of fraud.

We are subject to the periodic reporting requirements of the Securities Exchange Act of 1934, as amended, or the Exchange Act. We designed our disclosure controls and procedures to provide reasonable assurance that information we must disclose in reports we file or submit under the Exchange Act is accumulated and communicated to management, and recorded, processed, summarized and reported within the time periods specified in the rules and forms of the SEC. We believe that any disclosure controls and procedures, no matter how well-conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met.

These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people or by an unauthorized override of the controls. Accordingly, because of the inherent limitations in our control system, misstatements due to error or fraud may occur and not be detected.

Provisions in our corporate charter documents and under Delaware law could make an acquisition of us more difficult and may prevent attempts by our stockholders to replace or remove our current management.

Provisions in our amended and restated certificate of incorporation and our amended and restated bylaws may discourage, delay or prevent a merger, acquisition or other change in control of us that stockholders may consider favorable, including transactions in which stockholders might otherwise receive a premium for their shares. These provisions could also limit the price that investors might be willing to pay in the future for shares of our common stock, thereby depressing the market price of our common stock. In addition, these provisions may frustrate or prevent any attempts by our stockholders to replace or remove our current management by making it more difficult for stockholders to replace members of our board of directors. Because our board of directors is responsible for appointing the members of our management team, these provisions could in turn affect any attempt by our stockholders to replace current members of our management team. Among others, these provisions include that:

• our board of directors has the right to expand the size of our board of directors and to elect directors to fill a vacancy created by the expansion of the board of directors or the resignation, death or removal of a director, which prevents stockholders from being able to fill vacancies on our board of directors;

• our stockholders may not act by written consent or call special stockholders’ meetings; as a result, a holder, or holders, controlling a majority of our capital stock would not be able to take certain actions other than at annual stockholders’ meetings or special stockholders’ meetings called by the board of directors, the chairman of the board, the chief executive officer or the president;

• our certificate of incorporation prohibits cumulative voting in the election of directors, which limits the ability of minority stockholders to elect director candidates;

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• the affirmative vote of holders of at least 66-2/3% of the voting power of all of the then outstanding shares of voting stock, voting as a single class, will be required (a) to amend certain provisions of our certificate of incorporation, including provisions relating to the size of the board, removal of directors, special meetings, actions by written consent and cumulative voting and (b) to amend or repeal our bylaws, although our bylaws may be amended by a simple majority vote of our board of directors;

• stockholders must provide advance notice and additional disclosures in order to nominate individuals for election to the board of directors or to propose matters that can be acted upon at a stockholders’ meeting, which may discourage or deter a potential acquiror from conducting a solicitation of proxies to elect the acquiror’s own slate of directors or otherwise attempting to obtain control of our company; and

• our board of directors may issue, without stockholder approval, shares of undesignated preferred stock; the ability to issue undesignated preferred stock makes it possible for our board of directors to issue preferred stock with voting or other rights or preferences that could impede the success of any attempt to acquire us.

Moreover, because we are incorporated in Delaware, we are governed by the provisions of Section 203 of the Delaware General Corporation Law, which prohibits a person who owns in excess of 15% of our outstanding voting stock from merging or combining with us for a period of three years after the date of the transaction in which the person acquired in excess of 15% of our outstanding voting stock, unless the merger or combination is approved in a prescribed manner.

Item 1B. Unresolved Staff Comments

None.

Item 2. Properties

We occupy approximately 32,500 square feet of leased office and laboratory space located in Menlo Park, California. In December 2014, we amended our original lease for an additional 17,900 square feet and extended the expiration to May 31, 2020. We anticipate occupying the additional space in April 2015. We believe that our facilities, with the additional space, are sufficient to meet our current needs.

Item 3. Legal Proceedings

We are not currently a party to any material legal proceedings.

Item 4. Mine Safety Disclosures

Not applicable.

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PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Shares of our common stock have been traded on The NASDAQ Global Market, or NASDAQ, under the symbol “XENT” since July 24, 2014. The following table sets forth, for the period beginning July 24, 2014, through December 31, 2014, the high and low intraday prices per share of our common stock as reported by NASDAQ.

	High		Low
Fiscal Year Ended December 31, 2014
Third quarter (beginning July 24, 2014)	$	18.30	$	12.02
Fourth quarter		21.39		15.05

As of February 27, 2015, the closing price of our common stock was $26.41 and stockholders of record were approximately 58. Because many of our shares are held by brokers and other institutions on behalf of stockholders, we are unable to estimate the total number of stockholders represented by these record holders.

Dividend Policy

We have never declared or paid any cash dividends on our capital stock, and we do not currently intend to pay any cash dividends on our capital stock in the foreseeable future. We currently intend to retain all available funds and any future earnings to support operations and to finance the growth and development of our business. Any future determination to pay dividends will be made at the discretion of our board of directors subject to applicable laws, and will depend upon, among other factors, our results of operations, financial condition, contractual restrictions and capital requirements. Our future ability to pay cash dividends on our capital stock may also be limited by the terms of any future debt or preferred securities or future credit facility.

Recent Sales of Unregistered Securities

There were no sales of equity securities by us that were not registered under the Securities Act of 1933, as amended, or the Securities Act, during fiscal year ended December 31, 2014, that have not been previously reported in a Quarterly Report on Form 10-Q or in a Current Report on Form 8-K

Use of Proceeds

In July 2014, we completed our initial public offering of 5,750,000 shares of common stock at an offering price of $11.00 per share, for gross proceeds of $63.3 million, and net proceeds of approximately $55.8 million, after deducting underwriting discounts and commissions of approximately $4.5 million and offering expenses of approximately $3.0 million. Our Registration Statement on Form S-1 (File No. 333-196974) relating to the offering was declared effective by the SEC on July 23, 2014.

The offering commenced on July 23, 2014, closed on July 29, 2014, and did not terminate before all of the shares in the IPO that were registered in the registration statement were sold. J.P. Morgan Securities LLC and Piper Jaffray & Co acted as managing underwriters.

No offering expenses were paid directly or indirectly to any of our directors or officers (or their associates) or persons owning ten percent or more of any class of our equity securities or to any other affiliates.

There has been no material change in the planned use of proceeds from our IPO as described in our final prospectus filed with the SEC pursuant to Rule 424(b) under the Securities Act on July 24, 2014. From our IPO

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through December 31, 2014, we used approximately $0.9 million of the net proceeds from the IPO to fund the Phase 3 clinical trial of our Steroid Releasing Implant for Refactory Disease in Office and pre-clinical development our Steroid Releasing Implant for Primary Disease Management in Office products in development, approximately $1.6 million for research and development expenses related to these products and approximately $12.8 million for sales, marketing, working capital and general corporate purposes. The remainder of the net proceeds from the offering have been invested in cash equivalents and short-term investments.

Issuer Purchases of Equity Securities

None.

Performance Graph

The graph below compares the cumulative total return to security holders of our common stock with the comparable cumulative returns of the NASDAQ Composite and Biotechnology Indexes. The graph assumes the investment of $100 on July 24, 2014, the date on which our ordinary shares began trading on The NASDAQ Global Market, through December 31, 2014. Points on the graph represent the performance as of end of each calendar month.

The information under the heading “Performance Graph” shall not be deemed filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended.

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	Cumulative Total Return as of
	7/24/2014		7/31/2014		8/31/2014		9/30/2014		10/31/2014		11/30/2014		12/31/2014
Intersect ENT, Inc.	$	100	$	96	$	125	$	120	$	147	$	134	$	144
NASDAQ Composite Index		100		98		102		100		104		107		106
NASDAQ Biotechnology Index		100		98		108		107		116		119		119

The stock price performance included in this graph is not necessarily indicative of future stock price performance.

Since shares of our common stock has only been publicly traded since July 24, 2014, information surrounding stockholder returns in comparison to the NASDAQ Composite and Biotechnology Indices may not be meaningful to investors.

The material in this section is not “soliciting material” and is not deemed “filed” with the SEC and is not to be incorporated by reference into any filing of Intersect ENT, Inc. made under the Securities Act or the Exchange Act whether made before or after the date hereof and irrespective of any general incorporation language in any such filing except to the extent we specifically incorporate this section by reference.

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Item 6. Selected Financial Data

The following selected financial information has been derived from our audited financial statements. The information set forth below is not necessarily indicative of results of future operations and should not be relied upon as an indicator of our future performance. You should read the selected financial data set forth in the table below, together with the Financial Statements and related Notes to Financial Statements included in this Annual Report, as well as Part II, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, of this Annual Report.

	Fiscal Years Ended December 31,
	2014			2013			2012
	(in thousands, except per share amounts)
Statements of operations data:
Revenue	$	38,587		$	17,931		$	5,863
Cost of sales		10,223			8,150			3,837
Gross profit		28,364			9,781			2,026
Operating expenses:
Selling, general and administrative		36,111			18,229			9,251
Research and development		10,331			9,518			9,260
Total operating expenses		46,442			27,747			18,511
Loss from operations		(18,078	)		(17,966	)		(16,485	)
Interest and other income (expense), net		(284	)		(403	)		120
Net loss	$	(18,362	)	$	(18,369	)	$	(16,365	)
Net loss per share, basic and diluted	$	(1.61	)	$	(12.57	)	$	(16.38	)
Weighted average common shares used to compute net loss per share, basic and diluted		11,384			1,461			999
	December 31,
	2014			2013			2012
	(in thousands)
Balance sheet data:
Cash, cash equivalents and short-term investments	$	48,443		$	12,294		$	2,060
Working capital		52,167			13,118			1,152
Total assets		62,953			21,035			7,227
Convertible preferred stock warrant liability		—			237			93
Total debt		—			1,452			2,000
Total liabilities		9,141			6,892			5,627
Convertible preferred stock		—			90,760			60,320
Accumulated deficit		(96,621	)		(78,259	)		(59,890	)
Total stockholders’ equity (deficit)		53,812			(76,617	)		(58,720	)

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Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis of our financial condition and results of operations together with the section entitled “Selected Financial Data,” should be read in conjunction with our Financial Statements and the related notes to those statements included elsewhere in this Annual Report. In addition to historical financial information, the following discussion and analysis contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, or the Exchange Act. These forward-looking statements relate to future events or our future financial performance that involve risks, uncertainties and assumptions. Our actual results and timing of events may differ materially from those anticipated in these forward-looking statements as a result of many factors, including those discussed under “Risk Factors” and elsewhere in this prospectus. Please see “Cautionary Information Regarding Forward-Looking Statements” at the beginning of this Form 10-K for additional information you should consider regarding forward-looking statements. We undertake no obligation to revise or update any forward-looking statements to reflect any event or circumstance that arises after the date of this report, or to conform such statements to actual results or changes in our expectations.

Overview

We are a commercial stage drug-device company committed to improving the quality of life for patients with ear, nose and throat conditions. We have developed a drug releasing bioabsorbable implant technology that enables targeted and sustained release of therapeutic agents. This targeted drug delivery technology is designed to allow ear, nose and throat, or ENT, physicians to improve patient care. Our approved and in-development products are designed to treat the spectrum of needs among the estimated 3.5 million U.S. patients who are managed by ENT physicians for chronic sinusitis, one of the most prevalent chronic diseases in the United States and one of the most costly conditions for U.S. employers. Chronic sinusitis patients range from those needing and electing surgery, those not having had sinus surgery, and those that have had one or more surgeries but continue to suffer symptoms. To address these patient groups, we are:

• Marketing PROPEL^® and PROPEL mini, the first and only steroid releasing implants approved by the U.S. Food and Drug Administration, or FDA, for use in patients undergoing surgery for chronic sinusitis. PROPEL and PROPEL mini have been proven clinically in a meta-analysis of prospective, multicenter, randomized, controlled, double-blind clinical studies to improve surgical outcomes, including a 35% reduction in the need for postoperative oral steroid and surgical intervention. Inserted by a physician into the ethmoid sinuses during sinus surgery, the self-expanding implants are designed to conform to and hold open the surgically enlarged sinus, while gradually releasing an anti-inflammatory steroid over a period of 30 days, before being fully absorbed into the body.

• Conducting a clinical trial designed to demonstrate the benefit of PROPEL mini when placed in the frontal sinuses during surgery and to support an expanded indication for this approved product.

• Conducting clinical trials of RESOLVE, a steroid releasing implant designed to provide a cost-effective, less invasive solution for patients that have had ethmoid sinus surgery yet suffer from recurrent sinus obstruction due to polyps. The RESOLVE device is designed to be implanted in the sinus in a procedure conducted in the physician’s office as an alternative to revision surgery. We have completed three studies of RESOLVE in a total of 117 patients, and are currently conducting the RESOLVE II trial, a phase III double-blinded evaluation enrolling 300 patients to assess the safety and efficacy of the product.

• Conducting clinical trials of NOVA, a steroid releasing implant designed to provide a cost-effective, less invasive solution for patients with primary chronic sinusitis, those that have had not had sinus surgery. NOVA was designed to fit in the ostia of the dependent sinuses following sinus dilation, which is typically performed using a balloon in the physician’s office. We recently completed a 15 patient study to assess the feasibility of implant placement and outcomes measured through three months. Our next step in the development of NOVA is to work with the FDA to align on further clinical trial study design.

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We have expanded our sales organization to include 52 territory managers as of December 31, 2014, an expansion of 68% from our 31 territory managers as of December 31, 2013. We intend to continue to grow our sales force in order to expand our communication of the benefits of our steroid releasing implants to our physician customers. We have developed a base of recurring revenue that we expect will support future revenue growth, with approximately 85% of our 2014 revenue coming from reordering customers. In addition, we intend to seek to add new physician users and to expand the frequency of use among current users who only use PROPEL for a portion of their surgeries,

In July 2014, we completed our Initial Public Offering, or IPO, by issuing 5,750,000 shares of common stock at an offering price of $11.00 per share, for net proceeds of $55.8 million, after deducting underwriting discounts and commissions and offering expenses. Prior to our IPO, we financed our operations primarily through private placements of our convertible preferred securities and, to a lesser extent, certain debt financing arrangements.

Components of Our Results of Operations

Revenue

All of our revenue is currently derived from sales of PROPEL and PROPEL mini in the United States. We expect our revenue to increase as we expand our sales, marketing and reimbursement infrastructure and increase awareness of our products. We also expect our revenue to fluctuate from quarter to quarter due to a variety of factors. In the first quarter, our results can be impacted by adverse weather and by resetting of annual patient healthcare insurance plan deductibles, both of which may cause patients to delay elective procedures such as functional endoscopic sinus surgery, or FESS. In the second quarter, demand may be impacted by the seasonal nature of allergies and the resultant onset of sinus-related symptoms. In the third quarter, the number of FESS procedures nationwide is historically lower than other quarters throughout the year, which we believe is attributable to the summer vacations of ENT physicians and their patients. In the fourth quarter, demand may be impacted by the onset of the cold and flu season and related symptoms, as well as the desire of patients to spend their remaining balances in flexible-spending accounts or because they have met their annual deductibles under their health insurance plans.

Our currently approved products are commonly treated as general supplies utilized in sinus surgery and are paid for as part of the FESS procedure. We believe that establishment of reimbursement codes specific to the use of drug releasing implants for chronic sinusitis is an important factor in expanding access to our products, especially in the physician office setting.

All of our revenue is based in the U.S. and no single customer accounted for more than 10% of our revenue during the years ended December 31, 2014, 2013 and 2012.

Cost of Sales and Gross Profit

We manufacture PROPEL and PROPEL mini at our facility in Menlo Park, California. Cost of sales consists primarily of manufacturing overhead costs, material costs, direct labor and other direct costs such as shipping costs. A significant portion of our cost of sales currently consists of manufacturing overhead costs. These overhead costs include the cost of quality assurance, material procurement, inventory control, facilities, equipment and operations supervision and management. We expect overhead costs as a percentage of revenue to become less significant as our production volume increases. We expect cost of sales to increase in absolute dollars primarily as, and to the extent, our revenue grows.

We calculate gross margin as gross profit divided by revenue. Our gross margin has been and will continue to be affected by a variety of factors, primarily production volumes, manufacturing costs and product yields, and to a lesser extent the implementation of cost-reduction strategies. We expect our gross margin to increase over

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the long term as our production volume increases and as we spread the fixed portion of our manufacturing overhead costs over a larger number of units produced, thereby reducing our per unit manufacturing costs. However, our gross margin will likely fluctuate from quarter to quarter.

Selling, General and Administrative Expenses

Selling, general and administrative, or SG&A, expenses consist primarily of compensation for personnel, including stock-based compensation, related to selling, marketing, finance, information technology, human resource functions and business development. Additional SG&A expenses include commissions, training, travel expenses, promotional activities, conferences, trade shows, professional services fees, audit fees, insurance costs and general corporate expenses including allocated facilities-related expenses. We expect SG&A expenses to continue to increase in absolute dollars for the foreseeable future as we expand our commercial infrastructure to drive and support the anticipated growth in revenue and incur additional legal, accounting, insurance and other professional service fees associated with being a public company.

Research and Development Expenses

Research and development, or R&D, expenses consist primarily of product development, clinical and regulatory affairs, consulting services and other costs associated with products and technologies in development. These expenses include employee compensation, stock-based compensation, supplies, quality assurance and related travel and facilities expenses. Clinical expenses include clinical trial design, clinical site reimbursement, data management and travel expenses, and the cost of manufacturing products for clinical trials. We expect R&D expenses to increase in absolute dollars for the foreseeable future as we continue to develop, enhance and commercialize new products and technologies. However, we expect R&D expenses as a percentage of revenue to vary over time depending on the level and timing of initiating new product development efforts as well as our clinical development activities.

Results of Operations

	Fiscal Years Ended December 31,
	2014			2013			2012
Revenue	$	38,587		$	17,931		$	5,863
Cost of sales		10,223			8,150			3,837
Gross profit		28,364			9,781			2,026
Gross margin		74	%		55	%		35	%
Operating expenses:
Selling, general and administrative		36,111			18,229			9,251
Research and development		10,331			9,518			9,260
Total operating expenses		46,442			27,747			18,511
Loss from operations		(18,078	)		(17,966	)		(16,485	)
Interest and other income (expense), net		(284	)		(403	)		120
Net loss	$	(18,362	)	$	(18,369	)	$	(16,365	)

Comparison of Years Ended December 31, 2014 and 2013

Revenue

Revenue increased $20.7 million, or 115%, to $38.6 million during the year ended December 31, 2014, compared to $17.9 million during the year ended December 31, 2013. The growth in revenue was attributable to an increase in unit sales of PROPEL and PROPEL mini from 25,600 units to 54,900 units, or 114%. Our average

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selling price per unit was consistent for all periods presented. The increase in units was driven by an expansion of our sales, marketing and reimbursement organizations.

Cost of Sales and Gross Margin

Cost of sales increased $2.0 million, or 25%, to $10.2 million during the year ended December 31, 2014, compared to $8.2 million during the year ended December 31, 2013. The increase in cost of sales was primarily attributable to the growth in the number of PROPEL and PROPEL mini units sold. In addition, cost of sales incurred during the year ended December 31, 2013, included a charge of $0.8 million for expenses associated with establishing and qualifying our new manufacturing facility in Menlo Park, California and $0.5 million related to a packaging issue.

Gross margin for the year ended December 31, 2014, increased to 74%, compared to 55% for the year ended December 31, 2013. The increase in gross margin was primarily due to the growth in unit sales during the year ended December 31, 2014, which allowed us to spread the fixed portion of our manufacturing overhead costs over more production units, and the impact of the qualification of our new facility and the charge related to a packaging issue during the year ended December 31, 2013. The fixed portion of our manufacturing overhead allows our costs of sales to grow at a slower rate than our revenue.

Selling, General and Administrative Expenses

SG&A expenses increased $17.9 million, or 98%, to $36.1 million during the year ended December 31, 2014, compared to $18.2 million during the year ended December 31, 2013. The increase in SG&A expenses was primarily due to the build out of our infrastructure to support the ongoing commercialization of PROPEL and PROPEL mini. The primary driver of this increase was employee-related expenses of our sales, marketing and reimbursement organizations which increased $14.0 million, as we increased headcount to 97 as of December 31, 2014, compared to 55 at December 31, 2013. In addition, other SG&A expenses increased $3.9 million, primarily due to an increase in headcount and expenses associated with being a public company.

Research and Development Expenses

R&D expenses increased $0.8 million, or 9%, to $10.3 million during the year ended December 31, 2014, compared to $9.5 million during the year ended December 31, 2013. The increase in R&D expenses was primarily due to an increase in personnel costs as we increased headcount.

Interest and Other Income (Expense), Net

Interest and other expense, net, decreased $0.1 million to $0.3 million during the year ended December 31, 2014, compared to $0.4 million during the year ended December 31, 2013. The changes in interest and other expense, net were primarily attributable to the fair value adjustments of the convertible preferred stock financing option and preferred stock warrants. The preferred stock warrants were converted to common stock warrants upon the completion of our IPO in July 2014, and are no longer required to be marked-to-market at each reporting period.

Comparison of Years Ended December 31, 2013 and 2012

Revenue

Revenue increased $12.0 million, or 206%, to $17.9 million during the year ended December 31, 2013, compared to $5.9 million during the year ended December 31, 2012. The growth in revenue was attributable to an increase in unit sales of PROPEL and PROPEL mini from 8,400 units to 25,600 units, or 205%. Our average selling price per unit was consistent for both periods. The increase in units was driven by the increased

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commercialization of PROPEL and the introduction of PROPEL mini in late 2012, supported by an expansion of our sales, marketing and reimbursement organizations.

Cost of Sales and Gross Margin

Cost of sales increased $4.4 million, or 112%, to $8.2 million during the year ended December 31, 2013, compared to $3.8 million during the year ended December 31, 2012. The increase in cost of sales was primarily attributable to the growth in the number of PROPEL and PROPEL mini units sold, partially offset by a decrease of $0.6 million for expenses associated with establishing and qualifying our new manufacturing facility in Menlo Park, California.

Gross margin for the year ended December 31, 2013, increased to 55%, compared to 35% for the year ended December 31, 2012. The increase in gross margin was primarily due to the growth in unit sales which allowed us to spread the fixed portion of our manufacturing overhead costs over more production units, partially offset by the impact of the completion of the qualification of our Menlo Park facility and the charge related to the packaging issue. The fixed portion of our cost of sales allows our cost of sales to grow at a slower rate than our revenue.

Selling, General and Administrative Expenses

SG&A expenses increased $8.9 million, or 97%, to $18.2 million during the year ended December 31, 2013, compared to $9.3 million during the year ended December 31, 2012. The increase in SG&A expenses was primarily due to the build out of our infrastructure to support the commercialization of PROPEL and PROPEL mini. The primary driver of this increase was employee-related expenses of our sales, marketing and reimbursement organizations, which increased $8.3 million as we increased headcount to 55 as of December 31, 2013, compared to 21 at December 31, 2012. In addition, other SG&A expenses increased $0.7 million primarily due to the newly enacted medical device tax.

Research and Development Expenses

R&D expenses increased $0.2 million, or 3%, to $9.5 million during the year ended December 31, 2013, compared to $9.3 million during the year ended December 31, 2012. The increase in R&D expenses was primarily due to an increase of $1.9 million in clinical trial costs for the evaluation of our steroid releasing implant for refractory disease for use in the physician office setting. This was partially offset by a decrease of $1.0 million in development costs as that product transitioned into clinical trials and a decrease of $0.6 million in quality assurance costs allocated to R&D programs.

Interest and Other Income (Expense), Net

Interest and other income, net, decreased $0.5 million to an expense of $0.4 million during the year ended December 31, 2013, compared to an income of $0.1 million during the year ended December 31, 2012. The decrease in interest and other income, net was primarily attributable to a fair value adjustments of the preferred stock financing option in connection with our Series D convertible preferred stock financing, the fair value adjustment of the preferred stock warrants, which are accounted for as liabilities and marked-to-market at each reporting period, and interest expense related to our debt financing arrangements.

Liquidity and Capital Resources

Overview

As of December 31, 2014, we had cash, cash equivalents and short-term investments of $48.4 million and an accumulated deficit of $96.6 million, compared to cash and cash equivalents of $12.3 million and an accumulated deficit of $78.3 million as of December 31, 2013. In July 2014, we completed our IPO, issuing

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5,750,000 shares of common stock at an offering price of $11.00 per share yielding net proceeds of $55.8 million after deducting underwriting discounts and commissions and offering expenses. Our primary sources of capital prior to our IPO were from private placements of convertible preferred securities and debt financing. To date, we have raised $91.4 million from private placements of convertible preferred securities from our investors.

Cash Flows

	Fiscal Years Ended December 31,
	2014			2013			2012
	(in thousands)
Net cash (used in) provided by:
Operating activities	$	(17,954	)	$	(19,101	)	$	(16,148	)
Investing activities		(35,519	)		(467	)		5,956
Financing activities		54,582			29,802			2,302
Net increase (decrease) in cash and cash equivalents	$	1,109		$	10,234		$	(7,890	)

Net cash Used in Operating Activities

During the year ended December 31, 2014, net cash used in operating activities was $18.0 million, consisting primarily of a net loss of $18.4 million and an increase in net operating assets of $2.2 million, partially offset by non-cash charges of $2.6 million. The cash used in operations was primarily due to the ongoing commercialization of PROPEL and PROPEL mini. To support the ongoing commercialization of these products, we continued to expand our sales, marketing and reimbursement organizations resulting in an increase in accounts receivable, partially offset by an increase in accrued compensation. The non-cash charges primarily consisted of stock-based compensation expense, depreciation and amortization and the change in fair value of convertible preferred stock warrants. As of December 31, 2014 and 2013, 86% and 87%, respectively, of accounts receivable was less than 60 days old.

Net cash used in operating activities during the year ended December 31, 2013, was $19.1 million, consisting primarily of a net loss of $18.4 million and an increase in net operating assets of $2.1 million, partially offset by non-cash charges of $1.4 million. The cash used in operations was primarily due to the expansion our sales, marketing and reimbursement organizations to support the ongoing commercialization of PROPEL and PROPEL mini resulting in increases in accounts receivable and inventory, partially offset by an increase in accrued compensation due to the growth in our sales, marketing and reimbursement organizations. Non-cash charges consisted primarily of depreciation and stock-based compensation.

Net cash used in operating activities during the year ended December 31, 2012, was $16.1 million, consisting primarily of a net loss of $16.4 million and an increase in net operating assets of $0.4 million, partially offset by non-cash charges of $0.6 million. The increase in net operating assets was primarily due to increases in accounts receivable and inventory as we accelerated our commercial launch of PROPEL and introduced PROPEL mini, partially offset by an increase in accrued compensation related to expansion of our sales, marketing and reimbursement organizations. Non-cash charges consisted primarily of depreciation and stock-based compensation.

Net Cash (Used in) Provided by Investing Activities

During the year ended December 31, 2014, net cash used in investing activities was $35.5 million, consisting of purchases of short-term investments, available-for-sale, of $35.1 million and property and equipment of $0.4 million.

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Net cash used in investing activities during the year ended December 31, 2013, was $0.5 million, consisting of purchases of property and equipment.

Net cash provided by investing activities during the year ended December 31, 2012, was $6.0 million, consisting primarily of net proceeds from short-term investments of $7.3 million, partially offset by purchases of property and equipment of $1.4 million.

Net Cash Provided by Financing Activities

During the year ended December 31, 2014, net cash provided by financing activities was $54.6 million, consisting primarily of net proceeds from our IPO of $55.8 million, partially offset by the repayments in full of our equipment loan and capital lease of $1.5 million.

Net cash provided by financing activities during the year ended December 31, 2013, was $29.8 million, consisting primarily of net proceeds from the issuance of our Series D convertible preferred stock of $30.1 million.

Net cash provided by financing activities during the year ended December 31, 2012, was $2.3 million, primarily from proceeds of a $2.0 million equipment loan.

Liquidity

We currently believe that our existing cash, cash equivalents and short-term investments as of December 31, 2014, will be sufficient to meet our capital requirements and fund our operations for at least the next twelve months. If these sources are insufficient to satisfy our liquidity requirements, we may seek to sell additional equity or debt securities or obtain credit facilities. If we raise additional funds by issuing equity securities, our stockholders would experience dilution. Debt financing, if available, may involve covenants restricting our operations or our ability to incur additional debt. Any debt financing or additional equity that we raise may contain terms that are not favorable to us or our stockholders. Additional financing may not be available at all, or in amounts or on terms unacceptable to us. If we are unable to obtain additional financing, we may be required to delay the development, commercialization and marketing of our products.

Off-Balance Sheet Arrangements

As of December 31, 2014 and 2013, we were not a party to any off-balance sheet arrangements that have, or are reasonably likely to have, a current or future effect on our financial condition, changes in financial condition, revenue or expenses, results of operations, liquidity, capital expenditures or capital resources.

Contractual Obligations

The following table sets out, as of December 31, 2014, our contractual obligations due by period.

	Due by Period
	Less Than 1 Year		1-3 Years		3-5 Years		More Than 5 Years		Total
Operating lease obligations	$	645	$	3,030	$	3,205	$	685	$	7,565
Purchase commitments		724		56		—		—		780
	$	1,369	$	3,086	$	3,205	$	685	$	8,345

Our contractual obligations as of December 31, 2014, have not significantly changed from contractual obligations of $1.8 million as of December 31, 2013.

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Related Parties

For a description of our related party transactions, see Note 14 of our Financial Statements included in this Annual Report.

Critical Accounting Policies and Estimates

Management’s discussion and analysis of our financial condition and results of operations is based on our financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles. The preparation of these financial statements requires us to make estimates and assumptions for the reported amounts of assets, liabilities, revenue, expenses and related disclosures. Our estimates are based on our historical experience and on various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions and any such differences may be material.

While our significant accounting policies are more fully described in Note 2 of our Financial Statements included in this Annual Report, we believe the following discussion addresses our most critical accounting policies, which are those that are most important to the portrayal of our financial condition and results of operations and require our most difficult, subjective and complex judgments.

Revenue Recognition

We derive revenue from the sale of PROPEL and PROPEL mini to hospitals and ambulatory surgery centers in the United States. We recognize revenue when persuasive evidence of an arrangement exists, product delivery has occurred or there is no further obligation, pricing is fixed or determinable and collection is reasonably assured. We must make significant assumptions regarding the future collectability of amounts receivable from customers to determine whether revenue recognition criteria have been met. If collectability is not assured at the time of shipment, we defer revenue until such criteria have been met. In general, our standard terms and conditions of sale do not allow for product returns. We expense shipping and handling costs as incurred and include them in the cost of sales. In those cases where we bill shipping and handling costs to customers, we classify the amounts billed as a component of revenue.

Common Stock Valuation and Stock-based Compensation

We maintain an equity incentive plan to provide long-term incentive for employees, consultants and members of the board of directors. The plan allows for the issuance of non-statutory and incentive stock options to employees and non-statutory stock options to consultants and non-employee directors.

We are required to determine the fair value of equity incentive awards and recognize compensation expense for all equity incentive awards made to employees, consultants and directors. Stock-based compensation expense is recognized over the requisite service period in the statements of operations and comprehensive loss and is based on awards ultimately expected to vest, therefore the amount of expense has been reduced for estimated forfeitures. We use the straight-line method for expense attribution, except for awards issued with performance-based conditions which require an accelerated attribution method over the requisite performance and service periods.

The valuation model we use for calculating the fair value of awards for stock-based compensation expense is the Black-Scholes option-pricing model, or the Black-Scholes model. The Black-Scholes model requires us to make assumptions and judgments about the variables used in the calculation, including the expected term weighted average period of time that the options granted are expected to be outstanding, the volatility of common stock and an assumed risk-free interest rate.

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Following our IPO on July 23, 2014, the fair market value of our common stock is determined based on the closing price of our common stock on The NASDAQ Global Market. Prior to our IPO, the fair value of the shares of our common stock underlying the stock options had historically been determined by our board of directors. Because there was no public market for our common stock, our board of directors had determined the fair value of our common stock at the time of grant of the option by considering a number of objective and subjective factors, including valuations of comparable companies, sales of our convertible preferred stock, our operating and financial performance and the general and industry-specific economic outlook.

Convertible Preferred Stock Warrant Liability

For a warrant classified as a derivative liability, we recorded the fair value of that warrant on the balance sheet at the inception of such classification and adjusted to fair value at each financial reporting date. We recorded the changes in the fair value of the warrants in the statements of operations and comprehensive loss as a component of interest and other income or expense as appropriate. We continued to adjust the carrying value of the convertible preferred stock warrant liability for changes in the fair value of the warrants until the earlier of: the exercise of the warrants, at which time we reclassified the liability to temporary equity; the conversion of the underlying preferred stock into common stock, at which time we reclassified the liability to stockholders’ equity; or the expiration of the warrant, at which time we reversed the entire amount and reflect it in the statements of operations and comprehensive loss. Our assumptions with regard to the warrant valuation were based on estimates of the valuation of the underlying preferred stock, volatility, interest rate and such estimates could have varied significantly. In connection with our IPO in July 2014, the warrants for convertible preferred stock were converted to warrants for common stock, resulting in the reclassification of the related redeemable convertible preferred stock warrant liability of $0.4 million to additional paid-in capital.

Convertible Preferred Stock Financing Option

For freestanding options to purchase a future round of financing, we determined the fair value of that option based on the underlying estimated future fair value of the convertible preferred stock, the timing of when such obligation would have been satisfied, the discount factor applied based on the timing of the satisfaction of the obligation and the probability that the obligation would have been satisfied. In February 2013, we recorded the initial fair value of the series D convertible preferred stock financing option liability on the balance sheet at its inception and adjusted it to fair value at each financial reporting date. We recorded the changes in fair value in the statement of operations and comprehensive loss as a component of interest and other expense until it was exercised in October 2013. The assumptions used in determining the fair value of the obligation required significant judgment.

Recent Accounting Pronouncements

Please see Note 2 to the Financial Statements included in this Annual Report.

Item 7A. Quantitative and Qualitative Disclosure About Market Risk

Interest Rate Risk

The risk associated with fluctuating interest rates is primarily limited to our cash equivalents and short-term investments which are carried at fair market value. We do not currently use or plan to use financial derivatives in our investment portfolio.

