10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

______________________________

FORM 10-Q

REGISTRATION STATEMENT

Under

The Securities Act of 1933

______________________________

(Mark One)

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

For the quarterly period ended June 30, 2021

OR

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

For transition period from               to

Commission File Number   001-38847     

______________________________

SILK ROAD MEDICAL, INC.

(Exact name of registrant as specified in its charter)

______________________________

Delaware	3841	20-8777622
(State or other jurisdiction of ‎incorporation or organization)	(Primary Standard Industrial ‎Classification Code Number)	(I.R.S. Employer ‎Identification Number)

1213 Innsbruck Dr. Sunnyvale, CA 94089 (408) 720-9002

(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)

______________________________

Erica J. Rogers

Chief Executive Officer

1213 Innsbruck Dr. Sunnyvale, CA 94089 (408) 720-9002

(Name, address, including zip code, and telephone number, including area code, of agent for service)

______________________________

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 ☒    No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).    Yes ☒    No ☐

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

Large Accelerated Filer	☒	Accelerated Filer	☐
Non-accelerated Filer	☐	Smaller Reporting Company	☐
Emerging Growth Company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 7(a)(2)(B) of the Securities Act.  ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule12b-2 of the Act).    Yes ☐    No ☒

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

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock	SILK	Nasdaq Global Select Market

As of July 31, 2021, the number of outstanding shares of the registrant's common stock, par value $0.001 per share, was 34,683,795.

TABLE OF CONTENTS

	Part I: Financial Information	Page
Item 1.	Unaudited Condensed Financial Statements	4
	Condensed Balance Sheets	4
	Condensed Statements of Operations and Comprehensive Loss	5
	Condensed Statements of Stockholders' Equity	6
	Condensed Statements of Cash Flows	7
	Notes to Condensed Financial Statements	8
Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations	25
Item 3.	Quantitative and Qualitative Disclosure About Market Risk	32
Item 4.	Controls and Procedures	33
	Part II: Other Information
Item 1.	Legal Proceedings	33
Item 1A.	Risk Factors	33
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	68
Item 3.	Defaults Upon Senior Securities	69
Item 4.	Mine Safety Disclosures	69
Item 5.	Other Information	69
Item 6.	Exhibits	70
	Signatures	72

1

CAUTIONARY NOTES REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements concerning our business, operations and financial performance and condition, as well as our plans, objectives and expectations for our business, operations and financial performance and condition. Any statements contained herein that are not statements of historical facts may be deemed to be forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as “anticipate,” “assume,” “believe,” “contemplate,” “continue,” “could,” “due,” “estimate,” “expect,” “goal,” “intend,” “may,” “objective,” “plan,” “predict,” “potential,” “positioned,” “seek,” “should,” “target,” “will,” “would” and other similar expressions that are predictions of or indicate future events and future trends, or the negative of these terms or other comparable terminology.

These forward-looking statements include, but are not limited to, statements about:

•our plans to conduct further clinical trials;

•our plans and expected timeline related to our products, or developing new products, to address additional indications or to obtain regulatory approvals or clearances or otherwise;

•the expected use of our products by physicians;

•our expectations regarding the number of procedures that will be performed with our products, the number of physicians we expect to train, and the number of our sales territories;

•our ability to obtain, maintain and expand regulatory clearances for our current products and any new products we create;

•the expected growth of our business and our organization;

•our expectations regarding government and third-party payer coverage and reimbursement;

•our ability to retain and recruit key personnel, including the continued expansion of our sales and marketing infrastructure;

•our ability to obtain an adequate supply of materials and components for our products from our third-party suppliers, most of whom are single-source suppliers;

•our ability to manufacture sufficient quantities of our products with sufficient quality;

•our ability to obtain and maintain intellectual property protection for our products and our business;

•our ability to expand our business into new geographic markets;

•our compliance with extensive Nasdaq requirements and government laws, rules and regulations both in the United States and internationally;

•our estimates of our expenses, ongoing losses, future revenue, capital requirements and our need for, or ability to obtain, additional financing;

•our ability to identify and develop new and planned products and/or acquire new products; 

•our expectations regarding the continued impact of the COVID-19 pandemic on our business;

•developments and projections relating to our competitors or our industry; and

•our intended use of net proceeds from our public offerings.

We believe that it is important to communicate our future expectations to our investors. However, there may be events in the future that we are not able to accurately predict or control and that may cause our actual results to differ materially from the expectations we describe in our forward-looking statements. These forward-looking statements are based on management’s 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

2

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 Quarterly Report on Form 10-Q may turn out to be inaccurate. Factors that may cause actual results to differ materially from current expectations include, among other things, those listed under “Risk Factors” and elsewhere in this Quarterly Report on Form 10-Q.

These forward-looking statements speak only as of the date of this Quarterly Report on Form 10-Q. We assume no obligation to update or revise these forward-looking statements for any reason, even if new information becomes available in the future. You should not rely upon forward-looking statements as predictions of future events. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee that the future results, levels of activity, performance or events and circumstances reflected in the forward-looking statements will be achieved or occur. We undertake no obligation to update publicly any forward-looking statements for any reason after the date of this Quarterly Report on Form 10-Q to conform these statements to actual results or to changes in our expectations.

You should read this Quarterly Report on Form 10-Q and the documents that we reference in this Quarterly Report on Form 10-Q and have filed with the SEC as exhibits to this Quarterly Report on Form 10-Q with the understanding that our actual future results, levels of activity, performance and events and circumstances may be materially different from what we expect.

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Part I. Financial Information

Item 1: Unaudited Condensed Financial Statements

Silk Road Medical, Inc.

Condensed Balance Sheets

(unaudited)

(in thousands, except share and per share data)	June 30,		December 31,
	2021		2020
Assets
Current assets:
Cash and cash equivalents	$	101,849	$	69,466
Short-term investments		26,293		78,016
Accounts receivable, net		11,747		9,070
Inventories		12,771		9,989
Prepaid expenses and other current assets		5,877		6,787
Total current assets		158,537		173,328
Property and equipment, net		3,428		2,844
Restricted cash		310		310
Other non-current assets		5,931		2,832
Total assets	$	168,206	$	179,314
Liabilities and stockholders' equity
Current liabilities:
Accounts payable	$	1,958	$	2,598
Accrued liabilities		14,705		16,957
Total current liabilities		16,663		19,555
Long-term debt		48,614		48,533
Other liabilities		6,791		3,726
Total liabilities		72,068		71,814
Commitments and contingencies (Note 7)
Stockholders' equity:
Preferred stock, $0.001 par value
Shares authorized: 5,000,000 at June 30, 2021 and December 31, 2020
Shares issued and outstanding: none at June 30, 2021 and December 31, 2020
Common stock, $0.001 par value		—		—
Shares authorized: 100,000,000 at June 30, 2021 and December 31, 2020
Shares issued and outstanding: 34,623,409 and 34,249,649 at June 30, 2021 and December 31, 2020, respectively		35		34
Additional paid-in capital		356,224		346,318
Accumulated other comprehensive income		3		39
Accumulated deficit		(260,124)		(238,891)
Total stockholders' equity		96,138		107,500
Total liabilities and stockholders' equity	$	168,206	$	179,314

 
‎

The accompanying notes are an integral part of these condensed financial statements.

4

Silk Road Medical, Inc.

Condensed Statements of Operations and Comprehensive Loss

(unaudited)

(in thousands, except share and per share data)	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2021		2020		2021		2020
Revenue	$	26,456	$	15,094	$	48,509	$	34,027
Cost of goods sold		6,598		5,336		12,137		10,586
Gross profit		19,858		9,758		36,372		23,441
Operating expenses:
Research and development		7,261		3,393		12,744		6,522
Selling, general and administrative		22,549		15,758		43,743		35,450
Total operating expenses		29,810		19,151		56,487		41,972
Loss from operations		(9,952)		(9,393)		(20,115)		(18,531)
Interest income		47		299		142		702
Interest expense		(628)		(1,203)		(1,250)		(2,406)
Other income (expense), net		(6)		(56)		(10)		(59)
Net loss		(10,539)		(10,353)		(21,233)		(20,294)
Other comprehensive loss:
Unrealized gain (loss) on investments, net		(3)		(126)		(36)		314
Net change in other comprehensive loss		(3)		(126)		(36)		314
Net loss and comprehensive loss	$	(10,542)	$	(10,479)	$	(21,269)	$	(19,980)
Net loss per share, basic and diluted	$	(0.31)	$	(0.32)	$	(0.62)	$	(0.63)
Weighted average common shares used to compute net loss per share, basic and diluted		34,534,099		32,682,360		34,435,812		32,010,335

The accompanying notes are an integral part of these condensed financial statements.

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Silk Road Medical, Inc.

Condensed Statements of Stockholders' Equity

(unaudited)

(in thousands, except share data)	Common Stock			Additional ‎Paid-in		Accumulated		Accumulated ‎Other Comprehensive
	Shares	Amount		Capital		Deficit		Income		Total
Balances at December 31, 2020	34,249,649	$	34	$	346,318	$	(238,891)	$	39	$	107,500
Exercise of stock options	163,151		—		848		—		—		848
Issuance of common stock upon release of restricted stock units	25,490		—		—		—		—		—
Stock-based compensation	—		—		3,533		—		—		3,533
Net loss	—		—		—		(10,694)		—		(10,694)
Unrealized loss on investments, net	—		—		—		—		(33)		(33)
Balances at March 31, 2021	34,438,290		34		350,699		(249,585)		6		101,154
Exercise of stock options	155,443		1		1,030		—		—		1,031
Issuance of common stock upon release of restricted stock units	2,792		—		—		—		—		—
Issuance of common stock under employee stock purchase plan	26,884		—		1,086		—		—		1,086
Stock-based compensation	—		—		3,409		—		—		3,409
Net loss	—		—		—		(10,539)		—		(10,539)
Unrealized loss on investments, net	—		—		—		—		(3)		(3)
Balances at June 30, 2021	34,623,409	$	35	$	356,224	$	(260,124)	$	3	$	96,138
(in thousands, except share data)	Common Stock			Additional ‎Paid-in		Accumulated		Accumulated ‎Other Comprehensive
	Shares	Amount		Capital		Deficit		Income		Total
Balances at December 31, 2019	31,255,267	$	31	$	263,384	$	(191,526)	$	2	$	71,891
Exercise of stock options	140,370		—		274		—		—		274
Stock-based compensation	—		—		1,293		—		—		1,293
Net loss	—		—		—		(9,941)		—		(9,941)
Unrealized gains on investments, net	—		—		—		—		440		440
Balances at March 31, 2020	31,395,637		31		264,951		(201,467)		442		63,957
Issuance of common stock in connection with public offering, net of underwriting discount, commissions and offering costs of $4,457	1,923,076		2		70,541		—		—		70,543
Exercise of stock options	265,467		1		603		—		—		604
Issuance of common stock under employee stock purchase plan	25,919		—		801		—		—		801
Stock-based compensation	—		—		1,654		—		—		1,654
Net loss	—		—		—		(10,353)		—		(10,353)
Unrealized loss on investments, net	—		—		—		—		(126)		(126)
Balances at June 30, 2020	33,610,099	$	34	$	338,550	$	(211,820)	$	316	$	127,080

The accompanying notes are an integral part of these condensed financial statements.

6

Silk Road Medical, Inc.

Condensed Statements of Cash Flows

(unaudited)

(in thousands)	Six Months Ended
	June 30,
	2021		2020
Cash flows from operating activities
Net loss	$	(21,233)	$	(20,294)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization expense		482		368
Stock-based compensation expense		6,942		2,947
Amortization of premiums on investments, net		387		57
Amortization of debt discount and debt issuance costs		80		23
Amortization of right-of-use asset		373		295
Non-cash interest expense		(7)		167
Loss on disposal of property and equipment		—		51
Change in provision for doubtful accounts receivable		—		(9)
Provision for excess and obsolete inventories		50		105
Changes in assets and liabilities:
Accounts receivable		(2,677)		857
Inventories		(456)		(1,404)
Prepaid expenses and other current assets		(3,227)		(986)
Other assets		(74)		117
Accounts payable		(833)		262
Accrued liabilities		(482)		(5,925)
Other liabilities		(333)		(7)
Net cash used in operating activities		(21,008)		(23,376)
Cash flows from investing activities
Purchases of property and equipment		(874)		(479)
Purchases of investments		—		(23,606)
Proceeds from maturity of investments		51,300		9,180
Net cash provided by (used in) investing activities		50,426		(14,905)
Cash flows from financing activities
Proceeds from public offerings, net of underwriting discount, commissions and offering costs paid		—		70,863
Proceeds from issuance of common stock		2,965		1,679
Net cash provided by financing activities		2,965		72,542
Net change in cash, cash equivalents and restricted cash		32,383		34,261
Cash, cash equivalents and restricted cash, beginning of period		69,776		39,491
Cash, cash equivalents and restricted cash, end of period	$	102,159	$	73,752
Supplemental disclosure of cash flow information
Cash paid for interest	$	1,177	$	2,216
Noncash investing and financing activities:
Accounts payable and accrued liabilities for purchases of property and equipment	$	283	$	100
Offering costs in accrued liabilities		—		320
Right-of-use asset obtained in exchange for lease obligation	$	3,398	$	—

The accompanying notes are an integral part of these condensed financial statements.

7

Silk Road Medical, Inc.

Notes to Condensed Financial Statements

(unaudited)

1.    Formation and Business of the Company

The Company

Silk Road Medical, Inc. (the “Company”) was incorporated in the state of Delaware on March 21, 2007. The Company has developed a technologically advanced, minimally-invasive solution for patients with carotid artery disease who are at risk for stroke. The Company's portfolio of TCAR products enable a new procedure, referred to as transcarotid artery revascularization, or TCAR, that combines the benefits of endovascular techniques and surgical principles. The Company manufactures and sells in the United States its portfolio of TCAR products which are designed to provide direct access to the carotid artery, effective reduction in stroke risk throughout the procedure, and long-term restraint of carotid plaque. The Company commercialized its products in the United States in late 2015.

Public Offering

In May 2020, the Company completed an underwritten public offering of 6,808,154 shares of its common stock, of which 1,923,076 shares were offered for sale by the Company and the remaining 4,885,078 shares were offered for sale by certain selling stockholders, at a public offering price of $39.00 per share. The Company received cash proceeds of approximately $70,543,000 after deducting underwriting discounts and commissions of approximately $3,750,000 and expenses of approximately $707,000. Also in May 2020, the underwriters fully exercised their option to purchase 1,021,223 additional shares of common stock from the selling stockholders. The Company did not receive any of the proceeds from the sale of the shares of its common stock by the selling stockholders.

2.    Summary of Significant Accounting Policies

Basis of Preparation

The accompanying financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America, or U.S. GAAP, and applicable rules and regulations of the Securities and Exchange Commission, or SEC, regarding interim financial reporting. As permitted under those rules, certain footnotes or other financial information that are normally required by U.S. GAAP have been condensed or omitted, and accordingly the balance sheet as of December 31, 2020, and related disclosures, have been derived from the audited financial statements at that date but does not include all of the information required by U.S. GAAP for complete financial statements. These unaudited condensed financial statements have been prepared on the same basis as the Company’s annual financial statements and, in the opinion of management, reflect all adjustments (consisting only of normal recurring adjustments) that are necessary for the fair statement of the Company’s condensed financial information. The results of operations for the three and six months ended June 30, 202 are not necessarily indicative of the results to be expected for the year ending December 31, 2021 or for any other interim period or for any other future year.

The accompanying interim unaudited condensed financial statements and related financial information should be read in conjunction with the audited financial statements and the related notes thereto for the year ended December 31, 2020 included in the Company's annual report on Form 10-K filed with the SEC on March 1, 2021.

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 judgment when making estimates related to provisions for accounts receivable and excess and obsolete inventories, the valuation of deferred tax assets, the reserves for sales returns, and stock-based compensation. 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. Although these estimates are based on the Company’s knowledge of current events and actions it may undertake in the future, actual results may ultimately materially differ from these estimates and assumptions.

8

Silk Road Medical, Inc.

Notes to Condensed Financial Statements

(unaudited)

Due to the coronavirus (“COVID-19”) pandemic, there has been continued uncertainty and disruption in the global economy and financial markets. While some of the uncertainties began to lift throughout the first half of 2021, new virus variants, and increased infection rates during this period make the current COVID-related environment highly volatile and uncertain. The Company is not aware of any specific event or circumstance that would require an update to its estimates or judgments or a revision of the carrying value of its assets or liabilities as of June 30, 2021. The Company has also considered information available to it as of the date of issuance of these financial statements and is not aware of any specific events or circumstances that would require an update to its estimates or judgments, or a revision to the carrying value of its assets or liabilities. These estimates may change as new events occur and additional information becomes available. Actual results could differ materially from these estimates.

Fair Value of Financial Instruments

The Company has evaluated the estimated fair value of its financial instruments as of June 30, 2021 and December 31, 2020. The carrying amounts of certain of the Company’s financial instruments, which include cash equivalents, short-term investments, restricted cash, accounts receivable, accounts payable and accrued liabilities approximate their respective fair values because of the short-term nature of these instruments. Management believes that its long-term debt bears interest at the prevailing market rates for instruments with similar characteristics (Level 2 within the fair value hierarchy); accordingly, the carrying value of this instrument approximates its fair value.

Cash, Cash Equivalents and Restricted Cash

The Company considers all highly liquid investments with an original maturity of three months or less at the time of purchase to be cash equivalents. Cash equivalents are considered available-for-sale marketable securities and are recorded at fair value, based on quoted market prices. As of June 30, 2021 and December 31, 2020, the Company’s cash equivalents are entirely comprised of investments in money market funds.

Restricted cash as of June 30, 2021 and December 31, 2020 consists of a letter of credit of $310,000 representing collateral for the Company's facility lease in California.

Investments

Short-term investments consist of debt securities classified as available-for-sale and have original maturities greater than 90 days, but less than one year as of the balance sheet date. Long-term investments have maturities greater than one year as of the balance sheet date. All investments are recorded at fair value based on the fair value hierarchy. Money market funds and United States treasury bills with an original maturity less than 90 days are classified within Level 1 of the fair value hierarchy, and commercial paper, corporate bonds/notes, United States Government securities, and asset-backed securities are classified within Level 2 of the fair value hierarchy. Unrealized gains and losses, deemed temporary in nature, are reported as a separate component of accumulated other comprehensive income (loss). The cost of available-for-sale investments sold is based on the specific-identification method. Realized gains and losses are included in earnings and are derived for specific-identification method for determining the costs of investments sold and were insignificant for the three and six months ended June 30, 2021 and 2020. Amortization of premiums and accretion of discounts are reported as a component of interest income.

A decline in the fair value of any security below cost that is deemed other than temporary results in a charge to earnings and the corresponding establishment of a new cost basis for the investment. The Company evaluates the securities in an unrealized loss position for expected credit losses by considering factors such as historical experience, market data, issuer-specific factors, current economic conditions and credit ratings.

Concentration of Credit Risk, and Other Risks and Uncertainties

The Company is subject to risks related to public health crises such as the global pandemic associated with COVID-19, which has spread to most countries and all 50 states within the United States. The COVID-19 outbreak has negatively impacted, and may continue to negatively impact the Company’s operations, its revenue and overall financial condition by significantly decreasing the number of TCAR procedures performed. The number of TCAR procedures performed, similar to other surgical procedures, has significantly decreased as health care organizations globally prioritized the treatment of

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Silk Road Medical, Inc.

Notes to Condensed Financial Statements

(unaudited)

patients with COVID-19. For example, during 2020, in the United States, governmental authorities recommended, and in certain cases required, that elective, specialty and other procedures and appointments, be suspended or canceled to focus limited resources and personnel and hospital capacity toward the treatment of COVID-19 and to avoid exposing patients to COVID-19. These measures and challenges will likely continue for the duration of the pandemic, which is uncertain, and will continue to negatively impact the Company’s revenue while the pandemic continues. While some of these restrictions began to lift throughout the first half of 2021, new virus variants, and increased infection rates during this period make the current COVID-related environment highly volatile and uncertain.

Financial instruments that potentially subject the Company to credit risk consist of cash and cash equivalents, investments and accounts receivable to the extent of the amounts recorded on the balance sheet. Cash, cash equivalents, and investments are deposited in financial institutions which, at times, may be in excess of federally insured limits. Cash equivalents are invested in highly rated money market funds and United States treasury bills. The Company invests in a variety of financial instruments, such as, but not limited to, commercial paper, corporate bonds/notes, United States Government securities, asset-backed securities and, by policy, limits the amount of credit exposure with any one financial institution or commercial issuer. The Company has not experienced any material losses on its deposits of cash and cash equivalents or investments during the three and six months ended June 30, 2021 and 2020.

The Company’s accounts receivable are due from a variety of health care organizations in the United States. At June 30, 2021 and December 31, 2020, no customer represented 10% or more of the Company’s accounts receivable. For the three and six months ended June 30, 2021 and 2020, there were no customers that represented 10% or more of revenue.

The Company provides for uncollectible amounts when specific credit problems are identified. In doing so, the Company analyzes historical bad debt trends, customer credit worthiness, current economic trends and changes in customer payment patterns when evaluating the adequacy of the allowance for expected credit losses on customer accounts.

The Company manufactures certain of its commercial products in-house. Certain of the Company’s product components and sub-assemblies continue to be manufactured by sole suppliers, the most significant of which is the ENROUTE Transcarotid Stent System, manufactured by Cordis Corporation. Disruption in component or sub-assembly supply from these manufacturers or from in-house production would have a negative impact on the Company’s financial position and results of operations.

The Company is subject to certain risks, including that its devices may not be approved or cleared for marketing by governmental authorities or be successfully marketed. There can be no assurance that the Company’s products will achieve widespread adoption in the marketplace, nor can there be any assurance that existing devices or any future devices can be developed or manufactured at an acceptable cost and with appropriate performance characteristics. The Company is also subject to risks common to companies in the medical device industry, including, but not limited to, new technological innovations, dependence upon government and third-party payers to provide adequate coverage and reimbursement, dependence on key personnel and suppliers, protection of proprietary technology, product liability claims, and compliance with government regulations.

Existing or future devices developed by the Company may require approvals or clearances from the FDA or international regulatory agencies. In addition, in order to continue the Company’s operations, compliance with various federal and state laws is required. If the Company were denied or delayed in receiving such approvals or clearances, it may be necessary to adjust operations to align with the Company’s currently approved portfolio. If clearance for the products in the current portfolio were withdrawn by the FDA, this would have a material adverse impact on the Company.

Voluntary Recall

In January and February 2021, the Company announced the voluntary recall of certain lots of its ENROUTE Transcarotid Stent System, manufactured by one of its third-party suppliers, Cordis. The decision to recall these lots was based on complaints received about tips detaching from the stent delivery system as well as internal testing that the Company conducted. The Company believes the root cause of the detachment was a single operator at Cordis, who, over a specific timeframe, produced lots in which a small number of units were not reliably manufactured to specification.

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Silk Road Medical, Inc.

Notes to Condensed Financial Statements

(unaudited)

As a result of the voluntary recall the Company reflected a current asset of $4,160,000 on its balance sheet as of December 31, 2020, relating to the replacement lots and other direct costs to be received from Cordis. This amount includes $2,227,000 of recalled ENROUTE stent delivery systems held in the Company's inventory as of December 31, 2020, $1,696,000 of ENROUTE stent delivery systems in the process of being returned from its customers and other direct costs of $237,000. In addition, the Company established an accrual of $1,696,000 relating to its obligation to provide replacement ENROUTE stent delivery systems to its customers as of December 31, 2020. As of June 30, 2021, the Company has a current asset of $605,000 on its balance sheet, relating to the replacement lots and other direct costs to be received from Cordis. This amount comprises a receivable of $262,000 relating to both recalled ENROUTE stent delivery systems held in the Company’s inventory as of June 30, 2021 and pending replacement from Cordis, $11,000 of ENROUTE stent delivery systems to be returned from its customers and other direct costs of $332,000. In addition, as of June 30, 2021, the Company has a remaining accrual of $21,000 relating to its obligation to provide replacement ENROUTE stent delivery systems to its customers.

Leases

The Company accounts for leases in accordance with Accounting Standards Codification (“ASC”) 842, "Leases." The Company considers if an arrangement is a lease at inception if it obtains the right to control the use of an identified asset under a leasing arrangement with an initial term greater than twelve months. The Company determines whether a contract conveys the right to control the use of an identified asset for a period of time if the contract contains both the right to obtain substantially all of the economic benefits from the use of the identified asset and the right to direct the use of the identified asset. The Company also evaluates the nature of each lease to determine whether it is an operating or financing lease and recognizes the right-of-use asset and lease liabilities based on the present value of future minimum lease payments over the expected lease term. The Company’s leases do not generally contain an implicit interest rate and therefore the Company uses the incremental borrowing rate it would expect to pay to borrow on a similar collateralized basis over a similar term in order to determine the present value of its lease payments. The Company’s considers renewal options in the determination of the lease term if the option to renew is reasonably certain. Variable lease costs represent payments that are dependent on usage, a rate or index. Variable lease costs, which consists primarily of taxes, insurance and common area maintenance costs, are expensed as incurred, as the Company has elected to account separately for contracts that contain lease and non-lease components, consistent with its historical practice. The Company does not have any finance leases.

Revenue Recognition

The Company recognizes revenue in accordance with ASC Topic 606, "Revenue from Contracts with Customers."  Under ASC 606, revenue is recognized when a customer obtains control of promised goods or services, in an amount that reflects the consideration which the entity expects to receive in exchange for those goods or services. To determine revenue recognition for arrangements that an entity determines are within the scope of ASC 606, the Company performs the following five steps:

(i) identify the contract(s) with a customer;

(ii) identify the performance obligations in the contract;

(iii) determine the transaction price;

(iv) allocate the transaction price to the performance obligations in the contract; and

(v) recognize revenue when (or as) the entity satisfies a performance obligation.

As of June 30, 2021 and December 31, 2020, the Company recorded $158,000 and $71,000, respectively, of unbilled receivables, which are included in accounts receivable, net on the condensed balance sheet, as the Company has an unconditional right to payment as of the end of the applicable period.  

The Company’s revenue is generated from the sale of its products to hospitals and medical centers in the United States through direct sales representatives. Revenue is recognized when obligations under the terms of a contract with

11

Silk Road Medical, Inc.

Notes to Condensed Financial Statements

(unaudited)

customers are satisfied, which occurs with the transfer of control of the Company’s products to its customers, either upon shipment of the product or delivery of the product to the customer under the Company’s standard terms and conditions.  The Company’s products are readily available for usage as soon as the customer possesses it. Upon receipt, the customer controls the economic benefits of the product, has significant risks and rewards, and the legal title. The Company has present right to payment; therefore, the transfer of control is deemed to happen at a point in time. Revenue is measured as the amount of consideration the Company expects to receive in exchange for transferring the goods.

For sales where the Company’s sales representative hand delivers product directly to the hospital or medical center from the sales representative’s trunk stock inventory, the Company recognizes revenue upon delivery, which represents the point in time when control transfers to the customer. Upon delivery there are legally-enforceable rights and obligations between the parties which can be identified, commercial substance exists and collectability is probable. For sales which are sent directly from the Company to hospitals and medical centers, the transfer of control occurs at the time of shipment or delivery of the product.  There are no further performance obligations by the Company or the sales representative to the customer after delivery under either method of sale. As allowed under the practical expedient, the Company does not disclose the value of unsatisfied performance obligations for (i) contracts with an original expected length of one year or less and (ii) contracts for which it recognizes revenue at the amount to which it has the right to invoice for services performed.

The Company is entitled to the total consideration for the products ordered by customers as product pricing is fixed according to the terms of customer contracts and payment terms are short. Payment terms fall within the one-year guidance for the practical expedient which allows the Company to forgo adjustment of the promised amount of consideration for the effects of a significant financing component. The Company excludes taxes assessed by governmental authorities on revenue-producing transactions from the measurement of the transaction price.

Costs associated with product sales include commissions and royalties. The Company applies the practical expedient and recognizes commissions and royalties as expense when incurred because the expense is incurred at a point in time and the amortization period is less than one year.  Commissions are recorded as selling expense and royalties are recorded as cost of goods sold in the condensed statements of operations and comprehensive loss.

The Company accepts product returns at its discretion or if the product is defective as manufactured. The Company establishes estimated provisions for returns based on historical experience and considers other factors that it believes could significantly impact its expected returns, which provisions are classified within accrued liabilities on the condensed balance sheet.  The Company elected to expense shipping and handling costs as incurred and includes them in the cost of goods sold. In those cases where the Company bills shipping and handling costs to customers, it will classify the amounts billed as a component of revenue.

Cost of Goods Sold

The Company manufactures certain of its portfolio of TCAR products at its California facility and purchases other products from third party manufacturers. Cost of goods sold consists primarily of costs related to materials, components and subassemblies, manufacturing overhead costs, direct labor, reserves for excess, obsolete and non-sellable inventories as well as distribution-related expenses. A significant portion of the Company’s cost of goods sold 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 goods sold also includes depreciation expense for production equipment and certain direct costs such as shipping costs and royalties.

Stock–Based Compensation

The Company accounts for stock-based compensation in accordance with Financial Accounting Standards Board (“FASB”) ASC 718, "Compensation-Stock Compensation." ASC 718 requires the recognition of compensation expense, using a fair-value based method, for costs related to all share-based payments including stock options, restricted stock units and shares issued under its employee stock purchase plan. ASC 718 requires companies to estimate the fair value of all share-based payment option awards on the date of grant using an option pricing model. The fair value of stock options is recognized over the period during which an optionee is required to provide services in exchange for the option award, known as the requisite service period (usually the vesting period), on a straight-line basis. For performance-based

12

Silk Road Medical, Inc.

Notes to Condensed Financial Statements

(unaudited)

stock options, the Company will assess the probability of performance conditions being achieved in each reporting period. The amount of stock-based compensation expense recognized in any one period related to performance-based stock options can vary based on the achievement or anticipated achievement of the performance conditions. The Company accounts for option forfeitures as they occur.

The Company accounts for stock-based compensation for restricted stock units at their fair value, based on the closing market price of the Company's common stock on the date of grant. These costs are recognized on a straight-line basis over the requisite service period, which is usually the vesting period.

The Company accounts for stock-based compensation for its employee stock purchase plan based on the estimated fair value of the options on the date of grant. The Company estimates the grant date fair value using an option pricing model for each purchase period. These costs are recognized on a straight-line basis over the offering period.

Income Taxes

The Company accounts for income taxes under the liability method, whereby deferred tax assets and liabilities are determined based on the difference between the condensed financial statements and tax bases of assets and liabilities using the enacted tax rates in effect for the year in which the differences are expected to affect taxable income. A valuation allowance is established when necessary to reduce deferred tax assets to the amounts expected to be realized. As the Company has historically incurred operating losses, it has established a full valuation allowance against its net deferred tax assets, and there is no provision for income taxes.

The Company also follows the provisions of ASC 740-10, "Accounting for Uncertainty in Income Taxes." ASC 740-10 prescribes a comprehensive model for the recognition, measurement, presentation and disclosure in financial statements of any uncertain tax positions that have been taken or expected to be taken on a tax return. No liability related to uncertain tax positions is recorded on the condensed financial statements. It is the Company's policy to include penalties and interest expense related to income taxes as part of the provision for income taxes.

Comprehensive Loss

Comprehensive loss consists of net loss and changes in unrealized gains and losses on investments classified as available-for-sale. For the three and six months ended June 30, 2021 and 2020, the Company’s unrealized gains and losses on available-for-sale investments represent the only component of other comprehensive loss that are excluded from the reported net loss and that are presented in the condensed statements of operations and comprehensive loss. Accumulated other comprehensive income or loss is presented in the accompanying condensed balance sheets as a component of stockholders' equity.

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, without consideration for potential dilutive common shares. Diluted net loss per share is computed by dividing the net loss by the weighted average number of shares of common stock and potentially dilutive securities outstanding for the period. For purposes of the diluted net loss per share calculation, redeemable convertible preferred stock and warrants, common stock options, and restricted stock units are considered to be potentially dilutive securities. Since the Company was in a loss position for all periods presented, basic net loss per share is the same as diluted net loss per share as the inclusion of all potential dilutive common shares would have been anti-dilutive.

13

Silk Road Medical, Inc.

Notes to Condensed Financial Statements

(unaudited)

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

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2021		2020		2021		2020
Net loss	$	(10,539)	$	(10,353)	$	(21,233)	$	(20,294)
Weighted average common stock outstanding used to compute net loss per share, basic and diluted		34,534,099		32,682,360		34,435,812		32,010,335
Net loss, basic and diluted	$	(0.31)	$	(0.32)	$	(0.62)	$	(0.63)

The following potentially dilutive securities outstanding have been excluded from the computation of diluted weighted average shares outstanding because such securities have an antidilutive impact due to the Company's net loss:

	June 30,
	2021	2020
Common stock options	4,188,097	4,632,866
Restricted stock units	270,377	39,089
	4,458,474	4,671,955

Segment and Geographical Information

The Company operates and manages its business as one reportable and operating segment. The Company’s chief executive officer, who is the chief operating decision maker, reviews financial information on an aggregate basis for purposes of allocating resources and evaluating financial performance. Primarily all of the Company’s long-lived assets are based in the United States. Long-lived assets are comprised of property and equipment and the Company's right-of-use assets. All of the Company’s revenue was in the United States for the three and six months ended June 30, 2021 and 2020, based on the shipping location of the external customer.

3.    Recent Accounting Pronouncements

Effective January 1, 2021, the Company adopted ASU 2016-13, Financial Instruments-Credit Losses (Topic 326):"Measurement of Credit Losses on Financial Instruments," which requires measurement and recognition of expected credit losses for most financial assets and certain other instruments. Unrealized losses on available-for-sale debt securities that are attributed to credit risk are recorded through earnings rather than to other comprehensive income. Credit losses relating to available-for-sale debt securities are now recorded through an allowance for credit losses. In addition, Topic 326 also provides new guidance related to the measurement of expected credit losses on the Company’s allowance for bad debt for accounts receivable, which is estimated upon assessment of various factors including historical collection experience, current and future economic market conditions and a review of the current aging status and financial condition of the Company’s customers. The Company adopted the new standard using a modified retrospective transition method, which required a cumulative-effect adjustment, if any, to the opening balance of retained earnings to be recognized on the date of adoption. The Company did not have any cumulative-effect adjustments as of the date of adoption.

Effective January 1, 2021, the Company adopted ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes, which enhances and simplifies various aspects of the income tax accounting guidance related to intra-period tax allocation, interim period accounting for enacted changes in tax law, and the year-to-date loss limitation in interim period tax accounting. ASU 2019-12 also amends other aspects of the guidance to reduce complexity in certain areas. The adoption did not have a material impact on the Company's financial statements and related disclosures.

14

Silk Road Medical, Inc.

Notes to Condensed Financial Statements

(unaudited)

4.    Fair Value Measurements

The Company measures certain financial assets and liabilities at fair value on a recurring basis, including cash equivalents, investments, and the Company's previously outstanding preferred stock warrants. 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 – quoted prices in active markets for identical assets or liabilities;

•Level 2 – observable inputs other than quoted prices in active markets for identical assets and liabilities;

•Level 3 – unobservable inputs.

Assets and liabilities measured at fair value are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires management to make judgments and consider factors specific to the asset or liability. The Company’s cash equivalents are classified within Level 1 of the fair value hierarchy because they are valued using quoted market prices, broker or dealer quotations, or alternative pricing sources with reasonable levels of price transparency. The corporate bonds/notes, commercial paper, asset-backed securities and U.S. government securities are classified as Level 2 as they are valued based upon quoted market 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 corroborated by observable market data for substantially the full term of the assets.

The following tables sets forth by level within the fair value hierarchy the Company’s assets that are reported at fair value as of June 30, 2021 and December 31, 2020, using the inputs defined above (in thousands):

	June 30, 2021
	Level 1		Level 2		Level 3		Total
Assets:
Money market funds	$	101,291	$	—	$	—	$	101,291
Commercial paper		—		5,798		—		5,798
Corporate bonds/notes		—		5,371		—		5,371
U.S. government securities		—		15,124		—		15,124
	$	101,291	$	26,293	$	—	$	127,584

	December 31, 2020
	Level 1		Level 2		Level 3		Total
Assets:
Money market funds	$	60,295	$	—	$	—	$	60,295
Commercial paper		—		39,577		—		39,577
Corporate bonds/notes		—		7,969		—		7,969
U.S. government securities		—		38,470		—		38,470
	$	60,295	$	86,016	$	—	$	146,311

There were no transfers between fair value hierarchy levels during the three and six months ended June 30, 2021 and 2020.

15

Silk Road Medical, Inc.

Notes to Condensed Financial Statements

(unaudited)

5.    Balance Sheet Components

Investments

The fair value of the Company's available-for-sale investments as of June 30, 2021 and December 31, 2020 are as follows (in thousands):

	June 30, 2021
			Gross Unrealized				Estimated
	Amortized Cost		Gains		Losses		Fair Value
Money market funds	$	101,291	$	—	$	—	$	101,291
Commercial paper		5,798		—		—		5,798
Corporate bonds/notes		5,371		—		—		5,371
U.S. government securities		15,121		3		—		15,124
	$	127,581	$	3	$	—	$	127,584
Classified as:
Cash equivalents							$	101,291
Short-term investments								26,293
							$	127,584

	December 31, 2020
			Gross Unrealized				Estimated
	Amortized Cost		Gains		Losses		Fair Value
Money market funds	$	60,295	$	—	$	—	$	60,295
Commercial paper		39,577		—		—		39,577
Corporate bonds/notes		7,970		—		(1)		7,969
U.S. government securities		38,430		42		(2)		38,470
	$	146,272	$	42	$	(3)	$	146,311
Classified as:
Cash equivalents							$	68,295
Short-term investments								78,016
							$	146,311

All of the Company’s cash equivalents and short-term investments mature within one year as of June 30, 2021 and December 31, 2020. Available-for-sale investments held as of June 30, 2021 had a weighted average days to maturity of 95 days.

The following table presents the Company's available-for-sale investments that were in an unrealized loss position as of June 30, 2021 and December 31, 2020 (in thousands):

	June 30, 2021				December 31, 2020
	Less than 12 months				Less than 12 months
Assets:	Fair Value		Unrealized Loss		Fair Value		Unrealized Loss
Corporate bonds/notes	$	—	$	—	$	5,369	$	(1)
U.S. government securities		—		—		10,128		(2)
	$	—	$	—	$	15,497	$	(3)

16

Silk Road Medical, Inc.

Notes to Condensed Financial Statements

(unaudited)

Inventories

Components of inventories were as follows (in thousands):

	June 30,		December 31,
	2021		2020
Raw materials	$	2,153	$	1,785
Finished products		10,662		10,599
		12,815		12,384
Less: Reserve for excess and obsolete		(44)		(2,395)
	$	12,771	$	9,989

As of June 30, 2021 and December 31, 2020, there were no work-in-process inventories. The reserve for excess and obsolete inventory at June 30, 2021 and December 31, 2020, included $1,000 and $2,377,000, respectively, associated with the Company's voluntary product recall.

Accrued Liabilities

Accrued liabilities consist of the following (in thousands):

	June 30,		December 31,
	2021		2020
Accrued payroll and related expenses	$	9,246	$	9,573
Provision for sales returns		588		820
Accrued professional services		1,552		2,520
Recall replacement obligation		21		1,696
Operating lease liability		958		850
Accrued royalty expense		660		518
Deferred revenue		478		206
Accrued travel expenses		526		237
Accrued clinical expenses		182		113
Accrued other expenses		494		424
Total	$	14,705	$	16,957

17

Silk Road Medical, Inc.

Notes to Condensed Financial Statements

(unaudited)

6.    Long-term Debt

CRG

In October 2015, the Company entered into a term loan agreement with CRG. The term loan agreement provides for up to $30,000,000 in term loans split into two tranches as follows: (i) the Tranche A Loans provided for $20,000,000 in term loans, and (ii) the Tranche B Loans provided for up to $10,000,000 in term loans. The Company drew down the Tranche A Loans on October 13, 2015. The Tranche B Loans were available to be drawn prior to March 29, 2017. In January 2017, the term loan agreement was amended to extend the commitment period of the Tranche B Loans to April 28, 2017. In April 2017, the Company drew down $5,000,000 of the available Tranche B Loans.

In September 2018, the term loan agreement was amended to provide for additional term loans in an aggregate principal amount of up to $25,000,000. In September 2018, the Company drew down an additional $15,000,000 under the amended term loan agreement with CRG, no additional draw was taken. Under the terms of the amended term loan agreement, the related fixed interest rate was 10.0%, 8.0% of the interest was due and payable in cash and at the election of the Company, 2.0% of the interest due and payable may be paid in kind. All unpaid principal, and accrued and unpaid interest, was due and payable in full on December 31, 2022.

On October 29, 2020, in connection with the consummation of the Loan and Security agreement with Stifel Bank as noted below, the Company repaid all amounts outstanding under the term loan with CRG.

Stifel Bank

In October 2020, the Company entered into a Loan and Security Agreement, or Loan Agreement, with Stifel Bank which provides for a $50,000,000 loan facility, comprised of a $50,000,000 secured revolving credit facility, with a $2,000,000 subfacility for the issuance of letters of credit and other ancillary banking services, and a $50,000,000 secured term loan facility, provided that amounts outstanding under both facilities may not exceed an aggregate principal amount of $50,000,000 at any time. Any borrowings under the revolving loan facility mature on October 29, 2022, or October 29, 2023 if as of October 29, 2022, no event of default has occurred and we are in compliance with the terms of the Loan Agreement. Borrowings under the term loan facility mature on October 29, 2024. Interest under the revolving credit facility is the greater of a) 0.5% above the "Prime Rate" as published by The Wall Street Journal or b) 4.75%.

Also in October 2020, the Company drew down $49,000,000 under the term loan facility and used the majority of the proceeds to pay off and terminate the prior term loan agreement with CRG totaling $46,674,000, which included a prepayment premium of $305,000, a final interest payment of $365,000 and a facility fee of $2,191,000. The Company recognized a loss on debt extinguishment of $1,119,000 in connection with the early termination of the term loan agreement with CRG. The principal amount of outstanding term loans under the Loan Agreement with Stifel Bank shall be repaid in equal monthly installments beginning on May 29, 2022, or November 29, 2022 if the Company achieves revenue for the year ending December 31, 2021 of at least 80% of the board-approved financial projections for such fiscal year. Interest under the term loan facility is the greater of a) 0.75% above the "Prime Rate" as published by The Wall Street Journal or b) 4.75%. The term loan may not be reborrowed once repaid, but the Company may prepay the term loan at any time without premium or penalty.

The Company also concurrently entered in a Success Fee Agreement in October 2020 with Stifel Bank, which requires that the Company pay Stifel Bank the lesser of 0.75% of the original principal amount of all credit extensions made under the Loan Agreement or $375,000 in the event the Company completes a Liquidity Event (liquidation, merger, sale of the Company or change in control). The Success Fee Agreement terminates on October 29, 2025. The Company has determined the probability of a Liquidity Event to be remote and accordingly, has not recognized a liability as of June 30, 2021.

18

Silk Road Medical, Inc.

Notes to Condensed Financial Statements

(unaudited)

Obligations under the Loan Agreement are secured by substantially all of the Company's assets. Beginning on January 15, 2021, the Loan Agreement required that the Company maintain unrestricted cash and cash equivalents with Stifel Bank or at Stifel Bank Affiliates of at least $20,000,000. In addition, for any fiscal quarter where the Company's unrestricted cash and cash equivalents maintained with Stifel Bank or at Stifel Bank Affiliates are less than $60,000,000 for any day during such fiscal quarter, the Company must comply with a minimum revenue covenant. Additionally, the Loan Agreement contains customary affirmative and negative covenants, including covenants limiting the Company's ability and the ability of the Company's subsidiaries to, among other things, dispose of assets, effect certain mergers, incur debt, grant liens, pay dividends and distributions on capital stock, make investments and acquisitions, and enter into transactions with affiliates, in each case subject to customary exceptions for a loan facility of this size and type.

The events of default under the Loan Agreement include, among others, payment defaults, material misrepresentations, breaches of covenants, cross defaults with certain other material indebtedness, bankruptcy and insolvency events, and judgment defaults. The occurrence of an event of default could result in the acceleration of our obligations under the Loan Agreement, the termination of the lender’s commitments, a 5% increase in the applicable rate of interest and the exercise by the lender of other rights and remedies provided for under the Loan Agreement.

As of June 30, 2021, the aggregate outstanding principal balance under the Loan Agreement was $49,000,000 and the annual interest rate was 4.75%. As of June 30, 2021, the Company was in compliance with all applicable financial covenants. As of June 30, 2021, management does not believe that it is probable that the above events of default will be triggered within the next twelve months, therefore, the debt is classified as long-term on the condensed balance sheet.

Future maturities under the Loan Agreement as of June 30, 2021 are as follows (in thousands):

Period Ending December 31:	Amount
2021	$	1,183
2022		6,257
2023		25,749
2024		21,457
		54,646
Less: Amount representing interest		(5,646)
Less: Amount representing debt discount and debt issuance costs		(386)
Present value of minimum payments	$	48,614

19

Silk Road Medical, Inc.

Notes to Condensed Financial Statements

(unaudited)

7.    Commitments and Contingencies

Operating Lease and Rights-of-Use

The Company’s operating lease obligation at its corporate headquarters in California consists of leased office, laboratory, and manufacturing space under a non-cancellable operating lease that expires in October 2024. The lease agreement includes a renewal provision allowing the Company to extend this lease for an additional period of five years.

In May 2021, the Company entered into a new, non-cancelable operating lease for additional office, laboratory and manufacturing space in Minnesota that expires in November 2029. The lease agreement includes a renewal provision allowing the Company to extend this lease for two additional five year terms. In connection with the lease, the Company recognized a right-of-use asset and lease liability of $3,398,000.

Operating lease costs were $289,000 and $217,000 for the three months ended June 30, 2021 and 2020, respectively, and $506,000 and $435,000 for the six months ended June 30, 2021 and 2020, respectively. Cash paid for amounts included in the measurement of operating lease liabilities was $190,000 and $188,000 for the three months ended June 30, 2021 and 2020, respectively, and $393,000 and $372,000 for the six months ended June 30, 2021 and 2020, respectively. As of June 30, 2021, the weighted average discount rate was approximately 6.50% and the weighted average remaining lease term was 5.92 years. Balance sheet information as of June 30, 2021 and December 31, 2020 consists of the following (in thousands):

	June 30,		December 31,
Operating Lease:	2021		2020
Operating lease right-of-use assets in other non-current assets	$	5,823	$	2,798
Operating lease liability in accrued liabilities	$	958	$	850
Operating lease liability in other liabilities		5,748		2,850
Total operating lease liabilities	$	6,706	$	3,700

The following table summarizes the Company’s operating lease maturities as of June 30, 2021 (in thousands):

Period Ending December 31:	Amount
2021	$	(1,058)
2022		1,577
2023		1,970
2024		1,768
2025		886
2026 and thereafter		3,686
Total lease payments	$	8,829
Less: interest		(2,123)
Total lease liabilities	$	6,706

Purchase Obligations

Purchase obligations consist of agreements to purchase goods and services entered into in the ordinary course of business. As of June 30, 2021, the Company had non-cancellable purchase obligations to suppliers of $6,304,000.

Indemnification

In the normal course of business, the Company enters into contracts and agreements with suppliers and other parties that contain a variety of representations and warranties and may provide for indemnification of the counterparty. The Company’s exposure under these agreements is unknown because it involves claims that may be made against it in the future but have not yet been made. To date, the Company has not been subject to any claims or been required to defend any action related to its indemnification obligations.

The Company indemnifies each of its directors and officers for certain events or occurrences, subject to certain limits, while the director is or was serving at the Company’s request in such capacity, as permitted under Delaware law and in

20

Silk Road Medical, Inc.

Notes to Condensed Financial Statements

(unaudited)

accordance with its certificate of incorporation and bylaws. The term of the indemnification period lasts as long as a director may be subject to any proceeding arising out of acts or omissions of such director in such capacity. The maximum amount of potential future indemnification is unlimited; however, the Company currently holds director liability insurance. The Company believes that the fair value of these indemnification obligations is minimal. Accordingly, the Company has not recognized any liabilities relating to these obligations as of June 30, 2021.

Contingencies

The Company is not involved in any pending legal proceedings that it believes could have a material adverse effect on its financial condition, results of operations or cash flows. From time to time, the Company may pursue litigation to assert its legal right and such litigation may be costly and divert the efforts and attention of its management and technical personnel which could adversely affect its business. 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. There were no contingent liabilities requiring accrual at June 30, 2021 and December 31, 2020.

8.    Stockholders’ Equity

Preferred Stock

At June 30, 2021, the Company’s certificate of incorporation, as amended and restated, authorizes the Company to issue up to 5,000,000 shares of preferred stock with $0.001 par value per share, of which no shares were issued and outstanding.

Common Stock

At June 30, 2021, the Company’s certificate of incorporation, as amended and restated, authorizes the Company to issue up to 100,000,000 shares of common stock with $0.001 par value per share, of which 34,623,409 shares were issued and outstanding. The holders of common stock are also entitled to receive dividends whenever funds are legally available, when and if declared by the Board of Directors. As of June 30, 2021, no dividends have been declared to date. Each share of common stock is entitled to one vote.

9.    Stock Option Plans

In March 2019, the Company’s Board of Directors approved the adoption of the 2019 Equity Incentive Plan, or the 2019 Plan, which became effective immediately prior to the Company's initial public offering in April 2019. The 2019 Plan replaced the 2007 Stock Option Plan which was terminated immediately prior to consummation of the Company’s initial public offering, collectively the “Plans.” The 2019 Plan provides for the grant of incentive stock options, or ISOs, to employees and for the grant of nonqualified stock options, or NSOs, restricted stock, restricted stock units, stock appreciation rights, performance units and performance shares to employees, directors and consultants. A total of 2,317,000 shares of common stock were initially reserved for issuance pursuant to the 2019 Plan. In addition, the shares reserved for issuance under the 2019 Plan will also include shares reserved but not issued under the 2007 Stock Option Plan, plus any share awards granted under the 2007 Stock Option Plan that expire or terminate without having been exercised in full or that are forfeited or repurchased. In addition, the number of shares available for issuance under the 2019 Plan includes an annual increase on the first day of each fiscal year beginning fiscal 2020, equal to the lesser of (i) 3,000,000 shares; (ii) 4.0% of the outstanding shares of common stock as of the last day of the immediately preceding fiscal year; or (iii) an amount as determined by the Board of Directors. As of June 30, 2021, the Company has reserved 5,012,235 shares of common stock for issuance under the 2019 Plan.

21

Silk Road Medical, Inc.

Notes to Condensed Financial Statements

(unaudited)

A summary of the shares available for issuance under the 2019 Plan is as follows:

	Number of Shares
Balances, December 31, 2020	1,790,687
Authorized	1,369,985
Granted / Awarded	(545,874)
Cancelled	46,748
Balances, June 30, 2021	2,661,546

The exercise price of ISOs and NSOs shall not be less than 100% and 85%, respectively, of the estimated fair value of the shares on the date of grant as determined by the Board of Directors. The exercise price of ISOs and NSOs granted to a 10% stockholder shall not be less than 110% of the estimated fair value of the shares on the date of grant as determined by the Board of Directors. To date, options have a term of 10 years and generally vest over 4 years from the date of grant.

Stock option activity under the Company’s Plans is set forth below:

	Options Outstanding
	Number of	Weighted Average		Weighted Average ‎Remaining ‎Contractual Term		Aggregate Intrinsic
	Shares	Exercise Price		(Years)		Value
Balances, December 31, 2020	4,237,828	$	16.56		7.38	$	197,407
Options granted	312,961		54.18
Options exercised	(318,594)		5.82
Options cancelled	(44,098)		35.72
Balances, June 30, 2021	4,188,097	$	19.99		7.16	$	122,055
Vested and exercisable at June 30, 2021	2,673,791	$	11.11		6.36	$	98,665
Vested and expected to vest at June 30, 2021	4,188,097	$	19.99		7.16	$	122,055

The aggregate intrinsic value of options exercised during the six months ended June 30, 2021 was $15,152,000. The aggregate 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.

Restricted Stock Units

In March 2020, the Company began granting restricted stock units, or RSUs, under the 2019 Plan. RSUs generally vest over four years in annual equal increments. The fair value of RSUs is based on the Company’s closing stock price on the date of grant. A summary of RSUs activity for the six months ended June 30, 2021 is as follows:

	Number of Restricted Stock Units		Weighted Average ‎Grant Date ‎Fair Value
Balances, December 31, 2020		68,396	$	46.16
Awards granted		232,913		54.43
Awards vested		(28,282)		45.64
Awards canceled		(2,650)		55.30
Balances, June 30, 2021		270,377	$	53.25
Expected to vest at June 30, 2021		270,377	$	53.25

2019 Employee Stock Purchase Plan

In March 2019, the Company's Board of Directors adopted the 2019 Employee Stock Purchase Plan, or 2019 ESPP, under which eligible employees are permitted to purchase common stock at a discount through payroll deductions. A total

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Silk Road Medical, Inc.

Notes to Condensed Financial Statements

(unaudited)

of 434,000 shares of common stock were initially reserved for issuance and is increased on the first day of each fiscal year, beginning in 2020, by an amount equal to the lesser of (i) 1,200,000 shares (ii) 1.0% of the outstanding shares of common stock as of the last day of the immediately preceding fiscal year; or (iii) an amount as determined by the Board of Directors. As of June 30, 2021, the Company has reserved 1,089,048 shares of common stock for issuance under the 2019 ESPP. The price of the common stock purchased will be the lower of 85% of the fair market value of the common stock at the beginning of an offering period or at the end of a purchase period. The 2019 ESPP was effective upon adoption by the Company's Board of Directors but was not in use until the completion of the Company's initial public offering in April 2019. The 2019 ESPP is intended to qualify as an employee stock purchase plan within the meaning of Section 423 of the Internal Revenue Code of 1986, as amended.

As of June 30, 2021, 141,059 shares of common stock have been issued to employees participating in the 2019 ESPP and 947,989 shares were available for future issuance under the 2019 ESPP.

Stock-Based Compensation

The Company estimated the fair value of stock options using the Black–Scholes option pricing model. The fair value of employee and nonemployee stock options is being amortized on a straight–line basis over the requisite service period of the awards. The fair value of employee and nonemployee stock options was estimated using the following assumptions for the three and six months ended June 30, 2021 and 2020:

	Three Months Ended		Six Months Ended
	June 30,		June 30,
	2021	2020	2021	2020
Expected term (in years)	5.25 - 6.25	5.25 - 6.25	5.25 - 6.25	5.25 - 6.25
Expected volatility	46.6% - 47.0%	46.6% - 47.7%	45.0% - 50.4%	42.9% - 47.7%
Risk-free interest rate	0.93% - 1.08%	0.42% - 0.56%	0.41% - 1.08%	0.42% - 1.41%
Dividend yield	—%	—%	—%	—%

The fair value of the shares to be issued under the Company’s 2019 ESPP was estimated using the Black-Scholes valuation model with the following assumptions for the three and six months ended June 30, 2021 and 2020:

	Three Months Ended		Six Months Ended
	June 30,		June 30,
	2021	2020	2021	2020
Expected term (in years)	0.50	0.50	0.50	0.50
Expected volatility	51.5%	76.4%	44.4% - 76.4%	44.4% - 76.4%
Risk-free interest rate	0.03%	0.14%	0.03% - 1.58%	0.14% - 1.58%
Dividend yield	—%	—%	—%	—%

Total stock-based compensation expense relating to the Company's stock options, RSUs and 2019 ESPP during the three and six months ended June 30, 2021 and 2020 is as follows (in thousands):

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2021		2020		2021		2020
Cost of goods sold	$	151	$	89	$	309	$	153
Research and development expenses		636		246		1,325		423
Selling, general and administrative expenses		2,622		1,319		5,308		2,371
	$	3,409	$	1,654	$	6,942	$	2,947

As of June 30, 2021, there was total unrecognized compensation costs of $22,679,000 related to stock options expected to be recognized over a period of approximately 2.82 years, a total of $13,008,000 of unrecognized compensation costs related to unvested RSUs expected to be recognized over a period of approximately 3.54 years and $314,000 of unrecognized compensation costs related to the ESPP, which the Company will recognize over 0.39 years.

23

Silk Road Medical, Inc.

Notes to Condensed Financial Statements

(unaudited)

10.    401(k) Plan

The Company has a qualified retirement plan under section 401(k) of the Internal Revenue Code (“IRC”) under which participants may contribute up to 90% of their eligible compensation, subject to maximum deferral limits specified by the IRC. Beginning in January 2020, the Company started matching employees' contributions to the 401(k) plan at 50% of the first 5% of compensation deferred to the 401(k) plan. The Company's matching contributions were $330,000 and $229,000 for the three months ended June 30, 2021 and 2020, respectively, and $696,000 and $522,000 for the six months ended June 30, 2021 and 2020, respectively.

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Item 2: Management Discussion and Analysis of Financial Condition and Results of Operations

You should read the following discussion and analysis of our financial condition and results of operations together with the section entitled “Selected financial data” and our condensed financial statements and related notes thereto included elsewhere in this Quarterly Report on Form 10-Q. This discussion and other parts of this Quarterly Report on Form 10-Q contain forward-looking statements that involve risks and uncertainties, such as statements of our plans, objectives, expectations and intentions, that are based on the beliefs of our management, as well as assumptions made by, and information currently available to, our management. Our actual results could differ materially from those discussed in these forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed in the section of this Quarterly Report on Form 10-Q entitled “Risk Factors.”

Overview

We are a medical device company focused on reducing the risk of stroke and its devastating impact. We believe a key to stroke prevention is minimally-invasive and technologically advanced intervention to safely and effectively treat carotid artery disease, one of the leading causes of stroke. We have pioneered a new approach for the treatment of carotid artery disease called transcarotid artery revascularization, or TCAR, which we seek to establish as the standard of care. We manufacture and sell in the United States our portfolio of TCAR products, which are designed to provide direct access to the carotid artery, effective reduction in stroke risk throughout the procedure, and long-term restraint of carotid plaque.

We began commercializing our products in the United States in late 2015. Our products are currently the only devices cleared and approved by the FDA specifically for transcarotid use. While our current commercial focus is on the U.S. market, our products have obtained CE Mark approval, allowing us to commercialize in Europe in the future. We are also pursuing regulatory clearances in select international markets. TCAR is reimbursed based on established current procedural technology, or CPT, codes and International Classification of Diseases, or ICD-10, codes related to carotid stenting that track to Medicare Severity Diagnosis Related Group, or MS-DRG, classifications.

We designed our commercial strategy and built our direct sales force with a particular focus on vascular surgery practices. Vascular surgeons are skilled in endovascular procedures, and our sales and marketing efforts are focused on driving adoption and supporting their practice development by offering them an innovative, safe, effective and minimally-invasive alternative for treating carotid artery disease. We also market to other specialists with experience in CEA or CAS with the appropriate skill set for TCAR, including neurosurgeons, cardiothoracic surgeons and non-surgical interventionalists in radiology, neuroradiology and cardiology. We also work on developing strong relationships with physicians and hospitals that we have identified as key opinion leaders. We consider the hospitals and medical centers where the procedure is performed to be our customers, as they typically are responsible for purchasing our products.

We manufacture and distribute the ENROUTE NPS at our facility in Sunnyvale, California, using components and sub-assemblies manufactured both in-house and by third party manufacturers and suppliers. We purchase our other products from third-party contract manufacturers, including our ENROUTE stent. Many of these third-party manufacturers and outside vendors are currently single-source suppliers. While we expect that our existing manufacturing facility will be sufficient to meet our anticipated growth through at least the next three years, we supplement our distribution operations with a third-party logistics and warehousing service and during the second quarter of 2021 have expanded operations to include additional facilities in Minnesota.

In April 2019, we completed our initial public offering by issuing 6,000,000 shares of common stock, at a public offering price of $20.00 per share, for net proceeds of approximately $109.1 million after deducting underwriting discounts and commissions and expenses. In August 2019, we completed a secondary public offering of 4,200,000 shares of common stock by selling stockholders, and the exercise in full of the underwriters' option to purchase 630,000 additional shares of common stock from selling stockholders, at a public offering price of $39.50 per share. We received no proceeds from the sale of our common stock by the selling stockholders.

Prior to our initial public offering in April 2019, our primary sources of capital were private placements of convertible preferred stock, debt financing arrangements and revenue from sales of our products

In May 2020, we completed an underwritten public offering of 6,808,154 shares of our common stock, of which we offered 1,923,076 shares for sale and the remaining 4,885,078 shares were offered for sale by certain selling stockholders, at a public offering price of $39.00 per share. From the public offering, we received cash proceeds of approximately $70.5 million, net of underwriting discounts and commissions and offering costs which were paid by us.

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Also, in May 2020, the underwriters fully exercised their option to purchase 1,021,223 additional shares of common stock from the selling stockholders. We did not receive any of the proceeds from the sale of the shares of common stock by the selling stockholders. As of June 30, 2021, we had cash and cash equivalents of $101.8 million, investments of $26.3 million, long-term debt of $48.6 million and an accumulated deficit of $260.1 million.

COVID-19 Pandemic

The global COVID-19 pandemic presents significant risks to us and has had, and continues to have impacts on our business, operations, and financial results and condition, directly and indirectly, including, without limitation, impacts on: the health of our management and employees; our manufacturing, distribution, marketing and sales operations; our research and development activities, including clinical activities; and customer and patient behaviors. COVID-19 and its variants have negatively impacted, and may continue to negatively impact our operations and revenue and overall financial condition by significantly decreasing the number of TCAR procedures performed. The pandemic has also reduced our expectations for the growth rate in the number of TCAR procedures to be performed in the future. The number of TCAR procedures performed, similar to other surgical procedures, has significantly decreased as many health care organizations globally have prioritized the treatment of patients with COVID-19. These measures and challenges will likely continue for the duration of the pandemic, which is uncertain, and will significantly reduce our expected revenue while the pandemic continues. As well, due to presumed fear and anxiety, some patients are not accessing routine or emergency health care which may impact our expected procedures and revenue.

Numerous state and local jurisdictions have imposed, and others in the future may impose, “shelter-in-place” orders, quarantines, executive orders and similar government orders and restrictions for their residents to control the spread of COVID-19. Beginning in the first quarter of 2020, the governor of California, where our facilities are located, issued “shelter-in-place” or “stay at home” orders restricting non-essential activities, travel and business operations for an indefinite period of time, subject to certain exceptions for necessary activities. Such orders or restrictions have resulted in our facilities periodically closing, work stoppages, slowdowns and delays, travel restrictions and cancellation of events, among other effects, thereby negatively impacting our operations.

Other disruptions or potential disruptions include restrictions on our personnel to travel and access customers for selling, marketing, training, case support and product development feedback; delays in approvals by regulatory bodies; delays in product development efforts; and additional government requirements or other incremental mitigation efforts that may further impact our capacity to manufacture, sell and support the use of our products.

While some of these restrictions began to lift throughout the first half of 2021, new virus variants, and increased infection rates during this period make the current COVID-related environment highly volatile and uncertain. The ultimate extent of the impact of the COVID-19 pandemic on us remains highly uncertain and will depend on future developments and factors that continue to evolve, including the ability of various regions to effectively manage COVID-19, the extent of the continuing resurgence of COVID-19, the efficacy and extent of distribution of vaccines, and the impact of mutations of COVID-19. Most of these developments and factors are outside of our control and could exist for an extended period of time even after the pandemic might end.

