UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the quarterly period ended
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period from __________ to ____________
Commission File Number:
(Exact Name of Registrant as Specified in its Charter)
(State or other jurisdiction of incorporation or organization) |
(I.R.S. Employer |
(Address of principal executive offices) |
(Zip Code) |
Registrant’s telephone number, including area code: (
N/A
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
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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.
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).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, 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 |
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Accelerated filer |
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Smaller reporting company |
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Emerging growth company |
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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 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No
As of May 4, 2023, the registrant had
Table of Contents
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PART I. |
5 |
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Item 1. |
5 |
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5 |
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Condensed Consolidated Statements of Operations and Comprehensive Loss (Unaudited) |
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Condensed Consolidated Statements of Stockholders’ Equity (Unaudited) |
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8 |
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Notes to Condensed Consolidated Financial Statements (Unaudited) |
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Item 2. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations |
21 |
Item 3. |
28 |
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Item 4. |
28 |
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PART II. |
29 |
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Item 1. |
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Item 1A. |
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Item 2. |
30 |
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Item 3. |
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Item 4. |
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Item 5. |
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Item 6. |
31 |
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32 |
2
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
Unless the context otherwise requires, references in this Quarterly Report on Form 10-Q to the “Company,” “Sight Sciences,” “we,” “us” and “our” refer to Sight Sciences, Inc.
This Quarterly Report on Form 10-Q for the fiscal period ended March 31, 2023 (this "Quarterly Report") contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. We intend such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). All statements other than statements of historical facts contained in this Quarterly Report, including statements regarding our future results of operations or financial condition, business strategy and plans, and objectives of management for future operations, are forward-looking statements. In some cases, you can identify forward-looking statements because they contain words such as “anticipate,” “believe,” “contemplate,” “continue,” “could,” “estimate,” “expect,” “hope,” “intend,” “may,” “might,” “objective,” “ongoing,” “plan,” “potential,” “predict,” “project,” “should,” “target,” “will,” or “would” or the negative of these words or other similar terms or expressions. These forward-looking statements include, but are not limited to, statements concerning the following:
Actual events or results may differ from those expressed in forward-looking statements. As such, you should not rely on forward-looking statements as predictions of future events. We have based the forward-looking statements contained in this Quarterly Report primarily on our current expectations and projections about future events and trends that we believe may affect our business, financial condition, operating results, prospects, strategy, and financial needs. The outcome of the events described in these forward-looking statements is subject to risks, uncertainties, assumptions, and other factors described in the section titled “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2022 filed with the Securities and Exchange Commission (the "SEC") on March 16, 2023 (the "2022 Form 10-K") and elsewhere in this Quarterly Report. Moreover, we operate in a highly competitive and rapidly changing environment. New risks and uncertainties emerge from time to time, and it is not possible for us to predict all risks and uncertainties that could have an impact on the forward-looking statements contained in this Quarterly Report. The results, events and circumstances reflected in the forward-looking
3
statements may not be achieved or occur, and actual results, events or circumstances could differ materially from those described in the forward-looking statements.
The forward-looking statements in this Quarterly Report are based on information available to us as of the date of this Quarterly Report. While we believe that such information provides a reasonable basis for these statements, such information may be limited or incomplete. Our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all relevant information. These statements are inherently uncertain, and investors are cautioned not to unduly rely on these statements.
You should read this Quarterly Report and the documents that we reference in this Quarterly Report and have filed as exhibits to this Quarterly Report with the understanding that our actual future results, performance and achievements may be materially different from what we expect. We qualify all of our forward-looking statements by these cautionary statements. The forward-looking statements made in this Quarterly Report relate only to events as of the date on which the statements are made. We undertake no obligation to update any forward-looking statements made in this Quarterly Report to reflect events or circumstances after the date of this Quarterly Report or to reflect new information, actual results, revised expectations, or the occurrence of unanticipated events, except as required by law. We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements, and you should not place undue reliance on our forward-looking statements.
4
PART 1. FINANCIAL INFORMATION
Item 1. Financial Statements
SIGHT SCIENCES, INC.
Condensed Consolidated Balance Sheets (Unaudited)
(in thousands, except share and per share data)
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March 31, |
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December 31, |
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2023 |
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2022 |
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Assets |
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Current assets: |
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Cash and cash equivalents |
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$ |
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$ |
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Accounts receivable, net of allowance for credit losses of $ |
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Inventory, net |
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Prepaid expenses and other current assets |
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Total current assets |
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Property and equipment, net |
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Operating lease right-of-use assets |
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Other noncurrent assets |
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Total assets |
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$ |
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$ |
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Liabilities and stockholders’ equity |
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Current liabilities: |
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Accounts payable |
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$ |
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$ |
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Accrued compensation |
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Accrued and other current liabilities |
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Total current liabilities |
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Long-term debt |
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Other noncurrent liabilities |
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Total liabilities |
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(Note 6) |
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Stockholders’ equity: |
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Preferred stock par value of $ |
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Common stock par value of $ |
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Additional paid-in-capital |
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Accumulated deficit |
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( |
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( |
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Total stockholders’ equity |
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Total liabilities and stockholders’ equity |
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$ |
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$ |
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The accompanying notes are an integral part of these condensed consolidated financial statements.
5
SIGHT SCIENCES, INC.
Condensed Consolidated Statements of Operations and Comprehensive Loss (Unaudited)
(in thousands, except share and per share data)
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Three Months Ended |
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2023 |
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2022 |
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Revenue |
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$ |
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$ |
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Cost of goods sold |
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Gross profit |
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Operating expenses: |
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Research and development |
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Selling, general and administrative |
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Total operating expenses |
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Loss from operations |
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( |
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( |
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Interest expense |
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( |
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( |
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Other income (expense), net |
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( |
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Loss before income taxes |
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( |
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( |
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Provision for income taxes |
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Net loss and comprehensive loss |
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$ |
( |
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$ |
( |
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Net loss per share attributable to common stockholders, basic and diluted |
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$ |
( |
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$ |
( |
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Weighted-average shares used in computing net loss per share attributable to common stockholders, basic and diluted |
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The accompanying notes are an integral part of these condensed consolidated financial statements.
6
SIGHT SCIENCES, INC.
Condensed Consolidated Statements of Stockholders’ Equity (Unaudited)
(in thousands, except share data)
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Three Months Ended March 31, 2023 |
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Common Stock |
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Additional |
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Accumulated |
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Total |
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Shares |
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Amount |
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Capital |
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Deficit |
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Equity |
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Balance at December 31, 2022 |
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$ |
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$ |
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$ |
( |
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$ |
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Issuance of common stock upon exercise of stock options |
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— |
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— |
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Issuance of common stock upon vesting of restricted stock units |
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— |
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— |
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— |
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— |
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Withholding taxes on net share settlement of restricted stock units |
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— |
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— |
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( |
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— |
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( |
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Stock-based compensation expense |
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— |
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— |
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— |
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Net loss |
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— |
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— |
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— |
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( |
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( |
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Balance at March 31, 2023 |
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( |
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Three Months Ended March 31, 2022 |
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Common Stock |
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Additional |
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Accumulated |
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Total |
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Shares |
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Amount |
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Capital |
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Deficit |
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Equity |
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Balance at December 31, 2021 |
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$ |
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$ |
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$ |
( |
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$ |
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Issuance of common stock upon exercise of stock options |
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— |
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— |
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Stock-based compensation expense |
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— |
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— |
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— |
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Net loss |
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— |
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— |
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— |
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( |
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( |
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Balance at March 31, 2022 |
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( |
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The accompanying notes are an integral part of these condensed consolidated financial statements.
7
SIGHT SCIENCES, INC.
Condensed Consolidated Statements of Cash Flows (Unaudited)
(in thousands)
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Three Months Ended |
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March 31, |
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2023 |
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2022 |
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Cash flows from operating activities |
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Net loss |
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$ |
( |
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$ |
( |
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Adjustments to reconcile net loss to net cash used in operating activities: |
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Depreciation |
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Accretion of debt discount and amortization of debt issuance costs |
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Stock-based compensation expense |
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Provision for doubtful accounts receivable |
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( |
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( |
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Provision for excess and obsolete inventories |
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Noncash operating lease expense |
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Loss on disposal of property and equipment |
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Changes in operating assets and liabilities: |
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Accounts receivable |
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( |
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( |
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Inventory |
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( |
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( |
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Prepaid expenses and other current assets |
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Other noncurrent assets |
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( |
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Accounts payable |
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( |
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Accrued compensation |
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( |
) |
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( |
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Accrued and other current liabilities |
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( |
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Other noncurrent liabilities |
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Net cash used in operating activities |
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( |
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( |
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Cash flows from investing activities |
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Purchases of property and equipment |
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( |
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( |
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Net cash used in investing activities |
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( |
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( |
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Cash flows from financing activities |
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Proceeds from exercise of common stock options |
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Taxes paid on the net share settlement of restricted stock units |
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( |
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Net cash (used in) provided by financing activities |
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( |
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Net change in cash and cash equivalents |
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( |
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( |
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Cash and cash equivalents at beginning of period |
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Cash and cash equivalents at end of period |
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$ |
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$ |
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Supplemental disclosure of cash flow information |
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Cash paid for interest |
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$ |
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$ |
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Supplemental noncash disclosure |
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Acquisition of property and equipment included in accounts payable and accrued liabilities |
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$ |
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$ |
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The accompanying notes are an integral part of these condensed consolidated financial statements.
8
SIGHT SCIENCES, INC.
Notes to Condensed Consolidated Financial Statements (Unaudited)
Note 1. Company and Nature of Business
Description of Business
Sight Sciences, Inc. (the “Company”) was incorporated in the State of Delaware in 2010 and is headquartered in Menlo Park, California. The Company is an ophthalmic medical device company focused on the development and commercialization of surgical and nonsurgical technologies for the treatment of prevalent eye diseases.
Significant Risks and Uncertainties
Since inception, the Company has incurred losses and negative cash flows from operations. As of March 31, 2023, the Company had an accumulated deficit of $
The Company believes that its existing sources of liquidity will satisfy its working capital and capital requirements for at least 12 months from the issuance of its financial statements. Any failure to generate increased revenues, achieve improved gross margins, or control operating costs could require the Company to raise additional capital through equity or debt financing. Such additional financing may not be available on acceptable terms, or at all, and could require the Company to modify, delay, or abandon some of its planned future expansion or expenditures or reduce some of its ongoing operating costs, which could harm its business, operating results, financial condition, and ability to achieve its intended business objectives.
Note 2. Summary of Significant Accounting Policies
There have been no significant changes in the Company's significant accounting policies during the three months ended March 31, 2023, as compared with those disclosed in the 2022 Form 10-K for the year ended December 31, 2022 filed with the U.S. Securities and Exchange Commission (SEC) on March 16, 2023.
Basis of Presentation
The accompanying condensed consolidated financial statements are unaudited and have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) applicable to interim periods and pursuant to the instructions to Form 10-Q and Article 10 of Regulation S-X.
The unaudited consolidated financial statements have been prepared on a basis consistent with the audited financial statements. In the opinion of management, the unaudited consolidated financial statements reflect all adjustments, which include only normal recurring adjustments, necessary for the fair presentation of the Company's financial information contained herein. The condensed consolidated balance sheets as of December 31, 2022 has been derived from the audited financial statements at that date. These interim condensed consolidated financial statements do not include all disclosures required by GAAP and should be read in conjunction with the Company's financial statements and accompanying notes for the fiscal year ended December 31, 2022, which are contained in the Company's 2022 Form 10-K filed with the SEC on March 16, 2023. The Company's results of operations for the three months ended March 31, 2023 are not necessarily indicative of the results to be expected for the year ending December 31, 2023 or for any other interim period.
The accompanying condensed consolidated financial statements reflect the operations of the Company and its wholly-owned subsidiaries. All intercompany accounts and transactions have been eliminated.
9
Use of Estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. The most significant estimates related to the provision for doubtful accounts, inventory excess and obsolescence, the selection of useful lives of property and equipment, determination of the fair value of stock option grants, and provisions for income taxes and contingencies. Management evaluates its estimates and assumptions on an ongoing basis using historical experience and other factors, including the current economic environment, and makes adjustments when facts and circumstances dictate. These estimates are based on information available as of the date of the financial statements. Actual results could differ from these estimates and such differences could be material to the Company’s financial position and results of operations.
New Accounting Pronouncements
Accounting Standards Adopted
In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which amends the impairment model by requiring entities to use a forward-looking approach based on expected losses to estimate credit losses on certain types of financial instruments, including trade receivables and available-for-sale debt securities. The guidance was effective for the Company beginning in the first quarter of 2023. The amendments in ASU 2016-13 were adopted with no material impact on the Company's consolidated financial statements.
Accounting Standards Net Yet Adopted
As of March 31, 2023, there are no significant ASU's issued and not yet adopted, that are expected to have a material impact on the Company's financial statements and related disclosures.
Note 3. Fair Value Measurements
The Company reports all financial assets and liabilities and nonfinancial assets and liabilities that are recognized or disclosed at fair value in the financial statements on a recurring basis. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. The authoritative guidance establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to measurements involving significant unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are as follows:
Level 1—Inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date.
Level 2—Inputs are observable, unadjusted quoted prices in active markets for similar assets or liabilities, unadjusted quoted prices for identical or similar assets or liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the related assets or liabilities.
Level 3—Inputs are unobservable inputs for the asset or liability. The level in the fair value hierarchy within which a fair value measurement in its entirety is based on the lowest-level input that is significant to the fair value measurement in its entirety.
The Company's cash and cash equivalents included $
10
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March 31, 2023 |
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Amortized Cost |
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Unrealized Gains |
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Unrealized Losses |
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Aggregate Fair Value |
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U.S. treasury securities |
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$ |
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$ |
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$ |
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$ |
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The Company measures the fair value of outstanding debt for disclosure purposes on a recurring basis. As of March 31, 2023 and December 31, 2022, total debt of $
The financial statements as of March 31, 2023 and December 31, 2022, do not include any assets or liabilities that are measured at fair value on a nonrecurring basis.