As of December 31, 2014, we had cash, cash equivalents and short-term investments of $48.4 million. Cash equivalents and short-term investments are composed of money market funds, corporate debt securities and commercial paper. Our investment policy requires investments to be of high credit quality and generally limits the amount of credit exposure to any single issuer or group of issuers. Our objective is the preservation of capital and to maintain proper liquidity to meet our operating requirements while at the same time maximizing the

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income we receive from our financial instruments without significantly increasing risk. Because our short-term investments have a weighted average maturity of not more than one year, we believe the impact of a hypothetical 10% change in market interest rates at December 31, 2014, would not have a material effect on our financial position, results of operations or cash flows. We did not have any short-term investments at December 31, 2013.

Credit Risk

As of December 31, 2014, our cash, cash equivalents and short-term investments were maintained with two financial institutions in the United States, and our current deposits are likely in excess of insured limits. We have reviewed the financial statements of these institutions and believe they have sufficient assets and liquidity to conduct their operations in the ordinary course of business with little or no credit risk to us. As of December 31, 2013, our cash and cash equivalents were maintained with one financial institution in the United States.

Our accounts receivable primarily relate to revenue from the sale of PROPEL and PROPEL mini to hospitals and ambulatory surgery centers in the United States. As of December 31, 2014 and 2013, no single customer represented more than 10% of our accounts receivable.

Foreign Currency Risk

Our business is conducted in U.S. dollars. Any transactions that may be conducted in foreign currencies are not expected to have a material effect on our results of operations, financial position or cash flows.

Item 8. Financial Statements and Supplementary Data

Please see the Financial Statements included in this Annual Report on Form 10-K, beginning on Page F-l following the signature page to this Form 10-K, which are incorporated by reference here.

Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None.

Item 9A. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Management, with the participation of our Chief Executive Officer and our Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures as of December 31, 2014. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives, and management necessarily applies its judgment in evaluating the cost-benefit relationship of possible controls and procedures. Based on the evaluation of our disclosure controls and procedures as of December 31, 2014, our Chief Executive Officer and Chief Financial Officer concluded that, as of such date, our disclosure controls and procedures were effective at the reasonable assurance level.

62

Management’s Report on Internal Control over Financial Reporting

This annual report does not include a report of management’s assessment regarding internal control over financial reporting or an attestation report of our independent registered public accounting firm due to a transition period established by rules of the Securities and Exchange Commission for newly public companies.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting identified in connection with the evaluation required by Rule 13a-15(d) and 15d-15(d) of the Exchange Act that occurred during the three months ended December 31, 2014, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Item 9B. Other Information

None.

63

PART III

Certain information required by Part III is omitted from this Annual Report and is incorporated herein by reference from our Definitive Proxy Statement, relating to our 2015 Annual Meeting of Stockholders to be held on June 4, 2015, pursuant to Regulation 14A of the Exchange Act, or Proxy Statement, which will be filed with the SEC within 120 days of December 31, 2014.

Item 10. Directors, Executive Officers and Corporate Governance

The information required by this Item concerning our directors and executive officers is incorporated by reference to the sections of our Proxy Statement under the headings “Election of Directors,” “Board Committees and Meetings,” “Executive Officers,” and “Section 16(a) Beneficial Ownership Reporting Compliance.”

Our written Code of Ethics applies to all of our directors and employees, including our executive officers, including without limitation our principal executive officer, principal financial officer, principal accounting officer or controller or persons performing similar functions. The Code of Ethics is available on our website at www.intersectent.com in the Investors section under “Corporate Governance.” Changes to or waivers of the Code of Ethics will be disclosed on the same website. We intend to satisfy the disclosure requirement under Item 5.05 of Form 8-K regarding any amendment to, or waiver of, any provision of the Code of Ethics by disclosing such information on the same website.

Item 11. Executive Compensation

The information required by this Item is incorporated by reference to the sections of the Proxy Statement under the headings “Executive Compensation,” “Compensation Committee Interlocks and Insider Participation,” and “Compensation of Non-Employee Board Members.”

Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

The information required by this Item is incorporated by reference to the sections of the Proxy Statement under the headings “Security Ownership of Certain Beneficial Owners and Management” and “Securities Authorized for Issuance under Equity Compensation Plans.”

Item 13. Certain Relationships and Related Transactions, and Director Independence

The information required by this Item is incorporated by reference to the sections of the Proxy Statement under the headings “Election of Directors,” and “Certain Relationships and Related Party Transactions.”

Item 14. Principal Accountant Fees and Services

The information required by this Item is incorporated by reference to the section of the Proxy Statement under the heading “Principal Accountant Fees and Services.”

With the exception of the information specifically incorporated by reference in Part III to this Annual Report from our Proxy Statement, our Proxy Statement shall not be deemed to be filed as part of this report.

64

PART IV

Item 15. Exhibits and Financial Statement Schedules

(a) The following documents are filed as part of this Annual Report on Form 10-K:

(1) Financial Statements

The Financial Statements of the Company are included herein as required under Part II, Item 8, Financial Statements and Supplementary Data, of this Annual Report. See Index to Financial Statements on page F-l.

(2) Financial Statement Schedule

For the three fiscal years ended December 31, 2014 — Schedule II Valuation and Qualifying Accounts

Schedules not listed above have been omitted because information required to be set forth therein is not applicable or is shown in the financial statements or notes thereto.

(3) Exhibits (numbered in accordance with Item 601 of Regulation S-K)

See Part IV, Item 15(b) below.

(b) The following exhibits are filed or incorporated by reference into this Annual Report:

The Exhibit Index to this Annual Report on Form 10-K, which is incorporated by reference here.

65

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	Intersect ENT, Inc.
Date: March 11, 2015	By:	/S/    LISA D. EARNHARDT
		Lisa D. Earnhardt President and Chief Executive Officer
Date: March 11, 2015	By:	/S/    JERYL L. HILLEMAN
		Jeryl L. Hilleman Chief Financial Officer

66

POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Lisa D. Earnhardt and Jeryl L. Hilleman, jointly and severally, his or her attorneys-in-fact, each with the power of substitution, for him or her in any and all capacities, to sign any amendments to this Annual Report on Form 10-K, and to file the same, with exhibits thereto and other documents in connection therewith with the Securities and Exchange Commission, hereby ratifying and confirming all that each of said attorneys-in-fact, or his substitute or substitutes, may do or cause to be done by virtue hereof.

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

Name	Title	Date
/S/    LISA D. EARNHARDT         Lisa D. Earnhardt	President and Chief Executive Officer (Principal Executive Officer) and Director	March 11, 2015
/S/    JERYL L. HILLEMAN         Jeryl L. Hilleman	Chief Financial Officer (Principal Financial and Accounting Officer)	March 11, 2015
/S/    CASPER L. DE CLERCQ         Casper L. de Clercq	Director	March 11, 2015
/S/    CYNTHIA L. LUCCHESE         Cynthia L. Lucchese	Director	March 11, 2015
/S/    DANA G. MEAD, JR.         Dana G. Mead, Jr.	Director	March 11, 2015
/S/    FREDERIC H. MOLL          Frederic H. Moll	Director	March 11, 2015
/S/    CASEY M. TANSEY          Casey M. Tansey	Director	March 11, 2015

67

INTERSECT ENT, INC.

Index to Financial Statements

For the Three Fiscal Years Ended

December  31, 2014

INDEX TO FINANCIAL STATEMENTS

	Page
Report of Independent Registered Public Accounting Firm		F-2
Financial Statements:
Balance Sheets		F-3
Statements of Operations and Comprehensive Loss		F-4
Statements of Convertible Preferred Stock and Stockholders’ Equity (Deficit)		F-5
Statements of Cash Flows		F-6
Notes to Financial Statements		F-7

F-1

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The Board of Directors and Stockholders of

Intersect ENT, Inc.

We have audited the accompanying balance sheets of Intersect ENT, Inc. as of December 31, 2014, and 2013, and the related statements of operations and comprehensive loss, convertible preferred stock and stockholders’ equity (deficit) and cash flows for each of the three years in the period ended December 31, 2014. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. We were not engaged to perform an audit of the Company’s internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Intersect ENT, Inc. at December 31, 2014 and 2013, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2014, in conformity with U.S. generally accepted accounting principles.

/s/ Ernst & Young

San Jose, California

March 11, 2015

F-2

INTERSECT ENT, INC.

BALANCE SHEETS

(in thousands, except per share data)

	December 31,
	2014			2013
Assets
Current assets:
Cash and cash equivalents	$	13,403		$	12,294
Short-term investments, available-for-sale		35,040			—
Accounts receivable, net		8,337			4,200
Inventory		2,547			2,197
Prepaid expenses and other current assets		951			511
Total current assets		60,278			19,202
Property and equipment, net		1,474			1,707
Other non-current assets		1,201			126
Total assets	$	62,953		$	21,035
Liabilities, Convertible Preferred Stock and Stockholders’ Equity (Deficit)
Current liabilities:
Accounts payable	$	2,128		$	1,451
Accrued compensation		5,085			2,955
Equipment loans – current portion		—			696
Convertible preferred stock warrant liability		—			237
Other current liabilities		898			745
Total current liabilities		8,111			6,084
Equipment loans – non-current portion		—			756
Deferred rent		1,030			52
Total liabilities		9,141			6,892
Commitments and contingencies (note 11)
Convertible preferred stock issuable in series, $0.001 par value;
Authorized shares: none at December 31, 2014 and 15,907 at December 31, 2013;
Issued and outstanding shares: none at December 31, 2014 and 15,701 at December 31, 2013		—			90,760
Stockholders’ equity (deficit)
Preferred stock, $0.001 par value;
Authorized shares: 10,000 at December 31, 2014 and none at December 31, 2013;
Issued and outstanding shares: none		—			—
Common stock, $0.001 par value;
Authorized shares: 150,000 at December 31, 2014 and 2013;
Issued and outstanding shares: 23,379 and 1,762 at December 31, 2014 and 2013, respectively		23			2
Additional paid-in capital		150,410			1,859
Note receivable from related party		—			(219	)
Accumulated deficit		(96,621	)		(78,259	)
Total stockholders’ equity (deficit)		53,812			(76,617	)
Total liabilities, convertible preferred stock and stockholders’ equity (deficit)	$	62,953		$	21,035

See Accompanying Notes to Financial Statements

F-3

INTERSECT ENT, INC.

STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(in thousands, except per share data)

	Fiscal Years Ended December 31,
	2014			2013			2012
Revenue	$	38,587		$	17,931		$	5,863
Cost of sales		10,223			8,150			3,837
Gross profit		28,364			9,781			2,026
Operating expenses:
Selling, general and administrative		36,111			18,229			9,251
Research and development		10,331			9,518			9,260
Total operating expenses		46,442			27,747			18,511
Loss from operations		(18,078	)		(17,966	)		(16,485	)
Interest and other income		125			86			156
Interest and other expense		(409	)		(489	)		(36	)
Net loss	$	(18,362	)	$	(18,369	)	$	(16,365	)
Other comprehensive income:
Unrealized gain on short-term investments		—			—			7
Comprehensive loss	$	(18,362	)	$	(18,369	)	$	(16,358	)
Net loss per share, basic and diluted	$	(1.61	)	$	(12.57	)	$	(16.38	)
Weighted average common shares used to compute net loss per share, basic and diluted		11,384			1,461			999

See Accompanying Notes to Financial Statements

F-4

INTERSECT ENT, INC.

STATEMENTS OF CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY (DEFICIT)

(in thousands)

	Convertible Preferred Stock						Common Stock				Additional Paid-in Capital			Note Receivable From Related Party			Accumulated Other Comprehensive Loss			Accumulated Deficit			Total Stockholders’ Equity (Deficit)
	Shares			Amount			Shares		Amount
Balance at December 31, 2011		11,226		$	60,107			907	$	1	$	928		$	—		$	(7	)	$	(43,525	)	$	(42,603	)
Issuance of Series A convertible preferred stock upon exercise of warrants		57			213			—		—		—			—			—			—			—
Issuance common stock upon exercise of stock options		—			—			115		—		89			—			—			—			89
Stock-based compensation expense		—			—			—		—		152			—			—			—			152
Unrealized gain on short-term investments		—			—			—		—		—			—			7			—			7
Net loss		—			—			—		—		—			—			—			(16,365	)		(16,365	)
Balance at December 31, 2012		11,283			60,320			1,022		1		1,169			—			—			(59,890	)		(58,720	)
Issuance of Series A convertible preferred stock upon exercise of warrants		22			82			—		—		—			—			—			—			—
Issuance of Series D convertible preferred stock, net of issuance cost and preferred stock financing option		4,396			30,358			—		—		—			—			—			—			—
Issuance common stock upon exercise of stock options		—			—			740		1		364			—			—			—			365
Note receivable from related party		—			—			—		—		—			(275	)		—			—			(275	)
Stock-based compensation expense		—			—			—		—		326			56			—			—			382
Net loss		—			—			—		—		—			—			—			(18,369	)		(18,369	)
Balance at December 31, 2013		15,701			90,760			1,762		2		1,859			(219	)		—			(78,259	)		(76,617	)
Issuance of Series A convertible preferred stock upon exercise of warrants		3			29			—		—		—			—			—			—			—
Conversion of convertible preferred stock to common stock		(15,704	)		(90,789	)		15,704		16		90,773			—			—			—			90,789
Conversion of convertible preferred stock warrants to common stock warrants		—			—			—		—		406			—			—			—			406
Issuance common stock upon initial public offering, net of issuance costs		—			—			5,750		5		55,797			—			—			—			55,802
Issuance common stock upon exercise of stock options		—			—			163		—		244			—			—			—			244
Stock-based compensation expense		—			—			—		—		1,358			192			—			—			1,550
Reclass upon forgiveness of note receivable from related party		—			—			—		—		(27	)		27			—			—			—
Net loss		—			—			—		—		—			—			—			(18,362	)		(18,362	)
Balance at December 31, 2014		—		$	—			23,379	$	23	$	150,410		$	—		$	—		$	(96,621	)	$	53,812

See Accompanying Notes to Financial Statements

F-5

INTERSECT ENT, INC.

STATEMENTS OF CASH FLOWS

(in thousands)

	Fiscal Years Ended December 31,
	2014			2013			2012
Operating activities:
Net loss	$	(18,362	)	$	(18,369	)	$	(16,365	)
Adjustments to reconcile net loss to cash used in operating activities:
Depreciation and amortization		583			505			351
Stock-based compensation expense		1,550			382			152
Amortization of net investment premium paid		112			—			83
Change in fair value of convertible preferred stock warrants		198			134			(128	)
Change in fair value of convertible preferred stock financing option		—			212			—
Forgiveness of notes receivable from related party		100			100			116
Loss on disposal of fixed assets		52			26			33
Changes in operating assets and liabilities:
Accounts receivable, net		(4,137	)		(2,901	)		(1,011	)
Inventory		(350	)		(822	)		(1,004	)
Prepaid expenses and other current assets		(541	)		3			(241	)
Other non-current assets		(167	)		(2	)		(90	)
Accounts payable		645			360			331
Accrued compensation		2,130			1,051			1,271
Other current liabilities and deferred rent		233			220			354
Net cash used in operating activities		(17,954	)		(19,101	)		(16,148	)
Investing activities:
Purchases of short-term investments		(35,152	)		—			(1,324	)
Sales of short-term investments		—			—			8,622
Purchases of property and equipment		(367	)		(467	)		(1,413	)
Other investing activities		—			—			71
Net cash (used in) provided by investing activities		(35,519	)		(467	)		5,956
Financing activities:
Proceeds from issuance of common stock		232			122			89
Proceeds from equipment loan		—			—			2,000
Proceeds from capital lease financing		—			106			—
Repayments related to equipment loans		(1,365	)		(636	)		—
Repayments related to capital lease financing		(87	)		(18	)		—
Proceeds from initial public offering, net of issuance costs		55,802			—			—
Proceeds from the exercise of Series A convertible preferred warrants		—			82			213
Proceeds from issuance of Series D convertible preferred stock, net of issuance costs		—			30,146			—
Net cash provided by financing activities		54,582			29,802			2,302
Net increase (decrease) in cash and cash equivalents		1,109			10,234			(7,890	)
Cash and cash equivalents:
Beginning of the period		12,294			2,060			9,950
End of the period	$	13,403		$	12,294		$	2,060
Non-cash investing activities:
Lessor funded building improvements	$	961		$	—		$	—
Property and equipment included in accounts payable		33			17			—
Notes issued to related party for the exercise of stock options		—			500			—
Warrants issued for growth capital facility		—			10			—
Supplemental cash flow information:
Interest paid	$	53		$	93		$	—

See Accompanying Notes to Financial Statements

F-6

INTERSECT ENT, INC.

NOTES TO FINANCIAL STATEMENTS

1. Organization

Description of Business

Intersect ENT, Inc. (the “Company”) is incorporated in the state of Delaware and its facilities are located in Menlo Park, California. The Company is a commercial stage drug-device company committed to improving the quality of life for patients with ear, nose and throat conditions. The Company’s sole commercial products are the PROPEL and PROPEL mini drug releasing implants for patients undergoing sinus surgery to treat chronic sinusitis. The Company received approval from the U.S. Food and Drug Administration (“FDA”) for PROPEL in August 2011 and for PROPEL mini in November 2012. In the first half of 2013, the Company began scaling its U.S. direct commercial presence and currently markets its products only in the United States.

Liquidity and Business Risks

As of December 31, 2014, the Company had cash, cash equivalents and short-term investments of $48.4 million, and an accumulated deficit of $96.6 million. In July 2014 the Company completed its initial public offering (“IPO”) by issuing 5,750,000 shares of common stock at an offering price of $11.00 per share, for net proceeds of $55.8 million, after deducting underwriting discounts and commissions and offering expenses. The Company expects its cash, cash equivalents and short-term investments will be sufficient to fund its operations through at least the next twelve months.

2. Summary of Significant Accounting Policies

Basis of Preparation

The financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) and pursuant to the rules and regulations of the United States Securities and Exchange Commission (“SEC”).

Certain amounts in the financial statements have been reclassified to conform to the current year presentation.

1-for-4 Reverse Stock Split

On July 10, 2014, the Board of Directors and stockholders approved, and on July 11, 2014, the Company filed, an amended and restated certificate of incorporation effecting a 1-for-4 reverse stock split of common stock and all convertible preferred stock. The par value of the common and convertible preferred stock was not adjusted as a result of the reverse stock split. All issued and outstanding common stock, convertible preferred stock, warrants for preferred stock, stock options and per share amounts contained in the financial statements have been retroactively adjusted to reflect this reverse stock split for all periods presented.

Initial Public Offering

In July 2014, the Company completed its IPO by issuing 5,750,000 shares of common stock, including 750,000 shares pursuant to the full exercise by the underwriters of their option to purchase additional shares, at an offering price of $11.00 per share, for net proceeds of $55.8 million, after deducting underwriting discounts and commissions of $4.5 million and offering expenses of $3.0 million. In connection with the IPO, the Company’s outstanding shares of convertible preferred stock were automatically converted into 15,703,875 shares of common stock and warrants exercisable for convertible preferred stock were automatically converted into warrants exercisable for 53,357 shares of common stock, resulting in the reclassification of the related redeemable convertible preferred stock warrant liability of $0.4 million to additional paid-in capital.

F-7

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts and disclosures reported in the financial statements. Management uses significant judgment when making estimates related to its common stock valuation and related stock-based compensation, the valuations of the convertible preferred stock warrant liability, convertible preferred stock financing option, as well as certain accrued liabilities. Management bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results could differ from those estimates.

Cash and Cash Equivalents

The Company considers all highly liquid securities, readily convertible to cash, that mature within 90 days or less from the date of purchase to be cash equivalents.

Short-term Investments, Available-for-Sale

Short-term investments, which are available-for-sale, represent highly liquid debt instruments with maturities greater than 90 days at date of purchase. Such investments are recorded at fair value and unrealized holding gains and losses are reported as a separate component of comprehensive income (loss) in stockholders’ equity until realized. The Company reviews its investment portfolio periodically to assess for other-than-temporary impairment. Should the Company determine that any unrealized losses on the investments are other-than-temporary, the amount of that impairment to be recognized in earnings will depend on whether the Company intends to sell the security or more likely than not will be required to sell the security before recovery of its amortized cost basis less any current period credit loss. The specific identification method is used to determine the cost of securities disposed of, with realized gains and losses reflected in interest and other income or expense, as appropriate, in the statement of operations.

Fair Value of Financial Instruments

The Company measures certain financial assets and liabilities at fair value on a recurring basis, including cash equivalents, short-term investments, the convertible preferred stock warrant liability and the convertible preferred stock financing option. Fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or a liability. A three-tier fair value hierarchy is established as a basis for considering such assumptions and for inputs used in the valuation methodologies in measuring fair value:

Level 1	—	Observable inputs such as quoted prices (unadjusted) for identical assets or liabilities in active markets.
Level 2	—	Include other inputs that are based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active and model-based valuation techniques for which all significant inputs are observable in the market or can be derived from observable market data. Where applicable, these models project future cash flows and discount the future amounts to a present value using market-based observable inputs including interest rate curves, foreign exchange rates, and credit ratings.
Level 3	—	Unobservable inputs that are supported by little or no market activities, which would require the Company to develop its own assumptions.

The fair value hierarchy also requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.

F-8

Cash, Cash Equivalents and Short-term Investments

The following is a summary of cash, cash equivalents and short-term investments, available-for-sale, by type of instrument measured at fair value on a recurring basis (in thousands):

	December 31,
	2014								2013
	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Cash	$	1,971	$	—	$	—	$	1,971	$	1,076	$	—	$	—	$	1,076
Money market funds		11,432		—		—		11,432		11,218		—		—		11,218
Corporate debt securities		—		28,790		—		28,790		—		—		—		—
Commercial paper		—		6,250		—		6,250		—		—		—		—
	$	13,403	$	35,040	$	—	$	48,443	$	12,294	$	—	$	—	$	12,294
Reported as:
Cash and cash equivalents							$	13,403							$	12,294
Short-term investments, available-for-sale								35,040								—
							$	48,443							$	12,294

There were no transfers in and out of Level 1 and Level 2 fair value measurements during the years ended December 31, 2014 and 2013.

Convertible Preferred Stock Warrant Liability

The following table sets forth a summary of the changes in the estimated fair value of the Company’s convertible preferred stock warrants, which represents financial instruments with valuations classified as Level 3. When a determination is made to classify a financial instrument within Level 3, the determination is based upon the significance of the unobservable inputs to the overall fair value measurement. However, Level 3 financial instruments typically include, in addition to the unobservable inputs, observable inputs (that is, components that are actively quoted and can be validated to external sources). Accordingly, the expense in the table below includes changes in fair value due in part to observable factors that are part of the Level 3 methodology (in thousands):

	Fiscal Years Ended December 31,
	2014			2013		2012
Beginning of the period	$	237		$	93	$	221
Issued		—			10		—
Exercised		(29	)		—		—
Reclassified to equity (1)		(406	)		—		—
Change in fair value		198			134		(128	)
End of the period	$	—		$	237	$	93

(1) In connection with the Company’s IPO in July 2014, warrants for convertible preferred stock were converted to warrants for common stock, resulting in the reclassification of the related redeemable convertible preferred stock warrant liability to additional paid-in capital.

F-9

The fair value of the convertible preferred stock warrants was determined using the option pricing method, the probability weighted expected return method or Black-Scholes option pricing model using the following assumptions:

	Fiscal Years Ended December 31,
	2014			2013			2012
Expected life (years)		2.0			2.0			3.0
Expected volatility		46	%		45	%		58	%
Risk-free interest rate		0.5	%		0.4	%		0.4	%
Dividend yield		0.0	%		0.0	%		0.0	%

Series D Convertible Preferred Stock Financing Option

The Series D convertible preferred stock contained a provision that obligated the investors to purchase additional shares (“convertible preferred stock financing option”) at the same price as the initial closing upon notification by the Company that it had achieved an annualized revenue rate of at least $16.0 million over a trailing three month period. This convertible preferred stock financing option to purchase Series D convertible preferred stock in the future tranche was considered to be a freestanding financial instrument for accounting purposes. Therefore, in February 2013, the Company recorded a financing liability of $0.9 million representing the fair value of this convertible preferred stock financing option at the time of issuance. In October 2013, shortly after achieving the annualized revenue rate, the Company issued the additional 1,369,008 shares of Series D convertible preferred stock to the investors for net proceeds of $9.4 million. Since the convertible preferred stock financing option expired in October 2013 as a result of the issuance of Series D convertible preferred stock, the carrying and fair value of the convertible preferred stock financing option of $1.1 million in October 2013 was reclassified from liability to Series D convertible preferred stock. The Company recorded total charges related to the change in fair value during the year ended December 31, 2013 of $0.2 million related to this financing option liability.

The following table sets forth a summary of the changes in the estimated fair value of the Company’s convertible preferred stock financing option, which represents financial instruments with valuations classified as Level 3 (in thousands):

	Fiscal Years Ended December 31,
	2014		2013			2012
Beginning of the period	$	—	$	—		$	—
Issued		—		885			—
Exercised		—		(1,097	)		—
Change in fair value		—		212			—
End of the period	$	—	$	—		$	—

The fair value of the convertible preferred stock financing liability was determined using the present value methodology with the following assumptions which are categorized as Level 3:

	February 2013			October 2013
Total consideration per share	$	1.72		$	1.72
Additional investment per share		1.72			1.72
Discount rate		20.0	%		20.0	%
Probability of achievement		95.0	%		95.0	%
Years until milestone achieved		0.5			0.7

F-10

Concentration of Credit Risk

Financial instruments, which potentially subject the Company to concentrations of credit risk, consist principally of cash equivalents, short-term investments and accounts receivable. The Company believes that the credit risk in its accounts receivable is mitigated by its credit evaluation process, relatively short collection terms and dispersion of its customer base. The Company generally does not require collateral and losses on accounts receivable have historically been within management’s expectations.

The Company’s investment policy limits investments to certain types of debt securities issued by the U.S. government, its agencies, and institutions with investment-grade credit ratings, as well as corporate debt or commercial paper issued by the highest quality financial and non-financial companies, and places restrictions on maturities and concentration by type and issuer. The Company is exposed to credit risk in the event of a default by the financial institutions holding its cash and cash equivalents and issuers of investments to the extent recorded on the balance sheets. However, as of December 31, 2014 and 2013, the Company has limited its credit risk associated with cash, cash equivalents and short-term investments by placing its investments with banks it believes are highly creditworthy and with highly rated investments.

Allowance for Doubtful Accounts

The Company will provide for uncollectible accounts receivable by recording an allowance for doubtful accounts for accounts receivable deemed uncollectible. The Company evaluates the collectability of its accounts receivable based on known collection risks and historical experience. In circumstances where the Company is aware of a specific customer’s inability to meet its financial obligations to the Company (e.g., bankruptcy filings, substantial downgrading of credit ratings), the Company records a specific allowance for bad debts against amounts due to reduce the carrying amount of accounts receivable to the amount it reasonably believes will be collected.

If circumstances change, such as higher-than-expected defaults or an unexpected material adverse change in a major customer’s ability to meet its financial obligations, the Company’s estimates of the recoverability of the amounts due could be reduced by a significant amount. Based on the high creditworthiness of the customers that the Company sells to, the Company has experienced no significant collection issues. Therefore, the Company does not have an allowance for doubtful accounts established as of December 31, 2014 and 2013.

Inventory

Inventory is valued at the lower of cost or market, computed on a first-in, first out basis, or net realizable value. The Company estimates the recoverability of its inventory by reference to internal estimates of future demands and product life cycles, including expiration of inventory prior to sale.

Property and Equipment

Property and equipment are stated at cost, less accumulated depreciation and amortization. Depreciation is determined using the straight-line method over the estimated useful lives of the respective assets, generally three to five years. Leasehold improvements are amortized on a straight-line basis over the shorter of their estimated useful lives or the term of the lease. Amortization of assets under capital leases is included in depreciation and amortization expense. Maintenance and repairs are charged to operations as incurred.

Impairment of Long-lived Assets

Long-lived assets consists primarily of property and equipment and are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If circumstances require that a long-lived asset be tested for possible impairment, the Company compares the

F-11

undiscounted cash flows expected to be generated by the asset group to the carrying amount of the asset group. If the carrying amount of the long-lived asset is not recoverable on an undiscounted cash flow basis, an impairment is recognized to the extent that the carrying amount exceeds its fair value. The Company determines fair value using the income approach based on the present value of expected future cash flows or other appropriate measures of estimated fair value. The Company’s cash flow assumptions consider historical and forecasted revenue and operating costs and other relevant factors. Since inception, the Company has not recorded impairment charges on long-lived assets.

Convertible Preferred Stock Warrant Liability

For a warrant classified as a derivative liability, the fair value of that warrant was recorded on the balance sheet at the inception of such classification and adjusted to fair value at each financial reporting date. The changes in the fair value of the warrants were recorded in the statement of operations and comprehensive loss as a component of interest and other income or expense, as appropriate. The Company continued to adjust the carrying value of the convertible preferred stock warrant liability for changes in the fair value of the warrants until the earlier of: the exercise of the warrants, at which time the liability was reclassified to temporary equity; the conversion of the underlying convertible preferred stock into common stock, at which time the liability was reclassified to stockholders’ equity (deficit); or the expiration of the warrant, at which time the entire amount would have been reversed and reflected in the statement of operations and comprehensive loss. In connection with the Company’s IPO in July 2014, the warrants for convertible preferred stock were converted to warrants for common stock, resulting in the reclassification of the related redeemable convertible preferred stock warrant liability of $0.4 million to additional paid-in capital.

Convertible Preferred Stock Financing Option

For a freestanding option to purchase in a future round of financing, the fair value of that option was recorded on the balance sheet at the inception of such classification and adjusted to fair value at each financial reporting date. The change in the fair value of the convertible preferred stock financing option was recorded in the statement of operations and comprehensive loss as a component of interest and other income or expense, as appropriate. The Company adjusted the carrying value of the convertible preferred stock financing option liability for changes in the fair value of the option and continued to do so until the earlier of when the convertible preferred stock financing option was exercised or expired.

Revenue Recognition

Revenue is derived from the sale of PROPEL and PROPEL mini to hospitals and ambulatory surgery centers in the United States. The Company recognizes revenue when persuasive evidence of an arrangement exists, product delivery has occurred or there is no further obligation, pricing is fixed or determinable and collection is reasonably assured. The Company must make significant assumptions regarding the future collectability of amounts receivable from customers to determine whether revenue recognition criteria have been met. If collectability is not assured at the time of shipment, the Company defers revenue until such criteria have been met. In general, the Company’s standard terms and conditions of sale do not allow for product returns. The Company expenses shipping and handling costs as incurred and includes them in the cost of sales. In those cases where shipping and handling costs are billed to customers, the Company classifies the amounts billed as a component of revenue.

Cost of Sales

Cost of sales consists primarily of manufacturing overhead costs, material costs and direct labor. A significant portion of the Company’s cost of sales currently consists of manufacturing overhead costs. These overhead costs include the cost of quality assurance, material procurement, inventory control, facilities, equipment and operations supervision and management. Cost of sales also includes depreciation expense for production equipment and certain direct costs such as shipping costs.

F-12

Research and Development

Research and development expenses consist primarily of product development, clinical and regulatory affairs, consulting services and other costs associated with products and technologies in development. These expenses include employee compensation, stock-based compensation, supplies, quality assurance and related travel and facility costs. Clinical expenses include clinical trial design, clinical site reimbursement, data management and travel expenses, and the cost of manufacturing products for clinical trials.

Common Stock Valuation and Stock-based Compensation

The Company maintains a payment equity incentive plan to provide long-term incentives for employees, consultants and members of the board of directors. The plan allows for the issuance of non-statutory and incentive stock options to employees and non-statutory stock options to consultants and non-employee directors.

The Company is required to determine the fair value of equity incentive awards and recognize compensation expense for all equity incentive awards made to employees and directors, including employee stock options. Stock-based compensation expense is recognized over the requisite service period in the statements of operations and comprehensive loss and is based on awards ultimately expected to vest, therefore the amount of expense has been reduced for estimated forfeitures. The Company uses the straight-line method for expense attribution, except for awards issued with performance-based conditions which require an accelerated attribution method over the requisite performance and service periods.

Under the applicable accounting guidance for equity incentive awards issued to non-employees, the date at which the fair value of such awards is measured is equal to the earlier of: 1) the date at which a commitment for performance by the counterparty to earn the equity instrument is reached; or 2) the date at which the counterparty’s performance is complete. The Company recognizes stock-based compensation expense for the fair value of the vested portion of the non-employee awards in the statements of operations and comprehensive loss. The fair value of options granted to non-employees is remeasured as the options vest.

The valuation model used for calculating the fair value of awards for stock-based compensation expense is the Black-Scholes option-pricing model (the “Black-Scholes model”). The Black-Scholes model requires the Company to make assumptions and judgments about the variables used in the calculation, including the expected term (weighted average period of time that the options granted are expected to be outstanding), the volatility of common stock and an assumed risk-free interest rate. The Company uses the “simplified method” to determine the expected term of the stock option. Volatility is based on an average of the historical volatilities of the common stock of publicly-traded companies with characteristics similar to those of the Company. The risk-free rate is based on the U.S. Treasury yield curve in effect at the time of grant for periods corresponding with the expected term of the option. Since stock-based compensation expense is based on awards ultimately expected to vest, potential forfeitures are estimated based on the Company’s historical forfeiture experience and an analysis of similar companies. To the extent actual forfeitures differ from the estimates, the Company records the difference as a cumulative adjustment in the period that the estimates are revised.

Deferred Rent

Rent expense is recognized on a straight-line basis over the non-cancelable term of the Company’s operating lease and, accordingly, the Company records the difference between cash rent payments and the recognition of rent expense as a deferred rent liability. The Company also records lessor-funded lease incentives, such as leasehold improvements, as a deferred rent liability, which is amortized as a reduction of rent expense over the non-cancelable term of its operating lease.

Advertising Expenses

The Company expenses the costs of advertising, including promotional expenses, as incurred. Advertising expenses were $0.1 million, $46,000 and $23,000 during the years ended December 31, 2014, 2013 and 2012, respectively.