Components of our Results of Operations

Revenue

We currently derive all of our revenue from the sale of our portfolio of TCAR products to hospitals and medical centers in the United States. Each of our products is purchased individually, and the majority of our revenue is derived from sales of the ENROUTE NPS and ENROUTE stent. No single customer accounted for 10% or more of our revenue during the three and six months ended June 30, 2021 and 2020. We expect revenue to increase in absolute dollars as we expand our sales territories and trained physician base, add new accounts and as existing physicians perform more TCAR procedures. However, we anticipate continued headwinds related to physician and patient vacations and the rapid spread of Covid-19 variants and their nearer term impact on hospital capacity and patient behavior.

We expect our revenue to fluctuate from quarter-to-quarter due to a variety of factors, including seasonality. For example, in the first quarter, our results can be harmed by adverse weather and by resetting of annual patient healthcare insurance plan deductibles, both of which may cause patients to delay elective procedures. Holiday and summer vacations by physicians and/or their patients can also affect procedure volumes that in turn affect hospital ordering patterns. We have also seen procedure volumes moderate during major medical conferences when significant portions of our customer base are attending the conferences.

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Cost of Goods Sold and Gross Margin

We manufacture the ENROUTE NPS in California at our facility in Sunnyvale. We purchase our other products from third party manufacturers. Cost of goods sold consists primarily of costs related to materials, components and sub-assemblies, direct labor, manufacturing overhead, reserves for excess, obsolete and non-sellable inventories as well as distribution-related expenses. Overhead costs include the cost of quality assurance, material procurement, inventory control, facilities, equipment and operations supervision and management. Cost of goods sold also includes depreciation expense for production equipment and certain direct costs such as those incurred for shipping our products and royalties related to the sale of our ENROUTE stent. We record adjustments to our inventory valuation for estimated excess, obsolete and non-sellable inventories based on assumptions about future demand, past usage, changes to manufacturing processes and overall market conditions. We expense all inventory provisions as cost of goods sold. We expect cost of goods sold to increase in absolute dollars to the extent more of our products are sold.

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 average selling prices, product sales mix, production and ordering volumes, manufacturing costs, product yields, replacement of expired product, headcount and cost-reduction strategies. We expect our gross margin to increase over the long-term as our production and ordering volumes increase and as we spread the fixed portion of our overhead costs over a larger number of units produced, potentially offset by any investments in additional operational infrastructure in both California and our new facilities in Minnesota. We intend to use our design, engineering and manufacturing know-how and capabilities to further advance and improve the efficiency of our manufacturing processes, which we believe will reduce costs and have a positive long-term impact on our gross margin. However, our gross margin could fluctuate from quarter to quarter as we introduce new products, due to the timing of certain manufacturing engineering projects, as we adopt new manufacturing processes and technologies and as we expand our distribution operations and infrastructure to support long term growth and risk mitigation. In addition, COVID-19 and its variants may continue to negatively impact our gross margin in the near term due to unfavorable production variances as a result of lower production and lower demand.

Research and Development Expenses

Research and development, or R&D, expenses consist primarily of engineering, product development, clinical studies to develop and support our products, regulatory expenses, medical affairs, and other costs associated with products and technologies that are in development. These expenses include employee compensation, including stock-based compensation, supplies, consulting, prototyping, testing, materials, travel expenses, depreciation and an allocation of facilities overhead expenses. Additionally, R&D expenses include costs associated with our clinical studies, including clinical trial design, clinical trial site initiation and study costs, data management, related travel expenses and the cost of products used for clinical trials, internal and external costs associated with our regulatory compliance and quality assurance functions and overhead costs. We expect R&D expenses as a percentage of revenue to vary over time depending on the level and timing of our new product development efforts, as well as our clinical development, clinical trial and other related activities. While some of these restrictions began to lift throughout the first half of 2021, due to new virus variants and increased infections, we anticipate various COVID-19 related policies and restrictions to continue to delay or affect our product development efforts and clinical and regulatory matters throughout 2021.

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 and marketing functions, physician education programs, commercial operations and analytics, reimbursement, finance, information technology and human resource functions. Other SG&A expenses include sales commissions, training, travel expenses, promotional activities, marketing initiatives, market research and analysis, conferences and trade shows, professional services fees (including legal, audit and tax fees), insurance costs, general corporate expenses and allocated facilities-related expenses. We expect SG&A expenses to continue to increase in absolute dollars as we expand our infrastructure to both drive and support anticipated growth in revenue, due to additional legal, accounting, insurance and other expenses associated with being a public company, and as we expand our presence in Minnesota. In addition, we will continue exploring sales and marketing expansion opportunities in international geographies.

While some of these restrictions began to lift throughout the first half of 2021 and allowed for the resumption in certain employee and physician travel, tradeshow and other expenses, due to new virus variants and increased infections, we expect the COVID-19 pandemic to continue to modulate our SG&A expenses over the short term. The outbreak and persistence of COVID-19 in international markets that we have targeted for our international expansion may also delay preparation for and launch of such expansion efforts.

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Interest Income (Expense), net

Interest income (expense), net consists primarily of cash interest incurred on our outstanding indebtedness and non-cash interest related to the amortization of debt discount and issuance costs associated with our debt agreements. Our interest expense was partially offset by interest income earned on our investments. We expect our interest expense to decline due to the refinancing of our debt obligations in October 2020 and the associated decrease in interest rate.

Results of Operations:

	Three Months Ended				Six Months Ended
	June 30,				June 30,
(in thousands)	2021		2020		2021		2020
Revenue	$	26,456	$	15,094	$	48,509	$	34,027
Costs of goods sold		6,598		5,336		12,137		10,586
Gross profit		19,858		9,758		36,372		23,441
Operating expenses:
Research and development		7,261		3,393		12,744		6,522
Selling, general and administrative		22,549		15,758		43,743		35,450
Total operating expenses		29,810		19,151		56,487		41,972
Loss from operations		(9,952)		(9,393)		(20,115)		(18,531)
Interest income (expense), net		(581)		(904)		(1,108)		(1,704)
Other income (expense), net		(6)		(56)		(10)		(59)
Net loss	$	(10,539)	$	(10,353)	$	(21,233)	$	(20,294)

Comparison of Three Months Ended June 30, 2021 and 2020

Revenue. Revenue increased $11.4 million, or 75%, to $26.5 million during the three months ended June 30, 2021, compared to the three months ended June 30, 2020. The increase in revenue was attributable to an increase in the number of products sold as we expanded our sales territories, increased the number of new accounts, trained more physicians in TCAR and as physicians performed more TCAR procedures as compared to the prior period. Revenue during the three months ended June 30, 2020 was adversely impacted by COVID-19 as healthcare systems diverted resources to meet the increasing demands of managing COVID-19 .

Cost of Goods Sold and Gross Margin. Cost of goods sold increased $1.3 million, or 24%, to $6.6 million during the three months ended June 30, 2021, compared to the three months ended June 30, 2020. This increase was attributable to the increase in the number of products sold. Gross margin for the three months ended June 30, 2021 increased to 75%, compared to 65% in the three months ended June 30, 2020. Gross margin in the three months ended June 30, 2020, was impacted by unfavorable production variances as a result of temporarily idled manufacturing operations and lower than anticipated demand due to COVID-19.

Research and Development Expenses. R&D expenses increased $3.9 million, or 114%, to $7.3 million during the three months ended June 30, 2021, compared to $3.4 million during the three months ended June 30, 2020. The increase in R&D expenses was driven by growth in personnel and investment in new and ongoing R&D programs. The increase in R&D expenses was primarily attributable to an increase of $1.7 million in personnel-related expenses, including stock-based compensation, an increase of $1.0 million in product development materials and costs, an increase of $0.6 million in clinical and regulatory expense, an increase of $0.4 million in outside services and an increase of $0.2 million related to the allocated costs of facilities and other related expenses.

Selling, General and Administrative Expenses. SG&A expenses increased $6.8 million, or 43%, to $22.5 million during the three months ended June 30, 2021, compared to $15.8 million during the three months ended June 30, 2020. The increase in SG&A costs was due to the continued commercialization of our products, general corporate and other costs associated with operating as a public company, as well as the resumption of travel, tradeshow and other expenses as the impacts of COVID-19 declined compared to the second quarter of 2020. The increase in SG&A expenses is primarily attributable to an increase of $4.9 million in payroll and personnel-related expenses, an increase of $1.1 million in physician training and travel related costs, an increase of $0.3 million in consulting, legal and professional fees, an increase of $0.2 million in marketing and tradeshow expenses, an increase of $0.2 million in software related expense, and an increase of $0.1 million relating to depreciation and the allocated costs of facilities and other related expenses. Personnel-related expenses included stock-based compensation expense of $2.6 million and $1.3 million for the three months ended June 30, 2021 and 2020, respectively.

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Interest Income (Expense), Net. Interest income (expense), net decreased $0.3 million, or 36%, to an expense of $0.6 million during the three months ended June 30, 2021, compared to an expense of $0.9 million during the three months ended June 30, 2020. This decrease in net interest expense was attributable to the reduction in interest rate resulting from the refinancing of our debt obligations in October 2020, partially offset by a decrease in interest income due to both lower interest rates and a decrease in our cash and investments balances during the three months ended June 30, 2021 as compared with the prior period.

Other Income (Expense), Net. There were no significant changes within other income (expense), net during the three months ended June 30, 2021, compared to the three months ended June 30, 2020.

Comparison of Six Months Ended June 30, 2021 and 2020

Revenue. Revenue increased $14.5 million, or 43%, to $48.5 million during the six months ended June 30, 2021, compared to the six months ended June 30, 2020. The increase in revenue was attributable to an increase in the number of products sold as we expanded our sales territories, increased the number of new accounts, trained more physicians in TCAR and as physicians performed more TCAR procedures as compared to the prior period. Revenue during the six months ended June 30, 2020 was adversely impacted by COVID-19 as healthcare systems diverted resources to meet the increasing demands of managing COVID-19.

Cost of Goods Sold and Gross Margin. Cost of goods sold increased $1.6 million, or 15%, to $12.1 million during the six months ended June 30, 2021, compared to the six months ended June 30, 2020. This increase was attributable to the increase in the number of products sold. Gross margin for the six months ended June 30, 2021 increased to 75%, compared to 69% in the six months ended June 30, 2020. Gross margin in the six months ended June 30, 2020, was impacted by unfavorable production variances as a result of temporarily idled manufacturing operations and lower than anticipated demand due to COVID-19.

Research and Development Expenses. R&D expenses increased $6.2 million, or 95%, to $12.7 million during the six months ended June 30, 2021, compared to $6.5 million during the six months ended June 30, 2020. The increase in R&D expenses was driven by growth in personnel and investment in new and ongoing R&D programs. The increase in R&D expenses was primarily attributable to an increase of $2.9 million in personnel-related expenses, including stock-based compensation, as a result of increased headcount, an increase of $1.6 million in product development materials and costs, an increase of $1.0 million in clinical and regulatory expense, and an increase of $0.7 million in outside services.

Selling, General and Administrative Expenses. SG&A expenses increased $8.3 million, or 23%, to $43.7 million during the six months ended June 30, 2021, compared to $35.4 million during the six months ended June 30, 2020. The increase in SG&A costs was due to the continued commercialization of our products, general corporate and other costs associated with operating as a public company, as well as the resumption of travel, tradeshow and other expenses as the impacts of COVID-19 declined compared to the prior period. The increase in SG&A expenses is primarily attributable to an increase of $7.0 million in payroll and personnel-related expenses, an increase of $0.4 million in consulting, legal and professional fees, an increase of $0.4 million in software related expense, an increase of $0.3 million in physician training and travel related costs, and an increase of $0.2 million in insurance costs. Personnel-related expenses included stock-based compensation expense of $5.3 million and $2.4 million for the six months ended June 30, 2021 and 2020, respectively.

Interest Income (Expense), Net. Interest income (expense), net decreased $0.6 million, or 35%, to an expense of $1.1 million during the six months ended June 30, 2021, compared to an expense of $1.7 million during the six months ended June 30, 2020. This decrease in net interest expense was attributable to the reduced interest rate as a result of the refinancing of our debt obligations in October 2020, partially offset by a decrease in interest income due to lower interest rates during the six months ended June 30, 2021 as compared with the prior period.

Other Income (Expense), Net. There were no significant changes within other income (expense), net during the six months ended June 30, 2021, compared to the six months ended June 30, 2020.

Liquidity and Capital Resources

As of June 30, 2021, we had cash and cash equivalents of $101.8 million, investments of $26.3 million, an accumulated deficit of $260.1 million and $48.6 million outstanding under our Loan Agreement, net of issuance costs.

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On October 29, 2020, we entered into a Loan and Security Agreement, or Loan Agreement, with Stifel Bank which provides for a $50.0 million loan facility, comprised of a $50.0 million secured revolving credit facility, with a $2.0 million subfacility for the issuance of letters of credit and other ancillary banking services, and a $50.0 million secured term loan facility, provided that amounts outstanding under both facilities may not exceed an aggregate principal amount of $50.0 million at any time. Any borrowings under the revolving loan facility mature on October 29, 2022, or October 29, 2023 if as of October 29, 2022, no event of default has occurred and we are in compliance with the terms of the Loan Agreement. Borrowings under the term loan facility mature on October 29, 2024. Also on October 29, 2020, we drew down $49.0 million under the term loan facility and used the majority of the proceeds to pay off and terminate our prior loan agreement with CRG.

In May 2020, we completed an underwritten public offering of 6,808,154 shares of our common stock, of which we offered 1,923,076 shares for sale and the remaining 4,885,078 shares were offered for sale by certain selling stockholders, at a public offering price of $39.00 per share. From the public offering, we received cash proceeds of approximately $70.5 million, net of underwriting discounts and commissions and offering costs which were paid by us. Also, in May 2020, the underwriters fully exercised their option to purchase 1,021,223 additional shares of common stock from the selling stockholders. We did not receive any of the proceeds from the sale of the shares of common stock by the selling stockholders.

Prior to our public offerings, our primary sources of capital were private placements of convertible preferred stock, debt financing agreements and revenue from the sale of our products.

We believe that our cash and cash equivalents and available-for-sale investments as of June 30, 2021, together with our expected revenue will be sufficient to meet our capital requirements and fund our operations for at least the next 12 months.

Cash Flows

The following table summarizes our cash flows for each of the periods presented below:

	Six Months Ended
	June 30,
(in thousands)	2021		2020
Net cash (used in) provided by:
Operating activities	$	(21,008)	$	(23,376)
Investing activities		50,426		(14,905)
Financing activities		2,965		72,542
Net increase (decrease) in cash, cash equivalents and restricted cash	$	32,383	$	34,261

Net Cash Used in Operating Activities

Net cash used in operating activities for the six months ended June 30, 2021 was $21.0 million, consisting primarily of a net loss of $21.2 million and an increase in net operating assets of $8.1 million, partially offset by non-cash charges of $8.3 million. The increase in net operating assets was primarily due to increases in accounts receivable and inventories to support the growth of our operations, an increase in prepaid expenses and other current assets primarily due to timing of insurance premium payments and decreases in accounts payable, accrued and other liabilities, due to timing of payments. The non-cash charges primarily consisted of stock-based compensation, depreciation and amortization, amortization of premiums on investments and of right-of-use assets and provision for excess and obsolete inventories.

Net cash used in operating activities for the six months ended June 30, 2020 was $23.4 million, consisting primarily of a net loss of $20.3 million and an increase in net operating assets of $7.1 million, partially offset by non-cash charges of $4.0 million. The increase in net operating assets was primarily due to an increase in inventories to support the growth of our operations, an increase in prepaid expenses and other current assets and a decrease in accrued liabilities, partially offset by decreases in accounts receivable and increases in accounts payable, due to timing of payments and growth of our operations. The non-cash charges primarily consisted of stock-based compensation, depreciation and amortization, provision for excess and obsolete inventories, non-cash interest expense and other charges related to our term loan agreement with CRG.

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Net Cash Provided by (Used in) Investing Activities

Net cash provided by investing activities in the six months ended June 30, 2021 was $50.4 million. Cash provided by investing reflected maturities of investments of $51.3 million offset by purchases of property and equipment of $0.9 million.

Net cash used in investing activities in the six months ended June 30, 2020 was $14.9 million. Cash used in investing reflected purchases of purchases of property and equipment of $0.5 million and net purchases of investments of $14.4 million.

Net Cash Provided by Financing Activities

Net cash provided by financing activities in the six months ended June 30, 2021 was $3.0 million consisting of proceeds from stock option exercises and purchases under our employee stock purchase plan.

Net cash provided by financing activities in the six months ended June 30, 2020 was $72.5 million, consisting of proceeds of $70.9 million from our public offering, net of issuance costs paid, and proceeds of $1.7 million from stock option exercises and purchases under our employee stock purchase plan.

Off-Balance Sheet Arrangements

We currently have no off-balance sheet arrangements, such as structured finance, special purpose entities, or variable interest entities.

Contractual Obligations and Commitments

As of June 30, 2021, our principal obligations consist of the operating leases for our facilities, our Loan Agreement with Stifel Bank and non-cancellable inventory purchase commitments. The non-cancellable purchase commitments primarily consist of ENROUTE stents and other inventory components.

In May 2021, we entered into a lease agreement for approximately 63,118 square feet of office space located in Plymouth, Minnesota for a period beginning in May 2021 and ending in November 2029, with an initial annual base rent payment of approximately $0.8 million, increasing to $1.0 million annually in the final year of the lease term.

On October 29, 2020, we drew down $49.0 million under the term loan facility with Stifel Bank using the majority of the proceeds to pay off outstanding amounts under our loan agreement with CRG and to terminate the CRG loan agreement. The principal amount of outstanding term loans under the Loan Agreement with Stifel Bank shall be repaid in equal monthly installments beginning on May 29, 2022, or November 29, 2022 if we achieve revenue for the year ending December 31, 2021 of at least 80% of our board-approved financial projections for such fiscal year. The term loan may not be reborrowed once repaid, but we may prepay the term loan at any time without premium or penalty. We are also obligated to pay a fee to the lender upon the occurrence of certain liquidity events, along with other customary fees for a loan facility of this size and type.

Our obligations under the Loan Agreement are secured by substantially all of our assets. The Loan Agreement requires that we maintain unrestricted cash and cash equivalents with Stifel Bank or at Stifel Bank Affiliates of at least $20.0 million. In addition, for any fiscal quarter where our unrestricted cash and cash equivalents maintained with Stifel Bank or at a Stifel Bank Affiliates are less than $60.0 million for any day during such fiscal quarter, we must comply with a minimum revenue covenant. Additionally, the Loan Agreement contains customary affirmative and negative covenants, including covenants limiting our ability and the ability of our subsidiaries to, among other things, dispose of assets, effect certain mergers, incur debt, grant liens, pay dividends and distributions on capital stock, make investments and acquisitions, and enter into transactions with affiliates, in each case subject to customary exceptions for a loan facility of this size and type.

The events of default under the Loan Agreement include, among others, payment defaults, material misrepresentations, breaches of covenants, cross defaults with certain other material indebtedness, bankruptcy and insolvency events, and judgment defaults. The occurrence of an event of default could result in the acceleration of our obligations under the Loan Agreement, the termination of the lender’s commitments, a 5% increase in the applicable rate of interest and the exercise by the lender of other rights and remedies provided for under the Loan Agreement.

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There have been no other material changes to our contractual obligations from those described in our Annual Report on Form 10-K for the year ended December 31, 2020 filed with the SEC on March 1, 2021.

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. There have been no significant and material changes in our critical accounting policies during the three and six months ended June 30, 2021, as compared to those disclosed in “Management’s Discussion and Analysis of Financial Conditions and Results of Operations - Critical Accounting Policies and Estimates” in our Annual Report on Form 10-K for the year ended December 31, 2020 filed with the SEC on March 1, 2021.

Recently Issued Accounting Pronouncements

See Note 3 to our condensed financial statements included elsewhere in this Quarterly Report on Form 10-Q for new accounting pronouncements not yet adopted as of the date of this Quarterly Report on Form 10-Q.

Item 3: Quantitative and Qualitative Disclosures About Market Risk

We are exposed to market risks in the ordinary course of our business. These risks primarily include risk related to interest rate sensitivities and foreign currency exchange rate sensitivity.

Interest Rate Risk

We had cash, cash equivalents and investments of $128.1 million as of June 30, 2021 which consisted of bank deposits, money market funds, U.S. government securities, corporate bonds/notes and commercial paper. The primary objectives of our investment activities are the preservation of capital and support of our liquidity requirements. Our investments are exposed to market risk due to fluctuations in interest rates, which may affect our income and the fair market value of our investments.

We do not enter into investments for trading or speculative purposes and have not used any derivative financial instruments to manage our interest rate risk exposure. A hypothetical 10% change in interest rates would not have a material impact on the value of our cash and cash equivalents or our investments as of June 30, 2021.

Credit Risk

As of June 30, 2021 and December 31, 2020, our cash and cash equivalents were maintained with three and two financial institutions, respectively, 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 each to have sufficient assets and liquidity to conduct its operations in the ordinary course of business with little or no credit risk to us. Our cash equivalents and investments are invested in highly rated money market funds, U.S. treasury bills, U.S. government securities, corporate bonds/notes, asset-backed securities and commercial paper.

Our accounts receivable primarily relate to revenue from the sale of our products to hospitals and medical centers in the United States. No customer represented 10% or more of our accounts receivable as of June 30, 2021 or December 31, 2020.

Foreign Currency Risk

Our business is primarily 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.

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Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our President and Chief Executive Officer and our Chief Financial Officer, have evaluated our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended) prior to the filing of this quarterly report. Based on that evaluation, our President and Chief Executive Officer and our Chief Financial Officer have concluded that, as of the end of the period covered by this Quarterly Report on Form 10-Q, our disclosure controls and procedures were effective at the reasonable assurance level.

Changes in Internal Control Over Financial Reporting

There have been no changes in our internal control over financial reporting that occurred during the most recent fiscal quarter covered by this Quarterly Report on Form 10-Q that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Limitations on Effectiveness of Controls and Procedures

In designing and evaluating the disclosure controls and procedures, management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. In addition, the design of disclosure controls and procedures must reflect the fact that there are resource constraints and that management is required to apply judgment in evaluating the benefits of possible controls and procedures relative to their costs.

Part II. Other Information

Item 1. Legal Proceedings

From time to time we may become involved in legal proceedings or investigations, which could have an adverse impact on our reputation, business and financial condition and divert the attention of our management from the operation of our business.

Item 1A. Risk Factors

We have identified the following risks and uncertainties that may have a material adverse effect on our business, financial condition, results of operations and future growth prospects. Our business could be harmed by any of these risks. The risks and uncertainties described below are not the only ones we face. The occurrence of any of the following risks or additional risks and uncertainties not presently known to us or that we currently believe to be immaterial could materially and adversely affect our business, financial condition, results of operations and future prospects. The trading price of our common stock could decline due to any of these risks, and you may lose all or part of your investment. In assessing these risks, you should also refer to the other information contained in this Quarterly Report on Form 10-Q, including our condensed financial statements and related notes. Please also see “Cautionary Notes Regarding Forward-Looking Statements.”

Summary of Principal Risk Factors

The following risks and uncertainties are among the most significant we face. However, the risks and uncertainties identified in this subsection are not the only ones we face, and are qualified in their entirety by reference to all of the risk factors described in Item 1A.

General Risks Related to Our Business

•Our business is dependent upon the broad adoption of TCAR by hospitals and physicians.

•Adoption of TCAR depends upon positive clinical data and medical society recommendations, and negative clinical data or medical society recommendations would adversely affect our business.

•If we are not able to maintain adequate levels of third-party coverage and reimbursement for the procedures using our products, if third parties rescind or modify their coverage, or if patients are left with significant out-of-pocket costs, it would have a material adverse effect on our business, financial condition and results of operations.

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•The COVID-19 pandemic and efforts to reduce its spread have impacted, and, with the spread of new variants, may continue to negatively impact, our business and operations.

•We rely on Cordis Corporation, formerly a Cardinal Health Company, or Cordis, to supply the ENROUTE stent, and if Cordis fails to supply the ENROUTE stent in sufficient quantities or at all, it will have a material adverse effect on our business, financial condition and results of operations.

•We depend on a limited number of single source suppliers to manufacture our components, sub-assemblies and materials, including Cordis, which makes us vulnerable to supply shortages and price fluctuations that could have a material adverse effect on our business, financial condition and results of operations.

•We have a history of net losses, we expect to incur operating losses in the future and we may not be able to achieve or sustain profitability.

•The failure of third parties to meet their contractual, regulatory, and other obligations could adversely affect our business.

Intellectual Property Risks

•We may become a party to intellectual property litigation or administrative proceedings that could be costly and could interfere with our ability to sell and market our products.

•Our success will depend on our ability to obtain, maintain and protect our intellectual property rights.

•We may not be able to protect our intellectual property rights throughout the world.

Regulatory Risks

•Our products have in the past and could in the future be subject to product recalls that could harm our reputation or increase the probability of inspection by, or additional scrutiny from, the FDA or other relevant regulatory bodies.

•Changes in the CMS fee schedules may harm our revenue and operating results.

•If we fail to comply with broad based healthcare and other governmental regulations, we could face substantial fines and penalties and our business, results of operations and financial condition could be adversely affected.

•If we fail to obtain and maintain necessary regulatory clearances or approvals for our products, or if clearances or approvals for future products and indications are delayed or not issued, our commercial operations would be harmed.

•Our clinical trials may fail to demonstrate competent and reliable evidence of the safety and effectiveness of our products, which would prevent or delay commercialization of our products in development.

Risks Related to Our Business

We have a history of net losses, we expect to incur operating losses in the future and we may not be able to achieve or sustain profitability.

We have incurred net losses since our inception in March 2007. For the six months ended June 30, 2021, we had a net loss of $21.2 million, and we expect to continue to incur additional losses in the future. As of June 30, 2021, we had an accumulated deficit of $260.1 million. To date, we have financed our operations primarily through equity and debt financings and from sales of our portfolio of TCAR products that enable transcarotid artery revascularization. The losses and accumulated deficit have primarily been due to the substantial investments we have made to develop our products, as well as for costs related to general research and development, including clinical and regulatory initiatives to obtain marketing approval, sales and marketing efforts and infrastructure improvements.

Over the next several years, we expect to continue to devote a substantial amount of our resources to expand commercialization efforts and increase adoption of TCAR using our products, improve and expand reimbursement for TCAR, expand the labeled indications for our products and develop additional products. In addition, as a public company, we incur significant legal, accounting, director & officer liability insurance and other expenses that we did not incur as a private company, all of which continue to increase. Accordingly, we expect to continue to incur operating losses for the foreseeable future and we cannot assure you that we will achieve profitability in the future or that, if we do become profitable, we will sustain profitability. Our failure to achieve and sustain profitability in the future will make it more difficult

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to finance our business and accomplish our strategic objectives, which would have a material adverse effect on our business, financial condition and results of operations and cause the market price of our common stock to decline. In addition, failure of our products to significantly penetrate the target markets would negatively affect our business, financial condition and results of operations.

We rely on, and currently sell products to enable, TCAR, which is our only product offering.

To date, all of our revenue has been derived, and we expect it to continue to be derived in the near term, from sales of our products that enable TCAR. TCAR is a relatively new treatment option for certain patients diagnosed with carotid artery disease and, as a result, physician awareness of TCAR and our products, and experience with TCAR and our products, is limited. A number of factors that are outside of our control may contribute to fluctuations in our financial results, including:

•Physician and hospital demand for our products and the extent of adoption of TCAR, including the rate at which physicians recommend our products and TCAR to their patients;

•Positive or negative media coverage, or public, patient and/or physician perception, of our products and TCAR or competing products and procedures;

•Any safety or effectiveness concerns that arise regarding our products or TCAR;

•Unanticipated delays in product development or product launches;

•Our ability to maintain our current or obtain further regulatory clearances or approvals;

•Delays in, or failure of, product, component and material deliveries by our third-party suppliers; and

•Introduction of new products or procedures for treating carotid artery disease that compete with our products and the TCAR procedure.

It is therefore difficult to predict our future financial performance and growth, and such forecasts are inherently limited and subject to a number of uncertainties. If our assumptions regarding the risks and uncertainties we face, which we use to plan our business, are incorrect or change due to circumstances in our business or our markets, or if we do not address these risks successfully, our operating and financial results could differ materially from our expectations and our business could suffer.

In addition, because we devote substantially all of our resources to our products that enable TCAR and rely on our products and the adoption of TCAR as our sole source of revenue, any factors that negatively impact our products or TCAR, or result in a decrease in sales of products, could have a material adverse effect on our business, financial condition and results of operations.

Our business is dependent upon the broad adoption of TCAR by hospitals and physicians.

Our future growth and profitability largely depends on our ability to increase physician awareness of TCAR and on the willingness of physicians to adopt our products and TCAR, and to recommend the procedure to their patients. Physicians may not adopt our products unless they are able to determine, based on experience, clinical data, medical society recommendations and other analyses, that our products provide a safe and effective treatment alternative for carotid artery disease. Even if we are able to raise awareness among physicians, physicians tend to be slow in changing their medical treatment practices and may be hesitant to select our products or TCAR for recommendation to patients for a variety of reasons, including:

•Long-standing relationships with competing companies and distributors that sell other products, such as stents and embolic protection devices for transfemoral carotid artery stenting, or CAS;

•Competitive response and negative selling efforts from providers of alternative carotid revascularization products;

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

•Lack or perceived lack of sufficient clinical evidence, including long-term data, supporting clinical benefits;

•Reluctance to change to or use new products and procedures;

•Perceptions that our products are unproven; and

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•Time commitment and skill development that may be required to gain familiarity and proficiency with TCAR and our products.

Physicians play a significant role in determining the course of a patient’s treatment for carotid artery disease and, as a result, the type of treatment that will be recommended or provided to a patient. We focus our sales, marketing and education efforts primarily on vascular surgeons, and aim to educate referring physicians such as vascular surgeons, cardiologists, radiologists, neurologists, neurosurgeons and general practitioners regarding the patient population that would benefit from TCAR. However, we cannot assure you that we will achieve broad education or market acceptance among these practitioners. For example, if diagnosing physicians that serve as the primary point of contact for patients are not made aware of TCAR, they may not refer patients to physicians for treatment using our products, and those patients may instead not seek treatment at all or may be treated with alternative procedures. In addition, some physicians may choose to utilize TCAR on only a subset of their total patient population or may not adopt TCAR at all. If a physician experiences an adverse event in one or more of their TCAR patients or elects to convert TCAR to CEA mid-procedure, they may not continue offering and performing TCAR at the same rate or at all. Further, as TCAR is a new procedure, it may not fit into the workstreams of certain physicians. If we are not able to effectively demonstrate that TCAR is beneficial in a broad range of patients, adoption of TCAR will be limited and may not occur as rapidly as we anticipate or at all, which would have a material adverse effect on our business, financial condition and results of operations. We cannot assure you that TCAR or our products will achieve broad market acceptance among hospitals and physicians. Any failure of TCAR or our products to satisfy demand or to achieve meaningful market acceptance and penetration will harm our future prospects and have a material adverse effect on our business, financial condition and results of operations.

In addition, the medical device industry’s relationship with physicians is under increasing scrutiny by the Health and Human Services Office of the Inspector General, or OIG, the Department of Justice, or DOJ, state attorneys general, and other foreign and domestic government agencies. Our failure to comply with laws, rules and regulations governing our relationships with physicians, or an investigation into our compliance by the OIG, DOJ, state attorneys general or other government agencies, could significantly harm our business.

In most cases, before physicians can use our products for the first time, our products must be approved for use by a hospital's new product or value analysis committee, or the staff of a hospital or health system. Following such approval, we may be required to enter into a purchase contract. Such approvals or requirements to enter into a purchase contract could deter or delay the use of our products by physicians. We cannot provide assurance that our efforts to obtain such approvals, enter into purchase contracts, or generate adoption will be successful or increase the use of our products, and if we are not successful, it could have a material adverse effect on our business, financial condition and results of operations.

Adoption of TCAR depends upon positive clinical data and medical society recommendations, and negative clinical data or medical society recommendations would adversely affect our business.

The rate of adoption of TCAR and sales of our products that facilitate the procedure is heavily influenced by clinical data. Although the Society for Vascular Surgery’s TCAR Surveillance Project contains real world data comparing procedures, we have not conducted head-to-head clinical trials to compare TCAR to the procedures historically available to patients, such as CEA or CAS, which may limit the adoption of TCAR. Additionally, the Carotid Revascularization and Medical Management for Asymptomatic Carotid Stenosis 2 clinical trial is currently funded by the National Institutes of Health, which compares the effectiveness of each of CEA and CAS with best medical management solutions. Although we estimate that enrollment will not be completed until sometime after 2026, interim results have been released from time to time. At the completion of the four-year follow-up, the trial could conclude that medical management alone achieves the same therapeutic results as CEA and/or CAS, which could have an adverse impact on the adoption of TCAR. Finally, our competitors and third parties may also conduct clinical trials of our products without our participation. Unfavorable or inconsistent clinical data from existing or future clinical trials conducted by us, our competitors or third parties, the interpretation of our or other clinical data or findings of new or more frequent adverse events, could have a material adverse effect on our business, financial condition and results of operations.

As physicians are influenced by guidelines issued by physician organizations, such as the Society for Vascular Surgery, the rate of adoption of TCAR and sales of our products that facilitate the procedure are also heavily influenced by medical society recommendations. We believe the Society for Vascular Surgery’s Clinical Practice Guidelines, or SVS Guidelines, are of particular importance to the broader market acceptance of TCAR. The revised SVS Guidelines on the management of carotid artery disease were published in June 2021. Like previous versions of the guidelines, it generally discusses CAS and embolic protection methods, including flow reversal. The 2021 edition does state that TCAR is preferred over CEA and CAS in both symptomatic and asymptomatic, anatomically or physiologically high surgical risk patients. If subsequent versions of the SVS Guidelines do not recommend TCAR, or if the Society for Vascular Surgery issues a negative or limited statement regarding TCAR, physicians may not adopt or continue to use TCAR or our

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products at the same rate or at all, which would have a material adverse effect on our business, financial condition and results of operations. Additionally, if key opinion leaders who currently support TCAR cease to recommend TCAR or our products, our business, financial condition and results of operations will be adversely affected.

Adoption of TCAR depends upon appropriate physician training, and inadequate training may lead to negative patient outcomes, affect adoption of TCAR and adversely affect our business.

The success of TCAR depends in part on the skill of the physician performing the procedure and on our customers’ adherence to appropriate patient selection and proper techniques provided in training sessions conducted by our training faculty. For example, we train our customers to ensure correct use of our ENROUTE NPS and proper deployment of our ENROUTE stent. However, physicians rely on their previous medical training and experience when performing TCAR, and we cannot guarantee that all such physicians will have the necessary surgical and endovascular skills to perform the procedure. While we mandate physician attendance at our TCAR training program or training with proctors, we do not control which physicians perform TCAR or how much training they receive. Physicians who have not completed our training sessions may nonetheless attempt to perform TCAR. If physicians perform TCAR in a manner that is inconsistent with its labeled indications, with components that are not our products or without adhering to or completing our training sessions, their patient outcomes may not be consistent with the outcomes achieved in our and other clinical trials, studies or registries of TCAR. This result may negatively impact the perception of patient benefit and safety and limit adoption of TCAR and our products that facilitate the procedure, which would have a material adverse effect on our business, financial condition and results of operations. Additionally, physician organizations may adopt physician credentialing guidelines requiring TCAR training more extensive than our training program. If physicians conclude that we do not provide adequate TCAR training, they may be less likely to adopt TCAR and our products, which could have a material adverse effect on our business, financial condition and results of operations.

The COVID-19 pandemic and efforts to reduce its spread have impacted, and with the spread of new variants, may continue to negatively impact, our business and operations.

The spread of COVID-19 and its variants, or COVID-19, in the United States has continued to result in travel restrictions impacting our sales professionals and therapy development specialists who support them. While some of these restrictions began to lift throughout the first half of 2021, new virus variants, and increased infection rates during this period make the current COVID-related environment highly volatile and uncertain which creates uncertainty in the number of TCAR procedures and demand for our products as a result. Our field-based team continues to be available to support TCAR procedures, either in person or virtually. Members of our field team may, however, choose not to enter hospitals due to preexisting conditions, personal choice, or on doctors’ orders or may be unable to enter hospitals due to hospital policy. In addition, hospitals may reduce staffing and postpone certain procedures in response to COVID-19 or divert resources to treat those patients with COVID-19. Some hospitals have also restricted or limited access for non-patients, including our sales professionals and therapy development specialists, which has negatively impacted our access to physicians and their patients. Our business and operations may be impacted by competition for operating room and hybrid operating rooms within hospitals that have dedicated certain resources only to COVID-19 patients. As hospitals cancel and defer elective surgeries, it reduces their revenue and impacts their financial results, which could result in pricing pressure on our products as they seek cost savings. Prolonged restrictions relating to COVID-19 could adversely affect our procedures and the revenue we derive as a result. Additionally, some hospitals may have cash flow problems or cease doing business due to the impact of COVID-19 on their operations, which could reduce the number of hospitals where TCAR is performed and adversely affect our ability to collect amounts due to us and our revenue as a result.

We expect these challenges to continue to impact the number of TCAR procedures in 2021, but the extent cannot be quantified at this time. Patients may also be reluctant to visit their physicians at their offices or in hospitals due to fear of contracting COVID-19. Physicians may not be performing as many diagnostic tests for their patients and the labs where these tests are performed may not be open, staffed adequately or open the entire day. Even where physicians continue to treat symptomatic patients, treatment of asymptomatic patients is being deferred in many cases in areas where COVID-19 cases and hospitalizations are significant. The reduction in diagnostic testing and physician visits, the increase in deferred treatment, and patient behaviors are translating into fewer than expected TCAR procedures being performed in the current environment.

Governmental mandates related to COVID-19 or other infectious diseases have impacted, and we expect them to continue to impact, our personnel and personnel at third-party manufacturing facilities in the United States and other countries, and the availability or cost of materials, which would disrupt our supply chain and/or reduce our margins. While we have continued to operate with remote employees and essential employees on site, an extended implementation of this governmental mandate could impact our ability to operate effectively and conduct ongoing manufacturing or research and development activities. However, we are considered an essential business under applicable state rules and our manufacturing operations are ongoing. We have necessary components and raw materials on hand and appropriate distancing policies and protocols established to continue manufacturing and other operations.

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While we expect the COVID-19 pandemic to continue to impact our business over the short term as some procedures are temporarily deferred or cancelled altogether, we took swift and proactive measures to minimize business disruptions and preserve financial flexibility by raising additional capital and refinancing our debt in 2020. In assessing our own cash conservation options, we undertook preemptive steps to curtail spending and reduce non-essential sales, general, and administrative expenses. If key personnel or large groups of our employees contract the virus, that may also impact our business and operations. In the meantime, we have taken steps to provide for our employees, including providing the ability for employees to work remotely and implementing strategies to support appropriate social distancing techniques for onsite employees. We are also assessing our business continuity plans in the context of this pandemic.

The outbreak and persistence of COVID-19 in international markets that we have targeted for our international expansion has delayed preparation for and launch of such expansion efforts. Regulatory timelines for approval in some countries have been delayed. The spread of an infectious disease, including COVID-19, could also result in the inability of our suppliers to deliver components or raw materials to us on a timely basis. If there were a shortage of supply, the cost of these materials or components may increase and harm our ability to provide our products on a cost-effective basis. In connection with any supply shortages in the future, reliable and cost-effective replacement sources may not be available on short notice or at all, and this may force us to increase prices and face a corresponding decrease in demand for our products. In the event that any of our suppliers were to discontinue production of our key product components, developing alternate sources of supply for these components would be time consuming, difficult and costly. The extent to which COVID-19 impacts our business will depend on future developments, which are highly uncertain and cannot be predicted, including the duration and severity of the pandemic, the actions taken to reduce the transmission of COVID-19, and the speed with which normal economic and operating conditions resume, among others.

Finally, we anticipate that the COVID-19 pandemic may continue to impact clinical and regulatory matters. COVID-19 is delaying enrollment in clinical trials across the medical device industry and may affect any new trials we decide to pursue. Our ongoing diffusion weighted imaging trials in the US and Europe are experiencing patient enrollment delays. Additionally, we may experience regulatory delays in our effort to seek a label expansion for the ENROUTE stent in standard surgical risk patients, as the FDA has from time to time diverted resources to address the impact of COVID-19. COVID-19 may cause disruptions that could have a material adverse impact on our clinical trial plans and timelines, including:

•Delays in receiving authorizations from local regulatory authorities, ethics committees and institutional review boards to initiate planned clinical trials;

•Delays or difficulties in enrolling patients in our clinical trials;

•Delays or difficulties in clinical site initiation, including difficulties in recruiting clinical site investigators and clinical site staff;

•Delays in clinical sites receiving the supplies and materials needed to conduct our clinical trials, including interruptions in global shipping that may affect the transport of clinical trial materials;

•Changes in local regulations as part of a response to the COVID-19 pandemic which may require us to change the ways in which our clinical trials are conducted, which may result in unexpected costs, or to discontinue the clinical trials altogether;

•Diversion of healthcare resources away from the conduct of clinical trials, including the diversion of hospitals serving as our clinical trial sites and hospital staff supporting the conduct of our clinical trials;

•Interruption of key clinical trial activities, such as clinical trial site monitoring, due to limitations on travel imposed or recommended by federal or state governments, employers and others, or interruption of clinical trial subject visits and study procedures, the occurrence of which could affect the integrity of clinical trial data;

•Risk that participants enrolled in our clinical trials will acquire COVID-19 while the clinical trial is ongoing, which could impact the results of the clinical trial, including by increasing the number of observed adverse events;

•Delays in necessary interactions with local regulators, ethics committees and other third parties and contractors due to limitations in employee resources or forced furlough of government employees;

•Limitations in employee resources that would otherwise be focused on the conduct of our clinical trials, including because of sickness of employees or their families or the desire of employees to avoid contact with large groups of people; and

•Refusal of the FDA to accept data from clinical trials in affected geographies.

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Any of these occurrences may significantly harm our business, financial condition and prospects. In addition, many of the factors that cause, or lead to, a delay in the commencement or completion of clinical trials may also ultimately lead to the delay or denial of regulatory approvals or clearances of our product.

Our results of operations could be materially harmed if we are unable to accurately forecast customer demand for our products and manage our inventory.

We seek to maintain sufficient levels of inventory in order to protect ourselves from supply interruptions, but keep limited components, sub-assemblies, materials and finished products on hand. To ensure adequate inventory supply and manage our operations with our manufacturing partners and suppliers, we forecast anticipated materials requirements and demand for our products in order to predict inventory needs and then place orders with our suppliers based on these predictions. Our ability to accurately forecast demand for our products would be negatively affected by many factors, including our rapid growth, product recalls, pandemics, failure to accurately manage our expansion strategy, product introductions by competitors, an increase or decrease in customer demand for our products, our failure to accurately forecast customer acceptance of new products, changes to hospital capacity, staffing, procedure and protocol changes, unanticipated changes in general market conditions or regulatory matters and weakening of economic conditions or consumer confidence in future economic conditions.

Inventory levels in excess of customer demand may result in a portion of our inventory becoming obsolete or expiring, as well as inventory write-downs or write-offs. Conversely, if we underestimate customer demand for our products or our own requirements for components, subassemblies and materials, our manufacturing partners and suppliers may not be able to deliver components, sub-assemblies and materials to meet our requirements and our manufacturing may be affected by the impact of COVID-19 on our suppliers, which could result in inadequate inventory levels or interruptions, delays or cancellations of deliveries to our customers, any of which would damage our reputation, customer relationships and business. In addition, several components, sub-assemblies and materials incorporated into our products require lengthy order lead times, and additional supplies or materials may not be available when required on terms that are acceptable to us or our manufacturing partners, or at all, and our manufacturing partners and suppliers may not be able to allocate sufficient capacity in order to meet our increased requirements, any of which could have an adverse effect on our ability to meet customer demand for our products and our results of operations.

We have limited long-term data regarding the safety and effectiveness of our products, including our ENROUTE stent and TCAR generally.

Our products enable TCAR, which is a relatively new procedure, and our success depends on acceptance of our products and TCAR by the medical industry, including physicians and hospitals. The FDA reviews our products for safety and effectiveness, prior to commercial launch of these products. Thereafter, physicians, through their own use of the products and evaluation of clinical data, make their own decisions as to whether our products are safe and effective for their patients and improve their clinical outcomes. Important factors upon which the effectiveness of our products, including our ENROUTE stent, will be measured include but are not limited to long-term data regarding the risk of stroke and death and the rates of restenosis and reintervention following TCAR. The long-term clinical benefits of procedures that use our products are not fully known. Any failure of our stent or in-stent restenosis of the carotid artery following deployment of the stent could deter physicians from adopting our products and could have a material adverse effect on our business, financial condition and results of operations.

The results of short-term clinical experience of our products do not necessarily predict long-term clinical benefit. We believe that physicians will compare the rates of long-term risk of stroke and death, as well as restenosis and reintervention for procedures using our products, against alternative procedures, such as CEA and CAS. If the long-term data do not meet physicians’ expectations, or if long-term data indicate that our products are not as safe or effective as other treatment options or as current short-term data would suggest, our products may not become widely adopted, physicians may recommend alternative treatments for their patients and our business could be harmed.

If we are not able to maintain adequate levels of third-party coverage and reimbursement for the procedures using our products, if third parties rescind or modify their coverage, or if patients are left with significant out-of-pocket costs, it would have a material adverse effect on our business, financial condition and results of operations.

TCAR is currently covered under certain circumstances for certain patients by the Centers for Medicare and Medicaid Services, and has been covered by some commercial payers, independent networks and other entities not governed by the National Coverage Determination. In the United States, we derive our revenue from sales to hospitals and medical centers, which typically bill all or a portion of the costs and fees associated with our products to various third-party payers, including Medicare, Medicaid, Veterans’ Administration, private commercial insurance companies, health maintenance organizations and other healthcare-related organizations, and then bill patients for any applicable deductibles or co-

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payments. For example, our contracts are with the hospitals and medical centers that purchase our products for use with TCAR and not with the commercial payers. As a result, access to adequate coverage and reimbursement for our products by third-party payers is essential to the acceptance of our products by our customers.

However, in the United States, there is no uniform policy of coverage and reimbursement for medical device products and services among third-party payers, so coverage and reimbursement can differ significantly from payer to payer, and each coverage decision and level of reimbursement is independent. As a result, third-party reimbursement may not be available or adequate for our products, and there is no guarantee that we will be able to maintain our current levels of coverage or reimbursement or be able to expand coverage to other insurance carriers. Further, payers continually review new technologies for possible coverage and can, without notice, deny or limit coverage for products and procedures or delay coverage approval until further clinical data are available. As a result, the coverage determination process is often a time-consuming and costly process that may require us to provide scientific and clinical support for the use of our products to each payer separately, with no assurance that coverage and adequate reimbursement will be obtained, or maintained if obtained. If third-party reimbursement is not available or adequate for TCAR procedures using our products, or if there is any decline in the amount that payers are willing to reimburse our customers for TCAR or our products, new customers may not adopt, or may reduce their rate of adoption of, our products and we could experience additional pricing pressure, any of which could have a material adverse effect on our business, financial condition and results of operations.

Our products are covered for Medicare beneficiaries under a National Coverage Determination, or NCD, for Percutaneous Transluminal Angioplasty and for non-Medicare beneficiaries based on prior authorizations and individual insurer medical polices. Based on reimbursement information regarding CEA and CAS, we estimate that approximately 79% of carotid procedures are reimbursed by the U.S. Centers for Medicare & Medicaid Services, or CMS, and the remaining approximately 21% are reimbursed by commercial and other payers. Medicare is managed by CMS, which make the final determination regarding Medicare hospital and physician coverage and payment. Any future reconsideration of the applicable Medicare NCD may result in expansion of coverage of CAS and TCAR procedures based on FDA-approved indications or continued coverage limitations to CMS approved CAS investigational studies. CMS reimburses hospital inpatient services based on Medicare Severity Diagnosis Related Groups, or MS-DRGs. All CAS and CEA procedures are currently paid only as Medicare inpatient procedures. CMS policy focus on hospital price transparency, site (e.g. inpatient, outpatient, ambulatory surgery center and office) neutral payments and MS-DRG refinements may place additional downward pressure on future hospital inpatient payments. Medicare payments to physicians are based on a Resource Based Relative Value System. CMS policy changes to increase reimbursement for physician primary care services may result in reductions to physician payments for specialty services and procedures. As a result of any reductions in payments to hospitals and physicians for TCAR procedures, TCAR utilization may decline, which would have a material adverse effect on our business, financial condition and results of operations. Additionally, patients may elect to reduce or defer out-of-pocket costs during times of economic uncertainty or periods of legislative change. If hospital, physician and/or patient demand for TCAR, and thus our products that facilitate the procedure, is adversely affected by third-party reimbursement policies and decisions, it will have a material adverse effect on our business, financial condition and results of operations.

Internationally, reimbursement systems in foreign markets vary significantly by country and by region within some countries, and reimbursement approvals must be obtained on a country-by-country basis. In certain international markets, a product must be approved for reimbursement before it can be approved for sale in that country. Additionally, many international markets have government-managed healthcare systems that control reimbursement for products and procedures. In most markets there are both private insurance systems and government-managed systems. If sufficient levels of coverage and reimbursement are not available for TCAR or our current or future products, in either the United States or internationally, the demand for our products and our revenues will be adversely affected.

Additionally, when payers combine their operations, the combined company may elect to reimburse for TCAR at the lowest rate paid by any of the participants in the consolidation or use its increased size to negotiate reduced rates. If one of the payers participating in the consolidation does not reimburse for TCAR at all, the combined company may elect not to reimburse for TCAR, which would adversely impact our business, financial condition and results of operations.

If we fail to comply with our obligations in our intellectual property license from Cordis, we could lose license rights that are important to our business.

We are a party to a license agreement with Cordis, under which Cordis has granted us a worldwide, non-exclusive, royalty-bearing license to certain of its intellectual property related to the PRECISE® carotid stent for transcervical treatment of carotid artery disease with an intravascular stent for certain applications for accessing blood vessels through the neck and cervical area. Cardinal Health previously announced plans to divest Cordis to private equity firm Hellman & Friedman LLC., and the transaction recently closed on August 2, 2021. This license agreement imposes, and we expect that any future license agreements will impose, certain diligence, royalty, and other obligations on us. If we fail to comply with these obligations, our licensors, including Cordis, may have the right to reduce the scope of our rights or terminate

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these agreements, in which event we may not be able to develop and market any product that is covered by these agreements. Termination of this license for failure to comply with such obligations or for other reasons, or reduction, elimination or expiration of our licensed rights under it or any other license or agreement, may result in our having to negotiate new or reinstated licenses on less favorable terms or our not having sufficient intellectual property rights to operate our business or cause us to enter into new licenses for different stents. The occurrence of such events could materially harm our business and financial condition.

The risks described elsewhere pertaining to our intellectual property rights also apply to the intellectual property rights that we in-license, and any failure by us or our licensors, including Cordis, to obtain, maintain, defend and enforce these rights could have a material adverse effect on our business. In some cases we do not have control over the prosecution, maintenance or enforcement of the patents that we license, and may not have sufficient ability to provide input into the patent prosecution, maintenance and defense process with respect to such patents, and our licensors may fail to take the steps that we believe are necessary or desirable in order to obtain, maintain, defend and enforce the licensed patents.

We rely on Cordis to supply the ENROUTE stent, and if Cordis fails to supply the ENROUTE stent in sufficient quantities or at all, it will have a material adverse effect on our business, financial condition and results of operations.

We rely on Cordis to manufacture the ENROUTE stent pursuant to a supply agreement between us and Cordis Corporation. We strive to maintain an inventory of several months’ worth of ENROUTE stents to guard against potential shortfalls in supply, and we estimate that it would take one to two years to find an alternative supplier for our ENROUTE stent and multiple years to identify and seek approval for another stent, and in each case qualify it for use with our other products. In addition, Cordis currently manufactures the ENROUTE stent at a facility in Juarez, Mexico. This facility has previously and in the future could become subject to a COVID-19 outbreak which would cause Cordis to temporarily shut down manufacturing operations, which would in turn present risk to the ongoing supply of our stents used in TCAR procedures. The current political and trade relationship between the United States and Mexico is strained due to the prior administration and could deteriorate further. If Cordis's ability to manufacture the ENROUTE stent is interrupted as a result, or if Cordis experiences a product recall or breaches its supply agreement with us, we may not have a sufficient number of stents for delivery to support TCAR procedures. Finally, we or Hellman & Friedman LLC may wish to re-evaluate certain aspects of the license and supply agreement which may lead to lengthy or costly negotiations. Any shortfall in the supply of ENROUTE stents may result in lower adoption rates for TCAR, fewer TCAR procedures being performed generally, and a material adverse effect on our business, financial condition and results of operations.

TCAR involves surgical risks and is contraindicated in certain patients, which may limit adoption.

Risks of TCAR using our products include the risks that are common to surgical and endovascular procedures, including perforation, dissection, embolization, bleeding, infection, nerve injury and restenosis. Endovascular procedures occurring in the carotid arteries also include the additional risks of stroke, heart attack and death. We are aware of certain characteristics and features of TCAR that may prevent widespread market adoption, including the fact that physicians would need to adopt a new procedure, and that training for physicians will be required to enable them to effectively operate our products.

Our current products are contraindicated, and therefore should not be used, in certain patients. Our ENROUTE NPS is contraindicated in patients in whom antiplatelet and/or anticoagulation therapy is contraindicated; patients with uncorrected bleeding disorders; patients with severe disease of the ipsilateral common carotid artery; and patients with uncontrollable intolerance to flow reversal. Our ENROUTE stent is contraindicated in patients in whom antiplatelet and/or anticoagulation therapy is contraindicated; patients in whom the ENROUTE NPS is unable to be placed; patients with uncorrected bleeding disorders; patients with known allergies to nitinol; and patients with lesions in the ostium of the common carotid artery. Our ENHANCE peripheral access kit is contraindicated in patients with a known or suspected obstruction in the vessel. Our ENROUTE guidewire is contraindicated in patients judged not acceptable for percutaneous intervention. Additionally, patients that lack at least five centimeters of common carotid artery free of significant disease are not indicated for our ENROUTE NPS.

We face manufacturing risks that could adversely affect our ability to manufacture products and could reduce our gross margins and negatively affect our business and operating results.

Our business strategy depends on our ability to manufacture our current and future products in sufficient quantities and on a timely basis to meet customer demand, while adhering to product quality standards, complying with regulatory quality system requirements and managing manufacturing costs. We have a facility located in Sunnyvale, California, where we assemble and package certain of our products, and inspect, release and ship all of our products, either directly to our customers or to our third-party logistics and warehousing service. We currently produce our ENROUTE NPS at this facility, and we and the contract manufacturers of our other products do not have redundant facilities. If our or our

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manufacturing partners’ facilities suffers damage, or a force majeure event, this could materially impact our ability to operate.

We are also subject to numerous other risks relating to our manufacturing capabilities, including:

•Quality and reliability of components, sub-assemblies and materials that we source from third-party suppliers, who are required to meet our quality specifications, the majority of which are our single source suppliers for the products they supply;

•Our or our manufacturing partners’ inability to secure components, sub-assemblies and materials in a timely manner, in sufficient quantities or on commercially reasonable terms;

•Our or our manufacturing partners’ inability to maintain compliance with quality system requirements or pass regulatory quality inspections;

•Our or our manufacturing partners’ failure to develop products in a timely manner or to required specifications or to increase production capacity or volumes to meet demand;

•Our or our manufacturing partners’ inability to design or modify production processes to enable us to produce future products efficiently or implement changes in current products in response to design or regulatory requirements; and

•Difficulty identifying and qualifying, and obtaining new regulatory approvals, for alternative suppliers for components in a timely manner.

As demand for our products increases, we will have to invest additional resources to purchase components, sub-assemblies and materials, hire and train employees and enhance our manufacturing processes. If we fail to increase our production capacity efficiently, we may not be able to fill customer orders on a timely basis, our sales may not increase in line with our expectations and our operating margins could fluctuate or decline. In addition, although we expect some of our products in development to share product features, components, sub-assemblies and materials with our existing products, the manufacture of these products may require modification of our or our manufacturing partners’ current production processes or unique production processes, the hiring of specialized employees, the identification of new suppliers for specific components, sub-assemblies and materials or the development of new manufacturing technologies. It may not be possible for us or our manufacturing partners’ to manufacture these products at a cost or in quantities sufficient to make these products commercially viable or to maintain current operating margins, all of which could have a material adverse effect on our business, financial condition and results of operations.

We depend on a limited number of single source suppliers to manufacture our components, sub-assemblies and materials, which makes us vulnerable to supply shortages and price fluctuations that could have a material adverse effect on our business, financial condition and results of operations.

We rely on single source suppliers for the components, sub-assemblies and materials for our products. These components, sub-assemblies and materials are critical and there are relatively few alternative sources of supply. We have not qualified or obtained necessary regulatory approvals for additional suppliers for most of these components, sub-assemblies and materials, and we do not carry a significant inventory of these items. While we believe that alternative sources of supply may be available, we cannot be certain whether they will be available if and when we need them, or that any alternative suppliers would be able to provide the quantity and quality of components and materials that we would need to manufacture our products if our existing suppliers were unable to satisfy our supply requirements. To utilize other supply sources, we would need to identify and qualify new suppliers to our quality standards and obtain any additional regulatory approvals required to change suppliers, which could result in manufacturing delays and increase our expenses. Our manufacturing partners rely on single source suppliers as well, and are subject to the foregoing risks.

Our and our manufacturing partners’ dependence on third-party suppliers subjects us to a number of risks that could impact our ability to manufacture our products and harm our business, including:

•Interruption of supply resulting from modifications to, or discontinuation of, a supplier’s operations;

•Delays in product shipments resulting from uncorrected defects, reliability issues or a supplier’s failure to produce components that consistently meet our quality specifications;

•Price fluctuations due to a lack of long-term supply arrangements with our suppliers for key components;

•Inability to obtain adequate supply in a timely manner or on commercially reasonable terms;

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•Difficulty identifying and qualifying alternative suppliers for components in a timely manner;

•Inability of suppliers to comply with applicable provisions of the FDA’s Quality System Regulation, or QSR or other applicable laws or regulations enforced by the FDA and other state and applicable regulatory authorities;

•Inability to adequately ensure the quality of products and components manufactured by third parties;

•Production delays related to the evaluation and testing of products and components from alternative suppliers and corresponding regulatory qualifications;

•Delays in delivery by our suppliers due to changes in demand from us or their other customers; and

•An outbreak of disease or similar public health threat, such as the existing threat of COVID-19, particularly as it may impact our supply chain.

Although we require our third-party suppliers to supply us with components that meet our specifications and comply with applicable provisions of the QSR and other applicable legal and regulatory requirements in our agreements and contracts, and we perform incoming inspection, testing or other acceptance activities to ensure the components meet our requirements, there is a risk that our suppliers will not always act consistent with our best interests, and may not always supply components that meet our requirements or supply components in a timely manner. For example, in the first quarter of 2021, we announced the voluntary recall of certain lots of our ENROUTE Transcarotid Stent System, manufactured by one of our third-party suppliers, Cordis. Our decision to recall these lots was based on complaints we received about tips detaching from the stent delivery system as well as internal testing that we conducted. We have determined the root cause of the detachment was a single operator at Cordis, who, over a specific timeframe, produced lots in which a small number of units were not reliably manufactured to specification. Recalls like this one could cause the supply of our TCAR products to customers to be interrupted, us to incur additional expenses, have to purchase replacement products, negative publicity or damage to our reputation, any of which could cause our results of operations to be adversely impacted.

Our results of operations could be materially harmed if we are unable to accurately forecast customer demand for our products and manage our inventory.

We seek to maintain sufficient levels of inventory in order to protect ourselves from supply interruptions, but keep limited components, sub-assemblies, materials and finished products on hand. To ensure adequate inventory supply and manage our operations with our manufacturing partners and suppliers, we forecast anticipated materials requirements and demand for our products in order to predict inventory needs and then place orders with our suppliers based on these predictions. Our ability to accurately forecast demand for our products could be negatively affected by many factors, including our rapid growth, failure to accurately manage our expansion strategy, product introductions by competitors, an increase or decrease in customer demand for our products, our failure to accurately forecast customer acceptance of new products, unanticipated changes in general market conditions or regulatory matters and weakening of economic conditions or consumer confidence in future economic conditions.

Inventory levels in excess of customer demand may result in a portion of our inventory becoming obsolete or expiring, as well as inventory write-downs or write-offs. Conversely, if we underestimate customer demand for our products or our own requirements for components, subassemblies and materials, our manufacturing partners and suppliers may not be able to deliver components, sub-assemblies and materials to meet our requirements, which could result in inadequate inventory levels or interruptions, delays or cancellations of deliveries to our customers, any of which would damage our reputation, customer relationships and business. In addition, several components, sub-assemblies and materials incorporated into our products require lengthy order lead times, and additional supplies or materials may not be available when required on terms that are acceptable to us or our manufacturing partners, or at all, and our manufacturing partners and suppliers may not be able to allocate sufficient capacity in order to meet our increased requirements, any of which could have an adverse effect on our ability to meet customer demand for our products and our results of operations.

Our quarterly and annual results may fluctuate significantly and may not fully reflect the underlying performance of our business.

Our quarterly and annual results of operations, including our revenue, net income or net loss and cash flow, may vary significantly in the future, and period-to-period comparisons of our operating results may not be meaningful. Accordingly, the results of any one quarter or period should not be relied upon as an indication of future performance. Our quarterly and annual financial results may fluctuate as a result of a variety of factors, many of which are outside our control and, as a result, may not fully reflect the underlying performance of our business. Fluctuations in quarterly and annual results may decrease the value of our common stock. Because our quarterly results may fluctuate, period-to-period comparisons

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may not be the best indication of the underlying results of our business and should only be relied upon as one factor in determining how our business is performing.

We have a limited total addressable market based on our current labeling restrictions.

The total addressable market for TCAR is limited by a number of factors. Approximately 166,000 patients with carotid artery disease in the United States received treatment in the form of surgical or endovascular intervention in 2019. Of this group, we estimate that approximately one-third would be outside the scope of the FDA-approved labeling for the ENROUTE stent, as those patients are not deemed to be at high risk for adverse events from CEA, or high surgical risk. Although we have submitted a PMA supplement to the FDA to expand the labeling for the ENROUTE stent to treat patients at standard risk for adverse events from CEA, the current FDA-approved labeling for the ENROUTE stent is limited to patients at high risk for adverse events from CEA. Patients at high risk for adverse events from CEA are defined as having significant comorbidities and/or anatomic risk factors, and/or advanced age, that would make them riskier candidates for CEA. Furthermore, the safety and effectiveness of TCAR has not been established for certain patients. For example, the FDA-cleared labeling for the ENROUTE NPS states that patients should have at least five centimeters of common carotid artery free of significant disease for initial access to the artery and positioning of the ENROUTE sheath. In addition, per the FDA-approved labeling for the ENROUTE stent, TCAR is limited to asymptomatic patients with carotid artery stenosis of at least 80% and symptomatic patients with carotid artery stenosis of at least 50%, both of which must also be high surgical risk. In addition, physicians may choose to perform CEA in patients with certain anatomical characteristics, including heavily calcified carotid arteries, calcified lesions and severe vessel tortuosity. Finally, current labeling for our products includes contraindications for certain patients, thus further reducing our total addressable market.