Note 4. Balance Sheet Components
Property and Equipment, Net
Property and equipment, net consist of the following (in thousands):
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As of March 31, |
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As of December 31, |
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2023 |
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2022 |
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Tools and equipment |
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$ |
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$ |
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Computer equipment and software |
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Furniture and fixtures |
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Leasehold improvements |
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Construction in process |
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Less: Accumulated depreciation |
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( |
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( |
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Property and equipment, net |
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$ |
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$ |
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Depreciation expense was $
Accrued and Other Current Liabilities
Accrued and other current liabilities consist of the following (in thousands):
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As of March 31, |
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As of December 31, |
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2023 |
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2022 |
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Accrued expenses |
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$ |
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$ |
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Current portion of lease liabilities |
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Short term interest payable |
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Other accrued liabilities |
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Total accrued and other current liabilities |
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$ |
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$ |
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Other Noncurrent Liabilities
Other noncurrent liabilities consist of the following (in thousands):
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As of March 31, |
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|
As of December 31, |
|
||
|
|
2023 |
|
|
2022 |
|
||
Long term interest payable |
|
$ |
|
|
$ |
|
||
Noncurrent portion of lease liabilities |
|
|
|
|
|
|
||
Other noncurrent liabilities |
|
|
|
|
|
|
||
Total other noncurrent liabilities |
|
$ |
|
|
$ |
|
||
11
Note 5. Debt
The Company currently has two credit and security agreements with MidCap Financial Services (the "Lender"), which provide for a maximum $
The obligations under the MidCap Credit Facility are guaranteed by the Company's current and future subsidiaries, subject to exceptions for certain foreign subsidiaries. Obligations under the agreements are secured by substantially all assets of the Company, including material intellectual property. Additionally, the Company is subject to customary affirmative and negative covenants as defined in the credit agreements, including covenants that limit or restrict the ability to, among other things, incur indebtedness, grant liens, merge or consolidate, make investments, dispose of assets, make acquisitions, pay dividends or make distributions, repurchase stock and enter into certain transactions with affiliates, in each case subject to certain exceptions. As of March 31, 2023, the Company was in compliance with all financial and non-financial covenants.
The MidCap Credit Facility agreements each contain events of default that include, among others, non-payment of principal, interest or fees, breach of covenants, inaccuracy of representations and warranties, cross-defaults and bankruptcy and insolvency events.
As of March 31, 2023 and December 31, 2022, $
|
|
As of March 31, |
|
|
As of December 31, |
|
||
|
|
2023 |
|
|
2022 |
|
||
Term Loan |
|
$ |
|
|
$ |
|
||
Total principal payments due |
|
|
|
|
|
|
||
Less: debt discount related to warrant liability and issuance costs |
|
|
( |
) |
|
|
( |
) |
Total amounts outstanding |
|
|
|
|
|
|
||
Less: Current portion |
|
|
|
|
|
|
||
Total accrued and other current liabilities |
|
$ |
|
|
$ |
|
||
The repayment schedule relating to the Company’s debt as of March 31, 2023, is as follows (in thousands):
|
|
Amount |
|
|
2023 (remainder) |
|
|
|
|
2024 |
|
|
|
|
2025 |
|
|
|
|
Thereafter |
|
|
|
|
Total repayments |
|
$ |
|
|
Note 6. Commitments and Contingencies
Operating Lease Obligations
The Company’s leases include facility leases and storage leases. In determining the present value of lease payments, the Company uses its incremental borrowing rate based on the information available at the lease commencement date if the rate implicit in the lease is not readily determinable. The Company estimates its incremental borrowing rate based on qualitative factors including company specific credit offers, lease term, general economics, and the interest rate environment. In determining the lease term, the Company includes all renewal options that are reasonably probable to be executed.
During the first quarter of 2021, the Company renewed its lease on its corporate headquarters in Menlo Park, California. The lease commenced in early and is for a term of
12
date. The Company recorded an aggregate right-of-use ("ROU") asset and lease liability of $
During the fourth quarter of 2022, the Company entered into a supply agreement that is expected to last approximately
The Company recognizes rent expense on a straight-line basis over the noncancelable lease term. The Company’s rent expense was $
Operating lease expense and supplemental cash flow information related to operating leases for the three months ended March 31, 2023 and 2022 were as follows (in thousands):
|
|
Three Months Ended |
|
|
|||||
|
|
2023 |
|
|
2022 |
|
|
||
Operating lease expense |
|
$ |
|
|
$ |
|
|
||
Cash paid for operating leases |
|
|
|
|
|
|
|
||
Aggregate future minimum lease payments at March 31, 2023, under these noncancelable operating leases were as follows (in thousands):
|
|
As of March 31, |
|
|
|
|
|
2023 |
|
|
|
2023 (remainder) |
|
|
|
|
|
2024 |
|
|
|
|
|
Total future minimum lease payments |
|
$ |
|
|
|
Less: imputed interest |
|
|
( |
) |
|
Present value of future minimum lease payments |
|
$ |
|
|
|
Less: current portion of operating lease liability |
|
|
( |
) |
|
Operating lease liabilities – noncurrent |
|
$ |
|
|
|
Legal Proceedings
On September 16, 2021, the Company filed suit in the U.S. District Court for the District of Delaware (C.A. No. 1:21-cv-01317) alleging that Ivantis, Inc. ("Ivantis") directly and indirectly infringes U.S. Patent Nos. 8,287,482, 9,370,443, 9,486,361, and 10,314,742 by making, using, selling, and offering for sale the Hydrus® Microstent. The Company’s Complaint seeks money damages and injunctive relief. On January 24, 2022, Ivantis asserted counterclaims requesting declaratory judgments that the Company's asserted patents-in-suit are not infringed and/or invalid. On August 1, 2022, the Company filed an amended complaint alleging that Alcon Inc., Alcon Vision, LLC and Alcon Research, LLC (collectively, "Alcon") infringe the four originally asserted patents by making, using, selling, and offering for sale the Hydrus® Microstent, and that all defendants also infringe U.S. Patent No. 11,389,328. The defendants reasserted counterclaims requesting declaratory judgments that the Company’s asserted patents-in-suit are not infringed and/or invalid. A five-day jury trial is scheduled to commence on April 8, 2024. Ivantis and Alcon filed petitions with the U.S. Patent Office seeking inter partes review of U.S. Patent Nos. 8,287,482, 9,370,443, 9,486,361, and 10,314,742 (IPR2022-01529, IPR2022-01530, IPR2022-01533, IPR2022-01540), each of which the U.S. Patent Office denied for raising prior art reference and invalidity arguments that were cumulative of those previously considered by the Office. The Company is presently unable to
13
predict the outcome of this lawsuit or to reasonably estimate the potential financial impact of the lawsuit on the Company, if any.
The Company is subject to claims and assessments from time to time in the ordinary course of business. Accruals for litigation and contingencies are reflected in the financial statements based on management’s assessment, including the advice of legal counsel, of the expected outcome of litigation or other dispute resolution proceedings, and/or the expected resolution of contingencies. Liabilities for estimated losses are accrued if the potential losses from any claims or legal proceedings are considered probable and the amounts can be reasonably estimated. Significant judgment is required in both the determination of probability of loss and the determination as to whether the amount can be reasonably estimated. Accruals are based only on information available at the time of the assessment due to the uncertain nature of such matters. As additional information becomes available, management reassesses potential liabilities related to pending claims and litigation and may revise its previous estimates, which could materially affect the Company’s results of operations in a given period. As of March 31, 2023 the Company does not believe it was a party to any legal proceedings or claims which, if determined adversely, would, individually or taken together, have a material adverse effect on its business, financial condition, operating results, liquidity or future prospects. However, regardless of the merits of the claims raised or the outcome, legal proceedings and claims may have an adverse impact on the Company as a result of defense and settlement costs, diversion of management time and resources, and other factors.
Indemnification
In the normal course of business, the Company enters into contracts and agreements that contain a variety of representations and warranties and provide for general indemnifications. The Company’s exposure under these agreements is unknown because it involves claims that may be made against the Company in the future, but that have not yet been made. To date, the Company has not paid any claims or been required to defend any action related to its indemnification obligations. However, the Company may record charges in the future as a result of these indemnification obligations.
The Company indemnifies each of its directors and officers (each an "Indemnitee") 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 an indemnitee may be subject to any proceeding arising out of acts or omissions of such indemnitee in such capacity. The maximum amount of potential future indemnification is unlimited; however, the Company currently holds director and officer liability insurance. This insurance allows the transfer of risk associated with the Company’s exposure and may enable it to recover a portion of any future amounts paid. 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 March 31, 2023 or December 31, 2022.
Note 7. Stockholders' Equity
Common Stock
In connection with the IPO, the Company’s certificate of incorporation was amended and restated to provide for
14
At March 31, 2023 and December 31, 2022, the Company had reserved common stock for future issuances as follows:
|
|
March 31, |
|
|
December 31, |
|
||
|
|
2023 |
|
|
2022 |
|
||
Common stock options issued and outstanding |
|
|
|
|
|
|
||
Common stock available for future grant |
|
|
|
|
|
|
||
Restricted stock units outstanding |
|
|
|
|
|
|
||
Shares available for future purchase under ESPP |
|
|
|
|
|
|
||
Total |
|
|
|
|
|
|
||
Note 8. Equity Incentive Plans
2011 Stock Option Plan and 2021 Incentive Award Plan
In 2011, the Company established its 2011 Stock Option Plan (the “2011 Plan”) that provided for the granting of stock options to employees and nonemployees of the Company.
In July 2021, the board of directors and stockholders adopted and approved the 2021 Incentive Award Plan, (the “2021 Plan”). Under the 2021 Plan, the Company has the ability to issue incentive stock options ("ISOs"), nonqualified stock options ("NSOs"), stock appreciation rights, dividend equivalent rights, restricted stock awards, and restricted stock unit awards. Options under the 2021 Plan can typically be granted for periods of up to 10 years. For stock options granted to a grantee who, at the time the option is granted, owns stock representing more than 10% of the voting power of all classes of stock of the Company (or any parent or subsidiary of the Company), the term of the stock option may be granted for periods of up to five years. The ISOs and NSOs will be granted at a price per share not less than the fair value at the date of grant. The exercise price of a stock option granted to a 10% stockholder shall not be less than 110% of the grant date fair value of the shares. Options granted to new hires generally vest over a four-year period, with 25% of the shares vesting on the first anniversary of the grant date and the remaining shares vesting in 36 equal monthly installments thereafter; options granted as merit awards generally vest in 48 equal monthly installments following the grant date.
The Company initially reserved
The 2011 Plan was superseded by the 2021 Plan at the time of the IPO and no further grants have been made under the 2011 Plan from the date the 2021 Plan became effective. The terms under the 2011 Plan are consistent with those described above for the 2021 Plan.
At March 31, 2023 and December 31, 2022 there were
15
Stock Option Awards
The following table summarizes stock option activity under the 2021 Plan during the periods presented:
|
|
Number of |
|
|
Weighted-Average Exercise Price |
|
|
Weighted-Average |
|
|
Average Intrinsic Value |
|
||||
Balances as of December 31, 2022 |
|
|
|
|
$ |
|
|
|
|
|
$ |
|
||||
Grants |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Forfeited/cancelled |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|||
Exercised/released |
|
|
( |
) |
|
|
|
|
|
|
|
|
|
|||
Balances as of March 31, 2023 |
|
|
|
|
$ |
|
|
|
|
|
$ |
|
||||
Vested and exercisable as of March 31, 2023 |
|
|
|
|
$ |
|
|
|
|
|
$ |
|
||||
Vested and expected to vest as of March 31, 2023 |
|
|
|
|
$ |
|
|
|
|
|
$ |
|
||||
During the three months ended March 31, 2023 and 2022, the Company recorded stock-based compensation expense of $
The aggregate intrinsic value of options exercised was $
Determination of Fair Value
The Company estimated the grant date fair value of stock options using the Black-Scholes option-pricing model. The fair value of stock options is recognized on a straight-line basis over the requisite service periods of the awards.
|
|
Three Months Ended |
|
||
|
|
2023 |
|
2022 |
|
Expected term (in years) |
|
|
|
||
Expected volatility |
|
|
|
||
Risk-free interest rate |
|
|
|
||
Dividend yield |
|
– |
|
– |
|
Expected Term
The expected term is calculated using the simplified method, which is available if there is insufficient historical data about exercise patterns and post vesting employment termination behavior. The simplified method is based on the vesting period and the contractual term for each grant or for each vesting tranche for awards with graded vesting. The midpoint of the vesting date and the maximum contractual expiration date is used as the expected term under this method. For awards with multiple vesting tranches, the time from grant until the midpoints for each of the tranches may be averaged to provide an overall expected term.
Expected Volatility
The Company used an average historical stock price volatility of a peer group of publicly traded companies to be representative of its expected future stock price volatility, as the Company did not have any trading history for its common stock. For purposes of identifying these peer companies, the Company considered the industry, stage of
16
development, size, and financial leverage of potential comparable companies. For each grant, the Company measured historical volatility over a period equivalent to the expected term.
Risk-Free Interest Rate
The risk-free interest rate is based on the implied yield currently available on US Treasury zero-coupon issues with remaining terms equivalent to the expected term of a stock award.
Expected Dividend Rate
The Company has not paid, and does not anticipate paying, any dividends in the near future. Accordingly, the Company has estimated the dividend yield to be
Restricted Stock Units
RSUs are share awards that entitle the holder to receive freely tradeable shares of the Company’s common stock upon vesting. The RSUs cannot be transferred, and the awards are subject to forfeiture if the holder’s employment terminates prior to the release of the vesting restrictions. The RSUs generally vest over a
The following table summarizes restricted share award activity under the 2021 Plan:
|
|
Number of |
|
|
Weighted-Average Grant Date Fair Value Per Share |
|
||
Outstanding, December 31, 2022 |
|
|
|
|
$ |
|
||
Grants |
|
|
|
|
|
|
||
Forfeited/cancelled |
|
|
( |
) |
|
|
|
|
Vested |
|
|
( |
) |
|
|
|
|
Outstanding, March 31, 2023 |
|
|
|
|
$ |
|
||
During three months ended March 31, 2023 and 2022, the Company recorded stock-based compensation expense of $
Employee Stock Purchase Plan
In July 2021, the board of directors and stockholders adopted and approved the 2021 Employee Stock Purchase Plan (the “ESPP”). The Company initially reserved
The Company's first six-month offering period under the ESPP began during the second quarter of 2022. The Company has two offering periods annually, running for six-months, with the first offering period beginning in the second quarter, and the second offering period beginning in the fourth quarter. The purchase of shares for participants in the ESPP occurs at the conclusion of each offering period.