F-13

Income Taxes

The Company accounts for income taxes under the liability method. Under this method, deferred tax assets and liabilities are determined based on the differences between the financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates that will be in effect when the differences are expected to reverse. Valuation allowances against deferred tax assets are established when necessary to reduce deferred tax assets to the amounts expected to be realized. Currently, the Company has recorded a full valuation allowance against its deferred tax assets and there is no provision for income taxes, as the Company has incurred operating losses to date. The Company’s policy is to record interest and penalties expense related to uncertain tax positions as “other expense” in the statement of operations.

Net Loss per Share

Basic net loss per share is computed by dividing the net loss by the weighted average number of shares of common stock outstanding during the period. Diluted net loss per share is computed by dividing the net loss by the weighted average number of shares of common stock and dilutive potential shares of common stock outstanding during the period. Because the Company has reported a net loss for all periods presented, diluted net loss per share is the same as basic net loss per share for those periods as all potentially dilutive shares consisting of convertible preferred stock, stock options and warrants were antidilutive in those periods.

The Company allocates no loss to participating securities because they have no contractual obligation to share in the losses of the Company. The shares of the Company’s convertible preferred stock participate in any dividends declared by the Company and are therefore considered to be participating securities.

Net loss per share was determined as follows (in thousands, except per share amounts):

	Fiscal Years Ended December 31,
	2014			2013			2012
Net loss	$	(18,362	)	$	(18,369	)	$	(16,365	)
Weighted average common stock outstanding (1)		11,384			1,461			999
Net loss per share, basic and diluted	$	(1.61	)	$	(12.57	)	$	(16.38	)

(1) In connection with the Company’s IPO in July 2014, the convertible preferred stock outstanding was converted into 15,703,875 shares of common stock on a one-for-one basis.

The following potentially dilutive securities outstanding have been excluded from the computations of diluted weighted average shares outstanding because such securities have an antidilutive impact due to losses reported, in common stock equivalent shares (in thousands):

	December 31,
	2014		2013		2012
Convertible preferred stock outstanding (1)		—		15,701		11,283
Convertible preferred stock warrants (1)		—		57		74
Common stock warrants		66		—		—
Common stock options		2,458		1,928		1,594
		2,524		17,686		12,951

(1) In connection with the Company’s IPO in July 2014, the convertible preferred stock outstanding was converted into 15,703,875 shares of common stock and the convertible preferred stock warrants were converted into common stock warrants, both on a one-for-one basis.

F-14

Comprehensive Loss

Comprehensive loss consists of net loss and changes in unrealized gains and losses on short-term investments, available-for-sale. Accumulated other comprehensive income (loss) is presented in the accompanying balance sheets, when applicable.

Segment, Geographical and Customer Concentration

The Company operates in one segment. All of the Company’s assets and revenue are based in the U.S. No single customer accounted for more than 10% of its revenue during the years ended December 31, 2014, 2013 and 2012, and no single customer accounted for more than 10% of its accounts receivable at December 31, 2014 and 2013.

Recent Accounting Pronouncements

In August 2014, the Financial Accounting Standard Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-15, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern (“ASU 2014-15”). ASU 2014-15 requires that, in connection with preparing financial statements for each annual and interim reporting period, the Company should evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about its ability to continue as a going concern within one year after the date the financial statements are issued or within one year after the date that the financial statements are available to be issued. If the Company identifies conditions or events that raise substantial doubt about its ability to continue as a going concern, the Company should disclose how it plans are intended to mitigate or alleviate those relevant conditions or events raising substantial doubt about its ability to continue as a going concern. ASU 2014-15 is effective for all entities with annual periods ending after December 15, 2016 and interim periods thereafter. Early adoption is permitted. The adoption of ASU 2014-15 is not expected to have a material impact on the Company’s financial condition or results of operations.

In June 2014, the FASB issued ASU No. 2014-12, Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period (“ASU 2014-12”). ASU 2014-12 requires that a performance target that affects vesting of share-based payment awards and that could be achieved after the requisite service period be treated as a performance condition. Compensation cost should be recognized in the period in which it becomes probable that the performance target will be achieved and should represent the compensation cost attributable to the periods for which the requisite service has already been rendered. If the performance target becomes probable of being achieved before the end of the requisite service period, the remaining unrecognized compensation cost should be recognized prospectively over the remaining requisite service period. The total amount of compensation cost recognized during and after the requisite service period should reflect the number of awards that are expected to vest and should be adjusted to reflect those awards that ultimately vest. The requisite service period ends when the employee can cease rendering service and still be eligible to vest in the award if the performance target is achieved. ASU 2014-12 is effective for all entities for annual periods and interim periods within those annual periods beginning after December 15, 2015. Early adoption is permitted. An entity may apply the amendments in ASU 2014-12 either (i) prospectively to all awards granted or modified after the effective date or (ii) retrospectively to all awards with performance targets that are outstanding as of the beginning of the earliest annual period presented in the financial statements and to all new or modified awards thereafter. The adoption of ASU 2014-12 is not expected to have a material impact on the Company’s financial condition or results of operations.

In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (“ASU 2014-09”), which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. ASU 2014-09 will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective. In doing so, companies will need to use more judgment and make more estimates than under current guidance. These may include identifying performance obligations in the

F-15

contract, estimating the amount of variable consideration to include in the transaction price and allocating the transaction price to each separate performance obligation. ASU 2014-09 is effective for all entities for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period. Early adoption is not permitted. The standard permits the use of either the retrospective or cumulative effect transition method. The Company is evaluating the effect that ASU 2014-09 will have on its financial statements and related disclosures.

3. Composition of Certain Financial Statement Items

Inventory (in thousands):

	December 31,
	2014		2013
Raw materials	$	761	$	472
Work-in-process		141		241
Finished goods		1,645		1,484
	$	2,547	$	2,197

Property and Equipment (in thousands):

	December 31,
	2014			2013
Computer equipment and software	$	546		$	398
Furniture and office equipment		158			252
Laboratory equipment		2,276			2,262
Leasehold improvements		128			124
		3,108			3,036
Less: accumulated depreciation and amortization		(1,634	)		(1,329	)
	$	1,474		$	1,707

Depreciation and capital lease amortization expenses was $0.6 million and $0.5 million during the years ended December 31, 2014 and 2013, respectively.

Other Current Liabilities (in thousands):

	December 31,
	2014		2013
Manufacturing expenses	$	328	$	213
Deferred gross margin		137		54
Other		433		478
	$	898	$	745

F-16

4. Cash, Cash Equivalents and Short-term Investments

The following is a summary of cash, cash equivalents and short-term investments, available-for-sale, by type of instrument (in thousands):

	December 31,
	2014									2013
	Amortized Cost		Gross Unrealized					Estimated Fair Value		Amortized Cost		Gross Unrealized				Estimated Fair Value
			Gains		Losses							Gains		Losses
Cash	$	1,971	$	—	$	—		$	1,971	$	1,076	$	—	$	—	$	1,076
Money market funds		11,432		—		—			11,432		11,218		—		—		11,218
Corporate debt securities		28,797		3		(10	)		28,790		—		—		—		—
Commercial paper		6,243		7		—			6,250		—		—		—		—
	$	48,443	$	10	$	(10	)	$	48,443	$	12,294	$	—	$	—	$	12,294
Reported as:
Cash and cash equivalents								$	13,403							$	12,294
Short-term investments, available-for-sale									35,040								—
								$	48,443							$	12,294

Management has the intent and ability, if necessary, to liquidate any of the Company’s investments in order to meet the Company’s liquidity needs in the next 12 months. Accordingly, investments with contractual maturities greater than one year from the date of purchase, if any, are available-for-sale and classified as short-term on the accompanying balance sheets. As of December 31, 2014 and 2013, the Company had no investments with a maturity of greater than one year.

Based on an evaluation of securities that have been in a loss position, the Company did not recognize any other-than-temporary impairment charges during the years ended December 31, 2014, 2013 and 2012. The Company considered various factors which included a credit and liquidity assessment of the underlying securities and the Company’s intent and ability to hold the underlying securities until the estimated date of recovery of its amortized cost.

5. Loan and Security Agreement

In August 2013, the Company entered into a loan and security agreement (“Loan Agreement”) with Silicon Valley Bank (“SVB”) for a total commitment of $12.0 million. The commitment consisted of an $8.0 million growth capital facility and a $4.0 million revolving accounts receivable line of credit. In August 2014, the Company cancelled the Loan Agreement and had not received any advances under the Loan Agreement.

The $8.0 million growth capital facility consisted of two $4.0 million tranches. The first $4.0 million tranche was available immediately upon execution of the Loan Agreement and was available until October 31, 2014. The second $4.0 million tranche was contingent upon the Company achieving a trailing three-month revenue of at least $7.0 million. The Company achieved that condition as of January 31, 2014, and therefore the second tranche was available until March 31, 2015. Payments under both tranches would have been interest-only until March 31, 2015, at which time the outstanding balance would have converted to a 30-month fully amortizing loan. The interest rate would have been fixed at the time of advance and would have been the greater of 3.65% or the three-year U.S. Treasury note plus 3%. At the end of the amortization period, the Company would have made a final payment of 3.9% of the advanced amounts. There was a prepayment penalty of 2% of the prepaid principal during the first year, 1% during the second year and no prepayment penalty during the third year.

F-17

In addition, the Company issued a warrant to SVB to purchase up to 20,313 shares of the Company’s Series D convertible preferred stock for an aggregate exercise price of 0.5% of the total growth capital facility commitment, or $40,000. Following any draw-downs under the growth capital facility, the warrant would have become exercisable for additional shares of Series D convertible preferred stock equal to 1.25% of the advanced amounts under tranche one and two divided by $6.89. The initial value of the warrants issued was $10,000 and has been recognized as convertible preferred stock warrant liability and interest expense. In connection with the IPO, the warrants to purchase convertible preferred stock were converted to warrants to purchase common stock and any additional warrants that would have become exercisable under the terms of the Loan Agreement would have been exercisable for common stock. As of December 31, 2014, this warrant was exercisable for 5,803 shares of the Company’s common stock at an exercise price of $6.89 per share.

The $4.0 million revolving accounts receivable line of credit would have expired in August 2016. Advances would have been made for up to 80% of eligible accounts receivable. An annual loan fee of 0.75% would have been paid at the beginning of each of the three years. The interest would have been the greater of 4.25% or SVB Prime Rate plus 0.25%.

6. Equipment Loans

In September 2012, the Company entered into an equipment loan with an aggregate principal amount of $2.0 million, all of which was drawn down in December 2012. Payments were to be made in monthly installments over a 36-month period with an annual interest rate of 5.1%. A total of $36,000, $0.1 million and $4,000 were recorded as interest expense during the years ended December 31, 2014, 2013 and 2012, respectively. The amount outstanding under this loan at December 31, 2013 was $1.4 million. In August 2014, the amount outstanding under this equipment loan of $0.9 million was fully repaid.

In April 2013, the Company entered into a capital lease for a principal amount of $0.1 million. Payments were made in monthly installments over a 38-month period with an interest rate of 14.88%. In November 2014, the amount outstanding under this equipment loan of $59,000 was fully repaid.

7. Convertible Preferred Stock Warrant Liability

As of December 31, 2014 and 2013, the following warrants to purchase shares of convertible preferred stock were outstanding and exercisable (in thousands, except share and per share data):

Dates		In Connection With	Series		Exercise Price		Warrants Outstanding at December 31,				Initial Value		Fair Value at December 31,
Issuance	Expiration						2014		2013				2014 (1)		2013
Mar 2007	Mar 2014	Equipment loan		A	$	3.68		—		4,076	$	4	$	—	$	17
Nov 2007	Nov 2017	Venture loan		A	$	3.68		47,554		47,554		63		—		200
Aug 2013	Aug 2023	Loan Agreement		D	$	6.89		5,803		5,803		10		—		20
								53,357		57,433			$	—	$	237

(1) In connection with the Company’s IPO in July 2014, all warrants for convertible preferred stock were converted to warrants for common stock, resulting in the reclassification of the related redeemable convertible preferred stock warrant liability of $0.4 million to additional paid-in capital.

During the year ended December 31, 2014, warrants to purchase 4,076 shares of Series A convertible preferred stock were exercised through a cashless exercise provision. Net shares of 2,431 were issued and the remaining 1,645 shares were withheld for the exercise price. During the year ended December 31, 2013, warrants to purchase 22,418 shares of Series A convertible preferred stock were exercised at a price of $3.68 per share.

In connection with the execution of the Loan Agreement in August 2013, warrants were issued to purchase the Company’s Series D convertible preferred stock. The warrants were exercisable for 5,803 shares of Series D

F-18

convertible preferred stock at an exercise price of $6.89 per share. In connection with the Company’s IPO in July 2014, these warrants for Series D convertible preferred stock were converted to warrants for common stock. The warrants expire in August 2023 or upon the occurrence of an acquisition of the Company in exchange for cash or marketable securities.

8. Convertible Preferred Stock

In connection with the Company’s IPO in July 2014, the convertible preferred stock, issuable in series, was converted into 15,703,875 share of common stock on a one-for-one basis, resulting in the reclassification of the related redeemable convertible preferred stock of $90.8 million to common stock and additional paid-in capital.

A summary of the Company’s convertible preferred stock is as follows:

	December 31,
	2014						2013
Series	Shares Authorized		Shares Issued and Outstanding		Carrying Value (in thousands)		Shares Authorized		Shares Issued and Outstanding		Carrying Value (in thousands)
A		—		—	$	—		2,796,259		2,744,619	$	9,987
B		—		—		—		3,249,662		3,249,657		19,894
C		—		—		—		5,311,401		5,311,395		30,521
D		—		—		—		4,550,000		4,395,773		30,358
		—		—	$	—		15,907,322		15,701,444	$	90,760

A summary of the Company’s convertible preferred stock terms is as follows:

Series	Liquidation Preference Per Share		8% Dividend Per Share
A	$	3.68	$	0.2944
B		6.16		0.4928
C		5.84		0.4672
D		6.89		0.5514

The Company recorded its convertible preferred stock at fair value on the dates of issuance, net of issuance costs. A redemption event will only occur upon the liquidation or winding up of the Company, a greater than 50% change in control, or sale of substantially all of the assets of the Company. As the redemption event is outside the control of the Company, all shares of convertible preferred stock have been presented outside of permanent equity.

Series D Convertible Preferred Stock

In February 2013, the Company completed the initial closing of the Series D convertible preferred stock financings. The total net cash proceeds from this initial closing totaled $18.2 million and 2,656,636 shares of Series D convertible preferred stock were issued. In March 2013, the Company completed an additional closing of the Series D convertible preferred stock financings. The total net cash proceeds from this additional closing totaled $2.5 million and 370,129 shares of Series D convertible preferred stock were issued. The March 2013 closing included 72,548 shares purchased by certain employees of the Company for $0.5 million.

The Series D convertible preferred stock financing contained a provision that obligated the investors to purchase additional shares (“convertible preferred stock financing option”) at the same price as the initial closing upon notification by the Company that it had achieved an annualized revenue rate of at least $16.0 million over a trailing three-month period. This convertible preferred stock financing option to purchase Series D convertible

F-19

preferred stock in the future tranche was considered to be a freestanding financial instrument for accounting purposes. Therefore, in February 2013, the Company recorded a financing liability of $0.9 million representing the fair value of this convertible preferred stock financing option at the time of issuance. In October 2013, shortly after achieving the annualized revenue rate, the Company issued the additional 1,369,008 shares of Series D convertible preferred stock to the investors for net proceeds of $9.4 million. Since the convertible preferred stock financing option expired in October 2013 as a result of the issuance of Series D convertible preferred stock, the carrying and fair value of the convertible preferred stock financing option of $1.1 million in October 2013 was reclassified from liability to Series D convertible preferred stock. The Company recorded total charges related to the change in fair value during the year ended December 31, 2013 of $0.2 million related to this financing option liability.

Dividends

The holders of Series A, B, C and D convertible preferred stock are entitled to receive dividends (as determined on a per annum basis and on an as-converted basis), from any assets legally available, prior and in preference to any declaration or payment of any dividend to the common stockholders. No dividends other than those payable solely in common stock shall be paid on any common stock, Series A or Series B convertible preferred stock until they are paid on each outstanding share of Series C and D convertible preferred stock. Such dividends are payable when and if declared by the Board of Directors and are not cumulative. No dividends have been declared through the conversion date to common stock upon the effectiveness of the IPO in July 2014.

Liquidation

In the event of any liquidation, dissolution, or winding up of the Company, whether voluntary or involuntary (“Liquidation Event”), the holders of Series C and D convertible preferred stock are entitled to receive their liquidation preferences, prior to and in preference of any distribution of any assets of the Company to the holders of common stock, Series A or Series B convertible preferred stock, as adjusted for any stock splits, combinations, reorganizations, or similar transactions, plus any declared and unpaid dividends. If, upon the occurrence of such an event, the proceeds thus distributed among the holders of Series C and D convertible preferred stock shall be insufficient to permit the payment to such holders of the full preferential amounts, then the entire amount legally available for distribution shall be distributed among the holders of Series C and D convertible preferred stock in proportion to the full preferential amount that each such holder is otherwise entitled to receive had such proceeds been available.

After payment in full of the Series C and D convertible preferred stock liquidation preference, Series A and B convertible preferred stock liquidation preferences will be paid, as adjusted for any stock splits, combinations, reorganizations, or similar transactions. If, upon the occurrence of such an event, the proceeds thus distributed among the holders of Series A and B convertible preferred stock shall be insufficient to permit the payment to such holders of the full preferential amounts, then the entire amount legally available for distribution (after payment in full of the Series C and D convertible preferred stock liquidation preference) shall be distributed among the holders of Series A and B convertible preferred stock in proportion to the full preferential amount that each such holder is otherwise entitled to receive had such proceeds been available.

After liquidation preference payments have been made to the holders of the convertible preferred stock as described above, any remaining assets and funds of the Company are to be distributed ratably among the holders of common stock and Series A, B, C and D convertible preferred stock, assuming conversion of all shares of convertible preferred stock.

Prior to the Liquidation Event, the holders of all series of preferred stock may convert their preferred stock to common stock at the then-applicable conversion rate. Distribution of the Company’s assets to the new and existing common stockholders would then be made pro rata according to the number of shares held by each investor.

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If convertible preferred stock is not converted to common stock prior to the Liquidation Event, the holders of Series C and D convertible preferred stock are entitled to receive their liquidation preferences, prior to and in preference of distribution of any assets of the Company to the holders of common stock, Series A and Series B convertible preferred stock, by reason of their ownership (as adjusted for any stock splits, combinations, reorganizations, or similar transactions), plus any declared but unpaid dividends on such shares. The holders of Series A and B convertible preferred stock are entitled to receive their liquidation preferences, prior to and in preference of distribution of any assets of the Company to the holders of common stock, by reason of their ownership (as adjusted for any stock splits, combinations, reorganizations, or similar transactions), plus any declared but unpaid dividends on such shares.

Voting

Except as otherwise required by law, the holders of common and convertible preferred stock vote together as a single class. The holders of the convertible preferred stock are entitled to the number of votes equal to the number of shares of common stock into which the convertible preferred stock could be converted on the record date for the vote, or upon the written consent of the stockholders.

Redemption

The convertible preferred shares are not redeemable.

Conversion

Each share of Series A, B, C and D convertible preferred stock, at the option of the holder and at any time after the date of issuance, is convertible into shares of common stock, subject to certain anti-dilution adjustments, in accordance with the conversion formula provided in the Company’s Articles of Incorporation (currently 1-for-1). In the event of a stock split, the conversion price in effect immediately prior to such split will be proportionately decreased. Conversion is automatic at the conversion rate: (1) immediately upon the closing of a firm commitment, underwritten initial public offering pursuant to an effective registration statement under the Securities Act of 1933, as amended, in which the public offering price reflects a pre-money valuation of at least $200.0 million and with net proceeds raised of at least $40.0 million or (2) at the election of the holders of at least 70% of the then outstanding shares of such series of preferred stock, the election of the holders of at least 65% of the Series C convertible preferred stock and the election of the holders of at least 52% of the Series D convertible preferred stock, voting as a separate class. The convertible preferred stock warrants become exercisable for common stock.

9. Stockholders’ Equity

2014 Equity Incentive Plan

In July 2014, the Company’s board of directors approved the 2014 Equity Incentive Plan (“2014 Plan”). The 2014 Plan became effective on the effective date of the IPO, at which time the Company ceased making awards under the 2013 Equity Incentive Plan (the “2013 Plan”). Under the 2014 Plan, the Company may grant stock options, stock appreciation rights, restricted stock, restricted stock units and certain other awards to individuals who are employees, officers, directors or consultants of the Company. A total of 4,750,000 shares of common stock were initially reserved for issuance under the 2014 Plan. The number of shares of common stock reserved for issuance under the 2014 Plan will automatically increase on January 1 of each year, beginning on January 1, 2015, and continuing through and including January 1, 2024, by 3% of the total number of shares of the Company’s capital stock outstanding on December 31 of the preceding calendar year, or a lesser number of shares determined by the Company’s board of directors. The maximum number of shares that may be issued upon the exercise of ISOs under the 2014 Plan is 10.0 million. Incentive stock options (“ISOs”) and non-statutory stock options (“NSOs”) may be granted with exercise prices at no less than 100% of the fair value of the

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common stock on the date of grant. Options granted to a 10% stockholder shall be at no less than 110% of the fair value and ISO stock option grants to such 10% stockholders expire five years from the date of grant. ISOs granted under the 2014 Plan generally vest 25% after the completion of 12 months of service and the balance vests in equal monthly installments over the next 36 months of service and expire 10 years from the grant date, unless subject to provisions regarding 10% stockholders. NSOs vest per the specific agreement and expire 10 years from the date of grant. New shares are issued upon exercise of options under the stock plan.

2013 Equity Incentive Plan

The Company ceased making awards under the 2013 Plan upon the effective date of the Company’s IPO. Under the 2013 Plan approved by the Company’s Board of Directors in September 2013, shares of common stock were reserved for the issuance of ISOs, NSOs, stock bonuses and rights to acquire restricted stock to employees, officers, directors and consultants of the Company. There were 10,000 options issued with 100% of the shares vested as of the date of grant during the year ended December 31, 2014 and no options issued with 100% of the shares vested as of the date of grant during the year ended December 31, 2013. Options outstanding under the 2013 Plan will expire upon forfeiture. As of December 31, 2014, 0.6 million options were outstanding under the 2013 Plan.

The 2013 Plan was the successor to the 2003 Equity Incentive Plan (“2003 Plan”) which expired in September 2013. Options outstanding under the 2003 Plan will expire upon forfeiture.

A summary of the Company’s stock option activity and related information is as follows (in thousands, except price data):

	Fiscal Years Ended December 31,
	2014					2013					2012
	Options			Price		Options			Price		Options			Price
Outstanding, beginning of period		1,928		$	1.08		1,594		$	0.88		1,425		$	0.80
Granted		819			12.88		1,033			1.20		296			1.16
Granted - below fair market value		—			—		94			1.32		—			—
Exercised		(163	)		1.42		(740	)		0.84		(115	)		0.76
Forfeited		(126	)		3.86		(53	)		1.08		(12	)		0.88
Outstanding, end of period		2,458			4.84		1,928			1.08		1,594			0.88
Vested and expected to vest		2,338			4.67		1,752			1.08		1,461			0.84
Exercisable		1,612			2.66		1,314			1.00		1,206			0.80

As of December 31, 2014, the aggregate pre-tax intrinsic value of options outstanding were $33.7 million and options outstanding and exercisable were $25.6 million, and the weighted-average remaining contractual term of options outstanding were 8.0 years and options outstanding and exercisable were 7.5 years. The aggregate pre-tax intrinsic value of options exercised was $1.5 million, $0.3 million and $37,000 during the years ended December 31, 2014, 2013 and 2012, respectively. The aggregate pre-tax intrinsic value was calculated as the difference between the exercise prices of the underlying options and the estimated fair value of the common stock on the date of exercise.

Early Exercise of Stock Options

Stock options granted under the Plan may provide option holders the right to elect to exercise unvested options in exchange for restricted common stock. During the year ended December 31, 2013, employees exercised options with 69,037 unvested shares. As of December 31, 2014 and 2013, 29,017 and 53,796 shares,

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respectively, remained subject to a repurchase right held by the Company at the original issuance price in the event the optionees’ service is voluntarily or involuntarily terminated. As of December 31, 2014 and 2013 the related liability was $20,000 and $31,000, respectively.

2014 Employee Stock Purchase Plan

In July 2014, the Company’s board of directors approved the 2014 Employee Stock Purchase Plan (“2014 ESPP”). The 2014 ESPP became effective on the effective date of the IPO. A total of 496,092 shares were initially reserved for issuance under the 2014 ESPP. Additionally, the number of shares of common stock reserved for issuance under the 2014 ESPP will increase automatically each year, beginning on January 1, 2015, and continuing through and including January 1, 2024, by the lesser of (1) 1% of the total number of shares of common stock outstanding on December 31 of the preceding calendar year; or (2) such lesser number as determined by the Company’s board of directors. As of December 31, 2014, the Company has not implemented the 2014 ESPP.

Reserved Shares

The Company is required to reserve and keep available out of its authorized but unissued shares of common stock a number of shares sufficient to effect the conversion of all outstanding shares of preferred stock, warrants, and options granted and available for grant under the equity incentive stock plans.

The number of such shares of common stock reserved for the exercise and issuance of the following warrants, options and shares available for grant under the equity incentive stock plans as of December 31, 2014, are as follows (in thousands):

	December 31, 2014
Warrants outstanding		66
Options outstanding		2,458
Available for future grant:
2014 Equity incentive plan		4,434
2014 Employee stock purchase plan		496
		7,454

10. Stock-Based Compensation Expense

Total stock-based compensation recognized, before taxes, during the years ended December 31, 2014, 2013 and 2012 are as follows (in thousands):

	Fiscal Years Ended December 31,
	2014		2013		2012
Cost of sales	$	49	$	21	$	10
Selling, general and administrative		1,361		273		103
Research and development		140		88		39
	$	1,550	$	382	$	152

As of December 31, 2014, the amount of unearned stock-based compensation currently estimated to be expensed from now through the year 2018 related to unvested employee stock-based payment awards is $4.6 million and the weighted average period over which the unearned stock-based compensation is expected to be recognized is 3.2 years. If there are any modifications or cancellations of the underlying unvested securities,

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the Company may be required to accelerate, increase or cancel any remaining unearned stock-based compensation expense. Future stock-based compensation expense and unearned stock-based compensation will increase to the extent that the Company grants additional share-based payments.

The Company estimates the fair value of stock-based compensation on the date of grant using the Black-Scholes option-pricing model. The Black-Scholes model determines the fair value of stock-based payment awards based on the fair market value of the Company’s common stock on the date of grant and is affected by assumptions regarding a number of highly complex and subjective variables. These variables include, but are not limited to, the fair market value of the Company’s common stock, volatility over the expected term of the awards and actual and projected employee stock option exercise behaviors. The Company has opted to use the “simplified method” for estimating the expected term of options, whereby the expected term equals the arithmetic average of the vesting term and the original contractual term of the option. Due to the Company’s limited operating history and a lack of company specific historical and implied volatility data, the Company has based its estimate of expected volatility on the historical volatility of a group of similar companies that are publicly traded. When selecting these public companies on which it has based its expected stock price volatility, the Company generally selected companies with comparable characteristics to it, including enterprise value, stages of clinical development, risk profiles, position within the industry and with historical share price information sufficient to meet the expected life of the stock-based awards. The historical volatility data was computed using the daily closing prices for the selected companies’ shares during the equivalent period of the calculated expected term of the share-based payments. The Company will continue to analyze the historical stock price volatility and expected term assumptions as more historical data for the Company’s common stock becomes available. The risk-free rate assumption is based on the U.S. Treasury instruments with maturities similar to the expected term of the Company’s stock options. The expected dividend assumption is based on the Company’s history of not paying dividends and its expectation that it will not declare dividends for the foreseeable future.

As stock-based compensation expense is based on awards ultimately expected to vest, the amount of expense has been reduced for estimated forfeitures. Potential forfeitures are estimated based on the Company’s historical forfeiture experience and an analysis of similar companies. To the extent actual forfeitures differ from the estimates, the Company records the difference as a cumulative adjustment in the period that the estimates are revised.

The fair value of options granted to employees or directors during the years ended December 31, 2014, 2013 and 2012, was estimated as of the grant date using the Black-Scholes model assuming the weighted average assumptions listed in the following table:

	Fiscal Years Ended December 31,
	2014			2013			2012
Expected life (years)		6.0			6.0			6.0
Expected volatility		56	%		67	%		66	%
Risk-free interest rate		1.9	%		1.6	%		0.9	%
Dividend yield		0.0	%		0.0	%		0.0	%
Weighted average fair value	$	6.80		$	0.96		$	0.68

Option Modification

In April 2013, options held by the President and Chief Executive Officer, Ms. Earnhardt, a related party, were modified to permit exercise with promissory notes of up to $0.5 million. Under the terms of the notes, one quarter of the principal and interest was to be forgiven on each anniversary date of the note as long as Ms. Earnhardt remains the Company’s Chief Executive Officer. In addition, the entire principal and interest of the notes was to be forgiven on the earlier of an initial public offering or the closing of a liquidation event (as

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defined in the certificate of incorporation), in each case where total proceeds payable to the Company or its stockholders is greater than $200.0 million. The Company had the option to accelerate the maturity date if, at the Company’s reasonable discretion, such acceleration may be necessary due to any applicable law, rule or regulation, including, without limitation, the Sarbanes-Oxley Act of 2002. The economic effect of the modification was equivalent to converting options to purchase 0.6 million shares to a grant of restricted stock with four-year vesting and a contingent vesting acceleration provision. The incremental cost of the modification was $0.3 million, of which $0.2 million and $50,000 was recognized during the years ended December 31, 2014 and 2013, respectively.

In June 2014, the entire principal amount and all accrued and unpaid interest of the loan was forgiven in full. In connection with the forgiveness of the note, the unamortized modification cost relating to the vested options of $0.2 million was immediately recognized. The remaining unamortized modification cost of $0.1 million will be amortized over the remaining vesting period.

11. Commitments and Contingencies

Contingencies

In the normal course of business, the Company enters into contracts and agreements that contain a variety of representations and warranties and provide for general indemnifications. The Company’s exposure under these agreements is unknown because it involves claims that may be made against the Company in the future, but have not yet been made. The Company accrues a liability for such matters when it is probable that future expenditures will be made and such expenditures can be reasonably estimated.

Indemnification

The Company’s amended and restated certificate of incorporation contains provisions limiting the liability of directors, and its amended and restated bylaws provide that the Company will indemnify each of its directors to the fullest extent permitted under Delaware law. The Company’s amended and restated certificate of incorporation and amended and restated bylaws also provide its board of directors with discretion to indemnify its officers and employees when determined appropriate by the board. In addition, the Company has entered and expects to continue to enter into agreements to indemnify its directors and executive officers.

Litigation

The Company is not currently a party to any material legal proceedings. The Company may at times be involved in litigation and other legal claims in the ordinary course of business. When appropriate in the Company’s estimation, it may record reserves in its financial statements for pending litigation and other claims.

Building Lease

As of December 31, 2014, the Company has one leased facility under an operating lease agreement entered into in March 2012. In December 2014, the operation lease agreement was amended for an additional 17,900 square feet for a total of 50,400 square feet and the expiration was extended to May 31, 2020. Rental payments on operating leases are charged to expense on a straight-line basis over the period of the lease. The lease agreement requires the Company to pay executory costs such as real estate taxes, insurance and repairs, and includes a renewal provision allowing the Company to extend this lease for an additional three years at 95% of the then-current fair market rental rate. Because of the terms of the amended lease agreement, the Company is the deemed owner, for accounting purposes only, of the building improvements. Accordingly, the Company recorded an asset of $1.0 million, representing the total costs of the building improvements payable by the lessor, the legal owner of the building, with a corresponding offset recorded as deferred rent.

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Future minimum annual operating lease payments are as follows (in thousands):

Fiscal Years Ending December 31,
2015	$	645
2016		1,494
2017		1,536
2018		1,580
2019		1,625
Thereafter		685
		7,565

Rent expense was $1.3 million, $1.4 million and $0.6 million during the years ended December 31, 2014, 2013 and 2012, respectively.

Purchase Commitments

As of December 31, 2014, the Company had commitments to suppliers for purchases totaling $0.8 million.

12. Employee Retirement Plan

In January 2007, the Company established a qualified retirement plan under section 401(k) of the Internal Revenue Code (“IRC”) under which participants may contribute up to 100% of their eligible compensation, subject to maximum deferral limits specified by the IRC. The Company may make a discretionary profit sharing contribution to each eligible employee, subject to limits specified by the IRC, on an annual basis, provided the employee is employed with the Company on the last day of the plan year which is December 31. In addition, the Company may also make a matching contribution of up to 3% of an employee’s eligible compensation on a quarterly basis. The Company’s contributions will vest 25% per year over four years. As of December 31, 2014, the Company has not made any profit sharing or matching contributions.

13. Income Taxes

The Company has a history of losses and therefore has made no provision for income taxes. All losses result from domestic operations.

The amount computed by applying the federal statutory rate to income before taxes reconciles to the provision for income taxes is as follows (in thousands):

	Fiscal Years Ended December 31,
	2014			2013			2012
Tax at federal statutory rate	$	(6,243	)	$	(6,245	)	$	(5,564	)
State, net of federal benefit		(1,264	)		(826	)		(1,131	)
Permanent items		515			368			59
R&D tax credit		(315	)		(584	)		—
Other		12			(2	)		(3	)
Change in valuation allowance		7,295			7,289			6,639
	$	—		$	—		$	—

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Significant components of net deferred tax assets are as follows (in thousands):

	December 31,
	2014			2013
Deferred tax assets:
Net operating losses	$	33,912		$	28,236
R&D tax credit		2,888			2,394
Accruals and other		2,465			1,288
		39,265			31,918
Deferred tax liabilities:
Depreciation and amortization		(62	)		(9	)
		(62	)		(9	)
Net deferred tax asset:		39,203			31,909
Valuation allowance		(39,203	)		(31,909	)
	$	—		$	—

Deferred income taxes reflect the tax effects of net operating loss and tax credit carryforwards and the net temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.