Expanding the addressable market for TCAR is dependent upon labeling and reimbursement expansion initiatives.

The ENROUTE stent is not currently indicated for use in standard surgical risk patients. To access a larger portion of the market for carotid artery disease, we have filed for and will need to obtain approval by the FDA for a label expansion of the ENROUTE stent in standard surgical risk patients and obtain corresponding reimbursement coverage expansion for TCAR. FDA approval of an ENROUTE stent label expansion may require additional data from clinical studies or registries, which we are pursuing. However, there are no guarantees that we will be able to obtain such clinical study or registry data or FDA approval of a label expansion for the ENROUTE stent, or that any label expansion or additional reimbursement coverage will be sufficient to adequately access the standard risk portion of the market for carotid artery disease patients. If we are unable to obtain labeling and reimbursement coverage expansion, it may have a material adverse effect on our business, financial condition and results of operations.

Changes in public health insurance coverage and government reimbursement rates for the TCAR procedures using our products could affect the adoption of our products and our future revenue.

The federal government is considering ways to change, and has changed, the manner in which healthcare services are paid for in the United States. Individual states may also enact legislation that impacts Medicaid payments to hospitals and physicians. In addition, CMS establishes Medicare payment levels for hospitals and physicians on an annual basis, which can increase or decrease payment to such entities. Internationally, medical reimbursement systems vary significantly from country to country, with some countries limiting medical centers’ spending through fixed budgets, regardless of levels of patient treatment, and other countries requiring application for, and approval of, government or third-party reimbursement. Even if we succeed in bringing our products to market in additional foreign countries, uncertainties regarding future healthcare policy, legislation and regulation, as well as private market practices, could affect our ability to sell our products in commercially acceptable quantities at acceptable prices.

Cost-containment efforts of our customers, purchasing groups and governmental organizations could have a material adverse effect on our sales and profitability.

In an effort to reduce costs, many hospitals in the United States have become members of Group Purchasing Organizations, or GPOs, and Integrated Delivery Networks, or IDNs. GPOs and IDNs negotiate pricing arrangements with medical device companies and distributors and then offer these negotiated prices to affiliated hospitals and other members. GPOs and IDNs typically award contracts on a category-by-category basis through a competitive bidding process. Bids are generally solicited from multiple providers with the intention of driving down pricing or reducing the number of vendors. Due to the highly competitive nature of the GPO and IDN contracting processes, we may not be able to obtain new, or maintain existing, contract positions with major GPOs and IDNs. Furthermore, the increasing leverage of organized buying groups reduces market prices for our products and/or require administrative fees, thereby reducing our revenue and/or margins.

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While having a contract with a GPO or IDN for a given product category can facilitate sales to members of that GPO or IDN, such contract positions can offer no assurance that any level of sales will be achieved, as sales are typically made pursuant to individual purchase orders. Even when a provider is the sole contracted supplier of a GPO or IDN for a certain product category, members of the GPO or IDN are generally free to purchase from other suppliers. Furthermore, GPO and IDN contracts typically are terminable without cause by the GPO or IDN upon 60 to 90 days’ notice. Accordingly, the members of such groups may choose to purchase alternative products due to the price or quality offered by other companies, which could result in a decline in our revenue.

We may not be able to achieve or maintain satisfactory pricing and margins for our products.

Manufacturers of medical devices have a history of price competition, and we can give no assurance that we will be able to achieve satisfactory prices for our products or maintain prices at the levels we have historically achieved. Any decline in the amount that payers reimburse our customers for TCAR could make it difficult for customers to continue using, or to adopt, our products 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. If we are unable to maintain our prices, or if our costs increase and we are unable to offset such increase with an increase in our prices, our margins could erode. We will continue to be subject to significant pricing pressure, which could harm our business and results of operations.

If we are unable to manage the anticipated growth of our business, our future revenue and operating results may be harmed.

Any growth that we experience in the future will require us to expand our sales, general and administrative personnel, manufacturing and distribution operations, and facilities and information technology infrastructure. In addition to the need to scale our organization, future growth will impose significant added responsibilities on management, including the need to identify, recruit, train and integrate additional employees. Rapid expansion in personnel could mean that less experienced people manufacture, market and sell our products, which could result in inefficiencies and unanticipated costs, reduced quality and disruptions to our operations. In addition, rapid and significant growth may strain our administrative and operational infrastructure. Our ability to manage our business and growth will require us to continue to improve our operational, financial and management controls, reporting systems and procedures. If we are unable to manage our growth effectively, it may be difficult for us to execute our business strategy and our business could be harmed.

As demand for our products or any of our future products increases, we will need to continue to scale our capacity, expand customer service, billing and systems processes and enhance our internal quality assurance program. We cannot assure you that any increases in scale, related improvements and quality assurance will be successfully implemented or that appropriate personnel will be available to facilitate the growth of our business. Failure to implement necessary procedures, transition to new processes or hire the necessary personnel could result in higher costs or inability to meet increased demand. If we encounter difficulty meeting market demand, quality standards or physician expectations, our reputation could be harmed and our business could suffer.

Due to our recent growth in our business, we are actively searching for additional space to provide offices and facilities for the employees we expect to hire. We have supplemented our distribution operations with third-party logistics and warehousing services in another part of the country and are considering additional leased facilities inside and outside of the San Francisco Bay area and in the Minneapolis, Minnesota area, where we recently opened a satellite office. There is competition for office, shipping and warehousing space in the San Francisco Bay area and elsewhere and we can provide no assurance that we will find additional space or that such space will be on reasonable terms. If we are unable to obtain additional space or support on commercially reasonable terms our costs may go up or our business operations may be adversely affected.

If our manufacturing facility becomes damaged or inoperable, or if we are required to vacate a facility, we may be unable to produce the products we manufacture or we may experience delays in production or an increase in costs, which could adversely affect our results of operations.

We currently maintain our manufacturing and much of our research and development and non-field-based sales, general and administrative operations in a building located in Sunnyvale, California, which is situated on or near earthquake fault lines, and we do not yet have redundant manufacturing and distribution facilities. Should our building be significantly damaged or destroyed by natural or man-made disasters, such as earthquakes, fires or other events, it could take months to relocate or rebuild, during which time our employees may seek other positions, our research, development and manufacturing would cease or be delayed and our products may be unavailable. Moreover, the use of a new facility or new manufacturing, quality control, or environmental control equipment or systems generally requires FDA review and, with respect to certain products, approval of a PMA supplement. Because of the time required to authorize manufacturing

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in a new facility under FDA, the State of California and non-U.S. regulatory requirements, we may not be able to resume production on a timely basis even if we are able to replace production capacity in the event we lose manufacturing capacity. While we maintain property and business interruption insurance, such insurance has limits and would only cover the cost of rebuilding and relocating and lost revenue, but not general damage, losses caused by earthquakes, losses we may suffer due to our products being replaced by competitors’ products or loss in value due to associated decreases in our stock price. The inability to perform our research, development and manufacturing activities, combined with our limited inventory of materials and components and manufactured products, may cause physicians to discontinue using our products or harm our reputation, and we may be unable to reestablish relationships with such physicians in the future. Consequently, a catastrophic event at our facility could have a material adverse effect on our business, financial condition and results of operations.

Furthermore, the current lease for our manufacturing facility expires in 2024, and our operations are growing at a pace that may require us to find a replacement or expansion facility in California sooner. We may be unable to renew our lease or find a new facility on commercially reasonable terms. If we were unable or unwilling to renew at the proposed rates, relocating our manufacturing facility would involve significant expense in connection with the movement and installation of key manufacturing equipment and any necessary recertification with regulatory bodies, and we cannot assure investors that such a move would not delay or otherwise adversely affect our manufacturing activities or operating results. If our manufacturing capabilities were impaired by our move, we may not be able to manufacture and ship our products in a timely manner, which would adversely impact our business.

In addition, we rely on our manufacturing partners to supply certain of our products, and our partners are subject to similar risks with respect to their facilities. If our manufacturing partners’ facilities are damaged or destroyed and their ability to supply products to us is limited, it could negatively affect our reputation, physician relationships and TCAR adoption, all of which could have a material adverse effect on our business, financial condition and results of operations. Several of our products are sterilized at a particular third party facility, with limited alternate facilities. If an event occurs that results in damage to or closure of one or more of such facilities, we may be unable to sterilize such products at the previous levels or at all. Because of the time required to approve and license a sterilization facility, a third party may not be available on a timely basis to replace capacity in the event sterilization capacity is lost.

If we fail in our training initiatives, to increase our sales and marketing capabilities or to develop broad brand awareness, our growth will be impeded and our business will suffer.

We currently rely on our direct sales force to sell our products in targeted geographic regions in the U.S., and any failure to maintain and grow our direct sales force could harm our business. The members of our direct sales force are highly trained and possess substantial technical and clinical expertise, which we believe is critical in driving adoption of TCAR. The members of our U.S. sales force are at-will employees. The loss of these personnel to competitors, or otherwise, could materially harm our business. If we are unable to retain our direct sales force personnel or replace them with individuals of equivalent technical and clinical expertise and qualifications, or if we are unable to successfully instill such technical and clinical expertise in replacement personnel, our revenues and results of operations could be materially harmed.

In order to generate future growth, we plan to continue to expand and leverage our sales, marketing, and medical affairs infrastructure to increase our trained physician and hospital customer base and our business. Identifying and recruiting qualified sales, marketing and medical affairs personnel and training them on TCAR, on applicable federal and state laws and regulations, and on our internal policies and procedures requires significant time, expense and attention. It often takes several months or more before a sales representative is fully trained and productive. Our sales force may subject us to higher fixed costs than those of companies with competing products, such as stents, that utilize independent third parties, which could place us at a competitive disadvantage. Our business may be harmed if our efforts to expand and train our sales force do not generate a corresponding increase in revenue, and our higher fixed costs may slow our ability to reduce costs in the face of a sudden decline in demand for our products. Any failure to hire, develop and retain talented sales personnel, to achieve desired productivity levels in a reasonable period of time or timely reduce fixed costs, could have a material adverse effect on our business, financial condition and results of operations. Our ability to increase our customer base and achieve broader market acceptance of our products will depend to a significant extent on our ability to expand our marketing efforts. We plan to dedicate significant resources to our marketing programs. Our business may be harmed if our marketing efforts and expenditures do not generate a corresponding increase in revenue. In addition, we believe that developing and maintaining broad awareness of our brand is critical to achieving broad acceptance of our products and penetrating new accounts. Brand promotion activities may not generate patient or physician awareness or increase revenue, and even if they do, any increase in revenue may not offset the costs and expenses we incur in building our brand. Our medical affairs department may not train physicians at a rate sufficient to expand our physician base in a manner consistent with our business plan. If we fail to successfully promote, maintain and

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protect our brand, we may fail to attract or retain the physician acceptance necessary to realize a sufficient return on our brand building efforts, or to achieve the level of brand awareness that is critical for broad adoption of our products.

The market for our products is highly competitive. If our competitors are able to develop or market carotid artery disease treatments that are safer, more effective or gain greater acceptance in the marketplace, than any products we develop, our commercial opportunities will be reduced or eliminated.

Our industry is highly competitive, subject to change and significantly affected by new product introductions and other activities of industry participants. We are initially positioning TCAR as an alternative to CEA and CAS in high surgical risk patients. CEA has historically been performed by vascular surgeons as the primary surgical solution for carotid artery disease. The major manufacturers of products, such as patches and shunts, used in connection with CEA include LeMaitre Vascular, Getinge / Maquet, Baxter, Terumo, Gore and Edwards. Some competitors market products for use in CAS, such as peripheral access kits, stents, distal and proximal embolic protection devices, guidewires, balloons and sheaths. Such companies include Abbott, Boston Scientific, Cordis, Medtronic, Terumo, Gore, Contego Medical and InspireMD. These technologies, other products that are in current clinical trials, new drugs or additional indications for existing drugs could demonstrate better safety, effectiveness, clinical results, lower costs or greater physician and patient acceptance.

We compete, or may compete in the future, against other companies which have longer operating histories, more established products and greater resources, which may prevent us from achieving significant market penetration or improved operating results. These companies enjoy several competitive advantages, including:

•Greater financial and human capital resources;

•Significantly greater name recognition;

•Established relationships with vascular surgeons and other treating specialties, referring physicians, customers and third-party payers;

•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 carotid artery disease, we believe potential competitors have historically dedicated and will continue to dedicate significant resources to aggressively promote their products or develop new products. New treatment options may be developed that could compete more effectively with our products due to the prevalence of carotid artery disease and the extensive research efforts and technological progress that exist within the market.

Defects or failures associated with our products could lead to additional recalls, safety alerts or litigation, as well as significant costs and negative publicity.

Our business is subject to significant risks associated with manufacture, distribution and use of medical devices that are placed inside the human body, including the risk that patients may be severely injured by or even die from the misuse or malfunction of our products caused by design flaws or manufacturing defects. In addition, component failures, design defects, off-label uses or inadequate disclosure of product-related information could also result in an unsafe condition or the injury or death of a patient. These problems could lead to a recall or market withdrawal of, or issuance of a safety alert relating to, our products and could result in significant costs, negative publicity and adverse competitive pressure. For example, in the first quarter of 2021, we announced the voluntary recall of certain lots of our ENROUTE Transcarotid Stent System, manufactured by one of our third-party suppliers, Cordis. Our decision to recall these lots was based on complaints we received about tips detaching from the stent delivery system as well as internal testing that we conducted. We believe the root cause of the detachment was a single operator at Cordis, who, over a specific timeframe, produced lots in which a small number of units were not reliably manufactured to specification. The circumstances giving rise to recalls are unpredictable, and any recalls of existing or future products increase the probability of inspection by, or additional scrutiny from, the FDA and could have a material adverse effect on our business, financial condition and results of operations.

We provide a limited warranty that our products are free of material defects and conform to specifications, and offer to repair, replace or refund the purchase price of defective products. As a result, we bear the risk of potential warranty claims on our products. In the event that we attempt to recover some or all of the expenses associated with a warranty claim against us from our suppliers or vendors, we may not be successful in claiming recovery under any warranty or

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indemnity provided to us by such suppliers or vendors and any recovery from such vendor or supplier may not be adequate.

The medical device industry has historically been subject to extensive litigation over product liability claims. Operating in the area of the neck with the brain as the end organ is dangerous and presents risks of adverse events such as bleeding, arterial dissection, cranial nerve injury, myocardial infarction, stroke and death, which subject us to a greater risk of being involved in litigation than companies with products used in less critical areas of the body. We may be subject to product liability claims if our products cause, or merely appear to have caused, an injury or death, even if due to physician error. In addition, an injury or death that is caused by the activities of our suppliers, such as those that provide us with components and raw materials, or by an aspect of a treatment used in combination with our products, such as a complementary drug or anesthesia, may be the basis for a claim against us by patients, hospitals, physicians or others purchasing or using our products, even if our products were not the actual cause of such injury or death. We may choose to settle any claims to avoid fault and complication not due to failure of our products. An adverse outcome involving one of our products could result in reduced market acceptance and demand for all of our products, and could harm our reputation and our ability to market our products in the future. In some circumstances, adverse events arising from or associated with the design, manufacture or marketing of our products could result in the suspension or delay of regulatory reviews of our premarket notifications or applications for marketing. Any of the foregoing problems could disrupt our business and have a material adverse effect on our business, financial condition and results of operations.

Although we carry product liability insurance in the United States and in other countries in which we conduct business, including for clinical trials and product marketing, we can give no assurance that such coverage will be available or adequate to satisfy any claims. Product liability insurance is expensive, subject to significant deductibles and exclusions, and may not be available on acceptable terms, if at all. If we are unable to obtain or maintain insurance at an acceptable cost or on acceptable terms with adequate coverage or otherwise protect against potential product liability claims, we could be exposed to significant liabilities. 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. Defending a suit, regardless of its merit or eventual outcome, could be costly, could divert management’s attention from our business and might result in adverse publicity, which could result in reduced acceptance of our products in the market, product recalls or market withdrawals.

We are required to file adverse event reports under Medical Device Reporting, or MDR, regulations with the FDA, which reports are publicly available on the FDA’s website. We are required to file MDRs if our products may have caused or contributed to a serious injury or death or malfunctioned in a way that could likely cause or contribute to a serious injury or death if it were to recur. Any such MDR that reports a significant adverse event could result in negative publicity, which could harm our reputation and future sales.

Our ability to compete depends on our ability to innovate successfully and deliver any new products in a timely manner.

The market for our products is competitive, dynamic, and marked by rapid and substantial technological development and product innovation. New entrants or existing competitors could attempt to develop products that compete directly with ours. Demand for our products and future related products could be diminished by equivalent or superior products and technologies offered by competitors. If we are unable to innovate successfully, our products could become obsolete and our revenue would decline as our customers purchase our competitors’ products.

We are currently focused on development of existing products for TCAR and other indications, new products for TCAR and new products for other indications. If we are unable to develop new products, applications or features due to constraints, such as insufficient cash resources, high employee turnover, inability to hire personnel with sufficient technical skills or a lack of other research and development resources, we may not be able to maintain our competitive position compared to other companies. Furthermore, many of our competitors devote a considerably greater amount of funds to their research and development programs than we do, and those that do not may be acquired by larger companies that would allocate greater resources to research and development programs. Our failure or inability to devote adequate research and development resources or compete effectively with the research and development programs of our competitors could harm our business.

Any significant delays in our product launches may significantly impede our ability to enter or compete in a given market and may reduce the sales that we are able to generate from these products. We may experience delays in any phase of a product development, including during research and development, clinical trials, regulatory review, manufacturing and marketing. Delays in product introductions could have a material adverse effect on our business, financial condition and results of operations.

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The failure of TCAR to meet patient expectations or the occurrence of adverse events from TCAR could impair our financial performance.

Our future success depends upon patients having an experience with TCAR that meets their expectations in order to increase physician demand for our products as a result of positive feedback, social media and word-of-mouth. Patients may be dissatisfied if their expectations of the procedure and results, among other things, are not met. Despite what we believe to be the safety profile of our products, patients may experience adverse events such as arterial restenosis or dissection, cranial nerve injury, wound complications, transient ischemic attacks, stroke, heart attack, and death. If the results of TCAR do not meet the expectations of the patients, or patients experience adverse events, it could discourage patients from referring TCAR to others. For example, although we have not received any reports of strokes, deaths or other long-term patient sequelae from the tip detachments that triggered our recent recall, if there were to be patient injury, dissatisfied patients may express negative opinions through social media or we may otherwise suffer reputational damage or become subject to product liability lawsuits. Any failure to meet patient expectations and any resulting negative publicity or lawsuits could harm our reputation and future sales.

We depend on our senior management team and the loss of one or more key employees or an inability to attract and retain highly skilled employees could harm our business.

Our success depends largely on the continued services of key members of our executive management team and others in key management positions. For example, the services of Erica Rogers, our Chief Executive Officer, and Lucas Buchanan, our Chief Financial and Chief Operating Officer, are essential to driving adoption of our products, executing on our corporate strategy and ensuring the continued operations and integrity of financial reporting within our company. In addition, the services of Andrew Davis, our Chief Commercial Officer, are critical to driving the growth in sales of our products. Any of our employees may terminate their employment with us at any time. We do not currently maintain key person life insurance policies on any of our employees. If we lose one or more key employees, we may experience difficulties in competing effectively, developing our technologies and implementing our business strategy.

In addition, our research and development programs, and sales efforts depend on our ability to attract and retain highly skilled engineers and sales professionals. We may not be able to attract or retain qualified engineers and sales professionals in the future due to the competition for qualified personnel. We have from time to time experienced, and we expect to continue to experience, difficulty in hiring and retaining employees with appropriate qualifications. Many of the companies with which we compete for experienced personnel have greater resources than we do. When we hire employees from competitors or other companies, their former employers have previously and may in the future attempt to assert that these employees or we have breached legal obligations, which may result in a diversion of our time and resources and, potentially, damages. In addition, job candidates and existing employees, particularly in the San Francisco Bay Area, often consider the value of the stock awards they receive in connection with their employment along with salary, benefits and other factors. If the perceived benefits of our stock awards decline, either because we are a public company or for other reasons, it may harm our ability to recruit and retain highly skilled employees. If we fail to attract new personnel or fail to retain and motivate our current personnel, our business and future growth prospects would be harmed.

The use, misuse or off-label use of our products may result in injuries that lead to product liability suits, which could be costly to our business.

The ENROUTE stent has been approved by the FDA for the treatment of high surgical risk patients who require carotid revascularization and meet certain treatment parameters. If physicians expand the patient population in which they elect to use our products that is outside of the intended use approved by the FDA, then the use, misuse, or off-label use of our products may result in outcomes and adverse events including stroke, myocardial infarction and death, potentially leading to product liability claims. Our products are not indicated for use in all patients with carotid artery disease, and therefore cannot be marketed or advertised in the United States for certain uses without additional approvals or clearances from the FDA. However, we cannot prevent a physician from using our products for off-label applications or using components or products that are not our products when performing TCAR. In addition, we cannot guarantee that physicians are trained by us or their peers prior to utilizing our products. Complications resulting from the use of our products off-label or use by physicians who have not been trained appropriately, or at all, may expose us to product liability claims and harm our reputation. Moreover, if the FDA determines that our promotional materials or physician training, including our paid consultants’ educational materials, constitutes promotion of an off-label use, it could request that we modify our training or promotional materials or subject us to enforcement action, including warning letters, untitled letters, fines, penalties, or seizures. If we are found to have promoted such off-label uses, we may become subject to significant liability. The federal government has levied large civil and criminal fines and/or other penalties against companies for alleged improper promotion and has investigated, prosecuted, and/or enjoined several companies from engaging in off-label promotion.

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In addition, if our products are defectively designed, manufactured or labeled, contain defective components or are misused, we may become subject to costly litigation initiated by physicians, hospitals or patients. Product liability claims are especially prevalent in the medical device industry and could harm our reputation, divert management’s attention from our core business, be expensive to defend and may result in sizable damage awards against us. Although we maintain product liability insurance, we may not have sufficient insurance coverage for future product liability claims. We may not be able to obtain insurance in amounts or scope sufficient to provide us with adequate coverage against all potential liabilities. Any product liability claims brought against us, with or without merit, could increase our product liability insurance rates or prevent us from securing continuing coverage, harm our reputation, significantly increase our expenses, and reduce product sales. Product liability claims could cause us to incur significant legal fees and deductibles and claims in excess of our insurance coverage would be paid out of cash reserves, harming our financial condition and operating results.

We may need substantial additional funding and may not be able to raise capital when needed, which could force us to delay, reduce or eliminate our product development programs and commercialization efforts.

We believe that our cash and cash equivalents and investments and expected revenue will be sufficient to meet our capital requirements and fund our operations for at least the next 12 months. However, we have based these estimates on assumptions that may prove to be incorrect, and we could spend our available financial resources much faster than we currently expect. Our future funding requirements will depend on many factors, including:

•The degree and rate of market acceptance of TCAR and our products;

•Whether we acquire third-party companies, products or technologies;

•Restructuring, refinancing or repayment of debt;

•The scope and timing of investment in our sales force and physician training;

•The scope, rate of progress and cost of our research and development activities, current or future clinical studies and additional regulatory clearances or approvals;

•The scope and timing of investment in acute ischemic stroke and other neurovascular and cardiac products we develop;

•The costs associated with any current or future product recall that may occur;

•The costs of attaining, defending and enforcing our intellectual property rights;

•The impact of COVID-19, including new variants, on our business and operations;

•The emergence of competing technologies or other adverse market developments; and

•The rate at which we expand internationally.

We may seek to raise additional capital through equity offerings or debt financings and such additional financing may not be available to us on acceptable terms, or at all. In addition, any additional equity or debt financing that we raise may contain terms that are not favorable to us or our stockholders. For example, if we raise funds by issuing equity or equity-linked securities, the issuance of such securities could result in dilution to our stockholders. Any equity securities issued also may provide for rights, preferences or privileges senior to those of holders of our common stock. In addition, the issuance of additional equity securities by us, or the possibility of such issuance, may cause the market price of our common stock to decline.

In addition, the terms of debt securities issued or borrowings could impose significant restrictions on our operations including restrictive covenants, such as limitations on our ability to, among other things, dispose of assets, effect certain mergers, incur debt, grant liens, pay dividends and distributions on capital stock, make investments and acquisitions, and enter into transactions with affiliates, and other operating restrictions that could adversely affect our ability to conduct our business.

In the event that we enter into collaborations or licensing arrangements to raise capital, we may be required to accept unfavorable terms, such as relinquishment or licensing of certain technologies or products that we otherwise would seek to develop or commercialize ourselves, or reserve for future potential arrangements when we might otherwise be able to achieve more favorable terms. In addition, we may be forced to work with a partner on one or more of our products or market development programs, which could lower the economic value of those programs to us.

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If we are unable to obtain adequate financing on terms satisfactory to us when we require it, we may terminate or delay the development of one or more of our products, delay clinical trials necessary to market our products, or delay establishment of sales and marketing capabilities or other activities necessary to commercialize our products. If this were to occur, our ability to grow and support our business and to respond to market challenges could be significantly limited, which could have a material adverse effect on our business, financial condition and results of operations.

We have a significant amount of debt, which may affect our ability to operate our business and secure additional financing in the future.

As of June 30, 2021, we had an aggregate of approximately $49.0 million in principal outstanding under our Loan Agreement with Stifel Bank. We must make significant interest-only monthly payments under the Loan Agreement, which has diverted and will continue to divert resources from other activities. Our obligations under the Loan Agreement are collateralized by substantially all of our assets, excluding intellectual property, and we are subject to customary affirmative and negative covenants, including covenants limiting our ability and the ability of our subsidiaries to, among other things, dispose of assets, effect certain mergers, incur debt, grant liens, pay dividends and distributions on capital stock, make investments and acquisitions, and enter into transactions with affiliates, in each case subject to customary exceptions for a loan facility of this size and type. The covenants related to the Loan Agreement, as well as any future financing agreements into which we may enter, may restrict our ability to finance our operations and engage in, expand or otherwise pursue our business activities and strategies. While we have not previously breached and are not currently in breach of these or any other covenants contained in our Loan Agreement, there can be no guarantee that we will not breach these covenants in the future. Our ability to comply with these covenants may be affected by events beyond our control, and future breaches of any of these covenants could result in a default under the Loan Agreement. If not waived, future defaults could cause all of the outstanding indebtedness under the Loan Agreement to become immediately due and payable, termination of commitments to extend further credit, a 5% increase in the applicable rate of interest and the exercise by the lender of other rights and remedies provided for under the Loan Agreement. If we do not have or are unable to generate sufficient cash available to repay our debt obligations when they become due and payable, either upon maturity or in the event of a default, our assets could be foreclosed upon and we may not be able to obtain additional debt or equity financing on favorable terms, if at all, which may negatively impact our ability to operate and continue our business as a going concern.

We may acquire other companies or technologies, or enter into license agreements, distribution arrangements or strategic partnerships, which could fail to result in a commercial product or generate sales, divert our management’s attention, result in additional dilution to our stockholders and otherwise disrupt our operations and harm our operating results.

Although we currently have no agreements or commitments to complete any such transactions, we may in the future seek to acquire, license or invest in businesses, products or technologies that we believe could complement or expand our portfolio, enhance our technical capabilities or otherwise offer growth opportunities. We could also seek to enter into distribution arrangements or strategic partnerships with third parties that we believe could increase our revenue or offer other commercial benefits. However, we cannot assure you that we would be able to successfully complete any acquisition, license agreement or distribution agreement we choose to pursue, or that we would be able to successfully integrate any business or product or technology in a cost-effective and non-disruptive manner. Similarly, we cannot guarantee that we would derive benefits from any distribution arrangement or other strategic partnership. The pursuit of potential acquisition, license or partnering opportunities may divert the attention of management and cause us to incur various costs and expenses in identifying, investigating and pursuing suitable transactions, whether or not they are consummated. We may not be able to identify desirable acquisition targets or strategic partners, or be successful in entering into an agreement with any particular target or partner, or obtain the expected benefits of any acquisition, license, investment or other strategic partnership arrangement.

To date, the growth of our operations has been largely organic, and we have limited experience in acquiring other businesses or technologies. We may not be able to successfully integrate any acquired personnel, operations and technologies, or effectively manage the combined business following an acquisition. Acquisitions could also result in dilutive issuances of equity securities, the use of our available cash, or the incurrence of debt, which could harm our operating results. In addition, if an acquired business, product or technology fails to meet our expectations, our operating results, business and financial condition may suffer.

Our ability to utilize our net operating loss carryforwards may be limited.

As of December 31, 2020, we had U.S. federal and state net operating loss carryforwards, or NOLs, of $241.9 million and $209.8 million, respectively. Our U.S. federal NOLs arising in tax years ending on or before December 31, 2017 are subject to expiration and will begin to expire in 2027 (U.S. federal NOLs arising in tax years ending after December 31, 2017 are not subject to expiration) and our state NOLs will begin to expire in 2028. We may use these NOLs to offset

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taxable income for U.S. federal and state income tax purposes. However, Section 382 of the Internal Revenue Code of 1986, as amended, or the Code, may limit the NOLs we may use in any year for U.S. federal income tax purposes in the event of certain changes in ownership of our company. An “ownership change” pursuant to Section 382 of the Code generally occurs if one or more stockholders or groups of stockholders who own at least 5% of a company’s stock increase their ownership by more than 50 percentage points over their lowest ownership percentage within a rolling three-year period. Similar rules may apply under state tax laws. Although we have not performed a formal study under Section 382 of the Code, we believe we may have experienced at least one “ownership change” in the past and may have experienced others. In addition, future issuances or sales of our stock, including certain transactions involving our stock that are outside of our control, could result in future “ownership changes.” “Ownership changes” that have occurred in the past or that may occur in the future could result in the imposition of an annual limit on the amount of pre-ownership change NOLs and other tax attributes we can use to reduce our taxable income or income tax liability, potentially increasing and accelerating our liability for income taxes, and also potentially causing those tax attributes to expire unused. Any limitation on using NOLs could, depending on the extent of such limitation and the NOLs previously used, result in our retaining less cash after payment of U.S. federal and state income taxes during any year in which we have taxable income, rather than losses, than we would be entitled to retain if such NOLs were available as an offset against such income for U.S. federal and state income tax reporting purposes, which could adversely impact our operating results. Furthermore, under the Tax Cuts and Jobs Act of 2017, although the treatment of U.S. federal NOLs arising in tax years beginning on or before December 31, 2017 has generally not changed, U.S. federal NOLs arising in tax years beginning after December 31, 2017 may only be used to offset 80% of our taxable income. This change may require us to pay U.S. federal income taxes in future years despite generating a loss for federal income tax purposes in prior years.

As international expansion of our business occurs, it will expose us to market, regulatory, political, operational, financial, legal and economic risks associated with doing business outside of the United States.

Our long-term strategy is to increase our international presence, including but not limited to securing regulatory approvals in Japan and China. We currently have the right to affix the CE Mark to our products, allowing us to commercialize in Europe in the future if we choose to do so. This strategy may include establishing and maintaining physician outreach and education capabilities outside of the United States and expanding our relationships with international distributors, providers and payers. Doing business internationally involves a number of risks, including:

•Difficulties in staffing and managing our international operations;

•Multiple, conflicting and changing laws and regulations such as tax laws, privacy laws, export and import restrictions, employment laws, regulatory requirements and other governmental approvals, permits and licenses;

•Reduced or varied protection for intellectual property rights in some countries;

•Obtaining regulatory clearance where required for our products in various countries;

•Requirements to maintain data and the processing of that data on servers located within such countries;

•Complexities associated with managing multiple payer reimbursement regimes, government payers or patient self-pay systems;

•Difficulties in adequately training and managing international distributors;

•Limits on our ability to penetrate international markets if we are required to manufacture our products locally;

•Financial risks, such as longer payment cycles, difficulty collecting accounts receivable, foreign tax laws and complexities of foreign value-added tax systems, the effect of local and regional financial pressures on demand and payment for our products and exposure to foreign currency exchange rate fluctuations;

•Restrictions on the site-of-service for use of our products and the economics related thereto for physicians, providers and payers;

•Natural disasters, political and economic instability, including wars, terrorism, political unrest, outbreak of disease, boycotts, curtailment of trade and other market restrictions; and

•Regulatory and compliance risks that relate to maintaining accurate information and control over activities subject to regulation under the United States Foreign Corrupt Practices Act of 1977, or FCPA, U.K. Bribery Act of 2010 and comparable laws and regulations in other countries.

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Any of these factors could significantly harm our future international expansion and operations and, consequently, have a material adverse effect on our business, financial condition and results of operations.

Additionally, pursuant to the terms of our existing intellectual property license and supply agreement with Cordis, there are certain restrictions on our ability to sell the ENROUTE stent through select direct competitors of Cordis Corporation. If we are unable to locate international distributors that are not select direct competitors to Cordis Corporation, to market and sell our ENROUTE stent, our ability to expand our business internationally may be harmed, which could have a material adverse effect on our business, financial condition and results of operations.

Security breaches, loss of data and other disruptions could compromise sensitive information related to our business or our customers or patients, or prevent us from accessing critical information and expose us to liability, which could adversely affect our business and our reputation.

In the ordinary course of our business, we may become exposed to, or collect and store sensitive data, including procedure-based information and legally-protected health information, credit card, and other financial information, insurance information, and other potentially personally identifiable information. We also store sensitive intellectual property and other proprietary business information. Although we take measures to protect sensitive information from unauthorized access or disclosure, our information technology, or IT, and infrastructure, and that of our other technology partners, may be vulnerable to cyber attacks by hackers or viruses or breached due to employee error, malfeasance or other disruptions. We rely extensively on IT systems, networks and services, including internet sites, data hosting and processing facilities and tools, physical security systems and other hardware, software and technical applications and platforms, some of which are managed, hosted, provided and/or used by third-parties or their vendors, to assist in conducting our business. A significant breakdown, invasion, corruption, destruction or interruption of critical information technology systems or infrastructure, by our workforce, others with authorized access to our systems or unauthorized persons could negatively impact operations. The ever-increasing use and evolution of technology, including cloud-based computing, creates opportunities for the unintentional dissemination or intentional destruction of confidential information stored in our or our third-party providers' systems, portable media or storage devices. We could also experience a business interruption, theft of confidential information or reputational damage from industrial espionage attacks, malware or other cyber-attacks, which may compromise our system infrastructure or lead to data leakage, either internally or at our third-party providers. Although the aggregate impact on our operations and financial condition has not been material to date, we have been the target of events of this nature and expect them to continue as cybersecurity threats have been rapidly evolving in sophistication and becoming more prevalent in the industry. We are investing in protections and monitoring practices of our data and IT to reduce these risks and continue to monitor our systems on an ongoing basis for any current or potential threats. There can be no assurance, however, that our efforts will prevent breakdowns or breaches to our or our third-party providers’ databases or systems that could adversely affect our business.

We could be adversely affected by violations of the FCPA and similar worldwide anti-bribery laws and any investigation, and the outcome of any investigation, by government agencies of possible violations by us of the FCPA could have a material adverse effect on our business.

The FCPA and similar worldwide anti-bribery laws prohibit companies and their intermediaries from corruptly providing any benefits to government officials for the purpose of obtaining or retaining business. We are in the process of further enhancing policies and procedures intended to help ensure compliance with these laws. In the future, we may operate in parts of the world that have experienced governmental corruption to some degree. Moreover, because of the significant role government entities play in the regulation of many foreign healthcare markets, we may be exposed to heightened FCPA and similar risks arising from our efforts to seek regulatory approval of and reimbursement for our products in such countries. We cannot assure you that our internal control policies and procedures will protect us from improper acts committed by our employees or agents. Violations of these laws, or allegations of such violations, would significantly disrupt our business and have a material adverse effect on our business, financial condition and results of operations.

Risks Related to Our Intellectual Property

We may become a party to intellectual property litigation or administrative proceedings that could be costly and could interfere with our ability to sell and market our products.

The medical device industry has been characterized by extensive litigation regarding patents, trademarks, trade secrets, and other intellectual property rights, and companies in the industry have used intellectual property litigation to gain a competitive advantage. It is possible that U.S. and foreign patents and pending patent applications or trademarks controlled by third parties may be alleged to cover our products, or that we may be accused of misappropriating third parties’ trade secrets. Additionally, our products include components that we purchase from vendors, and may include design components that are outside of our direct control. Our competitors, many of which have substantially greater resources and have made substantial investments in patent portfolios, trade secrets, trademarks, and competing

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technologies, may have applied for or obtained, or may in the future apply for or obtain, patents or trademarks that will prevent, limit or otherwise interfere with our ability to make, use, sell and/or export our products or to use product names. Moreover, in recent years, individuals and groups that are non-practicing entities, commonly referred to as “patent trolls,” have purchased patents and other intellectual property assets for the purpose of making claims of infringement in order to extract settlements. From time to time, we may receive threatening letters, notices or “invitations to license,” or may be the subject of claims that our products and business operations infringe or violate the intellectual property rights of others. The defense of these matters can be time consuming, costly to defend in litigation, divert management’s attention and resources, damage our reputation and brand and cause us to incur significant expenses or make substantial payments. Vendors from whom we purchase hardware or software may not indemnify us in the event that such hardware or software is accused of infringing a third-party’s patent or trademark or of misappropriating a third-party’s trade secret.

Since patent applications are confidential for a period of time after filing, we cannot be certain that we were the first to file any patent application related to our products. Competitors may also contest our patents, if issued, by showing the patent examiner that the invention was not original, was not novel or was obvious. In litigation, a competitor could claim that our patents, if issued, are not valid for a number of reasons. If a court agrees, we would lose our rights to those challenged patents.

In addition, we may in the future be subject to claims by our former employees or consultants asserting an ownership right in our patents or patent applications, as a result of the work they performed on our behalf. Although we generally require all of our employees and consultants and any other partners or collaborators who have access to our proprietary know-how, information or technology to assign or grant similar rights to their inventions to us, we cannot be certain that we have executed such agreements with all parties who may have contributed to our intellectual property, nor can we be certain that our agreements with such parties will be upheld in the face of a potential challenge, or that they will not be breached, for which we may not have an adequate remedy.

Further, if such patents, trademarks, or trade secrets are successfully asserted against us, this may harm our business and result in injunctions preventing us from selling our products, license fees, damages and the payment of attorney fees and court costs. In addition, if we are found to willfully infringe third-party patents or trademarks or to have misappropriated trade secrets, we could be required to pay treble damages in addition to other penalties. Although patent, trademark, trade secret, and other intellectual property disputes in the medical device area have often been settled through licensing or similar arrangements, costs associated with such arrangements may be substantial and could include ongoing royalties. We may be unable to obtain necessary licenses on satisfactory terms, if at all. If we do not obtain necessary licenses, we may not be able to redesign our products to avoid infringement.

Similarly, interference or derivation proceedings provoked by third parties or brought by the U.S. Patent and Trademark Office, or USPTO, may be necessary to determine priority with respect to our patents, patent applications, trademarks or trademark applications. We may also become involved in other proceedings, such as reexamination, inter parties review, derivation or opposition proceedings before the USPTO or other jurisdictional body relating to our intellectual property rights or the intellectual property rights of others. Adverse determinations in a judicial or administrative proceeding or failure to obtain necessary licenses could prevent us from manufacturing our products or using product names, which would have a significant adverse impact on our business, financial condition and results of operations.

Additionally, we may file lawsuits or initiate other proceedings to protect or enforce our patents, trademarks or other intellectual property rights, which could be expensive, time consuming and unsuccessful. Competitors may infringe our issued patents, trademarks or other intellectual property. To counter infringement or unauthorized use, we may be required to file infringement claims, which can be expensive and time-consuming. Any claims we assert against perceived infringers could provoke these parties to assert counterclaims against us alleging that we infringe their intellectual property. In addition, in a patent infringement proceeding, a court may decide that a patent of ours is invalid or unenforceable, in whole or in part, construe the patent’s claims narrowly or refuse to stop the other party from using the technology at issue on the grounds that our patents do not cover the technology in question. Furthermore, even if our patents are found to be valid and infringed, a court may refuse to grant injunctive relief against the infringer and instead grant us monetary damages and/or ongoing royalties. Such monetary compensation may be insufficient to adequately offset the damage to our business caused by the infringer’s competition in the market. An adverse result in any litigation proceeding could put one or more of our patents at risk of being invalidated or interpreted narrowly, which could adversely affect our competitive business position, financial condition and results of operations.

Our success will depend on our ability to obtain, maintain and protect our intellectual property rights.

In order to remain competitive, we must develop, maintain and protect the proprietary aspects of our brands, technologies and data. We rely on a combination of contractual provisions, confidentiality procedures and patent, copyright, trademark, trade secret and other intellectual property laws to protect the proprietary aspects of our brands,

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technologies and data. These legal measures afford only limited protection, and competitors or others may gain access to or use our intellectual property and proprietary information. Our success will depend, in part, on preserving our trade secrets, maintaining the security of our data and know-how and obtaining and maintaining other intellectual property rights. We may not be able to obtain or maintain intellectual property or other proprietary rights necessary to our business or in a form that provides us with a competitive advantage. In addition, our trade secrets, data and know-how could be subject to unauthorized use, misappropriation, or disclosure to unauthorized parties, despite our efforts to enter into confidentiality agreements with our employees, consultants, clients and other vendors who have access to such information, and could otherwise become known or be independently discovered by third parties. Our intellectual property, including trademarks, could be challenged, invalidated, infringed, and circumvented by third parties, and our trademarks could also be diluted, declared generic or found to be infringing on other marks. If any of the foregoing occurs, we could be forced to re-brand our products, resulting in loss of brand recognition and requiring us to devote resources to advertising and marketing new brands, and suffer other competitive harm. Third parties may also adopt trademarks similar to ours, which could harm our brand identity and lead to market confusion. Failure to obtain and maintain intellectual property rights necessary to our business and failure to protect, monitor and control the use of our intellectual property rights could negatively impact our ability to compete and cause us to incur significant expenses. The intellectual property laws and other statutory and contractual arrangements in the United States and other jurisdictions we depend upon may not provide sufficient protection in the future to prevent the infringement, use, violation or misappropriation of our trademarks, data, technology and other intellectual property and services, and may not provide an adequate remedy if our intellectual property rights are infringed, misappropriated or otherwise violated.

We rely, in part, on our ability to obtain, maintain, expand, enforce, and defend the scope of our intellectual property portfolio or other proprietary rights, including the amount and timing of any payments we may be required to make in connection with the licensing, filing, defense and enforcement of any patents or other intellectual property rights. The process of applying for and obtaining a patent is expensive, time consuming and complex, and we may not be able to file, prosecute, maintain, enforce or license all necessary or desirable patent applications at a reasonable cost, in a timely manner, or in all jurisdictions where protection may be commercially advantageous, or we may not be able to protect our proprietary rights at all. Despite our efforts to protect our proprietary rights, unauthorized parties may be able to obtain and use information that we regard as proprietary. In addition, the issuance of a patent does not ensure that it is valid or enforceable, so even if we obtain patents, they may not be valid or enforceable against third parties. Our patent applications may not result in issued patents and our patents may not be sufficiently broad to protect our technology. Moreover, even if we are able to obtain patent protection, such patent protection may be of insufficient scope to achieve our business objectives. Issued patents may be challenged, narrowed, invalidated or circumvented. Decisions by courts and governmental patent agencies may introduce uncertainty in the enforceability or scope of patents owned by or licensed to us. Furthermore, the issuance of a patent does not give us the right to practice the patented invention. Third parties may have blocking patents that could prevent us from marketing our own products and practicing our own technology. Alternatively, third parties may seek approval to market their own products similar to or otherwise competitive with our products. In these circumstances, we may need to defend and/or assert our patents, including by filing lawsuits alleging patent infringement. In any of these types of proceedings, a court or agency with jurisdiction may find our patents invalid, unenforceable or not infringed; competitors may then be able to market products and use manufacturing and analytical processes that are substantially similar to ours. Even if we have valid and enforceable patents, these patents still may not provide protection against competing products or processes sufficient to achieve our business objectives.

If we are unable to protect the confidentiality of our other proprietary information, our business and competitive position may be harmed.

In addition to patent protection, we also rely on other proprietary rights, including protection of trade secrets, and other proprietary information that is not patentable or that we elect not to patent. However, trade secrets can be difficult to protect and some courts are less willing or unwilling to protect trade secrets. To maintain the confidentiality of our trade secrets and proprietary information, we rely heavily on confidentiality provisions that we have in contracts with our employees, consultants, collaborators and others upon the commencement of their relationship with us. We cannot guarantee that we have entered into such agreements with each party that may have or have had access to our trade secrets or proprietary technology and processes. We may not be able to prevent the unauthorized disclosure or use of our technical knowledge or other trade secrets by such third parties, despite the existence generally of these confidentiality restrictions. These contracts may not provide meaningful protection for our trade secrets, know-how, or other proprietary information in the event of any unauthorized use, misappropriation, or disclosure of such trade secrets, know-how, or other proprietary information. There can be no assurance that such third parties will not breach their agreements with us, that we will have adequate remedies for any breach, or that our trade secrets will not otherwise become known or independently developed by competitors. Despite the protections we do place on our intellectual property or other proprietary rights, monitoring unauthorized use and disclosure of our intellectual property is difficult, and we do not know whether the steps we have taken to protect our intellectual property or other proprietary rights will be adequate. In addition, the laws of many foreign countries will not protect our intellectual property or other proprietary

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rights to the same extent as the laws of the United States. Consequently, we may be unable to prevent our proprietary technology from being exploited abroad, which could affect our ability to expand to international markets or require costly efforts to protect our technology.

To the extent our intellectual property or other proprietary information protection is incomplete, we are exposed to a greater risk of direct competition. A third party could, without authorization, copy or otherwise obtain and use our products or technology, or develop similar technology. Our competitors could purchase our products and attempt to replicate some or all of the competitive advantages we derive from our development efforts or design around our protected technology. Our failure to secure, protect and enforce our intellectual property rights could substantially harm the value of our products, brand and business. The theft or unauthorized use or publication of our trade secrets and other confidential business information could reduce the differentiation of our products and harm our business, the value of our investment in research and development or acquisitions could be reduced and third parties might make claims against us related to losses of their confidential or proprietary information. Any of the foregoing could materially and adversely affect our business, financial condition and results of operations.

Further, it is possible that others will independently develop the same or similar technology or otherwise obtain access to our unpatented technology, and in such cases we could not assert any trade secret rights against such parties. Costly and time consuming litigation could be necessary to enforce and determine the scope of our trade secret rights and related confidentiality and nondisclosure provisions. If we fail to obtain or maintain trade secret protection, or if our competitors obtain our trade secrets or independently develop technology similar to ours or competing technologies, our competitive market position could be materially and adversely affected. In addition, some courts are less willing or unwilling to protect trade secrets and agreement terms that address non-competition are difficult to enforce in many jurisdictions and might not be enforceable in certain cases.

We also seek to preserve the integrity and confidentiality of our data and other confidential information by maintaining physical security of our premises and physical and electronic security of our information technology systems. While we have confidence in these individuals, organizations and systems, agreements or security measures may be breached and detecting the disclosure or misappropriation of confidential information and enforcing a claim that a party illegally disclosed or misappropriated confidential information is difficult, expensive and time-consuming, and the outcome is unpredictable. Further, we may not be able to obtain adequate remedies for any breach.

Obtaining and maintaining patent protection depends on compliance with various procedural, document submission, fee payment and other requirements imposed by governmental patent agencies, and our patent protection could be reduced or eliminated for non-compliance with these requirements.

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, we may not be able to stop a competitor from marketing products that are the same as or similar to our products, which would have a material adverse effect on our business.

We may not be able to protect our intellectual property rights throughout the world.

A company may attempt to commercialize competing products utilizing our proprietary design, trademarks or tradenames in foreign countries where we do not have sufficient patent protection and where legal recourse may be limited. This may have a significant commercial impact on our foreign business operations.

Filing, prosecuting and defending patents or trademarks on our current and future products in all countries throughout the world would be prohibitively expensive. The requirements for patentability and trademarking may differ in certain countries, particularly developing countries. The laws of some foreign countries do not protect intellectual property rights to the same extent as laws in the United States. Consequently, we may not be able to prevent third parties from utilizing our inventions and trademarks in all countries outside the United States. Competitors may use our technologies or trademarks in jurisdictions where we have not obtained patent or trademark protection to develop or market their own products and further, may export otherwise infringing products to territories where we have patent and trademark protection, but enforcement on infringing activities is inadequate. These products or trademarks may compete with our

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products or trademarks, and our patents, trademarks or other intellectual property rights may not be effective or sufficient to prevent them from competing.

Many companies have encountered significant problems in protecting and defending intellectual property rights in foreign jurisdictions. The legal systems of certain countries, particularly certain developing countries, do not favor the enforcement of patents, trademarks and other intellectual property protection, which could make it difficult for us to stop the infringement of our patents and trademarks or marketing of competing products in violation of our proprietary rights generally. Proceedings to enforce our patent and trademarks rights in foreign jurisdictions could result in substantial costs and divert our efforts and attention from other aspects of our business, could put our patents and trademarks at risk of being invalidated or interpreted narrowly and our patent or trademark applications at risk, and could provoke third parties to assert claims against us. We may not prevail in any lawsuits that we initiate and the damages or other remedies awarded, if any, may not be commercially meaningful. In addition, certain countries in Europe and certain developing countries, including India and China, have compulsory licensing laws under which a patent owner may be compelled to grant licenses to third parties. In those countries, we may have limited remedies if our patents are infringed or if we are compelled to grant a license to our patents to a third party, which could materially diminish the value of those patents. This could limit our potential revenue opportunities. Accordingly, our efforts to enforce our intellectual property rights around the world may be inadequate to obtain a significant commercial advantage from the intellectual property that we own or license. Finally, our ability to protect and enforce our intellectual property rights may be adversely affected by unforeseen changes in foreign intellectual property laws.

We may be subject to claims that we or our employees have misappropriated the intellectual property of a third party, including trade secrets or know-how, or are in breach of non-competition or non-solicitation agreements with our competitors and third parties may claim an ownership interest in intellectual property we regard as our own.

Many of our employees and consultants were previously employed at or engaged by other medical device, biotechnology or pharmaceutical companies, including our competitors or potential competitors. Some of these employees, consultants and contractors, may have executed proprietary rights, non-disclosure and non-competition agreements in connection with such previous employment. Although we try to ensure that our employees and consultants do not use the intellectual property, proprietary information, know-how or trade secrets of others in their work for us, we may be subject to claims that we or these individuals have, inadvertently or otherwise, misappropriated the intellectual property or disclosed the alleged trade secrets or other proprietary information, of these former employers or competitors.

Additionally, we may be subject to claims from third parties challenging our ownership interest in intellectual property we regard as our own, based on claims that our employees or consultants have breached an obligation to assign inventions to another employer, to a former employer, or to another person or entity. Litigation may be necessary to defend against any other claims, and it may be necessary or we may desire to enter into a license to settle any such claim; however, there can be no assurance that we would be able to obtain a license on commercially reasonable terms, if at all. If our defense to those claims fails, in addition to paying monetary damages, a court could 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 could have a material adverse effect on our business, financial condition and results of operations, and may prevent us from selling our products. In addition, we may lose valuable intellectual property rights or personnel. Even if we are successful in defending against these claims, litigation could result in substantial costs and could be a distraction to management. 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 could hamper or prevent our ability to commercialize our products, which could have an adverse effect on our business, financial condition and results of operations.

Changes in patent law could diminish the value of patents in general, thereby impairing our ability to protect our existing and future products.

Recent patent reform legislation could increase the uncertainties and costs surrounding the prosecution of patent applications and the enforcement or defense of issued patents. In 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 and also may affect patent litigation. These also include provisions that switched the United States from a “first-to-invent” system to a “first-to-file” system, allow third-party submission of prior art to the USPTO during patent prosecution and set forth additional procedures to attack the validity of a patent by the USPTO administered post grant proceedings. 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 USPTO recently

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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 in 2013. Accordingly, it is not clear what, if any, impact the Leahy-Smith Act will have on the operation of our business. The Leahy-Smith Act and its implementation could increase the uncertainties and costs surrounding the prosecution of our patent applications and the enforcement or defense of our issued patents, all of which could have a material adverse effect on our business, financial condition and results of operations.

In addition, patent reform legislation may pass in the future that could lead to additional uncertainties and increased costs surrounding the prosecution, enforcement and defense of our patents and applications. Furthermore, the U.S. Supreme Court and the U.S. Court of Appeals for the Federal Circuit have made, and will likely continue to make, changes in how the patent laws of the United States are interpreted. Similarly, foreign courts have made, and will likely continue to make, changes in how the patent laws in their respective jurisdictions are interpreted. We cannot predict future changes in the interpretation of patent laws or changes to patent laws that might be enacted into law by U.S. and foreign legislative bodies. Those changes may materially affect our patents or patent applications and our ability to obtain additional patent protection in the future.

The failure of third parties to meet their contractual, regulatory, and other obligations could adversely affect our business.

We rely on suppliers, vendors, outsourcing partners, consultants, alliance partners and other third parties to research, develop, manufacture and commercialize our products and manage certain parts of our business. Using these third parties poses a number of risks, such as: (i) they may not perform to our standards or legal requirements; (ii) they may not produce reliable results; (iii) they may not perform in a timely manner; (iv) they may not maintain confidentiality of our proprietary information; (v) disputes may arise with respect to ownership of rights to technology developed with our partners; and (vi) disagreements could cause delays in, or termination of, the research, development or commercialization of our products or result in litigation or arbitration. Moreover, some third parties are located in markets subject to political and social risk, corruption, infrastructure problems and natural disasters, in addition to country-specific privacy and data security risk given current legal and regulatory environments. Failure of third parties to meet their contractual, regulatory, and other obligations may materially affect our business.

If our trademarks and tradenames are not adequately protected, then we may not be able to build name recognition in our markets and our business may be adversely affected.

We rely on trademarks, service marks, tradenames and brand names to distinguish our products from the products of our competitors, and have registered or applied to register these trademarks. We cannot assure you that our trademark applications will be approved. During trademark registration proceedings, we may receive rejections. Although we are given an opportunity to respond to those rejections, we may be unable to overcome such rejections. In addition, in proceedings before the USPTO and comparable agencies in many foreign jurisdictions, third parties are given an opportunity to oppose pending trademark applications and to seek to cancel registered trademarks. Opposition or cancellation proceedings may be filed against our trademarks, and our trademarks may not survive such proceedings. In the event that our trademarks are successfully challenged, we could be forced to rebrand our products, which could result in loss of brand recognition and could require us to devote resources towards advertising and marketing new brands and managing through regulatory implications such as relabeling. At times, competitors may adopt trade names or trademarks similar to ours, thereby impeding our ability to build brand identity and possibly leading to market confusion. Certain of our current or future trademarks may become so well known by the public that their use becomes generic and they lose trademark protection. Over the long term, if we are unable to establish name recognition based on our trademarks and trade names, then we may not be able to compete effectively and our business, financial condition and results of operations may be adversely affected.

Risks Related to Government Regulation

Healthcare policy changes, including recently enacted legislation reforming the U.S. healthcare system, could harm our business, financial condition and results of operations.

In the United States, there have been and continue to be a number of legislative initiatives to contain healthcare costs. In March 2010, the Affordable Care Act was enacted in the United States, which made a number of substantial changes in the way healthcare is financed by both governmental and private insurers. Among other ways in which it may affect our business, the Affordable Care Act:

•Established 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;

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•Implemented 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

•Expanded the eligibility criteria for Medicaid programs.

We do not yet know the full impact that the Affordable Care Act will have on our business. The taxes imposed by the Affordable Care Act and the expansion in the government’s role in the U.S. healthcare industry may result in decreased sale of our products and, lower reimbursement by payers for our products, all of which may have a material adverse effect on our business, financial condition and results of operations. The Biden Administration and the U.S. Congress may take further action regarding the Affordable Care Act, including, but not limited to, repeal or replacement. Most recently, the Tax Cuts and Jobs Act of 2017 was enacted, which, among other things, removes penalties for not complying with the individual mandate to carry health insurance. Additionally, all or a portion of the Affordable Care Act and related subsequent legislation may be modified, repealed or otherwise invalidated through judicial challenge, which could result in lower numbers of insured individuals, reduced coverage for insured individuals and adversely affect our business, financial condition and results of operations.

In addition, other legislative changes have been proposed and adopted since the Affordable Care Act was enacted. On August 2, 2011, the Budget Control Act of 2011 was signed into law, which, among other things, reduced Medicare payments to providers by 2% per fiscal year, effective on April 1, 2013 and, due to subsequent legislative amendments to the statute, will remain in effect through 2029 unless additional Congressional action is taken. On January 2, 2013, the American Taxpayer Relief Act of 2012 was signed into law, which, among other things, reduced Medicare payments to several providers, including hospitals, and increased the statute of limitations period for the government to recover overpayments to providers from three to five years. The Medicare Access and CHIP Reauthorization Act of 2015, or MACRA, enacted on April 16, 2015, repealed the formula by which Medicare made annual payment adjustments to physicians and replaced the former formula with fixed annual updates and a new system of incentive payments which began in 2019 that are based on various performance measures and physicians’ participation in alternative payment models such as accountable care organizations. It is unclear what effect new quality and payment programs, such as MACRA, may have on our business, financial condition, results of operations or cash flows.

We expect additional state and federal healthcare policies and reform measures to be adopted in the future.  Any of these could make it more difficult and costly for us to obtain regulatory clearances or approvals for our products or to manufacture, market or distribute our products after clearance or approval is obtained.  They could result in reduced demand for our products or result in additional pricing pressure.  Any such reforms could have a material adverse effect on our industry generally and on our customers.  Any changes of, or uncertainty with respect to, future coverage or reimbursement rates could affect demand for our products, which in turn could impact our ability to successfully commercialize our products and could have an adverse material effect on our business, financial condition and results of operations.  Changes and reforms in the European Union and other countries where we may decide to commercialize could have similar effects.

Changes in the CMS fee schedules may harm our revenue and operating results.

Government payers, such as Centers for Medicare and Medicaid Services, or CMS, as well as insurers, have increased their efforts to control the cost, utilization and delivery of healthcare services. From time to time, the U.S. Congress has considered and implemented changes in the CMS fee schedules in conjunction with budgetary legislation. Reductions of reimbursement by Medicare or Medicaid for procedures that use our products or changes in policy regarding coverage of these procedures, such as adding requirements for payment, or prior authorizations, may be implemented from time to time. Reductions in the reimbursement rates and changes in payment policies of other third-party payers may occur as well. Similar changes in the past have resulted in reduced payments for procedures that use medical device products as well as added costs and have added more complex regulatory and administrative requirements. Further changes in federal, state, local and third-party payer regulations or policies may have a material adverse impact on the demand for our products and on our business. Actions by agencies regulating insurance or changes in other laws, regulations, or policies may also have a material adverse effect on our business, financial condition and results of operations.

If we fail to comply with broad based healthcare and other governmental regulations, we could face substantial fines and penalties and our business, results of operations and financial condition could be adversely affected.

The products we offer are highly regulated, and there can be no assurance that the regulatory environment in which we operate will not change significantly and adversely in the future. Our arrangements with physicians, hospitals and medical centers will expose us to broadly applicable fraud and abuse and other laws and regulations that may restrict the

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financial arrangements and relationships through which we market, sell and distribute our products. Our employees, consultants, and commercial partners may engage in misconduct or other improper activities, including non-compliance with regulatory standards and requirements. Federal and state healthcare laws and regulations that may affect our ability to conduct business, include, without limitation:

•Federal and state laws and regulations regarding billing and claims payment applicable to TCAR and regulatory agencies enforcing those laws and regulations;

•FDA prohibitions against the advertisement, promotion and labeling of our products for off-label uses, or uses outside the specific indications approved by the FDA;

•The federal Anti-Kickback Statute, which broadly prohibits, among other things, any person from knowingly and willfully offering, soliciting, receiving or providing remuneration, directly or indirectly, in exchange for or to induce either the referral of an individual for, or the purchase, order or recommendation of, any good or service for which payment may be made under federal healthcare programs, such as the CMS programs. A person or entity does not need to have actual knowledge of the statute or specific intent to violate it to have committed a violation. Moreover, 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 civil False Claims Act. Violations of the federal Anti-Kickback Statute may result in civil monetary penalties up to $176,495 for each violation, plus up to three times the remuneration involved. Civil penalties for such conduct can further be assessed under the federal False Claims Act. Violations can also result in criminal penalties, including criminal fines of up to $100,000 and imprisonment of up to 10 years. Similarly, violations can result in mandatory exclusion from participation in government healthcare programs, including Medicare and Medicaid;

•The federal False Claims Act, which prohibits, among other things, individuals or entities from knowingly presenting, or causing to be presented, false claims, or knowingly using false statements, to obtain payment from the federal government. These laws can apply to manufacturers who provide inaccurate information on coverage, coding, and reimbursement of their products to persons who bill third-party payers. Private individuals can bring False Claims Act “qui tam” actions, on behalf of the government and such individuals, commonly known as “whistleblowers,” may share in amounts paid by the entity to the government in fines or settlement. When an entity is determined to have violated the federal civil False Claims Act, the government may impose civil fines and penalties ranging from $11,655 to $23,331 for each false claim, plus treble damages, and exclude the entity from participation in Medicare, Medicaid and other federal healthcare programs;

•Federal criminal laws that prohibit executing a scheme to defraud any healthcare benefit program or making, or causing to be made, false statements relating to healthcare matters;

•The federal Civil Monetary Penalties Law, which prohibits, among other things, offering or transferring remuneration to a federal healthcare beneficiary that a person knows or should know is likely to influence the beneficiary’s decision to order or receive items or services reimbursable by the government from a particular provider or supplier;

•The FCPA, the U.K. Bribery Act of 2010, and other local anti-corruption laws that apply to our international activities;

•The federal Physician Payment Sunshine Act, or Open Payments, created under the Patient Protection and Affordable Care Act, as amended by the Health Care and Education Affordability Reconciliation Act, or Affordable Care Act, and its implementing regulations, which requires manufacturers of drugs, medical devices, biologicals and medical supplies for which payment is available under Medicare, Medicaid, or the Children’s Health Insurance Program to report annually to the U.S. Department of Health and Human Services, or HHS, information related to payments or other transfers of value made to licensed physicians, certain other healthcare professionals, and teaching hospitals, and requires applicable manufacturers and group purchasing organizations, to report annually ownership and investment interests held by physicians and their immediate family members. Additionally, on October 24, 2018, President Trump signed into law the “Substance Use-Disorder Prevention that Promoted Opioid Recovery and Treatment for Patients and Communities Act” which in part (under a provision entitled “Fighting the Opioid Epidemic with Sunshine”) extends the reporting and transparency requirements for physicians in the Physician Payments Sunshine Act to physician assistants, nurse practitioners, and other mid-level practitioners (with reporting requirements going into effect in 2022 for payments made in 2021). Applicable manufacturers are required to submit annual reports to CMS. Our failure to submit required information on time may result in civil monetary penalties of $11,766 per failure up to an aggregate of $176,495 per year (or up to an aggregate of $1.177 million per year for “knowing failures”), for all payments, transfers of value or ownership or

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investment interests that are not timely, accurately, and completely reported in an annual submission, and may result in liability under other federal laws or regulations;

•HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act, and its implementing regulations, which impose certain requirements relating to the privacy, security and transmission of individually identifiable health information; HIPAA also created criminal liability for knowingly and willfully falsifying or concealing a material fact or making a materially false statement in connection with the delivery of or payment for healthcare benefits, items or services. Failure to comply with the HIPAA privacy and security standards when applicable can result in civil monetary penalties up to $59,522 per violation, not to exceed $1.79 million per calendar year for non-compliance of an identical provision, and, in certain circumstances, criminal penalties with fines up to $250,000 per violation and/or imprisonment. State attorneys general can also bring a civil action to enjoin a HIPAA violation or to obtain statutory damages on behalf of residents of his or her state; and

•Analogous state and foreign 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 payer, including commercial insurers or patients; state laws that require device companies to comply with the industry’s voluntary compliance guidelines and the applicable compliance guidance promulgated by the federal government or otherwise restrict payments that may be made to healthcare providers and other potential referral sources; state laws that require device manufacturers to report information related to payments and other transfers of value to physicians and other healthcare providers or marketing expenditures; consumer protection and unfair competition laws, which broadly regulate marketplace activities and activities that potentially harm customers, foreign and state laws, including the E.U. General Data Protection Regulation, or GDPR, governing the privacy and security of health information in certain circumstances, many of which differ from each other in significant ways and may not have the same effect, thus complicating compliance efforts; and state laws related to insurance fraud in the case of claims involving private insurers.