As of March 31, 2023, the Company has collected payroll withholdings of $
17
As of March 31, 2023, there were
The fair value of shares to be issued under the Company's 2021 ESPP was estimated using the Black-Scholes valuation model with the following assumptions for the three months ended March 31, 2023:
|
|
Three Months Ended |
|
|
|
2023 |
|
Expected term (in years) |
|
|
|
Expected volatility |
|
|
|
Risk-free interest rate |
|
|
|
Dividend yield |
|
– |
|
Stock Based Compensation
The following is a summary of stock-based compensation expense by function (in thousands):
|
|
Three Months Ended |
|
|
|||||
|
|
2023 |
|
|
2022 |
|
|
||
Cost of goods sold |
|
$ |
|
|
$ |
|
|
||
Research and development |
|
|
|
|
|
|
|
||
Selling, general and administrative |
|
|
|
|
|
|
|
||
Total stock-based compensation expense |
|
$ |
|
|
$ |
|
|
||
Note 9. Net Loss per Share Attributable to Common Stockholders
Basic net loss per share is computed by dividing the net loss by the weighted-average number of common shares outstanding for the period. As the Company reported a net loss for the three months ended March 31, 2023 and 2022, respectively, basic net loss per share is the same as diluted net loss per share for each of the reported periods.
The following table sets forth the computation of basic and diluted net loss per share attributable to common stockholders (in thousands, except share and per share data):
|
|
Three Months Ended |
|
|
|||||
|
|
2023 |
|
|
2022 |
|
|
||
Numerator: |
|
|
|
|
|
|
|
||
Net loss attributable to common stockholders |
|
$ |
( |
) |
|
$ |
( |
) |
|
Denominator: |
|
|
|
|
|
|
|
||
Weighted-average shares of common stock |
|
|
|
|
|
|
|
||
Net loss per share attributable to common |
|
$ |
( |
) |
|
$ |
( |
) |
|
18
The following potentially dilutive securities were excluded from the computation of diluted net loss per share attributable to common stockholders for the period presented because including them would have been antidilutive as a result of the net loss position:
|
|
March 31, |
|
|||||
|
|
2023 |
|
|
2022 |
|
||
Stock option awards |
|
|
|
|
|
|
||
Restricted stock units |
|
|
|
|
|
|
||
Total |
|
|
|
|
|
|
||
Note 10. Segment Information
The Company has two reportable operating segments which are determined on the basis of the product portfolio: Surgical Glaucoma and Dry Eye. The operating and reportable segments were determined based on how the Company’s Chief Executive Officer, its Chief Operating Decision Maker (“CODM”), views and evaluates the Company’s operations. The CODM allocates resources to and evaluates the financial performance of each operating segment primarily based on gross profit and gross profit margin.
Surgical Glaucoma segment includes sales of the Company’s OMNI® Surgical System ("OMNI") and SIONTM Surgical Instrument ("SION") for use in minimally invasive glaucoma procedures. Dry Eye segment includes sales of the Company’s TearCare® System ("TearCare") and related components and accessories for use in the treatment of Dry Eye Disease.
The following table summarizes select operating results information for each reportable segment (in thousands):
|
|
Three Months Ended |
|
|
|||||
|
|
2023 |
|
|
2022 |
|
|
||
Revenue |
|
|
|
|
|
|
|
||
Surgical Glaucoma |
|
$ |
|
|
$ |
|
|
||
Dry Eye |
|
|
|
|
|
|
|
||
Total |
|
|
|
|
|
|
|
||
Cost of goods sold |
|
|
|
|
|
|
|
||
Surgical Glaucoma |
|
|
|
|
|
|
|
||
Dry Eye |
|
|
|
|
|
|
|
||
Total |
|
|
|
|
|
|
|
||
Gross profit |
|
|
|
|
|
|
|
||
Surgical Glaucoma |
|
|
|
|
|
|
|
||
Dry Eye |
|
|
|
|
|
( |
) |
|
|
Total |
|
|
|
|
|
|
|
||
Operating expense |
|
|
|
|
|
|
|
||
Loss from operations |
|
|
( |
) |
|
|
( |
) |
|
Interest expense |
|
|
( |
) |
|
|
( |
) |
|
Other income (expense), net |
|
|
|
|
|
( |
) |
|
|
Loss before income tax |
|
$ |
( |
) |
|
$ |
( |
) |
|
The Company does not allocate any components of income and expenses beyond revenue and cost of goods sold to the reportable operating segments in its reporting to the CODM. No asset information is provided for reportable operating segments because that information is not reviewed by the CODM on a segment basis. Substantially all of the Company’s revenue is generated from sales in the United States.
19
Note 11. Subsequent Events
The Company evaluated subsequent events through May 8, 2023, the date on which the condensed consolidated financial statements were available for issuance.
20
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our condensed consolidated financial statements and the related notes and other financial information included in this Quarterly Report and our audited financial statements and related notes as disclosed in our 2022 Form 10-K. Certain statements included in this discussion and analysis constitute “forward-looking statements” that are subject to considerable risks and uncertainties. Please see the information under the heading “Special Note Regarding Forward-Looking Statements” in this Quarterly Report.
Overview
Sight Sciences’ mission is to transform ophthalmology and optometry through the development and commercialization of proprietary devices that target the underlying causes of the world’s most prevalent eye diseases. We are passionate about improving patients’ lives. Our objective is to develop and market products for use in new treatment paradigms and to create an interventional mindset in eyecare whereby our products may be used in procedures which supplant conventional outdated approaches. Our business philosophy is grounded in the following principles:
Our initial product development has focused on the treatment of two of the world’s most prevalent and underserved eye diseases, glaucoma and dry eye disease. We have commercialized products in each of our two reportable segments; Surgical Glaucoma and Dry Eye. Our Surgical Glaucoma segment consists of sales of the OMNI® Surgical System, or OMNI, and the SION™ Surgical Instrument, or SION, while our Dry Eye segment includes sales of the TearCare® System, and related components and accessories. Each product is primarily sold through a highly-involved direct sales model that offers intensive education, training and customer service. We believe this philosophy and model not only enables us to differentiate our products and our overall company from competitors, but also to expand our addressable market by educating ophthalmologists and optometrists (together, "eyecare professionals" or "ECPs"), patients and other stakeholders on our products and evolving treatment paradigms. Outside of the U.S., we have established direct commercial operations in the United Kingdom and Germany. We sell OMNI in several other countries through distributors.
We sell OMNI and SION to facilities where ophthalmic surgeons perform outpatient procedures, mainly ambulatory service centers ("ASCs") and hospital outpatient departments ("HOPDs"), which are typically reimbursed by Medicare or private payors for procedures using our products. We sell TearCare to optometrist and ophthalmologist practices. Currently, there is no meaningful reimbursement coverage by Medicare or private payors for meibomian gland disease ("MGD") procedures, including TearCare, and patients typically pay out-of-pocket for TearCare. We are continuing our controlled commercial launch and are focused on our comprehensive, clinical data-driven long-term market development plan that aims to improve awareness and patient access to TearCare. We have dedicated meaningful resources to execute our commercial strategy and we continue to expand our sales organization through additional sales representatives and territories. The overall success of our approach to eyecare to date is evidenced by the over 150,000 estimated uses of OMNI and its direct predicates in over 1,500 hospitals and ASCs in the U.S. and Europe, and over 25,000 estimated uses of TearCare in over 1,000 eyecare facilities in the U.S. through March 31, 2023.
We currently operate no manufacturing facilities and instead contract with third parties for our production requirements. We believe our suppliers will be able to meet our current and anticipated manufacturing needs across all our products. We plan to continue to utilize third party contract manufacturers for our products and any related components.
21
Revenue in our Surgical Glaucoma segment for the three months ended March 31, 2023 and 2022 was $17.3 million and $13.9 million, respectively, with gross margins for the same period of 86.4% and 89.3%, respectively. The Company continues to focus on cost optimization efforts to increase margins in our Surgical Glaucoma segment. Revenue in our Dry Eye segment for the three months ended March 31, 2023 was $1.5 million, with gross margin of 54.0%. In the prior year comparable period, Dry Eye revenue was $1.0 million, with a gross margin of (52.5)%. Given the earlier stage of TearCare’s commercial development, we expect our Dry Eye segment’s gross margins to be lower than our Surgical Glaucoma segment’s gross margins for the near and medium-term due to the allocation of fixed labor and overhead costs to the segment's cost of goods sold.
We believe in the importance of continued strategic investment in initiatives that: further demonstrate our products’ clinical effectiveness and safety to potential customers, patients, payors and regulators; enhance our commercial capabilities, including resources dedicated to sales, marketing and education; ensure the broadest possible patient access to the treatment alternatives that our products are cleared to offer; enhance and improve upon our existing product technologies; and allow us to innovate new products, devices or drugs, in glaucoma and ocular surface disease or in new eye disease areas. As a result, we intend to continue to invest in clinical studies, sales and marketing, education initiatives, market access, and product development. However, we are also focused on being disciplined in our spend, and seek to grow operating expenses at a lower rate than revenue growth. Because of these and other factors, we expect to continue to incur net losses for at least the next several fiscal years. Moreover, we expect to incur expenses as a result of operating as a public company, including expenses related to compliance with the rules and regulations of the SEC and those of the Nasdaq Stock Market, additional insurance expenses, litigation expenses, investor relations activities and other administrative and professional services. As a result of these and other factors, we may require and seek additional debt and equity financing to fund our operations and planned growth.
To date, our primary sources of capital have been private placements of redeemable convertible preferred stock, debt financing agreements, the sale of common stock in our IPO, and revenue from the sale of our products. As of March 31, 2023, we had an outstanding term loan balance of $35.0 million (excluding debt discount and amortized debt issuance costs), cash and cash equivalents of $167.3 million and an accumulated deficit of $256.3 million.
Impact of COVID-19
From 2020 through 2022, the global healthcare system faced unprecedented challenges as a result of the COVID-19 situation and its impact. Although the lingering effects of COVID-19, many of which are unpredictable and impossible to quantify or measure, may have an adverse impact on the healthcare system generally and certain aspects of our business specifically, we do not expect it to have a material effect on our business going forward.
Factors Affecting our Business and Results of Operations
We believe there are several important factors that have impacted and that will continue to impact our business and results of operations. There have been no material changes to such factors from those described in the 2022 Form 10-K under the heading "Factors Affecting our Business and Results of Operations."
Components of our Results of Operations
Revenue
We currently derive the majority of our U.S. revenue from the sale of our OMNI and SION products to ASCs and HOPDs and our TearCare products to ophthalmology and optometry practices. During the three months ended March 31, 2023 and 2022, the revenues from our Surgical Glaucoma segment accounted for over 90% of our total revenues. Substantially all of our revenues for both periods were generated from sales within the U.S. Our Surgical Glaucoma customers place orders based on their expected procedure volume and reorder as needed, typically on a biweekly, monthly or bimonthly basis. Our TearCare customers typically purchase a TearCare System which consists of one or more SmartHubs, multiple single-use SmartLids and other accessories. After utilizing their initial inventory, customers can reorder TearCare SmartLids® ("SmartLids") as needed. No single customer accounted for 10% or more of our revenue for the three months ended March 31, 2023 and 2022.
22
The growth in our revenue is driven by the demand for elective surgery and treatment utilizing our products. Such demand is often lower during summer months because of ECP vacations and in winter months in certain parts of the world because of fewer business or surgery days due to holidays and adverse weather conditions.
Cost of Goods Sold and Gross Margin
Our products are produced by third-party manufacturers. Our cost of goods sold consists primarily of amounts paid for our products to third-party manufacturers, and our manufacturing overhead costs, which consist primarily of personnel expenses, including salaries, benefits and stock-based compensation, and reserves for excess, obsolete and non-sellable inventory. Cost of goods sold also includes depreciation expenses for production equipment which we provide to our third-party manufacturers and certain direct costs, such as shipping and handling costs.
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, including differences in segment gross margins, changes in average selling prices, product sales mix, production and ordering volumes, manufacturing costs, product yields, and headcount. In general, we expect our gross margins to increase over the long-term to the extent our production and ordering volumes increase and to the extent we spread the fixed portion of our overhead costs over a larger number of units produced. We intend to use our design, engineering and manufacturing know-how and capabilities to further advance and improve the efficiency of our suppliers’ manufacturing processes, which we believe will reduce costs and increase our gross margins. Our gross margins could fluctuate from quarter to quarter as we transition to new suppliers, introduce new products, and adopt new manufacturing processes and technologies.
Research and Development Expenses
Research and development ("R&D") expenses consist primarily of engineering, product development, clinical studies to develop and support our products, including clinical trial design, clinical trial site initiation and study costs, internal and external costs associated with our regulatory compliance and quality assurance functions, medical affairs, cost of products used for clinical trials and other costs associated with products and technologies – either new or enhancements of existing platforms – that are in development. These expenses also include personnel expenses, including salaries, benefits and stock-based compensation, supplies, consulting, prototyping, testing, materials, travel expenses, depreciation expenses for equipment and an allocation of IT and facility overhead expenses. Our R&D expenses as a percentage of revenue may vary over time depending on the level and timing of new product development efforts, as well as clinical development, clinical trial and other related activities. We expect our R&D expenses to increase for the next several years as we continue to invest in our active clinical trial program, develop new products, and improve our existing products.
Selling, General and Administrative Expenses
Selling, general and administrative ("SG&A") expenses consist primarily of personnel expenses, including salaries, benefits and stock-based compensation related to selling, marketing and corporate functions, allocation of IT and facility overhead expenses, bad debt expense, finance, legal and human resource costs. Other SG&A expenses include training, travel expenses, promotional activities, marketing initiatives, market research and analysis, conferences and trade shows, professional services fees (including external legal, audit, consulting and tax fees), insurance costs, and general corporate expenses.
Interest Expense
Interest expense consists primarily of interest incurred on our outstanding indebtedness and non-cash interest related to the accretion of debt discount and amortization of debt issuance costs associated with our term loan agreement.
Other Income (Expense), Net
Other income (expense), net primarily consists of interest and amortization on held-to-maturity investments in treasury securities.