Realization of the deferred tax assets is dependent upon the generation of future taxable income, if any, the amount and timing of which are uncertain. Based on available objective evidence, management believes it is more likely than not that the deferred tax assets are not recognizable and will not be recognizable until the Company has sufficient taxable income. Accordingly, the net deferred tax assets have been fully offset by a valuation allowance. The valuation allowance increased by $7.3 million during each of the years ended December 31, 2014 and 2013.

As of December 31, 2014, the Company’s federal net operating loss carryforwards of $85.5 million will expire at various dates beginning in 2026, if not utilized, and federal research and development tax credits of $2.3 million will begin to expire in 2026. In addition, net operating loss carryforwards for state income tax purposes of $89.4 million will begin to expire in 2016 and state research and development tax credits of $2.1 million do not expire.

Utilization of the net operating loss carryforwards may be subject to an annual limitation due to the ownership change limitations provided by the Internal Revenue Code of 1986 and similar state provisions. The annual limitation may result in the expiration of the net operating loss before utilization.

The Company had unrecognized tax benefit of $0.9 million and $0.7 million as of and December 31, 2014 and 2013, respectively, all of which is offset by a full valuation allowance. These unrecognized tax benefits, if recognized, would not affect the effective tax rate. There was no interest or penalties accrued at the adoption date and at December 31, 2014.

A reconciliation of the change in the unrecognized tax benefit during the year is as follows (in thousands):

	December 31,
	2014		2013		2012
Beginning of year	$	715	$	505	$	442
Additions for tax positions related to:
Current year		140		210		63
Prior years		6		—		—
End of year	$	861	$	715	$	505

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The Company does not expect a significant change to its unrecognized tax benefits over the next twelve months. The unrecognized tax benefits may increase or change during the next twelve months for items that arise in the ordinary course of business.

The Company files income tax returns in the U.S. federal and various state jurisdictions. Tax years beginning in 2003 through 2014, remain open to examination by the major taxing authorities to which the Company is subject to. The Company’s policy is to record interest related to uncertain tax positions as interest expense and any penalties as other expense in its statements of operations and comprehensive loss. As of the date of adoption of ASC Topic No. 740 and through December 31, 2014, the Company did not have any interest expense or penalties associated with unrecognized tax benefits.

14. Related Parties

In April 2013, options held by the President and Chief Executive Officer, Ms. Earnhardt, a related party, were modified to permit exercise with promissory notes of up to $0.5 million. Under the terms of the notes, one quarter of the principal and interest was to be forgiven on each anniversary date of the note as long as Ms. Earnhardt remained the Company’s Chief Executive Officer. In addition, the entire principal and interest of the notes was to be forgiven on the earlier of an initial public offering or the closing of a liquidation event (as defined in the certificate of incorporation), in each case where total proceeds payable to the Company or its stockholders is greater than $200.0 million. The Company had the option to accelerate the maturity date if, at the Company’s reasonable discretion, such acceleration may be necessary due to any applicable law, rule or regulation, including, without limitation, the Sarbanes-Oxley Act of 2002. The entire principal amount and all accrued and unpaid interest of the loan was forgiven in full in June 2014. The full recourse promissory notes were secured by a pledge of the exercised shares.

In January 2007, the Company loaned amounts to its Chief Operation Officer, Mr. Kaufman, a related party, in connection with the commencement of his employment with the Company. The loan was evidenced by a promissory note for $0.3 million. This note bore interest at the applicable federal rate and interest was determined in accordance with Section 7872 of the Internal Revenue Code and has been reflected as income to Mr. Kaufman. Pursuant to the terms of the promissory note, provided Mr. Kaufman remained a continuous, full-time employee of the Company, repayment of the notes was to begin after the third year of employment when 50% of his annual bonus would have been applied to the loan balance until the loan was paid in full. The note matures and becomes immediately due and payable within 30 days following the date on which Mr. Kaufman ceases, voluntarily or involuntarily, to be employed by the Company. No payment was received in the year ended December 31, 2011 since the Company did not pay an annual bonus in that year. In February 2011, the Company agreed to forgive Mr. Kaufman’s loan over three years, provided Mr. Kaufman remained employed by the Company, at the rate of $0.1 million annually in January 2012, 2013 and 2014. The note was secured by any stock and options Mr. Kaufman holds in the Company. Mr. Kaufman’s note was fully forgiven in January 2014.

In March 2009, the Company purchased three sinus irrigation tool patents from Medilyfe Inc., a Canadian corporation. A member of the Company’s Medical Advisory Board holds an executive-level position with Medilyfe Inc. The agreement called for a $40,000 payment upon execution of the agreement and an additional $35,000 upon the first anniversary of the agreement’s effective date in addition to the issuance of a warrant to purchase 43,750 shares of the Company’s common stock at $1.00 per share.

The warrant vested fully upon grant and will expire April 7, 2019. The value of the warrant was $30,000 determined using the Black-Scholes model. The cost of the patents is included in research and development expense, since substantial research and development efforts were required at the time of the payment of these amounts and there was no alternative future use of the technology rights. A $35,000 cash payment was made in 2012, since one additional patent claim was allowed by the U.S. Patent Office. The Company recorded $35,000 in research and development expense related to this agreement for the year ended December 31, 2012. An additional $80,000 cash payment will be due upon the first achievement of net sales of products incorporating

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this technology exceeding $1.0 million in a given calendar year. Such additional payment was not owed as of December 31, 2014 and 2013, since this technology is unrelated to the Company’s current activities.

Supplemental Quarterly Financial Information (unaudited)

The following table sets forth unaudited statements of operations data for each of the Company’s last eight quarters. This quarterly information is unaudited and has been prepared on the same basis as the annual financial statements. In the Company’s opinion, this quarterly information reflects all adjustments necessary for a fair presentation of the periods presented. The operating results for any quarter are not necessarily indicative of results for any future period.

	Fiscal Years Ended December 31,
	2014												2013
	Q1			Q2			Q3			Q4			Q1			Q2			Q3			Q4
Revenue	$	7,497		$	8,565		$	9,100		$	13,425		$	2,744		$	3,936		$	4,279		$	6,972
Cost of sales (1)		2,360			2,320			2,576			2,967			1,949			2,202			1,438			2,561
Gross profit		5,137			6,245			6,524			10,458			795			1,734			2,841			4,411
Gross margin (1)		69	%		73	%		72	%		78	%		29	%		44	%		66	%		63	%
Operating expenses:
Sales, general and administrative		6,658			8,291			9,667			11,495			3,350			4,087			4,700			6,092
Research and development		2,577			2,377			2,758			2,619			2,256			2,421			2,077			2,764
Total operating expenses		9,235			10,668			12,425			14,114			5,606			6,508			6,777			8,856
Loss from operations		(4,098	)		(4,423	)		(5,901	)		(3,656	)		(4,811	)		(4,774	)		(3,936	)		(4,445	)
Interest and other (expense) income, net (2)		(311	)		41			16			(30	)		58			(111	)		(163	)		(187	)
Net loss	$	(4,409	)	$	(4,382	)	$	(5,885	)	$	(3,686	)	$	(4,753	)	$	(4,885	)	$	(4,099	)	$	(4,632	)
Basic and diluted net loss per share	$	(2.49	)	$	(2.36	)	$	(0.32	)	$	(0.16	)	$	(4.57	)	$	(3.69	)	$	(2.39	)	$	(2.64	)
Shares used to compute basic and diluted net loss per share		1,773			1,860			18,217			23,375			1,039			1,323			1,718			1,755

(1) The first quarter of 2013 included $0.7 million for establishing and qualifying our new manufacturing facility. The second quarter of 2013 included a charge of $0.5 million related to a packaging issue and $0.1 million for establishing and qualifying our new manufacturing facility.

(2) The second and third quarter of 2013 each included $0.1 million in fair value expense adjustments for the preferred stock financing option. The fourth quarter of 2013 and first quarter of 2014 included $0.1 million and $0.3 million, respectively, in fair value expense adjustments for the preferred stock warrants classified as liabilities.

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SCHEDULE II — VALUATION AND QUALIFYING ACCOUNTS

EXHIBIT INDEX

		Incorporation By Reference
Exhibit	Description	Form	SEC File No.	Exhibit	Filing Date
3.1	Amended and Restated Certificate of Incorporation.	8-K	001-36545	3.1	7/30/2014
3.3	Amended and Restated Bylaws.	S-1	333-196974	3.4	7/9/2014
4.1	Form of Common Stock Certificate of the Registrant.	S-1	333-196974	4.1	7/14/2014
10.1	Form of Indemnity Agreement between the Registrant and its directors and officers.	S-1	333-196974	10.1	7/9/2014
10.2	2003 Equity Incentive Plan, as amended, and Form of Stock Option Grant Notice, Option Agreement and Form of Notice of Exercise.	S-1	333-196974	10.2	7/9/2014
10.3	2013 Equity Incentive Plan and Form of Stock Option Grant Notice, Option Agreement and Form of Notice of Exercise.	S-1	333-196974	10.3	7/9/2014
10.4	2014 Equity Incentive Plan and Form of Stock Option Grant Notice, Option Agreement and Form of Notice of Exercise.	S-1	333-196974	10.4	7/14/2014
10.5	2014 Employee Stock Purchase Plan.	S-1	333-196974	10.5	7/14/2014
10.6	Third Amended and Restated Investor Rights Agreement, dated as of February 15, 2013, by and among the registrant and certain of its stockholders.	S-1	333-196974	10.6	6/23/2014
10.7	Lease by and between the registrant and Menlo Business Park, LLC, dated as of March 2, 2012.	S-1	333-196974	10.6	6/23/2014
10.8	First Amendment to Lease by and between the registrant and Menlo Prepi I, LLC, dated as of December 17, 2014	8-K	001-36545	10.1	12/18/2014
10.9	Offer Letter by and between the registrant and Lisa Earnhardt, dated as of January 28, 2008, as amended.	S-1	333-196974	10.8	6/23/2014
10.10	Offer Letter by and between the registrant and Robert Binney, dated as of June 23, 2011, as amended.	S-1	333-196974	10.9	6/23/2014
10.11	Offer Letter by and between the registrant and Jeryl L. Hilleman, dated as of May 15, 2014.	S-1	333-196974	10.10	6/23/2014
10.12	Offer Letter by and between the registrant and Richard Kaufman, dated as of December 6, 2006, as amended.	S-1	333-196974	10.11	6/23/2014
10.13	Offer Letter by and between the registrant and James Stambaugh, dated as of September 15, 2006, as amended.	S-1	333-196974	10.12	6/23/2014
10.14	Offer Letter by and between the registrant and Susan Stimson, dated as of January 30, 2007, as amended.	S-1	333-196974	10.13	6/23/2014
10.15	Offer Letter by and between the registrant and Amy Conuel Wolbeck, dated as of November 24, 2008, as amended.	S-1	333-196974	10.14	6/23/2014
10.16	Loan and Security Agreement by and between the registrant and Silicon Valley Bank, dated as of August 30, 2013.	S-1	333-196974	10.15	6/23/2014

		Incorporation By Reference
Exhibit	Description	Form	SEC File No.	Exhibit	Filing Date
10.17#	Supply Agreement by and between the registrant and HOVIONE Inter Ltd, dated as of April 14, 2014.	S-1	333-196974	10.16	6/23/2014
10.18#	Supply Agreement by and between the registrant and AIM Plastics Inc., dated as of Supply January 28, 2014.	S-1	333-196974	10.17	6/23/2014
10.19#	Supply Agreement by and between the registrant and Stephen Gould Corporation, dated as of November 14, 2013.	S-1	333-196974	10.18	6/23/2014
10.20#	Analytical Testing Partnership Program 2014-2015 by and between the registrant and Exova, dated as of December 6, 2013.	S-1	333-196974	10.19	6/23/2014
10.21#	Master Services Agreement by and between the registrant and Polymer Solutions Corporation, dated as of April 9, 2014.	S-1	333-196974	10.20	6/23/2014
23.1	Consent of Independent Registered Public Accounting Firm.
24.1	Power of Attorney (see signature page hereto).
31.1	Certification of Principal Executive Officer pursuant to Rule 13a-14(a) and 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of Principal Financial Officer pursuant to Rule 13a-14(a) and 15d-14(a) of the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1*	Certification of Principal Executive Officer and Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS	XBRL Instance Document.
101.SCH	XBRL Taxonomy Extension Schema Document.
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB	XBRL Taxonomy Extension Label Linkbase Document.
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document.

# Confidential Treatment Granted.

* Exhibit 32.1 is being furnished and shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liability of that section, nor shall such exhibit be deemed to be incorporated by reference in any registration statement or other document filed under the Securities Act of 1933, as amended, or the Exchange Act, except as otherwise specifically stated in such filing.

EX-23.1

Exhibit 23.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the incorporation by reference in the registration statement on Form S-8 (No. 333-197885) pertaining to the 2014 Equity Incentive Plan and 2014 Employee Stock Purchase Plan of Intersect ENT, Inc. of our report dated March 11, 2015, with respect to the financial statements of Intersect ENT, Inc. included in this Annual Report (Form 10-K) for the year ended December 31, 2014.

/s/ Ernst & Young

San Jose, California

March 11, 2015

EX-31.1

Exhibit 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

PURSUANT TO SECTION 302 OF

THE SARBANES-OXLEY ACT OF 2002

I, Lisa D. Earnhardt, certify that:

1. I have reviewed this Form 10-K of Intersect ENT, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a–15(e) and 15d–15(e)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(c) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

March 11, 2015

/s/    Lisa D. Earnhardt        

Lisa D. Earnhardt

President and Chief Executive Officer

(Principal Executive Officer)

EX-31.2

Exhibit 31.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER

PURSUANT TO SECTION 302 OF

THE SARBANES-OXLEY ACT OF 2002

I, Jeryl L. Hilleman, certify that:

1. I have reviewed this Form 10-K of Intersect ENT, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a–15(e) and 15d–15(e)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(c) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

March 11, 2015

/s/    Jeryl L. Hilleman        

Jeryl L. Hilleman

Chief Financial Officer

(Principal Accounting and Financial Officer)

EX-32.1

Exhibit 32.1

CERTIFICATION OF PRINCIPAL EXECUTIVE OFFICER

AND PRINCIPAL FINANCIAL OFFICER

PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO SECTION 906

OF THE SARBANES-OXLEY ACT OF 2002

Pursuant to the requirement set forth in Rule 13a-14(b) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and Section 1350 of Chapter 63 of Title 18 of the United States Code (18 U.S.C. §1350), Lisa D. Earnhardt, President and Chief Executive Officer of Intersect ENT, Inc. (the “Company”) and Jeryl L. Hilleman, Chief Financial Officer of the Company, each hereby certify that, to the best of her knowledge:

1. The Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2014, to which this Certification is attached as Exhibit 32.1 (the “Report”), fully complies with the requirements of Section 13(a) or Section 15(d) of the Exchange Act, and

2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

In Witness Whereof, the undersigned have set their hands hereto as of the 11 day of March, 2015.

/s/    Lisa D. Earnhardt         

Lisa D. Earnhardt

President and Chief Executive Officer

(Principal Executive Officer)

/s/    Jeryl L. Hilleman        

Jeryl L. Hilleman

Chief Financial Officer

(Principal Accounting and Financial Officer)

A signed original of this written statement required by Rule 13a-14(b) of the Securities Exchange Act of 1934 and 18 U.S.C. Section 1350 has been provided to the Registrant and will be retained by the Registrant and furnished to the Securities and Exchange Commission or its staff upon request.

This certification accompanies the Form 10-K to which it relates, is not deemed filed with the Securities and Exchange Commission and is not to be incorporated by reference into any filing of the Registrant under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended (whether made before or after the date of the Form 10-K), irrespective of any general incorporation language contained in such filing.

XML

Summary of Significant Accounting Policies - Summary of Weighted Average Assumptions Used to Estimate Options Using Black-Scholes Model (Detail) (Convertible Preferred Stock Warrants [Member])	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Convertible Preferred Stock Warrants [Member]
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Expected life (years)	2 years	2 years	3 years
Expected volatility	46.00%	45.00%	58.00%
Risk-free interest rate	0.50%	0.40%	0.40%
Dividend yield	0.00%	0.00%	0.00%

XML

Loan And Security Agreement - Additional Information 2 (Detail) (USD $)	12 Months Ended	1 Months Ended
	Dec. 31, 2014	Aug. 31, 2013	Dec. 31, 2013
Class of Warrant or Right [Line Items]
Warrants exercisable for common stock shares	53,357		57,433
Warrants granted for common stock shares	66,000
Warrant exercisable, percentage of advanced amounts	1.25%
Loan Agreement Warrants [Member]
Class of Warrant or Right [Line Items]
Warrants exercisable for common stock shares	5,803	5,803
Warrants granted for common stock shares		20,313
Percentage of total growth capital facility		0.50%
Aggregate exercise price of warrants		$ 40,000
Warrant exercise price per share	6.89	$ 6.89
Initial fair value		$ 10,000
Class of warrant or right exercise price of warrants or rights description	Aggregate exercise price of 0.5% of the total growth capital facility commitment, or $40,000.
Class of warrant or right contingent consideration arrangements description	Following any draw-downs under the growth capital facility, the warrant would have become exercisable for additional shares of Series D convertible preferred stock equal to 1.25% of the advanced amounts under tranche one and two divided by $6.89.

XML

Composition of Certain Financial Statement Items - Property and Equipment (Detail) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2014	Dec. 31, 2013
Property, Plant and Equipment [Line Items]
Plant and equipment, gross	$ 3,108	$ 3,036
Less: accumulated depreciation and amortization	(1,634)	(1,329)
Plant and equipment, net	1,474	1,707
Computer Equipment [Member]
Property, Plant and Equipment [Line Items]
Plant and equipment, gross	546	398
Furniture and Fixtures [Member]
Property, Plant and Equipment [Line Items]
Plant and equipment, gross	158	252
Equipment [Member]
Property, Plant and Equipment [Line Items]
Plant and equipment, gross	2,276	2,262
Leasehold Improvements [Member]
Property, Plant and Equipment [Line Items]
Plant and equipment, gross	$ 128	$ 124

XML

Employee Retirement Plan - Additional Information (Detail) (USD $)	1 Months Ended	12 Months Ended
	Jan. 31, 2007	Dec. 31, 2014
Compensation and Retirement Disclosure [Abstract]
Maximum annual contribution per employee, percent	100.00%
Matching contribution percentage	3.00%
Contributions, annual vesting percentage	25.00%
Profit sharing or matching contribution by employer		$ 0
Contributions, vesting period	4 years
Matching contribution description		Company may also make a matching contribution of up to 3% of an employee's eligible compensation on a quarterly basis.

XML

Equipment Loans - Additional Information (Detail) (USD $)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012	Aug. 31, 2014	Apr. 30, 2013	Sep. 30, 2012	Nov. 30, 2014
Capital Leased Assets [Line Items]
Aggregate principal amount under loan facility						$ 2,000,000
Interest rate	5.10%
Interest expense	36,000	100,000	4,000
Amount outstanding		1,400,000		900,000
Frequency of monthly payments	36-month
Capital lease obligation					100,000
Capital Lease Obligations [Member]
Capital Leased Assets [Line Items]
Interest rate	14.88%
Amount outstanding							$ 59,000
Frequency of monthly payments	38-month

XML

Summary of Significant Accounting Policies - Schedule of Potentially Dilutive Securities Outstanding Excluded from the Computations of Diluted Weighted Average Shares Outstanding (Parenthetical) (Detail) (Common Stock [Member])	1 Months Ended	12 Months Ended
	Jul. 31, 2014	Dec. 31, 2014
Common Stock [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Convertible preferred stock was converted to common stock	One-for-one
Convertible preferred stock was converted into common stock	15,703,875	15,704,000

XML

Supplemental Quarterly Financial Information (Tables)

12 Months Ended

Dec. 31, 2014

Quarterly Financial Information Disclosure [Abstract]

Quarterly Financial Information of Statements of Operations

The following table sets forth unaudited statements of operations data for each of the Company’s last eight quarters. This quarterly information is unaudited and has been prepared on the same basis as the annual financial statements. In the Company’s opinion, this quarterly information reflects all adjustments necessary for a fair presentation of the periods presented. The operating results for any quarter are not necessarily indicative of results for any future period.

	Fiscal Years Ended December 31,
	2014												2013
	Q1			Q2			Q3			Q4			Q1			Q2			Q3			Q4
Revenue	$	7,497		$	8,565		$	9,100		$	13,425		$	2,744		$	3,936		$	4,279		$	6,972
Cost of sales (1)		2,360			2,320			2,576			2,967			1,949			2,202			1,438			2,561
Gross profit		5,137			6,245			6,524			10,458			795			1,734			2,841			4,411
Gross margin (1)		69	%		73	%		72	%		78	%		29	%		44	%		66	%		63	%
Operating expenses:
Sales, general and administrative		6,658			8,291			9,667			11,495			3,350			4,087			4,700			6,092
Research and development		2,577			2,377			2,758			2,619			2,256			2,421			2,077			2,764
Total operating expenses		9,235			10,668			12,425			14,114			5,606			6,508			6,777			8,856
Loss from operations		(4,098	)		(4,423	)		(5,901	)		(3,656	)		(4,811	)		(4,774	)		(3,936	)		(4,445	)
Interest and other (expense) income, net (2)		(311	)		41			16			(30	)		58			(111	)		(163	)		(187	)
Net loss	$	(4,409	)	$	(4,382	)	$	(5,885	)	$	(3,686	)	$	(4,753	)	$	(4,885	)	$	(4,099	)	$	(4,632	)
Basic and diluted net loss per share	$	(2.49	)	$	(2.36	)	$	(0.32	)	$	(0.16	)	$	(4.57	)	$	(3.69	)	$	(2.39	)	$	(2.64	)
Shares used to compute basic and diluted net loss per share		1,773			1,860			18,217			23,375			1,039			1,323			1,718			1,755

(1) The first quarter of 2013 included $0.7 million for establishing and qualifying our new manufacturing facility. The second quarter of 2013 included a charge of $0.5 million related to a packaging issue and $0.1 million for establishing and qualifying our new manufacturing facility.

(2) The second and third quarter of 2013 each included $0.1 million in fair value expense adjustments for the preferred stock financing option. The fourth quarter of 2013 and first quarter of 2014 included $0.1 million and $0.3 million, respectively, in fair value expense adjustments for the preferred stock warrants classified as liabilities.

XML

Income Taxes - Additional Information (Detail) (USD $)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012	Dec. 31, 2011
Income Tax Contingency [Line Items]
Increase in valuation allowance	$ 7,300,000	$ 7,300,000
Net operating loss carryforwards, federal	85,500,000
Net operating loss carryforwards, state	89,400,000
Research and development tax credits	2,888,000	2,394,000
Unrecognized tax benefit	861,000	715,000	505,000	442,000
Interest or penalties accrued on unrecognized tax benefits	0
Significant change to unrecognized tax benefits	The Company does not expect a significant change to its unrecognized tax benefits over the next twelve months. The unrecognized tax benefits may increase or change during the next twelve months for items that arise in the ordinary course of business.
Tax years beginning, description	Tax years beginning in 2003 through 2014, remain open to examination by the major taxing authorities to which the Company is subject to.
Earliest Tax Year [Member]
Income Tax Contingency [Line Items]
Tax examination year	2003
Latest Tax Year [Member]
Income Tax Contingency [Line Items]
Tax examination year	2014
Federal [Member]
Income Tax Contingency [Line Items]
Research and development tax credits	2,300,000
Operating loss carryforwards, expiration year	2026
Research and development tax credits, expiration year	2026
State [Member]
Income Tax Contingency [Line Items]
Research and development tax credits	$ 2,100,000
Operating loss carryforwards, expiration year	2016

XML

Convertible Preferred Stock Warrant Liability - Schedule of Warrants to Purchase Shares of Convertible Preferred Stock Outstanding and Exercisable (Parenthetical) (Detail) (USD $) In Thousands, unless otherwise specified	1 Months Ended	12 Months Ended
	Jul. 31, 2014	Dec. 31, 2014
Equity [Abstract]
Reclassification of redeemable convertible preferred stock warrant liability to additional paid-in capital	$ 406	$ 406

XML

Supplemental Quarterly Financial Information - Quarterly Financial Information of Statements of Operations (Detail) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended								12 Months Ended
	Dec. 31, 2014	Sep. 30, 2014	Jun. 30, 2014	Mar. 31, 2014	Dec. 31, 2013	Sep. 30, 2013	Jun. 30, 2013	Mar. 31, 2013	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Quarterly Financial Information Disclosure [Abstract]
Revenue	$ 13,425	$ 9,100	$ 8,565	$ 7,497	$ 6,972	$ 4,279	$ 3,936	$ 2,744	$ 38,587	$ 17,931	$ 5,863
Cost of sales	2,967	2,576	2,320	2,360	2,561	1,438	2,202	1,949	10,223	8,150	3,837
Gross profit	10,458	6,524	6,245	5,137	4,411	2,841	1,734	795	28,364	9,781	2,026
Gross margin	78.00%	72.00%	73.00%	69.00%	63.00%	66.00%	44.00%	29.00%
Operating expenses:
Sales, general and administrative	11,495	9,667	8,291	6,658	6,092	4,700	4,087	3,350	36,111	18,229	9,251
Research and development	2,619	2,758	2,377	2,577	2,764	2,077	2,421	2,256	10,331	9,518	9,260
Total operating expenses	14,114	12,425	10,668	9,235	8,856	6,777	6,508	5,606	46,442	27,747	18,511
Loss from operations	(3,656)	(5,901)	(4,423)	(4,098)	(4,445)	(3,936)	(4,774)	(4,811)	(18,078)	(17,966)	(16,485)
Interest and other (expense) income, net	(30)	16	41	(311)	(187)	(163)	(111)	58
Net loss	$ (3,686)	$ (5,885)	$ (4,382)	$ (4,409)	$ (4,632)	$ (4,099)	$ (4,885)	$ (4,753)	$ (18,362)	$ (18,369)	$ (16,365)
Basic and diluted net loss per share	$ (0.16)	$ (0.32)	$ (2.36)	$ (2.49)	$ (2.64)	$ (2.39)	$ (3.69)	$ (4.57)	$ (1.61)	$ (12.57)	$ (16.38)
Shares used to compute basic and diluted net loss per share	23,375	18,217	1,860	1,773	1,755	1,718	1,323	1,039	11,384	1,461	999

XML

Supplemental Quarterly Financial Information - Quarterly Financial Information of Statements of Operations (Parenthetical) (Detail) (USD $)	3 Months Ended								12 Months Ended
	Dec. 31, 2014	Sep. 30, 2014	Jun. 30, 2014	Mar. 31, 2014	Dec. 31, 2013	Sep. 30, 2013	Jun. 30, 2013	Mar. 31, 2013	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Effect of Fourth Quarter Events [Line Items]
Cost of sales	$ 2,967,000	$ 2,576,000	$ 2,320,000	$ 2,360,000	$ 2,561,000	$ 1,438,000	$ 2,202,000	$ 1,949,000	$ 10,223,000	$ 8,150,000	$ 3,837,000
Packaging issue							500,000
Fair value expense adjustments for preferred stock financing option										212,000
Fair value expense adjustments for the preferred stock warrants									198,000	134,000	(128,000)
Convertible Preferred Stock [Member]
Effect of Fourth Quarter Events [Line Items]
Fair value expense adjustments for preferred stock financing option							100,000	100,000
Fair value expense adjustments for the preferred stock warrants				300,000	100,000
Establishing and Qualifying New Manufacturing Facility [Member]
Effect of Fourth Quarter Events [Line Items]
Cost of sales							$ 100,000	$ 700,000

XML

Income Taxes - Schedule of Federal Statutory Rate to Income Taxes before Taxes Reconciles to Provision for Income Taxes (Detail) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Income Tax Disclosure [Abstract]
Tax at federal statutory rate	$ (6,243)	$ (6,245)	$ (5,564)
State, net of federal benefit	(1,264)	(826)	(1,131)
Permanent items	515	368	59
R&D tax credit	(315)	(584)
Other	12	(2)	(3)
Change in valuation allowance	7,295	7,289	6,639
Provision for income taxes	$ 0	$ 0	$ 0

XML

Composition of Certain Financial Statement Items (Tables)

12 Months Ended

Dec. 31, 2014

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Components of Inventory

Inventory (in thousands):

	December 31,
	2014		2013
Raw materials	$	761	$	472
Work-in-process		141		241
Finished goods		1,645		1,484
	$	2,547	$	2,197

Property and Equipment

Property and Equipment (in thousands):

	December 31,
	2014			2013
Computer equipment and software	$	546		$	398
Furniture and office equipment		158			252
Laboratory equipment		2,276			2,262
Leasehold improvements		128			124
		3,108			3,036
Less: accumulated depreciation and amortization		(1,634	)		(1,329	)
	$	1,474		$	1,707

Other Current Liabilities

Other Current Liabilities (in thousands):

	December 31,
	2014		2013
Manufacturing expenses	$	328	$	213
Deferred gross margin		137		54
Other		433		478
	$	898	$	745

XML

Composition of Certain Financial Statement Items - Other Current Liabilities (Detail) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2014	Dec. 31, 2013
Other Liabilities Disclosure [Abstract]
Manufacturing expenses	$ 328	$ 213
Deferred gross margin	137	54
Other	433	478
Other current liabilities	$ 898	$ 745

XML

Summary of Significant Accounting Policies - Additional Information 1 (Detail) (USD $)	12 Months Ended
	Dec. 31, 2014 Segments	Dec. 31, 2013	Dec. 31, 2012
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Allowance for doubtful accounts	$ 0	$ 0
Advertising expenses	100,000	46,000	23,000
Loss allocated to participating securities	0
Contractual obligation	$ 0
Number of operating segment	1
Revenue [Member] | Customer Concentration Risk [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Number of customer accounted for more than 10%	0	0	0
Concentration risk, percentage	10.00%	10.00%	10.00%
Accounts Receivable [Member] | Customer Concentration Risk [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Number of customer accounted for more than 10%	0	0
Concentration risk, percentage	10.00%	10.00%
Leasehold Improvements [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Estimated useful lives of lease	Straight-line basis over the shorter of their estimated useful lives or the term of the lease
Minimum [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Estimated useful life of property and equipment	3 years
Maximum [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Estimated useful life of property and equipment	5 years

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Related Parties - Additional Information (Detail) (USD $)	12 Months Ended			1 Months Ended						12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012	Mar. 31, 2009 Patents	Apr. 30, 2013	Jan. 31, 2014	Jan. 31, 2013	Jan. 31, 2012	Jan. 31, 2007	Dec. 31, 2011
Related Party Transaction [Line Items]
Options modified to permit exercise with promissory notes	$ 244,000	$ 365,000	$ 89,000
Forgiveness of notes receivable from related party	100,000	100,000	116,000
Shares Outstanding	53,357	57,433
Value of warrant at the date of grant		237,000
Affiliated Entity [Member]
Related Party Transaction [Line Items]
Milestone payments upon execution of agreement				40,000
Additional milestone payments				35,000
Number of irrigation tool patents purchased				3
Value of warrant at the date of grant				30,000
Additional cash payments due upon achievement of net sales	80,000
Cash payment			35,000
Affiliated Entity [Member] | Minimum [Member]
Related Party Transaction [Line Items]
Threshold of net sales of products incorporating technology, that triggers a cash payment	1,000,000
Affiliated Entity [Member] | Warrant [Member]
Related Party Transaction [Line Items]
Shares Outstanding				43,750
Warrant to purchase common stock per share value				$ 1.00
Warrant vested upon grant, Expiration date	Apr. 07, 2019
Promissory Notes [Member] | President And Chief Executive Officer [Member]
Related Party Transaction [Line Items]
Options modified to permit exercise with promissory notes					500,000
Terms of related party transaction description	Under the terms of the notes, one quarter of the principal and interest was to be forgiven on each anniversary date of the note as long as Ms. Earnhardt remained the Company’s Chief Executive Officer. In addition, the entire principal and interest of the notes was to be forgiven on the earlier of an initial public offering or the closing of a liquidation event (as defined in the certificate of incorporation) where total proceeds payable to the Company or its stockholders is greater than $200.0 million. The Company had the option to accelerate the maturity date if, at the Company’s reasonable discretion, such acceleration may be necessary due to any applicable law, rule or regulation, including, without limitation, the Sarbanes-Oxley Act of 2002. The entire principal amount and all accrued and unpaid interest of the loan was forgiven in full in June 2014. The full recourse promissory notes were secured by a pledge of the exercised shares.
Promissory Notes [Member] | President And Chief Executive Officer [Member] | Maximum [Member]
Related Party Transaction [Line Items]
Options modified to permit exercise with promissory notes					500,000
Promissory Notes [Member] | President And Chief Executive Officer [Member] | Minimum [Member]
Related Party Transaction [Line Items]
Liquidation event threshold representing total proceeds payable to the Company	200,000,000
Promissory Notes [Member] | Chief Operating Officer [Member]
Related Party Transaction [Line Items]
Note issued to related party									300,000
Terms of related party transaction description									Pursuant to the terms of the promissory note, provided Mr. Kaufman remained a continuous, full-time employee of the Company, repayment of the notes was to begin after the third year of employment when 50% of his annual bonus would have been applied to the loan balance until the loan was paid in full. The note matures and becomes immediately due and payable within 30 days following the date on which Mr. Kaufman ceases, voluntarily or involuntarily, to be employed by the Company.
Payment of note received										0
Forgiveness of notes receivable from related party						$ 100,000	$ 100,000	$ 100,000
Debt forgiveness term	3 years

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Summary of Significant Accounting Policies - Summary of Cash, Cash Equivalents and Short-Term Investments, Available-for-Sale, by Type of Instrument (Detail) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2014	Dec. 31, 2013
Net Investment [Line Items]
Short-term investments	$ 48,443	$ 12,294
Cash and Cash Equivalents [Member]
Net Investment [Line Items]
Short-term investments	13,403	12,294
Short-term investments, available-for-sale [Member]
Net Investment [Line Items]
Short-term investments	35,040
Cash [Member]
Net Investment [Line Items]
Short-term investments	1,971	1,076
Money Market Funds [Member]
Net Investment [Line Items]
Short-term investments	11,432	11,218
Corporate Debt Securities [Member]
Net Investment [Line Items]
Short-term investments	28,790
Commercial Paper [Member]
Net Investment [Line Items]
Short-term investments	6,250
Fair Value on Recurring Basis [Member]
Net Investment [Line Items]
Short-term investments	48,443	12,294
Fair Value on Recurring Basis [Member] | Cash and Cash Equivalents [Member]
Net Investment [Line Items]
Short-term investments	13,403	12,294
Fair Value on Recurring Basis [Member] | Short-term investments, available-for-sale [Member]
Net Investment [Line Items]
Short-term investments	35,040
Fair Value on Recurring Basis [Member] | Cash [Member]
Net Investment [Line Items]
Short-term investments	1,971	1,076
Fair Value on Recurring Basis [Member] | Money Market Funds [Member]
Net Investment [Line Items]
Short-term investments	11,432	11,218
Fair Value on Recurring Basis [Member] | Corporate Debt Securities [Member]
Net Investment [Line Items]
Short-term investments	28,790
Fair Value on Recurring Basis [Member] | Commercial Paper [Member]
Net Investment [Line Items]
Short-term investments	6,250
Level 1 [Member] | Fair Value on Recurring Basis [Member]
Net Investment [Line Items]
Short-term investments	13,403	12,294
Level 1 [Member] | Fair Value on Recurring Basis [Member] | Cash [Member]
Net Investment [Line Items]
Short-term investments	1,971	1,076
Level 1 [Member] | Fair Value on Recurring Basis [Member] | Money Market Funds [Member]
Net Investment [Line Items]
Short-term investments	11,432	11,218
Level 2 [Member] | Fair Value on Recurring Basis [Member]
Net Investment [Line Items]
Short-term investments	35,040
Level 2 [Member] | Fair Value on Recurring Basis [Member] | Corporate Debt Securities [Member]
Net Investment [Line Items]
Short-term investments	28,790
Level 2 [Member] | Fair Value on Recurring Basis [Member] | Commercial Paper [Member]
Net Investment [Line Items]
Short-term investments	$ 6,250

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Cash, Cash Equivalents and Short-term Investments - Additional Information (Detail) (USD $)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Investments Schedule [Abstract]
Investments with a maturity of greater than one year	$ 0	$ 0
Other-than-temporary impairment charges	$ 0	$ 0	$ 0

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Stock-Based Compensation Expense - Summary of Weighted Average Assumptions Used to Estimate Options Using Black-Scholes Model (Detail) (USD $)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Expected life (years)	6 years	6 years	6 years
Expected volatility	56.00%	67.00%	66.00%
Risk-free interest rate	1.90%	1.60%	0.90%
Dividend yield	0.00%	0.00%	0.00%
Weighted average fair value	$ 6.80	$ 0.96	$ 0.68

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Convertible Preferred Stock - Summary of Convertible Preferred Stock Terms (Detail) (USD $)	12 Months Ended
	Dec. 31, 2014
Series A convertible preferred stock [Member]
Temporary Equity [Line Items]
Liquidation Preference Per Share	$ 3.68
8% Dividend Per Share	$ 0.2944
Series B convertible preferred stock [Member]
Temporary Equity [Line Items]
Liquidation Preference Per Share	$ 6.16
8% Dividend Per Share	$ 0.4928
Series C convertible preferred stock [Member]
Temporary Equity [Line Items]
Liquidation Preference Per Share	$ 5.84
8% Dividend Per Share	$ 0.4672
Series D convertible preferred stock [Member]
Temporary Equity [Line Items]
Liquidation Preference Per Share	$ 6.89
8% Dividend Per Share	$ 0.5514

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Composition of Certain Financial Statement Items - Components of Inventory (Detail) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2014	Dec. 31, 2013
Inventory Disclosure [Abstract]
Raw materials	$ 761	$ 472
Work-in-process	141	241
Finished goods	1,645	1,484
Inventory, net	$ 2,547	$ 2,197

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Composition of Certain Financial Statement Items

12 Months Ended

Dec. 31, 2014

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Composition of Certain Financial Statement Items

3. Composition of Certain Financial Statement Items

Inventory (in thousands):

	December 31,
	2014		2013
Raw materials	$	761	$	472
Work-in-process		141		241
Finished goods		1,645		1,484
	$	2,547	$	2,197

Property and Equipment (in thousands):

	December 31,
	2014			2013
Computer equipment and software	$	546		$	398
Furniture and office equipment		158			252
Laboratory equipment		2,276			2,262
Leasehold improvements		128			124
		3,108			3,036
Less: accumulated depreciation and amortization		(1,634	)		(1,329	)
	$	1,474		$	1,707

Depreciation and capital lease amortization expenses was $0.6 million and $0.5 million during the years ended December 31, 2014 and 2013, respectively.