Because of the breadth of these laws and the narrowness of available statutory and regulatory exemptions or safe harbors, it is possible that some of our activities, such as stock-option compensation paid to physicians, could be subject to challenge under one or more of such laws. Any action brought against us for violations of these laws or regulations, even successfully defended, could cause us to incur significant legal expenses and divert our management’s attention from the operation of our business. We may be subject to private “qui tam” actions brought by individual whistleblowers on behalf of the federal or state governments.

The growth of our business and sales organization and our expansion outside of the United States may increase the potential of violating these laws or our internal policies and procedures. The risk of our being found in violation of these or other laws and regulations is further increased by the fact that many have not been fully interpreted by the regulatory authorities or the courts, and their provisions are open to a variety of interpretations. Any action brought against us for violation of these or other laws or regulations, 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. If our operations are found to be in violation of any of the federal, state and foreign laws described above or any other current or future fraud and abuse or other healthcare laws and regulations that apply to us, we may be subject to penalties, including significant criminal, civil, and administrative penalties, damages, fines, imprisonment, for individuals, exclusion from participation in government programs, such as Medicare and Medicaid, and we could be required to curtail or cease our operations. Any of the foregoing consequences could seriously harm our business and our financial results.

If we fail to obtain and maintain necessary regulatory clearances or approvals for our products, or if clearances or approvals for future products and indications are delayed or not issued, our commercial operations would be harmed.

Our products are subject to extensive regulation by the FDA in the United States and by regulatory agencies in other countries where we do business. Government regulations specific to medical devices are wide ranging and govern, among other things:

•Product design, development and manufacture;

•Laboratory, preclinical and clinical testing, labeling, packaging, storage and distribution;

•Premarketing clearance or approval;

•Record keeping;

•Product marketing, promotion and advertising, sales and distribution; and

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•Post marketing surveillance, including reporting of deaths or serious injuries and recalls and correction and removals.

Before a new medical device, including our recently FDA approved IDE for our feasibility study in acute ischemic stroke, Neuroprotection in Transcarotid Embolectomy (NITE-1), or a new intended use for an existing product, can be marketed in the United States, a company must first submit and receive either 510(k) clearance pursuant to Section 510(k) of the Food, Drug and Cosmetic Act, or the FDCA, or approval of a premarket approval, or PMA, application from the FDA, unless an exemption applies.

In many cases, the process of obtaining PMA approval, which was required for the ENROUTE stent, is much more rigorous, costly, lengthy and uncertain than the 510(k) clearance process. In the 510(k) clearance process, the FDA must determine that a proposed device is “substantially equivalent” to a device legally on the market, known as a “predicate” device, in order to clear the proposed device for marketing. To be “substantially equivalent,” the proposed device must have the same intended use as the predicate device, and either have the same technological characteristics as the predicate device or have different technological characteristics and not raise different questions of safety or effectiveness than the predicate device. Clinical data is sometimes required to support substantial equivalence. In the PMA approval process, the FDA must determine that a proposed device is safe and effective for its intended use based on extensive data, including technical, pre-clinical, clinical trial, manufacturing and labeling data. The PMA process is typically required for devices for which the 510(k) process cannot be used and that are deemed to pose the greatest risk. Modifications to products that are approved through a PMA application generally need prior FDA approval of a PMA supplement. Similarly, some modifications made to products cleared through a 510(k) may require a new 510(k), or such modification may put the device into class III and require PMA approval. The FDA’s 510(k) clearance process usually takes from three to 12 months, but may last longer. The process of obtaining a PMA generally takes from one to three years, or even longer, from the time the PMA is submitted to the FDA until an approval is obtained. Any delay or failure to obtain necessary regulatory approvals or clearances would have a material adverse effect on our business, financial condition and results of operations.

The FDA can delay, limit or deny clearance or approval of a device for many reasons, including:

•Our inability to demonstrate to the satisfaction of the FDA or the applicable regulatory entity or notified body that our products are safe or effective for their intended uses;

•The disagreement of the FDA or the applicable foreign regulatory body with the design, conduct or implementation of our clinical trials or the analyses or interpretation of data from pre-clinical studies or clinical trials;

•Serious and unexpected adverse device effects experienced by participants in our clinical trials;

•The data from our pre-clinical studies and clinical trials may be insufficient to support clearance or approval, where required;

•Our inability to demonstrate that the clinical and other benefits of the device outweigh the risks;

•An advisory committee, if convened by the applicable regulatory authority, may recommend against approval of our application or may recommend that the applicable regulatory authority require, as a condition of approval, additional preclinical studies or clinical trials, limitations on approved labeling or distribution and use restrictions, or even if an advisory committee, if convened, makes a favorable recommendation, the respective regulatory authority may still not approve the product;

•The applicable regulatory authority may identify significant deficiencies in our manufacturing processes, facilities or analytical methods or those of our third party contract manufacturers;

•The potential for approval policies or regulations of the FDA or applicable foreign regulatory bodies to change significantly in a manner rendering our clinical data or regulatory filings insufficient for clearance or approval; and

•The FDA or foreign regulatory authorities may audit our clinical trial data and conclude that the data is not sufficiently reliable to support approval or clearance.

Similarly, regulators may determine that our financial relationships with our principal investigators resulted in a perceived or actual conflict of interest that may have affected the interpretation of a study, the integrity of the data generated at the applicable clinical trial site or the utility of the clinical trial itself. Even if we are granted regulatory clearances or approvals, they may include significant limitations on the indicated uses for the product, which may limit the market for the product. Moreover, the FDA and European Union regulatory authorities strictly regulate the labeling,

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promotion and advertising of our products, including comparative and superiority claims vis a vis competitors’ products, that may be made about products.

As a condition of approving a PMA application, the FDA may also require some form of post-approval study or post-market surveillance, whereby the applicant conducts a follow-up study or follows certain patient groups for a number of years and makes periodic reports to the FDA on the clinical status of those patients when necessary to protect the public health or to provide additional safety and effectiveness data for the device. As a part of our PMA approval, we agreed with the FDA to conduct a post-approval study at a minimum of 30 sites in the United States to evaluate the safety and effectiveness of our products in at least 600 subjects. We completed enrollment in this study and submitted our final report to the FDA. In February 2020 we received notice from the FDA of their review and that we have fulfilled the post-approval study requirement. A PMA supplement with the updated labeling was submitted to FDA in December 2019 and subsequently approved by FDA in June 2020. The updated labeling included outcomes and adverse event data from the ROADSTER 2 Post-Approval Study. Failure to have conducted the post-approval study in compliance with applicable regulations or to have timely completed required post-approval studies or comply with other post-approval requirements could result in withdrawal of approval of the PMA, which would harm our business.

In addition, we are required to investigate all product complaints we receive, and timely file reports with the FDA, including MDRs that require that we report to regulatory authorities if our products may have caused or contributed to a death or serious injury or malfunctioned in a way that would likely cause or contribute to a death or serious injury if the malfunction were to recur.  If these reports are not submitted in a timely manner, regulators may impose sanctions and we may be subject to product liability or regulatory enforcement actions, including warning letters, untitled letters, fines, civil penalties, recalls, seizures, operating restrictions, denial of requests for 510(k) clearance or premarket approval of new products, new intended uses or modifications to existing products, withdrawal of current 510(k) clearances or premarket approvals and narrowing of approved or cleared product labeling, all of which could harm our business.  In addition, the FDA may provide notice of and conduct additional inspections, such as “for cause” inspections, of our business, sites and facilities as part of its review process. As of July 31, 2021, we had filed 373 MDR reports with the FDA for adverse events and device malfunctions including, but not limited to, stroke, arterial dissection, tip detachment, stent thrombosis and wound complications.

If we initiate a correction or removal action for our products to reduce a significant risk to health posed by our products, we would be required to submit a publicly available correction and removal report to the FDA and, in many cases, similar reports to other regulatory agencies. This report could be classified by the FDA as a device recall which could lead to an additional inspection by, or increased scrutiny from, the FDA, other international regulatory agencies and our customers regarding the quality and safety of our products. Furthermore, the submission of these reports could be used by competitors against us and cause physicians to delay or cancel prescriptions, which could harm our reputation. For example, in the first quarter of 2021, we announced the voluntary recall of certain lots of our ENROUTE Transcarotid Stent System, manufactured by one of our third-party suppliers, Cordis. Our decision to recall these lots was based on complaints we received about tips detaching from the stent delivery system as well as internal testing that we conducted. We have determined that the root cause of the detachment was a single operator at Cordis, who, over a specific timeframe, produced lots in which a small number of units were not reliably manufactured to specification. Recalls like this one could cause the supply of our TCAR products to customers to be interrupted, us to incur additional expenses, negative publicity or damage to our reputation, any of which could cause our results of operations to be adversely impacted.

The FDA and the Federal Trade Commission, or FTC, also regulate the advertising, promotion and labeling of our products to ensure that the claims we make are consistent with our regulatory clearances and approvals, that there is adequate and reasonable scientific data to substantiate the claims and that our promotional labeling and advertising is neither false nor misleading in any respect. If the FDA or FTC determines that any of our advertising or promotional claims are misleading, not substantiated or not permissible, we may be subject to enforcement actions, including adverse publicity, warning letters, and we may be required to revise our promotional claims and make other corrections or restitutions.

The FDA and state authorities have broad investigation and 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;

•Repair, replacement, refunds, recalls, termination of distribution, administrative detention or seizure of our products;

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

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•Denial of our requests for 510(k) clearance or premarket approval of new products, new intended uses or modifications to existing products;

•Withdrawal of 510(k) clearance or premarket approvals that have already been granted; and

•Criminal prosecution.

If any of these events were to occur, our business and financial condition could be harmed. In addition, the FDA’s and other regulatory authorities’ policies may change and additional government regulations may be enacted that could prevent, limit or delay regulatory approval of our products. If we are slow or unable to adapt to changes in existing requirements or the adoption of new requirements or policies, or if we are not able to maintain regulatory compliance, we may lose any marketing approval that we may have obtained and we may not achieve or sustain profitability, which would adversely affect our business, financial condition and results of operations.

Our clinical trials may fail to demonstrate competent and reliable evidence of the safety and effectiveness of our products, which would prevent or delay commercialization of our products in development.

We may be required to conduct clinical studies that demonstrate competent and reliable evidence that our products are safe and effective before we can commercialize our products.  Clinical testing is expensive and can take many years to complete, and its outcome is inherently uncertain. We cannot be certain that our planned clinical trials or any other future clinical trials will be successful. In addition, even if such clinical trials are successfully completed, we cannot guarantee that the FDA or foreign regulatory authorities will interpret the results as we do, and more trials could be required before we submit our products for approval. To the extent that the results of the trials are not satisfactory to the FDA or foreign regulatory authorities for support of a marketing application, we may be required to expend significant resources, which may not be available to us, to conduct additional trials in support of potential approval of our products. Even if regulatory approval is secured for any of our products, the terms of such approval may limit the scope and use of our products, which may also limit their commercial potential.

Material modifications to our products may require new 510(k) clearances, premarket approval, or CE Marks, or may require us to recall or cease marketing our products until new clearances or approvals are obtained.

Material modifications to the intended use or technological characteristics of our products will require new 510(k) clearances, premarket approvals or CE Marks prior to implementing the modifications, or require us to recall or cease marketing the modified devices until these clearances or approvals are obtained. Furthermore, changes to our manufacturing facility or supplier of components used in our products require prior FDA approval of a PMA supplement. The FDA requires device manufacturers to initially make and document a determination of whether or not a modification requires a new approval, supplement or clearance; however, the FDA can review a manufacturer’s decision. Any modification to an FDA cleared device that would significantly affect its safety or effectiveness or that would constitute a major change in its intended use would require a new 510(k) clearance or approval of a PMA supplement. We may not be able to obtain additional 510(k) clearances or premarket approvals for new products or for modifications to, or additional indications for, our products in a timely fashion, or at all. Delays in obtaining required future clearances would harm our ability to introduce new or enhanced products in a timely manner, which in turn would harm our future growth. We have made modifications to our products in the past that we believe do not require additional clearances or approvals, and we may make additional modifications in the future. If the FDA or an EU Notified Body disagrees and requires new clearances or approvals for any of these modifications, we may be required to recall and to stop selling or marketing our products as modified, which could harm our operating results and require us to redesign our products. In these circumstances, we may be subject to significant enforcement actions.

If we, or our suppliers, fail to comply with the FDA’s QSR or the European Union’s Medical Device Directive, our manufacturing or distribution operations could be delayed or shut down and our revenue could suffer.

Our manufacturing and design processes and those of our third-party component suppliers are required to comply with the QSR and the European Union’s Medical Device Directive, or MDD, both of which cover procedures and documentation of the design, testing, production, control, quality assurance, labeling, packaging, storage and shipping of our products. We are also subject to similar state requirements and licenses, and to ongoing ISO 13485 compliance in our operations, including design, manufacturing, and service, to maintain our CE Mark. In addition, we must engage in extensive recordkeeping and reporting and must make available our facilities and records for periodic unannounced inspections by governmental agencies, including the FDA, state authorities, EU Notified Bodies and comparable agencies in other countries. If we fail a regulatory inspection, our operations could be disrupted and our manufacturing interrupted. Failure to take timely and adequate corrective action in response to an adverse regulatory inspection could result in, among other things, a shutdown of our manufacturing or product distribution operations, significant fines, suspension of marketing clearances and approvals, seizures or recalls of our device, operating restrictions and criminal prosecutions,

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any of which would cause our business to suffer. Furthermore, our key component suppliers may not currently be or may not continue to be in compliance with applicable regulatory requirements, which may result in manufacturing delays for our products and cause our revenue to decline.

We are registered with the FDA as a medical device specifications developer and manufacturer. The FDA has broad post-market and regulatory enforcement powers. We are subject to unannounced inspections by the FDA and the Food and Drug Branch of the California Department of Public Health, or CDPH, and our Notified Body to determine our compliance with the QSR and other regulations at both our design and manufacturing facilities, and these inspections may include the manufacturing facilities of our suppliers. These inspections may be initiated as a result of concerns regarding the safety of our products or the components thereof.

We can provide no assurance that we will continue to remain in material compliance with the QSR or MDD. If the FDA, CDPH or our notified body in the European Union, BSI, inspect any of our facilities and discover compliance problems, we may have to cease manufacturing and product distribution until we can take the appropriate remedial steps to correct the audit findings. Taking corrective action may be expensive, time consuming and a distraction for management and if we experience a delay at our manufacturing facility we may be unable to produce our products, which would harm our business.

With the transition from the MDD to the new European Union Medical Device Regulation, or MDR, notified bodies are required to seek designation to operate as conformity assessment authorities under the new law, which was effective in May 2021. BSI, our notified body, successfully obtained designation to operate as conformity assessment authorities under the new law.

The impact of the new EU Medical Device Regulation may be costly and disruptive to our business.

The European Union has released regulations to ensure patient safety with the use of pharmaceuticals, medical devices and in-vitro diagnostics. The new regulations replace predecessor directives and emphasize a global convergence of regulations. Major changes include:

•Reclassification of some products;

•Greater emphasis on clinical data;

•Data transparency, including publication of clinical trial data and safety summaries;

•Defined content and structure for technical files to support registration;

•Unique device identification system;

•Greater burden on post-market surveillance and clinical follow-up;

•Reduction of adverse event reporting time from 30 to 15 days after the event; and

•More power to notified bodies.

Compliance with these new regulations may result in Europe being less attractive as a “first market” destination. Marketing authorization timelines will become more protracted and the costs of operating in Europe will increase. A significantly more costly path to regulatory compliance is anticipated. Adjusting to the new Medical Device Regulation may prove to be costly and disruptive to our business.

Our products have and may in the future be subject to product recalls that could harm our reputation.

The FDA and similar governmental authorities in other countries have the authority to require the recall of commercialized products in the event of material regulatory deficiencies or defects in design or manufacture. A government mandated or voluntary recall by us has occurred, and could occur again in the future, as a result of component failures, manufacturing errors or design or labeling defects. In January 2021, we announced the voluntary recall of certain lots of our ENROUTE Transcarotid Stent System. Additional recalls of our products would divert managerial attention, be expensive, harm our reputation with customers and harm our financial condition and results of operations. Additional recall announcements could also negatively affect our stock price.

Compliance with environmental laws and regulations could be expensive, and failure to comply with these laws and regulations could subject us to significant liability.

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Our research and development and manufacturing operations involve the use of hazardous substances and are subject to a variety of federal, state, local and foreign environmental laws and regulations relating to the storage, use, discharge, disposal, remediation of, and human exposure to, hazardous substances and the sale, labeling, collection, recycling, treatment and disposal of products containing hazardous substances. Liability under environmental laws and regulations can be joint and several and without regard to fault or negligence. Compliance with environmental laws and regulations may be expensive and noncompliance could result in substantial liabilities, fines and penalties, personal injury and third-party property damage claims and substantial investigation and remediation costs. Environmental laws and regulations could become more stringent over time, imposing greater compliance costs and increasing risks and penalties associated with violations. We cannot assure you that violations of these laws and regulations will not occur in the future or have not occurred in the past as a result of human error, accidents, equipment failure or other causes. The expense associated with environmental regulation and remediation could harm our financial condition and operating results.

Risks Related to Ownership of Our Common Stock

The market price of our common stock may be volatile and fluctuate substantially, which could result in substantial losses for purchasers of our common stock.

•The market price of our common stock is likely to be highly volatile and may fluctuate substantially due to many factors, including:

•Changes in analysts’ estimates, investors’ perceptions, recommendations by securities analysts, the loss of analyst coverage or our failure to achieve analysts’ estimates;

•Quarterly variations in our or our competitors’ results of operations;

•Periodic fluctuations in our revenue, which could be due in part to the way in which we recognize revenue;

•The financial projections we may provide to the public, any changes in these projections or our failure to meet these projections;

•General market conditions and other factors unrelated to our operating performance or the operating performance of our competitors;

•Changes in reimbursement by current or potential payers;

•Changes in operating performance and stock market valuations of other technology companies generally, or those in the medical device industry in particular;

•Actual or anticipated changes in regulatory oversight of our products;

•The results of our clinical trials;

•The loss of key personnel, including changes in our board of directors and management;

•Product recalls or other problems associated with our products;

•Legislation or regulation of our market;

•Lawsuits threatened or filed against us, including litigation by current or former employees alleging wrongful termination, sexual harassment, whistleblower or other claims;

•The announcement of new products, product enhancements or new product trials by us or our competitors;

•Announced or completed acquisitions of businesses or technologies by us or our competitors;

•Announcements related to patents issued to us or our competitors and related litigation; and

•Developments in our industry.

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 listed companies. Broad market and industry factors may significantly affect the market price of our common stock, regardless of our actual operating performance.

In addition, in the past, stockholders have instituted securities class action litigation following periods of market volatility. If we were to become involved in securities litigation, it could subject us to substantial costs, divert resources and

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the attention of management from our business and harm our business, results of operations, financial condition and reputation. These factors may materially and adversely affect the market price of our common stock.

We are obligated to maintain proper and effective internal controls over financial reporting and any failure to maintain the adequacy of these internal controls may adversely affect investor confidence in our company and, as a result, the value of our common stock.

We are required, pursuant to Section 404 of the Sarbanes-Oxley Act, or Section 404, to furnish a report by management on the effectiveness of our internal control over financial reporting. This assessment includes disclosure of any material weaknesses identified by our management in our internal control over financial reporting. We are required to comply with, among other requirements, the auditor attestation requirements of Section 404. If we have a material weakness, we would receive an adverse opinion regarding our internal control over financial reporting from our independent registered accounting firm.

Our compliance with Section 404 requires that we incur substantial accounting expense and expend significant management efforts. We have engaged outside consultants who function in the capacity of an internal audit group, and we will continue to hire additional consultants, accounting and financial staff with appropriate public company experience and technical accounting knowledge as we maintain the system and process documentation necessary to perform the evaluation needed to comply with Section 404.

We cannot assure you that there will not be material weaknesses in our internal control over financial reporting in the future. Any failure to maintain internal control over financial reporting could severely inhibit our ability to accurately report our financial condition or results of operations. If we are unable to conclude that our internal control over financial reporting is effective, or if our independent registered public accounting firm determines we have a material weakness in our internal control over financial reporting, we could lose investor confidence in the accuracy and completeness of our financial reports, the market price of our ordinary shares could decline, and we could be subject to sanctions or investigations by Nasdaq, the SEC or other regulatory authorities. Failure to remedy our current and any future material weakness in our internal control over financial reporting, or to implement or maintain other effective control systems required of public companies, could also restrict our future access to the capital markets.

Anti-takeover provisions in our amended and restated certificate of incorporation and bylaws, and Delaware law, could discourage a change in control of our company or a change in our management.

Our amended and restated certificate of incorporation and bylaws contain provisions that might enable our management to resist a takeover. These provisions include:

•A classified board of directors;

•Advance notice requirements applicable to stockholders for matters to be brought before a meeting of stockholders and requirements as to the form and content of a stockholders’ notice;

•A supermajority stockholder vote requirement for amending certain provisions of our amended and restated certificate of incorporation and bylaws;

•The right to issue preferred stock without stockholder approval, which could be used to dilute the stock ownership of a potential hostile acquirer;

•Allowing stockholders to remove directors only for cause;

•A requirement that the authorized number of directors may be changed only by resolution of the board of directors;

•Allowing all vacancies, including newly created directorships, to be filled by the affirmative vote of a majority of directors then in office, even if less than a quorum, except as otherwise required by law;

•A requirement that our stockholders may only take action at annual or special meetings of our stockholders and not by written consent;

•Limiting the forum to Delaware for certain litigation against us; and

•Limiting the persons that can call special meetings of our stockholders to our board of directors, the chairperson of our board of directors, the chief executive officer or the president, in the absence of a chief executive officer.

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These provisions might discourage, delay or prevent a change in control of our company or a change in our management. The existence of these provisions could adversely affect the voting power of holders of common stock and limit the price that investors might be willing to pay in the future for shares of our common stock. In addition, because we are incorporated in Delaware, we are governed by the provisions of Section 203 of the Delaware General Corporation Law, which generally prohibits a Delaware corporation from engaging in any of a broad range of business combinations with any “interested” stockholder for a period of three years following the date on which the stockholder became an “interested” stockholder. See “Description of Capital Stock.”

Our amended and restated certificate of incorporation and bylaws provide that the Court of Chancery of the State of Delaware will be the sole and exclusive forum for substantially all disputes between us and our stockholders, which could limit our stockholders’ abilities to obtain a favorable judicial forum for disputes with us or our directors, officers or employees.

Our amended and restated certificate of incorporation and bylaws provide that, unless we consent in writing to the selection of an alternative forum, the sole and exclusive forum, to the fullest extent permitted by law, for (1) any derivative action or proceeding brought on our behalf, (2) any action asserting a claim of breach of a fiduciary duty owed by any of our directors, officers or other employees to us or our stockholders, (3) any action asserting a claim against the company or any director or officer of the company arising pursuant to any provision of the Delaware General Corporation Law, (4) any action to interpret, apply, enforce or determine the validity of our amended and restated certificate of incorporation or bylaws, or (5) any other action asserting a claim that is governed by the internal affairs doctrine shall be the Court of Chancery of the State of Delaware or federal court located within the State of Delaware if the Court of Chancery does not have jurisdiction, in all cases subject to the court’s having jurisdiction over indispensable parties named as defendants. A complaint asserting a cause of action under the Securities Act may be brought in state or federal court. With respect to the Securities Exchange Act of 1934, or Exchange Act, only claims brought derivatively under the Exchange Act would be subject to the forum selection clause described above. The enforceability of similar choice of forum provisions in other companies' certificates of incorporation and bylaws has been challenged in legal proceedings, and it is possible that, in connection with any action, a court could find the choice of forum provisions contained in our amended and restated certificate of incorporation and bylaws to be inapplicable or unenforceable in such action. Although we believe these provisions benefit us by providing increased consistency in the application of Delaware law for the specified types of actions and proceedings, the provisions may have the effect of discouraging lawsuits against us or our directors and officers. Alternatively, if a court were to find the choice of forum provision contained in our amended and restated certificate of incorporation and bylaws to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could harm our business, financial condition and operating results. Any person or entity purchasing or otherwise acquiring any interest in our shares of capital stock shall be deemed to have notice of and consented to this exclusive forum provision, but will not be deemed to have waived our compliance with the federal securities laws and the rules and regulations thereunder.

We have not paid dividends in the past and do not expect to pay dividends in the future, and, as a result, any return on investment may be limited to the value of our stock.

We have never paid cash dividends and do not anticipate paying cash dividends in the foreseeable future. The payment of dividends will depend on our earnings, capital requirements, financial condition, prospects for future earnings and other factors our board of directors may deem relevant. In addition, our loan agreement limits our ability to, among other things, pay dividends or make other distributions or payments on account of our common stock, in each case subject to certain exceptions. If we do not pay dividends, our stock may be less valuable because a return on your investment will only occur if our stock price appreciates and you then sell our common stock.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Unregistered Sales of Equity Securities

Not applicable.

Use of Proceeds from Public Offering of Common Stock

In May 2020, we completed an underwritten public offering of 6,808,154 shares of common stock through a registration statement on Form S-3/ASR (File No. 333-238007), which was automatically effective upon filing on May 5, 2020. Pursuant to this registration statement we sold an aggregate 1,923,076 shares of our common stock at a public offering price of $39.00 per share for an aggregate offering price of $75.0 million, and certain selling stockholders sold an additional 4,885,078 shares of common stock. We received cash proceeds of approximately $70.5 million, net of

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underwriting discounts and commissions of approximately $3.8 million and offering costs of approximately $0.7 million. On May 20, 2020, the underwriters fully exercised their option to purchase 1,021,223 additional shares of common stock from the selling stockholders pursuant to the underwriting agreement. We did not receive any of the proceeds from the sale of the shares of common stock by the selling stockholders.

J.P. Morgan Securities LLC and BofA Securities, Inc. acted as representatives of the underwriters for the offering. There has been no material change in the planned use of proceeds from the public offering as described in our final prospectus supplement filed with the SEC on May 7, 2020 pursuant to Rule 424(b) of the Securities Act.

Item 3. Defaults Upon Senior Securities

Not applicable.

Item 4. Mine Safety Disclosures

Not applicable.

Item 5. Other Information

None.
‎

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Item 6. Exhibit Index

The exhibits listed in the accompanying index to exhibits are filed as part of, or incorporated by reference into, this Quarterly Report on Form 10-Q.

		Incorporated by Reference
Exhibit ‎Number	Description	Form	File No.	Exhibit	Filing Date
3.1**	Certificate of Amendment of Amended and Restated Certificate of Incorporation of the registrant as currently in effect.	S-1	333-230045	3.3	3/4/2019
3.2**	Bylaws of the registrant as currently in effect.	S-1	333-230045	3.5	3/4/2019
4.1**	Specimen Common Stock Certificate of the registrant.	S-1/A	333-230045	4.1	3/25/2019
4.2**	Amended and Restated Registration Rights Agreement by and among the registrant and certain stockholders, dated July 7, 2017.	S-1	333-230045	4.2	3/4/2019
4.3**	Amended and Restated Stockholders Agreement by and among the registrant and certain stockholders, dated July 7, 2017.	S-1	333-230045	4.3	3/4/2019
4.4**	Amendment to the Amended and Restated Registration Rights Agreement, dated March 21, 2019.	S-1/A	333-230045	4.8	3/25/2019
10.1**	Form of Indemnification Agreement for directors and executive officers.	S-1	333-230045	10.1	3/4/2019
10.2+**	2007 Stock Plan, as amended, and related form agreement.	S-1	333-230045	10.2	3/4/2019
10.3+**	2019 Employee Stock Purchase Plan and related form agreements.	S-1/A	333-230045	10.4	3/25/2019
10.4+**	Executive Incentive Compensation Plan.	S-1/A	333-230045	10.5	3/25/2019
10.5+**	2019 Equity Incentive Plan and related form agreements.	S-1/A	333-230045	10.6	3/25/2019
10.6#**	Supply Agreement by and between the registrant and Cordis Corporation, dated October 21, 2011, as amended by the Amendment dated March 12, 2012, the Second Amendment to Supply Agreement dated July 12, 2012, the Third Amendment to Supply Agreement dated April 19, 2013 and the Fourth Amendment to Supply Agreement dated April 9, 2018.	S-1	333-230045	10.6	3/4/2019
10.7#**	License Agreement by and between the registrant and Cordis Corporation, dated December 17, 2010.	S-1	333-230045	10.7	3/4/2019
10.8**	Quality Assurance Agreement by and among the registrant and Lake Region Medical and affiliates, dated May 4, 2015.	S-1	333-230045	10.8	3/4/2019
10.9#**	Amended and Restated Manufacturing and Supply Agreement by and between the registrant and Galt Medical Corporation, dated January 10, 2018.	S-1	333-230045	10.9	3/4/2019
10.10**	Term Loan Agreement by and among the registrant, certain affiliates of CRG Partners III L.P. as lenders and certain subsidiary guarantors, dated October 13, 2015, as amended by Amendment No. 1 to Term Loan Agreement dated January 3, 2017, Amendment No. 2 to Term Loan Agreement dated June 22, 2017, Amendment No. 3 to Term Loan Agreement dated November 30, 2017, Amendment No. 4 to Term Loan Agreement dated June 25, 2018, Amendment No. 5 to Term Loan Agreement dated September 4, 2018, Amendment No. 6 to Term Loan Agreement dated November 14, 2018 and effective as of October 31, 2018, and Amendment No. 7 to Term Loan Agreement dated June 11, 2019.	S-1	333-233044	10.10	8/6/2019
10.11**	Lease Agreement by and between the registrant and Hanover Properties Ltd., dated November 30, 2017.	S-1	333-230045	10.11	3/4/2019
10.12**	Director Offer Letter for Donald Zurbay dated as of February 6, 2018.	S-1/A	333-230045	10.13	3/25/2019
10.13+**	Confirmatory Employment Letter between the registrant and Erica Rogers, dated as of March 21, 2019.	S-1/A	333-230045	10.14	3/25/2019
10.14+**	Confirmatory Employment Letter between the registrant and Lucas Buchanan, dated as of March 21, 2019.	S-1/A	333-230045	10.15	3/25/2019
10.15+**	Confirmatory Employment Letter between the registrant and Richard Ruedy, dated as of March 21, 2019.	S-1/A	333-230045	10.16	3/25/2019
10.16+**	Confirmatory Employment Letter between the registrant and Andrew Davis, dated as of March 21, 2019.	S-1/A	333-230045	10.17	3/25/2019
10.17+**	Change in Control and Severance Agreement between the registrant and Erica Rogers, dated as of March 21, 2019.	S-1/A	333-230045	10.18	3/25/2019
10.18+**	Change in Control and Severance Agreement between the registrant and Lucas Buchanan, dated as of March 21, 2019.	S-1/A	333-230045	10.19	3/25/2019
10.19+**	Change in Control and Severance Agreement between the registrant and Richard Ruedy, dated as of March 21, 2019.	S-1/A	333-230045	10.20	3/25/2019
10.20+**	Change in Control and Severance Agreement between the registrant and Andrew Davis, dated as of March 21, 2019.	S-1/A	333-230045	10.21	3/25/2019
10.21**	Loan and Security Agreement, dated October 29, 2020, by and between the registrant and Stifel Bank.	8-K/A	001-38847	10.1	11/4/2020
10.22**†	First Amendment to Loan and Security Agreement, dated January 15, 2021, by and between the registrant and Stifel Bank.	10-Q	001-38847	10.22	5/10/2021
10.23*	Lease Agreement by and between the registrant and ARHC UHPTHMN01 LLC, dated May 12, 2021.

‎

70

31.1*	Certification of Principal Executive Officer pursuant to Securities Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*	Certification of Principal Financial Officer pursuant to Securities Exchange Act Rules 13a-14(a) and 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1*	Certification of Chief Executive Officer and Chief 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. The instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL 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.

*Filed herewith.

**Previously filed.

+Indicates management contract or compensatory plan.

†Portions of this exhibit have been omitted pursuant to Rule 601(b)(10) of Regulation S-K.

#Portions of the exhibit have been omitted pursuant to a request for confidential treatment. The omitted information has been filed separately with the SEC.

‎

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this Quarterly Report on Form 10-Q to be signed on its behalf by the undersigned thereunto duly authorized.

	SILK ROAD MEDICAL, INC.
August 6, 2021	By:	/s/ Erica J. Rogers
		Erica J. Rogers
		President, Chief Executive Officer and Director (principal executive officer)
August 6, 2021	By:	/s/ Lucas W. Buchanan
		Lucas W. Buchanan
		Chief Financial Officer and Chief Operating Officer (principal financial officer and principal accounting officer)

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EX-10.23

Exhibit 10.23

LEASEAGREEMENT

Between

ARHCUHPTHMN01LLC,asLandlordAnd

SILKROADMEDICAL, INC.,asTenant

Property:

PlymouthWestBusinessCenterPlymouth,Minnesota

TABLEOF CONTENTS(Continued)

Page

Section1–Summary;Premises, Term1

1.1 SummaryofTerms1

1.2 Premises1

1.3 Project, Building,CommonAreas2

1.4 Term3

1.5 Use;Compliance;Operation3

1.6 OptionstoExtend3

1.7 RightofFirstRefusal4

Section2–Rent5

2.1 BaseRent5

2.2 AdditionalRent6

2.3 Adjustments8

Section3–Alterations8

3.1 Alterations8

3.2 RemovalbyTenant9

3.3 Liens10

3.4 Survival10

Section4–Insurance10

4.1 Tenant’sInsurance10

4.2 FormofPolicy11

4.3 [IntentionallyOmitted]11

4.4 FailuretoCarry12

4.5 Landlord’sInsurance12

Section5–RepairsandMaintenance;Compliance;Services12

5.1 Tenant’sMaintenanceObligations12

5.2 Landlord’sMaintenanceObligations12

5.3 Tenant’sRighttoMakeRepairs12

5.4 EmergencyConditionDefined12

5.5 OtherTerms13

5.6 ProjectServices13

5.7 AdditionalServices13

5.8 AbatementEvent14

Section6–DamagetoPremises15

6.1 DestructionofPremises15

6.2 RighttoTerminate15

Section7–Eminent Domain16

7.1 TotalCondemnation16

7.2 PartialCondemnation16

7.3 Award16

Section8–AssignmentandSubletting16

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TABLEOF CONTENTS(Continued)

Page

8.1 AssignmentandSubletting16

8.2 TenanttoRemainObligated17

8.3 AssigneetoAssumeObligations17

Section9–Signage18

9.1SuiteIdentification18

Section10 –DefaultsandRemedies18

10.1 TenantEventsofDefault18

10.2 Landlord’sRemedies19

10.3 Landlord’sDefault;Tenant’sRemedies20

Section11 –CovenantofQuietEnjoyment21

Section12 –Subordination21

12.1 Subordination, Attornment21

12.2 SecurityDeposit22

12.3 Definitions22

Section13 –Indemnification22

13.1IndemnitybyTenant22

13.3 IndemnityClaimsProcess22

13.4 Survival22

Section14 –Surrender22

Section15 –HazardousMaterials23

15.1 TenantCovenants23

15.2 TenantIndemnity23

15.3 LandlordIndemnity23

Section16 –HoldingOver24

Section17 –Notices24

Section18 –Broker’sRepresentation24

Section19 –RightsReservedtoLandlord24

Section20 –OtherMatters25

20.1 Interpretation25

20.2 PartialInvalidity25

20.3 EntireAgreement25

20.4 GoverningLaw25

20.5 SuccessorsandAssigns25

20.6 Waiver25

20.7 LitigationandArbitrationCosts25

20.8 Counterparts;ElectronicExecutionandDelivery25

20.9 ModificationstoLease26

20.10 AccordandSatisfaction26

20.11 TimeoftheEssence26

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TABLEOF CONTENTS(Continued)

Page

20.12 WAIVEROFTRIALBYJURY26

20.13 AreasExcludedFromDemise26

20.14 DueAuthorization26

20.15 TenantFinancials26

20.16 ForceMajeure26

20.17 ERISA26

20.18 EstoppelCertificates27

20.19 Landlord’sInterest27

20.20 JointandSeveral27

20.21 Recordation;Confidentiality27

20.22 Security27

20.23 OFACCertification27

20.24 Parking28

20.25 RooftopUse28

20.26 SecurityDeposit28

20.27 LetterofCredit29

EXHIBITS
ExhibitA	FloorPlans
ExhibitB	RulesandRegulations
ExhibitC	WorkLetter
ExhibitD	Acceptance of Occupancy
ExhibitE	Parking Rules & Regulations
ExhibitE-1	ReservedParking
ExhibitF	FormofRooftopUseAgreement
ExhibitG	BlockPlan
ExhibitG-1	WorkstobeRemoved

SCHEDULES
1.1	Definitions
15	RulesandRegulations

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SUMMARYOFTERMS

(“SummaryofTerms”)

TENANT:Silk Road Medical, Inc., a Delaware corporation, whose address is 1213 Innsbruck Drive,Sunnyvale, CA94089,Attention:GeneralCounsel.

LANDLORD:ARHC UHPTHMN01, LLC, a Delaware limited liability company, whose address is c/oLillibridge Healthcare Services, Inc., 353 North Clark Street, Suite 3300, Chicago, IL 60654, Attention:AssetManagement.

EFFECTIVEDATE:ThelatestdateofexecutionofthisLease,asset forthon thesignaturepage.

PREMISES:Suite1

BUILDING:Theindustrialbuildinglocatedat1475527thAvenue,intheCityofPlymouth,StateofMinnesota.

BUSINESSHOURS:8:00a.m.-6:00p.m.MondaythroughFridayand8:00a.m.-1:00p.m.Saturday,holidaysexcluded.

RENTABLESQUAREFEET:Approximately63,118squarefeet.

TENANT’SPRORATASHARE:Approximately77.10%.

TERM:TheperiodbeginningontheCommencementDateandendingonthefinaldayofthe102ndfullcalendarmonth(approximately8.5LeaseYears).

EXTENSIONOPTIONS:2extension options,of 5yearseach.

INITIALBASERENT:$13.00 perRentableSquareFootofthePremisesperannum.

ANNUALESCALATOR:2.5%.

POSSESSIONDATE:AsdescribedinSection1.2hereof.

COMMENCEMENTDATE:ThePossessionDate.

RENT COMMENCEMENTDATE:Thefirsttooccurofthefollowingtwodates:(1)thedateonwhich

(a) the Tenant’s Work is substantially completed, (b) Tenant has completed installation of its furniture,fixtures and equipment and (c) a certificate of occupancy has been issued, or (2) the last to occur of thefollowing twodates:(a) January1, 2022or(b)8monthsaftertheCommencementDate.

BROKER:ColliersInternational,asbrokerforLandlord,andNewmarkSouthernRegion,LLC,aGeorgialimited liabilitycompany,doingbusinessasNewmarkKnightFrank,asbrokerforTenant.

IMPROVEMENT ALLOWANCE:$25.00 multiplied by the number of Rentable Square Feet in thePremises, subject to the Work Letter, together with up to an additional $20,000.00 exclusively for thepurposeoffundingthecostoftheDemisingWork(asdefinedbelow)

SECURITYDEPOSIT:$68,377.83

LEASEAGREEMENT

THIS LEASE AGREEMENT (this “Lease”) is executed as of the Effective Date by and betweenARHC UHPTHMN01,LLC,a Delaware limitedliabilitycompany(“Landlord”),and SILKROADMEDICAL, INC.,aDelawarecorporation(“Tenant”).

WI TNESSETH:

That in consideration of the rents, covenants and conditions herein set forth, Landlord and Tenantagreeasfollows:

Section1–Summary;Premises,Term

1.1 Summary of Terms.The Summary of Terms are made a part of this Lease, but theprovisions of this Lease addressing those matters in detail control over any inconsistent provisions in theSummary of Terms.All terms capitalized but not otherwise defined herein have the respective meaningsascribedtothem onSchedule1.1attachedheretoandmadeaparthereof.

1.2 Premises.Tenant hereby leases from Landlord the premises outlined on the floor plansattached hereto as Exhibit A(the “Premises”) consisting of approximately 63,118 Rentable Square Feet(defined below) and commonly referred to as Suite 1 in the Building. “Rentable Square Feet” and “UsableSquare Feet” shall each be computed in accordance with the American National Standard of the BuildingOwners and Managers Association, International, Standard Method for Measuring Floor Area in OfficeBuildings.LandlordandTenantacknowledgeandagreethatthereshallbenomodificationstotheRentableSquareFeetortheUsableSquareFeetasreferencedhereinduringtheTermofthisLeaseoranyExtensionOptions.

Prior to the Rent Commencement Date, Tenant’s occupancy of the Premises shall be governed bythetermsofthisLeaseexceptforthecovenanttopayBaseRentandAdditionalRent;exceptthat(a)Tenantshall pay for all electricity, gas, heating, ventilation and air conditioning usage and trash removal incurredin connection with Tenant’s performance of Tenant’s Work (defined below) or otherwise preparing thePremises for Tenant’s occupancy and (b) if Tenant occupies greater than 10,000 Rentable Square Feet inthe Premises prior to the Rent Commencement Date, then Tenant shall be required to pay Additional RentforthePremisesinaccordancewithSection2.2below.

Asusedherein,“PossessionDate”shallmeanthedateonwhichLandlorddeliversthePremisestoTenant.Landlord shall, subject to events of Force Majeure, use commercially reasonable efforts to causethe Possession Date to occur on or before May 11, 2021 (the “Anticipated Possession Date”).UponTenant’s occupancy of the Premises, Tenant shall execute an Acceptance of Occupancy certificate in theform of ExhibitDattachedhereto.

If the Possession Date does not occur by the Anticipated Possession Date, this Lease shall not bevoid or voidable, nor shall Landlord be liable to Tenant for any loss or damage resulting therefrom. Underthosecircumstances,asTenant’ssoleremedy,ifLandlordcannotcausethePossessionDatetooccurwithinthirty (30) days after the Anticipated Possession Date, Tenant may terminate this Lease by giving writtennotice to Landlord within thirty (30) days after the expiration of the thirty (30)-day period with theunderstanding that if the notice is not timely provided, the right to terminate shall be deemed waived.IfTenant timely elects to terminate this Lease, Tenant’s notice must provide a date for termination whichshall be not less than thirty (30) days after the date of Tenant’s notice.Landlord shall have the right tonullifyTenant’sterminationnoticebycausingthePossessionDatetooccuronorpriortotheeffectiveness

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ofthetermination.TheAnticipatedPossessionDateshallbeextendedbecauseofanydelaycausedbyaTenantDelayoreventsofForceMajeure.

Landlord shall deliver the Premises to Tenant (i) in good operating condition and repair, (ii) freeand clear of debris and with the restrooms professionally cleaned, and (iii) ready for Tenant to commenceconstruction of Tenant’s Work.Landlord represents and warrants to Tenant that to Landlord’s actualknowledge,(x)thePremisesisfreefrommoldorotherHazardousMaterials(exceptingdeminimisamountsstored in compliance with Environmental Requirements, (y) the Building systems serving the Premises(e.g., the mechanical, electrical, plumbing and heating and ventilation systems) (together, the “BuildingSystems”), are in good working order and repair, and (y) the roof of the Building is in good working orderandrepair.ShouldtheroofoftheBuildingnotremainingoodconditionandrepairfortheaforementionedtwelve(12)monthperiodfollowingthePossessionDateorfailorrequiremaintenanceand/orrepairduringsuch twelve (12)-month period (in each case, except due to the occurrence of casualty, which shall begoverned by Section 6 below), Landlord shall perform such maintenance and/or repair at Landlord’s solecost and expense without charge or pass-through to Tenant.Except as specifically provided in thisparagraph, Tenant acknowledges that it is leasing the Premises “as is” without any representations orwarranties.

Tenant acknowledges as of the Effective Date, the Premises are not fully demised from the spaceadjacent to the Premises in the Building. The work necessary to physically demise the Premises from suchadjacentspaceisrequiredtobepartof“Tenant’sWork”undertheWorkLetter(the“DemisingWork”andtheportionofthePremisestobesodemisedfromtheadjacentspaceisreferredtohereinasthe“AdditionalPremises”).In performing such demising work, Tenant hereby agrees to use reasonable efforts to avoidunreasonable interference with the adjacent tenant’s operations during the performance of such demisingwork,andTenantherebyagreestoreasonablycoordinatesuchdemisingworkwithsuchadjacenttenanttoachieve the same, including limiting Tenant’s access to only such portion of the premises leased to suchadjacenttenantasmaybereasonablynecessarytoperformtheDemisingWork.TenantfurtheracknowledgesandagreesthatitshallnotcommencetheDemisingWorkuntilafterMay28,2021,andthattheadjacenttenantshallcontinuetooccupytheAdditionalPremisesuntilsuchdate(andthesameshallnotdelaythePossessionDate).

At Tenant’s direction, Landlord has caused the prior tenant of the Premises to abandon (i) certainserver room racks and cabling located within the Premises, and (ii) that certain 60 kW standby generatorlocated on the roof the Building that provides emergency power to portions of the Premises (with theassociated cabling, the “Roof Generator”).As of the Effective Date, Tenant shall be deemed the owner ofall such equipment and Landlord hereby disclaims any ownership interest in the same.Tenant is takingpossession of all such equipment in its as-is, where-is condition and Landlord hereby disclaims anyrepresentation or warranty as to the same.With respect to the Roof Generator, (1) Landlord shall have noobligation to maintain, repair or replace the Roof Generator, (2) Tenant is not required to replace the RoofGenerator if the same becomes inoperable during the Term, but Tenant is responsible for providing, at itssole cost and expense, all maintenance and repair required to keep the Roof Generator in a safe conditionandincompliancewithanyapplicablecoderequirements,and(3)iftheRoofGeneratorbecomesinoperableduring the Term, Landlord shall have the right to require Tenant to remove and dispose of the RoofGeneratorandrepairalldamagearisingfromsuchremoval.

1.3 Project,Building,CommonAreas.Asusedherein,theterm“Project”collectivelymeanstheindustrialbuildingcommonlyknownasPlymouthWestBusinessCenter,locatedat1475527thAvenueNorth, Plymouth, Minnesota 55447 (the “Building”), as well as the land (the “Real Estate”) owned byLandlord on which the Building sits, together with the Common Areas and other improvements that arenow, ormayhereafterbe, locatedonorotherwisebenefittheRealEstate.

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1.4 Term.The term of this Lease (the “Term”) shall commence upon the CommencementDateassetforthontheSummaryofTermsandshallterminateuponthefinaldayofthe102ndfullcalendarmonth (approximately 8.5 Lease Years) after the Commencement Date, unless sooner terminated orextended as provided herein.If, per the other terms of this Lease, the Commencement Date would occurafter the Rent Commencement Date, then the Commencement Date shall be deemed to occur on the RentCommencementDate.IftheEffectiveDateoccursaftertheCommencementDate,thenthisLeaseshallberetroactivelyeffectiveasoftheCommencementDate.

1.5 Use;Compliance;Operation.

(A) Permitted Use.Tenant shall continuously occupy and use the Premises forgeneralofficeuse,tech,medicalmanufacturing,andwarehouseandanyotherrelatedusepermittedbylaw.TenantacknowledgesthatLandlordhasnotgrantedTenanttherighttobetheexclusiveproviderofanyuseintheProject.

(B) Compliance.At its cost, Tenant shall observe and comply, and shall cause theTenantPartiestoobserveandcomply,withtherulesandregulationsattachedheretoasExhibitB,togetherwithany reasonable modifications oradditions thereto(the“Rules andRegulations”),and withallGovernmental Regulations.Notwithstanding the foregoing, neither the Rules and Regulations attachedheretoasExhibitBnoranyreasonablemodificationsoradditionstheretoshallunreasonablyinterferewiththe rights granted to Tenant under this Lease. In addition to the foregoing, Landlord shall use commerciallyreasonable efforts to enforce all rules and regulations with respect to the Project against all tenants of theProjectinauniformandnon-discriminatorymanner.

1.6 OptionstoExtend.

(A) GrantofOptions.SubjecttothetermsofthisSection1.6,Tenantshallhavetwo

(2) sequentialoptionstoextendthetermofthisLeaseforadditionalperiodsoffive(5)yearseach(eachan“Option Period” and collectively, the “Option Periods”), with each Option Period to begin upon theexpiration of the Term (as the same may have been extended).No concessions, abatements or allowancesgranted with respect to the Term shall be applicable to any Option Period, and the Option Periods, onceexercised, cannotbeexercisedagain.

(B) Conditions to Exercise of Option.In order for Tenant to exercise its option toextendunderthisSection1.6,thefollowingconditionsmustbesatisfiedonthedatethatTenantdeliversitsExtension Notice (defined below) as well as on the date that the Option Period is to commence:(1) thereexists no Event of Default under this Lease that remains uncured after receipt of written notice andexpiration of the applicable cure period, and (2) the originally named Tenant shall not have assigned thisLease(excepttoanApprovedTransferee).

(C) Procedure.So long as the conditions specified in Section 1.6(B) are satisfied,Tenant shall provide Landlord with notice of its desire to extend the Term for an Option Period not lessthan nine (9) months nor more than twelve (12) months prior to the scheduled expiration of the Term (asthesamemayhavebeenpreviouslyextendedbyanOptionPeriod)(eachsuchnotice,a“ExerciseNotice”).If Tenant fails to timely deliver an Exercise Notice, Tenant shall be deemed to have waived its right toextendtheTerm.

(D) Notice and Determination of Base Rent. Concurrently with Tenant’s delivery oftheExerciseNotice,TenantshalldelivertoLandlordTenant’scalculationoftheFairMarketBaseRentforthe first year of the applicable Option Period (the “Tenant’s Option Rent Calculation”).Landlord shalldelivernotice(the“LandlordResponseNotice”)toTenantonorbeforethedatewhichisthirty(30) days

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afterLandlord’sreceiptoftheExercise  Notice  andTenant’sOption  RentCalculation,statingthat

(a) Landlord is accepting Tenant’s Option Rent Calculation as the Fair Market Base Rent, or (B) rejectingTenant’s Option Rent Calculation and setting forth Landlord’s calculation of the Fair Market Base Rent(the “Landlord’s Option Rent Calculation”).Within ten (10) business days of its receipt of the LandlordResponse Notice, Tenant may, at its option, accept the Fair Market Base Rent contained in the Landlord’sOption Rent Calculation.If Tenant does not affirmatively accept or Tenant rejects the Fair Market BaseRent specified in the Landlord’s Option Rent Calculation, then Landlord and Tenant shall commencenegotiationstoattempttoagreeoneachparty’sdeterminationoftheFairMarketBaseRentwithinthirty

(30) days after Landlord’s delivery of Landlord’s Response Notice to Tenant.If the parties cannot reachagreement within that time period, each acting in good faith but without any obligation to agree, then theFair Market Base Rent for the Premises shall be determined by a board of three (3) licensed commercialrealestatebrokers,oneofwhomshallbenamedbyLandlord,oneofwhomshallbenamedbyTenant,andthe two so appointed shall select a third.Each real estate broker so selected shall be licensed in thejurisdiction in which the Building is located as a real estate broker specializing in the field of commercialoffice leasing in the Metropolitan Area, area having no less than ten (10) years’ experience in such field,and recognized as ethical and reputable within the field.Landlord and Tenant agree to make theirappointments promptly within ten (10) days after the expiration of the thirty (30)-day period, or sooner ifmutually agreed upon.The two (2) brokers selected by Landlord and Tenant shall promptly select a thirdbroker within ten (10) days after they both have been appointed, and each broker, within fifteen (15) daysafter the third broker is selected, shall submit his or her determination of the Fair Market Base Rent.TheFairMarketBaseRentshallbethemeanofthetwoclosestrentalratedeterminations.LandlordandTenantshalleachpaythefeeofthebrokerselectedbyit,andtheyshallequallysharethepaymentofthefeeofthethirdbroker.

(E) Option Period Base Rent Increases. On the commencement of each Lease Yearduringan OptionPeriod(excludingthefirstdayofthefirstOptionPeriod),BaseRentshallincreaseassetforthinSection 2.1(A).

(F) ConditionofPremises.LandlordshallhavenoobligationtorefurbishorotherwiseimprovethePremisesforanyOptionPeriod.ThePremisesshallbetenderedonthecommencementdateoftheOptionPeriodin“as-iswhereis”condition.

1.7 RightofFirstRefusal.

(A) During the Term, including any extension thereof, Landlord hereby grants toTenantarightoffirstrefusal(the“RightofFirstRefusal”)tolease,onthetermsandconditionshereinaftersetforth,allspaceintheBuildingnotleasedbyTenantunderthisLease(the“ROFRSpace”)andforwhichLandlord receives a signed bona fide third-party offer (an “Offer”) that Landlord desires to accept.LandlordshallnotgranttoanyexistingorfuturetenantsanyrightssuperiortoTenant’swithrespecttotheROFR Space.Landlord shall give Tenant notice (the “ROFR Notice”) of (a) the location and size of theROFRSpacesubjectto theapplicableOffer;and (b)thematerialeconomictermsoftheOffer.

(B) Tenant shall (if it so elects) exercise its Right of First Refusal to lease the ROFRSpace on the terms and conditions set forth in the ROFR Notice and the terms hereof by delivering toLandlordnoticeofitselection(the“ElectionNotice”)notlaterthanten(10)businessdaysaftertheROFRNotice is given. Once given, Tenant’s Election Notice shall be irrevocable. If Tenant validly exercises itsRight of First Refusal in accordance with the terms hereof, Landlord and Tenant shall enter into a writtenamendment to the Lease within fifteen (15) days after the delivery of Tenant’s Election Notice confirmingthe terms, conditions and provisions applicable to the ROFR Space as determined in accordance with thisSection1.7.Notwithstandingtheforegoing, ifTenantdeliversanElectionNoticeduringtheinitialthirty

(30)monthsoftheTerm,thenthetermsandconditionsinthisLease(includingtheBaseRentonacostper

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square foot basis) shall be applied to the ROFR Space subject to equitable and proportionate adjustmentstotheImprovementAllowance,earlyoccupancytermsandrentabatementprovisions,basedontherentablesquarefootageoftheROFRSpaceandtheTermremainingonthisLease.

(C) IfTenantdoesnottimelydeliveritsElectionNoticeorelectsnottoleasetheROFRSpaceoriftheamendmentisnotexecutedbyTenantwithinthatfifteen(15)dayperiod,thenLandlordwillhave the right to lease the applicable ROFR Space on terms substantially similar to the Offer withoutreoffering the ROFR Space to Tenant.For purposes hereof, the phrase “terms substantially similar to theOffer” means terms that have a net economic benefit to Landlord of at least ninety-five percent (95%) oftheneteconomicbenefitthatLandlordwouldrealizeundertheOffer.

(D) Tenant may only exercise its Right of First Refusal if, at the time of Tenant’sexerciseofthatrightandonthecommencementdatefortheROFRSpace(the“ROFRSpaceCommencement Date”), (i) this Lease is in full force and effect and there does not then exist an Event ofDefaultunderthisLeasethatremainsuncuredafterreceiptofwrittennoticeandexpirationoftheapplicablecure period, and (ii) Tenant has not assigned this Lease (other than to an Approved Transferee) nor subletthe entirety of the Premises.If any of the conditions set forth in the immediately preceding sentence arenot satisfied, then the Right of First Refusal shall be deemed waived and of no further force or effect withrespecttosuch Offerbutshallsurvivewith respectto anyfutureOfferforany ROFRSpace.

(E) If Tenant timely and validly exercises its Right of First Refusal, then effective asoftheROFRSpaceCommencementDate,alloftheapplicableROFRSpaceshallbedeemedtobeincludedinthePremises,subjecttoalloftheterms,conditionsandprovisionsoftheLeaseandOfferNotice,exceptasfollows:

(1) The rentable square footage of the Premises shall be increased by therentable square footage of the ROFR Space and Tenant’s Proportionate Share shall be recalculated basedupontheincreasedrentablesquarefootageofthePremises;and

(2) TheROFRSpaceshallberentedinits“As-Is”and“Where-Is”condition;except for (a) any work to be performed by Landlord, if any, as provided in the Offer Notice, and (b) thewarrantiesofferedbyLandlordintheOfferNotice,ifany.

Section2– Rent

2.1 BaseRent.

(A) Amount.Tenant shall pay to Landlord the annual rentals (the “Base Rent”) setforth in this Section 2.1(A).Base Rent shall be paid in equal monthly installments on or before the firstday of each month, in advance, commencing upon the Rent Commencement Date and continuing throughthe last calendar month that falls within the Term.If the Rent Commencement Date is not the first day ofa calendar month, then the Base Rent due for the month in which the Rent Commencement Date occursshallbeproratedbaseduponthenumberofdaysinthatmonthfallingonoraftertheRentCommencementDate.

BaseRentfromtheRentCommencementDatethrough theendofthefirstLeaseYearshall betheInitialBaseRentsetforthontheSummaryofTerms.CommencingwiththesecondLeaseYearandonthecommencement of each Lease Year thereafter during the Term, Base Rent shall be increased to an amountequaltothesumof:

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(1) theBaseRentamount(asincreasedbyanypriorrentaladjustmentspursuanttotheseprovisions)ineffectimmediatelypriortothatincrease,plus

(2) the product of (a) the Base Rent amount (as increased by any prior rental adjustmentspursuant to these provisions) in effect immediately prior to that increase, multipliedby (b) the AnnualEscalatorsetforthontheSummaryofTerms.

PriortoeachannualBase Rentadjustment,LandlordshallprepareastatementreflectingtheBaseRent asadjustedinaccordanceherewith.

(B) RentAbatement.

(1) Base Rent Abatement.Notwithstanding Section 2.1(A) to the contrary,Base Rent shall be abated in its entirety for the first six (6) months following the Rent CommencementDate.Fortheavoidanceofdoubt,iftheRentCommencementDateisnotthefirstdayofacalendarmonth,thensuchabatementshallapplytotheentiretyofthefirstmonthfollowingtheRentCommencementDate,whichshallbeapartialmonth,theentiretyofthesecondthroughsixthcalendarmonthsfollowingtheRentCommencement Date and a portion of the seventh calendar month following the Rent CommencementDate, with the unabated Base Rent attributable to such partial calendar month being due on the first day ofsuchcalendarmonth.

(2) Inducement Recapture.The agreement for abated Base Rent set forth inSection 2.1(B)(1) above (the “Inducement Provision”) shall be deemed conditioned on Tenant’s full andfaithful performance of all provisions of this Lease.Should Tenant commit an Event of Default beyondany applicable notice and cure period that results in a termination of this Lease, the Inducement ProvisionshallautomaticallybedeemeddeletedfromthisLeaseandofnofurtherforceoreffect,andanyunamortized Base Rent (with the same amortized on a straight-line basis over the initial Term of this Lease) abatedthereunder shall be immediately due and payable by Tenant to Landlord.Landlord’s acceptance of BaseRent or the cure ofsuchbreachshall not be deemeda waiver byLandlordof the provisions of thisSection 2.1(B)(2)unlessspecificallysostated inwritingbyLandlordatthetimeofsuchacceptance.

(C) Manner of Payments. The payment of Base Rent, Additional Rent and any othersums due from Tenant to Landlord under this Lease (collectively, “Rent”) shall be made in lawful moneyof the United States of America and made payable to Landlord or another person designated by Landlordin writing from time to time, and at the place Landlord designates in writing from time to time.Landlordmay require that Tenant pay Landlord Rent electronically through an online portal, ACH payments oranothermethodasLandlordmayreasonablyrequire.Tenant’sobligationtopayRentisindependentofanyobligationofLandlordhereunderandshallbepaidwithoutabatement,reduction,demandorset-off,exceptasotherwisespecificallyprovidedherein.

(D) Late Payments.If any payment of Rent is more than ten (10) days past due,TenantshallpaytoLandlordondemandanadministrativechargeequaltofivepercent(5%)ofthepastdueamount.In addition, any Rent payment more than thirty (30) days past due shall accrue interest from thedue date at the rate (the “Default Rate”) of 15% per annum until paid in full, and Tenant shall pay interesttoLandlordondemand.

2.2 AdditionalRent.

(A) Amount. Commencing on the Rent Commencement Date (or earlier as describedin Section 1.2 above), Tenant shall pay to Landlord at the same time as it is required to make payment ofBaseRent,anamount(the“AdditionalRent”)equaltoTenant’sProRataShareofExpensesattributableto

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the Project for any full or partial calendar year during the Term; provided, however, that Tenant suchAdditional Rent calculated for any full or partial calendar year shall be divided into twelve (12) equalinstallmentsandTenantshallonlypaytoLandlord1/12ofsuchAdditionalRenteachmonth.

(B) Payment.Prior to any calendar year and from time to time during any calendaryear, Landlord may notify Tenant of monthly installments of Additional Rent payable by Tenant based onLandlord’s reasonable estimate of each of Taxes andExpenses for that calendar year.On the first day ofthe calendar month after Landlord’s notice of any increase in these installments, Tenant shall pay toLandlord (in addition to the revised monthly estimate) a lump sum payment in an amount so that Tenant’stotal payments for the calendar year will equal Landlord’s revised estimate of Additional Rent. AdditionalRentforthecalendaryearinwhichtheRentCommencementDateoccurs(iftheRentCommencementDateis other than January 1) shall be prorated based upon the number of days in that year falling on or after theRent Commencement Date. Additional Rent for the last calendar year in which the Term falls (if the TermendsonadateotherthanDecember31)shallbeproratedbaseduponthenumberofdaysintheTermfallingwithinthatyear.