23
Results of Operations
Comparison of the Three Months Ended March 31, 2023 and 2022 (dollars in thousands)
|
|
Three Months Ended March 31, |
|
|
Change |
|
||||||||||
|
|
2023 |
|
|
2022 |
|
|
$ |
|
|
% |
|
||||
|
|
(unaudited) |
|
|
|
|
|
|
|
|||||||
Revenue |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Surgical Glaucoma |
|
$ |
17,334 |
|
|
$ |
13,870 |
|
|
$ |
3,464 |
|
|
|
25.0 |
% |
Percentage of total revenue |
|
|
92.1 |
% |
|
|
93.2 |
% |
|
|
|
|
|
|
||
Dry Eye |
|
|
1,490 |
|
|
|
1,011 |
|
|
|
479 |
|
|
|
47.4 |
|
Percentage of total revenue |
|
|
7.9 |
% |
|
|
6.8 |
% |
|
|
|
|
|
|
||
Total |
|
|
18,824 |
|
|
|
14,881 |
|
|
|
3,943 |
|
|
|
26.5 |
|
Cost of goods sold |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Surgical Glaucoma |
|
|
2,362 |
|
|
|
1,491 |
|
|
|
871 |
|
|
|
58.4 |
|
Dry Eye |
|
|
686 |
|
|
|
1,542 |
|
|
|
(856 |
) |
|
|
(55.5 |
) |
Total |
|
|
3,048 |
|
|
|
3,033 |
|
|
|
15 |
|
|
|
0.5 |
|
Gross profit |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Surgical Glaucoma |
|
|
14,972 |
|
|
|
12,379 |
|
|
|
2,593 |
|
|
|
20.9 |
|
Dry Eye |
|
|
804 |
|
|
|
(531 |
) |
|
|
1,335 |
|
|
|
251.4 |
|
Total |
|
|
15,776 |
|
|
|
11,848 |
|
|
|
3,928 |
|
|
|
33.2 |
|
Gross margin |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Surgical Glaucoma |
|
|
86.4 |
% |
|
|
89.3 |
% |
|
|
|
|
|
|
||
Dry Eye |
|
|
54.0 |
% |
|
|
-52.5 |
% |
|
|
|
|
|
|
||
Total |
|
|
83.8 |
% |
|
|
79.6 |
% |
|
|
|
|
|
|
||
Operating expenses |
|
|
|
|
|
|
|
|
|
|
|
|
||||
Research and development |
|
|
4,669 |
|
|
|
5,646 |
|
|
|
(977 |
) |
|
|
(17.3 |
) |
Selling, general and administrative |
|
|
28,675 |
|
|
|
28,395 |
|
|
|
280 |
|
|
|
1.0 |
|
Total operating expenses |
|
|
33,344 |
|
|
|
34,041 |
|
|
|
(697 |
) |
|
|
(2.0 |
) |
Loss from operations |
|
|
(17,568 |
) |
|
|
(22,193 |
) |
|
|
4,625 |
|
|
|
20.8 |
|
Interest expense |
|
|
(1,276 |
) |
|
|
(1,046 |
) |
|
|
(230 |
) |
|
|
(22.0 |
) |
Other income (expense), net |
|
|
1,791 |
|
|
|
(15 |
) |
|
|
1,806 |
|
|
|
12,040.0 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Loss before income tax |
|
|
(17,053 |
) |
|
|
(23,254 |
) |
|
|
6,201 |
|
|
|
26.7 |
|
Provision (benefit) for income tax |
|
|
14 |
|
|
9 |
|
|
|
5 |
|
|
|
55.6 |
|
|
Net loss and comprehensive loss |
|
$ |
(17,067 |
) |
|
$ |
(23,263 |
) |
|
$ |
6,196 |
|
|
|
26.6 |
% |
Revenue. Revenue in the three months ended March 31, 2023 was $18.8 million, an increase of $3.9 million, or 26.5%, from the prior year comparable period. The overall increase in Surgical Glaucoma revenue was primarily attributable to an increase in the number of OMNI and SION units sold in the three months ended March 31, 2023. This growth in units was driven by both a growth in the number of facilities ordering OMNI and SION, as well as an increase in unit utilization per ordering facility. Our Dry Eye revenues increased in the three months ended March 31, 2023 versus the comparable period in 2022 due to the continued growth in our installed base of facilities that have purchased TearCare. Surgical Glaucoma sales represented 92.1% and 93.2% of our total revenue generated in the three months ended March 31, 2023 and 2022, respectively.
Cost of Goods Sold and Gross Profit. Cost of goods sold remained flat during the three months ended March 31, 2023 compared to the same period in the prior year. Our Surgical Glaucoma cost of goods sold increased $0.9 million as compared to 2022. The increase was driven by increased sales activity, partially offset by lower per unit production costs as a result of continued manufacturing efficiencies. Dry Eye cost of goods sold decreased $0.9 million in the three months ended March 31, 2023 over the comparable period in 2022 driven primarily by prior year charges associated with the voluntary recall of our SmartHub 1.0 devices.
Our total gross profit was $15.8 million in the three months ended March 31, 2023, an increase of $3.9 million from the comparable period in 2022. Our total gross margin for the three months ended March 31, 2023, increased
24
to 83.8%, up from 79.6% in the prior year comparable period primarily related to charges from the voluntary recall in our Dry Eye segment mentioned above. Gross margin in our Surgical Glaucoma segment was 86.4% for the quarter ended March 31, 2023, a decrease from 89.3% for the prior year comparable period driven by a write-off of inventory components as we transitioned to our next generation OMNI device and product mix. In our Dry Eye segment, gross margin increased from (52.5)% in the first quarter of 2022, to 54.0% for the quarter ended March 31, 2023 driven by the impact of the voluntary SmartHub recall in Q1 2022.
Research and Development ("R&D") Expenses. The $1.0 million decrease in R&D expenses during the three months ended March 31, 2023 compared to the three months ended March 31, 2022 was primarily attributable to a $0.4 million decrease in costs associated with contract engineering and lab supplies, a $0.2 million decrease in consulting expenses, and a $0.1 million decrease in personnel expenses.
Selling, General, and Administrative ("SG&A") Expenses. SG&A expenses were $28.7 million for the three months ended March 31, 2023, an increase of $0.3 million from the prior year comparable period. The increase was primarily attributable to a $2.0 million increase in personnel expenses which included a $0.3 million increase in stock-based compensation expense. This increase was partially offset by a $0.9 million decrease in consulting expenses, as well as a $0.8 million decrease in legal expense.
Interest Expense. Interest expense increased $0.2 million, as the Company saw an increase in lending rates during the three months ended March 31, 2023 compared to the three months ended March 31, 2022.
Other Income (Expense), Net. Other income (expense), net was $1.8 million for the three months ended March 31, 2023 as compared to an expense of $0.0 million in the three months ended March 31, 2022. The income in the current year is attributable to the amortization of purchase discounts on held-to-maturity cash-equivalent investments.
Cash Flows
The following table summarizes our cash flows for the periods indicated (in thousands):
|
|
Three Months Ended March 31, |
|
|||||
|
|
2023 |
|
|
2022 |
|
||
|
|
|
|
|
|
|
||
Net cash used in operating activities |
|
$ |
(17,383 |
) |
|
$ |
(21,966 |
) |
Net cash used in investing activities |
|
$ |
(126 |
) |
|
$ |
(227 |
) |
Net cash (used in) provided by financing activities |
|
$ |
(156 |
) |
|
$ |
92 |
|
Net (decrease) increase in cash |
|
$ |
(17,665 |
) |
|
$ |
(22,101 |
) |
Net Cash Used in Operating Activities.
Net cash used in operating activities for the three months ended March 31, 2023 was $17.4 million, consisting primarily of a net loss of $17.1 million and a net change in our operating assets and liabilities of $4.2 million, partially offset by non-cash charges of $3.9 million. The net change in our operating assets and liabilities was primarily due to a $1.0 million increase in accounts receivable and a $1.0 million increase in inventory to support the continued growth of our operations. The Company had a $0.9 million decrease in accounts payable, while accrued compensation and accrued and other current liabilities decreased by an aggregate of $3.7 million, primarily driven by the timing of payments on invoices and bonuses. The non-cash charges primarily consisted of $3.5 million related to stock-based compensation, $0.2 million of noncash operating lease expense, $0.1 million of depreciation, and $0.1 million of accretion of debt discount and amortization of debt issuance costs.
Net cash used in operating activities for the three months ended March 31, 2022 was $22.0 million, consisting primarily of a net loss of $23.3 million. The net change in our operating assets and liabilities during the period was $2.1 million, which was more than offset by non-cash charges of $3.4 million. The net change in our operating assets and liabilities was primarily due to a $1.2 million increase in accounts receivable and a $0.6 million increase in inventory to support the continued growth of our operations. Prepaid expenses decreased by $1.5 million as
25
balances on annual prepaid contracts decreased during the period. The Company also had a $2.1 million decrease in accrued compensation and a $0.2 million decrease in accounts payable driven by the timing of payments on invoices and bonuses. The non-cash charges primarily consisted of $3.0 million related to stock-based compensation, $0.2 million of depreciation, $0.2 million of accretion of debt discount and amortization of debt issuance costs, and $0.1 million of noncash operating lease expense.
Net Cash Used in Investing Activities.
Net cash used in investing activities in the three months ended March 31, 2023 and 2022 was $0.1 million and $0.2 million, respectively, in both cases for purchases of property and equipment.
Net Cash Provided by Financing Activities.
Net cash used in financing activities in the three months ended March 31, 2023 of $0.2 million was primarily related to taxes paid on the net share settlement of restricted stock units, partially offset by proceeds from stock option exercises.
Net cash provided by financing activities in the three months ended March 31, 2022 of $0.1 million was related to proceeds from stock option exercises.
Liquidity and Capital Resources
Sources of Liquidity
To date, our primary sources of capital have been private placements of redeemable convertible preferred stock, debt financing agreements, the sale of common stock in our IPO, and revenue from the sale of our products. Since our inception, we have raised an aggregate of approximately $402.4 million in net proceeds from sales of our redeemable convertible preferred stock and common stock and borrowed $32.9 million of net proceeds under our term loans.
As of March 31, 2023, we had cash and cash equivalents of $167.3 million, an accumulated deficit of $256.3 million and $35.0 million outstanding under our term loan agreement (before debt discount). Based on our current planned operations, we expect revenue from sales of our products, our cash and cash equivalents and additional borrowings available under our revolving credit facility will enable us to fund our operations for at least the next twelve months and the foreseeable future.
MidCap Loan Agreements
We currently have two credit and security agreements with MidCap Financial Services, which provide for a maximum $40.0 million credit facility, consisting of a $35.0 million senior secured term loan (the "Term Loan") and a $5.0 million revolving loan (the "Revolver" and collectively with the Term Loan, the “MidCap Credit Facility”).
Our obligations under the MidCap Credit Facility are guaranteed by us and our future subsidiaries, subject to exceptions for certain foreign subsidiaries. Our obligations under the agreements are secured by substantially all of our assets, including our material intellectual property. Additionally, we are subject to customary affirmative and negative covenants, including covenants that limit or restrict the ability of us to, among other things, incur indebtedness, grant liens, merge or consolidate, make investments, dispose of assets, make acquisitions, pay dividends or make distributions, repurchase stock and enter into certain transactions with affiliates, in each case subject to certain exceptions. As of March 31, 2023, we were in compliance with all financial and non-financial covenants.
The MidCap Credit Facility contains events of default that include, among others, non-payment of principal, interest or fees, breach of covenants, inaccuracy of representations and warranties, cross-defaults and bankruptcy and insolvency events.
26
Term Loan
The Term Loan agreement includes a maturity date of November 1, 2025 and includes a stated floating interest rate that is reserve-adjusted SOFR, plus 7.00%. Principal payments under the Term Loan are scheduled to begin in December 2023. However, if certain conditions are met, the initiation of principal payments can be delayed to December 2024. We currently expect that we will be in a position to meet the conditions necessary to extend the commencement date for the initiation of principal payments under the 2020 Term Loan from December 1, 2023 to December 1, 2024. In addition, the final payment fee is 6.0% and we are subject to certain financial and non-financial covenants.
We incurred $0.7 million of issuance costs in conjunction with the Term Loan which were netted against the borrowed funds in the balance sheet and are being accreted using the effective interest method as interest expense over the contractual period of the Term Loan.
In conjunction with the initial funding of the Term Loan in 2020, we issued a 10-year warrant to the Lender to purchase 300,000 shares of our Series F redeemable convertible preferred stock at an exercise price of $21.88 per share, or the MidCap Warrant, with the estimated fair value of $1.8 million. The MidCap Warrants were recorded at the fair value as a debt discount and as a warrant liability. The debt discount is being accreted using the effective interest method as interest expense over the contractual period of the Term Loan. The MidCap Warrant was automatically converted into a common stock warrant in connection with the IPO and subsequently exercised in the third quarter of fiscal year 2021. Accordingly, the MidCap Warrant no longer remains outstanding.
Revolver
The maturity date of the Revolver was amended to November 1, 2025 and the stated floating interest rate was adjusted to reserve-adjusted LIBOR plus 4.50%. As of March 31, 2023, $5.0 million was available to be drawn under the 2020 Revolver which remains undrawn.
Lease Agreements
Our corporate headquarters are located in Menlo Park, California, where we lease approximately 11,000 square feet of office, research and development, engineering and laboratory space pursuant to a lease that commenced on August 1, 2021, and expires on August 31, 2024. We also lease approximately 2,040 square feet of office space, which is primarily used by our commercial leadership team, in Southlake, Texas, pursuant to a lease that commenced on April 30, 2019 and expires on May 15, 2024.
Critical Accounting Policies and Estimates
Our condensed consolidated financial statements included elsewhere in this Quarterly Report are prepared in accordance with GAAP. The preparation of these condensed consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues, costs and 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.
An accounting policy is deemed to be critical if it requires an accounting estimate to be made based on assumptions about matters that are highly uncertain at the time the estimate is made, if different estimates reasonably could have been used, or if changes in the estimate that are reasonably possible could materially impact the financial statements. We believe that the assumptions and estimates associated with stock-based compensation has the greatest potential impact on our condensed consolidated financial statements. Therefore, we consider this to be our critical accounting policy and estimate.
There have been no material changes to our critical accounting policies and estimates as compared to the critical accounting policies and estimates described in our consolidated financial statements for the year ended December 31, 2022, included under the heading “Management’s Discussion and Analysis of Financial Condition
27
and Results of Operations—Critical Accounting Policies and Estimates” in our 2022 Form 10-K and in Note 2 to our condensed consolidated financial statements appearing elsewhere in this Quarterly Report.