Other Current Liabilities (in thousands):

	December 31,
	2014		2013
Manufacturing expenses	$	328	$	213
Deferred gross margin		137		54
Other		433		478
	$	898	$	745

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Stockholder's Equity - Additional Information (Detail) (USD $)	12 Months Ended			0 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012	Jul. 23, 2014	Dec. 31, 2011
Class of Stock [Line Items]
Shares reserved for issuance	7,454,000
Options outstanding	2,458,000	1,928,000	1,594,000		1,425,000
Aggregate pre-tax intrinsic value of options outstanding and exercisable	$ 25,600,000
Aggregate pre-tax intrinsic value of options outstanding	33,700,000
Aggregate pre-tax intrinsic value of options exercised	1,500,000	300,000	37,000
Weighted-average remaining contractual term of options outstanding	8 years
Weighted-average remaining contractual term of options exercisable	7 years 6 months
Options exercised with unvested shares		69,037
Repurchase rights held at original issuance price	29,017	53,796
Related liability	$ 20,000	$ 31,000
2014 Employee Stock Purchase Plan [Member]
Class of Stock [Line Items]
Shares reserved for issuance	496,092			496,092
Percentage of shares outstanding				1.00%
2014 Equity Incentive Plan [Member]
Class of Stock [Line Items]
Shares reserved for issuance	4,434,000			4,750,000
Percentage of shares outstanding				3.00%
Maximum number of shares to be issued				10,000,000
Options granted description	Options granted to a 10% stockholder shall be at no less than 110% of the fair value and ISO stock option grants to such 10% stockholders expire five years from the date of grant.
Expiry period of options granted	5 years
2014 Equity Incentive Plan [Member] | Incentive Stock Option [Member]
Class of Stock [Line Items]
Price of options granted, percentage	100.00%
Expiry period of options granted	10 years
ISOs vested , description	ISOs granted under the 2014 Plan generally vest 25% after the completion of 12 months of service and the balance vests in equal monthly installments over the next 36 months of service and expire 10 years from the grant date, unless subject to provisions regarding 10% stockholders. NSOs vest per the specific agreement and expire 10 years from the date of grant.
2013 Equity Incentive Plan [Member]
Class of Stock [Line Items]
Options issued, vested	10,000	0
Options outstanding	600,000

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Summary of Significant Accounting Policies - Schedule of Net Loss Per Share (Detail) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended								12 Months Ended
	Dec. 31, 2014	Sep. 30, 2014	Jun. 30, 2014	Mar. 31, 2014	Dec. 31, 2013	Sep. 30, 2013	Jun. 30, 2013	Mar. 31, 2013	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Earnings Per Share [Abstract]
Net loss	$ (3,686)	$ (5,885)	$ (4,382)	$ (4,409)	$ (4,632)	$ (4,099)	$ (4,885)	$ (4,753)	$ (18,362)	$ (18,369)	$ (16,365)
Weighted average common shares used to compute net loss per share, basic and diluted	23,375	18,217	1,860	1,773	1,755	1,718	1,323	1,039	11,384	1,461	999
Net loss per share, basic and diluted	$ (0.16)	$ (0.32)	$ (2.36)	$ (2.49)	$ (2.64)	$ (2.39)	$ (3.69)	$ (4.57)	$ (1.61)	$ (12.57)	$ (16.38)

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Stockholder's Equity (Tables)

12 Months Ended

Dec. 31, 2014

Equity [Abstract]

Summary of Stock Option Activity

A summary of the Company’s stock option activity and related information is as follows (in thousands, except price data):

	Fiscal Years Ended December 31,
	2014					2013					2012
	Options			Price		Options			Price		Options			Price
Outstanding, beginning of period		1,928		$	1.08		1,594		$	0.88		1,425		$	0.80
Granted		819			12.88		1,033			1.20		296			1.16
Granted - below fair market value		—			—		94			1.32		—			—
Exercised		(163	)		1.42		(740	)		0.84		(115	)		0.76
Forfeited		(126	)		3.86		(53	)		1.08		(12	)		0.88
Outstanding, end of period		2,458			4.84		1,928			1.08		1,594			0.88
Vested and expected to vest		2,338			4.67		1,752			1.08		1,461			0.84
Exercisable		1,612			2.66		1,314			1.00		1,206			0.80

Schedule of Common Stock Reserved for Exercise and Issuance of Warrants, Options and Shares Available for Grant under Equity Incentive Stock Plans

The number of such shares of common stock reserved for the exercise and issuance of the following warrants, options and shares available for grant under the equity incentive stock plans as of December 31, 2014, are as follows (in thousands):

	December 31, 2014
Warrants outstanding		66
Options outstanding		2,458
Available for future grant:
2014 Equity incentive plan		4,434
2014 Employee stock purchase plan		496
		7,454

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Convertible Preferred Stock (Tables)

12 Months Ended

Dec. 31, 2014

Equity [Abstract]

Summary of Convertible Preferred Stock

A summary of the Company’s convertible preferred stock is as follows:

	December 31,
	2014						2013
Series	Shares Authorized		Shares Issued and Outstanding		Carrying Value (in thousands)		Shares Authorized		Shares Issued and Outstanding		Carrying Value (in thousands)
A		—		—	$	—		2,796,259		2,744,619	$	9,987
B		—		—		—		3,249,662		3,249,657		19,894
C		—		—		—		5,311,401		5,311,395		30,521
D		—		—		—		4,550,000		4,395,773		30,358
		—		—	$	—		15,907,322		15,701,444	$	90,760

Summary of Convertible Preferred Stock Terms

A summary of the Company’s convertible preferred stock terms is as follows:

Series	Liquidation Preference Per Share		8% Dividend Per Share
A	$	3.68	$	0.2944
B		6.16		0.4928
C		5.84		0.4672
D		6.89		0.5514

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Convertible Preferred Stock Warrant Liability - Schedule of Warrants to Purchase Shares of Convertible Preferred Stock Outstanding and Exercisable (Detail) (USD $) In Thousands, except Share data, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Mar. 31, 2007	Nov. 30, 2007	Aug. 31, 2013
Class of Warrant or Right [Line Items]
Shares Outstanding	53,357	57,433
Fair Value		$ 237
Equipment Loan Warrant [Member]
Class of Warrant or Right [Line Items]
Initial Value			$ 4
Dates, Issuance	2007-03
Dates, Expiration	2014-03
In Connection With	Equipment loan
Series	A
Exercise Price	$ 3.68	$ 3.68
Shares Outstanding		4,076
Fair Value		17
Venture Loan [Member]
Class of Warrant or Right [Line Items]
Initial Value				$ 63
Dates, Issuance	2007-11
Dates, Expiration	2017-11
In Connection With	Venture loan
Series	A
Exercise Price	$ 3.68	$ 3.68
Shares Outstanding	47,554	47,554
Fair Value		200
Loan Origination Commitments [Member]
Class of Warrant or Right [Line Items]
Initial Value					$ 10
Dates, Issuance	2013-08
Dates, Expiration	2023-08
In Connection With	Loan Agreement
Series	D
Exercise Price	$ 6.89	$ 6.89
Shares Outstanding	5,803	5,803
Fair Value		$ 20

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Summary of Significant Accounting Policies - Schedule of Net Loss Per Share (Parenthetical) (Detail) (Common Stock [Member])	1 Months Ended	12 Months Ended
	Jul. 31, 2014	Dec. 31, 2014
Common Stock [Member]
Earnings Per Share, Diluted, by Common Class, Including Two Class Method [Line Items]
Convertible preferred stock was converted to common stock	One-for-one
Convertible preferred stock was converted into common stock	15,703,875	15,704,000

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Stock-Based Compensation Expense (Tables)

12 Months Ended

Dec. 31, 2014

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Summary of Stock Based Compensation Recognized Before Taxes

Total stock-based compensation recognized, before taxes, during the years ended December 31, 2014, 2013 and 2012 are as follows (in thousands):

	Fiscal Years Ended December 31,
	2014		2013		2012
Cost of sales	$	49	$	21	$	10
Selling, general and administrative		1,361		273		103
Research and development		140		88		39
	$	1,550	$	382	$	152

Summary of Weighted Average Assumptions Used to Estimate Options Using Black-Scholes Model

The fair value of options granted to employees or directors during the years ended December 31, 2014, 2013 and 2012, was estimated as of the grant date using the Black-Scholes model assuming the weighted average assumptions listed in the following table:

	Fiscal Years Ended December 31,
	2014			2013			2012
Expected life (years)		6.0			6.0			6.0
Expected volatility		56	%		67	%		66	%
Risk-free interest rate		1.9	%		1.6	%		0.9	%
Dividend yield		0.0	%		0.0	%		0.0	%
Weighted average fair value	$	6.80		$	0.96		$	0.68

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Commitments and Contingencies (Tables)

12 Months Ended

Dec. 31, 2014

Commitments and Contingencies Disclosure [Abstract]

Summary of Future Minimum Annual Operating Lease Payments

Future minimum annual operating lease payments are as follows (in thousands):

Fiscal Years Ending December 31,
2015	$	645
2016		1,494
2017		1,536
2018		1,580
2019		1,625
Thereafter		685
		7,565

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Summary of Significant Accounting Policies

12 Months Ended

Dec. 31, 2014

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

2. Summary of Significant Accounting Policies

Basis of Preparation

The financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) and pursuant to the rules and regulations of the United States Securities and Exchange Commission (“SEC”).

Certain amounts in the financial statements have been reclassified to conform to the current year presentation.

1-for-4 Reverse Stock Split

On July 10, 2014, the Board of Directors and stockholders approved, and on July 11, 2014, the Company filed, an amended and restated certificate of incorporation effecting a 1-for-4 reverse stock split of common stock and all convertible preferred stock. The par value of the common and convertible preferred stock was not adjusted as a result of the reverse stock split. All issued and outstanding common stock, convertible preferred stock, warrants for preferred stock, stock options and per share amounts contained in the financial statements have been retroactively adjusted to reflect this reverse stock split for all periods presented.

Initial Public Offering

In July 2014, the Company completed its IPO by issuing 5,750,000 shares of common stock, including 750,000 shares pursuant to the full exercise by the underwriters of their option to purchase additional shares, at an offering price of $11.00 per share, for net proceeds of $55.8 million, after deducting underwriting discounts and commissions of $4.5 million and offering expenses of $3.0 million. In connection with the IPO, the Company’s outstanding shares of convertible preferred stock were automatically converted into 15,703,875 shares of common stock and warrants exercisable for convertible preferred stock were automatically converted into warrants exercisable for 53,357 shares of common stock, resulting in the reclassification of the related redeemable convertible preferred stock warrant liability of $0.4 million to additional paid-in capital.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts and disclosures reported in the financial statements. Management uses significant judgment when making estimates related to its common stock valuation and related stock-based compensation, the valuations of the convertible preferred stock warrant liability, convertible preferred stock financing option, as well as certain accrued liabilities. Management bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results could differ from those estimates.

Cash and Cash Equivalents

The Company considers all highly liquid securities, readily convertible to cash, that mature within 90 days or less from the date of purchase to be cash equivalents.

Short-term Investments, Available-for-Sale

Short-term investments, which are available-for-sale, represent highly liquid debt instruments with maturities greater than 90 days at date of purchase. Such investments are recorded at fair value and unrealized holding gains and losses are reported as a separate component of comprehensive income (loss) in stockholders’ equity until realized. The Company reviews its investment portfolio periodically to assess for other-than-temporary impairment. Should the Company determine that any unrealized losses on the investments are other-than-temporary, the amount of that impairment to be recognized in earnings will depend on whether the Company intends to sell the security or more likely than not will be required to sell the security before recovery of its amortized cost basis less any current period credit loss. The specific identification method is used to determine the cost of securities disposed of, with realized gains and losses reflected in interest and other income or expense, as appropriate, in the statement of operations.

Fair Value of Financial Instruments

The Company measures certain financial assets and liabilities at fair value on a recurring basis, including cash equivalents, short-term investments, the convertible preferred stock warrant liability and the convertible preferred stock financing option. Fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or a liability. A three-tier fair value hierarchy is established as a basis for considering such assumptions and for inputs used in the valuation methodologies in measuring fair value:

Level 1	—	Observable inputs such as quoted prices (unadjusted) for identical assets or liabilities in active markets.
Level 2	—	Include other inputs that are based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active and model-based valuation techniques for which all significant inputs are observable in the market or can be derived from observable market data. Where applicable, these models project future cash flows and discount the future amounts to a present value using market-based observable inputs including interest rate curves, foreign exchange rates, and credit ratings.
Level 3	—	Unobservable inputs that are supported by little or no market activities, which would require the Company to develop its own assumptions.

The fair value hierarchy also requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.

Cash, Cash Equivalents and Short-term Investments

The following is a summary of cash, cash equivalents and short-term investments, available-for-sale, by type of instrument measured at fair value on a recurring basis (in thousands):

	December 31,
	2014								2013
	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Cash	$	1,971	$	—	$	—	$	1,971	$	1,076	$	—	$	—	$	1,076
Money market funds		11,432		—		—		11,432		11,218		—		—		11,218
Corporate debt securities		—		28,790		—		28,790		—		—		—		—
Commercial paper		—		6,250		—		6,250		—		—		—		—
	$	13,403	$	35,040	$	—	$	48,443	$	12,294	$	—	$	—	$	12,294
Reported as:
Cash and cash equivalents							$	13,403							$	12,294
Short-term investments, available-for-sale								35,040								—
							$	48,443							$	12,294

There were no transfers in and out of Level 1 and Level 2 fair value measurements during the years ended December 31, 2014 and 2013.

Convertible Preferred Stock Warrant Liability

The following table sets forth a summary of the changes in the estimated fair value of the Company’s convertible preferred stock warrants, which represents financial instruments with valuations classified as Level 3. When a determination is made to classify a financial instrument within Level 3, the determination is based upon the significance of the unobservable inputs to the overall fair value measurement. However, Level 3 financial instruments typically include, in addition to the unobservable inputs, observable inputs (that is, components that are actively quoted and can be validated to external sources). Accordingly, the expense in the table below includes changes in fair value due in part to observable factors that are part of the Level 3 methodology (in thousands):

	Fiscal Years Ended December 31,
	2014			2013		2012
Beginning of the period	$	237		$	93	$	221
Issued		—			10		—
Exercised		(29	)		—		—
Reclassified to equity (1)		(406	)		—		—
Change in fair value		198			134		(128	)
End of the period	$	—		$	237	$	93

(1) In connection with the Company’s IPO in July 2014, warrants for convertible preferred stock were converted to warrants for common stock, resulting in the reclassification of the related redeemable convertible preferred stock warrant liability to additional paid-in capital.

The fair value of the convertible preferred stock warrants was determined using the option pricing method, the probability weighted expected return method or Black-Scholes option pricing model using the following assumptions:

	Fiscal Years Ended December 31,
	2014			2013			2012
Expected life (years)		2.0			2.0			3.0
Expected volatility		46	%		45	%		58	%
Risk-free interest rate		0.5	%		0.4	%		0.4	%
Dividend yield		0.0	%		0.0	%		0.0	%

Series D Convertible Preferred Stock Financing Option

The Series D convertible preferred stock contained a provision that obligated the investors to purchase additional shares (“convertible preferred stock financing option”) at the same price as the initial closing upon notification by the Company that it had achieved an annualized revenue rate of at least $16.0 million over a trailing three month period. This convertible preferred stock financing option to purchase Series D convertible preferred stock in the future tranche was considered to be a freestanding financial instrument for accounting purposes. Therefore, in February 2013, the Company recorded a financing liability of $0.9 million representing the fair value of this convertible preferred stock financing option at the time of issuance. In October 2013, shortly after achieving the annualized revenue rate, the Company issued the additional 1,369,008 shares of Series D convertible preferred stock to the investors for net proceeds of $9.4 million. Since the convertible preferred stock financing option expired in October 2013 as a result of the issuance of Series D convertible preferred stock, the carrying and fair value of the convertible preferred stock financing option of $1.1 million in October 2013 was reclassified from liability to Series D convertible preferred stock. The Company recorded total charges related to the change in fair value during the year ended December 31, 2013 of $0.2 million related to this financing option liability.

The following table sets forth a summary of the changes in the estimated fair value of the Company’s convertible preferred stock financing option, which represents financial instruments with valuations classified as Level 3 (in thousands):

	Fiscal Years Ended December 31,
	2014		2013			2012
Beginning of the period	$	—	$	—		$	—
Issued		—		885			—
Exercised		—		(1,097	)		—
Change in fair value		—		212			—
End of the period	$	—	$	—		$	—

The fair value of the convertible preferred stock financing liability was determined using the present value methodology with the following assumptions which are categorized as Level 3:

	February 2013			October 2013
Total consideration per share	$	1.72		$	1.72
Additional investment per share		1.72			1.72
Discount rate		20.0	%		20.0	%
Probability of achievement		95.0	%		95.0	%
Years until milestone achieved		0.5			0.7

Concentration of Credit Risk

Financial instruments, which potentially subject the Company to concentrations of credit risk, consist principally of cash equivalents, short-term investments and accounts receivable. The Company believes that the credit risk in its accounts receivable is mitigated by its credit evaluation process, relatively short collection terms and dispersion of its customer base. The Company generally does not require collateral and losses on accounts receivable have historically been within management’s expectations.

The Company’s investment policy limits investments to certain types of debt securities issued by the U.S. government, its agencies, and institutions with investment-grade credit ratings, as well as corporate debt or commercial paper issued by the highest quality financial and non-financial companies, and places restrictions on maturities and concentration by type and issuer. The Company is exposed to credit risk in the event of a default by the financial institutions holding its cash and cash equivalents and issuers of investments to the extent recorded on the balance sheets. However, as of December 31, 2014 and 2013, the Company has limited its credit risk associated with cash, cash equivalents and short-term investments by placing its investments with banks it believes are highly creditworthy and with highly rated investments.

Allowance for Doubtful Accounts

The Company will provide for uncollectible accounts receivable by recording an allowance for doubtful accounts for accounts receivable deemed uncollectible. The Company evaluates the collectability of its accounts receivable based on known collection risks and historical experience. In circumstances where the Company is aware of a specific customer’s inability to meet its financial obligations to the Company (e.g., bankruptcy filings, substantial downgrading of credit ratings), the Company records a specific allowance for bad debts against amounts due to reduce the carrying amount of accounts receivable to the amount it reasonably believes will be collected.

If circumstances change, such as higher-than-expected defaults or an unexpected material adverse change in a major customer’s ability to meet its financial obligations, the Company’s estimates of the recoverability of the amounts due could be reduced by a significant amount. Based on the high creditworthiness of the customers that the Company sells to, the Company has experienced no significant collection issues. Therefore, the Company does not have an allowance for doubtful accounts established as of December 31, 2014 and 2013.

Inventory

Inventory is valued at the lower of cost or market, computed on a first-in, first out basis, or net realizable value. The Company estimates the recoverability of its inventory by reference to internal estimates of future demands and product life cycles, including expiration of inventory prior to sale.

Property and Equipment

Property and equipment are stated at cost, less accumulated depreciation and amortization. Depreciation is determined using the straight-line method over the estimated useful lives of the respective assets, generally three to five years. Leasehold improvements are amortized on a straight-line basis over the shorter of their estimated useful lives or the term of the lease. Amortization of assets under capital leases is included in depreciation and amortization expense. Maintenance and repairs are charged to operations as incurred.

Impairment of Long-lived Assets

Long-lived assets consists primarily of property and equipment and are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If circumstances require that a long-lived asset be tested for possible impairment, the Company compares the undiscounted cash flows expected to be generated by the asset group to the carrying amount of the asset group. If the carrying amount of the long-lived asset is not recoverable on an undiscounted cash flow basis, an impairment is recognized to the extent that the carrying amount exceeds its fair value. The Company determines fair value using the income approach based on the present value of expected future cash flows or other appropriate measures of estimated fair value. The Company’s cash flow assumptions consider historical and forecasted revenue and operating costs and other relevant factors. Since inception, the Company has not recorded impairment charges on long-lived assets.

Convertible Preferred Stock Warrant Liability

For a warrant classified as a derivative liability, the fair value of that warrant was recorded on the balance sheet at the inception of such classification and adjusted to fair value at each financial reporting date. The changes in the fair value of the warrants were recorded in the statement of operations and comprehensive loss as a component of interest and other income or expense, as appropriate. The Company continued to adjust the carrying value of the convertible preferred stock warrant liability for changes in the fair value of the warrants until the earlier of: the exercise of the warrants, at which time the liability was reclassified to temporary equity; the conversion of the underlying convertible preferred stock into common stock, at which time the liability was reclassified to stockholders’ equity (deficit); or the expiration of the warrant, at which time the entire amount would have been reversed and reflected in the statement of operations and comprehensive loss. In connection with the Company’s IPO in July 2014, the warrants for convertible preferred stock were converted to warrants for common stock, resulting in the reclassification of the related redeemable convertible preferred stock warrant liability of $0.4 million to additional paid-in capital.

Convertible Preferred Stock Financing Option

For a freestanding option to purchase in a future round of financing, the fair value of that option was recorded on the balance sheet at the inception of such classification and adjusted to fair value at each financial reporting date. The change in the fair value of the convertible preferred stock financing option was recorded in the statement of operations and comprehensive loss as a component of interest and other income or expense, as appropriate. The Company adjusted the carrying value of the convertible preferred stock financing option liability for changes in the fair value of the option and continued to do so until the earlier of when the convertible preferred stock financing option was exercised or expired.

Revenue Recognition

Revenue is derived from the sale of PROPEL and PROPEL mini to hospitals and ambulatory surgery centers in the United States. The Company recognizes revenue when persuasive evidence of an arrangement exists, product delivery has occurred or there is no further obligation, pricing is fixed or determinable and collection is reasonably assured. The Company must make significant assumptions regarding the future collectability of amounts receivable from customers to determine whether revenue recognition criteria have been met. If collectability is not assured at the time of shipment, the Company defers revenue until such criteria have been met. In general, the Company’s standard terms and conditions of sale do not allow for product returns. The Company expenses shipping and handling costs as incurred and includes them in the cost of sales. In those cases where shipping and handling costs are billed to customers, the Company classifies the amounts billed as a component of revenue.

Cost of Sales

Cost of sales consists primarily of manufacturing overhead costs, material costs and direct labor. A significant portion of the Company’s cost of sales currently consists of manufacturing overhead costs. These overhead costs include the cost of quality assurance, material procurement, inventory control, facilities, equipment and operations supervision and management. Cost of sales also includes depreciation expense for production equipment and certain direct costs such as shipping costs.

Research and Development

Research and development expenses consist primarily of product development, clinical and regulatory affairs, consulting services and other costs associated with products and technologies in development. These expenses include employee compensation, stock-based compensation, supplies, quality assurance and related travel and facility costs. Clinical expenses include clinical trial design, clinical site reimbursement, data management and travel expenses, and the cost of manufacturing products for clinical trials.

Common Stock Valuation and Stock-based Compensation

The Company maintains a payment equity incentive plan to provide long-term incentives for employees, consultants and members of the board of directors. The plan allows for the issuance of non-statutory and incentive stock options to employees and non-statutory stock options to consultants and non-employee directors.

The Company is required to determine the fair value of equity incentive awards and recognize compensation expense for all equity incentive awards made to employees and directors, including employee stock options. Stock-based compensation expense is recognized over the requisite service period in the statements of operations and comprehensive loss and is based on awards ultimately expected to vest, therefore the amount of expense has been reduced for estimated forfeitures. The Company uses the straight-line method for expense attribution, except for awards issued with performance-based conditions which require an accelerated attribution method over the requisite performance and service periods.

Under the applicable accounting guidance for equity incentive awards issued to non-employees, the date at which the fair value of such awards is measured is equal to the earlier of: 1) the date at which a commitment for performance by the counterparty to earn the equity instrument is reached; or 2) the date at which the counterparty’s performance is complete. The Company recognizes stock-based compensation expense for the fair value of the vested portion of the non-employee awards in the statements of operations and comprehensive loss. The fair value of options granted to non-employees is remeasured as the options vest.

The valuation model used for calculating the fair value of awards for stock-based compensation expense is the Black-Scholes option-pricing model (the “Black-Scholes model”). The Black-Scholes model requires the Company to make assumptions and judgments about the variables used in the calculation, including the expected term (weighted average period of time that the options granted are expected to be outstanding), the volatility of common stock and an assumed risk-free interest rate. The Company uses the “simplified method” to determine the expected term of the stock option. Volatility is based on an average of the historical volatilities of the common stock of publicly-traded companies with characteristics similar to those of the Company. The risk-free rate is based on the U.S. Treasury yield curve in effect at the time of grant for periods corresponding with the expected term of the option. Since stock-based compensation expense is based on awards ultimately expected to vest, potential forfeitures are estimated based on the Company’s historical forfeiture experience and an analysis of similar companies. To the extent actual forfeitures differ from the estimates, the Company records the difference as a cumulative adjustment in the period that the estimates are revised.

Deferred Rent

Rent expense is recognized on a straight-line basis over the non-cancelable term of the Company’s operating lease and, accordingly, the Company records the difference between cash rent payments and the recognition of rent expense as a deferred rent liability. The Company also records lessor-funded lease incentives, such as leasehold improvements, as a deferred rent liability, which is amortized as a reduction of rent expense over the non-cancelable term of its operating lease.

Advertising Expenses

The Company expenses the costs of advertising, including promotional expenses, as incurred. Advertising expenses were $0.1 million, $46,000 and $23,000 during the years ended December 31, 2014, 2013 and 2012, respectively.

Income Taxes

The Company accounts for income taxes under the liability method. Under this method, deferred tax assets and liabilities are determined based on the differences between the financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates that will be in effect when the differences are expected to reverse. Valuation allowances against deferred tax assets are established when necessary to reduce deferred tax assets to the amounts expected to be realized. Currently, the Company has recorded a full valuation allowance against its deferred tax assets and there is no provision for income taxes, as the Company has incurred operating losses to date. The Company’s policy is to record interest and penalties expense related to uncertain tax positions as “other expense” in the statement of operations.

Net Loss per Share

Basic net loss per share is computed by dividing the net loss by the weighted average number of shares of common stock outstanding during the period. Diluted net loss per share is computed by dividing the net loss by the weighted average number of shares of common stock and dilutive potential shares of common stock outstanding during the period. Because the Company has reported a net loss for all periods presented, diluted net loss per share is the same as basic net loss per share for those periods as all potentially dilutive shares consisting of convertible preferred stock, stock options and warrants were antidilutive in those periods.

The Company allocates no loss to participating securities because they have no contractual obligation to share in the losses of the Company. The shares of the Company’s convertible preferred stock participate in any dividends declared by the Company and are therefore considered to be participating securities.

Net loss per share was determined as follows (in thousands, except per share amounts):

	Fiscal Years Ended December 31,
	2014			2013			2012
Net loss	$	(18,362	)	$	(18,369	)	$	(16,365	)
Weighted average common stock outstanding (1)		11,384			1,461			999
Net loss per share, basic and diluted	$	(1.61	)	$	(12.57	)	$	(16.38	)

(1) In connection with the Company’s IPO in July 2014, the convertible preferred stock outstanding was converted into 15,703,875 shares of common stock on a one-for-one basis.

The following potentially dilutive securities outstanding have been excluded from the computations of diluted weighted average shares outstanding because such securities have an antidilutive impact due to losses reported, in common stock equivalent shares (in thousands):

	December 31,
	2014		2013		2012
Convertible preferred stock outstanding (1)		—		15,701		11,283
Convertible preferred stock warrants (1)		—		57		74
Common stock warrants		66		—		—
Common stock options		2,458		1,928		1,594
		2,524		17,686		12,951

(1) In connection with the Company’s IPO in July 2014, the convertible preferred stock outstanding was converted into 15,703,875 shares of common stock and the convertible preferred stock warrants were converted into common stock warrants, both on a one-for-one basis.

Comprehensive Loss

Comprehensive loss consists of net loss and changes in unrealized gains and losses on short-term investments, available-for-sale. Accumulated other comprehensive income (loss) is presented in the accompanying balance sheets, when applicable.

Segment, Geographical and Customer Concentration

The Company operates in one segment. All of the Company’s assets and revenue are based in the U.S. No single customer accounted for more than 10% of its revenue during the years ended December 31, 2014, 2013 and 2012, and no single customer accounted for more than 10% of its accounts receivable at December 31, 2014 and 2013.

Recent Accounting Pronouncements

In August 2014, the Financial Accounting Standard Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-15, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern (“ASU 2014-15”). ASU 2014-15 requires that, in connection with preparing financial statements for each annual and interim reporting period, the Company should evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about its ability to continue as a going concern within one year after the date the financial statements are issued or within one year after the date that the financial statements are available to be issued. If the Company identifies conditions or events that raise substantial doubt about its ability to continue as a going concern, the Company should disclose how it plans are intended to mitigate or alleviate those relevant conditions or events raising substantial doubt about its ability to continue as a going concern. ASU 2014-15 is effective for all entities with annual periods ending after December 15, 2016 and interim periods thereafter. Early adoption is permitted. The adoption of ASU 2014-15 is not expected to have a material impact on the Company’s financial condition or results of operations.