(C) Reconciliation.After Landlord has ascertained the actual amount of Taxes andExpenses for the prior calendar year, Landlord shall notify Tenant of the actual Additional Rent due fromTenant for that year (an “Annual Additional Rent Notice”).If the Additional Rent actually due exceedstotal estimated payments of Additional Rent made by Tenant for that calendar year, then Tenant shall payLandlord the deficiency within ten (10) days after receiving the Annual Additional Rent Notice.If theAdditional Rent actually due is less than the total estimated payments made by Tenant for that calendaryear,thenLandlordshall,atitsoption,creditanyexcesstoRentnextowingbyTenantorrefundtheexcessto Tenant (though if the Term has expired, then Landlord may only refund the excess to Tenant).NeitherLandlordnorTenantshallbeliabletotheotherforanyretroactiveTaxadjustmentsmademorethansix(6)monthsaftertheexpirationofthisLease.

(D) Rent Taxes; Taxes on Tenant Property.Tenant shall pay to Landlord, at thesame time as Tenant is required to pay Rent, an amount equal to all federal and state taxes (collectively,“RentTaxes”)noworhereafterleviedorassesseduponthatRent,orthepaymentorreceiptthereof,orthatLandlord will be required to pay as a result of its receipt of Tenant’s payment thereof; provided, however,thatTenantsuchRentTaxescalculatedforanyfullorpartialcalendaryearshallbedividedintotwelve(12)equal installments and Tenant shall only pay to Landlord 1/12 of such Rent Taxes each month.Tenantshall be responsible for and shall pay before delinquent all municipal, county, state and federal taxesassessed during the Term against any leasehold interest of Tenant or any property owned by Tenant andlocatedinthePremises.TheprovisionsofthisSection2.2shallsurvivetheexpirationorearlierterminationofthisLease.

(E) Right to Audit.So long as Tenant has paid in full any amount owing under anAnnual Additional Rent Notice, Tenant may, at any time after at least ten (10) days’ notice to Landlordgiven within six (6) months after Tenant receives that Annual Additional Rent Notice from Landlord,review Landlord’s records of Expenses and Taxes for the time period covered by that Annual AdditionalRentNotice.Thereviewmustbeperformedbyaqualifiedindependentcertifiedpublicaccountant(“CPA”)or commercial brokerage firm that is not paid on a contingency fee basis, and shall be completed atLandlord’scorporateofficesunlessallsuchinformationismadeavailableon-line(andnoinformationotherthan real estate tax bills may be removed from that location), unless Landlord in its sole discretion permitsTenanttoconductitsreviewelectronically.IfTenantdoesnotcompletethereviewanddelivertoLandlorda report requesting correction of Landlord’s determination of Expenses and Taxes within ninety (90) daysafter Tenant delivers to Landlord notice of its intent to audit, Tenant shall be deemed to have waived itsrighttoobjectsetforthinthisSection2.2(E).IfTenant’sreviewofLandlord’sbooksandrecordsdisclosesthat Tenant’s ProRataShare ofExpenses andTaxespaidbyTenantfortheperiodunder reviewexceeded

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the actual amount properly allocable to Tenant, then, so long as Landlord agrees with that determination,Landlord shall credit against Tenant’s next accruing Rent obligations an amount equal to the excess (orshall deliver to Tenant a refund of that excess amount, if the excess relates to the last year of the Term),and,ifTenant’sProRataShareofExpensesandTaxespaidbyTenantfortheperiodunderreviewexceededone hundred five percent (105%) of the actual amount properly allocable to Tenant, Landlord shallreimburseTenantforanyandallreasonableout-of-pocketcostsincurredbyTenantinconnectionwithsuchaudit.

IfLandlordandTenantareunabletoagreeontheamountoftheexcesspaidbyTenantwithinsixty

(60) days after Tenant delivers to Landlord notice of its intent to audit, then Tenant shall have the right,within five (5) days after the expiration of that period to submit the dispute for resolution by bindingarbitration with a mutually acceptable CPA having not less than five (5) years’ experience with respect tothe auditing and review of operating expense statements for similar buildings in the Metropolitan Area.IfLandlord and Tenant cannot agree on a CPA within fifteen (15) days after Landlord’s receipt of Tenant’selectiontosubmitthedisputetoarbitration,thenfive(5)daysthereafter,eachshallselectaCPAandwithinten(10)daysthereafter,thetwo(2)appointedCPAsshallselectathirdCPAandthethirdCPAshallbethearbitratortoresolvethedispute.

(F) Tenant shall cause all information disclosed in Landlord’s books and records aswell as the information disclosed in any audit or review of the books and records to be kept confidentialand shall not retain any copy of that information and shall not disclose that information to any other party,includinganyothertenantintheProject.Tenantshall,andTenantshallcauseanypartyengagedbyTenanttoreviewthebooksandrecordsto,executeanddelivertoLandlordaconfidentialityagreementinformandsubstancereasonablyacceptabletoLandlordpriortoperforminganyrevieworaudit.

2.3 Adjustments.If the Project is not at least 95% leased during any portion of any calendaryear, Landlord may, using sound accounting practices, adjust Expenses that are variable and thereforeincrease as leasing and occupancy of the Project increases to equal what would have been incurred byLandlord had the Project been 100% leased and occupied (an “Equitable Adjustment”).For example,assume (i) the Project has 10 offices, each of equal size; (ii) Tenant occupies one office and Tenant’s ProRata Share is 10%; (iii) the other nine offices are vacant; (iv) the cost of providing a particular service forTenant’s office is $1,000.If Tenant paid Tenant’s Pro Rata Share of that cost without an EquitableAdjustment,Tenantwouldonlypay10%of$1,000,or$100,whichisadisproportionallylowamountsinceTenant is receiving 100% of the benefit of that service.Instead, Landlord, taking into account anyeconomies of scale, will reasonably adjust Expenses to equal what would have been paid by Landlord forthat service had the Project been fully leased and occupied.In our example, if the cost of providing thatserviceforafullyleased andoccupied Project wouldbe$9,000,Tenantwouldpay10%of$9,000or$900of the $1,000 service for which it receives the sole benefit.On the other hand, if the cost of providing thatserviceforafullyleasedandoccupiedProjectis$10,000,Tenantwouldpay10%of$10,000orthefull

$1,000oftheserviceforwhichitreceivesthefullbenefit.Innoinstance,however,shallTenantpaymorethan the actual cost of the service for which an Equitable Adjustment is made.Landlord may incorporatetheEquitableAdjustmentinitsestimatesofExpenses.

Section3–Alterations

3.1 Alterations.

(A) Alterations.Allimprovementsoralterationsinoradditions,changesorinstallations to the Premises (“Alterations”) performed by or on behalf of Tenant or any of its subtenantsshall be governed by the terms of this Section 3.Tenant shall not permit any Alteration to be performedwithoutfirstobtainingLandlord’spriorconsent.Landlord’sconsentshallnotbeunreasonablywithheld,

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conditioned or delayed but may be withheld in Landlord’s sole discretion if (1) there exists an Event ofDefaultunderthisLeasethatremainsuncuredafterreceiptofwrittennoticeandexpirationoftheapplicablecure period or (2) the Alteration (i) impacts the structural components of the Project or (ii) impacts theutility or mechanical systems of the Project or (iii) impacts any other tenant’s premises or is visible fromthe outside of the Premises.Notwithstanding any contrary provision of this Lease, without securingLandlord’s prior written consent, but with at least ten (10) business days’ prior written notice to Landlord,Tenant shall be permittedtoperforminterior,cosmetic,non-structural alterations not exceedinganaggregate amount of One Hundred Thousand Dollars ($100,000) during any calendar year (provided thatTenant complies with all pertinent code, fire, safety and other such governmental regulations and Tenantdoes not take any action that could in any way interfere with the structural components, or have a materialadverse effect on the mechanical, electrical, maintenance, HVAC or plumbing systems in the Premises)(collectively, “Cosmetic Alterations”).If any Cosmetic Alteration requires the consent of a lender underany mortgage or deed of trust secured by the Project, Landlord shall notify Tenant of the same andreasonably cooperate with Tenant to obtain such consent (at Tenant’s sole cost and expense), and TenantshallnotcommencesuchCosmeticAlterationuntilthenecessaryconsentshavebeenobtainedbyLandlord.

(B) Procedures.Prior to the commencement of any Alteration, Tenant shall submitdetailed plans and specifications for Landlord’s review and approval.Landlord shall notify Tenant of itsapproval or disapproval of those plans and specifications and the work described therein within ten (10)businessdaysafterreceiptthereof.LandlordshallstateinwritingandinreasonabledetailanyobjectiontotheproposedAlteration.Tenantmayreviseitsplansandspecificationstoincorporatethosecommentsand,ifTenantdoesso,itmayagainrequestLandlord’sconsentpursuanttotheprocessdescribedabove.Neitherapproval of the plans and specifications nor supervision of the Alteration by Landlord shall constitute arepresentation or warranty by Landlord as to the accuracy, adequacy, sufficiency or propriety of the plansand specifications or the quality of workmanship or the compliance of the Alteration with GovernmentalRegulations.If Tenant desires to revise any plans and specifications after obtaining Landlord’s approvalthereof,Tenantshallre-submittherevisedplansandspecificationstoLandlordforitsapprovalasprovidedabove.

(C) Performance.Tenant shall paythe entirecost of any Alterationpermittedhereunder, including Landlord’s reasonable charges for review of the plans and specifications for anyAlterationandLandlord’sreasonablechargeforsupervisionofanyapprovedAlteration(nottoexceedthreepercent (3%) for the cost of any such Alteration). If requested by Landlord, Tenant shall provide evidencereasonably satisfactory to Landlord of Tenant’s financial ability to pay the cost of the Alteration.AllAlterations shall be performed in a good and workmanlike and first-class lien free manner, using newmaterials and in accordance with the plans and specifications submitted to and approved by Landlord aswellasinaccordancewithallapplicableGovernmentalRegulations.AllAlterationsshallbeperformedbycontractors and subcontractors who possess the requisite experiences, personnel, financial strength andotherresourcesnecessarytoperformandcompletetheproposedAlterationinagoodandworkmanlikelienfreemanner,andwhoareapprovedbyLandlordinadvanceinitsreasonablediscretion;provided,however,that for the design and construction of Tenant’s Work, Landlord approves Nelson as an architect and ArcoMurray as a general contractor.Tenant shall provide to Landlord evidence reasonably satisfactory toLandlordthatthosecontractorsandsubcontractorssatisfytheaforementionedrequirementsandpossesstheinsurance required under Section 4.Prior to commencing any Alteration, Tenant shall obtain and delivertoLandlordcompletecopiesofallpermitsandapprovalsrequiredbyapplicableGovernmentalRegulationstocommenceandcompletethatAlteration.

3.2 Removal by Tenant.Each Alteration made by Tenant in or upon the Premises shallbecomeLandlord’spropertyuponitsattachmenttothePremisesandshallremainuponthePremisesattheexpiration or termination of this Lease without compensation to Tenant, but Tenant shall remove anyAlterationifLandlorddirectsTenanttodoso;provided,however,thatTenantshallnotberequiredto

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remove those portions of the Tenant’s Work as set forth on the Block Plan attached hereto as Exhibit G(the “Block Plan”) at the expiration or termination of this Lease, except for those works described onExhibit G-1; and, provided further, that Landlord shall advise Tenant by delivery of written notice toTenant within ten (10) days after receipt of final plans and specifications relating to those portions ofTenant’s Work not shown on the Block Plan, whether any portions of such Tenant’s Work not shown onthe Block Plan are required to be removed at the expiration or termination of this Lease, and, shouldLandlordnotifyTenantthatnosuchportionsoftheTenant’sWorknotshownontheBlockPlanarerequiredtoberemoved,thenTenantshallnotberequiredtodosoattheexpirationorterminationofthisLease.Tothe extent specifically requested in writing by Tenant, Landlord shall inform Tenant at the time Landlordconsents to any Alteration whether Landlord requires removal of that Alteration at the expiration orterminationofthisLease.IfLandlorddoesnotsonotifyTenantthatLandlordisrequiringsuchremovalasrequested in writing by Tenant, then Tenant shall not be required to remove any such Alteration upon theexpirationorearlierterminationofthisLease.WhenremovinganAlteration,Tenantshallbeartheexpenseof removal and restore the Premises to the condition existing immediately prior to the Alteration at theexpirationorterminationofthisLease.

3.3 Liens. Tenant shall keep all of the portions of the Project free and clear of all liens arisingoutof,orclaimedbyreasonof,anyworkperformed,materialfurnishedorobligationsincurredbyorattheinsistence of Tenant or any of its subtenants.Upon completion of any Alteration, Tenant shall promptlyfurnish Landlord with final sworn owner’s and contractors’ statements and full and final waivers of liencovering all labor and materials included in the Alteration. If Tenant, within fifteen (15) business days afternoticefromLandlord,failsto(1)fullydischargeanylienorclaimoflienor(2)insureorbondoverthelienbytitleendorsementorbondsatisfactorytoLandlordandLandlord’slender,ifany(whichendorsement orbondshallalsocovercostsofdefense),Landlordmay,atitsoptionandwithoutlimitationofitsotherrightsandremedies,fullyorpartiallypaythelienamount.TenantshallreimburseLandlordtheamountLandlordpaidplusinterestattheDefaultRatefromthedateincurreduntilthedateTenantfullyreimbursesLandlord.Reimbursement is due on demand.No liens of any character created or suffered by Tenant or any of itssubtenants shall in any way, or to any extent, attach to or effect the rights of Landlord in the Premises, theRealEstateortheProject.

3.4 Survival.Tenant’sobligationsinthisSection3shallsurvivetheexpirationorterminationofthisLease.

Section4–Insurance

4.1 Tenant’sInsurance.Tenantshall,atitsexpense,includinganyinsurancepolicydeductibles or self-insured retentions, keep in full force and effect all of the following insurance policiesduring the Term and any extension thereof with carriers that maintain an A.M. Best Rating of A-VII orbetter:

(A) Commercial property insurance (1) insuring 100% of the full replacement cost onanagreedamountbasisofallAlterationsmadeatTenant’sexpenseordirectionduringtheperformanceofandwhencompleted,andallotherpropertyownedorusedbyTenantandlocatedinthePremises,includingat least twelve (12) months of business interruption coverage, and (2) written on an “all risk” or “specialperils” policy form, including coverage for windstorm.The proceeds of Tenant’s commercial propertyinsurance shall be used for the repair or replacement of the property so insured, except that if this Lease isterminated following a casualty, the proceeds applicable to Alterations shall be paid to Landlord and theproceedsapplicabletoTenant’spersonalpropertyshallbepaidtoTenant.

(B) Commercial general liability insurance written on an occurrence policy form thatisatleastasbroadasthecoverageprovidedbyISOFormCG00010413,coveringdamagesbecauseof

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bodily injury, property damage and personal and advertising injury, arising out of Tenant’s premises,operations or products-completed operations, with limits of liability of not less than $1,000,000 for bodilyinjury and property damage per occurrence and $2,000,000 general annual aggregate and a $3,000,000products-completedoperationsaggregate.

(C) Commercial automobile liability insurance covering liability arising from the useor operation of any auto, including those owned, hired, leased, rented, borrowed, non-owned or otherwiseoperated or used by or on behalf of Tenant.The coverage shall be on an occurrence form with combinedsingle limits of not less than $1,000,000 per accident for bodily injury (including death) and propertydamage.Alternatively,TenantmayinsurefortherisksrequiredtobeinsuredagainstunderthisSection4.1(C)throughitscommercialgeneralliabilityinsurancepolicy.

(D) Workers’compensationinsuranceincompliancewithallGovernmentalRegulations, and employer’s liability insurance with limits not less than $1,000,000 for bodily injury foreachaccident,$1,000,000forbodilyinjurybydiseaseforeachemployeeand$1,000,000forbodilyinjurybydiseasepolicylimit.

(E) Umbrella/excessliabilityinsurancecoveringinexcessof(andwrittenonaformatleast as broad as) the primary commercial general liability, employer’s liability and automobile liabilityinsurancepolicieswithlimitsnotlessthan$1,000,000eachoccurrenceand$1,000,000annualaggregate.

(F) DuringtheperformanceofallAlterations,Tenantshallalsocauseitscontractororsubcontractor, as appropriate, performing the Alteration to maintain, (1) commercial general liabilityinsurance as described in Section 4.1(B),  but with limits not less than $1,000,000 for bodily injury andproperty damage per occurrence and $2,000,000 general annual aggregate and a $2,000,000 products-completedoperationsaggregate;(2) commercialautomobileliabilityinsuranceasdescribedinSection 4.1(C); (3) workers’ compensation insurance and employer’s liability insurance as described inSection 4.1(D); and (4) umbrella/excess liability insurance covering in excess of (and written on a form atleast as broad as) the primary commercial general liability, employer’s liability and automobile liabilityinsurance policies with limits not less than $1,000,000 each occurrence and $1,000,000 annual aggregate.In addition, if design, engineering or other professional services are provided in connection with theAlteration,Tenantshallcausethepartyprovidingthoseservicestomaintainprofessionalliabilityinsurancewith limitsnotlessthan$1,000,000 eachclaim and$1,000,000 intheaggregate.

4.2 Form of Policy.All policies of insurance carried by Tenant, and all policies of insuranceTenant causes its contractors and subcontractors to maintain, shall (a) be issued by insurers authorized todobusinessinthestateinwhichthePremisesislocated;(b)onthecommercialgeneralliabilitypolicyandanyumbrella/excessliabilitypolicy,nametheLandlordIndemnifiedPartiesasadditionalinsureds;

(c) contain a waiver of any rights of subrogation and all rights of recovery in favor of and against theLandlord Indemnified Parties; and (d) be primary and non-contributing with any insurance maintained bythe Landlord Indemnified Parties.With respect to Tenant’s commercial general liability insurance,additional insured coverage shall be provided via the ISO CG 20 11 endorsement or its equivalent. Tenantshall,onorbeforetheCommencementDate,andwithinten(10)daysbeforetheexpirationofeachpolicy,deliver to Landlord certificates of insurance on the industry standard Accord Form showing compliancewith the insurance requirements set forth above. Tenant shall provide thirty (30) days’ prior written noticeto Landlord (10) days for non-payment of premium) in the event of cancellation or non-renewal of anyinsurancereferredtotherein.TheinsurancepoliciesandlimitsrequiredunderthisLeaseshallnotlimittheliability of Tenant under this Lease, and Landlord makes no representation that these types or amounts ofinsurancearesufficientoradequatetoprotectTenant’sinterestsorliabilities.

4.3 [IntentionallyOmitted]

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4.4 Failure to Carry.Without limiting Landlord’s remedies set forth in Section 10.2, ifTenantfailstocarryandmaintaintheinsurancecoveragessetforthinthisSection4,Landlordmay,upon

(10)days’priornoticetoTenant(unlessthecoverageswilllapsewithinthattimeperiod,inwhicheventnonotice shall be necessary), procure those policies of insurance and Tenant shall promptly reimburseLandlordthecostthereofwithinterestthereonattheDefaultRatefromthedateincurreduntilthedatepaid.

4.5 Landlord’s Insurance.Landlord shall, during the Term, maintain commercial propertyinsurance for 100% of the full replacement costs of the Building (exclusive of land, foundations andfootings).

Section5–RepairsandMaintenance;Compliance;Services

5.1 Tenant’s Maintenance Obligations.Tenant shall make and pay for all maintenance,replacement, alterations and repairs necessary to keep the interior non-structural portions of the Premisesand all equipment and facilities within the Premises in a good state of repair consistent with an industrialsuite in an industrial building of similar age and character as the Building in the Metropolitan Area, incompliance with all Governmental Regulations and in tenantable, safe condition.Tenant shall, at its ownexpense,installandmaintainfireextinguishersandotherfireprotectiondevicesinthePremisesasmayberequired from time to time by any Governmental Regulations or the insurance underwriters insuring theProjectinwhichthePremisesarelocated.

5.2 Landlord’s Maintenance Obligations.Landlord shall maintain the Project in a mannerconsistentwithanindustrialbuildingofsimilarageandcharacterastheBuildingintheMetropolitanArea,in compliance with applicable Governmental Regulations and in a tenantable, safe condition, which shallincludenecessarymaintenanceandrepairstotheroof,foundation,outerwallsandstructuralportionsoftheProject as well as cleaning, re-surfacing and snow and ice removal of the Common Areas, as well as allmaintenance,repairsand replacementcostsfortheHVAC systemsserving thePremises.

5.3 Tenant’sRighttoMakeRepairs.NotwithstandinganyofthetermssetforthinthisLeaseto the contrary, if Tenant provides Notice (or oral notice in the event of an Emergency Condition, as thattermisdefined,below)toLandlordofaneventorcircumstancewhichrequirestheactionofLandlordwithrespecttorepairand/ormaintenancerequiredtobeperformedbyLandlordunderthisLeasethatrelatesto

(i)anyfloorleasedbyTenant,(ii)anyBuildingSystems,or(iii)anyEmergencyCondition,whicheventorcircumstance materially and adversely affects the conduct of Tenant’s business from the Premises orTenant’s access to the Premises, without Tenant being obligated to take extraordinary measures or incurmaterial expense, and Landlord fails to commence corrective action within a reasonable period of time,given the circumstances, after the receipt of such notice, but in any event not later than ten (10) businessdaysafterreceiptofsuchnoticeandtodiligentlyprosecutethecorrectiveactiontocompletion,thenTenantmay proceed to take the required action upon delivery of an additional five (5) days’ notice to Landlordspecifying that Tenant is taking such required action (provided, however, that the initial ten (10) businessday notice and the subsequent five (5) day notice shall be replaced with a single twenty-four (24) hournotice in the event of an Emergency Condition) and if such action was required under the terms of thisLease to be taken by Landlord and was not commenced by Landlord within such ten (10) business dayperiod (or within twenty-four (24) hours in the event of an Emergency Condition) and thereafter diligentlypursued to completion, then Tenant shall be entitled to prompt reimbursement by Landlord of Tenant’sreasonable out-of-pocket costs and expenses in taking such action.Notwithstanding anything containedherein to the contrary, in no event shall Tenant be permitted to take any action under this Section 5.3 thatrelatestotheBuildingStructure.

5.4 Emergency Condition Defined.For purposes of Section 5.3, the term “EmergencyCondition”shallmeananyeventorcircumstancewhich requiresrepairormaintenancebyLandlordunder

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thisLeaseandwhich(i)createsanimmediatematerialrisk(a)ofphysicalharmtoanyTenantParty,or(b)tothe protection,safety,operationand preservationof Tenant’s mission-critical or business-criticalpersonal property in the Premises (including, for example, server rooms), or (ii) prevents Tenant fromaccessingthePremisesonacommerciallyreasonablebasis.

5.5 Other Terms. In the event Tenant takes such action pursuant to Section 5.3, Tenant shalluseonlythosecontractorsusedbyLandlordintheBuildingforworkunlesssuchcontractorsareunwillingor unable to perform, or timely perform, such work, in which event Tenant may utilize the services of anyother qualified contractor which normally and regularly performs similar work in Comparable Buildings.Promptly following completion of any work taken by Tenant pursuant to the terms of Section 5.3, Tenantshall deliver a detailed invoice of the work completed, the materials used and the costs relating thereto.IfLandlorddoesnotpaysuchamountswithinthirty(30)daysofLandlord’sreceiptofsuchdemand(togetherwiththerequiredsupportingdocumentation),thenTenantshallbeentitledtodeductfromuptofiftypercent(50%) of the Base Rent payable by Tenant under this Lease, the amount set forth in such invoice withinterest.

5.6 ProjectServices.LandlordshallfurnishthefollowingservicestothePremises:

(A) Heating and Cooling.Heating and air conditioning (“HVAC”) to provide acomfortable temperature for office and industrial business operations, assuming customary density forindustrial usage with respect to the number of people per Rentable Square Foot.Tenant shall haveoperational control of the HVAC for the Premises. To the extent Tenant conducts business at the Premisesoutside Business Hours or uses above normal capacity of HVAC to the Premises, Tenant shall pay anyadditional costs actually incurred and paid by Landlord in connection with that use.Landlord shall repairand provide quarterly maintenance services to any HVAC units currently serving the Premises.Upon atleast thirty (30) days prior written notice to Landlord, Tenant shall have the right to replace the vendorproviding maintenance services to the HVAC units serving the Premises with a vendor selected by TenantandapprovedbyLandlord,whichapprovalshallnotbeunreasonably withheld,conditionedordelayed.

(B) Janitorial Service.Landlord provide no janitorial services for the Premises butalljanitorialservicesshallbetheresponsibilityofTenant, atitssolecostandexpense.

(C) Water.Landlordshallfurnishcoldwaterfordrinkingandtoiletpurposesandcoldand hot water for lavatory purposes.To the extent Tenant needs water for any other purposes and thepurposeisapprovedbyLandlord,Tenantshallpay,asAdditionalRent,thecostofinstallingseparatemetersforthatwateraswellasthecostforthatwateratratesspecifiedby thewaterutilitywithoutmarkup.

(D) Electricity and Natural Gas.Electricity for outlets and overhead lights used inthe Premises and natural gas supplied to the Premises for heating purposes is supplied through a separatemeter. Tenant shall be responsible for contracting directly with the electric and natural gas utilities chosenbyLandlordtoservetheProjectandshallpay, asand whendue, thecostofthoseservices.

5.7 AdditionalServices.

(A) CommunicationServices.Theinstallationorchangeofanysignal,communication, data, alarm or other utility or similar service connections by Tenant must be made inaccordance with the requirements relating to Alterations.Tenant shall not install in the Premises andequipment that requires more dedicated electrical current than for which the current Building Systems arecurrently rated without the prior consent of Landlord, which consent shall not be unreasonably withheld,conditioned or delayed. Notwithstanding the foregoing, it shall be reasonable for Landlord to condition itsapprovalon,amongotherthings,Tenantinstallingatitscostandexpenseandinaccordancewiththe

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requirementsrelatingtoAlterationsthosemetersandotherequipmentasrequiredbyLandlord(andpayingthe cost of the electricity consumed by Tenant’s equipment).Tenant shall ascertain from Landlord themaximum amount of load or demand for use of electrical current that can safely be permitted in thePremises, taking into account the capacity of the electric wiring in the Building and the needs of othertenants of the Building, and shall not in any event connect a greater load than that safe capacity.Tenantshall not tamper with any other Building utility system, or run cable or pipe between suites, withoutLandlord’spriorconsent.

(B) Telephone.Tenant shall arrange for telephone service in the Premises directlywiththetelephoneserviceproviderselectedbyLandlord.Tenantshallpaydirectlytothatprovider,asandwhendue,thecostsrelatedtotheinstallationandservice.

(C) SeparateService.IfLandlordisnotrequiredtoprovideaparticularservicetoalltenants of the Project, but provides that service to Tenant, or to Tenant and some but not all tenants of theProject, then the cost of that service shall be apportioned among the tenants provided with that service.IfTenant is the sole party to whom Landlord provides a service, Tenant shall pay to Landlord the entire costofthatservice.

5.8 Abatement Event.In the event that Tenant is prevented, without taking extraordinarymeasuresorincurringmaterialexpense,fromusingthePremises(oranyportionthereof)forthePermittedUse,anddoesnotthereafteruse,theaffectedportionofthePremisesforthePermittedUseasaresultof(i)any repair, maintenance, alteration, or remediation performed by Landlord, or which Landlord fails toperform, after the Lease Commencement Date and required by the Lease, (ii) any failure of Landlord toprovide, or any material restriction of, services to the Premises, utilities to the Premises, or materiallynecessary access to the Premises, Common Areas, or Parking Facilities, in all events as required by thisLease, (iii) during any period of remediation, removal, abatement, or encapsulation of any hazardousmaterials required to be performed by Landlord pursuant to this Lease (such set of circumstances as setforth in items (i), (ii) and (iii), to be known as an “Abatement Event”), then Tenant shall give Landlordnotice of such Abatement Event, which notice may be provided by email to an email address or addressesdesignated by Landlord in written notice(s) delivered to Tenant from time to time, so long as notice isconcurrentlyprovidedasrequiredhereunder,byrecognizedovernightcourierservicefornextdaydelivery,and if such Abatement Event continues for six (6) consecutive Business Days after any such notice (the“Eligibility Period”) and so long as the Abatement Event is not due to Force Majeure, then the Base RentandAdditionalRentshallbeabatedorreduced,asthecasemaybe,afterexpirationoftheEligibilityPeriodforsuchtimethatTenantcontinuestobesopreventedfromusingthePremises(oranyportionthereof)forthe Permitted Use without taking extraordinary measures or incurring material expense, and does not use,the Premises or any portion thereof, for the Permitted Use, in the proportion that the rentable area of theportion ofthePremisesthatTenantispreventedfromusingforthePermittedUsewithouttakingextraordinary measures or incurring material expense, and does not use for the Permitted Use, bears to thetotalrentableareaofthePremises;provided,however,intheeventthatTenantispreventedfromusingforthe Permitted Use without taking extraordinary measures or incurring material expense, and does not use,a portion of the Premises for the Permitted Use for a period of time in excess of the Eligibility Period andthe remaining portion of the Premises is not sufficient to allow Tenant to effectively conduct its businesstherein, and if Tenant does not conduct its business from such remaining portion, then for such time afterexpiration of the Eligibility Period during which Tenant is so prevented from effectively conducting itsbusinesstherein,theBaseRentandAdditionalRentfortheentirePremisesshallbeabatedforsuchtimeasTenant continues to be so prevented from using for the Permitted Use, and does not use for the PermittedUse, the Premises.If, however, Tenant reoccupies any portion of the Premises during such period andrecommences use of such portion of the Premises for the Permitted Use, the Rent allocable to suchreoccupiedportion,basedontheproportionthattherentableareaofsuchreoccupiedportionofthePremisesbearstothetotalrentableareaofthePremises,shallbepayablebyTenantfromthedateTenantreoccupies

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such portion of the Premises. Landlord shall use commercially reasonable efforts to minimize the durationofanAbatementEventwithinLandlord’sreasonablecontrol,providedthatinadditiontosuchrighttoabateBase Rent and Additional Rent, Tenant shall have the right to commence appropriate legal proceedings(including,withoutlimitation,anactionforinjunctiverelief,butexcludinganyactionorclaimfordamages)against Landlord in connection with an Abatement Event following expiration of the Eligibility Period.ExceptasprovidedinthisSection5.8,nothingcontainedhereinshallbeinterpretedtomeanthatTenantisexcused from paying Rent due hereunder.For purposes of this Section 5.8, a “material restriction” shallmean a restriction of services, utilities or access such that Tenant cannot reasonably use the Premises aspermittedbythisLease.

Section6–DamagetoPremises

6.1 DestructionofPremises.

(A) SubjecttoSection6.2,iftheProjectisdamagedbyfireorothercasualty,LandlordshallrestorethedamagetothePremisestothesameconditionasexistedonthe RentCommencementDateexclusive of any Alterations. Landlord shall commence the repair, restoration or rebuilding thereof withinninety (90) days after that damage and shall substantially complete the restoration, repair or rebuilding aspromptly as practicable after the commencement thereof, subject to delays caused by events of ForceMajeure or by the acts or omissions of Tenant or any Tenant Party. Landlord shall promptly and diligentlyseekadjustmentofinsuranceproceedsafteranycasualty.

(B) If the fire or other casualty or the repair, restoration or rebuilding required byLandlord shall render the Premises untenantable in whole or in part, then Base Rent and Additional Rentshall proportionately abate from the date when the damage occurred until the date on which the Premisesare in the condition required by this Section 6.1.The proportion shall be computed on the basis that theRentable Square Feet of the portion of the Premises rendered untenantable and not occupied by TenantbearstotheaggregateRentableSquareFeetofthePremises.

6.2 RighttoTerminate.

(A) IfthecasualtyresultsindamagetothePremisesthatLandlordreasonablyestimates will take in excess of (i) twelve (12) months after the beginning of restoration to restore thePremises to the same condition as existed on the Rent Commencement Date (but excluding Alterations)and occurs at any time during the Term or (ii) three (3) months after the beginning of restoration to restorethePremisestothesameconditionasexistedontheRentCommencementDate(butexcludingAlterations)and occurs during the last two (2) years of the Term, as extended, then in either case either Landlord orTenantmayelecttoterminatethisLeaseupongivingnoticeofitselectiontotheotherpartywithinsixty

(60) days after the casualty.If the casualty results in damage to the Project that results in the samerestoration periods as set forth above, or the restoration is prohibited by any Governmental Regulation orthe insurance proceeds are insufficient or not available, then Landlord may elect to terminate this Leaseupongivingnoticeoftheelectionto Tenantwithinsixty-five(65)daysafterthecasualty.

(B) IfthisLeaseisterminatedasprovidedabove,theterminationshallbeeffectiveonthedatespecifiedinthefirstnoticereceivedbytheotherparty,butnoearlierthanthirty(30)daysaftertheoccurrence of the event causing the damage.In such event, Tenant shall be obligated to pay the Rentaccrued to the effective date of the termination, less any Rent abated pursuant to Section 6.1, whichobligation shall survive termination.Unless this Lease is terminated by either party as provided in thisSection6,thisLeaseshallremain in fullforceandeffect,notwithstanding thedamageorcasualty.

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Section7– EminentDomain

7.1 TotalCondemnation.IntheeventofaSubstantialTakingoftheProject(definedbelow),bothLandlordandTenantshallhavetherighttoterminatethisLeasebynoticetotheotherwithinthirty

(30) days after the date of the effectiveness of that taking.“Substantial Taking of the Project” means aTaking (defined below) either of the entire Project or a portion thereof, and in Landlord’s commerciallyreasonable opinion, the remainder of the Project cannot be restored to an economically viable first-classindustrialandofficebuildingwithouteithersubstantialalterationoftheProjectorrelieffromGovernmentalRegulation.“Taking” means a taking or condemnation for a public or quasi-public use by a competentgovernmental authority.If this Lease is terminated pursuant to this Section 7.1, the Term shall terminateupon the delivery of possession to the condemning authority and Tenant shall pay the Rent accruing to thedateoftermination.IfneitherLandlordnorTenantterminatesthisLeasewithintheapplicabletimeperiod,thisLeaseshallcontinueinfullforceandeffect, asmodifiedpursuanttoSection7.2.

7.2 Partial Condemnation.If a Taking occurs that does not entitle Landlord or Tenant toterminate this Lease under Section 7.1or if neither Landlord nor Tenant exercises a right to terminate thisLeasegrantedunderSection7.1,thenLandlordshallrepairandrestoretheProjecttotheextentpracticable,to the condition as existed on the Rent Commencement Date, excluding any Alterations, except thatLandlord is not required to expend for repair and restoration any sum in excess of an amount equal to theAward (defined below).If as a result of the Taking, the Rentable Square Feet of the Premises ispermanently reduced, Base Rent and Additional Rent shall proportionately abate from the date whenpossession of the portion of the Premises is given to the condemning authority.In addition, if the repair,restoration or rebuilding required by Landlord as a result of that Taking renders the Premises untenantablein whole or in part, Base Rent and Additional Rent shall proportionately abate from the date whenpossession of the Premises is given to the condemning authority until the date on which the Premises are,as nearly as practicable, in the condition as existed on the Rent Commencement Date, excluding anyAlterations.The proportionate abatement shall be computed on the basis that the Rentable Square Feet ofthe Premises either reduced or rendered untenantable and not occupied by Tenant bears to the aggregateRentableSquareFeetofthePremises.

7.3 Award.Any award, compensation or damages (the “Award”) for a partial or total takingshall be paid to and be the sole property of Landlord. Tenant shall have the right, to the extent the Awardis not diminished, to make a separate claim against the condemning authority for compensation as may beseparatelyawardedtoatenant.

Section8–AssignmentandSubletting

8.1 AssignmentandSubletting.

(A) Tenant shall not assign, pledge or encumber this Lease or any interest under it orsublet all or any portion of the Premises (individually or collectively, a “Transfer”), without Landlord’s(and,ifrequiredbythetermsofamortgageorgroundlease,the mortgagee’sandgroundlessor’s)consent.Landlord’s consent shall not be unreasonably withheld, conditioned or delayed with respect to a Transfer.EachofthefollowingshallalsoconstituteaTransfer(excludingineachinstancethetransferofanypubliclytraded stock): the dissolution, merger or consolidation of Tenant; any issuance, sale, gift, transfer orredemptionofanyownershipinterestinTenantoranyentityholdingadirectorindirectownershipinterestinTenant(whethervoluntary,involuntaryorbyoperationoflaw,oranycombinationoftheforegoing)thatcauses a change in any of the direct or indirect power to affect the management or policies of Tenant; oranydirectorindirectchangein25%ormoreoftheownershipinterestinTenant.

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(B) Landlord will not be considered to have unreasonably withheld its consent to anassignment or sublease if Landlord’s consent is withheld because:(1) there exists an Event of Defaultunder this Lease that remains uncured after receipt of written notice and expiration of the applicable cureperiod;(2)intheeventofasublease,theportionofthePremisesthatTenantproposestosublease,includingthe means of ingress thereto and egress therefrom, or the remaining portion of the Premises, or anycombination of the above, will violate any Governmental Regulations; (3) in the reasonable judgment ofLandlord, the proposed subtenant or assignee is not sufficiently financially responsible to perform itsobligations under the proposed sublease or assignment; or (4) the proposed assignment or sublease wouldresult in a prohibited transaction under ERISA (defined below).The foregoing, however, are merelyexamples of reasons that Landlord may withhold its consent and should not be deemed to be exclusive ofany other reasons for reasonably withholding consent, whether similar to or dissimilar from the foregoingexamples.

8.2 Tenant to Remain Obligated.No Transfer shall relieve Tenant from any covenant,liability or obligation hereunder (whether past, present or future) and Tenant shall remain liable under thisLease as a principal and not as a surety.Landlord’s consent to a Transfer shall not constitute a consent toany subsequent Transfer.Tenant shall pay all of Landlord’s costs, charges and expenses, includingreasonable attorney’s fees, incurred in connection with any Transfer requested or made by Tenant up to amaximum amount of $2,000 per request (so long as no modifications to this Lease are required inconnectionwithsuchconsent).

8.3 Assignee to Assume Obligations.If Tenant assigns this Lease as permitted herein, theassignee shall expressly assume all of the obligations of Tenant hereunder from and after the date ofassignment and agree to comply with and be bound by all of the terms, provisions and conditions of thisLease.The assumption shall be evidenced in a written instrument satisfactory to Landlord.If TenantsubleasesthePremisesaspermittedherein,thatsubleaseshallbeinawrittenformsatisfactorytoLandlordand contain the agreement of the subtenant to attorn to Landlord, at Landlord’s option and request, in theeventthisLeaseterminatesbeforetheexpirationofthesublease.

8.4 Approved Transferees. Notwithstanding the foregoing, Tenant may assign its interest inthis Lease or sublet any portion of the Premises without Landlord’s consent to any of the following(collectively, “Approved Transferees”):(i) any corporation which controls, is controlled by, or is undercommon control with Tenant, provided that the net worth of such corporation at the time of the proposedsublease or assignment is equal to or greater than Tenant’s net worth as of the Effective Date; (ii) anycorporation resulting from the merger or consolidation of Tenant, provided that the resulting corporationhasanetworthequaltoorgreaterthanTenant’snetworthasoftheEffectiveDate;(iii)anypersonorentitywhich acquires all the assets of Tenant as a going concern of the business that is being conducted on thePremises, provided that the resulting person or entity has a net worth equal to or greater than Tenant’s networth as of the Effective Date. At least ten (10) business days prior to any transfer to an ApprovedTransferee, Tenant shall provide written notice to Landlord of such transfer along withinformationreasonablynecessaryforLandlordtoverifythatsuchtransfereeconstitutesanApprovedTransferee.

8.5 TransferPremium.ExceptwithrespecttoanApprovedTransfer,ifTenantshallTransferthisLeaseoranypartofthePremisesforconsiderationinexcessofthepro-rataportionofRentapplicableto the space subject to the Transfer, then Tenant shall pay to Landlord as Additional Rent, fifty percent(50%) of any such excess within ten (10) days after Tenant has recouped its out-of-pocket costs andexpenses incurred on account of attorneys’ fees, market brokerage commissions and reasonable tenantimprovementcostsgrantedinconnectionwithsuchTransferincluding,butnotlimitedtokeymoney,bonusmoney or other cash consideration paid by an Approved Transferee to Tenant in connection with suchTransfer,andanypaymentinexcessoffairmarketvalueforservicesrenderedbyTenanttosuchApproved

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Transfereeorforassets,fixtures,inventory,equipment,orfurnituretransferredbyTenanttosuchApprovedTransfereeinconnectionwithsuchTransfer.

Section9– Signage

9.1 Suite Identification. Landlord, at its sole cost, will install Tenant’s identification signageoutside of the Premises on the floor where the Premises are located.The location, quality, design, style,lighting and size of that signage must be consistent with Landlord’s Building-standard signage program.Landlord’s prior consent is required for any changes to the signage initially installed by Landlord, and anychangeswillbeatTenant’ssolecostandexpense.Tenantshallnotinstalloraffixanysign,plaque,picture,advertisement, name, notice, lettering or direction on any part of the Project or on any part of the inside ofthePremisesthatcanbeseenfromoutsideofthePremises,withoutineachinstancefirstobtainingthepriorconsentofLandlord.

9.2 ExteriorSignage.Tenantshallhave(i)thenonexclusiverighttohaveitsnameoritstradename or such other name as Landlord may reasonably approve displayed on the Building’s currentmonument signage and (ii) the right to install Building top signage in a location mutually agreed upon byLandlordandTenant(collectively,“Tenant’sExteriorSignage”), subjectto thefollowing:

(A) Tenant’sExteriorSignagemust(i)complywithallapplicablegovernmentallaws,statutes,rules,codesandordinances,(ii) beapprovedinadvancebyallappropriategovernmentalauthorities,(iii)beapprovedinadvancebyLandlord,inLandlord’sreasonablediscretion,and(iv)complywith all other matters of record affecting the Building.Without limiting the generality of the foregoing,Landlord shall have the right to specifically approve the size, location, design, fabrication material andlighting ofTenant’sExteriorSignage priortotheinstallationthereof,whichapprovalshallnotbeunreasonablywithheld,conditionedordelayed.

(B) Once all required approvals have been obtained for Tenant’s Exterior SignagepursuanttoSection9.2(A),TenantshallcausethefabricationandinstallationofTenant’sExteriorSignage,all at Tenant’s cost and expense.Tenant shall also be responsible for the cost of any changes to Tenant’sExteriorSignage(whichchangesmustbepre-approvedbyLandlordinitsreasonablediscretion).

(C) Tenantshallmaintain,atTenant’ssolecostandexpense,Tenant’sExteriorSignageingoodrepairandconditionduringtheTerm.

(D) Tenant’s right to display its name on the monument signage at the Building or ontheBuildingexteriorshallexpireconcurrentlywiththeexpirationorearlierterminationofthisLease.

(E) Landlord shall have the right to re-locate, re-design or re-construct the Building’smonumentsignagefromtimetotime.

(F) Other than to an assignee of this Lease that is either permitted hereunder or towhichLandlord’sconsents,Tenant’srighttodisplayitsnameonthemonumentsignageattheBuilding onthe Building exterior pursuant to this Section 9.2 may not be assigned, transferred or otherwise conveyedtoanyotherparty.

Section10–DefaultsandRemedies

10.1 TenantEventsofDefault.Eachofthefollowingconstitutesaneventofdefault(an“EventofDefault”)hereunder:

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(A) Rent.If Tenant fails to pay Rent on the date due and that failure continues for aperiodoffive(5)daysafterwrittennoticefrom Landlord;or

(B) Insurance. If Tenant fails to maintain the insurance required to be maintained byTenanthereunderand thatfailureisnotcuredwithin thetimeperiodsetforth inSection4.4;

(C) Abandonment.TenantabandonsthePremises;or

(D) Transfer.ATransfer(otherthananApprovedTransfer)occurswithoutLandlord’sconsentasprovidedherein;or

(E) Bankruptcy.Oneofthefollowingcreditdefaultsoccurs:

(1) Tenant or any guarantor of this Lease commences any proceeding underany law relating to bankruptcy, insolvency, reorganization or relief of debts, or seeks appointment of areceiver, trustee, custodian or other similar official for Tenant or any guarantor of this Lease or for anysubstantialpartofitsrespectiveproperty,oranyofthoseproceedingsiscommencedagainstTenantoranyguarantorofthisLeaseandeitherremainsundismissedforaperiodofsixty(60)daysorresultsintheentryofanorderforreliefagainstTenantoranyguarantorofthisLeasethatisnotfullystayedwithinthirty(30)daysafterentry;or

(2) TenantoranyguarantorofthisLeasebecomesinsolventorbankrupt,doesnotgenerallypayitsrespectivedebtsastheybecomedue,oradmitsinwritingitsinabilitytopayitsdebts,ormakesageneralassignmentforthebenefitofcreditors;or

(3) Any third party obtains a levy or attachment under process of law againstTenant’sleasehold interestorotherproperty orassetsoranypropertyorassetsofany guarantor;or

(F) ViolationofProhibitedActivities.IfTenantoranyotherpartyusingoroccupyingthePremisesengagesinanyoftheactivitiesprohibitedunderSection1.5(B),orifaviolationofanyoftheprovisionsofSection 1.5(B)otherwiseoccurs;or

(G) Other Defaults.If Tenant is in default under any other provision of this Lease(otherthanthosespecifiedabove)andremainssoforaperiodofthirty(30)daysafterLandlordhasprovidednoticetoTenantofthatdefault,butifthatdefaultcannotreasonablyberemediedbyTenantwithinthirty

(30)daysafternoticeofdefault,thenTenantshallhaveadditionaltimeasisreasonablynecessarytoremedythe default if during that time Tenant is continuously and diligently pursuing the remedy necessary to curethedefault.

10.2 Landlord’sRemedies.

(A) Landlord’s Remedies.Upon the occurrence of an Event of Default that remainsuncured afterreceiptofwrittennoticeandexpiration oftheapplicablecureperiod,Landlordmay:

(1) Termination of Lease.Terminate this Lease and Tenant shall pay toLandlord, upon demand, an accelerated lump sum amount equal to the amount by which Landlord’scommercially reasonable estimate of the aggregate amount of Rent owing from the date of terminationthrough the scheduled expiration date of the Term, plus Landlord’s commercially reasonable estimate oftheaggregateexpensesofrelettingthePremises(includingbrokeragefees,unamortizedleasingcommissions and tenant concessions incurred or estimated to be incurred by Landlord; costs of removingandstoringanypropertyinthePremises;costsofrepairing,altering,remodelingorotherwiseputtingthe

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Premises into condition acceptable to new tenants; and all reasonable expenses incurred by Landlord inpursuingitsremedies,includingreasonableattorneys’feesandcourtcosts[collectively,“RelettingCosts”]), exceeds Landlord’s commercially reasonable estimate of the fair rental value of the Premises forthe same period (after giving effect to the time needed to relet the Premises) both discounted to presentvalue at the rate at which U.S. Treasuries are then yielding for a term closest to the scheduled expirationdateoftheTerm;or

(2) Termination of Possession.Terminate Tenant’s right of possession ofthePremiseswithoutterminationofthisLease,re-enterthePremisesbysummaryproceedingsorotherwise,expelTenantandremoveallpropertytherefrom,usingthelevelofeffortmandatedbythelawsofthestatewhere the Premises are located to relet the Premises at market rent (and Landlord is permitted to relet anyother vacant space in the Building prior to reletting the Premises) and receive the rent from reletting, andTenant is not entitled to receive any of that rent and remains liable for the equivalent of the amount of allRent reserved herein less the proceeds of reletting, if any, after deducting therefrom the Reletting Costs.Any and all monthly deficiencies payable by Tenant under this clause shall be paid monthly on the datehereinprovidedforthepaymentofBaseRent;or

(3) Application of Amounts Owed to Tenant.Apply against any amountsowedbyLandlordtoTenant, anyamountsthendueandpayablebyTenanttoLandlord;or

(4) Right to Cure.At its option, perform any obligations of Tenant underthis Lease and all costs and expenses incurred by Landlord in performing those obligations, together withinterest thereon at the Default Rate from the date incurred until paid in full, shall be reimbursed by TenanttoLandlordondemandandconstituteRentforpurposesofthisLease;or

(5) Property.Re-enter,seizeandtakepossessionofTenant’spersonalproperty, fixtures and equipment located at the Premises, all of which shall be deemed abandoned byTenant, andtosellthatpropertyatpublicorprivatesale.

(B) Additional Landlord Remedies.Tenant further agrees that the Rent constitutesthevalueofTenant’soccupancyofthePremises,andifTenantfailstopayanyRentassetforthherein,theunpaidRentshallconstituteanallowedsuper-priorityadministrativeexpenseinfavorofLandlordtowhichLandlordisentitledtoimmediatepayment,infull,andTenantshallagreetoenterintoanordertothateffectinabankruptcycase.

(C) Landlord Remedies Cumulative.Any and all remedies of Landlord set forth inthis Lease:(i) are in addition to any and all other remedies Landlord may have at law or in equity, (ii) arecumulative, and (iii) may be pursued successively or concurrently as Landlord may elect.The exercise ofany remedy by Landlord does not constitute an election of remedies or preclude Landlord from exercisinganyotherremediesinthefuture.

10.3 Landlord’sDefault;Tenant’sRemedies.

(A) Landlord shall be in default under this Lease if Landlord breaches any provisionof this Lease and that breach remains uncured for a period of thirty (30) days after Tenant has providednoticetoLandlordofthebreach,butifthatbreachcannotreasonablyberemediedbyLandlordwithinthirty

(30) days after notice of breach, then Landlord shall have additional time as may be reasonably necessaryto remedy the breach if during that time Landlord is continuously and diligently pursuing the remedynecessarytocurethebreach.

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(B) If Tenant claims or asserts that Landlord has violated or failed to perform acovenant of Landlord not to unreasonably withhold, delay, or condition Landlord’s consent or approvalunder this Lease, or in any case where Landlord’s reasonableness in exercising its judgment is in issue,Tenant’s sole remedy shall be an action for specific performance, declaratory judgment, or injunction, andin no event shall Tenant be entitled to any monetary damages for a breach of any such covenant orunreasonable exercise of judgment, and Tenant hereby specifically waives the right to any monetarydamages or other remedies in connection with any such breach or unreasonable exercise of judgment.Further,notwithstandinganythinginthisLeasetothecontrary,nobreachordefaultbyLandlordunderthisLease excuses Tenant from performing, or constitutes a defense to Tenant’s performance of, any duty,liability or obligation of Tenant under this Lease, and no breach or default by Landlord under this Leaseentitles Tenant to terminate this Lease, or abate Rent, in whole or in part. Additionally, Tenant waives anyrightitmayhaveunderlaw orinequityto cureanydefaultbyLandlordunderthisLease.

Section11– CovenantofQuietEnjoyment

Landlord covenants that Tenant, on payment of the Rent and performance of the covenants andagreementssetforthherein,shallpeaceablyandquietlyhave,holdandenjoythePremisesduringtheTermwithoutinterferenceofanypersonclaimingthroughLandlord.

Section12 –Subordination

12.1 Subordination,Attornment.

(A) Unless elected otherwise by the ground lessor, ground lessee or mortgagee, as thecase may be, this Lease shall be subordinate to any present or future ground lease or mortgage respectingthe Project, and any amendments thereto.That subordination is effective on condition that the groundlessor,ground lessee or mortgagee and Tenant enter into acommerciallyreasonablesubordination,nondisturbance and attornment agreement in recordable form which provides in substance that so long asTenant is not has not committed an Event of Default under this Lease that remains uncured after receipt ofwritten notice and expiration of the applicable cure period, its use and occupancy of the Premises shall notbedisturbed,notwithstandinganydefaultofLandlordundersuchmortgage.

(B) If any ground lease is terminated or mortgage foreclosed or deed in lieu offoreclosure given, Tenant shall attorn to that ground lessor or mortgagee or purchaser at that foreclosuresale, and this Lease shall continue in effect as a direct lease between Tenant and the ground lessor,mortgagee or purchaser.The ground lessor, ground lessee or mortgagee or purchaser shall (1) be liable asLandlordonlyfortheobligationsofLandlordaccruingafterthatgroundlessor,groundlesseeormortgageeor purchaser has taken fee title to the Building or Project and (2) not be liable for (a) any Rent paid morethan thirty (30) days in advance or (b) any offsets, claims or defenses that Tenant may have against theprevious Landlord.Tenant shall within ten (10) days after request by Landlord or ground lessor, groundlessee, mortgagee or purchaser (in case of attornment), execute and deliver to the requesting party asubordination, non-disturbance and attornment agreement substantially in the form then used by therequestingparty.

(C) LandlordherebyconfirmsthatasoftheEffectiveDate,theBuildingisunencumbered by any mortgage financing. Notwithstanding the foregoing, the subordination of this LeasefromandaftertheEffectiveDatetoanyfuturemortgageshallbesubjectto,andconditionedupon,Tenant’sexecutionanddeliveryofacommerciallyreasonablenon-disturbanceagreementfromLandlord’smortgagee (an “SNDA”) in recordable form which provides in substance that so long as Tenant has notcommittedanEventofDefaultunderthisLeasethatremainsuncuredafterreceiptofwrittennoticeand

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expirationoftheapplicablecureperiod,itsuseandoccupancyofthePremisesshallnotbedisturbed,notwithstandinganydefaultofLandlordundersuchmortgage.

12.2 Security Deposit.Any ground lessor, ground lessee, mortgagee or purchaser shall beresponsibleforthereturnofanysecuritydepositandrentvoluntarilypaidinadvancebyTenantonlytotheextentthesecuritydepositorrentisreceivedbyorcreditedtothatgroundlessor,groundlessee,mortgageeorpurchaser.

12.3 Definitions.As used in this Section 12, “mortgage” includes “trust deed” and “deed oftrust” and “mortgagee” includes “trustee,” “beneficiary” and the mortgagee of any ground lessee, and“ground lessor,” “mortgagee,” and “purchaser at a foreclosure sale” includes, in each case, all of itssuccessorsandassigns,howeverremote.

Section13–Indemnification

13.1 Indemnity by Tenant.Tenant shall protect, indemnify, defend and save harmless theLandlord Indemnified Parties for, from, against and regarding any and all foreseeable or unforeseeableclaims, suits, proceedings, actions, liabilities, expenses, losses, costs, deficiencies, fines, penalties ordamages (including consequential or punitive damages) of any kind or nature (collectively, “Claims”),including reasonable attorneys’ fees, on account of any matter or thing, action or failure to act arising outoforinconnectionwiththisLease,thePremisesortheoperationsofTenantonanyportionofthePremises.

13.2 Indemnity by Landlord.Subject to the waivers of subrogation provided for hereunder,Landlord shall protect, indemnify, defend and save harmless Tenant for, from, against and regarding anyand all foreseeable or unforeseeable Claims, including reasonable attorneys’ fees, to the extent arising outof(a)abreach ofthisLeaseby Landlordor(b)thegrossnegligenceorwillfulmisconductofLandlord.

13.3 Indemnity Claims Process. Tenant shall pay any amounts that become due to Landlordunder this Section 13within ten (10) days after Landlord’s demand, and if not timely paid, those amountsshall bear interest at the Default Rate from the date of demand until paid. Tenant, at its expense, shallcontest, resist, and defend any claim, action, or proceeding asserted or instituted against Landlord or anyLandlord Indemnified Parties, with counsel acceptable to Landlord, in its discretion, and shall not, underany circumstances, compromise or otherwise dispose of any suit, action, or proceeding without obtainingLandlord’spriorconsent.TenantshallhavetherighttocontrolthedefenseorsettlementofanyClaimif

(a) Tenant shall first confirm in writing to Landlord that Tenant is obligated under this Section 13 toindemnifyLandlordand(b)TenantpaysanyandallamountsrequiredtobepaidinrespectoftheClaim.If Tenant controls the defense or settlement of the Claim then any compromise or settlement shall requirethe prior approval of Landlord, which approval shall not be unreasonably withheld if Landlord (or theapplicable Landlord Indemnified Party) is irrevocably released from all liabilities and losses in connectionwiththeClaimaspartofthesettlementorcompromise.Landlord,atitselectionandsolecostandexpense,may, but is not obligated to, participate in the defense of any Claim.If Tenant does not act promptly andcompletely to satisfy its indemnification obligations, Landlord may resist and defend the Claims againstLandlordoranyLandlordIndemnifiedPartyatTenant’ssolecost.

13.4 Survival.The provisions of this Section 13shall survive the expiration or termination ofthis Lease with respect to any Claims asserted against Landlord, or asserted by Landlord directly againstTenant, withinanyapplicablestatuteoflimitations.

Section14 –Surrender

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UpontheexpirationorearlierterminationofthisLease,TenantshallpeaceablyleaveandsurrenderthePremisestoLandlordbroomcleanandotherwiseintheconditioninwhichthePremisesarerequiredtobemaintainedbythetermsofthisLease,reasonablewearandtearandcasualtyandcondemnationexcepted. TenantshallsurrenderallkeysforthePremisestoLandlordandshallinformLandlordofthecombinationsto all locks, safes and vaults in the Premises.At or prior to the expiration or termination of this Lease,Tenant shall, at its expense, remove from the Premises all furnishings, fixtures and equipment situatedthereonandtheAlterationsthatarerequiredtoberemovedunderSection3.2,andrepairanydamagecausedby that removal.However, Tenant shall not remove any equipment, conduits or fixtures providing water,plumbing, electricity, heating, ventilation, air conditioning, lighting, life safety, sprinkler or sewer serviceto the Premises, regardless of whether the same were installed by or on behalf of Tenant or Landlord. Anyfurnishings, fixtures and equipment not removed by Tenant shall (if not already) become Landlord’spropertyupontheexpirationorearlierterminationofthisLeaseandshallbeconclusively presumedtohavebeen conveyed to Landlord under this Lease via a bill of sale without payment or credit by Landlord toTenant.Landlord may remove any property not removed by Tenant and store and/or retain or sell thatproperty,andTenantshallpayLandlordthecostoftheremoval,storageanddispositionaswellasthecostofrepairinganydamagescausedbytheremovalwithinthirty(30)daysafterdemand.Tenant’sobligationsunderthisSection14survivetheexpirationorearlierterminationofthisLease.

Section15–HazardousMaterials

15.1 Tenant Covenants.Tenant shall, and shall cause the Tenant Parties to, (a) not use,maintain, generate, store, treat or dispose of any Hazardous Materials in or on the Premises or the Project,other than those chemicals shown on Schedule 15 attached hereto, and otherwise de minimis amounts ofmaterials that are required for the normal maintenance and operation of the Premises for normal industrialandofficeuseandthatareused,storedanddisposedofinaccordancewithallEnvironmentalRequirements(including, if applicable, obtaining and maintaining all necessary governmental permits associated withsuch Hazardous materials), (b) clean or remediate, in accordance with all Environmental Requirements,any Hazardous Materials that may contaminate, or emanate from, any part of the Project, the Premises orthe soils, ground water or aquifer under the Project as a result of Tenant’s or the Tenant Parties’ use oroccupancy of the Premises, (c) not place or permit to be placed any Hazardous Materials in any receptaclenot specifically designated and permitted for those materials, (d) cause all Hazardous Materials to bedisposed of by licensed, reputable contractors approved by Landlord and (e) promptly provide Landlordwith anynoticereceivedbyTenantortheTenantPartiesconcerningHazardousMaterials.

15.2 Tenant Indemnity.Without limiting the indemnification contained in Section 13above,Tenant shall indemnify, defend (with counsel reasonably approved by Landlord) and hold the LandlordIndemnified Parties harmless from and against any Claims, including cleanup, engineering and attorneys’fees and expenses that Landlord or the indemnified parties may incur by reason of (1) a violation of thecovenantssetforthinSection 15.1above,(2)Tenant’sortheTenantParties’use,maintenance,generation,storage, treatment or disposal of any Hazardous Materials in, on or under the Project or the Premises, (3)theviolationofanyapplicableEnvironmentalRequirementbyTenantortheTenantPartiesandrelatingtothePremisesorTenant’sortheTenantParties’use,occupancyoroperationthereof,(4)anyClaimbroughtor asserted against Landlord or the indemnified parties, regardless of when brought, which directly orindirectly relates to or arises out of any of the mattersindemnified in this Section 15.2 or (5) anyinvestigation or claim of any governmental agency or third party for any actions taken by Tenant or theTenant Parties on or about the Premises.Tenant’s indemnity obligations under this Section 15.2shallsurvivethecancellationorterminationofthisLease.

15.3 Landlord Indemnity.Without limiting the indemnification contained in Section 13above,Landlordshallindemnify,defend(withcounselreasonablyapprovedbyTenant)andholdtheTenantharmlessfromandagainstanyClaims,includingcleanup,engineeringandattorneys’feesandexpenses

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thatLandlordortheindemnifiedpartiesmayincurbyreasonof(1)anyHazardousMaterialsin,onorundertheProjectorthePremisesbeforetheEffectiveDate,or(2)anyinvestigationorclaimofanygovernmentalagency or third party for any actions taken by Landlord on or about the Premises.Landlord’s indemnityobligationsunderthis Section 15.3shallsurvivethecancellation ortermination ofthisLease.

Section16– HoldingOver

If Tenant remains in occupancy of any portion of the Premises after the expiration or terminationof the Term, Tenant shall become a month-to-month tenant upon all terms of this Lease as might beapplicable to the month-to-month tenancy, except that Tenant shall pay Base Rent and Additional Rent ata rate equal to 150% of the rate effective immediately prior to the holdover. Tenant shall also be liable forany and all damages incurred by Landlord as a result of holding over.No acceptance of Rent payablepursuanttothisSection16byLandlordorthecreationofthemonth-to-monthtenancyconstitutesawaiverofTenant’sdefaultorawaiverofLandlord’srighttoregainpossessionofthePremisesoranyotherremedy.

Section17–Notices

Allnoticesanddemands,consents,approvals,requests,orothercommitmentsrequiredorpermitted to be given under this Lease shall be in writing and sent by United States certified mail, returnreceiptrequested,postageprepaid,orbyFedExorsimilargenerallyrecognizedovernightcourierregularlyproviding proof of delivery, addressed to the parties as set forth in the Summary of Terms (subject to theright of any party to designate a different address for its receipt of notices hereunder within the 48contiguous continental United States of America by notice duly given).Delivery shall be treated as givenasofthefirsttooccurof(i) actualdelivery,(ii)ifmailed,thesecondbusinessdayafterbeingdepositedin

U.S.Mail,properpostageprepaid,addressedasprovidedabove,or(iii)ifsentbyovernightcourier,onthefirst business day after being delivered to that courier with all charges for overnight delivery having beenprepaid.

Section18–Broker’sRepresentation

Exceptforthebrokers,ifany,identifiedontheSummaryofTerms,Landlordrepresentsthatitdealtwith no broker or brokers and Tenant represents that it dealt with no broker or brokers in connection withthe negotiation, execution and delivery of this Lease.Landlord and Tenant shall indemnify and hold theother harmless from and against any losses, damages, penalties, claims or demands of whatsoever naturearising from a breach of its foregoing representation including reasonable attorneys’ fees and expenses.TherepresentationsandindemnificationssetforthinthisSection18survivethecancellationorterminationofthisLease.