JOBS Act Accounting Election
The Jumpstart Our Business Startups Act of 2012 (JOBS Act) permits an “emerging growth company” such as us to take advantage of an extended transition period to comply with new or revised accounting standards applicable to public companies. We have elected to use this extended transition period under the JOBS Act. As a result, our financial statements may not be comparable to the financial statements of issuers who are required to comply with the effective dates for new or revised accounting standards that are applicable to public companies, which may make comparison of our financials to those of other public companies more difficult.
Recently Issued Accounting Pronouncements
As of March 31, 2023, there are no significant Accounting Standard Updates (ASU's) issued and not yet adopted, that are expected to have a material impact on the Company's financial statements and related disclosures.
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 interest rate risk and foreign currency exchange rate risk. There have been no material changes to such risks from those described in our 2022 Form 10-K under "Item 3 - Quantitative and Qualitative Disclosures About Market Risk."
Item 4. Controls and Procedures.
Evaluation of disclosure controls and procedures
Our management, with the participation and supervision of our principal executive officer and our principal financial and accounting officer, evaluated our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act). The term "disclosure controls and procedures," as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the Company's management, including its principal executive officer, principal financial officer and principal accounting officer, as appropriate to allow timely decisions regarding required disclosure.
Based on this evaluation, our principal executive officer and our principal financial and accounting officer concluded that, as a result of the material weakness in our internal control over financial reporting described below, as of the end of the period covered by this Quarterly Report on Form 10-Q, our disclosure controls and procedures were not effective. However, our management, including our principal executive officer and our principal financial and accounting officer, has concluded that, notwithstanding the identified material weakness in our internal control over financial reporting, the condensed consolidated financial statements in this Quarterly Report on Form 10-Q fairly present, in all material respects, our financial position, results of operations, and cash flows for the periods presented in conformity with GAAP.
Remediation efforts on previously reported material weaknesses
In connection with the preparation of our financial statements in connection with our IPO, we identified a material weakness in our internal control over financial reporting. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our annual or interim financial statements will not be prevented or detected on a timely basis. The material weakness related to a lack of sufficient full-time accounting personnel with requisite experience and deep technical accounting knowledge to (i) identify and resolve complex accounting issues under
28
GAAP, and (ii) enable appropriate segregation of duties and reviews over the financial reviews over the financial close and reporting process.
During the year ended December 31, 2022, our management, with the oversight of the Audit Committee of our Board of Directors, designed and implemented measures to remediate the control deficiencies contributing to the material weakness and completed testing of internal controls. These remediation efforts, which continued initiatives that began during the year ended December 31, 2021, included the following:
While significant progress has been made to improve our internal control over financial reporting, not all aspects of our past material weakness have been sufficiently remediated. The remaining aspect of the material weakness relates to the lack of sufficient accounting resources with deep technical accounting knowledge to identify and resolve complex accounting issues in a timely manner. Remediation of the material weakness will require further validation and testing of the operating effectiveness of the applicable remedial controls over a sustained period of financial reporting cycles.
Changes in internal control over financial reporting
Other than the changes intended to remediate the material weakness noted above, there were no changes in our internal control over financial reporting during the most recently completed fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
PART II—OTHER INFORMATION
Item 1. Legal Proceedings.
Except as set forth in Note 6, Commitments and Contingencies, in our notes to the unaudited condensed consolidated financial statements in this Quarterly Report, we do not believe we are currently a party to any legal proceedings, regulatory matters, or other disputes or claims which, if determined adversely to us, would, individually or taken together, have a material adverse effect on our business, financial condition, operating results, liquidity or future prospects. However, regardless of the merits of the claims raised or the outcome, legal proceedings, regulatory matters, and other disputes and claims may have an adverse impact on us as a result of defense and settlement costs, diversion of management time and resources, and other factors
Item 1A. Risk Factors.
We are not aware of any material changes to the risk factors set forth under the heading "Risk Factors" in the 2022 Form 10-K, which are incorporated herein by reference. The risks described in the 2022 Form 10-K are not the only ones we face. Additional risks we currently do not know about or that we currently believe to be immaterial may also impair our business, financial condition, operating results, liquidity, and future prospects.
29
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
Use of Proceeds
In July 2021, we completed our IPO. All shares sold were registered pursuant to a registration statement on Form S-1 (File No. 333-257320), as amended (the "Registration Statement"), declared effective by the SEC on July 14, 2021.
There has been no material change in the intended use of proceeds from the IPO as described in the Registration Statement.
Recent Sales of Unregistered Securities
None.
Issuer Purchases of Equity Securities
None.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Mine Safety Disclosures.
Not applicable.
Item 5. Other Information.
None.
30
Item 6. Exhibits.
The following exhibits are filed or furnished as a part of, or incorporated by reference into, this Quarterly Report.
|
|
|
|
Incorporated by Reference |
|
|
|
|
|
|
|
|
Exhibit Number |
|
Exhibit Description |
|
Form |
|
File No. |
|
Exhibit |
|
Filing Date |
|
Filed/Furnished Herewith |
10.1# |
|
Employment Agreement between Sight Sciences, Inc. and Alison Bauerlein, dated April 3, 2023 |
|
|
|
|
|
|
|
|
|
|
31.1 |
|
Certification of the Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act |
|
|
|
|
|
|
|
|
|
* |
31.2 |
|
Certification of the Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act |
|
|
|
|
|
|
|
|
|
* |
32.1 |
|
|
|
|
|
|
|
|
|
|
** |
|
32.2 |
|
|
|
|
|
|
|
|
|
|
** |
|
101.INS |
|
Inline XBRL Instance Document |
|
|
|
|
|
|
|
|
|
* |
101.SCH |
|
Inline XBRL Taxonomy Extension Schema Document |
|
|
|
|
|
|
|
|
|
* |
101.CAL |
|
Inline XBRL Taxonomy Extension Calculation Linkbase Document |
|
|
|
|
|
|
|
|
|
* |
101.DEF |
|
Inline XBRL Taxonomy Extension Definition Linkbase Document |
|
|
|
|
|
|
|
|
|
* |
101.LAB |
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Inline XBRL Taxonomy Extension Label Linkbase Document |
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* |
101.PRE |
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Inline XBRL Taxonomy Extension Presentation Linkbase Document |
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* |
104 |
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Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) |
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* |
* Filed herewith.
** Furnished herewith.
# Indicates a management or compensator plan
31
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
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SIGHT SCIENCES, INC |
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May 8, 2023 |
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By: |
/s/ Paul Badawi |
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Paul Badawi |
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President and Chief Executive Officer |
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32
Exhibit 10.1
Employment Agreement
This Employment Agreement (this “Agreement”), effective as of April 3, 2023 (the “Effective Date”), is made by and between Sight Sciences, Inc., a Delaware corporation (together with any successor thereto, the “Company”), and Alison Bauerlein (“Executive”) (collectively referred to herein as the “Parties” or individually referred to as a “Party”).
RECITALS
A. It is the desire of the Company to assure itself of the services of Executive as of the Effective Date and thereafter by entering into this Agreement.
B. Executive and the Company mutually desire that Executive provide services to the Company on the terms herein provided.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing and of the respective covenants and agreements set forth below, the Parties hereto agree as follows:
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Executive’s employment hereunder and the Term may be terminated by the Company or Executive, as applicable, without any breach of this Agreement under the following circumstances and the Term will end on the Date of Termination:
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The Company may assign its rights and obligations under this Agreement to any of its affiliates or to any successor to all or substantially all of the business or the assets of the Company (by merger or otherwise), and may assign or encumber this Agreement and its rights hereunder as security for indebtedness of the Company and its affiliates. This Agreement shall be binding upon and inure to the benefit of the Company, Executive and their respective successors, assigns, personal and legal representatives, executors, administrators, heirs, distributees, devisees, and legatees, as applicable. None of Executive’s rights or obligations may be assigned or transferred by Executive, other than Executive’s rights to payments hereunder, which may be transferred only by will or operation of law. Notwithstanding the foregoing, Executive shall be entitled, to the extent permitted under applicable law and applicable Company Arrangements, to select and change a beneficiary or beneficiaries to receive compensation hereunder following Executive’s death by giving written notice thereof to the Company.
provided, however, that Executive’s termination will not be considered for Cause unless and until (a) the Company has provided Executive, within 60 days of the Company’s knowledge of the occurrence of the
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facts and circumstances underlying the Cause event, written notice stating with reasonable specificity the applicable facts and circumstances underlying such finding of Cause and (b) in the case of alleged Cause under clause (i) or (ii) of the foregoing definition (except with respect to a breach of the Restrictive Covenant Agreement) and to the extent the applicable condition or event is reasonably capable of being cured, Executive shall have failed to cure such condition or event within 30 days after the receipt of such notice, provided that Executive need not have been provided an opportunity to cure more than once in any twelve month period.
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Executive acknowledges that Executive has read and understands this Agreement, is fully aware of its legal effect, has not acted in reliance upon any representations or promises made by the Company other than those contained in writing herein, and has entered into this Agreement freely based on Executive’s own judgment.
[Signature Page Follows]
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IN WITNESS WHEREOF, the Parties have executed this Agreement on the date and year first above written.
SIGHT SCIENCES, INC.
By:_/s/Paul Badawi________
Name: Paul Badawi
Title: CEO
EXECUTIVE
_/s/Alison Bauerlein________
Alison Bauerlein
[Signature Page to Employment Agreement]
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EXHIBIT A
Separation Agreement and Release
This Separation Agreement and Release (“Agreement”) is made by and between Alison Bauerlein (“Executive”) and Sight Sciences, Inc. (the “Company”) (collectively referred to as the “Parties” or individually referred to as a “Party”). Capitalized terms used but not defined in this Agreement shall have the meanings set forth in the Employment Agreement (as defined below).
WHEREAS, the Parties have previously entered into that certain Employment Agreement, dated as of April 3, 2023 (the “Employment Agreement”), and that certain Employee Proprietary Information and Inventions Assignment Agreement, dated as of April 3, 2023 (the “Restrictive Covenant Agreement”); and
WHEREAS, in connection with Executive’s termination of employment with the Company or a subsidiary or affiliate of the Company effective ________, 20__, the Parties wish to resolve any and all disputes, claims, complaints, grievances, charges, actions, petitions, and demands that Executive may have against the Company and any of the Releasees as defined below, including, but not limited to, any and all claims arising out of or in any way related to Executive’s employment with or separation from the Company or its subsidiaries or affiliates but, for the avoidance of doubt, nothing herein will be deemed to release any rights or remedies in connection with Executive’s ownership of vested equity securities of the Company, vested benefits or Executive’s right to indemnification by the Company or any of its affiliates pursuant to contract or applicable law (collectively, the “Retained Claims”).
NOW, THEREFORE, in consideration of the severance payments and benefits described in Section 4 of the Employment Agreement, which, pursuant to the Employment Agreement, are conditioned on Executive’s execution and non-revocation of this Agreement, and in consideration of the mutual promises made herein, the Company and Executive hereby agree as follows:
1. Severance Payments and Benefits; Salary and Benefits. The Company agrees to provide Executive with the severance payments and benefits described in Section [4(b)/4(c)] of the Employment Agreement, payable at the times set forth in, and subject to the terms and conditions of, the Employment Agreement. In addition, to the extent not already paid, and subject to the terms and conditions of the Employment Agreement, the Company shall pay or provide to Executive all other payments or benefits described in Section 3(c) of the Employment Agreement, subject to and in accordance with the terms thereof.
2. Release of Claims. Executive agrees that, other than with respect to the Retained Claims, the foregoing consideration represents settlement in full of all outstanding obligations owed to Executive by the Company, any of its direct or indirect subsidiaries and affiliates, and any of its or their current and former officers, directors, equityholders, managers, employees, agents, investors, attorneys, shareholders, administrators, affiliates, benefit plans, plan administrators, insurers, trustees, divisions, and subsidiaries and predecessor and successor corporations and assigns (collectively, the “Releasees”). Executive, on Executive’s own behalf and on behalf of any of Executive’s affiliated companies or entities and any of their respective heirs, family members, executors, agents, and assigns, other than with respect to the Retained Claims, hereby and forever releases the Releasees from, and agrees not to sue concerning, or in any manner to institute, prosecute, or pursue, any claim, complaint, charge, duty, obligation, or cause of action relating to any matters of any kind, whether presently known or unknown, suspected or unsuspected, that Executive may possess against any of the Releasees arising from any omissions, acts,
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facts, or damages that have occurred up until and including the date Executive signs this Agreement, including, without limitation:
(a) any and all claims relating to or arising from Executive’s employment or service relationship with the Company or any of its direct or indirect subsidiaries or affiliates and the termination of that relationship;
(b) any and all claims relating to, or arising from, Executive’s right to purchase, or actual purchase of any shares of stock or other equity interests of the Company or any of its affiliates, including, without limitation, any claims for fraud, misrepresentation, breach of fiduciary duty, breach of duty under applicable state law, and securities fraud under any state or federal law;
(c) any and all claims for wrongful discharge of employment; termination in violation of public policy; discrimination; harassment; retaliation; breach of contract, both express and implied; breach of covenant of good faith and fair dealing, both express and implied; promissory estoppel; negligent or intentional infliction of emotional distress; fraud; negligent or intentional misrepresentation; negligent or intentional interference with contract or prospective economic advantage; unfair business practices; defamation; libel; slander; negligence; personal injury; assault; battery; invasion of privacy; false imprisonment; conversion; and disability benefits;
(d) any and all claims for violation of any federal, state, or municipal statute, including, but not limited to, Title VII of the Civil Rights Act of 1964; the Civil Rights Act of 1991; the Rehabilitation Act of 1973; the Americans with Disabilities Act of 1990; the Equal Pay Act; the Fair Labor Standards Act; the Fair Credit Reporting Act; the Age Discrimination in Employment Act of 1967; the Older Workers Benefit Protection Act; the Employee Retirement Income Security Act of 1974; the Worker Adjustment and Retraining Notification Act; the Family and Medical Leave Act; the Sarbanes-Oxley Act of 2002; the California Worker Adjustment and Retraining Notification Act; the California Fair Employment and Housing Act; the California Family Rights Act; the California Paid Family Leave Act; the California Consumer Credit Reporting Agencies Act; the California Military and Veterans Code; California Business & Professions Code Section 17200; and the California Labor Code;
(e) any and all claims for violation of the federal or any state constitution;
(f) any and all claims arising out of any other laws and regulations relating to employment or employment discrimination;
(g) any claim for any loss, cost, damage, or expense arising out of any dispute over the non-withholding or other tax treatment of any of the proceeds received by Executive as a result of this Agreement;
(h) any and all claims arising out of the wage and hour and wage payments laws and regulations of the state or states in which Executive has provided service to the Company or any of its affiliates; and
(i) any and all claims for attorneys’ fees and costs.