In June 2014, the FASB issued ASU No. 2014-12, Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period (“ASU 2014-12”). ASU 2014-12 requires that a performance target that affects vesting of share-based payment awards and that could be achieved after the requisite service period be treated as a performance condition. Compensation cost should be recognized in the period in which it becomes probable that the performance target will be achieved and should represent the compensation cost attributable to the periods for which the requisite service has already been rendered. If the performance target becomes probable of being achieved before the end of the requisite service period, the remaining unrecognized compensation cost should be recognized prospectively over the remaining requisite service period. The total amount of compensation cost recognized during and after the requisite service period should reflect the number of awards that are expected to vest and should be adjusted to reflect those awards that ultimately vest. The requisite service period ends when the employee can cease rendering service and still be eligible to vest in the award if the performance target is achieved. ASU 2014-12 is effective for all entities for annual periods and interim periods within those annual periods beginning after December 15, 2015. Early adoption is permitted. An entity may apply the amendments in ASU 2014-12 either (i) prospectively to all awards granted or modified after the effective date or (ii) retrospectively to all awards with performance targets that are outstanding as of the beginning of the earliest annual period presented in the financial statements and to all new or modified awards thereafter. The adoption of ASU 2014-12 is not expected to have a material impact on the Company’s financial condition or results of operations.

In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (“ASU 2014-09”), which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. ASU 2014-09 will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective. In doing so, companies will need to use more judgment and make more estimates than under current guidance. These may include identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price and allocating the transaction price to each separate performance obligation. ASU 2014-09 is effective for all entities for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period. Early adoption is not permitted. The standard permits the use of either the retrospective or cumulative effect transition method. The Company is evaluating the effect that ASU 2014-09 will have on its financial statements and related disclosures.

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Income Taxes (Tables)

12 Months Ended

Dec. 31, 2014

Income Tax Disclosure [Abstract]

Schedule of Federal Statutory Rate to Income Taxes before Taxes Reconciles to Provision for Income Taxes

The amount computed by applying the federal statutory rate to income before taxes reconciles to the provision for income taxes is as follows (in thousands):

	Fiscal Years Ended December 31,
	2014			2013			2012
Tax at federal statutory rate	$	(6,243	)	$	(6,245	)	$	(5,564	)
State, net of federal benefit		(1,264	)		(826	)		(1,131	)
Permanent items		515			368			59
R&D tax credit		(315	)		(584	)		—
Other		12			(2	)		(3	)
Change in valuation allowance		7,295			7,289			6,639
	$	—		$	—		$	—

Schedule of Significant Components of Net Deferred Tax Assets

Significant components of net deferred tax assets are as follows (in thousands):

	December 31,
	2014			2013
Deferred tax assets:
Net operating losses	$	33,912		$	28,236
R&D tax credit		2,888			2,394
Accruals and other		2,465			1,288
		39,265			31,918
Deferred tax liabilities:
Depreciation and amortization		(62	)		(9	)
		(62	)		(9	)
Net deferred tax asset:		39,203			31,909
Valuation allowance		(39,203	)		(31,909	)
	$	—		$	—

Schedule of Reconciliation of Change in Unrecognized Tax Benefit

A reconciliation of the change in the unrecognized tax benefit during the year is as follows (in thousands):

	December 31,
	2014		2013		2012
Beginning of year	$	715	$	505	$	442
Additions for tax positions related to:
Current year		140		210		63
Prior years		6		—		—
End of year	$	861	$	715	$	505

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Summary of Significant Accounting Policies - Schedule of Changes in Estimated Fair Value using Valuations Classified as Level 3 - Convertible Preferred Stock Financing Option (Detail) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2013	Dec. 31, 2014	Dec. 31, 2011
Fair Value Disclosures [Abstract]
Beginning of the period	$ 0	$ 0	$ 0
Issued	885
Exercised	(1,097)
Change in fair value of convertible preferred stock financing option	212
End of the period	$ 0	$ 0	$ 0

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Loan And Security Agreement - Additional Information (Detail) (USD $)	12 Months Ended
	Dec. 31, 2014	Aug. 31, 2014	Dec. 31, 2013	Aug. 31, 2013
Line of Credit Facility [Line Items]
Advances under loan and security agreement		$ 900,000	$ 1,400,000
Loan and security agreement, terms	Second $4.0 million tranche was contingent upon the Company achieving a trailing three-month revenue of at least $7.0 million.
Loan and security agreement, interest rate description	The interest rate would have been fixed at the time of advance and would have been the greater of 3.65% or the three-year U.S. Treasury note plus 3%.
Loan and security agreement, amortization period	30 months
Loan and security agreement, Final Payment, Percentage of advanced amount	3.90%
Percentage of annual loan fee	5.10%
Silicon Valley Bank
Line of Credit Facility [Line Items]
Loan and security agreement				12,000,000
Advances under loan and security agreement		0
Tranche Two | Minimum [Member]
Line of Credit Facility [Line Items]
Trailing three-month revenue	7,000,000
Year One [Member]
Line of Credit Facility [Line Items]
Penalty on prepaid principal	2.00%
Year Two [Member]
Line of Credit Facility [Line Items]
Penalty on prepaid principal	1.00%
Year Three [Member]
Line of Credit Facility [Line Items]
Penalty on prepaid principal	0.00%
Growth Capital Facility | Silicon Valley Bank
Line of Credit Facility [Line Items]
Loan and security agreement				8,000,000
Growth Capital Facility | Tranche One
Line of Credit Facility [Line Items]
Loan and security agreement	4,000,000
Loan agreement expiry date	Oct. 31, 2014
Growth Capital Facility | Tranche Two
Line of Credit Facility [Line Items]
Loan and security agreement	4,000,000
Loan agreement expiry date	Mar. 31, 2015
Revolving Accounts Receivable Line of Credit [Member]
Line of Credit Facility [Line Items]
Loan and security agreement, interest rate description	Interest would have been the greater of 4.25% or SVB Prime Rate plus 0.25%.
Line of credit, expiration period	August 2016
Percentage of eligible accounts receivable	80.00%
Percentage of annual loan fee	0.75%
Interest great percentage	4.25
Percentage of prime rate plus	0.25%
Revolving Accounts Receivable Line of Credit [Member] | Silicon Valley Bank
Line of Credit Facility [Line Items]
Loan and security agreement				$ 4,000,000

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Income Taxes - Schedule of Significant Components of Net Deferred Tax Assets (Detail) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2014	Dec. 31, 2013
Deferred tax assets:
Net operating losses	$ 33,912	$ 28,236
R&D tax credit	2,888	2,394
Accruals and other	2,465	1,288
Gross deferred tax assets	39,265	31,918
Deferred tax liabilities:
Depreciation and amortization	(62)	(9)
Deferred tax liabilities, gross	(62)	(9)
Net deferred tax asset:	39,203	31,909
Valuation allowance	(39,203)	(31,909)
Net deferred tax assets	$ 0	$ 0

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Balance Sheets (USD $) In Thousands, unless otherwise specified	Dec. 31, 2014	Dec. 31, 2013
Current assets:
Cash and cash equivalents	$ 13,403	$ 12,294
Short-term investments, available-for-sale	35,040
Accounts receivable, net	8,337	4,200
Inventory	2,547	2,197
Prepaid expenses and other current assets	951	511
Total current assets	60,278	19,202
Property and equipment, net	1,474	1,707
Other non-current assets	1,201	126
Total assets	62,953	21,035
Current liabilities:
Accounts payable	2,128	1,451
Accrued compensation	5,085	2,955
Equipment loans - current portion		696
Convertible preferred stock warrant liability		237
Other current liabilities	898	745
Total current liabilities	8,111	6,084
Equipment loans - non-current portion		756
Deferred rent	1,030	52
Total liabilities	9,141	6,892
Commitments and contingencies (note 11)
Convertible preferred stock issuable in series, $0.001 par value; Authorized shares: none at December 31, 2014 and 15,907 at December 31, 2013; Issued and outstanding shares: none at December 31, 2014 and 15,701 at December 31, 2013		90,760
Preferred stock, $0.001 par value; Authorized shares: 10,000 at December 31, 2014 and none at December 31, 2013; Issued and outstanding shares: none
Common stock, $0.001 par value; Authorized shares: 150,000 at December 31, 2014 and 2013; Issued and outstanding shares: 23,379 and 1,762 at December 31, 2014 and 2013, respectively	23	2
Additional paid-in capital	150,410	1,859
Note receivable from related party		(219)
Accumulated deficit	(96,621)	(78,259)
Total stockholders' equity (deficit)	53,812	(76,617)
Total liabilities, convertible preferred stock and stockholders' equity (deficit)	$ 62,953	$ 21,035

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Summary of Significant Accounting Policies - Schedule of Potentially Dilutive Securities Outstanding Excluded from the Computations of Diluted Weighted Average Shares Outstanding (Detail) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of diluted weighted average shares outstanding	2,524	17,686	12,951
Common Stock Options [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of diluted weighted average shares outstanding	2,458	1,928	1,594
Convertible Preferred Stock [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of diluted weighted average shares outstanding		15,701	11,283
Convertible Preferred Stock Warrants [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of diluted weighted average shares outstanding		57	74
Common Stock Warrants [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of diluted weighted average shares outstanding	66

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Statements of Cash Flows (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Operating activities:
Net loss	$ (18,362)	$ (18,369)	$ (16,365)
Adjustments to reconcile net loss to cash used in operating activities:
Depreciation and amortization	583	505	351
Stock-based compensation expense	1,550	382	152
Amortization of net investment premium paid	112		83
Change in fair value of convertible preferred stock warrants	198	134	(128)
Change in fair value of convertible preferred stock financing option		212
Forgiveness of notes receivable from related party	100	100	116
Loss on disposal of fixed assets	52	26	33
Changes in operating assets and liabilities:
Accounts receivable, net	(4,137)	(2,901)	(1,011)
Inventory	(350)	(822)	(1,004)
Prepaid expenses and other current assets	(541)	3	(241)
Other non-current assets	(167)	(2)	(90)
Accounts payable	645	360	331
Accrued compensation	2,130	1,051	1,271
Other current liabilities and deferred rent	233	220	354
Net cash used in operating activities	(17,954)	(19,101)	(16,148)
Investing activities:
Purchases of short-term investments	(35,152)		(1,324)
Sales of short-term investments			8,622
Purchases of property and equipment	(367)	(467)	(1,413)
Other investing activities			71
Net cash (used in) provided by investing activities	(35,519)	(467)	5,956
Financing activities:
Proceeds from issuance of common stock	232	122	89
Proceeds from equipment loan			2,000
Proceeds from capital lease financing		106
Repayments related to equipment loans	(1,365)	(636)
Repayments related to capital lease financing	(87)	(18)
Proceeds from initial public offering, net of issuance costs	55,802
Proceeds from the exercise of Series A convertible preferred warrants		82	213
Proceeds from issuance of Series D convertible preferred stock, net of issuance costs		30,146
Net cash provided by financing activities	54,582	29,802	2,302
Net increase (decrease) in cash and cash equivalents	1,109	10,234	(7,890)
Cash and cash equivalents:
Beginning of the period	12,294	2,060	9,950
End of the period	13,403	12,294	2,060
Non-cash investing activities:
Lessor funded building improvements	961
Property and equipment included in accounts payable	33	17
Notes issued to related party for the exercise of stock options		500
Warrants issued for growth capital facility		10
Supplemental cash flow information:
Interest paid	$ 53	$ 93

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Convertible Preferred Stock - Additional Information (Detail) (USD $)	1 Months Ended	12 Months Ended	1 Months Ended
	Jul. 31, 2014	Dec. 31, 2014	Oct. 31, 2013	Mar. 31, 2013	Feb. 28, 2013	Dec. 31, 2013
Subsidiary, Sale of Stock [Line Items]
Redeemable convertible preferred stock reclassified to common stock and additional paid-in capital		$ 90,789,000
Convertible preferred stock redemption description		A redemption event will only occur upon the liquidation or winding up of the Company, a greater than 50% change in control, or sale of substantially all of the assets of the Company.
Financing liability						237,000
Dividends declared	0
Terms of convertible preferred stock		(1) immediately upon the closing of a firm commitment, underwritten initial public offering pursuant to an effective registration statement under the Securities Act of 1933, as amended, in which the public offering price reflects a pre-money valuation of at least $200.0 million and with net proceeds raised of at least $40.0 million or (2) at the election of the holders of at least 70% of the then outstanding shares of such series of preferred stock, the election of the holders of at least 65% of the Series C convertible preferred stock and the election of the holders of at least 52% of the Series D convertible preferred stock, voting as a separate class. The convertible preferred stock warrants become exercisable for common stock.
Public offering, minimum pre-money valuation		200,000,000
Minimum voting percentage of conversion		70.00%
Common Stock [Member]
Subsidiary, Sale of Stock [Line Items]
Convertible preferred stock was converted to common stock	One-for-one
Convertible preferred stock was converted into common stock	15,703,875	15,704,000
Redeemable convertible preferred stock reclassified to common stock and additional paid-in capital	90,789,000	16,000
Minimum [Member]
Subsidiary, Sale of Stock [Line Items]
Total net cash proceeds from initial closing		40,000,000
Series D convertible preferred stock [Member]
Subsidiary, Sale of Stock [Line Items]
Minimum voting percentage of conversion		52.00%
Series D convertible preferred stock [Member] | Private Placement [Member] | Convertible Preferred Stock Financing Option [Member]
Subsidiary, Sale of Stock [Line Items]
Total net cash proceeds from initial closing			9,400,000	2,500,000	18,200,000
Preferred stock, shares issued			1,369,008	370,129	2,656,636
Annualized revenue rate over a trailing three-month period			16,000,000
Financing liability			1,100,000		900,000
Convertible preferred stock expired		2013-10
Change in fair value charges			200,000
Series D convertible preferred stock [Member] | Employee [Member] | Convertible Preferred Stock Financing Option [Member]
Subsidiary, Sale of Stock [Line Items]
Total net cash proceeds from initial closing				$ 500,000
Preferred stock, shares issued				72,548
Series C convertible preferred stock [Member]
Subsidiary, Sale of Stock [Line Items]
Minimum voting percentage of conversion		65.00%

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Organization - Additional Information 1 (Detail) (Common Stock [Member], Initial Public Offering [Member], USD $) In Millions, except Share data, unless otherwise specified	1 Months Ended
	Jul. 31, 2014
Common Stock [Member] | Initial Public Offering [Member]
Subsidiary, Sale of Stock [Line Items]
Common stock issued during period, shares	5,750,000
Common stock issued during period, price per share	$ 11.00
Net proceeds from initial public offering	$ 55.8

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Stock-Based Compensation Expense - Summary of Stock Based Compensation Recognized Before Taxes (Detail) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock-based compensation expense	$ 1,550	$ 382	$ 152
Cost of Sales [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock-based compensation expense	49	21	10
Selling, General and Administrative Expenses [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock-based compensation expense	1,361	273	103
Research and Development Expense [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Stock-based compensation expense	$ 140	$ 88	$ 39

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Schedule II - Valuation and Qualifying Accounts

12 Months Ended

Dec. 31, 2014

Valuation and Qualifying Accounts [Abstract]

Schedule II - Valuation and Qualifying Accounts

SCHEDULE II — VALUATION AND QUALIFYING ACCOUNTS

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Summary of Significant Accounting Policies - Additional Information (Detail) (USD $)	0 Months Ended	1 Months Ended	12 Months Ended		1 Months Ended
	Jul. 11, 2014	Jul. 31, 2014	Dec. 31, 2014	Dec. 31, 2013	Oct. 31, 2013	Mar. 31, 2013	Feb. 28, 2013
Subsidiary, Sale of Stock [Line Items]
Reverse stock split, ratio	0.25
Warrants exercisable for common stock shares			53,357	57,433
Reclassification of redeemable convertible preferred stock warrant liability to additional paid-in capital		$ 406,000	$ 406,000
Transfer of assets from level 1 to level 2			0	0
Transfer of liabilities from level 1 to level 2			0	0
Transfer of assets from level 2 to level 1			0	0
Transfer of liabilities from level 2 to level 1			0	0
Financing liability				237,000
Net proceeds from convertible preferred stock financings				30,146,000
Private Placement [Member] | Series D convertible preferred stock [Member] | Convertible Preferred Stock Financing Option [Member]
Subsidiary, Sale of Stock [Line Items]
Number of shares issued					1,369,008	370,129	2,656,636
Net proceeds from initial public offering					9,400,000	2,500,000	18,200,000
Annualized revenue rate over a trailing three month period			16,000,000
Financing liability					1,100,000		900,000
Net proceeds from convertible preferred stock financings					9,400,000
Change in fair value charges					200,000
Common Stock [Member]
Subsidiary, Sale of Stock [Line Items]
Reverse stock split			1-for-4 reverse stock split
Convertible preferred stock converted into shares of common stock		15,703,875	15,704,000
Common Stock [Member] | Initial Public Offering [Member]
Subsidiary, Sale of Stock [Line Items]
Number of shares issued		5,750,000
Common stock issued during period, price per share		$ 11.00
Net proceeds from initial public offering		55,800,000
Underwriting discounts and commissions		4,500,000
Initial public offering, expenses		3,000,000
Convertible preferred stock converted into shares of common stock		15,703,875
Warrants exercisable for common stock shares		53,357
Reclassification of redeemable convertible preferred stock warrant liability to additional paid-in capital		$ 406,000
Common Stock [Member] | Over-Allotment Option [Member]
Subsidiary, Sale of Stock [Line Items]
Number of shares issued		750,000

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Summary of Significant Accounting Policies (Tables)

12 Months Ended

Dec. 31, 2014

Summary of Cash, Cash Equivalents and Available-for-Sale Investments Measured at Fair Value on Recurring Basis

The following is a summary of cash, cash equivalents and short-term investments, available-for-sale, by type of instrument measured at fair value on a recurring basis (in thousands):

	December 31,
	2014								2013
	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Cash	$	1,971	$	—	$	—	$	1,971	$	1,076	$	—	$	—	$	1,076
Money market funds		11,432		—		—		11,432		11,218		—		—		11,218
Corporate debt securities		—		28,790		—		28,790		—		—		—		—
Commercial paper		—		6,250		—		6,250		—		—		—		—
	$	13,403	$	35,040	$	—	$	48,443	$	12,294	$	—	$	—	$	12,294
Reported as:
Cash and cash equivalents							$	13,403							$	12,294
Short-term investments, available-for-sale								35,040								—
							$	48,443							$	12,294

Schedule of Net Loss Per Share

Net loss per share was determined as follows (in thousands, except per share amounts):

	Fiscal Years Ended December 31,
	2014			2013			2012
Net loss	$	(18,362	)	$	(18,369	)	$	(16,365	)
Weighted average common stock outstanding (1)		11,384			1,461			999
Net loss per share, basic and diluted	$	(1.61	)	$	(12.57	)	$	(16.38	)

(1) In connection with the Company’s IPO in July 2014, the convertible preferred stock outstanding was converted into 15,703,875 shares of common stock on a one-for-one basis.

Schedule of Potentially Dilutive Securities Outstanding Excluded from the Computations of Diluted Weighted Average Shares Outstanding

The following potentially dilutive securities outstanding have been excluded from the computations of diluted weighted average shares outstanding because such securities have an antidilutive impact due to losses reported, in common stock equivalent shares (in thousands):

	December 31,
	2014		2013		2012
Convertible preferred stock outstanding (1)		—		15,701		11,283
Convertible preferred stock warrants (1)		—		57		74
Common stock warrants		66		—		—
Common stock options		2,458		1,928		1,594
		2,524		17,686		12,951

(1) In connection with the Company’s IPO in July 2014, the convertible preferred stock outstanding was converted into 15,703,875 shares of common stock and the convertible preferred stock warrants were converted into common stock warrants, both on a one-for-one basis.

Convertible Preferred Stock Warrants [Member]

Schedule of Changes in Estimated Fair Value using Valuations Classified as Level 3

The following table sets forth a summary of the changes in the estimated fair value of the Company’s convertible preferred stock warrants, which represents financial instruments with valuations classified as Level 3. When a determination is made to classify a financial instrument within Level 3, the determination is based upon the significance of the unobservable inputs to the overall fair value measurement. However, Level 3 financial instruments typically include, in addition to the unobservable inputs, observable inputs (that is, components that are actively quoted and can be validated to external sources). Accordingly, the expense in the table below includes changes in fair value due in part to observable factors that are part of the Level 3 methodology (in thousands):

	Fiscal Years Ended December 31,
	2014			2013		2012
Beginning of the period	$	237		$	93	$	221
Issued		—			10		—
Exercised		(29	)		—		—
Reclassified to equity (1)		(406	)		—		—
Change in fair value		198			134		(128	)
End of the period	$	—		$	237	$	93

(1) In connection with the Company’s IPO in July 2014, warrants for convertible preferred stock were converted to warrants for common stock, resulting in the reclassification of the related redeemable convertible preferred stock warrant liability to additional paid-in capital.

Schedule of Fair Value Assumptions and Methodology

The fair value of the convertible preferred stock warrants was determined using the option pricing method, the probability weighted expected return method or Black-Scholes option pricing model using the following assumptions:

	Fiscal Years Ended December 31,
	2014			2013			2012
Expected life (years)		2.0			2.0			3.0
Expected volatility		46	%		45	%		58	%
Risk-free interest rate		0.5	%		0.4	%		0.4	%
Dividend yield		0.0	%		0.0	%		0.0	%

Series D Convertible Preferred Stock Financing Option [Member]

Schedule of Changes in Estimated Fair Value using Valuations Classified as Level 3

The following table sets forth a summary of the changes in the estimated fair value of the Company’s convertible preferred stock financing option, which represents financial instruments with valuations classified as Level 3 (in thousands):

	Fiscal Years Ended December 31,
	2014		2013			2012
Beginning of the period	$	—	$	—		$	—
Issued		—		885			—
Exercised		—		(1,097	)		—
Change in fair value		—		212			—
End of the period	$	—	$	—		$	—

Schedule of Fair Value Assumptions and Methodology

The fair value of the convertible preferred stock financing liability was determined using the present value methodology with the following assumptions which are categorized as Level 3:

	February 2013			October 2013
Total consideration per share	$	1.72		$	1.72
Additional investment per share		1.72			1.72
Discount rate		20.0	%		20.0	%
Probability of achievement		95.0	%		95.0	%
Years until milestone achieved		0.5			0.7

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Commitments and Contingencies - Additional Information (Detail) (USD $) In Millions, unless otherwise specified	12 Months Ended
	Dec. 31, 2014 sqft	Dec. 31, 2013	Dec. 31, 2012
Commitments and Contingencies Disclosure [Abstract]
Operating lease, Date	2012-03
Renewal provision allowing the Company to extend lease, percentage	95.00%
Lease agreement description	Rental payments on operating leases are charged to expense on a straight-line basis over the period of the lease. The lease agreement requires the Company to pay executory costs such as real estate taxes, insurance and repairs, and includes a renewal provision allowing the Company to extend this lease for an additional three years at 95% of the then-current fair market rental rate.
Additional area under operating lease agreement	17,900
Total area under operating lease agreement	50,400
Operating lease , expiration date	May 31, 2020
Building improvements payable by the lessor	$ 1.0
Rent expense	1.3	1.4	0.6
Commitments to suppliers for purchases	$ 0.8

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Organization

12 Months Ended

Dec. 31, 2014

Accounting Policies [Abstract]

Organization

1. Organization

Description of Business

Intersect ENT, Inc. (the “Company”) is incorporated in the state of Delaware and its facilities are located in Menlo Park, California. The Company is a commercial stage drug-device company committed to improving the quality of life for patients with ear, nose and throat conditions. The Company’s sole commercial products are the PROPEL and PROPEL mini drug releasing implants for patients undergoing sinus surgery to treat chronic sinusitis. The Company received approval from the U.S. Food and Drug Administration (“FDA”) for PROPEL in August 2011 and for PROPEL mini in November 2012. In the first half of 2013, the Company began scaling its U.S. direct commercial presence and currently markets its products only in the United States.

Liquidity and Business Risks

As of December 31, 2014, the Company had cash, cash equivalents and short-term investments of $48.4 million, and an accumulated deficit of $96.6 million. In July 2014 the Company completed its initial public offering (“IPO”) by issuing 5,750,000 shares of common stock at an offering price of $11.00 per share, for net proceeds of $55.8 million, after deducting underwriting discounts and commissions and offering expenses. The Company expects its cash, cash equivalents and short-term investments will be sufficient to fund its operations through at least the next twelve months.

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Balance Sheets (Parenthetical) (USD $)	Dec. 31, 2014	Dec. 31, 2013
Statement of Financial Position [Abstract]
Convertible preferred stock, par value	$ 0.001	$ 0.001
Convertible preferred stock, shares authorized	0	15,907,322
Convertible preferred stock, Shares Issued	0	15,701,444
Convertible preferred stock, shares outstanding	0	15,701,444
Preferred stock, par value	$ 0.001	$ 0.001
Preferred stock, shares authorized	10,000,000	0
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0
Common stock, par value	$ 0.001	$ 0.001
Common stock, shares authorized	150,000,000	150,000,000
Common stock, shares issued	23,379,000	1,762,000
Common stock, shares outstanding	23,379,000	1,762,000

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Commitments and Contingencies

12 Months Ended

Dec. 31, 2014

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

11. Commitments and Contingencies

Contingencies

In the normal course of business, the Company enters into contracts and agreements that contain a variety of representations and warranties and provide for general indemnifications. The Company’s exposure under these agreements is unknown because it involves claims that may be made against the Company in the future, but have not yet been made. The Company accrues a liability for such matters when it is probable that future expenditures will be made and such expenditures can be reasonably estimated.

Indemnification

The Company’s amended and restated certificate of incorporation contains provisions limiting the liability of directors, and its amended and restated bylaws provide that the Company will indemnify each of its directors to the fullest extent permitted under Delaware law. The Company’s amended and restated certificate of incorporation and amended and restated bylaws also provide its board of directors with discretion to indemnify its officers and employees when determined appropriate by the board. In addition, the Company has entered and expects to continue to enter into agreements to indemnify its directors and executive officers.

Litigation

The Company is not currently a party to any material legal proceedings. The Company may at times be involved in litigation and other legal claims in the ordinary course of business. When appropriate in the Company’s estimation, it may record reserves in its financial statements for pending litigation and other claims.

Building Lease

As of December 31, 2014, the Company has one leased facility under an operating lease agreement entered into in March 2012. In December 2014, the operation lease agreement was amended for an additional 17,900 square feet for a total of 50,400 square feet and the expiration was extended to May 31, 2020. Rental payments on operating leases are charged to expense on a straight-line basis over the period of the lease. The lease agreement requires the Company to pay executory costs such as real estate taxes, insurance and repairs, and includes a renewal provision allowing the Company to extend this lease for an additional three years at 95% of the then-current fair market rental rate. Because of the terms of the amended lease agreement, the Company is the deemed owner, for accounting purposes only, of the building improvements. Accordingly, the Company recorded an asset of $1.0 million, representing the total costs of the building improvements payable by the lessor, the legal owner of the building, with a corresponding offset recorded as deferred rent.

Future minimum annual operating lease payments are as follows (in thousands):

Fiscal Years Ending December 31,
2015	$	645
2016		1,494
2017		1,536
2018		1,580
2019		1,625
Thereafter		685
		7,565

Rent expense was $1.3 million, $1.4 million and $0.6 million during the years ended December 31, 2014, 2013 and 2012, respectively.

Purchase Commitments

As of December 31, 2014, the Company had commitments to suppliers for purchases totaling $0.8 million.

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Document and Entity Information (USD $)	12 Months Ended
	Dec. 31, 2014	Feb. 28, 2015	Jun. 30, 2014
Document And Entity Information [Abstract]
Document Type	10-K
Amendment Flag	false
Document Period End Date	Dec. 31, 2014
Document Fiscal Year Focus	2014
Document Fiscal Period Focus	FY
Trading Symbol	XENT
Entity Registrant Name	Intersect ENT, Inc.
Entity Central Index Key	0001271214
Current Fiscal Year End Date	--12-31
Entity Well-known Seasoned Issuer	No
Entity Current Reporting Status	Yes
Entity Voluntary Filers	No
Entity Filer Category	Non-accelerated Filer
Entity Common Stock, Shares Outstanding		23,498,856
Entity Public Float			$ 0

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Employee Retirement Plan

12 Months Ended

Dec. 31, 2014

Compensation and Retirement Disclosure [Abstract]

Employee Retirement Plan

12. Employee Retirement Plan

In January 2007, the Company established a qualified retirement plan under section 401(k) of the Internal Revenue Code (“IRC”) under which participants may contribute up to 100% of their eligible compensation, subject to maximum deferral limits specified by the IRC. The Company may make a discretionary profit sharing contribution to each eligible employee, subject to limits specified by the IRC, on an annual basis, provided the employee is employed with the Company on the last day of the plan year which is December 31. In addition, the Company may also make a matching contribution of up to 3% of an employee’s eligible compensation on a quarterly basis. The Company’s contributions will vest 25% per year over four years. As of December 31, 2014, the Company has not made any profit sharing or matching contributions.

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Statements of Operations and Comprehensive Loss (USD $) In Thousands, except Per Share data, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Income Statement [Abstract]
Revenue	$ 38,587	$ 17,931	$ 5,863
Cost of sales	10,223	8,150	3,837
Gross profit	28,364	9,781	2,026
Operating expenses:
Selling, general and administrative	36,111	18,229	9,251
Research and development	10,331	9,518	9,260
Total operating expenses	46,442	27,747	18,511
Loss from operations	(18,078)	(17,966)	(16,485)
Interest and other income	125	86	156
Interest and other expense	(409)	(489)	(36)
Net loss	(18,362)	(18,369)	(16,365)
Other comprehensive income:
Unrealized gain on short-term investments			7
Comprehensive loss	$ (18,362)	$ (18,369)	$ (16,358)
Net loss per share, basic and diluted	$ (1.61)	$ (12.57)	$ (16.38)
Weighted average common shares used to compute net loss per share, basic and diluted	11,384	1,461	999

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Equipment Loans

12 Months Ended

Dec. 31, 2014

Debt Disclosure [Abstract]

Equipment Loans

6. Equipment Loans

In September 2012, the Company entered into an equipment loan with an aggregate principal amount of $2.0 million, all of which was drawn down in December 2012. Payments were to be made in monthly installments over a 36-month period with an annual interest rate of 5.1%. A total of $36,000, $0.1 million and $4,000 were recorded as interest expense during the years ended December 31, 2014, 2013 and 2012, respectively. The amount outstanding under this loan at December 31, 2013 was $1.4 million. In August 2014, the amount outstanding under this equipment loan of $0.9 million was fully repaid.

In April 2013, the Company entered into a capital lease for a principal amount of $0.1 million. Payments were made in monthly installments over a 38-month period with an interest rate of 14.88%. In November 2014, the amount outstanding under this equipment loan of $59,000 was fully repaid.

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Loan and Security Agreement

12 Months Ended

Dec. 31, 2014

Debt Disclosure [Abstract]

Loan and Security Agreement

5. Loan and Security Agreement

In August 2013, the Company entered into a loan and security agreement (“Loan Agreement”) with Silicon Valley Bank (“SVB”) for a total commitment of $12.0 million. The commitment consisted of an $8.0 million growth capital facility and a $4.0 million revolving accounts receivable line of credit. In August 2014, the Company cancelled the Loan Agreement and had not received any advances under the Loan Agreement.

The $8.0 million growth capital facility consisted of two $4.0 million tranches. The first $4.0 million tranche was available immediately upon execution of the Loan Agreement and was available until October 31, 2014. The second $4.0 million tranche was contingent upon the Company achieving a trailing three-month revenue of at least $7.0 million. The Company achieved that condition as of January 31, 2014, and therefore the second tranche was available until March 31, 2015. Payments under both tranches would have been interest-only until March 31, 2015, at which time the outstanding balance would have converted to a 30-month fully amortizing loan. The interest rate would have been fixed at the time of advance and would have been the greater of 3.65% or the three-year U.S. Treasury note plus 3%. At the end of the amortization period, the Company would have made a final payment of 3.9% of the advanced amounts. There was a prepayment penalty of 2% of the prepaid principal during the first year, 1% during the second year and no prepayment penalty during the third year.

In addition, the Company issued a warrant to SVB to purchase up to 20,313 shares of the Company’s Series D convertible preferred stock for an aggregate exercise price of 0.5% of the total growth capital facility commitment, or $40,000. Following any draw-downs under the growth capital facility, the warrant would have become exercisable for additional shares of Series D convertible preferred stock equal to 1.25% of the advanced amounts under tranche one and two divided by $6.89. The initial value of the warrants issued was $10,000 and has been recognized as convertible preferred stock warrant liability and interest expense. In connection with the IPO, the warrants to purchase convertible preferred stock were converted to warrants to purchase common stock and any additional warrants that would have become exercisable under the terms of the Loan Agreement would have been exercisable for common stock. As of December 31, 2014, this warrant was exercisable for 5,803 shares of the Company’s common stock at an exercise price of $6.89 per share.

The $4.0 million revolving accounts receivable line of credit would have expired in August 2016. Advances would have been made for up to 80% of eligible accounts receivable. An annual loan fee of 0.75% would have been paid at the beginning of each of the three years. The interest would have been the greater of 4.25% or SVB Prime Rate plus 0.25%.

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Summary of Significant Accounting Policies (Policies)

12 Months Ended

Dec. 31, 2014

Basis of Preparation

Basis of Preparation

The financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) and pursuant to the rules and regulations of the United States Securities and Exchange Commission (“SEC”).

Financial Statements Reclassification

Certain amounts in the financial statements have been reclassified to conform to the current year presentation.

1-for-4 Reverse Stock Split

On July 10, 2014, the Board of Directors and stockholders approved, and on July 11, 2014, the Company filed, an amended and restated certificate of incorporation effecting a 1-for-4 reverse stock split of common stock and all convertible preferred stock. The par value of the common and convertible preferred stock was not adjusted as a result of the reverse stock split. All issued and outstanding common stock, convertible preferred stock, warrants for preferred stock, stock options and per share amounts contained in the financial statements have been retroactively adjusted to reflect this reverse stock split for all periods presented.