Section19 –RightsReservedtoLandlord

The following rights, exercisable without notice and without affecting any of Tenant’s obligationsunder this Lease, are all reserved by Landlord:(1) to change the name or street address of the Project ortheBuildingnumbersthereof;(2)toinstallandmaintainsignsontheexteriorandinterioroftheProject;

(3)toretainatalltimes,andtouseinappropriateinstances,passkeystothePremises;(4)togranttoanyonethe exclusive right to conduct any business, but the granting by Landlord of an exclusive right in no wayprohibitsTenantfromusingthePremisesforthepurposesforwhichitisusingthePremises asoftheRentCommencement Date; (5) to render any service in the Project, including furnishing electricity, telephoneservice, ice, water, towels, toilet supplies, shoe shines, sign painting, beverage or food service or otherservices to the Project, so long as the rates therefor are reasonably competitive for industrial and officebuildings in the Metropolitan Area; (6) upon at least twenty-four (24) hours’ advance written notice toTenant,to,orhaveitsagents,exhibitthePremisesatreasonablehourstoprospectivepurchasers,

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mortgagees, and ground lessors of the Project and, in the final nine months of the Term, to prospectivetenants; (7) to, or have its agents, decorate, remodel, repair, alter or otherwise prepare the Premises forreoccupancyatanytimeafterTenantvacatesorabandonsthePremises;(8)to,orhaveitsagents,enterthePremises after at least twenty-four (24) hours’ advance written notice at reasonable hours (except in theevent of an emergency, when no notice need be given) for reasonable purposes, including inspection, theprovisionofservicesandtheperformanceoftheobligationsofLandlordhereunder;and(9)toapprovetheweight,size,placementandtimeandmannerofmovementwithinthePremisesandtheProjectofanysafeorotherheavyarticleofTenant’sProperty,withoutany liabilityonaccountofthatapproval.

Section20 – OtherMatters

20.1 Interpretation.Captions of this Lease are solely for convenience of reference and shallnot in any way limit or amplify the terms and provisions hereof.Whenever the words “including,”“include,”or“includes”areusedinthisLease,theyshallbeinterpretedinanon-exclusivemannerasthoughthewords “withoutlimitation”immediatelyfollowed.

20.2 Partial Invalidity.If any term, covenant or condition of this Lease or the applicationthereof to any person or circumstance shall, to any extent, be invalid or unenforceable, the remainder ofthis Lease or the application of that term, covenant or condition to persons or circumstances other thanthose as to which it is held invalid or unenforceable shall not be affected thereby and each term, covenantorcondition ofthisLeaseshallbevalid and beenforced tothefullestextentpermitted bylaw.

20.3 Entire Agreement.All understandings and agreements, oral or written, previously madebetweenthepartiesaremergedintothisLeaseandthisLeasefullyandcompletelyexpressestheagreementbetween Landlord and Tenant.This Lease cannot be amended or modified except by a written instrumentexecutedbyLandlordandTenant.

20.4 Governing Law.This Lease, and all disputes arising under or related to this Lease, shallbe governed by and construed in accordance with the internal laws of the State in which the Project islocated.

20.5 Successors and Assigns. Subject to Section 8and Section 12, this Lease shall be bindingupon and inure to the benefit of the parties hereto and their respective heirs, executors, administrators,successorsandassigns.

20.6 Waiver.No failure by either party to exercise, or delay in exercising, any right, power orprivilege hereunder shall operate as a waiver thereof, nor shall any single or partial exercise of any right,power or privilege hereunder preclude any other or further exercise thereof, or the exercise of any otherright, power or privilege.Any consent or approval given by Landlord in any one instance shall notconstituteconsentorapprovalforanysubsequentmatter,evenifsimilartothematterforwhichthatconsentorapprovalwasoriginallygiven.

20.7 Litigation and Arbitration Costs.In the event of any litigation or arbitration betweenTenant and Landlord to enforce any provision of this Lease or any right of either party hereto, theunsuccessful party to that litigation or arbitration shall pay to the successful party all costs and expenses,includingreasonableattorneys’fees, incurredbythesuccessfulpartytherein.

20.8 Counterparts;ElectronicExecutionandDelivery.ThisLeasemaybeexecutedelectronically and in any number of counterparts, each of which constitutes an original and all of which,whentakentogether,shallconstituteoneandthesameagreement.Further,electroniccopiesoftheexecuted

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copiesofthisLeasemaybedeliveredtothepartiesbyfacsimiletransmissionoremail(includingasanattachmentin.PDFformat)and,uponreceipt,shallconstituteoriginalsandbindinguponthepartieshereto.

20.9 Modifications to Lease.If, in connection with Landlord’s obtaining financing for theProject,theproposedlenderrequestsreasonablemodificationofthisLeaseasaconditionofthatfinancing,Tenant shall not unreasonably withhold or delay its agreement to those modifications so long as thosemodifications do not materially increase the obligations or materially and adversely affect the rights ofTenantunderthisLease.

20.10 AccordandSatisfaction.NopaymentbyTenantorreceiptbyLandlordofalesseramountthan the Rent stipulated herein shall be deemed to be other than on account of the earliest stipulated Rent,nor shall any endorsement or statement on any check or any letter accompanying any check or payment ofRent constitute an accord and satisfaction.Landlord may accept that check or payment without prejudiceto Landlord’srighttorecoverthebalanceofRentorto pursueanyotherremedyin thisLease.

20.11 TimeoftheEssence.TimeisoftheessenceofeachprovisionofthisLease.

20.12 WAIVER OF TRIAL BY JURY.EACH PARTY WAIVES TRIAL BY JURY INTHE EVENT OF ANY LEGAL PROCEEDING BROUGHT BY THE OTHER IN CONNECTIONWITH THIS LEASE. EACH PARTY SHALL BRING ANY ACTION AGAINST THE OTHER INCONNECTION WITH THIS LEASE IN FEDERAL OR STATE COURTS LOCATED IN THEDISTRICT WHERE THE PROJECT IS LOCATED, CONSENTS TO THE JURISDICTION OFTHOSECOURTS,ANDWAIVESANYRIGHTTOHAVEANYPROCEEDINGTRANSFERREDFROMTHOSECOURTS.

20.13 Areas Excluded From Demise.The exterior walls of the Premises, the area beneath thefinishedfloorofthePremisesandtheareaabovethefinishedceilinglevelofthePremisesarenotdemisedhereunder.

20.14 DueAuthorization.LandlordandTenantherebycovenant,warrantandrepresentthat:

(1) the individual executing this Lease on its behalf is duly authorized to execute and deliver this Lease inaccordancewiththatparty’sorganizationaldocuments;(2)thisLeaseisbindinguponthatpartyand(3)theexecution and delivery of this Lease will not result in any breach of, or constitute a default under anymortgage,deedoftrust,lease,loan,creditagreement,partnershipagreementorothercontractorinstrumenttowhichitisapartyorbywhichitmaybebound.

20.15 Tenant Financials. If Landlord is required to furnish that information in connection withtheclosingofaproposedsaleorrefinancingoftheProjectorifTenantisindefaulthereunder,Tenantshallprovide Landlord, upon ten (10) days’ prior notice from Landlord, with a current financial statement forTenant’s business.The information provided by Tenant shall be kept confidential by Landlord andLandlord’s lender or prospective purchaser, except to the extent already a part of the public domain,disclosureisrequired byapplicableGovernmentalRegulationsortoenforcethisLease.

20.16 Force Majeure.Both Landlord and Tenant shall be excused from performing theirobligations or undertakings provided in this Lease, in the event of, but only so long as the performance ofany of those obligations are prevented or delayed, retarded or hindered by, an event of Force Majeure, butthis Section 20.16 shall not apply to any obligation to pay money or perform any financial obligationshereunder.

20.17 ERISA.Tenant represents and warrants that it is not and is not acting on behalf of (1) an“employeebenefitplan”withinthemeaningofSection3(3)oftheEmployeeRetirementIncomeSecurity

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Actof1974,asamended(“ERISA”),(2)a“plan”withinthemeaningofSection4975oftheInternalRevenueCodeof1986,asamendedor(3)anentitydeemedtohold“planassets”withinthemeaningof29

C.F.R.§2510.3-101ofanysuchemployeebenefitplan orplans.

20.18 Estoppel Certificates.Within ten (10) days after request by Landlord, Tenant shallexecuteanddelivertoLandlordawrittencertificateastothestatusofthisLease,anyexistingdefaults,thestatus of the payments and performance of the parties required hereunder and any other information thatmaybereasonablyrequested.

20.19 Landlord’s Interest. Landlord’s liability under this Lease is limited solely to Landlord’sequity in the Project, and in no event shall recourse be had to any other property or assets of Landlord oragainst any property or assets of any member, partner, shareholder, trustee, officer or director of Landlordor its members, partners or shareholders. If Landlord at any time transfers its interest in the Project or thisLease, Landlord shall be released of any obligations occurring after that transfer, and Tenant shall looksolelytoLandlord’ssuccessorsforperformanceofthoseobligations.

20.20 JointandSeveral.IfTenantismorethanoneperson,allobligationsofTenanthereunderarejointandseveralobligationsofeachpersonexecutingthisLeaseasTenant.

20.21 Recordation; Confidentiality. Tenant shall not record or file, or permit to be recorded orfiled,acopyofthisLease(oramemorandumthereof)orotherwisedisclosethetermsofthisLeasewithoutfirstobtainingLandlord’sconsent,whichmaybegranted orwithheld inLandlord’ssolediscretion.

20.22 Security.Landlord has no duty to provide security for any portion of the Premises andTenant assumes sole responsibility and liability for the security of itself, its employees, customers andinvitees and their respective property, in the Premises.To the extent Landlord provides security to theCommon Areas, Landlord does not warrant the efficacy of any security personnel, services, procedures orequipment.Landlord shall not be responsible for or liable in any manner for failure of any securitypersonnel, services, procedures or equipment to prevent or control, or apprehend anyone suspected of,personalinjuryorpropertydamagein,onoraroundtheProject.

20.23 OFACCertification.

(A) Tenant represents, warrants and covenants to Landlord that Tenant, its affiliates,and their respective officers, directors, members, partners, shareholders and other equity interest holdersare not and will not at any time from the Effective Date through the end of the Term be (1) in violation ofany of the Anti-Terrorism Laws (as defined in this Section 20.233), or (2) a Prohibited Person (as definedin this Section 20.233). Tenant further certifies that it has not entered into this Lease, directly or indirectlyon behalf of any Prohibited Person or for the purpose of effecting any act that would violate the Anti-Terrorism Laws.

(B) “Anti-Terrorism Laws” shall mean any federal law, regulation, rule or orderrelatingtoterrorismormoneylaunderingthatmaynoworhereafterbeineffect,includingExecutiveOrderNo. 13224 on Terrorist Financing, effective September 24, 2001, any regulations of the U.S. TreasuryDepartment’s Office of Foreign Assets Control (“OFAC”) related to Specially Designated Nationals andBlocked Persons that may now or hereafter be in effect, and the Uniting and Strengthening America byProviding Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (Public Law 107-56) as amended, International Money Laundering Abatement and Financial Anti-Terrorism Act of 2001,the Bank Secrecy Act, the Trading with the Enemy Act, and the International Emergency EconomicsPowersActandtherulesandregulationspromulgatedunderthoseacts.

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(C) “Prohibited Person” shall mean any person or entity owned or controlled by,affiliated with, or acting for or on behalf of, any person, group or entity or nation named by any ExecutiveOrder or the United States Treasury Department as a “specially designated national and blocked person”,oraterroristonthethenmostcurrentlistpublishedbyOFACatitsofficialwebsite,http://www.treas.gov/offices/enforcement/ofac/sdn/t11sdn.pdf, or at any replacement website or otherreplacementofficialpublicationofthatlist.

20.24 Parking. Parking in the Common Areas shall be made available to Tenant and the TenantParties on a non-exclusive basis.Tenant shall be entitled to the free use of Tenant’s Pro Rata Share of allparking at the Project (for a total of 160 parking spaces) and to the exclusive use of 15 of such parkingspacesinthelocationnearesttotheentranceofthePremisesasdesignatedonExhibitE-1attachedhereto.Tenant may install electrical vehicle charging stations in its reserved parking spaces with Landlord’s priorwritten approval, which shall not be unreasonably withheld, conditioned or delayed, as to the proposedAlterations required to install the charging stations.Tenant shall at all times adhere to all rules andregulations imposed by Landlord or the parking operator, if any, in connection with parking at the Project,includingthosesetforthonExhibitEattachedhereto.

20.25 Rooftop Use. Tenant shall have the right, at its option and without charge, to use the roofof the Building for the installation and maintenance of its telecommunications equipment. No other tenantshall be granted rooftop Building rights.If Tenant desires to exercise such right, Tenant shall notifyLandlordofthesameinwritingandpromptlythereafter,LandlordandTenantshallenterintoarooftopuseagreement in the form of Exhibit Fattached hereto (the “Rooftop Use Agreement”). Landlord and Tenantagree to reasonably cooperate to complete the exhibits to the Rooftop Use Agreement, it being understoodand agreed that until the completion of such exhibits, Landlord shall be under no obligation to execute theRooftop Use Agreement.Until the mutual execution and delivery of the Rooftop Use Agreement, Tenantshall have no right to access or install any equipment on the roof of the Building.Any termination of thisLeaseterminatesallrightsunderthisSection20.25.TenantshallbeentitledtothefreeuseofTenant’sProRata Share of space on the roof of the Building.In addition to the foregoing, Landlord may not allow anythird-partythatisnototherwiseatenantintheBuilding,tolease,licenseorallowanythird-partytouseanyportionofroofforanypurposeincluding,butnotlimited, rooftopsignagerights.

20.26 SecurityDeposit.

(A) Security Amount. Tenant shall pay to Landlord upon the execution and deliveryof this Lease the Security Deposit amount (as the same may be reduced pursuant to Section 20.26(F), the“Security Amount”) set forth in the attached Summary of Terms as security (the “Security Deposit”) forthe full and faithful performance by Tenant of each and every term, provision, covenant, and condition ofthis Lease. The Security Deposit shall not be deemed an advance payment of Rent or a measure ofLandlord’sdamagesforanyTenantdefault,norshallitbeabarordefensetoanyactionthatLandlordmayatanytimecommenceagainstTenant.TheSecurityDepositshallbethepropertyofLandlordandLandlordmay commingle the Security Deposit with other assets of Landlord or its affiliates and use the SecurityDeposit to reduce the indebtedness of Landlord or its affiliates, and Tenant shall not be entitled to anyinterestontheSecurityDeposit.

(B) Application of Security Deposit. Upon the occurrence of any Event of Defaultunder this Lease that remains uncured after receipt of written notice and expiration of the applicable cureperiod, Landlord, at its option and in the order that Landlord in its discretion determines, may apply theSecurity Deposit to any (1) obligation of Tenant under this Lease or (2) loss or expense that Landlord mayincur in connection with or related to this Lease or any Event of Default, whether the obligation or loss orexpenseaccruesbeforeoraftertheEventofDefault.

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(C) Transfer of Security Deposit. If Landlord sells or transfers the Building orLandlordceasestohaveaninterestintheBuilding,LandlordmayremitanyunappliedpartoftheSecurityDeposittothesuccessorowneroftheBuilding,andfromandafterthatpaymentortransfer,Landlordshallberelievedofallliabilitywithrespectthereto.

(D) RestorationofSecurityDeposit.IfLandlordappliestheSecurityDeposit(oranyportion thereof) from time to time as provided in this Lease, Tenant shall replenish the Security Deposit infull, within 10 days after demand by Landlord, by paying to Landlord the amount of the Security Depositsoapplied.

(E) Return of Security Deposit at Expiration or Termination of Lease. If: (1) noEvent of Default has occurred and is continuing under this Lease and (2) Tenant has fully performed andsatisfied all of its obligations under this Lease, then Landlord shall pay the Security Deposit, or theremainingunappliedportionthereof,toTenantwithin93daysaftertheexpirationorearlierterminationofthis Lease and the surrender of the Premises to Landlord in accordance with the terms of this Lease; butLandlord may retain an amount of the Security Deposit, as it shall reasonably determine, to secure thepaymentofanyRent,theamountofwhichLandlordisthenunabletodeterminefinally(andLandlordshallreturn any retained amount to Tenant promptly following the final determination of that Rent amount andthefullpaymenttoLandlordofthatRent).

(F) EarlyReturnofSecurityDeposit.ProvidednoEventofDefaultunderthisLeasethatremainsuncuredafterreceiptofwrittennoticeandexpirationoftheapplicablecureperiodthenexists,on the first anniversary of the Rent Commencement Date, Tenant’s obligation to deposit the SecurityDeposit with Landlord shall extinguish and the Security Deposit shall promptly be returned to Tenant.IfanuncuredEventofDefaultdoesexistonsuchanniversarydate,suchextinguishmentshallbestayeduntilsuchtimeasnouncuredEventofDefaultthenexists.

20.27 LetterofCredit.

(A) In lieu of the Security Deposit, at Tenant’s election, Tenant may deposit withLandlordandmaintainduringtheTerm,aLetterofCreditinanundrawnfaceamountequalto$65,373.75(as the same may be reduced pursuant to Section 20.27(F), the “LC Amount”) as partial collateral forTenant’s obligations under this Lease.Upon the occurrence of an Event of Default under this Lease thatremainsuncuredafterreceiptofwrittennoticeandexpirationoftheapplicablecureperiod,Landlordmay,butshallnotberequiredto,drawupontheLetterofCredit(inwholeorinpart)andapplythe cashproceedsthereof to the obligations due from Tenant under this Lease and to compensate Landlord for the Claimsarising in connection with such uncured Event of Default (or any other Event of Default under this Leasethat remains uncured after receipt of written notice and expiration of the applicable cure period).Anyamount drawn by Landlord shall not be deemed:(a) to fix or determine the amounts to which Landlord isentitledtorecoverunderthisLeaseorotherwise;(b)towaiveorcureanydefaultunderthisLease;or(c)tolimitorwaiveLandlord’srighttopursueanyremediesprovidedforinthisLease.

(B) Tenantcovenantsasfollows:(a)onorbeforethirty(30)dayspriortotheexpirationdate of the then issued and outstanding Letter of Credit, Tenant shall deposit with Landlord a replacementLetter of Credit in the LC Amount; (b) if all or any portion of the Letter of Credit is drawn against byLandlord, Tenant shall, within five (5) business days after written demand by Landlord, deposit withLandlordareplacementorsupplementaryLetterofCreditsuchthatatalltimesduringthetermofthisLeaseand, subject to Section 20.27(G), for sixty (60) days after the Expiration Date, Landlord shall have theabilitytodrawononeormoreLettersofCredittotaling,intheaggregate,theLCAmount;and(c)followingan Issuer Revocation, Tenant shall obtain a replacement Letter of Credit in the LC Amount from anotherIssuerwithinfifteen(15)businessdaysofLandlord’swrittendemandtherefor.IfTenantfailstotimely

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perform any of the foregoing, then in addition to any other rights and remedies available under this Lease,LandlordmayimmediatelydrawuponthefullamountofthethenissuedandoutstandingLetterofCredit.

(C) UpontheissuanceofareplacementLetterofCredit,Landlordshallhavetherightto draw solely on such replacement Letter of Credit and Landlord shall have no right to draw against theLetterofCreditwhichisreplacedbysuchreplacementLetterofCredit.

(D) Tenant shall have the right to deposit with Landlord one or more Letters of CredittosatisfytherequirementsofthisSection20.27,solongastheaggregateundrawnfaceamountofallissuedandoutstandingLettersofCreditequaltheLCAmount.

(E) If Landlord draws on a Letter of Credit, the cash proceeds thereof not used tocompensateLandlordforamountsduetoLandlordunderthisLeasebyreasonofan EventofDefaultunderthis Lease that remains uncured after receipt of written notice and expiration of the applicable cure periodshall be held by Landlord as an additional security deposit under this Lease and Landlord may, from timeto time, without prejudice to any other right or remedy, apply such cash proceeds to the obligations duefrom Tenant under this Lease and to compensate Landlord for the actual damages suffered or incurred byit in connection with such uncured Event of Default (or any other Event of Default under this Lease thatremains uncured after receipt of written notice and expiration of the applicable cure period).The holdingof such cash proceeds by Landlord shall not limit or stay Tenant’s obligation hereunder to cause to beissued, subject to Section 20.27(G), for the entire Term, plus (60) days after the Expiration Date, a LetterofCreditintheLCAmount.AbsentanEventofDefaultunderthisLeasethatremainsuncuredafterreceiptofwrittennoticeandexpirationoftheapplicablecureperiod (exceptanEventaDefaultthatwouldbefullycured bythepostingofaLetterofCreditin theLCAmount),uponLandlord’sreceiptofaLetterofCreditin the LC Amount, any such cash proceeds then held by Landlord shall be returned to Tenant. If requestedbyTenant,LandlordshallmakesuchcashproceedsavailabletocollateralizeareplacementLetterofCreditor supplemental Letter of Credit pursuant to a written agreement with the applicable Issuer, wherebyLandlordshallagreetodisbursesuchcashproceedstotheapplicableIssueruponsuchIssuer’sirrevocableand unconditional commitment to issue the applicable replacement Letter of Credit or supplemental Letterof Credit upon its receipt of such cash proceeds.Notwithstanding the foregoing, Landlord shall not berequiredtomakesuchcashproceedsavailableifan uncuredEventofDefaultthenexistsunlessthepostingoftheapplicablereplacementorsupplementalLetterofCreditwouldcurealloutstandingEventsofDefault.If Tenant is not in default under this Lease as of the Expiration Date, any cash proceeds then held byLandlordshallbereturned toTenantwithinthirty (30)daysfollowingtheExpirationDate.

(F) Provided no Event of Default under this Lease that remains uncured after receiptofwrittennoticeandexpirationoftheapplicablecureperiodthenexists,onthefirstanniversaryoftheRentCommencementDate,theLCAmountshallbereducedto$0.00.IfanuncuredEventofDefaultdoesexiston such anniversary date, such reduction shall be stayed until such time as no uncured Event of Defaultthenexists.

(G) AsusedinthisthisSection20.27,thefollowingshallhavethefollowingmeanings:

(1) “Issuer”meansthefinancialinstitutionthat,fromtimetotime,hasissued

aLetterofCredit.

(2) “Issuer Revocation” means that an Issuer shall fail to be in compliancewith all of the Issuer Standards, or shall admit in writing its inability to pay its debts generally as theybecome due, shall file a petition in bankruptcy or a petition to take advantage of any insolvency statute,shall consent to the appointment of a receiver or conservator of itself or the whole or any substantial partofitsproperty,shallfileapetitionoranswerseekingreorganizationorarrangementunderthefederal

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bankruptcy laws, shall have a receiver, conservator or liquidator appointed for it (including an FDICreceiver, conservator or liquidator), or shall become subject to operational supervision by any federal orstateregulatoryauthority.

(3) “IssuerStandards”meanthattheIssuer:(i) hasatthetimeofdetermination net worth, as determined in accordance with GAAP, in excess of Five Hundred MillionDollars ($500,000,000.00); and (ii) has a current long-term credit rating from at least two (2) nationallyrecognized statistical rating organizations (such as Standard & Poor’s, Moody’s Investor Services or FitchRatings)equivalenttoorgreaterthanA-/A3.

(H) “Letter of Credit” means an unconditional, irrevocable, standby letter of credit ina form approved by Landlord in its commercially reasonable discretion, naming Landlord as beneficiary,and issued by an Issuer that satisfies the Issuer Standards and is otherwise acceptable to Landlord in itscommerciallyreasonablediscretion.

SIGNATURESONFOLLOWINGPAGE

-31-

ThepartieshaveexecutedanddeliveredthisLeaseasoftheEffectiveDate.

TENANT:
SILK ROAD MEDICAL, INC.,
a Delaware corporation
By:	/s/ Lucas Buchanan
Name:	Lucas Buchanan
Title:	CFO & COO
Date:	May 10, 2021
LANDLORD:
ARHC UHPTHMN01, LLC,
a Delaware limited liability company
By:	/s/ Stephanie Keator
Name:	Stephanie Keator
Title:	Director, Asset Management
Date:	May 12, 2021

-SignaturePage-

EXHIBITA

FLOORPLANS

Exhibit A,1

EXHIBITB

RULESANDREGULATIONS

1. Use:TenantshallnotuseorpermitanypartofthePremisestobeusedforanypurposesotherthanthosesetforthinthisLease.

2. Maintenance: Tenant shall maintain all portions of the Premises and immediately adjoining areasin a clean and safe condition.Tenant shall comply with any waste recycling, waste separation orother waste program imposed from time to time by the provider of the waste removal services orLandlord.

3. Common Areas and Doormats:The Common Areas shall not be obstructed. No doormats shallbeplacedorleftinanypubliccorridor.

4. Exterior:No awnings or other projections shall be attached to the outside walls of the Building.Tenant must obtain Landlord’s approval, prior to installation, of any shades, blinds, curtains,screens, ventilators or window treatments of any kind, as well as any lighting within a tenant’spremisesthatmaybevisiblefrom theexteriorofBuilding.

5. Signs:No signs, insignia, advertisement, object, notice or other lettering shall be exhibited,inscribed, painted or affixed on any part of the Premises or the Building without prior consent ofLandlord.In the event of the violation of the foregoing by any Tenant, Landlord, upon 24-hours’notice, may remove the same without any liability, and may charge the expense incurred in thatremoval to the tenant violating this rule.Interior signs and lettering on doors and directory tabletshould be inscribed, painted or affixed for each tenant by Landlord at the expense of that tenantand shall be of a size, color and style acceptable to Landlord. At the expiration of the term Tenantistoremoveallsignsfrom thewindows,doorsanddirectoryboard.

6. Alterations:All contractors and subcontractors performing Alterations must work in harmonywithLandlord’sandothertenants’contractorsandsubcontractors.TenantshallcauseallAlterations to be performed in a manner so as not to obstruct access to the premises of any othertenantintheProjectoranypartoftheCommonAreasordisruptanybuildingserviceorequipmentoranyothertenant’sequipment.TenantshallnotberequiredtouseunionlaborinconnectionwiththeperformanceofanyAlterationsorCosmeticAlterations.

7. AirFlow:Thesashes,skylights,windows,anddoorsthatadmitlightandairintothehallsorotherpublic places in the Building shall not be obstructed, nor shall any items be placed on the windowsillsorontheperipheralairconditioningenclosures.

8. Use of Water and Plumbing: The water closets and other plumbing fixtures shall not be used forany purpose other than those for which they were designed or constructed, and no sweeping,rubbish,acidsorothersubstancesshallbethrown ordepositedtherein.Alldamagesresultingfromany misuse of the fixtures shall be borne by the tenant who, or whose employees, agents, visitors,orlicenseesshallhave, causedthesame.

9. Bikes and Animals:No bicycles, animals (other than service animals certified under applicableGovernmental Regulations to accompany their disabled handler) or birds of any kind shall bebrought into or kept in or about the Premises or the Building.Tenant may maintain fish in aproperlymaintainedaquarium.

ExhibitB, 1

10. Noise:Nonoisethat,inthejudgmentofLandlord,mightdisturbothertenantsintheBuildingshallbe made or permitted by any tenant.Nothing shall be done or permitted in the Premises by anytenant which would impair or interfere with the use or enjoyment by any other tenant of any otherspaceintheBuilding.

11. Locks and Access:Additional locks shall not be placed upon any doors or windows by Tenant.Nor shall any changes be made to the locks which shall make the locks inoperable by Landlord’smaster key. Landlord will furnish two keys for the entrance doors to the Premises. Additional keyswill be ordered through Landlord and paid for by Tenant.Tenant will return all keys upontermination of this Lease. The agent and janitor of the Building shall be allowed admittance to thePremises,tocoveranyemergency,orrequiredexaminationthatmayarise.

12. Delivery and Moving:All removals, or the carrying in or out of any safes, freight, furniture, andany other object must take place during hours and in elevators as Landlord or its agent maydetermine from time to time.Any damage done to the Building shall be paid for by the tenantcausingit.

13. Passes:Landlord may require any person leaving the Building with any package or other objectsto submit a pass, listing the package or object or matter, from the tenant from whose premises thepackage or object or matterisbeingremoved.The establishment andenforcementof thisrequirementshallnotimposeanyresponsibilityonLandlordfortheprotectionofanytenantagainsttheremovalofpropertyfrom thepremisesofthattenant.

14. Moving; Safes and Heavy Articles:Safes and other heavy articles shall be placed by Tenant insuch places only as may be specified in writing by Landlord, without any liability on account ofthatapproval.HandtrucksandmovingequipmentusedbyTenantintheBuildingmustbeequippedwithrubbertires,sideguardsandothersafeguardsasLandlordrequiresandbeapprovedinadvanceinwritingbyLandlord.

15. Advertising: Landlord shall have the right to prohibit any advertising or identifying sign by anytenant which, in Landlord’s judgment, tends to impair the reputation of the Building or itsdesirability as a building for offices.Upon notice from Landlord, that tenant shall refrain from ordiscontinue the advertising or identifying sign.Tenant shall not use the name of the Building foranypurpose,otherthanthatofthebusinessaddress.

16. Areas Reserved to Landlord:Landlord reserves (a) the right to install, maintain, use, repair andreplace pipes, ducts, conduits and wires, heating, ventilating, cooling, plumbing, electrical andother systems, and structural elements, leading through or a part of the Premises, in locations thatwill not materially interfere with Tenant’s use of the Premises, and (b) the right to use the exteriorwalls of the Premises, the area beneath the finished floor of the Premises and the area above thefinishedceilinglevelofthePremises.

17. Building Security:Tenant assumes full responsibility for protecting the Premises from theft androbbery.UpontherequestofLandlord,TenantshallfurnishtoLandlordinformationincludingthenameandtelephonenumberofanindividualdesignatedbyTenantwhoshouldbecontactedinthecase of an emergency, the name of all individuals to whom Tenant has given entrance keys, andthe names of all individuals authorized by Tenant to enter the Premises at other than BusinessHours.

18. Closing Doors and Windows:Tenant, before closing and leaving the Premises at any time, shallseethatalloperablewindowsareclosedandalllightsareturnedout.Allentrancedoorsinthe

ExhibitB, 2

PremisesshallbeleftlockedbyTenantwhenthePremisesarenotinuse.Entrancedoorsshallnotbeleftopenatanytime.

19. DataandUtilityLines:Landlordhastherighttoregulateaccesstotelephone,data,electricalandother utility lines and closets in the Project and to require use of designated contractors for anywork involving access to the same.Landlord will direct the electricians as to where and how thewiresaretobeintroduced.UnlessapprovedinadvancebyLandlord,noboringorcuttingforwireswillbepermitted.

20. Lodging:ThePremisesshallnotbeusedforlodgingorsleeping.

21. ServiceRequests:ServicerequestsshallbedirectedtotheBuildingoffice.EmployeesofLandlordshallnotperformany work forTenantunlessunderinstructionsfromLandlord.

22. Canvassing:Canvassing, soliciting and peddling in the Building are prohibited and each tenantshallcooperatetopreventthesame.

23. Odors:TenantshallusecommerciallyreasonableeffortstopreventodorsfromemanatingfromthePremises.

24. Machinery:With the exception of Tenant’s manufacturing equipment together with usual andofficeandpersonalfoodpreparationequipment(includingpersonalcomputers,servers,telephones,lighting and microwave ovens) installed within the Premises, Tenant shall not use machinery orstovesatthePremises.

25. Utilities:Tenant shall not waste electricity, water, or air conditioning and shall cooperate withLandlord to assure the most effective operation of the Building’s heating and air conditioning.Tenantshallnotadjustanycontrols,otherthan roomthermostatsinstalled forTenant’suse.

26. Tenant’s Responsibility for Others:Tenant shall be responsible for the observance of all of theforegoingrulesandregulationsbyTenant’semployees,agents,clients,customers,andguests.

27. Changes to Rules:Landlord reserves the right to rescind, alter or waive any rule or regulation atany time, provided that no such changes shall unreasonably interfere, restrict or impair Tenant’saccess to or use of the Premises for the conduct of Tenant’s business therein, and no such changesshallincreaseTenant’scostsassociatedwiththisLease.Landlordshallusecommerciallyreasonable efforts to enforce the rules and regulations hereunder in a uniform manner against alltenantsintheBuilding.

ExhibitB, 3

EXHIBITC

WORKLETTER

ThisWorkLetter(this“WorkLetter”)supplementstheLeasetowhichthisWorkLetterisattached.

AlltermscapitalizedbutnotdefinedhereinshallhavethemeaningsascribedtothemintheLease.

NOW,THEREFORE,forgoodandvaluableconsideration,thereceiptandsufficiencyofwhichareherebyacknowledged,LandlordandTenantherebyagreeasfollows:

1. Tenant’sWork.

(a) Tenant shall, in accordance with the terms and conditions of this Section 1 andSection2oftheLease,constructorcausetobeconstructed,certainimprovementsandperformotherworkto be approved and/or reasonably required by Landlord more completely described in the hereinafterdefinedTenant’sPlans(“Tenant’sWork”).TenantshallproceeddiligentlywithTenant’sWorkinordertohaveitfullycompletedandthePremisesreadyforoccupancybytheRentCommencementDatesubjecttoany delays resulting from events of Force Majeure. Tenant’s Work shall be staged at locations reasonablyacceptable to Landlord.Subject to the Improvement Allowance, provided in Section 1(d) below, all ofTenant’sWorkshallbedoneatTenant’ssolecostandexpense.

(b) Tenant shall, as soon as reasonably practical after mutual execution of the Lease,submit plans and specifications (and, if requested by Landlord, a narrative description from Tenant’sarchitect)forTenant’sWorkasitrelatestothePremisestoLandlordforitsapproval,whichapprovalshallnot be unreasonably withheld, conditioned or delayed (“Tenant’s Plans”).Landlord shall have a period often(10)businessdaysafterreceiptofTenant’sPlanswithinwhichtoeitherapprovethoseplansortomakecomments and changes thereon.If Landlord does not object to those plans within that ten (10) businessdayperiod,Landlordshallbedeemedtohaveapprovedthesame.IfLandlordobjectsbymakingreasonablydetailed comments to Tenant’s Plans, Tenant shall revise Tenant’s Plans in accordance with Landlord’scommentsandresubmitthemtoLandlordforapprovalwithinten(10)businessdaysfromthedateofreceiptof written comments from Landlord.Landlord shall then have five (5) business days after receipt of therevised Tenant’s Plans to approve the revised Tenant’s Plans.If Landlord fails to timely object to therevised Tenant’s Plans, Landlord shall be deemed to have approved the same.If Landlord objects bymaking reasonably, detailed comments to the revised portions of Tenant’s Plans, the revision processdescribed herein shall be repeated.Once approved, Tenant shall not make material changes or materialrevisions to any of Tenant’s Plans without submitting the changes and revisions to Landlord for its reviewandapprovalinaccordancewiththeproceduresofthisSection1(b).

(c) PromptlyaftertheapprovalofTenant’sPlans,TenantshallcommenceandthereafterproceeddiligentlywiththecompletionofallTenant’sWorkinaccordancewiththetermshereofand the installation of the fixtures, furniture and equipment as may be necessary to prepare the Premisesfortheoperationofbusiness.UponcompletionofTenant’sWork,andpriortoorcontemporaneouslywithTenant opening for business, Tenant shall deliver to Landlord a copy of a certificate of occupancy for thePremises, if required, together with copies of all other licenses and permits that are necessary for Tenant’suseandoccupancyofthePremises.

Tenantshall,priortocommencementofTenant’sWork,submittoLandlordforitsreviewandapproval(whichshallnotbeunreasonablywithheld,delayedorconditioned)atrueandcompletecopyof a guaranteed maximum price or stipulated sum contract with its general contractor (the “ConstructionContract”).TotheextentTenantdesirestomakeanychangestoTenant’sPlansthatincreasethecostof

Exhibit AtoWorkLetterAgreement

theworkundertheConstructionContract,theincreasedcostsshallbetreatedas“ExcessCosts”andTenantshallcomplywithallprovisionsofthisWorkLetterrelatedthereto.

Inaddition,priortothecommencementofTenant’sWork,TenantshallsubmittoLandlordfor its review and approval (which shall not be unreasonably withheld, delayed or conditioned) a scheduleof values (the “Schedule of Values”) that allocates the cost of Tenant’s Work among various portions ofTenant’sWork.TheScheduleofValuesshallbepreparedinformandsupportedbydatatosubstantiateitsaccuracyasLandlordorLandlord’sarchitectmayreasonablyrequire.

(d) With respect to Tenant’s Work, Landlord shall pay to Tenant an amount equal totheImprovementAllowanceasacontributiontowardsTenant’sWork(andinnoeventshalltheImprovement Allowance be used to purchase furniture, equipment or other personal property); provided,however, that up to 20% of the Improvement Allowance may be applied towards the soft costs of theLandlord’s Work, including architect, space planner, engineers, construction and project managementprofessionals, and permitting and license costs and fees. Landlord shall also provide Tenant, in addition totheImprovementAllowance,anallowanceofupto$12,000fortest-fitsoninitialdesignsandlayoutofthePremises.

2. Disbursement of Improvement Allowance. Disbursement of the Improvement Allowanceshallbemadenotmoreoftenthanonceevery30daysandinnomorethanfour(4)disbursements.Subjectto the other terms of this Work Letter, the amount of each disbursement of the Improvement Allowanceshall be calculated as follows: (i) take that portion of the total costs properly allocable to the completedTenant’s Work as determined by multiplying the percentage completion of each portion of the Tenant’sWorkbythetotalcontractcostsallocatedtothatportionpursuanttotheScheduleofValuesand(ii)subtracttheaggregateofpreviousdisbursements.

If Landlord, in its sole discretion and without any obligation to do so, agrees to make an advanceof the Improvement Allowance instead of the reimbursement to Tenant contemplated herein, Tenant shallhold those funds in trust for the benefit of Landlord and, within two business days after receipt of thosefunds,Tenantshalldisbursethosefundstothepartiesentitled topaymentofthosefunds.

In addition to the other conditions set forth herein, Landlord shall not be obligated to make orauthorize any disbursement of the Improvement Allowance (i) if an Event of Default under this Leaseexists, or (ii) if the work or the materials relating to any costs of Tenant’s Work inexcess of theImprovementAllowance(“ExcessCosts”)havenotbeen(a)fullyperformedordeliveredandincorporatedinto the Premises, as applicable, and (b) fully paid for in full by Tenant or (iii) that portion of Tenant’sWork for which a disbursement of the Improvement Allowance is requested has not been completed asrequiredhereinandthepartiessupplyingorconstructingthatportionofTenant’sWorkhavenotbeenfullypaid forthatportion or(iv)ifanyofthefollowing conditionsarenotsatisfied orcomplied with:

(1) Tenant shall have submitted to Landlord an application for payment (the “Application forPayment”)whichshallcoveraminimumofone calendarmonth;and

(2) The Application for Payment shall indicate the percentage of completion of each portionofTenant’sWorkasoftheendoftheperiodcoveredbytheApplicationforPayment,basedontheScheduleofValues;and

(3) EachApplicationforPaymentshallalsobeaccompaniedbythefollowing,allinformandsubstancereasonablyacceptabletoLandlord:

Exhibit AtoWorkLetterAgreement

(i) a duly executed and acknowledged contractor’s sworn statement showing allsubcontractors and material suppliers that the contractor has engaged, the amountofeachsubcontractandsupplycontract,theamountpreviouslypaidonaccountofeach subcontract and supply contract, the amount requested for any subcontractorandmaterial supplierintheApplicationforPaymentandtheamounttobepaidtothe contractor from the progress payment as well as the balance to complete,together with similar sworn statements from all major subcontractors (that is, asubcontractorwithacontractvalueinexcessof$10,000.00);

(ii) duly executed waivers of mechanics’ and materialmens’ liens from the contractorandallsubcontractorsandmaterialsuppliers,establishingpaymentorsatisfactionofpaymentrequested bythecontractorintheApplicationforPayment;

(iii) awrittencertificationfromTenant’sarchitect,certifying(a)thattheamountofalldisbursementsoftheImprovementAllowanceandTenant’scontributionforExcess Costs to date, including the amount of the disbursement requested by theApplication for Payment, (1) has been earned based on Tenant’s architect’s actualknowledge that the work is on site and in place, (2) is fair, and (b) that allcompletedportionsofTenant’sWorkhavebeencompletedinaccordancewiththeTenant’sPlans;and

(iv) copies of paid invoices or other evidence reasonably satisfactory to LandlordestablishingTenant’sfullpaymentoftheamountsrequestedintheApplicationforPayment.

ThefinalpaymentoftheImprovementAllowanceshallbedisbursedwithin30daysafterallofthefollowingconditionshavebeenmet:(i)alloftheforegoingconditions,withrespecttointerimdisbursements, shall be satisfied, (ii) Tenant shall have fully completed all of the Tenant’s Work inaccordancewiththeTenant’sPlansandinstalledthefixtures,furnitureandequipmentasmaybenecessaryto prepare the Premises for the operation of Tenant’s business, (iii) Tenant is open for business in thePremisesand(iv)TenanthassubmittedinformreasonablysatisfactorytoLandlordeachofthefollowing:

(A) final owner and contractor’s sworn statements listing all subcontractors and material suppliers and thecontractvalueforeach,(B)fullandfinallienwaiverscoveringalllaborandmaterialsincludedinTenant’sWork, (C) a final unconditional certificate of occupancy and copies of all other licenses and permits thatare necessary for Tenant’s Work and/or Tenant’s use and occupancy of the Premises, (D) evidence ofTenant’s insurance required under the Lease, (E) certification from Tenant’s architect, if an architect wasused in connection with Tenant’s Plans, that Tenant’s Work has been fully performed and completed inaccordance with Tenant’s Plans, and (F) any other information that Landlord reasonably requires.If theconditionstoLandlord’spaymentofanyportionoftheImprovementAllowancehavenotbeensatisfiedbythefirstanniversaryoftheRentCommencementDate,thenTenantshallforfeititsrightstothatundisbursedportionoftheImprovementAllowance.

3. FailuretoDisburseImprovementAllowance.IfLandlordfailstotimelyfulfillitsobligation to fund any portion of the Improvement Allowance, Tenant shall be entitled to deliver notice(the“PaymentNotice”)thereoftoLandlordandtoanymortgageortrustdeedholderoftheBuildingwhoseidentity and address have been previously provided to Tenant.If Landlord still fails to fulfill any suchobligationwithinten (10)businessdaysafterLandlord’sreceiptofthePaymentNoticefromTenantandifLandlord fails to deliver notice to Tenant within such ten (10) business day period explaining Landlord’sgood faith reasons that the amounts described in Tenant’s Payment Notice are not due and payable byLandlord (“Payment Refusal Notice”), Tenant shall be entitled to offset the amount set forth in the subjectPaymentNoticeagainstTenant’snextinstallment(s)ofBaseRentduehereunder,untilfullyoffsetby

Exhibit AtoWorkLetterAgreement

Tenant or paid by Landlord.If Landlord delivers a Payment Refusal Notice with respect to any disputedportion of the Improvement Allowance, Landlord and Tenant shall in good faith discuss the issues raisedbyLandlordinthePaymentRefusalNoticeinpersonorbytelephoneduringthefive(5)daysafterTenant’sreceipt of a Payment Refusal Notice. If after those discussions, Landlord and Tenant are not able to agreeon the amounts to be so paid by Landlord, if any, within five (5) days after Tenant’s receipt of a PaymentRefusal Notice, Tenant shall not be entitled to offset such amount and either party shall have the right toseektheresolutionofsuchmatterthroughacourtofcompetentjurisdiction.

4. Miscellaneous.

(a) Tenant’sRepresentative.TenanthasdesignatedKarenBarronasitssolerepresentative with respect to the matters set forth in this Work Letter, who shall have full authority andresponsibilitytoactonbehalfoftheTenantasrequiredinthisWorkLetter.

(b) Landlord’s Representative.Landlord has designated Michele Davis as its solerepresentative with respect to the matters set forth in this Work Letter, who, until further notice to Tenant,shallhavefullauthorityandresponsibilitytoactonbehalfoftheLandlordasrequiredinthisWorkLetter

(c) This Work Letter shall not be deemed applicable to any additional space added totheoriginalPremisesatanytimeorfromtimetotime,whetherbyanyoptionsundertheLeaseorotherwise,or to any portion of the original Premises or any additions thereto in the event of a renewal or extension ofthe initial term of the Lease, whether by any options under the Lease or otherwise, unless expressly soprovidedintheLeaseoranyamendmentorsupplementthereto.

(d) AnynoticesrequiredtobesenthereundershallbeinwritingandsentinthemannersetforthintheLease.

(e) Unless otherwise due to the gross negligence or willful misconduct of Landlord,Landlord shall not be liable in any way for any injury, loss or damage which may occur to any of Tenant’sproperty or installations in the Premises prior to the Rent Commencement Date or during the performanceofTenant’sWork.

Exhibit AtoWorkLetterAgreement

EXHIBITD

ACCEPTANCEOFOCCUPANCY

TENANT:SilkRoadMedical,Inc.,aDelawarecorporation

LANDLORD:ARHCUHPTHMN01,LLC,aDelawarelimitedliabilitycompany

BUILDING:PlymouthWestBusinessCenter

PREMISES:

DATE OFORIGINALLEASE:

This Acceptance of Occupancy is executed by Tenant and Landlord pursuant to the provisions oftheLeasereferencedabove.AlltermscapitalizedbutnotdefinedhereinshallhavetherespectivemeaningsascribedtothemintheLease.

1. TenantacknowledgesthatithasinspectedthePremisesandfindssametobesubstantiallycompleteandnow suitableforTenant’spermitteduse.

2. Tenantand  Landlord  hereby  agree,  that  the  Possession  Date  occurred  on

,2021,andtheRentCommencementDateshallthereforebenolaterthan

, 2022.Landlord and Tenant shall execute an acknowledgment of the actual RentCommencement Date (and the corresponding expiration of the Term) upon the occurrence of the actualRentCommencementDate.

3. This Acceptance of Occupancy may be executed electronically and in any number ofcounterparts, each of which shall be deemed to be an original and all of which, when taken together, shallconstituteoneandthesameagreement.Further,electroniccopiesoftheexecutedcopiesofthisAcceptanceofOccupancymaybedeliveredtothepartiesbyfacsimiletransmissionoremail(includingasanattachmentin .PDF format)and,uponreceipt, shallbedeemed originalsand bindingupon thepartieshereto.

SIGNATURESONFOLLOWINGPAGE

Exhibit D,1

Executedasofthelatestdateofexecutionset forthbelow.

TENANT:

SILK ROAD MEDICAL, INC.,

a Delaware corporation

By:

Name:

Title:

Date:

LANDLORD:

ARHC UHPTHMN01, LLC,

a Delaware limited liability company

By:

Name:

Title:

Date:

Exhibit D,2

EXHIBITE

PARKINGRULES &REGULATIONS

A. TERMSOFPARKING:

1. Tenant or anyone designated in writing by Tenant (for convenience, collectively referredtoas“Permittee”)shallbeentitledtothenon-exclusiveuseoftheparkingspacesattheProjectandfortheexclusiveuseof15parkingspaces(the“ParkingSpaces”)attheProjectnearesttheentranceto the Premises at no cost per space monthly during the initial lease term so long as the Terms ofParkingandtheParkingRulesandRegulationsbelow arecompliedwith.

2. Each Parking Space is to be used for the express purpose of parking one vehicle, and fornootherpurpose.

3. Permittee’s right to use parking spaces at the Project may be terminated in full or in partby Landlord or Tenant at any time upon not less than thirty (30) days’ prior notice to the other,except as otherwise provided in these terms.If Permittee does not comply or has not compliedwith the Parking Rules and Regulations, or any posted or unposted City, State, Federal, or othergovernmental ordinances, laws, rules, or regulations, Landlord or Parking operator may, amongotherthings:

(a) RefusetoallowtheoffendingpersonorvehicletoparkattheProject.

(b) RemoveorcausetoberemovedtheoffendingvehiclefromtheProject,atthevehicleowner’sexpense

4. Landlordreservestherighttomodifyoradoptfromtimetotimereasonableandnondiscriminatory rules and regulations for the parking areas as it deems necessary or prudent fortheoperation, maintenance,repairormanagementthereof.

5. Tenant shall make known the Parking Rules and Regulations to all Permittees and allpersonstowhomTenantprovidesparking.

6. Each Permittee assumes all risks and liability for damage or injury to his/her person,automobile and all other personal property in, on or about the parking areas, and Tenant agrees toholdLandlordharmlesstherefrom.

B. PARKINGRULESANDREGULATIONS:

1. Vehiclesmustbeparkedentirelywithinthestalllinespaintedonthefloor.

2. Alldirectionalsignsandarrowsmustbeobserved.

3. Thespeedlimitwithintheparkingareasis5milesperhour.

4. Parkingisprohibitedinthefollowingareas:

(a) Notstripedforparking;

ExhibitE,1

(b) Aisles;

(c) Where“No Parking”signsareposted;

(d) Inreservedspaces,exceptforthepersonforwhomitisreserved.

5. Everydriverisrequiredtoparkhis/herownvehicle.

6. Washing,waxing,cleaningorservicingofanyvehicleisprohibited.

7. Nodumpingoftrashorashtraysexceptintrashcontainersprovided.

8. EachPermitteewhousestheparkingareasassumesallrisksandliabilityfordamageorinjurytohis/herperson,vehicleandallotherpersonalpropertyin,onorabouttheparkingareas.

ExhibitE,2

EXHIBIT E-1EXCLUSIVEPARKINGSPACES

ExhibitE-1,1

EXHIBITF

FORMOFROOFTOPUSEAGREEMENT

ROOFTOPUSEAGREEMENT

ReferenceisherebymadetothatcertainLeaseAgreementdated(asthesamehasbeen amended to date, the “Lease”), by and between ARHC UHPTHMN01, LLC, a Delaware limitedliability company (“Landlord”), and SILK ROAD MEDICAL, INC., a Delaware corporation (“Tenant”),with respect to the premises located at 14755 27th Avenue, Plymouth, Minnesota (the “Premises”).Allinitiallycapitalizedtermsusedandnototherwisedefinedherein,shallhavethemeaningsgivensuchtermsintheLease.

Subjecttothetermshereof,Tenantshallhavetherighttoinstallcertaincommunicationequipmentdescribed on Exhibit A attached hereto (the “Rooftop Equipment”) on the roof of the Building at thelocation identified on Exhibit B attached hereto (the “Rooftop Equipment Area”) and to maintain andoperate the Rooftop Equipment during the Term, as the same may be extended from time to time, subjecttothefollowing:

1. Landlord shall have the right to impose reasonable requirements on the maintenance andoperation of the Rooftop Equipment, including, without limitation, the requirement that Tenant erectfencing or other barriers to enclose or secure the Rooftop Equipment, the requirement that Tenant installreinforcements necessary to support the weight of the Rooftop Equipment, or the requirement that Tenantinstall roof walk pads to and around the Rooftop Equipment, all at the sole cost and expenses of Tenant.TenantherebyacknowledgesthattheGroundLeaseandothermattersofrecordaffectingtheBuildingmayimpose certain requirements with respect to the maintenance and operation of the Rooftop Equipment andTenantagreestocomplywithanysuchrequirements.

2. Prior to the installation of the Rooftop Equipment and as a condition precedent to theeffectiveness of this Rooftop Use Agreement, the party installing the Rooftop Equipment shall execute anindemnityintheformofExhibitCattachedheretoandshalldeliverevidenceofinsurancetoLandlordwithtypes and amounts of coverages acceptable to Landlord in its commercially reasonable discretion.Asapplicable, Landlord shall be named as an “additional insured” on any such policies of insurance. AtLandlord’s election, such installation shall be supervised by a representative of Landlord and shall beperformed in such a manner so as to minimize disturbance to the tenants and occupants of the Building.Allsuchinstallationshallbedoneinagoodandworkmanlikemannerandincompliancewiththestandardrules and regulations of the Building.Without the express written consent of Landlord, there shall be nopenetrations of the roof of the Building in connection with the installation of the Rooftop Equipment andall cabling required to be installed in connection therewith shall utilize existing access points and conduitsasdirectedbyLandlordortheBuildingmanager.

3. TenantshallberesponsibleforthesatisfactionorpaymentofanyliensagainsttheBuildingin connection with the installation of the Rooftop Equipment.Such liens shall be discharged by Tenantwithin twenty (20) days after notice of filing thereof by bonding, payment or otherwise. If any such liensare not discharged timely, as aforesaid, Landlord may discharge the same for the account of and at theexpense of Tenant by payment, bonding or otherwise, and Tenant shall promptly reimburse Landlord forall documented costs, disbursements, fees and expenses incurred in connection with so discharging suchliens.

4. Provided Tenant provides Landlord with prior written notice, Tenant shall have the rightofaccesstotheRooftopEquipment.

ExhibitF,1

5. Tenant shall, at its sole cost and expense, provide adequate maintenance personnel toensure the safe operation of the Rooftop Equipment. In addition, Tenant shall, at its sole cost and expense,install, maintain and operate all of its equipment used in connection with the Rooftop Equipment in afashion and manner so as not to unreasonably interfere with the use and operation of any:(a) othertelevision or radio equipment in the Building; (b) any Building systems (including, without limitation, theelevators and any present or future electronic control system for any of the Building systems), equipmentoranyotherpartsoftheBuilding;(c)othertransmitting,receivingormastertelevision,telecommunicationsormicrowaveantennaequipmentcurrentlyorhereafterlocatedontheroofoftheBuilding;or(d)anyradiocommunication system now or hereafter used by Landlord or any other licensee or tenant of the Building.If Tenant shall violate the provisions of this Section 5, Tenant agrees to cease all operations from theRooftop Equipment Area (except for testing reasonably approved by Landlord) within three (3) businessdays after receipt of written notice from Landlord until such unreasonable interference has been corrected,to the reasonable satisfaction of Landlord.Landlord shall impose substantially similar obligations on anyother similar licensees or tenants of the roof of the Building and shall seek to enforce such obligations in anon-discriminatoryfashion.

6. Withinten(10)businessdaysaftertheexpirationorearlierterminationoftheTerm,Tenantshall remove the Rooftop Equipment and all wires and cables used in connection with the RooftopEquipment, and shall repair all damage to the Building occasioned by the installation, maintenance orremoval of the Rooftop Equipment.If Tenant fails to timely complete such removal and repair, all sumsincurred by Landlord to complete such work shall be paid by Tenant to Landlord within ten (10) days ofdemandtherefor.

7. In connection with the installation and removal of the Rooftop Equipment, and from timeto time during the term of this Agreement, Landlord shall have the right to have the same inspected byLandlord’s preferred roofing inspection company and within ten (10) days of Landlord’s written demandtherefor, Tenant shall reimburse Landlord for the cost of such inspection.At its sole cost and expense,Tenantshallcomplywithallrecommendationsofsuchinspectionwithrespecttotheinstallation,maintenance or removal of the Rooftop Equipment and, if necessary, Tenant shall reimburse Landlord forthecostofanyfollow-upinspectionsneededtoensureTenant’scompliancewithanysuchrecommendations.

8. Tenant shall have no right to profit from or receive any income in connection with theRooftop Equipment.Tenant shall pay any federal, state and local taxes applicable to the installation anduse of the Rooftop Equipment and Tenant shall procure, maintain and pay for and obtain all fees, permitsandgovernmentalagencylicensesnecessaryinconnectionwiththeinstallation,maintenanceandoperationoftheRooftopEquipment.TenantshallprovideLandlordwith copiesofallsuch permitsorlicenses.

9. Tenant, at its sole cost and expense, shall comply with all present and future laws,regulations or requirements of any applicable governmental agencies, quasi-governmental agencies or firerating bureau relating to the maintenance, use, installation and operation of the Rooftop Equipment;provided, however, that if compliance with such laws, regulations or requirements would require a changeintheconfigurationorlocationoftheRooftopEquipment,suchchangesshallbesubjecttoLandlord’spriorwrittenapproval,nottobeunreasonablywithheld.

10. Landlord makes no representations or warranties whatsoever with respect to the fitness orsuitability of the Building or the Rooftop Equipment Area for the operation of the Rooftop Equipment,including, without limitation, with respect to the quality and clarity of any receptions and transmissions toorfromtheRooftopEquipmentandthepresenceofanyinterferencewithsuchsignals,whetheremanatingfrom the Building or otherwise.Tenant acknowledges and agrees that Tenant’s use of the RooftopEquipmentandRooftopEquipmentAreashallbeatitssolerisk,andTenantabsolvesandfullyreleases

ExhibitF,2

Landlord and all other Landlord Indemnified Parties (collectively, the “Indemnitees”) from any and allsuites,actions,damages,liability,lossesandexpenses(collectively,“Losses”),includinglossordamagetothe Rooftop Equipment, arising out of the Rooftop Equipment or Tenant’s use of the roof of the Buildingin connection therewith, except to the extent attributable to the gross negligence or willful misconduct ofLandlord or its employees, agents or contractors.In addition, Tenant agrees to indemnify, defend, protectand hold harmless each of the Indemnitees from and against any and all Losses resulting as a direct orindirect consequence of the Rooftop Equipment, Tenant’s use of the Rooftop Equipment, the installationor removal of the Rooftop Equipment or Tenant’s use of or access to the roof of the Building or thedesignated chaseway of the Building in connection with the Rooftop Equipment, except to the extentattributabletothegrossnegligenceorwillfulmisconductofLandlordoritsemployees,agentsorcontractors.Tenant, at its sole cost and expense, shall procure and maintain insurance in connection withtheRooftopEquipmentandTenant’sobligationsinconnectiontherewithinthesameamountsandwiththesametypesofcoverageasrequiredunderArticle8oftheLease, asapplicable.

11. Notwithstandinganythingtothecontrarycontainedherein,Tenantshallpaydirectlytotheutility company or governmental authority providing utilities all costs and charges for electricity or othersourcesofenergyconsumedinconnectionwiththeRooftopEquipment,ifany,andLandlordshallhavenoobligationtopayforanyservicesprovidedtotheRooftopEquipmentArea.Totheextentnecessary,Tenantshall install, at its sole cost and expense, a separate electrical meter to monitor Tenant’s electrical usage inconnection with the Rooftop Equipment.Notwithstanding the foregoing, Landlord and Tenant maymutually agree upon an alternative arrangement for Tenant to pay for the electricity or other sources ofenergyconsumedinconnectionwiththeRooftopEquipment.

12. IfTenantfailstocurethebreachofanycovenantorobligationsetforthinthisAgreementwithin ten (10) business days following written notice from Landlord, Landlord shall have the right toterminate Tenant’s rooftop rights specified hereunder upon notice to Tenant and without terminating theLease;provided,however,ifthenatureofTenant’sbreachissuchthatthesamecannotreasonablybecuredwithin a ten (10) business day period, Landlord shall not have the right to terminate Tenant’s rights underthis Agreement if Tenant diligently commences such cure within such ten (10) business day period andthereafterdiligentlyproceedstorectifysuchbreach.

13. TherightsgrantedtoTenantunderthisAgreementarepersonaltotheTenantnamedaboveandmaynotbeassignedortransferredwithouttheexpresswrittenconsentofLandlord,exceptintheeventofanassignmenttoanApprovedTransferee.

14. Asapplicable,Sections20.1through20.26,inclusive,oftheLeaseareincorporatedherein,exceptthatallreferencesto“thisLease”shallbeinterpretedas“thisAgreement.”

[Signaturepagefollows]

ExhibitF,3

INWITNESSWHEREOF,thepartieshaveexecutedthisAgreementasof

.

Landlord:

ARHCUHPTHMN01,LLC,

aDelawarelimitedliabilitycompany

By:

Name:

Title:

Tenant:

SILKROADMEDICAL,INC.,,

aDelawarecorporation

/
By:	/s/ Lucas Buchanan
Name:	Lucas Buchanan
Title:	CFO & COO

ExhibitF,4

ExhibitAtoRooftop UseAgreement

RooftopEquipment

[seeattached]

ExhibitF,5

ExhibitBtoRooftop UseAgreement

RooftopEquipmentArea

[seeattached]

ExhibitF,6

ExhibitCtoRooftop UseAgreement

FormofIndemnity

INDEMNITYAGREEMENT

(shortform)

(“Indemnitor”), hereby agrees to indemnify, defend, protect andhold harmless ARHC UHPTHMN01 LLC, a Delaware limited liability company (“Owner”), and itspartners,officers,members,subsidiaries,employees,agents,shareholders,officers,successorsandassignsfrom and against all claims, actions, causes of action, liabilities, penalties, forfeitures, damages, losses orexpenses (including attorneys’ fees and costs through litigation and all appeals) resulting from death of orinjurytoanypersonordamagetoanyproperty,arisingfromorcauseddirectlybyIndemnitor’sperformance of the Work, including, without limitation, Indemnitor’s failure to comply with any and allregulations, codesorordinancesapplicabletoIndemnitor,thePropertyortheWork.

Any defense obligation arising hereunder on the part of Indemnitor shall be performed by counselacceptable to Owner in its reasonable discretion.If Indemnitor fails to satisfy its obligations hereunderwithin five (5) days of Owner’s written demand therefor, Owner shall be entitled to perform Indemnitor’sobligations hereunder and Indemnitor shall reimburse Owner for any and all expenses incurred by Ownerinconnectiontherewith,includingattorneys’fees,withinfive(5)daysofOwner’swrittendemandtherefor.

As used herein, the “Work” means Indemnitor’s installation of certain rooftop equipment andassociatedcablingattherealpropertylocatedat1475527thAvenue, Plymouth,Minnesota(the“Property”)onbehalfandattheexpenseofSilkRoadMedical, Inc.,atenantattheProperty.

IN WITNESS WHEREOF, Indemnitor has executed this Indemnity Agreement as of the date setforthbelow:

Indemnitor:

By:

Name:

Title:

ExhibitF,7

EXHIBITG

THEBLOCKPLAN

Exhibit G,1

EXHIBIT G-1

WORKSTOBE REMOVED

· AllfencinginstalledwithinthePremises(whichincludespatchinganyholesintheslabafterremoval)

· AllrackinginstalledwithinthePremises(whichincludespatchinganyholesintheslabafterremoval).

[seeattached]

ExhibitG-1,1

SCHEDULE1.1

Definitions

“CommonAreas” means the parkingareas; driveways,roadways andtruckways; pedestriansidewalks and tunnels; courtyards, loading docks, delivery areas and service areas; landscaped areas,detentionbasinsandrelatedcontrolstructuresandfacilities;publicbathroomsandcomfortstations;publicstairways,elevators,escalatorsandcorridors;publiclobbiesandallotherareas,equipmentorimprovements which may be provided by Landlord for the convenience and use in common by Landlordand the tenants of the Project including all heating, ventilating and cooling systems provided by Landlordforalltenants.

“EnvironmentalRequirements”collectivelyshallmeanandincludeallpresentandfuturelawsandany amendments (whether common law, statute, rule, order, regulation or otherwise), permits, and otherrequirements or guidelines of governmental authorities applicable to the Premises and relating to theenvironment and environmental conditions or to any Hazardous Materials (including the ComprehensiveEnvironmental Response Compensation, and Liability Act of 1980, 42 U.S.C. §§ 9601 et seq., the FederalResource Conservation and Recovery Act of 1976, 42 U.S.C. §§ 6901 et seq., the Hazardous MaterialsTransportationAct,49U.S.C.§§ 6901etseq.,theFederalWaterPollution ControlAct,33U.S.C.§§1251etseq.,theCleanAirAct,42U.S.C.§§7401etseq.,theToxicSubstancesControlAct,15U.S.C.

§§ 2601-2629,theSafeDrinkingWaterAct,42U.S.C. §§ 300f-300j,theEmergencyPlanningandCommunity Right-To-Know Act, 42 U.S.C. §§ 1101 et seq., and any so-called “Super Fund” or “SuperLien”law).