Executive acknowledges that Executive has been advised of and is familiar with the provisions of California Civil Code Section 1542, which states:
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A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS THAT THE CREDITOR OR RELEASING PARTY DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIME OF EXECUTING THE RELEASE, AND THAT, IF KNOWN BY HIM OR HER, WOULD HAVE MATERIALLY AFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR OR RELEASED PARTY.
Being aware of said code section, Executive expressly waives all rights Executive may have thereunder, as well as under any other law, including under common law principles of similar effect.
Executive agrees that the release set forth in this section shall be and remain in effect in all respects as a complete general release as to the matters released. This release does not release claims that cannot be released as a matter of law, including, but not limited to, Executive’s right to report possible violations of federal law or regulation to any governmental agency or entity in accordance with the provisions of and rules promulgated under Section 21F of the Securities Exchange Act of 1934 or Section 806 of the Sarbanes-Oxley Act of 2002, or any other whistleblower protection provisions of state or federal law or regulation and any right to receive an award for information provided thereunder, Executive’s right to file a charge with or participate in a charge by the Equal Employment Opportunity Commission, or any other local, state, or federal administrative body or government agency that is authorized to enforce or administer laws related to employment, against the Company for discrimination (with the understanding that Executive’s release of claims herein bars Executive from recovering such monetary relief from the Company or any Releasee for any alleged discriminatory treatment), claims for unemployment compensation or any state disability insurance benefits pursuant to the terms of applicable state law, claims to continued participation in certain of the Company’s group benefit plans pursuant to the terms and conditions of COBRA, claims to any benefit entitlements vested as the date of separation of Executive’s employment, pursuant to written terms of any employee benefit plan of the Company or its affiliates and Executive’s right under applicable law and any Retained Claims. This release further does not release claims for breach of Section 3(c) or Section 4 of the Employment Agreement.
3. Acknowledgment of Waiver of Claims under ADEA. Executive understands and acknowledges that Executive is waiving and releasing any rights Executive may have under the Age Discrimination in Employment Act of 1967 (“ADEA”), and that this waiver and release is knowing and voluntary. Executive understands and agrees that this waiver and release does not apply to any rights or claims that may arise under the ADEA after the date Executive signs this Agreement. Executive understands and acknowledges that the consideration given for this waiver and release is in addition to anything of value to which Executive was already entitled. Executive further understands and acknowledges that Executive has been advised by this writing that: (a) Executive should consult with an attorney prior to executing this Agreement; (b) Executive has 21 days within which to consider this Agreement, and the Parties agree that such time period to review this Agreement shall not be extended upon any material or immaterial changes to this Agreement; (c) Executive has seven days following Executive’s execution of this Agreement to revoke this Agreement pursuant to written notice to the Chief Financial Officer of the Company; (d) this Agreement shall not be effective until after the revocation period has expired; and (e) nothing in this Agreement prevents or precludes Executive from challenging or seeking a determination in good faith of the validity of this waiver under the ADEA, nor does it impose any condition precedent, penalties, or costs for doing so, unless specifically authorized by federal law. In the event Executive signs this Agreement and returns it to the Company in less than the 21 day period identified above, Executive hereby acknowledges that Executive has freely and voluntarily chosen to waive the time period allotted for considering this Agreement.
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4. Restrictive Covenants.
(a) Executive acknowledges and agrees that the post-termination obligations set forth in the Restrictive Covenant Agreement, including without limitation Executive’s obligations relating to confidentiality, non-use and non-disclosure of Proprietary Information (as defined in the Restrictive Covenant Agreement), cooperation, and return of property, are hereby incorporated by reference and shall remain in full force and effect pursuant to their terms to the maximum extent permitted by applicable law. Executive represents and warrants that Executive has complied with all provisions of the Restrictive Covenant Agreement at all times through the Effective Date (as defined below). However, nothing in this Agreement prevents Executive from engaging in communications protected by the National Labor Relations Act or discussing or disclosing information about unlawful acts in the workplace, such as harassment or discrimination or any other conduct that Executive has reason to believe is unlawful.
(b) Executive’s continued compliance with the terms of the Restrictive Covenant Agreement is a material condition to receipt of the severance payments and benefits set forth in Section 1 of this Agreement. In the event Executive breaches the Restrictive Covenant Agreement, then, in addition to any remedies and enforcement mechanisms set forth in the Restrictive Covenant Agreement, the Employment Agreement and this Agreement, and any other remedies available to the Company (including equitable and injunctive remedies), Executive shall forfeit any additional consideration owing and shall be obligated to promptly return to the Company (within fifteen (15) business days of any breach) the full gross amount of all severance payments and benefits provided.
5. Severability. In the event that any provision or any portion of any provision hereof or any surviving agreement made a part hereof becomes or is declared by a court of competent jurisdiction or arbitrator to be illegal, unenforceable, or void, this Agreement shall continue in full force and effect without said provision or portion of provision.
6. No Oral Modification. This Agreement may only be amended in a writing signed by Executive and a duly authorized officer of the Company.
7. Governing Law; Dispute Resolution. This Agreement shall be subject to the provisions of Sections 9(a), 9(c), and 9(h) of the Employment Agreement.
8. Effective Date. Executive has seven days after Executive signs this Agreement to revoke it and this Agreement will become effective on the eighth day following the date Executive signed this Agreement (the “Effective Date”).
9. Voluntary Execution of Agreement. Executive understands and agrees that Executive executed this Agreement voluntarily, without any duress or undue influence on the part or behalf of the Company or any third party, with the full intent of releasing all of Executive’s claims against the Company and any of the other Releasees. Executive acknowledges that: (a) Executive has read this Agreement; (b) Executive has not relied upon any representations or statements made by the Company that are not specifically set forth in this Agreement; (c) Executive has been represented in the preparation, negotiation, and execution of this Agreement by legal counsel of Executive’s own choice or has elected not to retain legal counsel; (d) Executive understands the terms and consequences of this Agreement and of the releases it contains; and (e) Executive is fully aware of the legal and binding effect of this Agreement.
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[Signature Page Follows]
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IN WITNESS WHEREOF, the Parties have executed this Agreement on the respective dates set forth below.
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EXECUTIVE |
Dated: |
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SIGHT SCIENCES, INC. |
Dated: |
By: |
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Exhibit 31.1
Certification
I, Paul Badawi, certify that:
Date: May 8, 2023 |
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/s/ Paul Badawi |
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Paul Badawi Chief Executive Officer (Principal ExecutiveOfficer) |
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Exhibit 31.2
Certification
I, Alison Bauerlein, certify that:
Date: May 8, 2023 |
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/s/ Alison Bauerlein |
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Alison Bauerlein (Principal Financial Officer) |
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Exhibit 32.1
Certification of Chief Executive Officer
Pursuant to 18 U.S.C. § 1350, as created by Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned officer of Sight Sciences, Inc. (the “Company”) hereby certifies that, to his knowledge:
Dated: May 8, 2023 |
/s/ Paul Badawi |
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Paul Badawi |
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Chief Executive Officer |
The foregoing certification is being furnished solely to accompany the Report pursuant to 18 U.S.C. § 1350, and is not being filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and is not to be incorporated by reference into any filing of the Company, whether made before or after the date hereof, regardless of any general incorporation language in such filing.
Exhibit 32.2
Certification of Chief Financial Officer
Pursuant to 18 U.S.C. § 1350, as created by Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned officer of Sight Sciences, Inc. (the “Company”) hereby certifies that, to her knowledge:
Dated: May 8, 2023 |
/s/ Alison Bauerlein |
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Alison Bauerlein |
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Chief Financial Officer |
The foregoing certification is being furnished solely to accompany the Report pursuant to 18 U.S.C. § 1350, and is not being filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, and is not to be incorporated by reference into any filing of the Company, whether made before or after the date hereof, regardless of any general incorporation language in such filing.
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands |
Mar. 31, 2023 |
Dec. 31, 2022 |
|---|---|---|
| Accounts receivable, net of allowances | $ 774 | $ 1,024 |
| Preferred stock par value | $ 0.001 | $ 0.001 |
| Preferred stock, shares authorized | 10,000,000 | 10,000,000 |
| Preferred Stock, Shares Issued | 0 | 0 |
| Preferred Stock, Shares Outstanding | 0 | 0 |
| Common stock, par value | $ 0.001 | $ 0.001 |
| Common stock, shares authorized | 200,000,000 | 200,000,000 |
| Common stock, shares issued | 48,450,378 | 48,298,138 |
| Common stock, shares outstanding | 48,450,378 | 48,298,138 |
Condensed Consolidated Statements of Operations and Comprehensive Loss (Unaudited) - USD ($) $ in Thousands |
3 Months Ended | |
|---|---|---|
Mar. 31, 2023 |
Mar. 31, 2022 |
|
| Income Statement [Abstract] | ||
| Revenue | $ 18,824 | $ 14,881 |
| Cost of goods sold | 3,048 | 3,033 |
| Gross profit | 15,776 | 11,848 |
| Operating expenses: | ||
| Research and development | 4,669 | 5,646 |
| Selling, general and administrative | 28,675 | 28,395 |
| Total operating expenses | 33,344 | 34,041 |
| Loss from operations | (17,568) | (22,193) |
| Interest expense | (1,276) | (1,046) |
| Other (expense) income, net | 1,791 | (15) |
| Loss before income taxes | (17,053) | (23,254) |
| Provision for income taxes | 14 | 9 |
| Net loss and comprehensive loss | $ (17,067) | $ (23,263) |
| Net loss per share attributable to common stockholders-basic | $ (0.35) | $ (0.49) |
| Net loss per share attributable to common stockholders-diluted | $ (0.35) | $ (0.49) |
| Weighted-average shares of common stock outstanding-basic | 48,405,271 | 47,569,499 |
| Weighted-average shares of common stock outstanding-diluted | 48,405,271 | 47,569,499 |
Company and Nature of Business |
3 Months Ended |
|---|---|
Mar. 31, 2023 | |
| Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
| Company and Nature of Business | Note 1. Company and Nature of Business
Description of Business
Sight Sciences, Inc. (the “Company”) was incorporated in the State of Delaware in 2010 and is headquartered in Menlo Park, California. The Company is an ophthalmic medical device company focused on the development and commercialization of surgical and nonsurgical technologies for the treatment of prevalent eye diseases. Significant Risks and Uncertainties Since inception, the Company has incurred losses and negative cash flows from operations. As of March 31, 2023, the Company had an accumulated deficit of $256.3 million and recorded a net loss of $17.1 million for the three months then ended and expects to incur additional losses in the future. If the Company’s revenue levels from its products are not sufficient or if the Company is unable to secure additional funding when desired, the Company may need to delay the development of its products, scale back its business and operations, or change its business strategy. The Company believes that its existing sources of liquidity will satisfy its working capital and capital requirements for at least 12 months from the issuance of its financial statements. Any failure to generate increased revenues, achieve improved gross margins, or control operating costs could require the Company to raise additional capital through equity or debt financing. Such additional financing may not be available on acceptable terms, or at all, and could require the Company to modify, delay, or abandon some of its planned future expansion or expenditures or reduce some of its ongoing operating costs, which could harm its business, operating results, financial condition, and ability to achieve its intended business objectives. |
Summary of Significant Accounting Policies |
3 Months Ended |
|---|---|
Mar. 31, 2023 | |
| Accounting Policies [Abstract] | |
| Summary of Significant Accounting Policies | Note 2. Summary of Significant Accounting Policies There have been no significant changes in the Company's significant accounting policies during the three months ended March 31, 2023, as compared with those disclosed in the 2022 Form 10-K for the year ended December 31, 2022 filed with the U.S. Securities and Exchange Commission (SEC) on March 16, 2023. Basis of Presentation The accompanying condensed consolidated financial statements are unaudited and have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) applicable to interim periods and pursuant to the instructions to Form 10-Q and Article 10 of Regulation S-X. The unaudited consolidated financial statements have been prepared on a basis consistent with the audited financial statements. In the opinion of management, the unaudited consolidated financial statements reflect all adjustments, which include only normal recurring adjustments, necessary for the fair presentation of the Company's financial information contained herein. The condensed consolidated balance sheets as of December 31, 2022 has been derived from the audited financial statements at that date. These interim condensed consolidated financial statements do not include all disclosures required by GAAP and should be read in conjunction with the Company's financial statements and accompanying notes for the fiscal year ended December 31, 2022, which are contained in the Company's 2022 Form 10-K filed with the SEC on March 16, 2023. The Company's results of operations for the three months ended March 31, 2023 are not necessarily indicative of the results to be expected for the year ending December 31, 2023 or for any other interim period. The accompanying condensed consolidated financial statements reflect the operations of the Company and its wholly-owned subsidiaries. All intercompany accounts and transactions have been eliminated.
Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. The most significant estimates related to the provision for doubtful accounts, inventory excess and obsolescence, the selection of useful lives of property and equipment, determination of the fair value of stock option grants, and provisions for income taxes and contingencies. Management evaluates its estimates and assumptions on an ongoing basis using historical experience and other factors, including the current economic environment, and makes adjustments when facts and circumstances dictate. These estimates are based on information available as of the date of the financial statements. Actual results could differ from these estimates and such differences could be material to the Company’s financial position and results of operations. New Accounting Pronouncements Accounting Standards Adopted In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which amends the impairment model by requiring entities to use a forward-looking approach based on expected losses to estimate credit losses on certain types of financial instruments, including trade receivables and available-for-sale debt securities. The guidance was effective for the Company beginning in the first quarter of 2023. The amendments in ASU 2016-13 were adopted with no material impact on the Company's consolidated financial statements. Accounting Standards Net Yet Adopted As of March 31, 2023, there are no significant ASU's issued and not yet adopted, that are expected to have a material impact on the Company's financial statements and related disclosures. |
Fair Value Measurements |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Fair Value Disclosures [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Fair Value Measurements | Note 3. Fair Value Measurements The Company reports all financial assets and liabilities and nonfinancial assets and liabilities that are recognized or disclosed at fair value in the financial statements on a recurring basis. Valuation techniques used to measure fair value must maximize the use of observable inputs and minimize the use of unobservable inputs. The authoritative guidance establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to measurements involving significant unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are as follows: Level 1—Inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date. Level 2—Inputs are observable, unadjusted quoted prices in active markets for similar assets or liabilities, unadjusted quoted prices for identical or similar assets or liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the related assets or liabilities. Level 3—Inputs are unobservable inputs for the asset or liability. The level in the fair value hierarchy within which a fair value measurement in its entirety is based on the lowest-level input that is significant to the fair value measurement in its entirety. The Company's cash and cash equivalents included $157.3 million of treasury bills as of March 31, 2023. These securities are classified as held-to-maturity and all have been purchased with original maturities of 90 days or less. Held-to-maturity debt securities are recorded at amortized cost in the financial statements.
