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Nature of Business
6 Months Ended
Jun. 30, 2023
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Nature of Business

1. Nature of Business

T2 Biosystems, Inc. and its subsidiary (the “Company,” “we,” or “T2”) have operations based in Lexington, Massachusetts. T2 Biosystems, Inc. was incorporated on April 27, 2006 as a Delaware corporation. The Company is an in vitro diagnostics company that has developed an innovative and proprietary technology platform that offers a rapid, sensitive and simple alternative to existing diagnostic methodologies. The Company has developed a broad set of applications aimed at lowering mortality rates, improving patient outcomes and reducing the cost of healthcare by helping medical professionals make targeted treatment decisions earlier. The Company’s technology enables rapid detection of pathogens, biomarkers and other abnormalities in a variety of unpurified patient sample types, including whole blood, plasma, serum, saliva, sputum, cerebral spinal fluid and urine, and can detect cellular targets at limits of detection as low as one colony forming unit per milliliter (“CFU/mL”). We are currently targeting a range of critically underserved healthcare conditions, focusing initially on those for which a rapid diagnosis will serve an important dual role – saving lives and reducing costs. The Company’s current development efforts primarily target sepsis, bioterrorism, and Lyme disease, which represent areas of significant unmet medical need in which rapid detection and targeted treatment could lead to improved patient outcomes.

Liquidity and Going Concern

At June 30, 2023, the Company had cash and cash equivalents of $16.1 million, an accumulated deficit of $558.5 million, stockholders’ deficit of $36.4 million and has experienced cash outflows from operating activities since its inception. The future success of the Company is dependent on its ability to successfully commercialize its products, obtain regulatory clearance for and successfully launch its future product candidates, obtain additional capital and ultimately attain profitable operations. The Company has primarily funded its operations through public equity and private debt financings.

The Company is subject to a number of risks similar to other early commercial stage life science companies, including, but not limited to commercially launching the Company’s products, development and market acceptance of the Company’s product candidates, development by its competitors of new technological innovations, protection of proprietary technology, and raising additional capital.

The Company’s T2Dx® Instrument, the T2Candida® Panel, and the T2Bacteria® Panel are authorized for use in the United States by the Food and Drug Administration, or FDA. In June 2020 the FDA extended Emergency Use Authorization, or EUA, to the Company’s T2SARS-CoV-2™ Panel. In 2023, customers have significantly reduced their purchases of the Company’s COVID-19 test and the Company has not forecasted any COVID-19 test sales in 2023.

The Company has a milestone-based product development contract with the Biomedical Advanced Research and Development Authority (“BARDA”) (see Note 11 below) and should BARDA reduce, cancel or not exercise additional options, the Company’s ability to continue to fund the development of its next-generation products may be hindered.

The Company believes that its cash and cash equivalents of $16.1 million at June 30, 2023 will not be sufficient to fund its current operating plan through the fourth quarter of 2023. Certain elements of the Company’s operating plan cannot be considered probable, and in order to support the business, the Company initiated a process to explore a range of strategic alternatives focused on maximizing values. Under ASC 205-40, the future receipt of potential funding from co-development partners and other resources cannot be considered probable at this time because none of the plans are entirely within the Company’s control.

In May 2023, as part of a strategic restructuring program, the Company initiated a workforce reduction of nearly 30%. Additionally, the Company is continuing to explore alternative strategic options, including an acquisition, merger, reverse merger, other business combination, sale of assets or licensing. In May 2023, CRG reduced the minimum liquidity covenant under its Term Loan Agreement with CRG from $5.0 million to $500,000 until December 31, 2023. In July 2023, the Company also converted $10 million of the outstanding debt under its Term Loan Agreement with CRG to equity (see Note 6 below).

The Nasdaq Stock Market LLC (“Nasdaq”) has rules that require all companies listed on the Nasdaq Capital Market to maintain a $1.00 minimum bid price (the “Minimum Bid Price Rule”) and to maintain a minimum value of listed securities (the “MVLS Rule”) of at least $35 million.

On November 22, 2022, the Company received notice from the Nasdaq indicating that the Company was in violation of the MVLS Rule. The Company was provided 180 days, or until May 22, 2023, to regain compliance, which includes maintaining a closing market value of its listed securities of at least $35 million for a minimum of ten consecutive trading days. On March 30, 2023, the Company received notice from the Nasdaq indicating that the Company was in violation of the Minimum Bid Price Rule. On May 23, 2023, the Nasdaq notified the Company that its securities were subject to delisting due to non-compliance with Nasdaq’s MVLS Rule. The Company requested a hearing with the Nasdaq and on July 6, 2023 appealed to the Nasdaq Hearings Panel for an extension to the time period in which to regain compliance with the MVLS Rule and the Minimum Bid Price Rule. On July 26, 2023, we filed a definitive proxy statement to effect a reverse stock split of our common stock in connection with our annual meeting that will occur in September 2023 to help regain compliance with the Nasdaq rules. However, there is no assurance that the shareholder vote required for the reverse stock split or that any other actions that we take to restore our compliance with the Nasdaq rules will be successful. On July 27, 2023, the Nasdaq granted the Company’s request for an extension to comply with applicable rules until November 20, 2023.

These conditions raise substantial doubt regarding the Company’s ability to continue as a going concern for a period of one year after the date that the financial statements are issued. Management’s plans to alleviate the conditions that raise substantial doubt include raising additional funding and maintaining reduced operating expenses in order to continue as a going concern for a period of 12 months from the date these condensed consolidated financial statements are issued. Management has concluded the likelihood that its plan to successfully obtain sufficient funding from one or more of these sources or maintain reduced expenditures, while reasonably possible, is less than probable. Accordingly, the Company has concluded that substantial doubt exists about the Company’s ability to continue as a going concern for a period of at least 12 months from the date of issuance of these financial statements. See Part II, Item 1A—“Risk Factors” in this Quarterly Report on Form 10-Q.

The accompanying financial statements have been prepared on a going concern basis, which contemplates the realization of assets and satisfaction of liabilities in the ordinary course of business. The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might result from the outcome of the uncertainties described above.