“Expenses” shall mean all costs and expenses paid or incurred by or on behalf of Landlord foroperating, maintaining, repairing, upgrading, replacing, and managing the Project, including the costs ofheating, cooling and lighting; rent under any ground lease associated with the Real Estate; snow and iceandtrashremoval;painting;cleaning;landscapingandgroundsmaintenance;windowcleaning;repairandmaintenance(includingLandlord’srepair,maintenanceandserviceobligationssetforthinSection5.2andSection 5.6) of the Project; maintenance and repair of all personal property of Landlord used or useful inconnection with the Project; loading docks and truck docks; fuel, gas, water, sewer, steam, electricity andother utility charges (other than utilities metered directly to and paid by other tenants); commerciallyreasonable insurance and insurance deductibles; security or traffic control forces or equipment (not to beconstruedtorequireLandlordtoprovidethoseservicesorthatequipment);salesandusetaxesonpurchasedgoods; commercially reasonable costs paid to service providers and contractors without premium ormarkup; other labor costs, payroll taxes, insurance, training and wages, salaries and fringe benefits ofpersons engaged in the accounting, operation, management, maintenance or repair of the Project, whichcharges shall be equitably prorated to reasonably approximate time spent on services rendered by theemployees and personnel for the benefit of the Project as compared to time spent on matters unrelated tothe Project (the “Landlord Labor Costs”); allocation of costs and expenses from Landlord’s corporateoffices,includingcostsandexpensesforinformationtechnology,accountingandothercentralizedadministrative functions provided to the Project, which costs and expenses shall be equitably prorated toreflect those for the benefit of the Project as compared to those unrelated to the Project (the “LandlordCentralizedCosts”);amarketratemanagementfeenottoexceed3.5%ofthetotalbaserentpaidbytenantsat the Project (the “Management Fee”); and any other expense or charge which, in accordance withgenerallyacceptedaccountingormanagementprinciples,wouldbeconsideredasanexpenseofoperating,maintaining, upgrading, replacing, managingorrepairingtheProject.

Notwithstandingtheforegoing,forpurposesofthisLease,Expensesshallnot,however,include:

Schedule 1.1,1

1. coststoremedyandcorrectanylatentdefectsoftheconstructionoftheProject(including,without limitation, the original construction or renovation of the Project); and the costs inconnectionwithanyexpansionoftheProject;

2. depreciationandothernon-cashexpenses;

3. financing costs including interest and principal amortization and debts and the costs ofprocuring any financing or refinancing of the Project or Building or any portion thereof(includingpoints,loan fees,titleinsurance,appraisalfeesand recording fees);

4. costsincurredinthesaleoftheProjectorBuilding(oranyportionthereof);

5. paymentstoreserveaccounts,including,withoutlimitation,paymentstoreservespursuanttoanyloanagreementsorcovenants,conditionsandrestrictionsencumberingtheProject;

6. payments applicable to expenses included in Expenses made or owing by tenants or otheroccupantsoftheProject;

7. corporate, income, profits or excess profits taxes assessed upon the income of Landlord,taxes on capital or net worth of Landlord, gift, estate, succession, inheritance, franchise,capital stock taxes and transfer taxes of Landlord, in any case, to the extent relating to theoperationofLandlord'sbusinessasdistinguishedfromTaxesleviedorassessedagainsttheProject;

8. theamountsorproceedsforwhichLandlordisentitledtobereimbursedbyanythirdpartyrelating todamagewherethecostsofrepairofwhichwasincludedinExpenses;

9. leasingcommissions,feesandcosts,advertisingandpromotionalexpensesandothercostsincurred in procuring tenants or in selling any portion of the Project, including, withoutlimitation, legal fees in connection with the negotiation and preparation of letters, dealmemorandums, letters of intent, leases, subleases and/or assignments and other costs andexpenses incurred in connection with the lease, sublease and/or assignment negotiationsandtransactionswithpresentorprospectivetenantsorotheroccupantsoftheProject;

10. anyentertainment,diningortravelexpensesofLandlordforanypurposeandanyflowers,gifts,balloons,etc.providedtoanyentitywhatsoever,including,butnotlimitedto,Tenant,othertenants,employees,vendors,contractors,prospectivetenantsand agents;

11. thecostofany“tenantrelations”parties,eventsorpromotionunlessapprovedbyTenant;

12. tenantallowances,tenantconcessions,workletters,andothercostsorexpenses(includingpermit,licenseandinspectionfees)incurredincompleting,fixturing,furnishing,renovating or otherwise improving, decorating or redecorating space for tenants or otheroccupants of the Building, or vacant, leasable space in the Building, including spaceplanning/interior designfeesforthesame;

13. managementfeesinexcessoftheManagementFee;

14. except as to the Management Fee, any payments made to subsidiaries of Landlord orentitiesundercommoncontrolwithLandlordforservicesorgoodson,toorfortheProject

Schedule 1.1,2

inexcessofmarketratesbeingpaidforsuchservicesorgoodsbylandlordsofComparableBuildings;

15. legalfeesincurredwithrespecttoanynegotiations,claimsagainstordisputeswithexistingor potential tenants, including, without limitation, any fines or costs resulting from andLandlord'sdefaultunderaleasewithatenant;

16. costs incurred to correct any breach of any covenant, agreement, representation, warrantyorindemnitymadebyLandlordinthisLease;

17. costs(includinginconnectiontherewith,allattorneys'feesandcostsofsettlementjudgmentsandpaymentsinlieuthereof)arisingfromclaims,disputesorpotentialdisputesaboutpotentialoractualclaimslitigationorarbitrationproceedingspertainingtoLandlordand/ortheProjectorCommonArea;

18. wages, bonuses, payroll taxes and health benefits and other compensation of employeesabove the grade of Building or property manager or property engineer (or such other titleas may be associated with such job function) or included in the Landlord Labor Costs andany "finder's fees", brokerage commissions, job placement costs or job advertising cost,other than with respect to a receptionist or secretary in the Project office, no more thanonceperyear;

19. any liabilities, costs or expenses associated with or incurred about the removal, enclosure,encapsulation, monitoring or other handling of Hazardous Materialsand the cost ofdefendingclaimsregardingtheexistenceorreleaseofHazardousMaterialsattheProperty(but this exclusion shall not relieve Tenant from liability for any Hazardous Materials forwhich Tenantisotherwiseresponsiblepursuantto theexpresstermsoftheLease);

20. costs of any items for which Landlord is paid or reimbursed by insurance or otherwise(Landlordagreeingtousecommerciallyreasonableeffortstoobtainallinsuranceproceedsandwarrantyclaimstowhichitmaybeentitled);

21. increased insurance premiums or real estate taxes assessed specifically to or against anytenantofaProjectorforwhich Landlordreceivesreimbursementfromany othertenant;

22. costofanyworkorservicestotheextentrelatingtoanypropertyotherthantheProject;

23. any cost representing an amount paid to a person, firm, corporation or other entity relatedto Landlord to the extent materially more than the amount which would have been paid intheabsenceofsuchrelationship;

24. anycostofpaintingordecoratinganyleasedorleasableareaoftheBuildingorProject;

25. unlesspartoftheLandlord’sCentralizedCosts,Landlord'sgeneraloverhead,costsassociatedwiththeoperationofthebusinessofthecorporation,partnershiporotherentitywhich constitutes Landlord, as distinguished from the costs of operation of the Project orCommonArea,including,withoutlimitation,corporateorpartnershipaccountingandlegalmatters, and any other expense not directly attributable and allocated, if appropriate, tooperating and management of the Project (e.g., the activities of Landlord’s officers andexecutivesorprofessionaldevelopmentexpendituresofsuchofficersandexecutives);

Schedule 1.1,3

26. legal and auditing fees which are for the benefit of Landlord only, including, withoutlimitation,collectingdelinquentrents,preparingcorporateorpartnershipreturnsandothercorporate or partnership financial statements, and audits other than those incurred aboutthepreparationofstatementspursuanttoadditionalrentprovisions;

27. interest, penalties, late fees or charges incurred by Landlord due to late payment of anyitem includedinExpenses;

28. costs of repair or other work occasioned by the exercise of eminent domain or "Casualty"(as that term is defined in Section 11.1) to the extent that such costs exceed the amount ofthe deductible or self-insurance then applicable to Landlord's casualty insurance whichdeductibleshallbereasonablebyofficebuildingindustrystandards;

29. costsrelatedtotheviolationoflawsorregulationsexistingasoftheCommencementDate(but specifically excluding legally non-conforming elements of the Project), including thecost of improvements made or other things done in order to bring the Project or particularelements thereof into compliance with any federal, state or local law applicable to thoseelementsasoftheCommencementDate(butspecificallyexcludinglegallynon-conformingelementsoftheProject)andforwhichLandlordisresponsibleformaintainingandrepairing;

30. propertydamagesorpersonalinjurycostsarisingfromthenegligenceorwillfulmisconduct of other tenants in the Building or by the negligence of willful misconduct ofLandlordoritsagents,contractorsoremployees;

31. costs for items considered capital repairs, expenditures, replacements, improvements orequipment related to the Project or Common Area, except for the Permitted Capital Items(asdefinedbelow);

32. rentalsforitems(exceptwhenneededaboutnormalrepairsandmaintenanceofpermanentsystems) which if purchased, rather than rented, would constitute a Capital Item which isspecifically excluded under subsection (25) above (excluding, however, equipment notaffixedto theProjectwhich isused in providing janitorialorsimilarservices);

33. charitableorpoliticalcontributions;

34. expenses about services or other benefits which are not offered to Tenant or for whichTenantischargedfordirectly,butwhichareprovidedtoanothertenantoroccupantoftheProject;

35. costsofothertenants'signs(provided,however,thatLandlordshallbepermittedtoincludeinExpensesanyexpendituresandcostsincurredbyLandlordinthemaintenanceandrepairofamonumentsignstating onlytheProjectaddressand thedirectoryfortheProject);

36. any"above-standard"cleaning,including,butnotlimitedtoconstructioncleanuporspecialcleaningsassociatedwithparties/eventsandspecifictenantrequirementsmorethanserviceprovidedtoTenant,includingrelated trashcollection,removal,haulinganddumping;

37. costs incurred about the sale, financing, refinancing, mortgaging or sale of the Project,including, without limitation, brokerage commissions, attorneys' and accountants' fees,closing costs,titleinsurancepremiums, transfertaxesandinterestcharges;

Schedule 1.1,4

38. allotheritemsforwhichanotherpartycompensatesorpayssothatLandlordshallnotrecoveranyitemofcostmorethanonce;and

39. thecostsofanyinitial"tapfees"orone-timelumpsumsewerorwaterconnectionfeesfortheBuilding.

Expenses shall include the cost of any capital improvements made on or after the CommencementDate which are made or installed either for the purpose of reducing any cost included within Expenses orwhich are required under Governmental Regulations that were not applicable to the Project on the date ofthis Lease, in each case amortized over the useful life of that capital improvement (as determined inaccordance with generally accepted accounting principles), together with interest on the unamortized costof that improvement at the prime rate of interest on the date the cost of that capital improvement wasincurred(the “PermittedCapital Items”).Tothe extent that Expenses include the costs of capitalimprovements,Landlordshallbepermittedtodothesamewithrespecttothecostsofleasingthosecapitalitems.

Landlord shall not (i) make a profit by charging items to Expenses that are otherwise also chargedseparatelytoothersand(ii)collectExpensesfromTenantandallothertenantsintheBuildinginanamountinexcessofwhatLandlordincursfortheitemsincludedinExpenses.

“FairMarketBaseRent”shallmeanthebaserent(exclusiveofAdditionalRentwhichshallbepaidas provided elsewhere in this Lease) at which a willing landlord would lease comparable premises as thePremises in a comparable building as the Building(a “Comparable Building”) (“comparable” beingdetermined on the basis of age, square footage, size and existing tenant improvements, furniture, fixturesand equipment, all taken “as is where is” without imposing any artificial schedule of depreciation orartificial schedule of amortization of useful life) to a willing tenant of comparable creditworthiness as thecreditworthinessofTenantasdeterminedonthelastdayoftheTermimmediatelypriortothecommencement of the applicable Option Period and for the first year of a lease term commensurate withthe Option Period (with effect given to any required increases in base rent set forth in this Lease and anyadditionalrenewalperiodssetforthintheLease)commencingonthelastdayofthethen-currentTermandthat is similar in all material economic and non-economic respects to this Lease.Fair Market Base Rentshall not be reduced by reason of any costs or expenses saved by Landlord by reason of Landlord’s nothaving to find a new tenant for the Premises (including brokerage commissions, costs of improvementsnecessary to prepare the space for that tenant’s occupancy, rent concession, or lost rental income duringanyvacancyperiod)norshallitbeincreasedbyTenant’scostofmovingortheamountoftheunamortizedportionofTenant’salterations.

“ForceMajeure”shallmeanactsofGod,fire,earthquake,flood,explosion,actionsoftheelements,war, invasion, insurrection, riot, mob violence, sabotage, inability to procure or general shortage of labor,equipment, facility, materials or supplies in the open market, failure of transportation, strikes, lock outs,actions of labor unions, condemnation, requisition, laws, governmental action or inaction, orders ofgovernment or civil or military or naval authorities or any cause, whether similar or dissimilar to theforegoing, not within their reasonable control of, as applicable, Landlord or the Landlord IndemnifiedParties, or Tenant or the Tenant Parties.In no event, however, shall a lack of money be grounds for ForceMajeure.

“Governmental Regulations” shall mean all instruments of record that burden the Real Estate andalllaws,requirements,rules,orders,codesandregulationsofthefederal,stateandmunicipalgovernmentsor other duly constituted public authority, and of any board of insurance regulators or underwriters, healthofficer,firemarshal,and/orbuildinginspectoraffectingorrelatingtothePremises,thebusinessconductedinthePremisesandTenant’suseofthePremisesincludingthemakingofAlterations.

Schedule 1.1,5

“HazardousMaterials”means,atanytime,(1)asbestosandanyasbestoscontainingmaterial,

(2) any substance that is then defined or listed in, or otherwise classified pursuant to, any EnvironmentalRequirements or any applicable laws or regulations as a “hazardous substance”, “hazardous material”,“hazardous waste”, “infectious waste”, “toxic substance”, “toxic pollutant” or any other formulationintended to define, list, or classify substances by reason of deleterious properties such as ignitability,corrosivity, reactivity, carcinogenicity, toxicity, reproductive toxicity, or “EP toxicity”, (3) petroleumproducts and waste, (4) polychlorinated biphenyls, (5) urea formaldehyde, (6) radon gas, (7) radioactivematter, (8) medical waste, (9) mold, or (10) any product that is inflammable, combustible, corrosive,caustic, poisonous,explosiveorhazardous.

As defined in Environmental Requirements, Tenant is and shall be deemed to be the “operator” ofTenant’s “facility” and the “owner” of all Hazardous Materials brought on or generated at the Premises byTenant, its subtenants, assignees, agents, employees, contractors or invitees, and the wastes, by-products,orresiduesgenerated, resulting,orproducedtherefrom.

“LandlordIndemnifiedParties”shallmean,collectively,Landlord,itsaffiliatesandtheirrespectivedirectors,officers,shareholders,members,managers,partners,agents,employees,representatives,successorsandassigns.

“LeaseYear”shallmeaneachconsecutive12-monthperiodbeginningwiththeRentCommencementDate,exceptthatiftheRentCommencementDateisotherthanthefirstdayofacalendarmonth, then the first Lease Year shall be the period from the Rent Commencement Date through the date12monthsafterthelastdayofthecalendarmonthinwhichtheRentCommencementDateoccurs,andeachsubsequentLeaseYearshallbetheperiod of12 monthsfollowing thelastday ofthepriorLeaseYear.

“MetropolitanArea”shallmeantheareacoveredbyHennepin,RamseyandDakotacounties,eachlocatedintheStateofMinnesota.

“Taxes”shallmeanalltaxesandassessments,specialorordinary,andallotherimpositionsofeverykind and nature whatsoever (including any transit tax, sewer rents, impact fee, school district assessmentsandtaxesbasedongrossreceiptsofrentorpaymentsreceivedforservices),whichmaybelevied,assessed,charged or imposed upon the Project or any personal property owned or leased by Landlord and usedtherewith, together with all fees and costs incurred by Landlord for the purpose of contesting or protestingthe amounts or rates of Taxes.Taxes shall not include any income tax (or tax that Landlord determines inits reasonable discretion is a successor thereto) or any excess profit, franchise, capital stock, estate orinheritance tax payable by Landlord except as specifically provided in the next sentence.If at any timeduring the Term the method of taxation prevailing at the Commencement Date shall be altered so that anyneworadditionaltaxassessment,levy,imposition,orcharge,oranypartthereof,shallbeimposedinplaceorpartlyinplaceofanyTaxesorcontemplatedincreasetherein,thenallofthosetaxes,assessments,levies,impositionsorchargesshallbedeemedtobeTaxesforthepurposehereof.IfanyassessmentsconstitutingTaxesareormaybepayabletotheapplicabletaxingauthorityininstallmentsovermorethanonecalendaryearthen,totheextentpermittedby itslender,LandlordshallcausethoseTaxestobepaidininstallments,and only those installments (plus any interest thereon) payable during a calendar year in which the Termfalls shall be included in Taxes for that calendar year.Otherwise, Taxes “for” a calendar year shall bedeemed to refer, at Landlord’s option, either to Taxes payable in that calendar year or to Taxes levied,assessed or otherwise accrued or imposed for that calendar year without regard to when those Taxes arepayable.Taxesshallnotincludeinterestandpenaltiesforlatepayment,excepttotheextentthatthepenaltyorinterestisattributabletoTenant’sfailuretoremitonatimelybasisTenant’sProRataShareofTaxes.Ifthe interest or penalty is attributable solely to Tenant’s failure to remit Tenant’s Pro Rata Share of Taxes,thenTenantshallbesolelyresponsibleforpaymentofthatinterestand/orpenalty.Iftheinterestorpenalty

Schedule 1.1,6

is attributable to failure by Tenant and to other tenants’ failure to pay their pro rata share of Taxes, Tenantshallpayitsproportionateshareoftheamountofthatinterestand/orpenalty.

“TenantParties”shallmean,collectively,Tenant’ssubtenants,assignees,agents,licensees,contractors, subcontractors,concessionairesandemployees.

“Tenant’s Pro Rata Share” shall mean the percentage obtained by dividing the Rentable SquareFeet within the Premises by the total Rentable Square Feet in the Project; except that (i) the Project’sRentable Square Footage shall be reduced by any below grade space not used for normal industrial and/orofficepurposesand,(ii)ifanyportionoftheProjectisexemptfromTaxes,theRentableSquareFeetintheexemptportionshallnotbeincludedintheRentableSquareFeetoftheProjectforpurposesofdeterminingTenant’s responsibility for paying its share of Taxes with the understanding that the tenant or occupant ofthe exempt space shall be entitled to receive the full benefit of the exemption.Tenant’s Pro Rata SharemaybeadjustedfromtimetotimeuponnoticefromLandlordonaccountofanyreductiontoorexpansionofthePremisesortheProject,whetherfromcasualty,condemnation,alteration orotherwise.

Schedule 1.1,7

SCHEDULE15

PermittedChemicals

ProductName	Supplier	CAS#	ContainerType	Volume/Container	UOM	Typical Qty onHand	State	Flammable	Reactive	Corrosive	Primary UseLocation
DeionizedWater		7732-18-5	PlasticBottle	1	L	10	Liquid	No	No	No	CER
Dymax208-CTH-F	Dymax		PlasticBottle	10	ml	500	Liquid	No	No	No	CER
IsopropylAlcohol,70%		67-63-0	PlasticBottle	1	gal	10	Liquid	Yes	No	No	CER
IsopropylAlcohol,99%		67-63-0	PlasticBottle	1	gal	10	Liquid	Yes	No	No	CER
Loctite4011			PlasticBottle	0.7	oz	7	Liquid	Yes	No	No	CER
ThinnerTPV 2		123-86-4	MetalCan	1	L	2	Liquid	Yes	No	No	CER
Spor-KlenzReadyToUse	Steris		PlasticBottle	850	ml	1700	Liquid	No	No	Yes	CER
Liquinox CriticalCleaningDetergent			PlasticBottle	1	qt	2	Liquid	No	No	No	IQC
Bleach			PlasticBottle	3	qt	12	Liquid	No	No	No	R&D
Glycerin		56-81-5	PlasticBottle	4	L	4	Liquid	Yes	No	No	R&D
UniversalMoldRelease		115-10-6	AerosolCan	14	floz	28	Gas	Yes	No	No	R&D
Unilube	Griffon	8042-47-5	PlasticBottle	100	ml	100	Liquid	No	No	No	R&D
Magnalube-G	Magnalube		Tube	0.75	oz	0.75	Liquid	Yes	No	No	R&D
CloroxHealthcareBleachGermicidalCleaner			PlasticBottle	1	qt	5	Liquid	No	Yes	No	RMALab
CidexOPA			PlasticBottle	1	gal	2	Liquid	No	No	No	RMALab
MetricideDualEnzymaticDetergent			PlasticBottle	1	gal	1	Liquid	No	No	No	RMALab
MetricideOPAPlus			PlasticBottle	1	gal	2	Liquid	No	No	No	RMALab
SpilfyterLiquidAcidNeutralizer			PlasticBottle	1	gal	4	Liquid	No	No	No	RMALab
TAPPlatinumSiliconePartA			PlasticBottle	8	oz	8oz	Liquid	No	No	No	R&D
Krytox1525	McMaster		PlasticBottle	9	oz	18 oz	Liquid	No	No	No	CER
TAPPlatiniumSiliconePartB			PlasticBottle	8	oz	8oz	Liquid	No	No	No	R&D
SiliconeSolutionsSiliconeGel(PartA/B)			PlasticBottle	8	oz	16 oz	Liquid	No	No	No	R&D
MoldBuilderLiquidLatexRubber			MetalCan	16	oz	16 oz	Liquid	No	No	No	R&D
LpHse	Steris		PlasticBottle	1	gal	1	Liquid	Yes	No	Yes	CER
VespheneIise	Steris		PlasticBottle	1	gal	1	Liquid	No	No	Yes	CER

Schedule 1.1,1

EX-31.1

Exhibit 31.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER

Pursuant to

Securities Exchange Act Rules 13a-14(a) and 15d-14(a),

As Adopted Pursuant to

Section 302 of the Sarbanes-Oxley Act of 2002

I, Erica J. Rogers, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q of Silk Road Medical, 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 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)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and we 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 consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b.Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c.    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

d.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 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.

/s/ Erica J. Rogers

Erica J. Rogers

President, Chief Executive Officer and Director

(Principal Executive Officer)

Date: August6, 2021

EX-31.2

Exhibit 31.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER

Pursuant to

Securities Exchange Act Rules 13a-14(a) and 15d-14(a),

As Adopted Pursuant to

Section 302 of the Sarbanes-Oxley Act of 2002

I, Lucas W. Buchanan, certify that:

1.I have reviewed this Quarterly Report on Form 10-Q of Silk Road Medical, 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 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)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and we 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 consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b.    Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c.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

d.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 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.

/s/ Lucas W. Buchanan

Lucas W. Buchanan

Chief Financial Officer and Chief Operating Officer

(Principal Financial and Accounting Officer)

Date: August6, 2021

EX-32.1

Exhibit 32.1

CERTIFICATIONS OF CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER

PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Quarterly Report of Silk Road Medical, Inc. (the “Company”) on Form 10-Q for the period ended June 30, 2021, as filed with the Securities and Exchange Commission (the “Report”), Erica J. Rogers, as Chief Executive Officer of the Company, and Lucas W. Buchanan, as Chief Financial Officer and Chief Operating Officer of the Company, each hereby certifies, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. Section 1350), to his knowledge:

1.The Report, fully complies with the requirements of Section 13(a) or Section 15(d) of the Exchange Act of 1934, as amended; and

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

/s/ Erica J. Rogers

Erica J. Rogers

President, Chief Executive Officer and Director

(Principal Executive Officer)

Date: August6, 2021

/s/ Lucas W. Buchanan

Lucas W. Buchanan

Chief Financial Officer and Chief Operating Officer

(Principal Financial and Accounting Officer)

Date: August6, 2021

This certification accompanies the Form 10-Q 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 Silk Road Medical, Inc. 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-Q), irrespective of any general incorporation language contained in such filing.

XML

Cover Page - shares	6 Months Ended
	Jun. 30, 2021	Jul. 31, 2021
Cover [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Jun. 30, 2021
Current Fiscal Year End Date	--12-31
Document Transition Report	false
Entity File Number	001-38847
Entity Registrant Name	SILK ROAD MEDICAL, INC.
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	20-8777622
Entity Address, Address Line One	1213 Innsbruck Dr.
Entity Address, City or Town	Sunnyvale
Entity Address, State or Province	CA
Entity Address, Postal Zip Code	94089
City Area Code	408
Local Phone Number	720-9002
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Title of 12(b) Security	Common Stock
Trading Symbol	SILK
Security Exchange Name	NASDAQ
Entity Common Stock, Shares Outstanding		34,683,795
Entity Central Index Key	0001397702
Document Fiscal Year Focus	2021
Document Fiscal Period Focus	Q2
Amendment Flag	false

XML

Condensed Balance Sheets - USD ($) $ in Thousands	Jun. 30, 2021	Dec. 31, 2020
Current assets:
Cash and cash equivalents	$ 101,849	$ 69,466
Short-term investments	26,293	78,016
Accounts receivable, net	11,747	9,070
Inventories	12,771	9,989
Prepaid expenses and other current assets	5,877	6,787
Total current assets	158,537	173,328
Property and equipment, net	3,428	2,844
Restricted cash	310	310
Other non-current assets	5,931	2,832
Total assets	168,206	179,314
Current liabilities:
Accounts payable	1,958	2,598
Accrued liabilities	14,705	16,957
Total current liabilities	16,663	19,555
Long-term debt	48,614	48,533
Other liabilities	6,791	3,726
Total liabilities	72,068	71,814
Commitments and contingencies (Note 7)
Preferred stock, $0.001 par value
Shares authorized: 5,000,000 at June 30, 2021 and December 31, 2020 Shares issued and outstanding: none at June 30, 2021 and December 31, 2020
Common stock, $0.001 par value
Shares authorized: 100,000,000 at June 30, 2021 and December 31, 2020 Shares issued and outstanding: 34,623,409 and 34,249,649 at June 30, 2021 and December 31, 2020, respectively	35	34
Additional paid-in capital	356,224	346,318
Accumulated other comprehensive income	3	39
Accumulated deficit	(260,124)	(238,891)
Total stockholders’ equity	96,138	107,500
Total liabilities and stockholders’ equity	$ 168,206	$ 179,314

XML

Condensed Balance Sheets (Parenthetical) - $ / shares	Jun. 30, 2021	Dec. 31, 2020
Preferred stock, $0.001 par value
Preferred shares (in USD per share)	$ 0.001	$ 0.001
Preferred shares authorized (in shares)	5,000,000	5,000,000
Preferred stock, shares issued (in shares)	0	0
Preferred stock, shares outstanding (in shares)	0	0
Common stock, $0.001 par value
Common stock, par value (in USD per share)	$ 0.001	$ 0.001
Common stock, shares authorized (in shares)	100,000,000	100,000,000
Common stock, shares issued (in shares)	34,623,409	34,249,649
Shares outstanding (in shares)	34,623,409	34,249,649

XML

Condensed Statements of Operations and Comprehensive Loss - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Condensed Statements of Operations and Comprehensive Loss [Abstract]
Revenue	$ 26,456	$ 15,094	$ 48,509	$ 34,027
Cost of goods sold	6,598	5,336	12,137	10,586
Gross profit	19,858	9,758	36,372	23,441
Operating expenses:
Research and development	7,261	3,393	12,744	6,522
Selling, general and administrative	22,549	15,758	43,743	35,450
Total operating expenses	29,810	19,151	56,487	41,972
Loss from operations	(9,952)	(9,393)	(20,115)	(18,531)
Interest income	47	299	142	702
Interest expense	(628)	(1,203)	(1,250)	(2,406)
Other income (expense), net	(6)	(56)	(10)	(59)
Net loss	(10,539)	(10,353)	(21,233)	(20,294)
Other comprehensive loss:
Unrealized gain (loss) on investments, net	(3)	(126)	(36)	314
Net change in other comprehensive loss	(3)	(126)	(36)	314
Net loss and comprehensive loss	$ (10,542)	$ (10,479)	$ (21,269)	$ (19,980)
Net loss per share, basic and diluted	$ (0.31)	$ (0.32)	$ (0.62)	$ (0.63)
Weighted average common shares used to compute net loss per share, basic and diluted	34,534,099	32,682,360	34,435,812	32,010,335

XML

Condensed Statements of Stockholders' Equity - USD ($) $ in Thousands	Common Stock	Additional Paid-in Capital	Accumulated Deficit	Accumulated Other Comprehensive Income	Total
Beginning balance (in shares) at Dec. 31, 2019	31,255,267
Beginning balance at Dec. 31, 2019	$ 31	$ 263,384	$ (191,526)	$ 2	$ 71,891
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Exercise of stock options (in shares)	140,370
Exercise of stock options		274			274
Stock-based compensation		1,293			1,293
Net loss			(9,941)		(9,941)
Unrealized gain (loss) on investments, net				440	440
Ending balance (in shares) at Mar. 31, 2020	31,395,637
Ending balance at Mar. 31, 2020	$ 31	264,951	(201,467)	442	63,957
Beginning balance (in shares) at Dec. 31, 2019	31,255,267
Beginning balance at Dec. 31, 2019	$ 31	263,384	(191,526)	2	71,891
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net loss					(20,294)
Ending balance (in shares) at Jun. 30, 2020	33,610,099
Ending balance at Jun. 30, 2020	$ 34	338,550	(211,820)	316	127,080
Beginning balance (in shares) at Mar. 31, 2020	31,395,637
Beginning balance at Mar. 31, 2020	$ 31	264,951	(201,467)	442	63,957
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Exercise/issuance of common stock (in shares)	1,923,076
Exercise/issuance of common stock	$ 2	70,541			70,543
Exercise of stock options (in shares)	265,467
Exercise of stock options	$ 1	603			604
Issuance of common stock under employee stock purchase plan (in shares)	25,919
Issuance of common stock under employee stock purchase plan		801			801
Stock-based compensation		1,654			1,654
Net loss			(10,353)		(10,353)
Unrealized gain (loss) on investments, net				(126)	(126)
Ending balance (in shares) at Jun. 30, 2020	33,610,099
Ending balance at Jun. 30, 2020	$ 34	338,550	(211,820)	316	127,080
Beginning balance (in shares) at Dec. 31, 2020	34,249,649
Beginning balance at Dec. 31, 2020	$ 34	346,318	(238,891)	39	107,500
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Exercise of stock options (in shares)	163,151
Exercise of stock options		848			848
Issuance of common stock upon release of restricted stock units (in shares)	25,490
Stock-based compensation		3,533			3,533
Net loss			(10,694)		(10,694)
Unrealized gain (loss) on investments, net				(33)	(33)
Ending balance (in shares) at Mar. 31, 2021	34,438,290
Ending balance at Mar. 31, 2021	$ 34	350,699	(249,585)	6	101,154
Beginning balance (in shares) at Dec. 31, 2020	34,249,649
Beginning balance at Dec. 31, 2020	$ 34	346,318	(238,891)	39	$ 107,500
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Exercise of stock options (in shares)					318,594
Net loss					$ (21,233)
Ending balance (in shares) at Jun. 30, 2021	34,623,409
Ending balance at Jun. 30, 2021	$ 35	356,224	(260,124)	3	96,138
Beginning balance (in shares) at Mar. 31, 2021	34,438,290
Beginning balance at Mar. 31, 2021	$ 34	350,699	(249,585)	6	101,154
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Exercise of stock options (in shares)	155,443
Exercise of stock options	$ 1	1,030			1,031
Issuance of common stock upon release of restricted stock units (in shares)	2,792
Issuance of common stock under employee stock purchase plan (in shares)	26,884
Issuance of common stock under employee stock purchase plan		1,086			1,086
Stock-based compensation		3,409			3,409
Net loss			(10,539)		(10,539)
Unrealized gain (loss) on investments, net				(3)	(3)
Ending balance (in shares) at Jun. 30, 2021	34,623,409
Ending balance at Jun. 30, 2021	$ 35	$ 356,224	$ (260,124)	$ 3	$ 96,138

XML

Condensed Statements of Cash Flows - USD ($) $ in Thousands	6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020
Cash flows from operating activities
Net loss	$ (21,233)	$ (20,294)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization expense	482	368
Stock-based compensation expense	6,942	2,947
Amortization of premiums on investments, net	387	57
Amortization of debt discount and debt issuance costs	80	23
Amortization of right-of-use asset	373	295
Non-cash interest expense	(7)	167
Loss on disposal of property and equipment		51
Change in provision for doubtful accounts receivable		(9)
Provision for excess and obsolete inventories	50	105
Changes in assets and liabilities:
Accounts receivable	(2,677)	857
Inventories	(456)	(1,404)
Prepaid expenses and other current assets	(3,227)	(986)
Other assets	(74)	117
Accounts payable	(833)	262
Accrued liabilities	(482)	(5,925)
Other liabilities	(333)	(7)
Net cash used in operating activities	(21,008)	(23,376)
Cash flows from investing activities
Purchases of property and equipment	(874)	(479)
Purchases of investments		(23,606)
Proceeds from maturity of investments	51,300	9,180
Net cash provided by (used in) investing activities	50,426	(14,905)
Cash flows from financing activities
Proceeds from public offerings, net of underwriting discount, commissions and offering costs paid		70,863
Proceeds from issuance of common stock	2,965	1,679
Net cash provided by financing activities	2,965	72,542
Net change in cash, cash equivalents and restricted cash	32,383	34,261
Cash, cash equivalents and restricted cash, beginning of period	69,776	39,491
Cash, cash equivalents and restricted cash, end of period	102,159	73,752
Supplemental disclosure of cash flow information
Cash paid for interest	1,177	2,216
Noncash investing and financing activities:
Accounts payable and accrued liabilities for purchases of property and equipment	283	100
Offering costs in accrued liabilities		$ 320
Right-of-use asset obtained in exchange for lease obligation	$ 3,398

XML

Formation and Business of the Company	6 Months Ended
	Jun. 30, 2021
Balance Sheet Components [Abstract]
Formation and Business of the Company	1.    Formation and Business of the Company The Company Silk Road Medical, Inc. (the “Company”) was incorporated in the state of Delaware on March 21, 2007. The Company has developed a technologically advanced, minimally-invasive solution for patients with carotid artery disease who are at risk for stroke. The Company's portfolio of TCAR products enable a new procedure, referred to as transcarotid artery revascularization, or TCAR, that combines the benefits of endovascular techniques and surgical principles. The Company manufactures and sells in the United States its portfolio of TCAR products which are designed to provide direct access to the carotid artery, effective reduction in stroke risk throughout the procedure, and long-term restraint of carotid plaque. The Company commercialized its products in the United States in late 2015. Public Offering In May 2020, the Company completed an underwritten public offering of 6,808,154 shares of its common stock, of which 1,923,076 shares were offered for sale by the Company and the remaining 4,885,078 shares were offered for sale by certain selling stockholders, at a public offering price of $39.00 per share. The Company received cash proceeds of approximately $70,543,000 after deducting underwriting discounts and commissions of approximately $3,750,000 and expenses of approximately $707,000. Also in May 2020, the underwriters fully exercised their option to purchase 1,021,223 additional shares of common stock from the selling stockholders. The Company did not receive any of the proceeds from the sale of the shares of its common stock by the selling stockholders.

XML

Summary of Significant Accounting Policies

6 Months Ended

Jun. 30, 2021

Summary of Significant Accounting Policies [Abstract]

Summary of Significant Accounting Policies

2.    Summary of Significant Accounting Policies

Basis of Preparation

The accompanying financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America, or U.S. GAAP, and applicable rules and regulations of the Securities and Exchange Commission, or SEC, regarding interim financial reporting. As permitted under those rules, certain footnotes or other financial information that are normally required by U.S. GAAP have been condensed or omitted, and accordingly the balance sheet as of December 31, 2020, and related disclosures, have been derived from the audited financial statements at that date but does not include all of the information required by U.S. GAAP for complete financial statements. These unaudited condensed financial statements have been prepared on the same basis as the Company’s annual financial statements and, in the opinion of management, reflect all adjustments (consisting only of normal recurring adjustments) that are necessary for the fair statement of the Company’s condensed financial information. The results of operations for the three and six months ended June 30, 202 are not necessarily indicative of the results to be expected for the year ending December 31, 2021 or for any other interim period or for any other future year.

The accompanying interim unaudited condensed financial statements and related financial information should be read in conjunction with the audited financial statements and the related notes thereto for the year ended December 31, 2020 included in the Company's annual report on Form 10-K filed with the SEC on March 1, 2021.

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 judgment when making estimates related to provisions for accounts receivable and excess and obsolete inventories, the valuation of deferred tax assets, the reserves for sales returns, and stock-based compensation. 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. Although these estimates are based on the Company’s knowledge of current events and actions it may undertake in the future, actual results may ultimately materially differ from these estimates and assumptions.

Due to the coronavirus (“COVID-19”) pandemic, there has been continued uncertainty and disruption in the global economy and financial markets. While some of the uncertainties began to lift throughout the first half of 2021, new virus variants, and increased infection rates during this period make the current COVID-related environment highly volatile and uncertain. The Company is not aware of any specific event or circumstance that would require an update to its estimates or judgments or a revision of the carrying value of its assets or liabilities as of June 30, 2021. The Company has also considered information available to it as of the date of issuance of these financial statements and is not aware of any specific events or circumstances that would require an update to its estimates or judgments, or a revision to the carrying value of its assets or liabilities. These estimates may change as new events occur and additional information becomes available. Actual results could differ materially from these estimates.

Fair Value of Financial Instruments

The Company has evaluated the estimated fair value of its financial instruments as of June 30, 2021 and December 31, 2020. The carrying amounts of certain of the Company’s financial instruments, which include cash equivalents, short-term investments, restricted cash, accounts receivable, accounts payable and accrued liabilities approximate their respective fair values because of the short-term nature of these instruments. Management believes that its long-term debt bears interest at the prevailing market rates for instruments with similar characteristics (Level 2 within the fair value hierarchy); accordingly, the carrying value of this instrument approximates its fair value.

Cash, Cash Equivalents and Restricted Cash

The Company considers all highly liquid investments with an original maturity of three months or less at the time of purchase to be cash equivalents. Cash equivalents are considered available-for-sale marketable securities and are recorded at fair value, based on quoted market prices. As of June 30, 2021 and December 31, 2020, the Company’s cash equivalents are entirely comprised of investments in money market funds.

Restricted cash as of June 30, 2021 and December 31, 2020 consists of a letter of credit of $310,000 representing collateral for the Company's facility lease in California.

Investments

Short-term investments consist of debt securities classified as available-for-sale and have original maturities greater than 90 days, but less than one year as of the balance sheet date. Long-term investments have maturities greater than one year as of the balance sheet date. All investments are recorded at fair value based on the fair value hierarchy. Money market funds and United States treasury bills with an original maturity less than 90 days are classified within Level 1 of the fair value hierarchy, and commercial paper, corporate bonds/notes, United States Government securities, and asset-backed securities are classified within Level 2 of the fair value hierarchy. Unrealized gains and losses, deemed temporary in nature, are reported as a separate component of accumulated other comprehensive income (loss). The cost of available-for-sale investments sold is based on the specific-identification method. Realized gains and losses are included in earnings and are derived for specific-identification method for determining the costs of investments sold and were insignificant for the three and six months ended June 30, 2021 and 2020. Amortization of premiums and accretion of discounts are reported as a component of interest income.

A decline in the fair value of any security below cost that is deemed other than temporary results in a charge to earnings and the corresponding establishment of a new cost basis for the investment. The Company evaluates the securities in an unrealized loss position for expected credit losses by considering factors such as historical experience, market data, issuer-specific factors, current economic conditions and credit ratings.

Concentration of Credit Risk, and Other Risks and Uncertainties

The Company is subject to risks related to public health crises such as the global pandemic associated with COVID-19, which has spread to most countries and all 50 states within the United States. The COVID-19 outbreak has negatively impacted, and may continue to negatively impact the Company’s operations, its revenue and overall financial condition by significantly decreasing the number of TCAR procedures performed. The number of TCAR procedures performed, similar to other surgical procedures, has significantly decreased as health care organizations globally prioritized the treatment of

patients with COVID-19. For example, during 2020, in the United States, governmental authorities recommended, and in certain cases required, that elective, specialty and other procedures and appointments, be suspended or canceled to focus limited resources and personnel and hospital capacity toward the treatment of COVID-19 and to avoid exposing patients to COVID-19. These measures and challenges will likely continue for the duration of the pandemic, which is uncertain, and will continue to negatively impact the Company’s revenue while the pandemic continues. While some of these restrictions began to lift throughout the first half of 2021, new virus variants, and increased infection rates during this period make the current COVID-related environment highly volatile and uncertain.

Financial instruments that potentially subject the Company to credit risk consist of cash and cash equivalents, investments and accounts receivable to the extent of the amounts recorded on the balance sheet. Cash, cash equivalents, and investments are deposited in financial institutions which, at times, may be in excess of federally insured limits. Cash equivalents are invested in highly rated money market funds and United States treasury bills. The Company invests in a variety of financial instruments, such as, but not limited to, commercial paper, corporate bonds/notes, United States Government securities, asset-backed securities and, by policy, limits the amount of credit exposure with any one financial institution or commercial issuer. The Company has not experienced any material losses on its deposits of cash and cash equivalents or investments during the three and six months ended June 30, 2021 and 2020.

The Company’s accounts receivable are due from a variety of health care organizations in the United States. At June 30, 2021 and December 31, 2020, no customer represented 10% or more of the Company’s accounts receivable. For the three and six months ended June 30, 2021 and 2020, there were no customers that represented 10% or more of revenue.

The Company provides for uncollectible amounts when specific credit problems are identified. In doing so, the Company analyzes historical bad debt trends, customer credit worthiness, current economic trends and changes in customer payment patterns when evaluating the adequacy of the allowance for expected credit losses on customer accounts.

The Company manufactures certain of its commercial products in-house. Certain of the Company’s product components and sub-assemblies continue to be manufactured by sole suppliers, the most significant of which is the ENROUTE Transcarotid Stent System, manufactured by Cordis Corporation. Disruption in component or sub-assembly supply from these manufacturers or from in-house production would have a negative impact on the Company’s financial position and results of operations.

The Company is subject to certain risks, including that its devices may not be approved or cleared for marketing by governmental authorities or be successfully marketed. There can be no assurance that the Company’s products will achieve widespread adoption in the marketplace, nor can there be any assurance that existing devices or any future devices can be developed or manufactured at an acceptable cost and with appropriate performance characteristics. The Company is also subject to risks common to companies in the medical device industry, including, but not limited to, new technological innovations, dependence upon government and third-party payers to provide adequate coverage and reimbursement, dependence on key personnel and suppliers, protection of proprietary technology, product liability claims, and compliance with government regulations.

Existing or future devices developed by the Company may require approvals or clearances from the FDA or international regulatory agencies. In addition, in order to continue the Company’s operations, compliance with various federal and state laws is required. If the Company were denied or delayed in receiving such approvals or clearances, it may be necessary to adjust operations to align with the Company’s currently approved portfolio. If clearance for the products in the current portfolio were withdrawn by the FDA, this would have a material adverse impact on the Company.

Voluntary Recall

In January and February 2021, the Company announced the voluntary recall of certain lots of its ENROUTE Transcarotid Stent System, manufactured by one of its third-party suppliers, Cordis. The decision to recall these lots was based on complaints received about tips detaching from the stent delivery system as well as internal testing that the Company conducted. The Company believes the root cause of the detachment was a single operator at Cordis, who, over a specific timeframe, produced lots in which a small number of units were not reliably manufactured to specification.

As a result of the voluntary recall the Company reflected a current asset of $4,160,000 on its balance sheet as of December 31, 2020, relating to the replacement lots and other direct costs to be received from Cordis. This amount includes $2,227,000 of recalled ENROUTE stent delivery systems held in the Company's inventory as of December 31, 2020, $1,696,000 of ENROUTE stent delivery systems in the process of being returned from its customers and other direct costs of $237,000. In addition, the Company established an accrual of $1,696,000 relating to its obligation to provide replacement ENROUTE stent delivery systems to its customers as of December 31, 2020. As of June 30, 2021, the Company has a current asset of $605,000 on its balance sheet, relating to the replacement lots and other direct costs to be received from Cordis. This amount comprises a receivable of $262,000 relating to both recalled ENROUTE stent delivery systems held in the Company’s inventory as of June 30, 2021 and pending replacement from Cordis, $11,000 of ENROUTE stent delivery systems to be returned from its customers and other direct costs of $332,000. In addition, as of June 30, 2021, the Company has a remaining accrual of $21,000 relating to its obligation to provide replacement ENROUTE stent delivery systems to its customers.

Leases

The Company accounts for leases in accordance with Accounting Standards Codification (“ASC”) 842, "Leases." The Company considers if an arrangement is a lease at inception if it obtains the right to control the use of an identified asset under a leasing arrangement with an initial term greater than twelve months. The Company determines whether a contract conveys the right to control the use of an identified asset for a period of time if the contract contains both the right to obtain substantially all of the economic benefits from the use of the identified asset and the right to direct the use of the identified asset. The Company also evaluates the nature of each lease to determine whether it is an operating or financing lease and recognizes the right-of-use asset and lease liabilities based on the present value of future minimum lease payments over the expected lease term. The Company’s leases do not generally contain an implicit interest rate and therefore the Company uses the incremental borrowing rate it would expect to pay to borrow on a similar collateralized basis over a similar term in order to determine the present value of its lease payments. The Company’s considers renewal options in the determination of the lease term if the option to renew is reasonably certain. Variable lease costs represent payments that are dependent on usage, a rate or index. Variable lease costs, which consists primarily of taxes, insurance and common area maintenance costs, are expensed as incurred, as the Company has elected to account separately for contracts that contain lease and non-lease components, consistent with its historical practice. The Company does not have any finance leases.

Revenue Recognition

The Company recognizes revenue in accordance with ASC Topic 606, "Revenue from Contracts with Customers."  Under ASC 606, revenue is recognized when a customer obtains control of promised goods or services, in an amount that reflects the consideration which the entity expects to receive in exchange for those goods or services. To determine revenue recognition for arrangements that an entity determines are within the scope of ASC 606, the Company performs the following five steps:

(i) identify the contract(s) with a customer;

(ii) identify the performance obligations in the contract;

(iii) determine the transaction price;

(iv) allocate the transaction price to the performance obligations in the contract; and

(v) recognize revenue when (or as) the entity satisfies a performance obligation.

As of June 30, 2021 and December 31, 2020, the Company recorded $158,000 and $71,000, respectively, of unbilled receivables, which are included in accounts receivable, net on the condensed balance sheet, as the Company has an unconditional right to payment as of the end of the applicable period.  

The Company’s revenue is generated from the sale of its products to hospitals and medical centers in the United States through direct sales representatives. Revenue is recognized when obligations under the terms of a contract with

customers are satisfied, which occurs with the transfer of control of the Company’s products to its customers, either upon shipment of the product or delivery of the product to the customer under the Company’s standard terms and conditions.  The Company’s products are readily available for usage as soon as the customer possesses it. Upon receipt, the customer controls the economic benefits of the product, has significant risks and rewards, and the legal title. The Company has present right to payment; therefore, the transfer of control is deemed to happen at a point in time. Revenue is measured as the amount of consideration the Company expects to receive in exchange for transferring the goods.

For sales where the Company’s sales representative hand delivers product directly to the hospital or medical center from the sales representative’s trunk stock inventory, the Company recognizes revenue upon delivery, which represents the point in time when control transfers to the customer. Upon delivery there are legally-enforceable rights and obligations between the parties which can be identified, commercial substance exists and collectability is probable. For sales which are sent directly from the Company to hospitals and medical centers, the transfer of control occurs at the time of shipment or delivery of the product.  There are no further performance obligations by the Company or the sales representative to the customer after delivery under either method of sale. As allowed under the practical expedient, the Company does not disclose the value of unsatisfied performance obligations for (i) contracts with an original expected length of one year or less and (ii) contracts for which it recognizes revenue at the amount to which it has the right to invoice for services performed.

The Company is entitled to the total consideration for the products ordered by customers as product pricing is fixed according to the terms of customer contracts and payment terms are short. Payment terms fall within the one-year guidance for the practical expedient which allows the Company to forgo adjustment of the promised amount of consideration for the effects of a significant financing component. The Company excludes taxes assessed by governmental authorities on revenue-producing transactions from the measurement of the transaction price.

Costs associated with product sales include commissions and royalties. The Company applies the practical expedient and recognizes commissions and royalties as expense when incurred because the expense is incurred at a point in time and the amortization period is less than one year.  Commissions are recorded as selling expense and royalties are recorded as cost of goods sold in the condensed statements of operations and comprehensive loss.

The Company accepts product returns at its discretion or if the product is defective as manufactured. The Company establishes estimated provisions for returns based on historical experience and considers other factors that it believes could significantly impact its expected returns, which provisions are classified within accrued liabilities on the condensed balance sheet.  The Company elected to expense shipping and handling costs as incurred and includes them in the cost of goods sold. In those cases where the Company bills shipping and handling costs to customers, it will classify the amounts billed as a component of revenue.

Cost of Goods Sold

The Company manufactures certain of its portfolio of TCAR products at its California facility and purchases other products from third party manufacturers. Cost of goods sold consists primarily of costs related to materials, components and subassemblies, manufacturing overhead costs, direct labor, reserves for excess, obsolete and non-sellable inventories as well as distribution-related expenses. A significant portion of the Company’s cost of goods sold 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 goods sold also includes depreciation expense for production equipment and certain direct costs such as shipping costs and royalties.

Stock–Based Compensation

The Company accounts for stock-based compensation in accordance with Financial Accounting Standards Board (“FASB”) ASC 718, "Compensation-Stock Compensation." ASC 718 requires the recognition of compensation expense, using a fair-value based method, for costs related to all share-based payments including stock options, restricted stock units and shares issued under its employee stock purchase plan. ASC 718 requires companies to estimate the fair value of all share-based payment option awards on the date of grant using an option pricing model. The fair value of stock options is recognized over the period during which an optionee is required to provide services in exchange for the option award, known as the requisite service period (usually the vesting period), on a straight-line basis. For performance-based

stock options, the Company will assess the probability of performance conditions being achieved in each reporting period. The amount of stock-based compensation expense recognized in any one period related to performance-based stock options can vary based on the achievement or anticipated achievement of the performance conditions. The Company accounts for option forfeitures as they occur.

The Company accounts for stock-based compensation for restricted stock units at their fair value, based on the closing market price of the Company's common stock on the date of grant. These costs are recognized on a straight-line basis over the requisite service period, which is usually the vesting period.

The Company accounts for stock-based compensation for its employee stock purchase plan based on the estimated fair value of the options on the date of grant. The Company estimates the grant date fair value using an option pricing model for each purchase period. These costs are recognized on a straight-line basis over the offering period.

Income Taxes

The Company accounts for income taxes under the liability method, whereby deferred tax assets and liabilities are determined based on the difference between the condensed financial statements and tax bases of assets and liabilities using the enacted tax rates in effect for the year in which the differences are expected to affect taxable income. A valuation allowance is established when necessary to reduce deferred tax assets to the amounts expected to be realized. As the Company has historically incurred operating losses, it has established a full valuation allowance against its net deferred tax assets, and there is no provision for income taxes.

The Company also follows the provisions of ASC 740-10, "Accounting for Uncertainty in Income Taxes." ASC 740-10 prescribes a comprehensive model for the recognition, measurement, presentation and disclosure in financial statements of any uncertain tax positions that have been taken or expected to be taken on a tax return. No liability related to uncertain tax positions is recorded on the condensed financial statements. It is the Company's policy to include penalties and interest expense related to income taxes as part of the provision for income taxes.

Comprehensive Loss

Comprehensive loss consists of net loss and changes in unrealized gains and losses on investments classified as available-for-sale. For the three and six months ended June 30, 2021 and 2020, the Company’s unrealized gains and losses on available-for-sale investments represent the only component of other comprehensive loss that are excluded from the reported net loss and that are presented in the condensed statements of operations and comprehensive loss. Accumulated other comprehensive income or loss is presented in the accompanying condensed balance sheets as a component of stockholders' equity.

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, without consideration for potential dilutive common shares. Diluted net loss per share is computed by dividing the net loss by the weighted average number of shares of common stock and potentially dilutive securities outstanding for the period. For purposes of the diluted net loss per share calculation, redeemable convertible preferred stock and warrants, common stock options, and restricted stock units are considered to be potentially dilutive securities. Since the Company was in a loss position for all periods presented, basic net loss per share is the same as diluted net loss per share as the inclusion of all potential dilutive common shares would have been anti-dilutive.

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

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2021		2020		2021		2020
Net loss	$	(10,539)	$	(10,353)	$	(21,233)	$	(20,294)
Weighted average common stock outstanding used to compute net loss per share, basic and diluted		34,534,099		32,682,360		34,435,812		32,010,335
Net loss, basic and diluted	$	(0.31)	$	(0.32)	$	(0.62)	$	(0.63)

The following potentially dilutive securities outstanding have been excluded from the computation of diluted weighted average shares outstanding because such securities have an antidilutive impact due to the Company's net loss:

	June 30,
	2021	2020
Common stock options	4,188,097	4,632,866
Restricted stock units	270,377	39,089
	4,458,474	4,671,955

Segment and Geographical Information

The Company operates and manages its business as one reportable and operating segment. The Company’s chief executive officer, who is the chief operating decision maker, reviews financial information on an aggregate basis for purposes of allocating resources and evaluating financial performance. Primarily all of the Company’s long-lived assets are based in the United States. Long-lived assets are comprised of property and equipment and the Company's right-of-use assets. All of the Company’s revenue was in the United States for the three and six months ended June 30, 2021 and 2020, based on the shipping location of the external customer.

 

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Recent Accounting Pronouncements

6 Months Ended

Jun. 30, 2021

Recent Accounting Pronouncements [Abstract]

Recent Accounting Pronouncements

3.    Recent Accounting Pronouncements

Effective January 1, 2021, the Company adopted ASU 2016-13, Financial Instruments-Credit Losses (Topic 326):"Measurement of Credit Losses on Financial Instruments," which requires measurement and recognition of expected credit losses for most financial assets and certain other instruments. Unrealized losses on available-for-sale debt securities that are attributed to credit risk are recorded through earnings rather than to other comprehensive income. Credit losses relating to available-for-sale debt securities are now recorded through an allowance for credit losses. In addition, Topic 326 also provides new guidance related to the measurement of expected credit losses on the Company’s allowance for bad debt for accounts receivable, which is estimated upon assessment of various factors including historical collection experience, current and future economic market conditions and a review of the current aging status and financial condition of the Company’s customers. The Company adopted the new standard using a modified retrospective transition method, which required a cumulative-effect adjustment, if any, to the opening balance of retained earnings to be recognized on the date of adoption. The Company did not have any cumulative-effect adjustments as of the date of adoption.

Effective January 1, 2021, the Company adopted ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes, which enhances and simplifies various aspects of the income tax accounting guidance related to intra-period tax allocation, interim period accounting for enacted changes in tax law, and the year-to-date loss limitation in interim period tax accounting. ASU 2019-12 also amends other aspects of the guidance to reduce complexity in certain areas. The adoption did not have a material impact on the Company's financial statements and related disclosures.

 

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Fair Value Measurements

6 Months Ended

Jun. 30, 2021

Fair Value Measurements [Abstract]

Fair Value Measurements

4.    Fair Value Measurements

The Company measures certain financial assets and liabilities at fair value on a recurring basis, including cash equivalents, investments, and the Company's previously outstanding preferred stock warrants. 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 – quoted prices in active markets for identical assets or liabilities;

•Level 2 – observable inputs other than quoted prices in active markets for identical assets and liabilities;

•Level 3 – unobservable inputs.

Assets and liabilities measured at fair value are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires management to make judgments and consider factors specific to the asset or liability. The Company’s cash equivalents are classified within Level 1 of the fair value hierarchy because they are valued using quoted market prices, broker or dealer quotations, or alternative pricing sources with reasonable levels of price transparency. The corporate bonds/notes, commercial paper, asset-backed securities and U.S. government securities are classified as Level 2 as they are valued based upon quoted market 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 corroborated by observable market data for substantially the full term of the assets.

The following tables sets forth by level within the fair value hierarchy the Company’s assets that are reported at fair value as of June 30, 2021 and December 31, 2020, using the inputs defined above (in thousands):

	June 30, 2021
	Level 1		Level 2		Level 3		Total
Assets:
Money market funds	$	101,291	$	—	$	—	$	101,291
Commercial paper		—		5,798		—		5,798
Corporate bonds/notes		—		5,371		—		5,371
U.S. government securities		—		15,124		—		15,124
	$	101,291	$	26,293	$	—	$	127,584

	December 31, 2020
	Level 1		Level 2		Level 3		Total
Assets:
Money market funds	$	60,295	$	—	$	—	$	60,295
Commercial paper		—		39,577		—		39,577
Corporate bonds/notes		—		7,969		—		7,969
U.S. government securities		—		38,470		—		38,470
	$	60,295	$	86,016	$	—	$	146,311

There were no transfers between fair value hierarchy levels during the three and six months ended June 30, 2021 and 2020.

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Balance Sheet Components

6 Months Ended

Jun. 30, 2021

Balance Sheet Components [Abstract]

Balance Sheet Components

5.    Balance Sheet Components

Investments

The fair value of the Company's available-for-sale investments as of June 30, 2021 and December 31, 2020 are as follows (in thousands):

	June 30, 2021
			Gross Unrealized				Estimated
	Amortized Cost		Gains		Losses		Fair Value
Money market funds	$	101,291	$	—	$	—	$	101,291
Commercial paper		5,798		—		—		5,798
Corporate bonds/notes		5,371		—		—		5,371
U.S. government securities		15,121		3		—		15,124
	$	127,581	$	3	$	—	$	127,584
Classified as:
Cash equivalents							$	101,291
Short-term investments								26,293
							$	127,584

	December 31, 2020
			Gross Unrealized				Estimated
	Amortized Cost		Gains		Losses		Fair Value
Money market funds	$	60,295	$	—	$	—	$	60,295
Commercial paper		39,577		—		—		39,577
Corporate bonds/notes		7,970		—		(1)		7,969
U.S. government securities		38,430		42		(2)		38,470
	$	146,272	$	42	$	(3)	$	146,311
Classified as:
Cash equivalents							$	68,295
Short-term investments								78,016
							$	146,311

All of the Company’s cash equivalents and short-term investments mature within one year as of June 30, 2021 and December 31, 2020. Available-for-sale investments held as of June 30, 2021 had a weighted average days to maturity of 95 days.

The following table presents the Company's available-for-sale investments that were in an unrealized loss position as of June 30, 2021 and December 31, 2020 (in thousands):

	June 30, 2021				December 31, 2020
	Less than 12 months				Less than 12 months
Assets:	Fair Value		Unrealized Loss		Fair Value		Unrealized Loss
Corporate bonds/notes	$	—	$	—	$	5,369	$	(1)
U.S. government securities		—		—		10,128		(2)
	$	—	$	—	$	15,497	$	(3)

Inventories

Components of inventories were as follows (in thousands):

	June 30,		December 31,
	2021		2020
Raw materials	$	2,153	$	1,785
Finished products		10,662		10,599
		12,815		12,384
Less: Reserve for excess and obsolete		(44)		(2,395)
	$	12,771	$	9,989

As of June 30, 2021 and December 31, 2020, there were no work-in-process inventories. The reserve for excess and obsolete inventory at June 30, 2021 and December 31, 2020, included $1,000 and $2,377,000, respectively, associated with the Company's voluntary product recall.

Accrued Liabilities

Accrued liabilities consist of the following (in thousands):

	June 30,		December 31,
	2021		2020
Accrued payroll and related expenses	$	9,246	$	9,573
Provision for sales returns		588		820
Accrued professional services		1,552		2,520
Recall replacement obligation		21		1,696
Operating lease liability		958		850
Accrued royalty expense		660		518
Deferred revenue		478		206
Accrued travel expenses		526		237
Accrued clinical expenses		182		113
Accrued other expenses		494		424
Total	$	14,705	$	16,957

 

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Long-term Debt

6 Months Ended

Jun. 30, 2021

Long-term Debt [Abstract]

Long-term Debt

6.    Long-term Debt

CRG

In October 2015, the Company entered into a term loan agreement with CRG. The term loan agreement provides for up to $30,000,000 in term loans split into two tranches as follows: (i) the Tranche A Loans provided for $20,000,000 in term loans, and (ii) the Tranche B Loans provided for up to $10,000,000 in term loans. The Company drew down the Tranche A Loans on October 13, 2015. The Tranche B Loans were available to be drawn prior to March 29, 2017. In January 2017, the term loan agreement was amended to extend the commitment period of the Tranche B Loans to April 28, 2017. In April 2017, the Company drew down $5,000,000 of the available Tranche B Loans.

In September 2018, the term loan agreement was amended to provide for additional term loans in an aggregate principal amount of up to $25,000,000. In September 2018, the Company drew down an additional $15,000,000 under the amended term loan agreement with CRG, no additional draw was taken. Under the terms of the amended term loan agreement, the related fixed interest rate was 10.0%, 8.0% of the interest was due and payable in cash and at the election of the Company, 2.0% of the interest due and payable may be paid in kind. All unpaid principal, and accrued and unpaid interest, was due and payable in full on December 31, 2022.

On October 29, 2020, in connection with the consummation of the Loan and Security agreement with Stifel Bank as noted below, the Company repaid all amounts outstanding under the term loan with CRG.

Stifel Bank

In October 2020, the Company entered into a Loan and Security Agreement, or Loan Agreement, with Stifel Bank which provides for a $50,000,000 loan facility, comprised of a $50,000,000 secured revolving credit facility, with a $2,000,000 subfacility for the issuance of letters of credit and other ancillary banking services, and a $50,000,000 secured term loan facility, provided that amounts outstanding under both facilities may not exceed an aggregate principal amount of $50,000,000 at any time. Any borrowings under the revolving loan facility mature on October 29, 2022, or October 29, 2023 if as of October 29, 2022, no event of default has occurred and we are in compliance with the terms of the Loan Agreement. Borrowings under the term loan facility mature on October 29, 2024. Interest under the revolving credit facility is the greater of a) 0.5% above the "Prime Rate" as published by The Wall Street Journal or b) 4.75%.

Also in October 2020, the Company drew down $49,000,000 under the term loan facility and used the majority of the proceeds to pay off and terminate the prior term loan agreement with CRG totaling $46,674,000, which included a prepayment premium of $305,000, a final interest payment of $365,000 and a facility fee of $2,191,000. The Company recognized a loss on debt extinguishment of $1,119,000 in connection with the early termination of the term loan agreement with CRG. The principal amount of outstanding term loans under the Loan Agreement with Stifel Bank shall be repaid in equal monthly installments beginning on May 29, 2022, or November 29, 2022 if the Company achieves revenue for the year ending December 31, 2021 of at least 80% of the board-approved financial projections for such fiscal year. Interest under the term loan facility is the greater of a) 0.75% above the "Prime Rate" as published by The Wall Street Journal or b) 4.75%. The term loan may not be reborrowed once repaid, but the Company may prepay the term loan at any time without premium or penalty.