Initial Public Offering

Initial Public Offering

In July 2014, the Company completed its IPO by issuing 5,750,000 shares of common stock, including 750,000 shares pursuant to the full exercise by the underwriters of their option to purchase additional shares, at an offering price of $11.00 per share, for net proceeds of $55.8 million, after deducting underwriting discounts and commissions of $4.5 million and offering expenses of $3.0 million. In connection with the IPO, the Company’s outstanding shares of convertible preferred stock were automatically converted into 15,703,875 shares of common stock and warrants exercisable for convertible preferred stock were automatically converted into warrants exercisable for 53,357 shares of common stock, resulting in the reclassification of the related redeemable convertible preferred stock warrant liability of $0.4 million to additional paid-in capital.

Use of Estimates

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts and disclosures reported in the financial statements. Management uses significant judgment when making estimates related to its common stock valuation and related stock-based compensation, the valuations of the convertible preferred stock warrant liability, convertible preferred stock financing option, as well as certain accrued liabilities. Management bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results could differ from those estimates.

Cash and Cash Equivalents

Cash and Cash Equivalents

The Company considers all highly liquid securities, readily convertible to cash, that mature within 90 days or less from the date of purchase to be cash equivalents.

Short-term Investments, Available-for-Sale and Cash, Cash Equivalents

Short-term Investments, Available-for-Sale

Short-term investments, which are available-for-sale, represent highly liquid debt instruments with maturities greater than 90 days at date of purchase. Such investments are recorded at fair value and unrealized holding gains and losses are reported as a separate component of comprehensive income (loss) in stockholders’ equity until realized. The Company reviews its investment portfolio periodically to assess for other-than-temporary impairment. Should the Company determine that any unrealized losses on the investments are other-than-temporary, the amount of that impairment to be recognized in earnings will depend on whether the Company intends to sell the security or more likely than not will be required to sell the security before recovery of its amortized cost basis less any current period credit loss. The specific identification method is used to determine the cost of securities disposed of, with realized gains and losses reflected in interest and other income or expense, as appropriate, in the statement of operations.

Cash, Cash Equivalents and Short-term Investments

The following is a summary of cash, cash equivalents and short-term investments, available-for-sale, by type of instrument measured at fair value on a recurring basis (in thousands):

	December 31,
	2014								2013
	Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3		Total
Cash	$	1,971	$	—	$	—	$	1,971	$	1,076	$	—	$	—	$	1,076
Money market funds		11,432		—		—		11,432		11,218		—		—		11,218
Corporate debt securities		—		28,790		—		28,790		—		—		—		—
Commercial paper		—		6,250		—		6,250		—		—		—		—
	$	13,403	$	35,040	$	—	$	48,443	$	12,294	$	—	$	—	$	12,294
Reported as:
Cash and cash equivalents							$	13,403							$	12,294
Short-term investments, available-for-sale								35,040								—
							$	48,443							$	12,294

There were no transfers in and out of Level 1 and Level 2 fair value measurements during the years ended December 31, 2014 and 2013.

Fair Value of Financial Instruments

Fair Value of Financial Instruments

The Company measures certain financial assets and liabilities at fair value on a recurring basis, including cash equivalents, short-term investments, the convertible preferred stock warrant liability and the convertible preferred stock financing option. Fair value is an exit price, representing the amount that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants. As such, fair value is a market-based measurement that should be determined based on assumptions that market participants would use in pricing an asset or a liability. A three-tier fair value hierarchy is established as a basis for considering such assumptions and for inputs used in the valuation methodologies in measuring fair value:

Level 1	—	Observable inputs such as quoted prices (unadjusted) for identical assets or liabilities in active markets.
Level 2	—	Include other inputs that are based upon quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active and model-based valuation techniques for which all significant inputs are observable in the market or can be derived from observable market data. Where applicable, these models project future cash flows and discount the future amounts to a present value using market-based observable inputs including interest rate curves, foreign exchange rates, and credit ratings.
Level 3	—	Unobservable inputs that are supported by little or no market activities, which would require the Company to develop its own assumptions.

The fair value hierarchy also requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value.

Convertible Preferred Stock Warrant Liability

Convertible Preferred Stock Warrant Liability

The following table sets forth a summary of the changes in the estimated fair value of the Company’s convertible preferred stock warrants, which represents financial instruments with valuations classified as Level 3. When a determination is made to classify a financial instrument within Level 3, the determination is based upon the significance of the unobservable inputs to the overall fair value measurement. However, Level 3 financial instruments typically include, in addition to the unobservable inputs, observable inputs (that is, components that are actively quoted and can be validated to external sources). Accordingly, the expense in the table below includes changes in fair value due in part to observable factors that are part of the Level 3 methodology (in thousands):

	Fiscal Years Ended December 31,
	2014			2013		2012
Beginning of the period	$	237		$	93	$	221
Issued		—			10		—
Exercised		(29	)		—		—
Reclassified to equity (1)		(406	)		—		—
Change in fair value		198			134		(128	)
End of the period	$	—		$	237	$	93

(1) In connection with the Company’s IPO in July 2014, warrants for convertible preferred stock were converted to warrants for common stock, resulting in the reclassification of the related redeemable convertible preferred stock warrant liability to additional paid-in capital.

The fair value of the convertible preferred stock warrants was determined using the option pricing method, the probability weighted expected return method or Black-Scholes option pricing model using the following assumptions:

	Fiscal Years Ended December 31,
	2014			2013			2012
Expected life (years)		2.0			2.0			3.0
Expected volatility		46	%		45	%		58	%
Risk-free interest rate		0.5	%		0.4	%		0.4	%
Dividend yield		0.0	%		0.0	%		0.0	%

For a warrant classified as a derivative liability, the fair value of that warrant was recorded on the balance sheet at the inception of such classification and adjusted to fair value at each financial reporting date. The changes in the fair value of the warrants were recorded in the statement of operations and comprehensive loss as a component of interest and other income or expense, as appropriate. The Company continued to adjust the carrying value of the convertible preferred stock warrant liability for changes in the fair value of the warrants until the earlier of: the exercise of the warrants, at which time the liability was reclassified to temporary equity; the conversion of the underlying convertible preferred stock into common stock, at which time the liability was reclassified to stockholders’ equity (deficit); or the expiration of the warrant, at which time the entire amount would have been reversed and reflected in the statement of operations and comprehensive loss. In connection with the Company’s IPO in July 2014, the warrants for convertible preferred stock were converted to warrants for common stock, resulting in the reclassification of the related redeemable convertible preferred stock warrant liability of $0.4 million to additional paid-in capital.

Convertible Preferred Stock Financing Option

Convertible Preferred Stock Financing Option

For a freestanding option to purchase in a future round of financing, the fair value of that option was recorded on the balance sheet at the inception of such classification and adjusted to fair value at each financial reporting date. The change in the fair value of the convertible preferred stock financing option was recorded in the statement of operations and comprehensive loss as a component of interest and other income or expense, as appropriate. The Company adjusted the carrying value of the convertible preferred stock financing option liability for changes in the fair value of the option and continued to do so until the earlier of when the convertible preferred stock financing option was exercised or expired.

Concentration of Credit Risk

Concentration of Credit Risk

Financial instruments, which potentially subject the Company to concentrations of credit risk, consist principally of cash equivalents, short-term investments and accounts receivable. The Company believes that the credit risk in its accounts receivable is mitigated by its credit evaluation process, relatively short collection terms and dispersion of its customer base. The Company generally does not require collateral and losses on accounts receivable have historically been within management’s expectations.

The Company’s investment policy limits investments to certain types of debt securities issued by the U.S. government, its agencies, and institutions with investment-grade credit ratings, as well as corporate debt or commercial paper issued by the highest quality financial and non-financial companies, and places restrictions on maturities and concentration by type and issuer. The Company is exposed to credit risk in the event of a default by the financial institutions holding its cash and cash equivalents and issuers of investments to the extent recorded on the balance sheets. However, as of December 31, 2014 and 2013, the Company has limited its credit risk associated with cash, cash equivalents and short-term investments by placing its investments with banks it believes are highly creditworthy and with highly rated investments.

Allowance for Doubtful Accounts

Allowance for Doubtful Accounts

The Company will provide for uncollectible accounts receivable by recording an allowance for doubtful accounts for accounts receivable deemed uncollectible. The Company evaluates the collectability of its accounts receivable based on known collection risks and historical experience. In circumstances where the Company is aware of a specific customer’s inability to meet its financial obligations to the Company (e.g., bankruptcy filings, substantial downgrading of credit ratings), the Company records a specific allowance for bad debts against amounts due to reduce the carrying amount of accounts receivable to the amount it reasonably believes will be collected.

If circumstances change, such as higher-than-expected defaults or an unexpected material adverse change in a major customer’s ability to meet its financial obligations, the Company’s estimates of the recoverability of the amounts due could be reduced by a significant amount. Based on the high creditworthiness of the customers that the Company sells to, the Company has experienced no significant collection issues. Therefore, the Company does not have an allowance for doubtful accounts established as of December 31, 2014 and 2013.

Inventory

Inventory

Inventory is valued at the lower of cost or market, computed on a first-in, first out basis, or net realizable value. The Company estimates the recoverability of its inventory by reference to internal estimates of future demands and product life cycles, including expiration of inventory prior to sale.

Property and Equipment

Property and Equipment

Property and equipment are stated at cost, less accumulated depreciation and amortization. Depreciation is determined using the straight-line method over the estimated useful lives of the respective assets, generally three to five years. Leasehold improvements are amortized on a straight-line basis over the shorter of their estimated useful lives or the term of the lease. Amortization of assets under capital leases is included in depreciation and amortization expense. Maintenance and repairs are charged to operations as incurred.

Impairment of Long-lived Assets

Impairment of Long-lived Assets

Long-lived assets consists primarily of property and equipment and are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. If circumstances require that a long-lived asset be tested for possible impairment, the Company compares the undiscounted cash flows expected to be generated by the asset group to the carrying amount of the asset group. If the carrying amount of the long-lived asset is not recoverable on an undiscounted cash flow basis, an impairment is recognized to the extent that the carrying amount exceeds its fair value. The Company determines fair value using the income approach based on the present value of expected future cash flows or other appropriate measures of estimated fair value. The Company’s cash flow assumptions consider historical and forecasted revenue and operating costs and other relevant factors. Since inception, the Company has not recorded impairment charges on long-lived assets.

Revenue Recognition

Revenue Recognition

Revenue is derived from the sale of PROPEL and PROPEL mini to hospitals and ambulatory surgery centers in the United States. The Company recognizes revenue when persuasive evidence of an arrangement exists, product delivery has occurred or there is no further obligation, pricing is fixed or determinable and collection is reasonably assured. The Company must make significant assumptions regarding the future collectability of amounts receivable from customers to determine whether revenue recognition criteria have been met. If collectability is not assured at the time of shipment, the Company defers revenue until such criteria have been met. In general, the Company’s standard terms and conditions of sale do not allow for product returns. The Company expenses shipping and handling costs as incurred and includes them in the cost of sales. In those cases where shipping and handling costs are billed to customers, the Company classifies the amounts billed as a component of revenue.

Cost of Sales

Cost of Sales

Cost of sales consists primarily of manufacturing overhead costs, material costs and direct labor. A significant portion of the Company’s cost of sales currently consists of manufacturing overhead costs. These overhead costs include the cost of quality assurance, material procurement, inventory control, facilities, equipment and operations supervision and management. Cost of sales also includes depreciation expense for production equipment and certain direct costs such as shipping costs.

Research and Development

Research and Development

Research and development expenses consist primarily of product development, clinical and regulatory affairs, consulting services and other costs associated with products and technologies in development. These expenses include employee compensation, stock-based compensation, supplies, quality assurance and related travel and facility costs. Clinical expenses include clinical trial design, clinical site reimbursement, data management and travel expenses, and the cost of manufacturing products for clinical trials.

Common Stock Valuation and Stock-based Compensation

Common Stock Valuation and Stock-based Compensation

The Company maintains a payment equity incentive plan to provide long-term incentives for employees, consultants and members of the board of directors. The plan allows for the issuance of non-statutory and incentive stock options to employees and non-statutory stock options to consultants and non-employee directors.

The Company is required to determine the fair value of equity incentive awards and recognize compensation expense for all equity incentive awards made to employees and directors, including employee stock options. Stock-based compensation expense is recognized over the requisite service period in the statements of operations and comprehensive loss and is based on awards ultimately expected to vest, therefore the amount of expense has been reduced for estimated forfeitures. The Company uses the straight-line method for expense attribution, except for awards issued with performance-based conditions which require an accelerated attribution method over the requisite performance and service periods.

Under the applicable accounting guidance for equity incentive awards issued to non-employees, the date at which the fair value of such awards is measured is equal to the earlier of: 1) the date at which a commitment for performance by the counterparty to earn the equity instrument is reached; or 2) the date at which the counterparty’s performance is complete. The Company recognizes stock-based compensation expense for the fair value of the vested portion of the non-employee awards in the statements of operations and comprehensive loss. The fair value of options granted to non-employees is remeasured as the options vest.

The valuation model used for calculating the fair value of awards for stock-based compensation expense is the Black-Scholes option-pricing model (the “Black-Scholes model”). The Black-Scholes model requires the Company to make assumptions and judgments about the variables used in the calculation, including the expected term (weighted average period of time that the options granted are expected to be outstanding), the volatility of common stock and an assumed risk-free interest rate. The Company uses the “simplified method” to determine the expected term of the stock option. Volatility is based on an average of the historical volatilities of the common stock of publicly-traded companies with characteristics similar to those of the Company. The risk-free rate is based on the U.S. Treasury yield curve in effect at the time of grant for periods corresponding with the expected term of the option. Since stock-based compensation expense is based on awards ultimately expected to vest, potential forfeitures are estimated based on the Company’s historical forfeiture experience and an analysis of similar companies. To the extent actual forfeitures differ from the estimates, the Company records the difference as a cumulative adjustment in the period that the estimates are revised.

Deferred Rent

Deferred Rent

Rent expense is recognized on a straight-line basis over the non-cancelable term of the Company’s operating lease and, accordingly, the Company records the difference between cash rent payments and the recognition of rent expense as a deferred rent liability. The Company also records lessor-funded lease incentives, such as leasehold improvements, as a deferred rent liability, which is amortized as a reduction of rent expense over the non-cancelable term of its operating lease.

Advertising Expenses

Advertising Expenses

The Company expenses the costs of advertising, including promotional expenses, as incurred. Advertising expenses were $0.1 million, $46,000 and $23,000 during the years ended December 31, 2014, 2013 and 2012, respectively.

Income Taxes

Income Taxes

The Company accounts for income taxes under the liability method. Under this method, deferred tax assets and liabilities are determined based on the differences between the financial reporting and tax bases of assets and liabilities and are measured using the enacted tax rates that will be in effect when the differences are expected to reverse. Valuation allowances against deferred tax assets are established when necessary to reduce deferred tax assets to the amounts expected to be realized. Currently, the Company has recorded a full valuation allowance against its deferred tax assets and there is no provision for income taxes, as the Company has incurred operating losses to date. The Company’s policy is to record interest and penalties expense related to uncertain tax positions as “other expense” in the statement of operations.

Net Loss per Share

Net Loss per Share

Basic net loss per share is computed by dividing the net loss by the weighted average number of shares of common stock outstanding during the period. Diluted net loss per share is computed by dividing the net loss by the weighted average number of shares of common stock and dilutive potential shares of common stock outstanding during the period. Because the Company has reported a net loss for all periods presented, diluted net loss per share is the same as basic net loss per share for those periods as all potentially dilutive shares consisting of convertible preferred stock, stock options and warrants were antidilutive in those periods.

The Company allocates no loss to participating securities because they have no contractual obligation to share in the losses of the Company. The shares of the Company’s convertible preferred stock participate in any dividends declared by the Company and are therefore considered to be participating securities.

Net loss per share was determined as follows (in thousands, except per share amounts):

	Fiscal Years Ended December 31,
	2014			2013			2012
Net loss	$	(18,362	)	$	(18,369	)	$	(16,365	)
Weighted average common stock outstanding (1)		11,384			1,461			999
Net loss per share, basic and diluted	$	(1.61	)	$	(12.57	)	$	(16.38	)

(1) In connection with the Company’s IPO in July 2014, the convertible preferred stock outstanding was converted into 15,703,875 shares of common stock on a one-for-one basis.

The following potentially dilutive securities outstanding have been excluded from the computations of diluted weighted average shares outstanding because such securities have an antidilutive impact due to losses reported, in common stock equivalent shares (in thousands):

	December 31,
	2014		2013		2012
Convertible preferred stock outstanding (1)		—		15,701		11,283
Convertible preferred stock warrants (1)		—		57		74
Common stock warrants		66		—		—
Common stock options		2,458		1,928		1,594
		2,524		17,686		12,951

(1) In connection with the Company’s IPO in July 2014, the convertible preferred stock outstanding was converted into 15,703,875 shares of common stock and the convertible preferred stock warrants were converted into common stock warrants, both on a one-for-one basis.

Comprehensive Loss

Comprehensive Loss

Comprehensive loss consists of net loss and changes in unrealized gains and losses on short-term investments, available-for-sale. Accumulated other comprehensive income (loss) is presented in the accompanying balance sheets, when applicable.

Segment, Geographical and Customer Concentration

Segment, Geographical and Customer Concentration

The Company operates in one segment. All of the Company’s assets and revenue are based in the U.S. No single customer accounted for more than 10% of its revenue during the years ended December 31, 2014, 2013 and 2012, and no single customer accounted for more than 10% of its accounts receivable at December 31, 2014 and 2013.

Recent Accounting Pronouncements

Recent Accounting Pronouncements

In August 2014, the Financial Accounting Standard Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-15, Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern (“ASU 2014-15”). ASU 2014-15 requires that, in connection with preparing financial statements for each annual and interim reporting period, the Company should evaluate whether there are conditions or events, considered in the aggregate, that raise substantial doubt about its ability to continue as a going concern within one year after the date the financial statements are issued or within one year after the date that the financial statements are available to be issued. If the Company identifies conditions or events that raise substantial doubt about its ability to continue as a going concern, the Company should disclose how it plans are intended to mitigate or alleviate those relevant conditions or events raising substantial doubt about its ability to continue as a going concern. ASU 2014-15 is effective for all entities with annual periods ending after December 15, 2016 and interim periods thereafter. Early adoption is permitted. The adoption of ASU 2014-15 is not expected to have a material impact on the Company’s financial condition or results of operations.

In June 2014, the FASB issued ASU No. 2014-12, Accounting for Share-Based Payments When the Terms of an Award Provide That a Performance Target Could Be Achieved after the Requisite Service Period (“ASU 2014-12”). ASU 2014-12 requires that a performance target that affects vesting of share-based payment awards and that could be achieved after the requisite service period be treated as a performance condition. Compensation cost should be recognized in the period in which it becomes probable that the performance target will be achieved and should represent the compensation cost attributable to the periods for which the requisite service has already been rendered. If the performance target becomes probable of being achieved before the end of the requisite service period, the remaining unrecognized compensation cost should be recognized prospectively over the remaining requisite service period. The total amount of compensation cost recognized during and after the requisite service period should reflect the number of awards that are expected to vest and should be adjusted to reflect those awards that ultimately vest. The requisite service period ends when the employee can cease rendering service and still be eligible to vest in the award if the performance target is achieved. ASU 2014-12 is effective for all entities for annual periods and interim periods within those annual periods beginning after December 15, 2015. Early adoption is permitted. An entity may apply the amendments in ASU 2014-12 either (i) prospectively to all awards granted or modified after the effective date or (ii) retrospectively to all awards with performance targets that are outstanding as of the beginning of the earliest annual period presented in the financial statements and to all new or modified awards thereafter. The adoption of ASU 2014-12 is not expected to have a material impact on the Company’s financial condition or results of operations.

In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (“ASU 2014-09”), which requires an entity to recognize the amount of revenue to which it expects to be entitled for the transfer of promised goods or services to customers. ASU 2014-09 will replace most existing revenue recognition guidance in U.S. GAAP when it becomes effective. In doing so, companies will need to use more judgment and make more estimates than under current guidance. These may include identifying performance obligations in the contract, estimating the amount of variable consideration to include in the transaction price and allocating the transaction price to each separate performance obligation. ASU 2014-09 is effective for all entities for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period. Early adoption is not permitted. The standard permits the use of either the retrospective or cumulative effect transition method. The Company is evaluating the effect that ASU 2014-09 will have on its financial statements and related disclosures.

Series D convertible preferred stock [Member]

Convertible Preferred Stock Financing Option

Series D Convertible Preferred Stock Financing Option

The Series D convertible preferred stock contained a provision that obligated the investors to purchase additional shares (“convertible preferred stock financing option”) at the same price as the initial closing upon notification by the Company that it had achieved an annualized revenue rate of at least $16.0 million over a trailing three month period. This convertible preferred stock financing option to purchase Series D convertible preferred stock in the future tranche was considered to be a freestanding financial instrument for accounting purposes. Therefore, in February 2013, the Company recorded a financing liability of $0.9 million representing the fair value of this convertible preferred stock financing option at the time of issuance. In October 2013, shortly after achieving the annualized revenue rate, the Company issued the additional 1,369,008 shares of Series D convertible preferred stock to the investors for net proceeds of $9.4 million. Since the convertible preferred stock financing option expired in October 2013 as a result of the issuance of Series D convertible preferred stock, the carrying and fair value of the convertible preferred stock financing option of $1.1 million in October 2013 was reclassified from liability to Series D convertible preferred stock. The Company recorded total charges related to the change in fair value during the year ended December 31, 2013 of $0.2 million related to this financing option liability.

The following table sets forth a summary of the changes in the estimated fair value of the Company’s convertible preferred stock financing option, which represents financial instruments with valuations classified as Level 3 (in thousands):

	Fiscal Years Ended December 31,
	2014		2013			2012
Beginning of the period	$	—	$	—		$	—
Issued		—		885			—
Exercised		—		(1,097	)		—
Change in fair value		—		212			—
End of the period	$	—	$	—		$	—

The fair value of the convertible preferred stock financing liability was determined using the present value methodology with the following assumptions which are categorized as Level 3:

	February 2013			October 2013
Total consideration per share	$	1.72		$	1.72
Additional investment per share		1.72			1.72
Discount rate		20.0	%		20.0	%
Probability of achievement		95.0	%		95.0	%
Years until milestone achieved		0.5			0.7

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Income Taxes

12 Months Ended

Dec. 31, 2014

Income Tax Disclosure [Abstract]

Income Taxes

13. Income Taxes

The Company has a history of losses and therefore has made no provision for income taxes. All losses result from domestic operations.

The amount computed by applying the federal statutory rate to income before taxes reconciles to the provision for income taxes is as follows (in thousands):

	Fiscal Years Ended December 31,
	2014			2013			2012
Tax at federal statutory rate	$	(6,243	)	$	(6,245	)	$	(5,564	)
State, net of federal benefit		(1,264	)		(826	)		(1,131	)
Permanent items		515			368			59
R&D tax credit		(315	)		(584	)		—
Other		12			(2	)		(3	)
Change in valuation allowance		7,295			7,289			6,639
	$	—		$	—		$	—

Significant components of net deferred tax assets are as follows (in thousands):

	December 31,
	2014			2013
Deferred tax assets:
Net operating losses	$	33,912		$	28,236
R&D tax credit		2,888			2,394
Accruals and other		2,465			1,288
		39,265			31,918
Deferred tax liabilities:
Depreciation and amortization		(62	)		(9	)
		(62	)		(9	)
Net deferred tax asset:		39,203			31,909
Valuation allowance		(39,203	)		(31,909	)
	$	—		$	—

Deferred income taxes reflect the tax effects of net operating loss and tax credit carryforwards and the net temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes.

Realization of the deferred tax assets is dependent upon the generation of future taxable income, if any, the amount and timing of which are uncertain. Based on available objective evidence, management believes it is more likely than not that the deferred tax assets are not recognizable and will not be recognizable until the Company has sufficient taxable income. Accordingly, the net deferred tax assets have been fully offset by a valuation allowance. The valuation allowance increased by $7.3 million during each of the years ended December 31, 2014 and 2013.

As of December 31, 2014, the Company’s federal net operating loss carryforwards of $85.5 million will expire at various dates beginning in 2026, if not utilized, and federal research and development tax credits of $2.3 million will begin to expire in 2026. In addition, net operating loss carryforwards for state income tax purposes of $89.4 million will begin to expire in 2016 and state research and development tax credits of $2.1 million do not expire.

Utilization of the net operating loss carryforwards may be subject to an annual limitation due to the ownership change limitations provided by the Internal Revenue Code of 1986 and similar state provisions. The annual limitation may result in the expiration of the net operating loss before utilization.

The Company had unrecognized tax benefit of $0.9 million and $0.7 million as of and December 31, 2014 and 2013, respectively, all of which is offset by a full valuation allowance. These unrecognized tax benefits, if recognized, would not affect the effective tax rate. There was no interest or penalties accrued at the adoption date and at December 31, 2014.

A reconciliation of the change in the unrecognized tax benefit during the year is as follows (in thousands):

	December 31,
	2014		2013		2012
Beginning of year	$	715	$	505	$	442
Additions for tax positions related to:
Current year		140		210		63
Prior years		6		—		—
End of year	$	861	$	715	$	505

The Company does not expect a significant change to its unrecognized tax benefits over the next twelve months. The unrecognized tax benefits may increase or change during the next twelve months for items that arise in the ordinary course of business.

The Company files income tax returns in the U.S. federal and various state jurisdictions. Tax years beginning in 2003 through 2014, remain open to examination by the major taxing authorities to which the Company is subject to. The Company’s policy is to record interest related to uncertain tax positions as interest expense and any penalties as other expense in its statements of operations and comprehensive loss. As of the date of adoption of ASC Topic No. 740 and through December 31, 2014, the Company did not have any interest expense or penalties associated with unrecognized tax benefits.

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Stockholder's Equity

12 Months Ended

Dec. 31, 2014

Equity [Abstract]

Stockholder's Equity

9. Stockholders’ Equity

2014 Equity Incentive Plan

In July 2014, the Company’s board of directors approved the 2014 Equity Incentive Plan (“2014 Plan”). The 2014 Plan became effective on the effective date of the IPO, at which time the Company ceased making awards under the 2013 Equity Incentive Plan (the “2013 Plan”). Under the 2014 Plan, the Company may grant stock options, stock appreciation rights, restricted stock, restricted stock units and certain other awards to individuals who are employees, officers, directors or consultants of the Company. A total of 4,750,000 shares of common stock were initially reserved for issuance under the 2014 Plan. The number of shares of common stock reserved for issuance under the 2014 Plan will automatically increase on January 1 of each year, beginning on January 1, 2015, and continuing through and including January 1, 2024, by 3% of the total number of shares of the Company’s capital stock outstanding on December 31 of the preceding calendar year, or a lesser number of shares determined by the Company’s board of directors. The maximum number of shares that may be issued upon the exercise of ISOs under the 2014 Plan is 10.0 million. Incentive stock options (“ISOs”) and non-statutory stock options (“NSOs”) may be granted with exercise prices at no less than 100% of the fair value of the common stock on the date of grant. Options granted to a 10% stockholder shall be at no less than 110% of the fair value and ISO stock option grants to such 10% stockholders expire five years from the date of grant. ISOs granted under the 2014 Plan generally vest 25% after the completion of 12 months of service and the balance vests in equal monthly installments over the next 36 months of service and expire 10 years from the grant date, unless subject to provisions regarding 10% stockholders. NSOs vest per the specific agreement and expire 10 years from the date of grant. New shares are issued upon exercise of options under the stock plan.

2013 Equity Incentive Plan

The Company ceased making awards under the 2013 Plan upon the effective date of the Company’s IPO. Under the 2013 Plan approved by the Company’s Board of Directors in September 2013, shares of common stock were reserved for the issuance of ISOs, NSOs, stock bonuses and rights to acquire restricted stock to employees, officers, directors and consultants of the Company. There were 10,000 options issued with 100% of the shares vested as of the date of grant during the year ended December 31, 2014 and no options issued with 100% of the shares vested as of the date of grant during the year ended December 31, 2013. Options outstanding under the 2013 Plan will expire upon forfeiture. As of December 31, 2014, 0.6 million options were outstanding under the 2013 Plan.

The 2013 Plan was the successor to the 2003 Equity Incentive Plan (“2003 Plan”) which expired in September 2013. Options outstanding under the 2003 Plan will expire upon forfeiture.

A summary of the Company’s stock option activity and related information is as follows (in thousands, except price data):

	Fiscal Years Ended December 31,
	2014					2013					2012
	Options			Price		Options			Price		Options			Price
Outstanding, beginning of period		1,928		$	1.08		1,594		$	0.88		1,425		$	0.80
Granted		819			12.88		1,033			1.20		296			1.16
Granted - below fair market value		—			—		94			1.32		—			—
Exercised		(163	)		1.42		(740	)		0.84		(115	)		0.76
Forfeited		(126	)		3.86		(53	)		1.08		(12	)		0.88
Outstanding, end of period		2,458			4.84		1,928			1.08		1,594			0.88
Vested and expected to vest		2,338			4.67		1,752			1.08		1,461			0.84
Exercisable		1,612			2.66		1,314			1.00		1,206			0.80

As of December 31, 2014, the aggregate pre-tax intrinsic value of options outstanding were $33.7 million and options outstanding and exercisable were $25.6 million, and the weighted-average remaining contractual term of options outstanding were 8.0 years and options outstanding and exercisable were 7.5 years. The aggregate pre-tax intrinsic value of options exercised was $1.5 million, $0.3 million and $37,000 during the years ended December 31, 2014, 2013 and 2012, respectively. The aggregate pre-tax intrinsic value was calculated as the difference between the exercise prices of the underlying options and the estimated fair value of the common stock on the date of exercise.

Early Exercise of Stock Options

Stock options granted under the Plan may provide option holders the right to elect to exercise unvested options in exchange for restricted common stock. During the year ended December 31, 2013, employees exercised options with 69,037 unvested shares. As of December 31, 2014 and 2013, 29,017 and 53,796 shares, respectively, remained subject to a repurchase right held by the Company at the original issuance price in the event the optionees’ service is voluntarily or involuntarily terminated. As of December 31, 2014 and 2013 the related liability was $20,000 and $31,000, respectively.

2014 Employee Stock Purchase Plan

In July 2014, the Company’s board of directors approved the 2014 Employee Stock Purchase Plan (“2014 ESPP”). The 2014 ESPP became effective on the effective date of the IPO. A total of 496,092 shares were initially reserved for issuance under the 2014 ESPP. Additionally, the number of shares of common stock reserved for issuance under the 2014 ESPP will increase automatically each year, beginning on January 1, 2015, and continuing through and including January 1, 2024, by the lesser of (1) 1% of the total number of shares of common stock outstanding on December 31 of the preceding calendar year; or (2) such lesser number as determined by the Company’s board of directors. As of December 31, 2014, the Company has not implemented the 2014 ESPP.

Reserved Shares

The Company is required to reserve and keep available out of its authorized but unissued shares of common stock a number of shares sufficient to effect the conversion of all outstanding shares of preferred stock, warrants, and options granted and available for grant under the equity incentive stock plans.

The number of such shares of common stock reserved for the exercise and issuance of the following warrants, options and shares available for grant under the equity incentive stock plans as of December 31, 2014, are as follows (in thousands):

	December 31, 2014
Warrants outstanding		66
Options outstanding		2,458
Available for future grant:
2014 Equity incentive plan		4,434
2014 Employee stock purchase plan		496
		7,454

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Convertible Preferred Stock - Summary of Convertible Preferred Stock (Detail) (USD $) In Thousands, except Share data, unless otherwise specified	Dec. 31, 2014	Dec. 31, 2013
Class of Stock [Line Items]
Convertible preferred stock, shares authorized	0	15,907,322
Convertible preferred stock, Shares Issued	0	15,701,444
Convertible preferred stock, shares outstanding	0	15,701,444
Convertible preferred stock, Carrying Value		$ 90,760
Series A convertible preferred stock [Member]
Class of Stock [Line Items]
Convertible preferred stock, shares authorized		2,796,259
Convertible preferred stock, Shares Issued		2,744,619
Convertible preferred stock, shares outstanding		2,744,619
Convertible preferred stock, Carrying Value		9,987
Series B convertible preferred stock [Member]
Class of Stock [Line Items]
Convertible preferred stock, shares authorized		3,249,662
Convertible preferred stock, Shares Issued		3,249,657
Convertible preferred stock, shares outstanding		3,249,657
Convertible preferred stock, Carrying Value		19,894
Series C convertible preferred stock [Member]
Class of Stock [Line Items]
Convertible preferred stock, shares authorized		5,311,401
Convertible preferred stock, Shares Issued		5,311,395
Convertible preferred stock, shares outstanding		5,311,395
Convertible preferred stock, Carrying Value		30,521
Series D convertible preferred stock [Member]
Class of Stock [Line Items]
Convertible preferred stock, shares authorized		4,550,000
Convertible preferred stock, Shares Issued		4,395,773
Convertible preferred stock, shares outstanding		4,395,773
Convertible preferred stock, Carrying Value		$ 30,358

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Convertible Preferred Stock Warrant Liability

12 Months Ended

Dec. 31, 2014

Text Block [Abstract]

Convertible Preferred Stock Warrant Liability

7. Convertible Preferred Stock Warrant Liability

As of December 31, 2014 and 2013, the following warrants to purchase shares of convertible preferred stock were outstanding and exercisable (in thousands, except share and per share data):

Dates		In Connection With	Series		Exercise Price		Warrants Outstanding at December 31,				Initial Value		Fair Value at December 31,
Issuance	Expiration						2014		2013				2014 (1)		2013
Mar 2007	Mar 2014	Equipment loan		A	$	3.68		—		4,076	$	4	$	—	$	17
Nov 2007	Nov 2017	Venture loan		A	$	3.68		47,554		47,554		63		—		200
Aug 2013	Aug 2023	Loan Agreement		D	$	6.89		5,803		5,803		10		—		20
								53,357		57,433			$	—	$	237

(1) In connection with the Company’s IPO in July 2014, all warrants for convertible preferred stock were converted to warrants for common stock, resulting in the reclassification of the related redeemable convertible preferred stock warrant liability of $0.4 million to additional paid-in capital.