The Company measures the fair value of outstanding debt for disclosure purposes on a recurring basis. As of March 31, 2023 and December 31, 2022, total debt of $33.5 million and $33.3 million is reported at amortized cost, respectively. This outstanding debt is classified as Level 2 as it is not actively traded. The amortized cost of the outstanding debt approximates the fair value. The financial statements as of March 31, 2023 and December 31, 2022, do not include any assets or liabilities that are measured at fair value on a nonrecurring basis. |
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Balance Sheet Components |
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| Organization, Consolidation and Presentation of Financial Statements [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Balance Sheet Components | Note 4. Balance Sheet Components Property and Equipment, Net Property and equipment, net consist of the following (in thousands):
Depreciation expense was $0.1 million and $0.2 million for the three months ended March 31, 2023 and 2022, respectively. Accrued and Other Current Liabilities Accrued and other current liabilities consist of the following (in thousands):
Other Noncurrent Liabilities Other noncurrent liabilities consist of the following (in thousands):
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Debt |
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| Debt Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Debt | Note 5. Debt The Company currently has two credit and security agreements with MidCap Financial Services (the "Lender"), which provide for a maximum $40.0 million credit facility, consisting of a $35.0 million senior secured term loan (the "Term Loan") and a $5.0 million revolving loan (the "Revolver" and collectively with the Term Loan, the “MidCap Credit Facility”). The obligations under the MidCap Credit Facility are guaranteed by the Company's current and future subsidiaries, subject to exceptions for certain foreign subsidiaries. Obligations under the agreements are secured by substantially all assets of the Company, including material intellectual property. Additionally, the Company is subject to customary affirmative and negative covenants as defined in the credit agreements, including covenants that limit or restrict the ability to, among other things, incur indebtedness, grant liens, merge or consolidate, make investments, dispose of assets, make acquisitions, pay dividends or make distributions, repurchase stock and enter into certain transactions with affiliates, in each case subject to certain exceptions. As of March 31, 2023, the Company was in compliance with all financial and non-financial covenants. The MidCap Credit Facility agreements each contain events of default that include, among others, non-payment of principal, interest or fees, breach of covenants, inaccuracy of representations and warranties, cross-defaults and bankruptcy and insolvency events. As of March 31, 2023 and December 31, 2022, $5.0 million was available to be drawn under the Revolver, respectively. The Revolver had not been drawn upon as of March 31, 2023 and December 31, 2022. Long-term and short-term debt was as follows (in thousands):
The repayment schedule relating to the Company’s debt as of March 31, 2023, is as follows (in thousands):
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Commitments and Contingencies |
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| Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Commitments and Contingencies | Note 6. Commitments and Contingencies Operating Lease Obligations The Company’s leases include facility leases and storage leases. In determining the present value of lease payments, the Company uses its incremental borrowing rate based on the information available at the lease commencement date if the rate implicit in the lease is not readily determinable. The Company estimates its incremental borrowing rate based on qualitative factors including company specific credit offers, lease term, general economics, and the interest rate environment. In determining the lease term, the Company includes all renewal options that are reasonably probable to be executed. During the first quarter of 2021, the Company renewed its lease on its corporate headquarters in Menlo Park, California. The lease commenced in early and is for a term of 37 months from the commencement date. The Company recorded an aggregate right-of-use ("ROU") asset and lease liability of $1.5 million. The ROU asset and corresponding lease liability were estimated using a weighted-average incremental borrowing rate of 13.59%. Total base rent is approximately $1.6 million under the lease agreement. During the fourth quarter of 2022, the Company entered into a supply agreement that is expected to last approximately 18 months. The supply agreement contained provisions that, when evaluated, indicated an embedded lease was present within the agreement. The agreement commenced in early December 2022 and the Company recorded an aggregate ROU asset and lease liability of $0.7 million. The ROU asset and corresponding lease liability were estimated using a weighted-average incremental borrowing rate of 10.75%. Total base rent under the agreement is approximately $0.7 million. The Company recognizes rent expense on a straight-line basis over the noncancelable lease term. The Company’s rent expense was $0.3 million and $0.2 million for the three months ended March 31, 2023 and 2022, respectively. As of March 31, 2023, the weighted average remaining lease term for the leases was 1.3 years. Operating lease expense and supplemental cash flow information related to operating leases for the three months ended March 31, 2023 and 2022 were as follows (in thousands):
Aggregate future minimum lease payments at March 31, 2023, under these noncancelable operating leases were as follows (in thousands):
Legal Proceedings On September 16, 2021, the Company filed suit in the U.S. District Court for the District of Delaware (C.A. No. 1:21-cv-01317) alleging that Ivantis, Inc. ("Ivantis") directly and indirectly infringes U.S. Patent Nos. 8,287,482, 9,370,443, 9,486,361, and 10,314,742 by making, using, selling, and offering for sale the Hydrus® Microstent. The Company’s Complaint seeks money damages and injunctive relief. On January 24, 2022, Ivantis asserted counterclaims requesting declaratory judgments that the Company's asserted patents-in-suit are not infringed and/or invalid. On August 1, 2022, the Company filed an amended complaint alleging that Alcon Inc., Alcon Vision, LLC and Alcon Research, LLC (collectively, "Alcon") infringe the four originally asserted patents by making, using, selling, and offering for sale the Hydrus® Microstent, and that all defendants also infringe U.S. Patent No. 11,389,328. The defendants reasserted counterclaims requesting declaratory judgments that the Company’s asserted patents-in-suit are not infringed and/or invalid. A five-day jury trial is scheduled to commence on April 8, 2024. Ivantis and Alcon filed petitions with the U.S. Patent Office seeking inter partes review of U.S. Patent Nos. 8,287,482, 9,370,443, 9,486,361, and 10,314,742 (IPR2022-01529, IPR2022-01530, IPR2022-01533, IPR2022-01540), each of which the U.S. Patent Office denied for raising prior art reference and invalidity arguments that were cumulative of those previously considered by the Office. The Company is presently unable to predict the outcome of this lawsuit or to reasonably estimate the potential financial impact of the lawsuit on the Company, if any. The Company is subject to claims and assessments from time to time in the ordinary course of business. Accruals for litigation and contingencies are reflected in the financial statements based on management’s assessment, including the advice of legal counsel, of the expected outcome of litigation or other dispute resolution proceedings, and/or the expected resolution of contingencies. Liabilities for estimated losses are accrued if the potential losses from any claims or legal proceedings are considered probable and the amounts can be reasonably estimated. Significant judgment is required in both the determination of probability of loss and the determination as to whether the amount can be reasonably estimated. Accruals are based only on information available at the time of the assessment due to the uncertain nature of such matters. As additional information becomes available, management reassesses potential liabilities related to pending claims and litigation and may revise its previous estimates, which could materially affect the Company’s results of operations in a given period. As of March 31, 2023 the Company does not believe it was a party to any legal proceedings or claims which, if determined adversely, would, individually or taken together, have a material adverse effect on its business, financial condition, operating results, liquidity or future prospects. However, regardless of the merits of the claims raised or the outcome, legal proceedings and claims may have an adverse impact on the Company as a result of defense and settlement costs, diversion of management time and resources, and other factors. Indemnification In the normal course of business, the Company enters into contracts and agreements that contain a variety of representations and warranties and provide for general indemnifications. The Company’s exposure under these agreements is unknown because it involves claims that may be made against the Company in the future, but that have not yet been made. To date, the Company has not paid any claims or been required to defend any action related to its indemnification obligations. However, the Company may record charges in the future as a result of these indemnification obligations. The Company indemnifies each of its directors and officers (each an "Indemnitee") 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 an indemnitee may be subject to any proceeding arising out of acts or omissions of such indemnitee in such capacity. The maximum amount of potential future indemnification is unlimited; however, the Company currently holds director and officer liability insurance. This insurance allows the transfer of risk associated with the Company’s exposure and may enable it to recover a portion of any future amounts paid. 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 March 31, 2023 or December 31, 2022. |
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Stockholders' Equity |
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| Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Stockholders' Equity | Note 7. Stockholders' Equity Common Stock In connection with the IPO, the Company’s certificate of incorporation was amended and restated to provide for 200,000,000 authorized shares of common stock with a par value of $0.001 per share and 10,000,000 authorized shares of preferred stock with a par value of $0.001 per share. The holders of common stock are entitled to receive dividends whenever funds are legally available, when and if declared by the board of directors. As of March 31, 2023, no dividends have been declared to date. Each share of common stock is entitled to one vote.
At March 31, 2023 and December 31, 2022, the Company had reserved common stock for future issuances as follows:
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Equity Incentive Plans |
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| Share-Based Payment Arrangement [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Equity Incentive Plans | Note 8. Equity Incentive Plans 2011 Stock Option Plan and 2021 Incentive Award Plan In 2011, the Company established its 2011 Stock Option Plan (the “2011 Plan”) that provided for the granting of stock options to employees and nonemployees of the Company. In July 2021, the board of directors and stockholders adopted and approved the 2021 Incentive Award Plan, (the “2021 Plan”). Under the 2021 Plan, the Company has the ability to issue incentive stock options ("ISOs"), nonqualified stock options ("NSOs"), stock appreciation rights, dividend equivalent rights, restricted stock awards, and restricted stock unit awards. Options under the 2021 Plan can typically be granted for periods of up to 10 years. For stock options granted to a grantee who, at the time the option is granted, owns stock representing more than 10% of the voting power of all classes of stock of the Company (or any parent or subsidiary of the Company), the term of the stock option may be granted for periods of up to five years. The ISOs and NSOs will be granted at a price per share not less than the fair value at the date of grant. The exercise price of a stock option granted to a 10% stockholder shall not be less than 110% of the grant date fair value of the shares. Options granted to new hires generally vest over a four-year period, with 25% of the shares vesting on the first anniversary of the grant date and the remaining shares vesting in 36 equal monthly installments thereafter; options granted as merit awards generally vest in 48 equal monthly installments following the grant date. The Company initially reserved 5,200,000 shares of common stock for future issuance under the 2021 Plan. Pursuant to the evergreen provision in the 2021 Plan, this initial reserve was increased by 2,414,907 and 2,375,235 shares on January 1, 2023 and 2022, respectively. These annual increases under the evergreen provision are equal to the lesser of (i) 5% of the aggregate number of shares of Common Stock outstanding on the final day of the immediately preceding calendar year and (ii) such smaller number of shares of Common Stock as determined by the Board, subject to certain limitations. The 2011 Plan was superseded by the 2021 Plan at the time of the IPO and no further grants have been made under the 2011 Plan from the date the 2021 Plan became effective. The terms under the 2011 Plan are consistent with those described above for the 2021 Plan. At March 31, 2023 and December 31, 2022 there were 7,258,472 and 6,099,584 shares, respectively, of common stock available for issuance under the 2021 Plan.
Stock Option Awards The following table summarizes stock option activity under the 2021 Plan during the periods presented:
During the three months ended March 31, 2023 and 2022, the Company recorded stock-based compensation expense of $2.2 million and $2.5 million related to stock option awards, respectively. The weighted-average grant-date fair values of options granted during the three months ended March 31, 2023 and 2022 was $6.91 and $9.76 per share, respectively.
The aggregate intrinsic value of options exercised was $0.6 million during the three months ended March 31, 2023. 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. As of March 31, 2023, the unrecognized stock-based compensation expense relating to unvested options was $22.0 million, which is expected to be recognized over a weighted-average period of 2.4 years.