The Company also concurrently entered in a Success Fee Agreement in October 2020 with Stifel Bank, which requires that the Company pay Stifel Bank the lesser of 0.75% of the original principal amount of all credit extensions made under the Loan Agreement or $375,000 in the event the Company completes a Liquidity Event (liquidation, merger, sale of the Company or change in control). The Success Fee Agreement terminates on October 29, 2025. The Company has determined the probability of a Liquidity Event to be remote and accordingly, has not recognized a liability as of June 30, 2021.

Obligations under the Loan Agreement are secured by substantially all of the Company's assets. Beginning on January 15, 2021, the Loan Agreement required that the Company maintain unrestricted cash and cash equivalents with Stifel Bank or at Stifel Bank Affiliates of at least $20,000,000. In addition, for any fiscal quarter where the Company's unrestricted cash and cash equivalents maintained with Stifel Bank or at Stifel Bank Affiliates are less than $60,000,000 for any day during such fiscal quarter, the Company must comply with a minimum revenue covenant. Additionally, the Loan Agreement contains customary affirmative and negative covenants, including covenants limiting the Company's ability and the ability of the Company's subsidiaries to, among other things, dispose of assets, effect certain mergers, incur debt, grant liens, pay dividends and distributions on capital stock, make investments and acquisitions, and enter into transactions with affiliates, in each case subject to customary exceptions for a loan facility of this size and type.

The events of default under the Loan Agreement include, among others, payment defaults, material misrepresentations, breaches of covenants, cross defaults with certain other material indebtedness, bankruptcy and insolvency events, and judgment defaults. The occurrence of an event of default could result in the acceleration of our obligations under the Loan Agreement, the termination of the lender’s commitments, a 5% increase in the applicable rate of interest and the exercise by the lender of other rights and remedies provided for under the Loan Agreement.

As of June 30, 2021, the aggregate outstanding principal balance under the Loan Agreement was $49,000,000 and the annual interest rate was 4.75%. As of June 30, 2021, the Company was in compliance with all applicable financial covenants. As of June 30, 2021, management does not believe that it is probable that the above events of default will be triggered within the next twelve months, therefore, the debt is classified as long-term on the condensed balance sheet.

Future maturities under the Loan Agreement as of June 30, 2021 are as follows (in thousands):

Period Ending December 31:	Amount
2021	$	1,183
2022		6,257
2023		25,749
2024		21,457
		54,646
Less: Amount representing interest		(5,646)
Less: Amount representing debt discount and debt issuance costs		(386)
Present value of minimum payments	$	48,614

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Commitments and Contingencies

6 Months Ended

Jun. 30, 2021

Commitments and Contingencies [Abstract]

Commitments and Contingencies

7.    Commitments and Contingencies

Operating Lease and Rights-of-Use

The Company’s operating lease obligation at its corporate headquarters in California consists of leased office, laboratory, and manufacturing space under a non-cancellable operating lease that expires in October 2024. The lease agreement includes a renewal provision allowing the Company to extend this lease for an additional period of five years.

In May 2021, the Company entered into a new, non-cancelable operating lease for additional office, laboratory and manufacturing space in Minnesota that expires in November 2029. The lease agreement includes a renewal provision allowing the Company to extend this lease for two additional five year terms. In connection with the lease, the Company recognized a right-of-use asset and lease liability of $3,398,000.

Operating lease costs were $289,000 and $217,000 for the three months ended June 30, 2021 and 2020, respectively, and $506,000 and $435,000 for the six months ended June 30, 2021 and 2020, respectively. Cash paid for amounts included in the measurement of operating lease liabilities was $190,000 and $188,000 for the three months ended June 30, 2021 and 2020, respectively, and $393,000 and $372,000 for the six months ended June 30, 2021 and 2020, respectively. As of June 30, 2021, the weighted average discount rate was approximately 6.50% and the weighted average remaining lease term was 5.92 years. Balance sheet information as of June 30, 2021 and December 31, 2020 consists of the following (in thousands):

	June 30,		December 31,
Operating Lease:	2021		2020
Operating lease right-of-use assets in other non-current assets	$	5,823	$	2,798
Operating lease liability in accrued liabilities	$	958	$	850
Operating lease liability in other liabilities		5,748		2,850
Total operating lease liabilities	$	6,706	$	3,700

The following table summarizes the Company’s operating lease maturities as of June 30, 2021 (in thousands):

Period Ending December 31:	Amount
2021	$	(1,058)
2022		1,577
2023		1,970
2024		1,768
2025		886
2026 and thereafter		3,686
Total lease payments	$	8,829
Less: interest		(2,123)
Total lease liabilities	$	6,706

Purchase Obligations

Purchase obligations consist of agreements to purchase goods and services entered into in the ordinary course of business. As of June 30, 2021, the Company had non-cancellable purchase obligations to suppliers of $6,304,000.

Indemnification

In the normal course of business, the Company enters into contracts and agreements with suppliers and other parties that contain a variety of representations and warranties and may provide for indemnification of the counterparty. The Company’s exposure under these agreements is unknown because it involves claims that may be made against it in the future but have not yet been made. To date, the Company has not been subject to any claims or been required to defend any action related to its indemnification obligations.

The Company indemnifies each of its directors and officers for certain events or occurrences, subject to certain limits, while the director is or was serving at the Company’s request in such capacity, as permitted under Delaware law and in

accordance with its certificate of incorporation and bylaws. The term of the indemnification period lasts as long as a director may be subject to any proceeding arising out of acts or omissions of such director in such capacity. The maximum amount of potential future indemnification is unlimited; however, the Company currently holds director liability insurance. The Company believes that the fair value of these indemnification obligations is minimal. Accordingly, the Company has not recognized any liabilities relating to these obligations as of June 30, 2021.

Contingencies

The Company is not involved in any pending legal proceedings that it believes could have a material adverse effect on its financial condition, results of operations or cash flows. From time to time, the Company may pursue litigation to assert its legal right and such litigation may be costly and divert the efforts and attention of its management and technical personnel which could adversely affect its business. 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. There were no contingent liabilities requiring accrual at June 30, 2021 and December 31, 2020.

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Stockholders' Equity

6 Months Ended

Jun. 30, 2021

Stockholders' Equity [Abstract]

Stockholders' Equity

8.    Stockholders’ Equity

Preferred Stock

At June 30, 2021, the Company’s certificate of incorporation, as amended and restated, authorizes the Company to issue up to 5,000,000 shares of preferred stock with $0.001 par value per share, of which no shares were issued and outstanding.

Common Stock

At June 30, 2021, the Company’s certificate of incorporation, as amended and restated, authorizes the Company to issue up to 100,000,000 shares of common stock with $0.001 par value per share, of which 34,623,409 shares were issued and outstanding. The holders of common stock are also entitled to receive dividends whenever funds are legally available, when and if declared by the Board of Directors. As of June 30, 2021, no dividends have been declared to date. Each share of common stock is entitled to one vote.

 

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Stock Option Plans

6 Months Ended

Jun. 30, 2021

Stock Option Plans [Abstract]

Stock Option Plans

9.    Stock Option Plans

In March 2019, the Company’s Board of Directors approved the adoption of the 2019 Equity Incentive Plan, or the 2019 Plan, which became effective immediately prior to the Company's initial public offering in April 2019. The 2019 Plan replaced the 2007 Stock Option Plan which was terminated immediately prior to consummation of the Company’s initial public offering, collectively the “Plans.” The 2019 Plan provides for the grant of incentive stock options, or ISOs, to employees and for the grant of nonqualified stock options, or NSOs, restricted stock, restricted stock units, stock appreciation rights, performance units and performance shares to employees, directors and consultants. A total of 2,317,000 shares of common stock were initially reserved for issuance pursuant to the 2019 Plan. In addition, the shares reserved for issuance under the 2019 Plan will also include shares reserved but not issued under the 2007 Stock Option Plan, plus any share awards granted under the 2007 Stock Option Plan that expire or terminate without having been exercised in full or that are forfeited or repurchased. In addition, the number of shares available for issuance under the 2019 Plan includes an annual increase on the first day of each fiscal year beginning fiscal 2020, equal to the lesser of (i) 3,000,000 shares; (ii) 4.0% of the outstanding shares of common stock as of the last day of the immediately preceding fiscal year; or (iii) an amount as determined by the Board of Directors. As of June 30, 2021, the Company has reserved 5,012,235 shares of common stock for issuance under the 2019 Plan.

A summary of the shares available for issuance under the 2019 Plan is as follows:

	Number of Shares
Balances, December 31, 2020	1,790,687
Authorized	1,369,985
Granted / Awarded	(545,874)
Cancelled	46,748
Balances, June 30, 2021	2,661,546

The exercise price of ISOs and NSOs shall not be less than 100% and 85%, respectively, of the estimated fair value of the shares on the date of grant as determined by the Board of Directors. The exercise price of ISOs and NSOs granted to a 10% stockholder shall not be less than 110% of the estimated fair value of the shares on the date of grant as determined by the Board of Directors. To date, options have a term of 10 years and generally vest over 4 years from the date of grant.

Stock option activity under the Company’s Plans is set forth below:

	Options Outstanding
	Number of	Weighted Average		Weighted Average ‎Remaining ‎Contractual Term		Aggregate Intrinsic
	Shares	Exercise Price		(Years)		Value
Balances, December 31, 2020	4,237,828	$	16.56		7.38	$	197,407
Options granted	312,961		54.18
Options exercised	(318,594)		5.82
Options cancelled	(44,098)		35.72
Balances, June 30, 2021	4,188,097	$	19.99		7.16	$	122,055
Vested and exercisable at June 30, 2021	2,673,791	$	11.11		6.36	$	98,665
Vested and expected to vest at June 30, 2021	4,188,097	$	19.99		7.16	$	122,055

The aggregate intrinsic value of options exercised during the six months ended June 30, 2021 was $15,152,000. The aggregate 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.

Restricted Stock Units

In March 2020, the Company began granting restricted stock units, or RSUs, under the 2019 Plan. RSUs generally vest over four years in annual equal increments. The fair value of RSUs is based on the Company’s closing stock price on the date of grant. A summary of RSUs activity for the six months ended June 30, 2021 is as follows:

	Number of Restricted Stock Units		Weighted Average ‎Grant Date ‎Fair Value
Balances, December 31, 2020		68,396	$	46.16
Awards granted		232,913		54.43
Awards vested		(28,282)		45.64
Awards canceled		(2,650)		55.30
Balances, June 30, 2021		270,377	$	53.25
Expected to vest at June 30, 2021		270,377	$	53.25

2019 Employee Stock Purchase Plan

In March 2019, the Company's Board of Directors adopted the 2019 Employee Stock Purchase Plan, or 2019 ESPP, under which eligible employees are permitted to purchase common stock at a discount through payroll deductions. A total

of 434,000 shares of common stock were initially reserved for issuance and is increased on the first day of each fiscal year, beginning in 2020, by an amount equal to the lesser of (i) 1,200,000 shares (ii) 1.0% of the outstanding shares of common stock as of the last day of the immediately preceding fiscal year; or (iii) an amount as determined by the Board of Directors. As of June 30, 2021, the Company has reserved 1,089,048 shares of common stock for issuance under the 2019 ESPP. The price of the common stock purchased will be the lower of 85% of the fair market value of the common stock at the beginning of an offering period or at the end of a purchase period. The 2019 ESPP was effective upon adoption by the Company's Board of Directors but was not in use until the completion of the Company's initial public offering in April 2019. The 2019 ESPP is intended to qualify as an employee stock purchase plan within the meaning of Section 423 of the Internal Revenue Code of 1986, as amended.

As of June 30, 2021, 141,059 shares of common stock have been issued to employees participating in the 2019 ESPP and 947,989 shares were available for future issuance under the 2019 ESPP.

Stock-Based Compensation

The Company estimated the fair value of stock options using the Black–Scholes option pricing model. The fair value of employee and nonemployee stock options is being amortized on a straight–line basis over the requisite service period of the awards. The fair value of employee and nonemployee stock options was estimated using the following assumptions for the three and six months ended June 30, 2021 and 2020:

	Three Months Ended		Six Months Ended
	June 30,		June 30,
	2021	2020	2021	2020
Expected term (in years)	5.25 - 6.25	5.25 - 6.25	5.25 - 6.25	5.25 - 6.25
Expected volatility	46.6% - 47.0%	46.6% - 47.7%	45.0% - 50.4%	42.9% - 47.7%
Risk-free interest rate	0.93% - 1.08%	0.42% - 0.56%	0.41% - 1.08%	0.42% - 1.41%
Dividend yield	—%	—%	—%	—%

The fair value of the shares to be issued under the Company’s 2019 ESPP was estimated using the Black-Scholes valuation model with the following assumptions for the three and six months ended June 30, 2021 and 2020:

	Three Months Ended		Six Months Ended
	June 30,		June 30,
	2021	2020	2021	2020
Expected term (in years)	0.50	0.50	0.50	0.50
Expected volatility	51.5%	76.4%	44.4% - 76.4%	44.4% - 76.4%
Risk-free interest rate	0.03%	0.14%	0.03% - 1.58%	0.14% - 1.58%
Dividend yield	—%	—%	—%	—%

Total stock-based compensation expense relating to the Company's stock options, RSUs and 2019 ESPP during the three and six months ended June 30, 2021 and 2020 is as follows (in thousands):

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2021		2020		2021		2020
Cost of goods sold	$	151	$	89	$	309	$	153
Research and development expenses		636		246		1,325		423
Selling, general and administrative expenses		2,622		1,319		5,308		2,371
	$	3,409	$	1,654	$	6,942	$	2,947

As of June 30, 2021, there was total unrecognized compensation costs of $22,679,000 related to stock options expected to be recognized over a period of approximately 2.82 years, a total of $13,008,000 of unrecognized compensation costs related to unvested RSUs expected to be recognized over a period of approximately 3.54 years and $314,000 of unrecognized compensation costs related to the ESPP, which the Company will recognize over 0.39 years.

 

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401(k) Plan

6 Months Ended

Jun. 30, 2021

401(k) Plan [Abstract]

401(k) Plan

10.    401(k) Plan

The Company has a qualified retirement plan under section 401(k) of the Internal Revenue Code (“IRC”) under which participants may contribute up to 90% of their eligible compensation, subject to maximum deferral limits specified by the IRC. Beginning in January 2020, the Company started matching employees' contributions to the 401(k) plan at 50% of the first 5% of compensation deferred to the 401(k) plan. The Company's matching contributions were $330,000 and $229,000 for the three months ended June 30, 2021 and 2020, respectively, and $696,000 and $522,000 for the six months ended June 30, 2021 and 2020, respectively.

 

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Summary of Significant Accounting Policies (Policies)

6 Months Ended

Jun. 30, 2021

Summary of Significant Accounting Policies [Abstract]

Basis of Preparation

Basis of Preparation

The accompanying financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America, or U.S. GAAP, and applicable rules and regulations of the Securities and Exchange Commission, or SEC, regarding interim financial reporting. As permitted under those rules, certain footnotes or other financial information that are normally required by U.S. GAAP have been condensed or omitted, and accordingly the balance sheet as of December 31, 2020, and related disclosures, have been derived from the audited financial statements at that date but does not include all of the information required by U.S. GAAP for complete financial statements. These unaudited condensed financial statements have been prepared on the same basis as the Company’s annual financial statements and, in the opinion of management, reflect all adjustments (consisting only of normal recurring adjustments) that are necessary for the fair statement of the Company’s condensed financial information. The results of operations for the three and six months ended June 30, 202 are not necessarily indicative of the results to be expected for the year ending December 31, 2021 or for any other interim period or for any other future year.

The accompanying interim unaudited condensed financial statements and related financial information should be read in conjunction with the audited financial statements and the related notes thereto for the year ended December 31, 2020 included in the Company's annual report on Form 10-K filed with the SEC on March 1, 2021.

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 judgment when making estimates related to provisions for accounts receivable and excess and obsolete inventories, the valuation of deferred tax assets, the reserves for sales returns, and stock-based compensation. 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. Although these estimates are based on the Company’s knowledge of current events and actions it may undertake in the future, actual results may ultimately materially differ from these estimates and assumptions.

Due to the coronavirus (“COVID-19”) pandemic, there has been continued uncertainty and disruption in the global economy and financial markets. While some of the uncertainties began to lift throughout the first half of 2021, new virus variants, and increased infection rates during this period make the current COVID-related environment highly volatile and uncertain. The Company is not aware of any specific event or circumstance that would require an update to its estimates or judgments or a revision of the carrying value of its assets or liabilities as of June 30, 2021. The Company has also considered information available to it as of the date of issuance of these financial statements and is not aware of any specific events or circumstances that would require an update to its estimates or judgments, or a revision to the carrying value of its assets or liabilities. These estimates may change as new events occur and additional information becomes available. Actual results could differ materially from these estimates.

Fair Value of Financial Instruments

Fair Value of Financial InstrumentsThe Company has evaluated the estimated fair value of its financial instruments as of June 30, 2021 and December 31, 2020. The carrying amounts of certain of the Company’s financial instruments, which include cash equivalents, short-term investments, restricted cash, accounts receivable, accounts payable and accrued liabilities approximate their respective fair values because of the short-term nature of these instruments. Management believes that its long-term debt bears interest at the prevailing market rates for instruments with similar characteristics (Level 2 within the fair value hierarchy); accordingly, the carrying value of this instrument approximates its fair value.

Cash, Cash Equivalents and Restricted Cash

Cash, Cash Equivalents and Restricted Cash

The Company considers all highly liquid investments with an original maturity of three months or less at the time of purchase to be cash equivalents. Cash equivalents are considered available-for-sale marketable securities and are recorded at fair value, based on quoted market prices. As of June 30, 2021 and December 31, 2020, the Company’s cash equivalents are entirely comprised of investments in money market funds.

Restricted cash as of June 30, 2021 and December 31, 2020 consists of a letter of credit of $310,000 representing collateral for the Company's facility lease in California.

Investments

Investments

Short-term investments consist of debt securities classified as available-for-sale and have original maturities greater than 90 days, but less than one year as of the balance sheet date. Long-term investments have maturities greater than one year as of the balance sheet date. All investments are recorded at fair value based on the fair value hierarchy. Money market funds and United States treasury bills with an original maturity less than 90 days are classified within Level 1 of the fair value hierarchy, and commercial paper, corporate bonds/notes, United States Government securities, and asset-backed securities are classified within Level 2 of the fair value hierarchy. Unrealized gains and losses, deemed temporary in nature, are reported as a separate component of accumulated other comprehensive income (loss). The cost of available-for-sale investments sold is based on the specific-identification method. Realized gains and losses are included in earnings and are derived for specific-identification method for determining the costs of investments sold and were insignificant for the three and six months ended June 30, 2021 and 2020. Amortization of premiums and accretion of discounts are reported as a component of interest income.

A decline in the fair value of any security below cost that is deemed other than temporary results in a charge to earnings and the corresponding establishment of a new cost basis for the investment. The Company evaluates the securities in an unrealized loss position for expected credit losses by considering factors such as historical experience, market data, issuer-specific factors, current economic conditions and credit ratings.

Concentration of Credit Risk, and Other Risks and Uncertainties

Concentration of Credit Risk, and Other Risks and Uncertainties

The Company is subject to risks related to public health crises such as the global pandemic associated with COVID-19, which has spread to most countries and all 50 states within the United States. The COVID-19 outbreak has negatively impacted, and may continue to negatively impact the Company’s operations, its revenue and overall financial condition by significantly decreasing the number of TCAR procedures performed. The number of TCAR procedures performed, similar to other surgical procedures, has significantly decreased as health care organizations globally prioritized the treatment of

patients with COVID-19. For example, during 2020, in the United States, governmental authorities recommended, and in certain cases required, that elective, specialty and other procedures and appointments, be suspended or canceled to focus limited resources and personnel and hospital capacity toward the treatment of COVID-19 and to avoid exposing patients to COVID-19. These measures and challenges will likely continue for the duration of the pandemic, which is uncertain, and will continue to negatively impact the Company’s revenue while the pandemic continues. While some of these restrictions began to lift throughout the first half of 2021, new virus variants, and increased infection rates during this period make the current COVID-related environment highly volatile and uncertain.

Financial instruments that potentially subject the Company to credit risk consist of cash and cash equivalents, investments and accounts receivable to the extent of the amounts recorded on the balance sheet. Cash, cash equivalents, and investments are deposited in financial institutions which, at times, may be in excess of federally insured limits. Cash equivalents are invested in highly rated money market funds and United States treasury bills. The Company invests in a variety of financial instruments, such as, but not limited to, commercial paper, corporate bonds/notes, United States Government securities, asset-backed securities and, by policy, limits the amount of credit exposure with any one financial institution or commercial issuer. The Company has not experienced any material losses on its deposits of cash and cash equivalents or investments during the three and six months ended June 30, 2021 and 2020.

The Company’s accounts receivable are due from a variety of health care organizations in the United States. At June 30, 2021 and December 31, 2020, no customer represented 10% or more of the Company’s accounts receivable. For the three and six months ended June 30, 2021 and 2020, there were no customers that represented 10% or more of revenue.

The Company provides for uncollectible amounts when specific credit problems are identified. In doing so, the Company analyzes historical bad debt trends, customer credit worthiness, current economic trends and changes in customer payment patterns when evaluating the adequacy of the allowance for expected credit losses on customer accounts.

The Company manufactures certain of its commercial products in-house. Certain of the Company’s product components and sub-assemblies continue to be manufactured by sole suppliers, the most significant of which is the ENROUTE Transcarotid Stent System, manufactured by Cordis Corporation. Disruption in component or sub-assembly supply from these manufacturers or from in-house production would have a negative impact on the Company’s financial position and results of operations.

The Company is subject to certain risks, including that its devices may not be approved or cleared for marketing by governmental authorities or be successfully marketed. There can be no assurance that the Company’s products will achieve widespread adoption in the marketplace, nor can there be any assurance that existing devices or any future devices can be developed or manufactured at an acceptable cost and with appropriate performance characteristics. The Company is also subject to risks common to companies in the medical device industry, including, but not limited to, new technological innovations, dependence upon government and third-party payers to provide adequate coverage and reimbursement, dependence on key personnel and suppliers, protection of proprietary technology, product liability claims, and compliance with government regulations.

Existing or future devices developed by the Company may require approvals or clearances from the FDA or international regulatory agencies. In addition, in order to continue the Company’s operations, compliance with various federal and state laws is required. If the Company were denied or delayed in receiving such approvals or clearances, it may be necessary to adjust operations to align with the Company’s currently approved portfolio. If clearance for the products in the current portfolio were withdrawn by the FDA, this would have a material adverse impact on the Company.

Voluntary Recall

Voluntary Recall

In January and February 2021, the Company announced the voluntary recall of certain lots of its ENROUTE Transcarotid Stent System, manufactured by one of its third-party suppliers, Cordis. The decision to recall these lots was based on complaints received about tips detaching from the stent delivery system as well as internal testing that the Company conducted. The Company believes the root cause of the detachment was a single operator at Cordis, who, over a specific timeframe, produced lots in which a small number of units were not reliably manufactured to specification.

As a result of the voluntary recall the Company reflected a current asset of $4,160,000 on its balance sheet as of December 31, 2020, relating to the replacement lots and other direct costs to be received from Cordis. This amount includes $2,227,000 of recalled ENROUTE stent delivery systems held in the Company's inventory as of December 31, 2020, $1,696,000 of ENROUTE stent delivery systems in the process of being returned from its customers and other direct costs of $237,000. In addition, the Company established an accrual of $1,696,000 relating to its obligation to provide replacement ENROUTE stent delivery systems to its customers as of December 31, 2020. As of June 30, 2021, the Company has a current asset of $605,000 on its balance sheet, relating to the replacement lots and other direct costs to be received from Cordis. This amount comprises a receivable of $262,000 relating to both recalled ENROUTE stent delivery systems held in the Company’s inventory as of June 30, 2021 and pending replacement from Cordis, $11,000 of ENROUTE stent delivery systems to be returned from its customers and other direct costs of $332,000. In addition, as of June 30, 2021, the Company has a remaining accrual of $21,000 relating to its obligation to provide replacement ENROUTE stent delivery systems to its customers.

Leases

LeasesThe Company accounts for leases in accordance with Accounting Standards Codification (“ASC”) 842, "Leases." The Company considers if an arrangement is a lease at inception if it obtains the right to control the use of an identified asset under a leasing arrangement with an initial term greater than twelve months. The Company determines whether a contract conveys the right to control the use of an identified asset for a period of time if the contract contains both the right to obtain substantially all of the economic benefits from the use of the identified asset and the right to direct the use of the identified asset. The Company also evaluates the nature of each lease to determine whether it is an operating or financing lease and recognizes the right-of-use asset and lease liabilities based on the present value of future minimum lease payments over the expected lease term. The Company’s leases do not generally contain an implicit interest rate and therefore the Company uses the incremental borrowing rate it would expect to pay to borrow on a similar collateralized basis over a similar term in order to determine the present value of its lease payments. The Company’s considers renewal options in the determination of the lease term if the option to renew is reasonably certain. Variable lease costs represent payments that are dependent on usage, a rate or index. Variable lease costs, which consists primarily of taxes, insurance and common area maintenance costs, are expensed as incurred, as the Company has elected to account separately for contracts that contain lease and non-lease components, consistent with its historical practice. The Company does not have any finance leases.

Revenue Recognition and Cost of Goods Sold

Revenue Recognition

The Company recognizes revenue in accordance with ASC Topic 606, "Revenue from Contracts with Customers."  Under ASC 606, revenue is recognized when a customer obtains control of promised goods or services, in an amount that reflects the consideration which the entity expects to receive in exchange for those goods or services. To determine revenue recognition for arrangements that an entity determines are within the scope of ASC 606, the Company performs the following five steps:

(i) identify the contract(s) with a customer;

(ii) identify the performance obligations in the contract;

(iii) determine the transaction price;

(iv) allocate the transaction price to the performance obligations in the contract; and

(v) recognize revenue when (or as) the entity satisfies a performance obligation.

As of June 30, 2021 and December 31, 2020, the Company recorded $158,000 and $71,000, respectively, of unbilled receivables, which are included in accounts receivable, net on the condensed balance sheet, as the Company has an unconditional right to payment as of the end of the applicable period.  

The Company’s revenue is generated from the sale of its products to hospitals and medical centers in the United States through direct sales representatives. Revenue is recognized when obligations under the terms of a contract with

customers are satisfied, which occurs with the transfer of control of the Company’s products to its customers, either upon shipment of the product or delivery of the product to the customer under the Company’s standard terms and conditions.  The Company’s products are readily available for usage as soon as the customer possesses it. Upon receipt, the customer controls the economic benefits of the product, has significant risks and rewards, and the legal title. The Company has present right to payment; therefore, the transfer of control is deemed to happen at a point in time. Revenue is measured as the amount of consideration the Company expects to receive in exchange for transferring the goods.

For sales where the Company’s sales representative hand delivers product directly to the hospital or medical center from the sales representative’s trunk stock inventory, the Company recognizes revenue upon delivery, which represents the point in time when control transfers to the customer. Upon delivery there are legally-enforceable rights and obligations between the parties which can be identified, commercial substance exists and collectability is probable. For sales which are sent directly from the Company to hospitals and medical centers, the transfer of control occurs at the time of shipment or delivery of the product.  There are no further performance obligations by the Company or the sales representative to the customer after delivery under either method of sale. As allowed under the practical expedient, the Company does not disclose the value of unsatisfied performance obligations for (i) contracts with an original expected length of one year or less and (ii) contracts for which it recognizes revenue at the amount to which it has the right to invoice for services performed.

The Company is entitled to the total consideration for the products ordered by customers as product pricing is fixed according to the terms of customer contracts and payment terms are short. Payment terms fall within the one-year guidance for the practical expedient which allows the Company to forgo adjustment of the promised amount of consideration for the effects of a significant financing component. The Company excludes taxes assessed by governmental authorities on revenue-producing transactions from the measurement of the transaction price.

Costs associated with product sales include commissions and royalties. The Company applies the practical expedient and recognizes commissions and royalties as expense when incurred because the expense is incurred at a point in time and the amortization period is less than one year.  Commissions are recorded as selling expense and royalties are recorded as cost of goods sold in the condensed statements of operations and comprehensive loss.

The Company accepts product returns at its discretion or if the product is defective as manufactured. The Company establishes estimated provisions for returns based on historical experience and considers other factors that it believes could significantly impact its expected returns, which provisions are classified within accrued liabilities on the condensed balance sheet.  The Company elected to expense shipping and handling costs as incurred and includes them in the cost of goods sold. In those cases where the Company bills shipping and handling costs to customers, it will classify the amounts billed as a component of revenue.

Cost of Goods Sold

The Company manufactures certain of its portfolio of TCAR products at its California facility and purchases other products from third party manufacturers. Cost of goods sold consists primarily of costs related to materials, components and subassemblies, manufacturing overhead costs, direct labor, reserves for excess, obsolete and non-sellable inventories as well as distribution-related expenses. A significant portion of the Company’s cost of goods sold 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 goods sold also includes depreciation expense for production equipment and certain direct costs such as shipping costs and royalties.

Stock-Based Compensation

Stock–Based Compensation

The Company accounts for stock-based compensation in accordance with Financial Accounting Standards Board (“FASB”) ASC 718, "Compensation-Stock Compensation." ASC 718 requires the recognition of compensation expense, using a fair-value based method, for costs related to all share-based payments including stock options, restricted stock units and shares issued under its employee stock purchase plan. ASC 718 requires companies to estimate the fair value of all share-based payment option awards on the date of grant using an option pricing model. The fair value of stock options is recognized over the period during which an optionee is required to provide services in exchange for the option award, known as the requisite service period (usually the vesting period), on a straight-line basis. For performance-based

stock options, the Company will assess the probability of performance conditions being achieved in each reporting period. The amount of stock-based compensation expense recognized in any one period related to performance-based stock options can vary based on the achievement or anticipated achievement of the performance conditions. The Company accounts for option forfeitures as they occur.

The Company accounts for stock-based compensation for restricted stock units at their fair value, based on the closing market price of the Company's common stock on the date of grant. These costs are recognized on a straight-line basis over the requisite service period, which is usually the vesting period.

The Company accounts for stock-based compensation for its employee stock purchase plan based on the estimated fair value of the options on the date of grant. The Company estimates the grant date fair value using an option pricing model for each purchase period. These costs are recognized on a straight-line basis over the offering period.

Income Taxes

Income Taxes

The Company accounts for income taxes under the liability method, whereby deferred tax assets and liabilities are determined based on the difference between the condensed financial statements and tax bases of assets and liabilities using the enacted tax rates in effect for the year in which the differences are expected to affect taxable income. A valuation allowance is established when necessary to reduce deferred tax assets to the amounts expected to be realized. As the Company has historically incurred operating losses, it has established a full valuation allowance against its net deferred tax assets, and there is no provision for income taxes.

The Company also follows the provisions of ASC 740-10, "Accounting for Uncertainty in Income Taxes." ASC 740-10 prescribes a comprehensive model for the recognition, measurement, presentation and disclosure in financial statements of any uncertain tax positions that have been taken or expected to be taken on a tax return. No liability related to uncertain tax positions is recorded on the condensed financial statements. It is the Company's policy to include penalties and interest expense related to income taxes as part of the provision for income taxes.

Comprehensive Loss

Comprehensive LossComprehensive loss consists of net loss and changes in unrealized gains and losses on investments classified as available-for-sale. For the three and six months ended June 30, 2021 and 2020, the Company’s unrealized gains and losses on available-for-sale investments represent the only component of other comprehensive loss that are excluded from the reported net loss and that are presented in the condensed statements of operations and comprehensive loss. Accumulated other comprehensive income or loss is presented in the accompanying condensed balance sheets as a component of stockholders' equity.

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, without consideration for potential dilutive common shares. Diluted net loss per share is computed by dividing the net loss by the weighted average number of shares of common stock and potentially dilutive securities outstanding for the period. For purposes of the diluted net loss per share calculation, redeemable convertible preferred stock and warrants, common stock options, and restricted stock units are considered to be potentially dilutive securities. Since the Company was in a loss position for all periods presented, basic net loss per share is the same as diluted net loss per share as the inclusion of all potential dilutive common shares would have been anti-dilutive.

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

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2021		2020		2021		2020
Net loss	$	(10,539)	$	(10,353)	$	(21,233)	$	(20,294)
Weighted average common stock outstanding used to compute net loss per share, basic and diluted		34,534,099		32,682,360		34,435,812		32,010,335
Net loss, basic and diluted	$	(0.31)	$	(0.32)	$	(0.62)	$	(0.63)

The following potentially dilutive securities outstanding have been excluded from the computation of diluted weighted average shares outstanding because such securities have an antidilutive impact due to the Company's net loss:

	June 30,
	2021	2020
Common stock options	4,188,097	4,632,866
Restricted stock units	270,377	39,089
	4,458,474	4,671,955

Segment and Geographical Information

Segment and Geographical InformationThe Company operates and manages its business as one reportable and operating segment. The Company’s chief executive officer, who is the chief operating decision maker, reviews financial information on an aggregate basis for purposes of allocating resources and evaluating financial performance. Primarily all of the Company’s long-lived assets are based in the United States. Long-lived assets are comprised of property and equipment and the Company's right-of-use assets. All of the Company’s revenue was in the United States for the three and six months ended June 30, 2021 and 2020, based on the shipping location of the external customer.

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Recent Accounting Pronouncements (Policies)

6 Months Ended

Jun. 30, 2021

Recent Accounting Pronouncements [Abstract]

Recent Accounting Pronouncements

Effective January 1, 2021, the Company adopted ASU 2016-13, Financial Instruments-Credit Losses (Topic 326):"Measurement of Credit Losses on Financial Instruments," which requires measurement and recognition of expected credit losses for most financial assets and certain other instruments. Unrealized losses on available-for-sale debt securities that are attributed to credit risk are recorded through earnings rather than to other comprehensive income. Credit losses relating to available-for-sale debt securities are now recorded through an allowance for credit losses. In addition, Topic 326 also provides new guidance related to the measurement of expected credit losses on the Company’s allowance for bad debt for accounts receivable, which is estimated upon assessment of various factors including historical collection experience, current and future economic market conditions and a review of the current aging status and financial condition of the Company’s customers. The Company adopted the new standard using a modified retrospective transition method, which required a cumulative-effect adjustment, if any, to the opening balance of retained earnings to be recognized on the date of adoption. The Company did not have any cumulative-effect adjustments as of the date of adoption.

Effective January 1, 2021, the Company adopted ASU 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes, which enhances and simplifies various aspects of the income tax accounting guidance related to intra-period tax allocation, interim period accounting for enacted changes in tax law, and the year-to-date loss limitation in interim period tax accounting. ASU 2019-12 also amends other aspects of the guidance to reduce complexity in certain areas. The adoption did not have a material impact on the Company's financial statements and related disclosures.

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Summary of Significant Accounting Policies (Tables)

6 Months Ended

Jun. 30, 2021

Summary of Significant Accounting Policies [Abstract]

Net Loss Per Share Determination

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2021		2020		2021		2020
Net loss	$	(10,539)	$	(10,353)	$	(21,233)	$	(20,294)
Weighted average common stock outstanding used to compute net loss per share, basic and diluted		34,534,099		32,682,360		34,435,812		32,010,335
Net loss, basic and diluted	$	(0.31)	$	(0.32)	$	(0.62)	$	(0.63)

Schedule of Potentially Dilutive Securities Outstanding Excluded from Diluted Weighted Average Shares Outstanding

	June 30,
	2021	2020
Common stock options	4,188,097	4,632,866
Restricted stock units	270,377	39,089
	4,458,474	4,671,955

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Fair Value Measurements (Tables)

6 Months Ended

Jun. 30, 2021

Fair Value Measurements [Abstract]

Financial Liabilities Measure on a Recurring Basis

	June 30, 2021
	Level 1		Level 2		Level 3		Total
Assets:
Money market funds	$	101,291	$	—	$	—	$	101,291
Commercial paper		—		5,798		—		5,798
Corporate bonds/notes		—		5,371		—		5,371
U.S. government securities		—		15,124		—		15,124
	$	101,291	$	26,293	$	—	$	127,584

	December 31, 2020
	Level 1		Level 2		Level 3		Total
Assets:
Money market funds	$	60,295	$	—	$	—	$	60,295
Commercial paper		—		39,577		—		39,577
Corporate bonds/notes		—		7,969		—		7,969
U.S. government securities		—		38,470		—		38,470
	$	60,295	$	86,016	$	—	$	146,311

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Balance Sheet Components (Tables)

6 Months Ended

Jun. 30, 2021

Balance Sheet Components [Abstract]

Fair Value of the Available-For-Sale Investments

	June 30, 2021
			Gross Unrealized				Estimated
	Amortized Cost		Gains		Losses		Fair Value
Money market funds	$	101,291	$	—	$	—	$	101,291
Commercial paper		5,798		—		—		5,798
Corporate bonds/notes		5,371		—		—		5,371
U.S. government securities		15,121		3		—		15,124
	$	127,581	$	3	$	—	$	127,584
Classified as:
Cash equivalents							$	101,291
Short-term investments								26,293
							$	127,584

	December 31, 2020
			Gross Unrealized				Estimated
	Amortized Cost		Gains		Losses		Fair Value
Money market funds	$	60,295	$	—	$	—	$	60,295
Commercial paper		39,577		—		—		39,577
Corporate bonds/notes		7,970		—		(1)		7,969
U.S. government securities		38,430		42		(2)		38,470
	$	146,272	$	42	$	(3)	$	146,311
Classified as:
Cash equivalents							$	68,295
Short-term investments								78,016
							$	146,311

Available-For-Sale Investments in Unrealized Loss Position

	June 30, 2021				December 31, 2020
	Less than 12 months				Less than 12 months
Assets:	Fair Value		Unrealized Loss		Fair Value		Unrealized Loss
Corporate bonds/notes	$	—	$	—	$	5,369	$	(1)
U.S. government securities		—		—		10,128		(2)
	$	—	$	—	$	15,497	$	(3)

Schedule of Inventories

	June 30,		December 31,
	2021		2020
Raw materials	$	2,153	$	1,785
Finished products		10,662		10,599
		12,815		12,384
Less: Reserve for excess and obsolete		(44)		(2,395)
	$	12,771	$	9,989

Schedule of Accrued Liabilities

	June 30,		December 31,
	2021		2020
Accrued payroll and related expenses	$	9,246	$	9,573
Provision for sales returns		588		820
Accrued professional services		1,552		2,520
Recall replacement obligation		21		1,696
Operating lease liability		958		850
Accrued royalty expense		660		518
Deferred revenue		478		206
Accrued travel expenses		526		237
Accrued clinical expenses		182		113
Accrued other expenses		494		424
Total	$	14,705	$	16,957

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Long-term Debt (Tables)

6 Months Ended

Jun. 30, 2021

Long-term Debt [Abstract]

Future Maturities Under the Term Loan Agreement

Period Ending December 31:	Amount
2021	$	1,183
2022		6,257
2023		25,749
2024		21,457
		54,646
Less: Amount representing interest		(5,646)
Less: Amount representing debt discount and debt issuance costs		(386)
Present value of minimum payments	$	48,614

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Commitments and Contingencies (Tables)

6 Months Ended

Jun. 30, 2021

Commitments and Contingencies [Abstract]

Balance Sheet Information

	June 30,		December 31,
Operating Lease:	2021		2020
Operating lease right-of-use assets in other non-current assets	$	5,823	$	2,798
Operating lease liability in accrued liabilities	$	958	$	850
Operating lease liability in other liabilities		5,748		2,850
Total operating lease liabilities	$	6,706	$	3,700

Operating Lease Maturities

Period Ending December 31:	Amount
2021	$	(1,058)
2022		1,577
2023		1,970
2024		1,768
2025		886
2026 and thereafter		3,686
Total lease payments	$	8,829
Less: interest		(2,123)
Total lease liabilities	$	6,706

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Stock Option Plans (Tables)

6 Months Ended

Jun. 30, 2021

Share-based Compensation Arrangement by Share-based Payment Award [Line Items]

Summary of Shares Available for Issuance

	Number of Shares
Balances, December 31, 2020	1,790,687
Authorized	1,369,985
Granted / Awarded	(545,874)
Cancelled	46,748
Balances, June 30, 2021	2,661,546

Stock Option Activity

	Options Outstanding
	Number of	Weighted Average		Weighted Average ‎Remaining ‎Contractual Term		Aggregate Intrinsic
	Shares	Exercise Price		(Years)		Value
Balances, December 31, 2020	4,237,828	$	16.56		7.38	$	197,407
Options granted	312,961		54.18
Options exercised	(318,594)		5.82
Options cancelled	(44,098)		35.72
Balances, June 30, 2021	4,188,097	$	19.99		7.16	$	122,055
Vested and exercisable at June 30, 2021	2,673,791	$	11.11		6.36	$	98,665
Vested and expected to vest at June 30, 2021	4,188,097	$	19.99		7.16	$	122,055

Summary of RSU Activity

	Number of Restricted Stock Units		Weighted Average ‎Grant Date ‎Fair Value
Balances, December 31, 2020		68,396	$	46.16
Awards granted		232,913		54.43
Awards vested		(28,282)		45.64
Awards canceled		(2,650)		55.30
Balances, June 30, 2021		270,377	$	53.25
Expected to vest at June 30, 2021		270,377	$	53.25

Stock-Based Compensation Expense Relating to Stock Options to Employees and Nonemployees

	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2021		2020		2021		2020
Cost of goods sold	$	151	$	89	$	309	$	153
Research and development expenses		636		246		1,325		423
Selling, general and administrative expenses		2,622		1,319		5,308		2,371
	$	3,409	$	1,654	$	6,942	$	2,947

Common Stock Options [Member]

Share-based Compensation Arrangement by Share-based Payment Award [Line Items]

Schedule of Fair Value Assumptions

	Three Months Ended		Six Months Ended
	June 30,		June 30,
	2021	2020	2021	2020
Expected term (in years)	5.25 - 6.25	5.25 - 6.25	5.25 - 6.25	5.25 - 6.25
Expected volatility	46.6% - 47.0%	46.6% - 47.7%	45.0% - 50.4%	42.9% - 47.7%
Risk-free interest rate	0.93% - 1.08%	0.42% - 0.56%	0.41% - 1.08%	0.42% - 1.41%
Dividend yield	—%	—%	—%	—%

ESPP [Member]

Share-based Compensation Arrangement by Share-based Payment Award [Line Items]

Schedule of Fair Value Assumptions

	Three Months Ended		Six Months Ended
	June 30,		June 30,
	2021	2020	2021	2020
Expected term (in years)	0.50	0.50	0.50	0.50
Expected volatility	51.5%	76.4%	44.4% - 76.4%	44.4% - 76.4%
Risk-free interest rate	0.03%	0.14%	0.03% - 1.58%	0.14% - 1.58%
Dividend yield	—%	—%	—%	—%

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Formation and Business of the Company (Details) $ / shares in Units, $ in Thousands	1 Months Ended
	May 31, 2020 USD ($) $ / shares shares
Subsequent Event [Line Items]
Issued and sold common stock (in shares)	6,808,154
Stock issued, price per share (in USD per share) | $ / shares	$ 39.00
Public Stock Offering Shares From Company [Member]
Subsequent Event [Line Items]
Issued and sold common stock (in shares)	1,923,076
Public Stock Offering Shares From Existing Shareholders [Member]
Subsequent Event [Line Items]
Issued and sold common stock (in shares)	4,885,078
Over Allotment [Member]
Subsequent Event [Line Items]
Issued and sold common stock (in shares)	1,021,223
Net proceeds | $	$ 70,543
Payments of deferred offering costs | $	707
Payment of stock issuance underwriting discounts and commissions | $	$ 3,750

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Summary of Significant Accounting Policies - Cash, Cash Equivalents and Restricted Cash (Narrative) (Details) - USD ($) $ in Thousands	Jun. 30, 2021	Dec. 31, 2020
Summary of Significant Accounting Policies [Abstract]
Restricted cash	$ 310	$ 310

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Summary of Significant Accounting Policies - Voluntary Recall (Narrative) (Details) - USD ($) $ in Thousands	6 Months Ended	12 Months Ended
	Jun. 30, 2021	Dec. 31, 2020
Inventory [Line Items]
Inventories	$ 12,771	$ 9,989
ENROUTE [Member]
Inventory [Line Items]
Inventories	262	2,227
Inventory Recall Expense	332	237
Contingent liabilities requiring accrual	21	1,696
ENROUTE, Held By Customer [Member]
Inventory [Line Items]
Inventories	11	1,696
Voluntary Recall
Inventory [Line Items]
Inventories	$ 605	$ 4,160

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Summary of Significant Accounting Policies - Revenue Recognition (Narrative) (Details) - USD ($) $ in Thousands	Jun. 30, 2021	Dec. 31, 2020
Summary of Significant Accounting Policies [Abstract]
Unbilled receivables	$ 158	$ 71

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Summary of Significant Accounting Policies - Income Taxes (Narrative) (Details)	Jun. 30, 2021 USD ($)
Summary of Significant Accounting Policies [Abstract]
Provision for income taxes	$ 0

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Summary of Significant Accounting Policies - Segment and Geographical Information (Narrative) (Details)	6 Months Ended
	Jun. 30, 2021 segment
Summary of Significant Accounting Policies [Abstract]
Number of reportable segments	1
Number of operating segments	1

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Summary of Significant Accounting Policies (Schedule of Earnings Per Share) (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Summary of Significant Accounting Policies [Abstract]
Net loss	$ (10,539)	$ (10,353)	$ (21,233)	$ (20,294)
Weighted average common stock outstanding used to compute net loss per share, basic and diluted (in shares)	34,534,099	32,682,360	34,435,812	32,010,335
Net loss, basic and diluted (in USD per share)	$ (0.31)	$ (0.32)	$ (0.62)	$ (0.63)

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Summary of Significant Accounting Policies (Schedule of Potentially Dilutive Securities Not Included in Calculation of Earnings per Share) (Details) - shares	6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of earnings per share (in shares)	4,458,474	4,671,955
Common Stock Options [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of earnings per share (in shares)	4,188,097	4,632,866
Restricted Stock Units [Member]
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of earnings per share (in shares)	270,377	39,089

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Fair Value Measurements (Details) - USD ($)	Jun. 30, 2021	Dec. 31, 2020	Jun. 30, 2020
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Fair Value, Assets, Level 1 to Level 2 Transfers, Amount	$ 0		$ 0
Fair Value, Assets, Level 2 to Level 1 Transfers, Amount	0		$ 0
Recurring [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets	127,584,000	$ 146,311,000
Recurring [Member] | Money Market Funds [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets	101,291,000	60,295,000
Recurring [Member] | Commercial Papers [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets	5,798,000	39,577,000
Recurring [Member] | Corporate Bonds/Notes [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets	5,371,000	7,969,000
Recurring [Member] | U.S. Government Securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets	15,124,000	38,470,000
Recurring [Member] | Level 1 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets	101,291,000	60,295,000
Recurring [Member] | Level 1 [Member] | Money Market Funds [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets	101,291,000	60,295,000
Recurring [Member] | Level 2 [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets	26,293,000	86,016,000
Recurring [Member] | Level 2 [Member] | Commercial Papers [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets	5,798,000	39,577,000
Recurring [Member] | Level 2 [Member] | Corporate Bonds/Notes [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets	5,371,000	7,969,000
Recurring [Member] | Level 2 [Member] | U.S. Government Securities [Member]
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]
Assets	$ 15,124,000	$ 38,470,000

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Balance Sheet Components (Narrative) (Details) - USD ($)	Jun. 30, 2021	Dec. 31, 2020
Inventory [Line Items]
Weighted average days to maturity	95 days
Work-in-process inventories	$ 0
Excess And Obsolete Inventory [Member]
Inventory [Line Items]
Loss contingency receivable	$ 1,000	$ 2,377,000

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Balance Sheet Components (Fair Value of Available-For-Sale Investments) (Details) - USD ($) $ in Thousands	Jun. 30, 2021	Dec. 31, 2020
Money Market Funds [Member]
Debt Securities, Available-for-sale [Line Items]
Amortized Cost	$ 101,291	$ 60,295
Estimated Fair Value	101,291	60,295
Commercial Paper [Member]
Debt Securities, Available-for-sale [Line Items]
Amortized Cost	5,798	39,577
Estimated Fair Value	5,798	39,577
Corporate Bonds/Notes [Member]
Debt Securities, Available-for-sale [Line Items]
Amortized Cost	5,371	7,970
Gross Unrealized Losses		(1)
Estimated Fair Value	5,371	7,969
U.S. Government Securitie [Member]
Debt Securities, Available-for-sale [Line Items]
Amortized Cost	15,121	38,430
Gross Unrealized Gains	3	42
Gross Unrealized Losses		(2)
Estimated Fair Value	15,124	38,470
Asset-Backed Securities [Member]
Debt Securities, Available-for-sale [Line Items]
Amortized Cost	127,581	146,272
Gross Unrealized Gains	3	42
Gross Unrealized Losses		(3)
Estimated Fair Value	127,584	146,311
Cash Equivalents [Member]
Debt Securities, Available-for-sale [Line Items]
Estimated Fair Value	101,291	68,295
Short-Term Investments [Member]
Debt Securities, Available-for-sale [Line Items]
Estimated Fair Value	26,293	78,016
Long-Term Investments [Member]
Debt Securities, Available-for-sale [Line Items]
Estimated Fair Value	$ 127,584	$ 146,311

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Balance Sheet Components (Available-for-Sale Investments in Unrealized Loss Position) (Details) $ in Thousands	Dec. 31, 2020 USD ($)
Debt Securities, Available-for-sale [Line Items]
Fair Value, Less than 12 months	$ 15,497
Unrealized Loss, Less than 12 months	(3)
Corporate Bonds/Notes [Member]
Debt Securities, Available-for-sale [Line Items]
Fair Value, Less than 12 months	5,369
Unrealized Loss, Less than 12 months	(1)
U.S. Government Securitie [Member]
Debt Securities, Available-for-sale [Line Items]
Fair Value, Less than 12 months	10,128
Unrealized Loss, Less than 12 months	$ (2)

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Balance Sheet Components (Schedule of Inventory) (Details) - USD ($) $ in Thousands	Jun. 30, 2021	Dec. 31, 2020
Balance Sheet Components [Abstract]
Raw materials	$ 2,153	$ 1,785
Finished products	10,662	10,599
Inventory, gross	12,815	12,384
Less: Reserve for excess and obsolete	(44)	(2,395)
Inventories	$ 12,771	$ 9,989

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Balance Sheet Components (Accrued Liabilities) (Details) - USD ($) $ in Thousands	Jun. 30, 2021	Dec. 31, 2020
Balance Sheet Components [Abstract]
Accrued payroll and related expenses	$ 9,246	$ 9,573
Provision for sales returns	588	820
Accrued professional services	1,552	2,520
Recall replacement obligation	21	1,696
Operating lease liability	958	850
Accrued royalty expense	660	518
Deferred revenue	478	206
Accrued travel expenses	526	237
Accrued clinical expenses	182	113
Accrued other expenses	494	424
Total	$ 14,705	$ 16,957

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Long-term Debt - CRG (Narrative) (Details) - Term Loan [Member] - USD ($)	1 Months Ended
	Sep. 30, 2018	Apr. 30, 2017	Jun. 30, 2021
Debt Instrument [Line Items]
Debt, face amount			$ 30,000,000
Term Loan, Tranche A [Member]
Debt Instrument [Line Items]
Debt, face amount			20,000,000
Term Loan, Tranche B [Member]
Debt Instrument [Line Items]
Debt, face amount			$ 10,000,000
Proceeds from debt		$ 5,000,000
Term Loan, Additional [Member]
Debt Instrument [Line Items]
Proceeds from debt	$ 0
Term Loan, Amended [Member]
Debt Instrument [Line Items]
Debt, face amount	25,000,000
Proceeds from debt	$ 15,000,000
Stated interest rate	10.00%
Interest rate paid-in-kind	8.00%
Interest rate paid in cash	2.00%

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Long-term Debt - Stifel Bank (Narrative) (Details) - USD ($)	1 Months Ended	6 Months Ended
	Oct. 31, 2020	Jun. 30, 2021
Term Loan [Member]
Subsequent Event [Line Items]
Debt pay off	$ 46,674,000
Prepayment premium fee	305,000
Debt interest	365,000
Facility fee	2,191,000
Loss on debt extinguishment	(1,119,000)
Letter of Credit [Member] | Stifel Bank [Member]
Subsequent Event [Line Items]
Facility amount		$ 50,000,000
Amount drawn on facility	$ 49,000,000
Aggregate outstanding principal balance		$ 49,000,000
Annual interest rate		4.75%
Percentage of revenue for debt repayment		80.00%
Percent of original principal threshold		0.75%
Redemption amount		$ 375,000
Debt default rate		5.00%
Stated interest rate		4.75%
Secured Revolving Credit Facility [Member] | Stifel Bank [Member]
Subsequent Event [Line Items]
Facility amount		$ 50,000,000
Secured Revolving Credit Facility, Subfacility [Member] | Stifel Bank [Member]
Subsequent Event [Line Items]
Facility amount		2,000,000
Minimum [Member] | Letter of Credit [Member] | Stifel Bank [Member]
Subsequent Event [Line Items]
Restricted Cash		$ 20,000,000
Minimum [Member] | Letter of Credit [Member] | Prime Rate [Member] | Stifel Bank [Member]
Subsequent Event [Line Items]
Variable interest rate		0.50%
Maximum [Member] | Letter of Credit [Member] | Stifel Bank [Member]
Subsequent Event [Line Items]
Restricted Cash		$ 60,000,000
Maximum [Member] | Letter of Credit [Member] | Prime Rate [Member] | Stifel Bank [Member]
Subsequent Event [Line Items]
Variable interest rate		0.75%

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Long-term Debt (Future Maturities Under the Term Loan) (Details) $ in Thousands	Jun. 30, 2021 USD ($)
Long-term Debt [Abstract]
2021	$ 1,183
2022	6,257
2023	25,749
2024	21,457
Long-term debt, gross before accretion of closing fees	54,646
Less: Amount representing interest	(5,646)
Less: Amount representing debt discount and debt issuance costs	(386)
Present value of minimum payments	$ 48,614

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Commitments and Contingencies - Lease (Narrative) (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020	May 31, 2021	Dec. 31, 2020
Lessee, Lease, Description [Line Items]
Operating Lease, Right-of-Use Asset	$ 5,823		$ 5,823		$ 3,398	$ 2,798
Operating Lease, Liability	6,706		6,706		$ 3,398	$ 3,700
Operating lease costs	289	$ 217	506	$ 435
Operating lease liabilities	$ 190	$ 188	$ 393	$ 372
Weighted average discount rate	6.50%		6.50%
Weighted average remaining lease term	5 years 11 months 1 day		5 years 11 months 1 day
Headquarters [Member]
Lessee, Lease, Description [Line Items]
Renewal term	5 years		5 years
Additional Office, Laboratory And Manufacturing Space [Member]
Lessee, Lease, Description [Line Items]
Renewal term	5 years		5 years

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Commitments and Contingencies - Purchase Obligation and Contingencies (Narrative) (Details) $ in Thousands	Jun. 30, 2021 USD ($)
Commitments and Contingencies [Abstract]
Purchase obligation	$ 6,304

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Commitments and Contingencies (Balance Sheet Information) (Details) - USD ($) $ in Thousands	Jun. 30, 2021	May 31, 2021	Dec. 31, 2020
Commitments and Contingencies [Abstract]
Operating lease right-of-use asset in other non-current assets	$ 5,823	$ 3,398	$ 2,798
Operating lease liability in accrued liabilities	958		850
Operating lease liability in other liabilities	5,748		2,850
Total operating lease liabilities	$ 6,706	$ 3,398	$ 3,700

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Commitments and Contingencies (Operating Lease Maturities) (Details) - USD ($) $ in Thousands	Jun. 30, 2021	May 31, 2021	Dec. 31, 2020
Commitments and Contingencies [Abstract]
2021	$ (1,058)
2022	1,577
2023	1,970
2024	1,768
2025	886
2026 and thereafter	3,686
Total lease payments	8,829
Less: interest	(2,123)
Total lease liabilities	$ 6,706	$ 3,398	$ 3,700

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Stockholders' Equity (Details) - $ / shares	Jun. 30, 2021	Dec. 31, 2020
Stockholders' Equity [Abstract]
Preferred shares authorized (in shares)	5,000,000	5,000,000
Preferred shares (in USD per share)	$ 0.001	$ 0.001
Preferred stock, shares outstanding (in shares)	0	0
Preferred stock, shares issued (in shares)	0	0
Shares authorized (in shares)	100,000,000	100,000,000
Par value (in USD per share)	$ 0.001	$ 0.001
Shares issued (in shares)	34,623,409	34,249,649
Shares outstanding (in shares)	34,623,409	34,249,649

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Stock Option Plans (Narrative) (Details) - USD ($) $ in Thousands	1 Months Ended	6 Months Ended
	Mar. 31, 2019	Jun. 30, 2021
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Compensation expensed not yet recognized		$ 22,679
Compensation expensed not yet recognized, period for recognition		2 years 9 months 25 days
ISO and NSO [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Exercise threshold as a percentage of fair value of shares		10.00%
Option term		10 years
Option vesting term		4 years
ISO [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Exercise threshold as a percentage of fair value of shares		100.00%
NSO [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Exercise threshold as a percentage of fair value of shares		85.00%
Common Stock Options [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Aggregate intrinsic value of options exercised		$ 15,152
Restricted Stock Units [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Option vesting term		4 years
Compensation expensed not yet recognized, period for recognition		3 years 6 months 14 days
Unrecognized compensation costs of unvested RSUs		$ 13,008
Maximum [Member] | ISO and NSO [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Exercise threshold as a percentage of fair value of shares		110.00%
2019 Equity Incentive Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Shares of common stock reserved for issuance (in shares)	2,317,000	5,012,235
Common stock reserved for future issuance (in shares)	434,000
Percent of purchase of price of common stock	1.00%
Compensation expensed not yet recognized, period for recognition		4 months 20 days
Unrecognized compensation costs related to the ESPP		$ 314
2019 Equity Incentive Plan [Member] | Scenario, Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Number of additional shares allowable under the plan (in shares)		3,000,000
Percent of outstanding shares of common stock		4.00%
2019 Equity Incentive Plan [Member] | Common Stock Options [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Common stock reserved for future issuance (in shares)		1,089,048
Percent of purchase of price of common stock		85.00%
Issuance of common stock under employee stock purchase plan (in shares)		141,059
Shares available for future issuance (in shares)		947,989
2019 Equity Incentive Plan [Member] | Maximum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Common stock reserved for future issuance (in shares)	1,200,000

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Stock Option Plans (Activity Under Compensation Plan) (Details) - 2019 Equity Incentive Plan [Member]	6 Months Ended
	Jun. 30, 2021 shares
Shares Available for Grant
Beginning balance (in shares)	1,790,687
Authorized (in shares)	1,369,985
Granted/Awarded (in shares)	(545,874)
Canceled (in shares)	46,748
Ending balance (in shares)	2,661,546

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Stock Option Plans (Stock Option Activity) (Details) $ / shares in Units, $ in Thousands	6 Months Ended	12 Months Ended
	Jun. 30, 2021 USD ($) $ / shares shares	Dec. 31, 2020 USD ($) $ / shares shares
Number of Shares
Beginning balance (in shares) | shares	4,237,828
Options granted (in shares) | shares	312,961
Options exercised (in shares) | shares	(318,594)
Options cancelled (in shares) | shares	(44,098)
Ending balance (in shares) | shares	4,188,097	4,237,828
Vested and exercisable (in shares) | shares	2,673,791
Vested and expect to vest (in shares) | shares	4,188,097
Weighted Average Exercise Price
Beginning balance (in USD per share) | $ / shares	$ 16.56
Options granted (in USD per share) | $ / shares	54.18
Options exercised (in USD per share) | $ / shares	5.82
Options cancelled (in USD per share) | $ / shares	35.72
Ending balance (in USD per share) | $ / shares	19.99	$ 16.56
Vested and exercisable (in USD per share) | $ / shares	11.11
Vested and expected to vest (in USD per share) | $ / shares	$ 19.99
Weighted Average Remaining Contractual Term (in Years)
Awards outstanding	7 years 1 month 28 days	7 years 4 months 17 days
Vested and exercisable	6 years 4 months 9 days
Vested and expected to vest	7 years 1 month 28 days
Aggregate Intrinsic Value (in thousands)
Awards outstanding | $	$ 122,055	$ 197,407
Vested and exercisable | $	98,665
Vested and expected to vest | $	$ 122,055

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Stock Option Plans (RSUs) (Details) - Restricted Stock Units [Member]	6 Months Ended
	Jun. 30, 2021 $ / shares shares
Number of Restricted Stock Units
Beginning balance (in shares) | shares	68,396
Restricted stock granted (in shares) | shares	232,913
Restricted stock vested (in shares) | shares	(28,282)
Restricted stock forfeited (in shares) | shares	(2,650)
Ending balance (in shares) | shares	270,377
Expected to vest (in shares) | shares	270,377
Weighted Average Grant Date Fair Value
Beginning balance (in USD per share) | $ / shares	$ 46.16
Restricted stock granted (in USD per share) | $ / shares	54.43
Restricted stock vested (in USD per share) | $ / shares	45.64
Restricted stock forfeited (in USD per share) | $ / shares	55.30
Ending balance (in USD per share) | $ / shares	53.25
Expected to vest (in USD per share) | $ / shares	$ 53.25

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Stock Option Plans (Fair Value of Stock Options) (Details)	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Dividend yield
Common Stock Options [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expected volatility, minimum	46.60%	46.60%	45.00%	42.90%
Expected volatility, maximum	47.00%	47.70%	50.40%	47.70%
Risk-free interest rate, minimum	0.93%	0.42%	0.41%	0.42%
Risk-free interest rate, maximum	1.08%	0.56%	1.08%	1.41%
Dividend yield
Common Stock Options [Member] | Minimum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expected term (in years)	5 years 3 months	5 years 3 months	5 years 3 months	5 years 3 months
Common Stock Options [Member] | Maximum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expected term (in years)	6 years 3 months	6 years 3 months	6 years 3 months	6 years 3 months
ESPP [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expected term (in years)	6 months	6 months	6 months	6 months
Expected volatility	51.50%	76.40%
Expected volatility, minimum			44.40%	44.40%
Expected volatility, maximum			76.40%	76.40%
Risk-free interest rate	0.03%	0.14%
Risk-free interest rate, minimum			0.03%	0.14%
Risk-free interest rate, maximum			1.58%	1.58%
Dividend yield

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Stock Option Plans (Stock-based Compensation) (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Stock-based compensation expense	$ 3,409	$ 1,654	$ 6,942	$ 2,947
Cost of Goods Sold [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Stock-based compensation expense	151	89	309	153
Research and Development Expenses [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Stock-based compensation expense	636	246	1,325	423
Selling, General and Administrative Expenses [Member]
Share-based Compensation Arrangement by Share-based Payment Award, Compensation Cost [Line Items]
Stock-based compensation expense	$ 2,622	$ 1,319	$ 5,308	$ 2,371

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401(k) Plan (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 30, 2021	Jun. 30, 2020	Jun. 30, 2021	Jun. 30, 2020
401(k) Plan [Abstract]
Percentage employee contribution			90.00%
Employer discretionary contribution	$ 330	$ 229	$ 696	$ 522
Employer contribution match percentage			50.00%
Percent of matching contribution of the employee's pay			5.00%