During the year ended December 31, 2014, warrants to purchase 4,076 shares of Series A convertible preferred stock were exercised through a cashless exercise provision. Net shares of 2,431 were issued and the remaining 1,645 shares were withheld for the exercise price. During the year ended December 31, 2013, warrants to purchase 22,418 shares of Series A convertible preferred stock were exercised at a price of $3.68 per share.

In connection with the execution of the Loan Agreement in August 2013, warrants were issued to purchase the Company’s Series D convertible preferred stock. The warrants were exercisable for 5,803 shares of Series D convertible preferred stock at an exercise price of $6.89 per share. In connection with the Company’s IPO in July 2014, these warrants for Series D convertible preferred stock were converted to warrants for common stock. The warrants expire in August 2023 or upon the occurrence of an acquisition of the Company in exchange for cash or marketable securities.

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Convertible Preferred Stock

12 Months Ended

Dec. 31, 2014

Equity [Abstract]

Convertible Preferred Stock

8. Convertible Preferred Stock

In connection with the Company’s IPO in July 2014, the convertible preferred stock, issuable in series, was converted into 15,703,875 share of common stock on a one-for-one basis, resulting in the reclassification of the related redeemable convertible preferred stock of $90.8 million to common stock and additional paid-in capital.

A summary of the Company’s convertible preferred stock is as follows:

	December 31,
	2014						2013
Series	Shares Authorized		Shares Issued and Outstanding		Carrying Value (in thousands)		Shares Authorized		Shares Issued and Outstanding		Carrying Value (in thousands)
A		—		—	$	—		2,796,259		2,744,619	$	9,987
B		—		—		—		3,249,662		3,249,657		19,894
C		—		—		—		5,311,401		5,311,395		30,521
D		—		—		—		4,550,000		4,395,773		30,358
		—		—	$	—		15,907,322		15,701,444	$	90,760

A summary of the Company’s convertible preferred stock terms is as follows:

Series	Liquidation Preference Per Share		8% Dividend Per Share
A	$	3.68	$	0.2944
B		6.16		0.4928
C		5.84		0.4672
D		6.89		0.5514

The Company recorded its convertible preferred stock at fair value on the dates of issuance, net of issuance costs. A redemption event will only occur upon the liquidation or winding up of the Company, a greater than 50% change in control, or sale of substantially all of the assets of the Company. As the redemption event is outside the control of the Company, all shares of convertible preferred stock have been presented outside of permanent equity.

Series D Convertible Preferred Stock

In February 2013, the Company completed the initial closing of the Series D convertible preferred stock financings. The total net cash proceeds from this initial closing totaled $18.2 million and 2,656,636 shares of Series D convertible preferred stock were issued. In March 2013, the Company completed an additional closing of the Series D convertible preferred stock financings. The total net cash proceeds from this additional closing totaled $2.5 million and 370,129 shares of Series D convertible preferred stock were issued. The March 2013 closing included 72,548 shares purchased by certain employees of the Company for $0.5 million.

The Series D convertible preferred stock financing contained a provision that obligated the investors to purchase additional shares (“convertible preferred stock financing option”) at the same price as the initial closing upon notification by the Company that it had achieved an annualized revenue rate of at least $16.0 million over a trailing three-month period. This convertible preferred stock financing option to purchase Series D convertible preferred stock in the future tranche was considered to be a freestanding financial instrument for accounting purposes. Therefore, in February 2013, the Company recorded a financing liability of $0.9 million representing the fair value of this convertible preferred stock financing option at the time of issuance. In October 2013, shortly after achieving the annualized revenue rate, the Company issued the additional 1,369,008 shares of Series D convertible preferred stock to the investors for net proceeds of $9.4 million. Since the convertible preferred stock financing option expired in October 2013 as a result of the issuance of Series D convertible preferred stock, the carrying and fair value of the convertible preferred stock financing option of $1.1 million in October 2013 was reclassified from liability to Series D convertible preferred stock. The Company recorded total charges related to the change in fair value during the year ended December 31, 2013 of $0.2 million related to this financing option liability.

Dividends

The holders of Series A, B, C and D convertible preferred stock are entitled to receive dividends (as determined on a per annum basis and on an as-converted basis), from any assets legally available, prior and in preference to any declaration or payment of any dividend to the common stockholders. No dividends other than those payable solely in common stock shall be paid on any common stock, Series A or Series B convertible preferred stock until they are paid on each outstanding share of Series C and D convertible preferred stock. Such dividends are payable when and if declared by the Board of Directors and are not cumulative. No dividends have been declared through the conversion date to common stock upon the effectiveness of the IPO in July 2014.

Liquidation

In the event of any liquidation, dissolution, or winding up of the Company, whether voluntary or involuntary (“Liquidation Event”), the holders of Series C and D convertible preferred stock are entitled to receive their liquidation preferences, prior to and in preference of any distribution of any assets of the Company to the holders of common stock, Series A or Series B convertible preferred stock, as adjusted for any stock splits, combinations, reorganizations, or similar transactions, plus any declared and unpaid dividends. If, upon the occurrence of such an event, the proceeds thus distributed among the holders of Series C and D convertible preferred stock shall be insufficient to permit the payment to such holders of the full preferential amounts, then the entire amount legally available for distribution shall be distributed among the holders of Series C and D convertible preferred stock in proportion to the full preferential amount that each such holder is otherwise entitled to receive had such proceeds been available.

After payment in full of the Series C and D convertible preferred stock liquidation preference, Series A and B convertible preferred stock liquidation preferences will be paid, as adjusted for any stock splits, combinations, reorganizations, or similar transactions. If, upon the occurrence of such an event, the proceeds thus distributed among the holders of Series A and B convertible preferred stock shall be insufficient to permit the payment to such holders of the full preferential amounts, then the entire amount legally available for distribution (after payment in full of the Series C and D convertible preferred stock liquidation preference) shall be distributed among the holders of Series A and B convertible preferred stock in proportion to the full preferential amount that each such holder is otherwise entitled to receive had such proceeds been available.

After liquidation preference payments have been made to the holders of the convertible preferred stock as described above, any remaining assets and funds of the Company are to be distributed ratably among the holders of common stock and Series A, B, C and D convertible preferred stock, assuming conversion of all shares of convertible preferred stock.

Prior to the Liquidation Event, the holders of all series of preferred stock may convert their preferred stock to common stock at the then-applicable conversion rate. Distribution of the Company’s assets to the new and existing common stockholders would then be made pro rata according to the number of shares held by each investor.

If convertible preferred stock is not converted to common stock prior to the Liquidation Event, the holders of Series C and D convertible preferred stock are entitled to receive their liquidation preferences, prior to and in preference of distribution of any assets of the Company to the holders of common stock, Series A and Series B convertible preferred stock, by reason of their ownership (as adjusted for any stock splits, combinations, reorganizations, or similar transactions), plus any declared but unpaid dividends on such shares. The holders of Series A and B convertible preferred stock are entitled to receive their liquidation preferences, prior to and in preference of distribution of any assets of the Company to the holders of common stock, by reason of their ownership (as adjusted for any stock splits, combinations, reorganizations, or similar transactions), plus any declared but unpaid dividends on such shares.

Voting

Except as otherwise required by law, the holders of common and convertible preferred stock vote together as a single class. The holders of the convertible preferred stock are entitled to the number of votes equal to the number of shares of common stock into which the convertible preferred stock could be converted on the record date for the vote, or upon the written consent of the stockholders.

Redemption

The convertible preferred shares are not redeemable.

Conversion

Each share of Series A, B, C and D convertible preferred stock, at the option of the holder and at any time after the date of issuance, is convertible into shares of common stock, subject to certain anti-dilution adjustments, in accordance with the conversion formula provided in the Company’s Articles of Incorporation (currently 1-for-1). In the event of a stock split, the conversion price in effect immediately prior to such split will be proportionately decreased. Conversion is automatic at the conversion rate: (1) immediately upon the closing of a firm commitment, underwritten initial public offering pursuant to an effective registration statement under the Securities Act of 1933, as amended, in which the public offering price reflects a pre-money valuation of at least $200.0 million and with net proceeds raised of at least $40.0 million or (2) at the election of the holders of at least 70% of the then outstanding shares of such series of preferred stock, the election of the holders of at least 65% of the Series C convertible preferred stock and the election of the holders of at least 52% of the Series D convertible preferred stock, voting as a separate class. The convertible preferred stock warrants become exercisable for common stock.

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Stock-Based Compensation Expense

12 Months Ended

Dec. 31, 2014

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Stock-Based Compensation Expense

10. Stock-Based Compensation Expense

Total stock-based compensation recognized, before taxes, during the years ended December 31, 2014, 2013 and 2012 are as follows (in thousands):

	Fiscal Years Ended December 31,
	2014		2013		2012
Cost of sales	$	49	$	21	$	10
Selling, general and administrative		1,361		273		103
Research and development		140		88		39
	$	1,550	$	382	$	152

As of December 31, 2014, the amount of unearned stock-based compensation currently estimated to be expensed from now through the year 2018 related to unvested employee stock-based payment awards is $4.6 million and the weighted average period over which the unearned stock-based compensation is expected to be recognized is 3.2 years. If there are any modifications or cancellations of the underlying unvested securities, the Company may be required to accelerate, increase or cancel any remaining unearned stock-based compensation expense. Future stock-based compensation expense and unearned stock-based compensation will increase to the extent that the Company grants additional share-based payments.

The Company estimates the fair value of stock-based compensation on the date of grant using the Black-Scholes option-pricing model. The Black-Scholes model determines the fair value of stock-based payment awards based on the fair market value of the Company’s common stock on the date of grant and is affected by assumptions regarding a number of highly complex and subjective variables. These variables include, but are not limited to, the fair market value of the Company’s common stock, volatility over the expected term of the awards and actual and projected employee stock option exercise behaviors. The Company has opted to use the “simplified method” for estimating the expected term of options, whereby the expected term equals the arithmetic average of the vesting term and the original contractual term of the option. Due to the Company’s limited operating history and a lack of company specific historical and implied volatility data, the Company has based its estimate of expected volatility on the historical volatility of a group of similar companies that are publicly traded. When selecting these public companies on which it has based its expected stock price volatility, the Company generally selected companies with comparable characteristics to it, including enterprise value, stages of clinical development, risk profiles, position within the industry and with historical share price information sufficient to meet the expected life of the stock-based awards. The historical volatility data was computed using the daily closing prices for the selected companies’ shares during the equivalent period of the calculated expected term of the share-based payments. The Company will continue to analyze the historical stock price volatility and expected term assumptions as more historical data for the Company’s common stock becomes available. The risk-free rate assumption is based on the U.S. Treasury instruments with maturities similar to the expected term of the Company’s stock options. The expected dividend assumption is based on the Company’s history of not paying dividends and its expectation that it will not declare dividends for the foreseeable future.

As stock-based compensation expense is based on awards ultimately expected to vest, the amount of expense has been reduced for estimated forfeitures. Potential forfeitures are estimated based on the Company’s historical forfeiture experience and an analysis of similar companies. To the extent actual forfeitures differ from the estimates, the Company records the difference as a cumulative adjustment in the period that the estimates are revised.

The fair value of options granted to employees or directors during the years ended December 31, 2014, 2013 and 2012, was estimated as of the grant date using the Black-Scholes model assuming the weighted average assumptions listed in the following table:

	Fiscal Years Ended December 31,
	2014			2013			2012
Expected life (years)		6.0			6.0			6.0
Expected volatility		56	%		67	%		66	%
Risk-free interest rate		1.9	%		1.6	%		0.9	%
Dividend yield		0.0	%		0.0	%		0.0	%
Weighted average fair value	$	6.80		$	0.96		$	0.68

Option Modification

In April 2013, options held by the President and Chief Executive Officer, Ms. Earnhardt, a related party, were modified to permit exercise with promissory notes of up to $0.5 million. Under the terms of the notes, one quarter of the principal and interest was to be forgiven on each anniversary date of the note as long as Ms. Earnhardt remains the Company’s Chief Executive Officer. In addition, the entire principal and interest of the notes was to be forgiven on the earlier of an initial public offering or the closing of a liquidation event (as defined in the certificate of incorporation), in each case where total proceeds payable to the Company or its stockholders is greater than $200.0 million. The Company had the option to accelerate the maturity date if, at the Company’s reasonable discretion, such acceleration may be necessary due to any applicable law, rule or regulation, including, without limitation, the Sarbanes-Oxley Act of 2002. The economic effect of the modification was equivalent to converting options to purchase 0.6 million shares to a grant of restricted stock with four-year vesting and a contingent vesting acceleration provision. The incremental cost of the modification was $0.3 million, of which $0.2 million and $50,000 was recognized during the years ended December 31, 2014 and 2013, respectively.

In June 2014, the entire principal amount and all accrued and unpaid interest of the loan was forgiven in full. In connection with the forgiveness of the note, the unamortized modification cost relating to the vested options of $0.2 million was immediately recognized. The remaining unamortized modification cost of $0.1 million will be amortized over the remaining vesting period.

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Stockholder's Equity - Schedule of Common Stock Reserved for Exercise and Issuance of Warrants, Options and Shares Available for Grant under Equity Incentive Stock Plans (Detail)	Dec. 31, 2014	Jul. 23, 2014
Class of Stock [Line Items]
Warrants outstanding	66,000
Options outstanding	2,458,000
Available for future grant:
Total common stock reserved for exercise and issuance, shares	7,454,000
2014 Equity Incentive Plan [Member]
Available for future grant:
Total common stock reserved for exercise and issuance, shares	4,434,000	4,750,000
2014 Employee Stock Purchase Plan [Member]
Available for future grant:
Total common stock reserved for exercise and issuance, shares	496,092	496,092

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Stock-Based Compensation Expense - Additional Information (Detail) (USD $) Share data in Millions, unless otherwise specified	0 Months Ended	12 Months Ended			1 Months Ended
	Dec. 31, 2014	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012	Apr. 30, 2013
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Unearned stock-based compensation	$ 4,600,000	$ 4,600,000
Weighted average period for unearned stock-based compensation to be recognized	3 years 2 months 12 days
Options modified to permit exercise with promissory notes		244,000	365,000	89,000
Conversion of options to grant restricted stock		0.6
Vesting period		4 years
Incremental cost of modification		300,000
Incremental cost recognized		200,000	50,000
Unamortized modification cost related to vested options		200,000
Remaining unamortized cost yet to be amortized	100,000	100,000
Promissory Notes [Member] | President And Chief Executive Officer [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Options modified to permit exercise with promissory notes					500,000
Minimum [Member] | Promissory Notes [Member] | President And Chief Executive Officer [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Liquidation event threshold representing total proceeds payable to the Company		$ 200,000,000

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Stockholder's Equity - Summary of Stock Option Activity (Detail) (USD $) In Thousands, except Per Share data, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Equity [Abstract]
Options price, outstanding, beginning of period	$ 1.08	$ 0.88	$ 0.80
Options price, granted	$ 12.88	$ 1.20	$ 1.16
Options price, granted - below fair market value		$ 1.32
Options price, exercised	$ 1.42	$ 0.84	$ 0.76
Options price, forfeited	$ 3.86	$ 1.08	$ 0.88
Options price, outstanding, end of period	$ 4.84	$ 1.08	$ 0.88
Options price, vested and expected to vest	$ 4.67	$ 1.08	$ 0.84
Options price, exercisable	$ 2.66	$ 1.00	$ 0.80
Options outstanding, beginning of period	1,928	1,594	1,425
Options granted	819	1,033	296
Options granted - below fair market value		94
Options exercised	(163)	(740)	(115)
Options forfeited	(126)	(53)	(12)
Options outstanding, end of period	2,458	1,928	1,594
Options vested and expected to vest	2,338	1,752	1,461
Options exercisable	1,612	1,314	1,206

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Organization - Additional Information (Detail) (USD $)	Dec. 31, 2014	Dec. 31, 2013
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Cash, cash equivalents and short-term investments	$ 48,400,000
Accumulated deficit	$ (96,621,000)	$ (78,259,000)

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Cash, Cash Equivalents and Short-term Investments - Summary of Cash, Cash Equivalents and Available-for-Sale Investments by Type of Instrument (Detail) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013
Net Investment [Line Items]
Cash, cash equivalents and available-for-sale investments, Amortized Cost	$ 48,443	$ 12,294
Cash, cash equivalents and available-for-sale investments, Gross Unrealized Gains	10
Cash, cash equivalents and available-for-sale investments, Gross Unrealized Losses	(10)
Cash, cash equivalents and available-for-sale investments, Estimated Fair Value	48,443	12,294
Cash and Cash Equivalents [Member]
Net Investment [Line Items]
Cash, cash equivalents and available-for-sale investments, Estimated Fair Value	13,403	12,294
Short-term investments, available-for-sale [Member]
Net Investment [Line Items]
Cash, cash equivalents and available-for-sale investments, Estimated Fair Value	35,040
Cash [Member]
Net Investment [Line Items]
Cash, cash equivalents and available-for-sale investments, Amortized Cost	1,971	1,076
Cash, cash equivalents and available-for-sale investments, Estimated Fair Value	1,971	1,076
Money Market Funds [Member]
Net Investment [Line Items]
Cash, cash equivalents and available-for-sale investments, Amortized Cost	11,432	11,218
Cash, cash equivalents and available-for-sale investments, Estimated Fair Value	11,432	11,218
Corporate Debt Securities [Member]
Net Investment [Line Items]
Cash, cash equivalents and available-for-sale investments, Amortized Cost	28,797
Cash, cash equivalents and available-for-sale investments, Gross Unrealized Gains	3
Cash, cash equivalents and available-for-sale investments, Gross Unrealized Losses	(10)
Cash, cash equivalents and available-for-sale investments, Estimated Fair Value	28,790
Commercial Paper [Member]
Net Investment [Line Items]
Cash, cash equivalents and available-for-sale investments, Amortized Cost	6,243
Cash, cash equivalents and available-for-sale investments, Gross Unrealized Gains	7
Cash, cash equivalents and available-for-sale investments, Estimated Fair Value	$ 6,250

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Supplemental Quarterly Financial Information

12 Months Ended

Dec. 31, 2014

Quarterly Financial Information Disclosure [Abstract]

Supplemental Quarterly Financial Information

Supplemental Quarterly Financial Information (unaudited)

The following table sets forth unaudited statements of operations data for each of the Company’s last eight quarters. This quarterly information is unaudited and has been prepared on the same basis as the annual financial statements. In the Company’s opinion, this quarterly information reflects all adjustments necessary for a fair presentation of the periods presented. The operating results for any quarter are not necessarily indicative of results for any future period.

	Fiscal Years Ended December 31,
	2014												2013
	Q1			Q2			Q3			Q4			Q1			Q2			Q3			Q4
Revenue	$	7,497		$	8,565		$	9,100		$	13,425		$	2,744		$	3,936		$	4,279		$	6,972
Cost of sales (1)		2,360			2,320			2,576			2,967			1,949			2,202			1,438			2,561
Gross profit		5,137			6,245			6,524			10,458			795			1,734			2,841			4,411
Gross margin (1)		69	%		73	%		72	%		78	%		29	%		44	%		66	%		63	%
Operating expenses:
Sales, general and administrative		6,658			8,291			9,667			11,495			3,350			4,087			4,700			6,092
Research and development		2,577			2,377			2,758			2,619			2,256			2,421			2,077			2,764
Total operating expenses		9,235			10,668			12,425			14,114			5,606			6,508			6,777			8,856
Loss from operations		(4,098	)		(4,423	)		(5,901	)		(3,656	)		(4,811	)		(4,774	)		(3,936	)		(4,445	)
Interest and other (expense) income, net (2)		(311	)		41			16			(30	)		58			(111	)		(163	)		(187	)
Net loss	$	(4,409	)	$	(4,382	)	$	(5,885	)	$	(3,686	)	$	(4,753	)	$	(4,885	)	$	(4,099	)	$	(4,632	)
Basic and diluted net loss per share	$	(2.49	)	$	(2.36	)	$	(0.32	)	$	(0.16	)	$	(4.57	)	$	(3.69	)	$	(2.39	)	$	(2.64	)
Shares used to compute basic and diluted net loss per share		1,773			1,860			18,217			23,375			1,039			1,323			1,718			1,755

(1) The first quarter of 2013 included $0.7 million for establishing and qualifying our new manufacturing facility. The second quarter of 2013 included a charge of $0.5 million related to a packaging issue and $0.1 million for establishing and qualifying our new manufacturing facility.

(2) The second and third quarter of 2013 each included $0.1 million in fair value expense adjustments for the preferred stock financing option. The fourth quarter of 2013 and first quarter of 2014 included $0.1 million and $0.3 million, respectively, in fair value expense adjustments for the preferred stock warrants classified as liabilities.

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Cash, Cash Equivalents and Short-term Investments (Tables)

12 Months Ended

Dec. 31, 2014

Cash and Cash Equivalents [Abstract]

Summary of Cash, Cash Equivalents and Available-for-Sale Investments by Type of Instrument

The following is a summary of cash, cash equivalents and short-term investments, available-for-sale, by type of instrument (in thousands):

	December 31,
	2014									2013
	Amortized Cost		Gross Unrealized					Estimated Fair Value		Amortized Cost		Gross Unrealized				Estimated Fair Value
			Gains		Losses							Gains		Losses
Cash	$	1,971	$	—	$	—		$	1,971	$	1,076	$	—	$	—	$	1,076
Money market funds		11,432		—		—			11,432		11,218		—		—		11,218
Corporate debt securities		28,797		3		(10	)		28,790		—		—		—		—
Commercial paper		6,243		7		—			6,250		—		—		—		—
	$	48,443	$	10	$	(10	)	$	48,443	$	12,294	$	—	$	—	$	12,294
Reported as:
Cash and cash equivalents								$	13,403							$	12,294
Short-term investments, available-for-sale									35,040								—
								$	48,443							$	12,294

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Composition of Certain Financial Statement Items - Additional information (Detail) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Statement of Financial Position [Abstract]
Depreciation and capital lease amortization expenses	$ 583	$ 505	$ 351

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Summary of Significant Accounting Policies - Schedule of Fair Value Assumptions and Methodology (Detail) (Series D Convertible Preferred Stock Financing Option [Member], USD $)	1 Months Ended
	Oct. 31, 2013	Feb. 28, 2013
Series D Convertible Preferred Stock Financing Option [Member]
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Total consideration per share	$ 1.72	$ 1.72
Additional investment per share	$ 1.72	$ 1.72
Discount rate	20.00%	20.00%
Probability of achievement	95.00%	95.00%
Years until milestone achieved	8 months 12 days	6 months

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Statements of Convertible Preferred Stock and Stockholders' (Deficit) Equity (USD $) In Thousands, except Share data	Total	Convertible Preferred Stock [Member]	Common Stock [Member]	Additional Paid-in Capital [Member]	Note Receivable From Related Party [Member]	Accumulated Other Comprehensive Loss [Member]	Accumulated Deficit [Member]	Series A [Member] Convertible Preferred Stock [Member]	Series D [Member] Convertible Preferred Stock [Member]
Beginning balance, Value at Dec. 31, 2011	$ (42,603)	$ 60,107	$ 1	$ 928		$ (7)	$ (43,525)
Beginning balance, Shares at Dec. 31, 2011		11,226,000	907,000
Issuance of convertible preferred stock upon exercise of warrants, Value								213
Issuance of convertible preferred stock upon exercise of warrants, Shares								57,000
Issuance common stock upon exercise of stock options, Value	89			89
Issuance common stock upon exercise of stock options, Shares	115,000		115,000
Stock-based compensation expense	152			152
Unrealized gain on short-term investments	7					7
Net loss	(16,365)						(16,365)
Ending balance, Value at Dec. 31, 2012	(58,720)	60,320	1	1,169			(59,890)
Ending balance, Shares at Dec. 31, 2012		11,283,000	1,022,000
Issuance of convertible preferred stock upon exercise of warrants, Value								82
Issuance of convertible preferred stock, net of issuance cost and preferred stock financing option, Value									30,358
Issuance of convertible preferred stock upon exercise of warrants, Shares								22,000
Issuance of convertible preferred stock, net of issuance cost and preferred stock financing option, Shares									4,396,000
Issuance common stock upon exercise of stock options, Value	365		1	364
Issuance common stock upon exercise of stock options, Shares	740,000		740,000
Note receivable from related party	(275)				(275)
Stock-based compensation expense	382			326	56
Net loss	(18,369)						(18,369)
Ending balance, Value at Dec. 31, 2013	(76,617)	90,760	2	1,859	(219)		(78,259)
Ending balance, Shares at Dec. 31, 2013		15,701,000	1,762,000
Issuance of convertible preferred stock upon exercise of warrants, Value								29
Issuance of convertible preferred stock upon exercise of warrants, Shares								3,000
Conversion of convertible preferred stock to common stock, Value	90,789	(90,789)	16	90,773
Conversion of convertible preferred stock to common stock, Shares		(15,704,000)	15,704,000
Conversion of convertible preferred stock warrants to common stock warrants	406			406
Issuance common stock upon initial public offering, net of issuance costs, Value	55,802		5	55,797
Issuance common stock upon initial public offering, net of issuance costs, Shares			5,750,000
Issuance common stock upon exercise of stock options, Value	244			244
Issuance common stock upon exercise of stock options, Shares	163,000		163,000
Stock-based compensation expense	1,550			1,358	192
Reclass upon forgiveness of note receivable from related party				(27)	27
Net loss	(18,362)						(18,362)
Ending balance, Value at Dec. 31, 2014	$ 53,812		$ 23	$ 150,410			$ (96,621)
Ending balance, Shares at Dec. 31, 2014			23,379,000

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Cash, Cash Equivalents and Short-term Investments

12 Months Ended

Dec. 31, 2014

Cash and Cash Equivalents [Abstract]

Cash, Cash Equivalents and Short-term Investments

4. Cash, Cash Equivalents and Short-term Investments

The following is a summary of cash, cash equivalents and short-term investments, available-for-sale, by type of instrument (in thousands):

	December 31,
	2014									2013
	Amortized Cost		Gross Unrealized					Estimated Fair Value		Amortized Cost		Gross Unrealized				Estimated Fair Value
			Gains		Losses							Gains		Losses
Cash	$	1,971	$	—	$	—		$	1,971	$	1,076	$	—	$	—	$	1,076
Money market funds		11,432		—		—			11,432		11,218		—		—		11,218
Corporate debt securities		28,797		3		(10	)		28,790		—		—		—		—
Commercial paper		6,243		7		—			6,250		—		—		—		—
	$	48,443	$	10	$	(10	)	$	48,443	$	12,294	$	—	$	—	$	12,294
Reported as:
Cash and cash equivalents								$	13,403							$	12,294
Short-term investments, available-for-sale									35,040								—
								$	48,443							$	12,294

Management has the intent and ability, if necessary, to liquidate any of the Company’s investments in order to meet the Company’s liquidity needs in the next 12 months. Accordingly, investments with contractual maturities greater than one year from the date of purchase, if any, are available-for-sale and classified as short-term on the accompanying balance sheets. As of December 31, 2014 and 2013, the Company had no investments with a maturity of greater than one year.

Based on an evaluation of securities that have been in a loss position, the Company did not recognize any other-than-temporary impairment charges during the years ended December 31, 2014, 2013 and 2012. The Company considered various factors which included a credit and liquidity assessment of the underlying securities and the Company’s intent and ability to hold the underlying securities until the estimated date of recovery of its amortized cost.

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Convertible Preferred Stock Warrant Liability - Additional Information (Detail) (USD $)	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Aug. 31, 2013
Class of Warrant or Right [Line Items]
Net preferred stock shares issued	0	0
Shares withheld due to exercise price	0	0
Shares Outstanding	53,357	57,433
Equipment Loan Warrant [Member]
Class of Warrant or Right [Line Items]
Number of shares of Series A convertible preferred stock exercised though a cashless exercise of warrants	4,076
Net preferred stock shares issued	2,431
Shares withheld due to exercise price	1,645
Number of shares of Series A convertible preferred stock exercised though exercise of warrants		22,418
Loan Agreement Warrants [Member]
Class of Warrant or Right [Line Items]
Shares Outstanding	5,803		5,803
Warrants exercise price per share	6.89		$ 6.89
Warrants expiry date	2023-08
Warrants expiration description	Or upon the occurrence of an acquisition of the Company in exchange for cash or marketable securities.

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Commitments and Contingencies - Summary of Future Minimum Annual Operating Lease Payments (Detail) (USD $) In Thousands, unless otherwise specified	Dec. 31, 2014
Commitments and Contingencies Disclosure [Abstract]
2015	$ 645
2016	1,494
2017	1,536
2018	1,580
2019	1,625
Thereafter	685
Total	$ 7,565

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Convertible Preferred Stock Warrant Liability (Tables)

12 Months Ended

Dec. 31, 2014

Text Block [Abstract]

Schedule of Warrants to Purchase Shares of Convertible Preferred Stock Outstanding and Exercisable

As of December 31, 2014 and 2013, the following warrants to purchase shares of convertible preferred stock were outstanding and exercisable (in thousands, except share and per share data):

Dates		In Connection With	Series		Exercise Price		Warrants Outstanding at December 31,				Initial Value		Fair Value at December 31,
Issuance	Expiration						2014		2013				2014 (1)		2013
Mar 2007	Mar 2014	Equipment loan		A	$	3.68		—		4,076	$	4	$	—	$	17
Nov 2007	Nov 2017	Venture loan		A	$	3.68		47,554		47,554		63		—		200
Aug 2013	Aug 2023	Loan Agreement		D	$	6.89		5,803		5,803		10		—		20
								53,357		57,433			$	—	$	237

(1) In connection with the Company’s IPO in July 2014, all warrants for convertible preferred stock were converted to warrants for common stock, resulting in the reclassification of the related redeemable convertible preferred stock warrant liability of $0.4 million to additional paid-in capital.

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Income Taxes - Schedule of Reconciliation of Change in Unrecognized Tax Benefit (Detail) (USD $) In Thousands, unless otherwise specified	12 Months Ended
	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Income Tax Disclosure [Abstract]
Beginning of year	$ 715	$ 505	$ 442
Additions for tax positions related to:
Current year	140	210	63
Prior years	6
End of year	$ 861	$ 715	$ 505

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Summary of Significant Accounting Policies - Schedule of Changes in Estimated Fair Value using Valuations Classified as Level 3 - Convertible Preferred Stock Warrant Liability (Detail) (USD $)	1 Months Ended	12 Months Ended
	Jul. 31, 2014	Dec. 31, 2014	Dec. 31, 2013	Dec. 31, 2012
Class of Warrant or Right [Line Items]
Beginning of the period		$ 237,000
Reclassified to equity	(406,000)	(406,000)
Change in fair value		198,000	134,000	(128,000)
End of the period			237,000
Convertible Preferred Stock [Member] | Level 3 [Member]
Class of Warrant or Right [Line Items]
Beginning of the period		237,000	93,000	221,000
Issued			10,000
Exercised		(29,000)
Reclassified to equity		(406,000)
Change in fair value		198,000	134,000	(128,000)
End of the period			$ 237,000	$ 93,000

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Related Parties

12 Months Ended

Dec. 31, 2014

Related Party Transactions [Abstract]

Related Parties

14. Related Parties

In April 2013, options held by the President and Chief Executive Officer, Ms. Earnhardt, a related party, were modified to permit exercise with promissory notes of up to $0.5 million. Under the terms of the notes, one quarter of the principal and interest was to be forgiven on each anniversary date of the note as long as Ms. Earnhardt remained the Company’s Chief Executive Officer. In addition, the entire principal and interest of the notes was to be forgiven on the earlier of an initial public offering or the closing of a liquidation event (as defined in the certificate of incorporation), in each case where total proceeds payable to the Company or its stockholders is greater than $200.0 million. The Company had the option to accelerate the maturity date if, at the Company’s reasonable discretion, such acceleration may be necessary due to any applicable law, rule or regulation, including, without limitation, the Sarbanes-Oxley Act of 2002. The entire principal amount and all accrued and unpaid interest of the loan was forgiven in full in June 2014. The full recourse promissory notes were secured by a pledge of the exercised shares.

In January 2007, the Company loaned amounts to its Chief Operation Officer, Mr. Kaufman, a related party, in connection with the commencement of his employment with the Company. The loan was evidenced by a promissory note for $0.3 million. This note bore interest at the applicable federal rate and interest was determined in accordance with Section 7872 of the Internal Revenue Code and has been reflected as income to Mr. Kaufman. Pursuant to the terms of the promissory note, provided Mr. Kaufman remained a continuous, full-time employee of the Company, repayment of the notes was to begin after the third year of employment when 50% of his annual bonus would have been applied to the loan balance until the loan was paid in full. The note matures and becomes immediately due and payable within 30 days following the date on which Mr. Kaufman ceases, voluntarily or involuntarily, to be employed by the Company. No payment was received in the year ended December 31, 2011 since the Company did not pay an annual bonus in that year. In February 2011, the Company agreed to forgive Mr. Kaufman’s loan over three years, provided Mr. Kaufman remained employed by the Company, at the rate of $0.1 million annually in January 2012, 2013 and 2014. The note was secured by any stock and options Mr. Kaufman holds in the Company. Mr. Kaufman’s note was fully forgiven in January 2014.

In March 2009, the Company purchased three sinus irrigation tool patents from Medilyfe Inc., a Canadian corporation. A member of the Company’s Medical Advisory Board holds an executive-level position with Medilyfe Inc. The agreement called for a $40,000 payment upon execution of the agreement and an additional $35,000 upon the first anniversary of the agreement’s effective date in addition to the issuance of a warrant to purchase 43,750 shares of the Company’s common stock at $1.00 per share.

The warrant vested fully upon grant and will expire April 7, 2019. The value of the warrant was $30,000 determined using the Black-Scholes model. The cost of the patents is included in research and development expense, since substantial research and development efforts were required at the time of the payment of these amounts and there was no alternative future use of the technology rights. A $35,000 cash payment was made in 2012, since one additional patent claim was allowed by the U.S. Patent Office. The Company recorded $35,000 in research and development expense related to this agreement for the year ended December 31, 2012. An additional $80,000 cash payment will be due upon the first achievement of net sales of products incorporating this technology exceeding $1.0 million in a given calendar year. Such additional payment was not owed as of December 31, 2014 and 2013, since this technology is unrelated to the Company’s current activities.