Determination of Fair Value The Company estimated the grant date fair value of stock options using the Black-Scholes option-pricing model. The fair value of stock options is recognized on a straight-line basis over the requisite service periods of the awards. The fair value of stock options was estimated using the following weighted-average assumptions:
Expected Term The expected term is calculated using the simplified method, which is available if there is insufficient historical data about exercise patterns and post vesting employment termination behavior. The simplified method is based on the vesting period and the contractual term for each grant or for each vesting tranche for awards with graded vesting. The midpoint of the vesting date and the maximum contractual expiration date is used as the expected term under this method. For awards with multiple vesting tranches, the time from grant until the midpoints for each of the tranches may be averaged to provide an overall expected term. Expected Volatility The Company used an average historical stock price volatility of a peer group of publicly traded companies to be representative of its expected future stock price volatility, as the Company did not have any trading history for its common stock. For purposes of identifying these peer companies, the Company considered the industry, stage of development, size, and financial leverage of potential comparable companies. For each grant, the Company measured historical volatility over a period equivalent to the expected term. Risk-Free Interest Rate The risk-free interest rate is based on the implied yield currently available on US Treasury zero-coupon issues with remaining terms equivalent to the expected term of a stock award. Expected Dividend Rate The Company has not paid, and does not anticipate paying, any dividends in the near future. Accordingly, the Company has estimated the dividend yield to be 0%. Restricted Stock Units RSUs are share awards that entitle the holder to receive freely tradeable shares of the Company’s common stock upon vesting. The RSUs cannot be transferred, and the awards are subject to forfeiture if the holder’s employment terminates prior to the release of the vesting restrictions. The RSUs generally vest over a four-year period with straight-line vesting in equal amounts on an annual basis, provided the employee remains continuously employed with the Company. The fair value of the RSUs is equal to the closing price of the Company’s common stock on the grant date. The following table summarizes restricted share award activity under the 2021 Plan:
During three months ended March 31, 2023 and 2022, the Company recorded stock-based compensation expense of $1.1 million and $0.5 million related to the RSUs. As of March 31, 2023, there was $19.7 million of total unrecognized stock-based compensation expense relating to the RSUs that is expected to be recognized over a weighted-average period of 3.4 years. Employee Stock Purchase Plan In July 2021, the board of directors and stockholders adopted and approved the 2021 Employee Stock Purchase Plan (the “ESPP”). The Company initially reserved 850,000 shares of common stock for future issuance under the ESPP. Pursuant to the evergreen provision under the ESPP, this initial reserve was increased by 482,981 and 475,047 shares on January 1, 2023 and 2022, respectively. These annual increases pursuant to the evergreen provision are equal to the lesser of (i) 1% of the aggregate number of shares of common stock outstanding on the final day of the immediately preceding calendar year and (ii) such smaller number of shares of common stock as determined by the Board, subject to certain limitations. The Company's first six-month offering period under the ESPP began during the second quarter of 2022. The Company has two offering periods annually, running for six-months, with the first offering period beginning in the second quarter, and the second offering period beginning in the fourth quarter. The purchase of shares for participants in the ESPP occurs at the conclusion of each offering period. As of March 31, 2023, the Company has collected payroll withholdings of $0.5 million in the current offering period for the purchase of shares under the ESPP. The Company recorded $0.2 million of stock-based compensation expense associated with the ESPP for the quarter ended March 31, 2023. There was no stock-based compensation expense associated with the ESPP for the three months ended March 31, 2022. As of March 31, 2023, there were 1,709,104 shares of common stock available for issuance under the ESPP. The fair value of shares to be issued under the Company's 2021 ESPP was estimated using the Black-Scholes valuation model with the following assumptions for the three months ended March 31, 2023:
Stock Based Compensation The following is a summary of stock-based compensation expense by function (in thousands):
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Net Loss per Share Attributable to Common Stockholders |
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| Net Loss per Share Attributable to Common Stockholders | Note 9. Net Loss per Share Attributable to Common Stockholders Basic net loss per share is computed by dividing the net loss by the weighted-average number of common shares outstanding for the period. As the Company reported a net loss for the three months ended March 31, 2023 and 2022, respectively, basic net loss per share is the same as diluted net loss per share for each of the reported periods. The following table sets forth the computation of basic and diluted net loss per share attributable to common stockholders (in thousands, except share and per share data):
The following potentially dilutive securities were excluded from the computation of diluted net loss per share attributable to common stockholders for the period presented because including them would have been antidilutive as a result of the net loss position:
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Segment Information |
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| Segment Information | Note 10. Segment Information The Company has two reportable operating segments which are determined on the basis of the product portfolio: Surgical Glaucoma and Dry Eye. The operating and reportable segments were determined based on how the Company’s Chief Executive Officer, its Chief Operating Decision Maker (“CODM”), views and evaluates the Company’s operations. The CODM allocates resources to and evaluates the financial performance of each operating segment primarily based on gross profit and gross profit margin. Surgical Glaucoma segment includes sales of the Company’s OMNI® Surgical System ("OMNI") and SIONTM Surgical Instrument ("SION") for use in minimally invasive glaucoma procedures. Dry Eye segment includes sales of the Company’s TearCare® System ("TearCare") and related components and accessories for use in the treatment of Dry Eye Disease. The following table summarizes select operating results information for each reportable segment (in thousands):
The Company does not allocate any components of income and expenses beyond revenue and cost of goods sold to the reportable operating segments in its reporting to the CODM. No asset information is provided for reportable operating segments because that information is not reviewed by the CODM on a segment basis. Substantially all of the Company’s revenue is generated from sales in the United States. |
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Subsequent Events |
3 Months Ended |
|---|---|
Mar. 31, 2023 | |
| Subsequent Events [Abstract] | |
| Subsequent Events | Note 11. Subsequent Events The Company evaluated subsequent events through May 8, 2023, the date on which the condensed consolidated financial statements were available for issuance. |
Summary of Significant Accounting Policies (Policies) |
3 Months Ended |
|---|---|
Mar. 31, 2023 | |
| Accounting Policies [Abstract] | |
| Basis of Presentation | Basis of Presentation The accompanying condensed consolidated financial statements are unaudited and have been prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”) applicable to interim periods and pursuant to the instructions to Form 10-Q and Article 10 of Regulation S-X. The unaudited consolidated financial statements have been prepared on a basis consistent with the audited financial statements. In the opinion of management, the unaudited consolidated financial statements reflect all adjustments, which include only normal recurring adjustments, necessary for the fair presentation of the Company's financial information contained herein. The condensed consolidated balance sheets as of December 31, 2022 has been derived from the audited financial statements at that date. These interim condensed consolidated financial statements do not include all disclosures required by GAAP and should be read in conjunction with the Company's financial statements and accompanying notes for the fiscal year ended December 31, 2022, which are contained in the Company's 2022 Form 10-K filed with the SEC on March 16, 2023. The Company's results of operations for the three months ended March 31, 2023 are not necessarily indicative of the results to be expected for the year ending December 31, 2023 or for any other interim period. The accompanying condensed consolidated financial statements reflect the operations of the Company and its wholly-owned subsidiaries. All intercompany accounts and transactions have been eliminated. |
| Use of Estimates | Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. The most significant estimates related to the provision for doubtful accounts, inventory excess and obsolescence, the selection of useful lives of property and equipment, determination of the fair value of stock option grants, and provisions for income taxes and contingencies. Management evaluates its estimates and assumptions on an ongoing basis using historical experience and other factors, including the current economic environment, and makes adjustments when facts and circumstances dictate. These estimates are based on information available as of the date of the financial statements. Actual results could differ from these estimates and such differences could be material to the Company’s financial position and results of operations. |
| New Accounting Pronouncements Not Yet Adopted | New Accounting Pronouncements Accounting Standards Adopted In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which amends the impairment model by requiring entities to use a forward-looking approach based on expected losses to estimate credit losses on certain types of financial instruments, including trade receivables and available-for-sale debt securities. The guidance was effective for the Company beginning in the first quarter of 2023. The amendments in ASU 2016-13 were adopted with no material impact on the Company's consolidated financial statements. Accounting Standards Net Yet Adopted As of March 31, 2023, there are no significant ASU's issued and not yet adopted, that are expected to have a material impact on the Company's financial statements and related disclosures. |
Fair Value Measurements (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Summary of Held-to-maturity debt securities at amortized cost in the financial statements. | These securities are classified as held-to-maturity and all have been purchased with original maturities of 90 days or less. Held-to-maturity debt securities are recorded at amortized cost in the financial statements.
|
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Balance Sheet Components (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Summary of Property and Equipment, Net | Property and equipment, net consist of the following (in thousands):
|
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| Summary of Accrued and Other Current Liabilities | Accrued and other current liabilities consist of the following (in thousands):
|
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| Summary of Other Noncurrent Liabilities | Other noncurrent liabilities consist of the following (in thousands):
|
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Debt (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Debt Disclosure [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Long-term and Short-term Debt | Long-term and short-term debt was as follows (in thousands):
|
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| Repayment Schedule Relating to the Company's Debt | The repayment schedule relating to the Company’s debt as of March 31, 2023, is as follows (in thousands):
|
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Commitments and Contingencies (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Commitments and Contingencies Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Operating Lease Expense Recognized and Supplemental Cash Flow | Operating lease expense and supplemental cash flow information related to operating leases for the three months ended March 31, 2023 and 2022 were as follows (in thousands):
|
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| Schedule of Aggregate Future Minimum Lease Payments | Aggregate future minimum lease payments at March 31, 2023, under these noncancelable operating leases were as follows (in thousands):
|
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Stockholders' Equity (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Mar. 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Equity [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Reserved Common Stock for Future Issuances | At March 31, 2023 and December 31, 2022, the Company had reserved common stock for future issuances as follows:
|
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Equity Incentive Plans (Tables) |
3 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2023 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Summary of Stock Option Activity | The following table summarizes stock option activity under the 2021 Plan during the periods presented:
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| Summary of Weighted Average Valuation Assumptions Used to Estimate Fair Value of Employee Stock Options | The fair value of stock options was estimated using the following weighted-average assumptions:
|
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| Share-based Payment Arrangement, Restricted Stock Unit, Activity | The following table summarizes restricted share award activity under the 2021 Plan:
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| Summary of Stock-Based Compensation Expense by Function | The following is a summary of stock-based compensation expense by function (in thousands):
|
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| 2021 Employee Stock Purchase Plan | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Summary of Weighted Average Valuation Assumptions Used to Estimate Fair Value of Employee Stock Options | The fair value of shares to be issued under the Company's 2021 ESPP was estimated using the Black-Scholes valuation model with the following assumptions for the three months ended March 31, 2023:
|
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Net Loss per Share Attributable to Common Stockholders (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Earnings Per Share [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Computation of Basic and Diluted Net Loss per Share Attributable to Common Stockholders | The following table sets forth the computation of basic and diluted net loss per share attributable to common stockholders (in thousands, except share and per share data):
|
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| Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share | The following potentially dilutive securities were excluded from the computation of diluted net loss per share attributable to common stockholders for the period presented because including them would have been antidilutive as a result of the net loss position:
|
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Segment Information (Tables) |
3 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Mar. 31, 2023 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Segment Reporting [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
| Schedule of Segment Reporting Information | The following table summarizes select operating results information for each reportable segment (in thousands):
|
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Company and Nature of Business - Additional Information (Details) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | ||
|---|---|---|---|
Mar. 31, 2023 |
Mar. 31, 2022 |
Dec. 31, 2022 |
|
| Organization Consolidation And Presentation Of Financial Statements Disclosure [Line Items] | |||
| Accumulated deficit | $ (256,310) | $ (239,243) | |
| Net loss | $ (17,067) | $ (23,263) | |
| Common stock, shares authorized | 200,000,000 | 200,000,000 | |
| Common stock, par value | $ 0.001 | $ 0.001 | |
| Preferred stock, shares authorized | 10,000,000 | 10,000,000 | |
| Preferred stock par value | $ 0.001 | $ 0.001 | |
| IPO | |||
| Organization Consolidation And Presentation Of Financial Statements Disclosure [Line Items] | |||
| Common stock, shares authorized | 200,000,000 | ||
| Common stock, par value | $ 0.001 | ||
| Preferred stock, shares authorized | 10,000,000 | ||
| Preferred stock par value | $ 0.001 | ||
Fair value Measurement - Additional Information (Details) - Fair Value, Recurring - USD ($) $ in Millions |
3 Months Ended | |
|---|---|---|
Mar. 31, 2023 |
Dec. 31, 2022 |
|
| Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
| Treasury bills | $ 157.3 | |
| Fair Value, Inputs, Level 2 | ||
| Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
| Debt Instrument, Fair Value Amount | $ 33.5 | $ 33.3 |
Fair Value Measurements - Held-to-maturity debt securities at amortized cost (Details) - US Treasury Securities [Member] $ in Thousands |
Mar. 31, 2023
USD ($)
|
|---|---|
| Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | |
| Amortized Cost | $ 157,297 |
| Unrealized Gains | 58 |
| Unrealized Losses | 0 |
| Aggregate Fair Value | $ 157,355 |
Balance Sheet Components - Summary of Property and Equipment, Net (Details) - USD ($) $ in Thousands |
Mar. 31, 2023 |
Dec. 31, 2022 |
|---|---|---|
| Property Plant And Equipment [Line Items] | ||
| Property and equipment, gross | $ 2,772 | $ 3,005 |
| Less: Accumulated depreciation | (1,379) | (1,434) |
| Property and equipment, net | 1,393 | 1,571 |
| Tools and Equipment | ||
| Property Plant And Equipment [Line Items] | ||
| Property and equipment, gross | 2,085 | 2,173 |
| Computer Equipment and Software | ||
| Property Plant And Equipment [Line Items] | ||
| Property and equipment, gross | 37 | 37 |
| Furniture and Fixtures | ||
| Property Plant And Equipment [Line Items] | ||
| Property and equipment, gross | 183 | 282 |
| Leasehold Improvements | ||
| Property Plant And Equipment [Line Items] | ||
| Property and equipment, gross | 38 | 38 |
| Construction In Process | ||
| Property Plant And Equipment [Line Items] | ||
| Property and equipment, gross | $ 429 | $ 475 |
Balance Sheet Components - Additional Information (Details) - USD ($) $ in Thousands |
3 Months Ended | |
|---|---|---|
Mar. 31, 2023 |
Mar. 31, 2022 |
|
| Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
| Depreciation | $ 146 | $ 179 |
Balance Sheet Components - Summary of Accrued and Other Current Liabilities (Details) - USD ($) $ in Thousands |
Mar. 31, 2023 |
Dec. 31, 2022 |
|---|---|---|
| Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
| Accrued expenses | $ 4,361 | $ 5,307 |
| Current portion of lease liabilities | 1,069 | 1,033 |
| Short term interest payable | 364 | 348 |
| Other accrued liabilities | 892 | 1,087 |
| Total accrued and other current liabilities | 6,686 | 7,777 |
| Total accrued and other current liabilities | $ 6,686 | $ 7,775 |
Balance Sheet Components - Summary of Other Noncurrent Liabilities (Details) - USD ($) $ in Thousands |
Mar. 31, 2023 |
Dec. 31, 2022 |
|---|---|---|
| Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||
| Long term interest payable | $ 1,272 | $ 1,194 |
| Noncurrent portion of lease liabilities | 353 | 635 |
| Other noncurrent liabilities | 38 | 38 |
| Total other noncurrent liabilities | $ 1,663 | $ 1,867 |
Debt - Additional Information (Details) - USD ($) $ in Thousands |
Mar. 31, 2023 |
Dec. 31, 2022 |
|---|---|---|
| Debt Instrument [Line Items] | ||
| Long-term Debt | $ 35,000 | |
| Revolving 2020 | ||
| Debt Instrument [Line Items] | ||
| Line of credit facility, current borrowing capacity | 5,000 | $ 5,000 |
| Mid Cap Financial Services | ||
| Debt Instrument [Line Items] | ||
| Maximum borrowing capacity | 40,000 | |
| Mid Cap Financial Services | Senior Secured 2019 Term Loan | ||
| Debt Instrument [Line Items] | ||
| Maximum borrowing capacity | 35,000 | |
| Mid Cap Financial Services | Revolver 2019 | ||
| Debt Instrument [Line Items] | ||
| Maximum borrowing capacity | $ 5,000 |
Debt - Schedule of Long-term and Short-term Debt (Details) - USD ($) $ in Thousands |
Mar. 31, 2023 |
Dec. 31, 2022 |
|---|---|---|
| Debt Instrument [Line Items] | ||
| Principal payments due | $ 35,000 | $ 35,000 |
| Less: debt discount related to warrant liability and issuance costs | (1,543) | (1,687) |
| Total amounts outstanding | 33,457 | 33,313 |
| Less: Current portion | 0 | 0 |
| Total accrued and other current liabilities | 33,457 | 33,313 |
| Term Loan | ||
| Debt Instrument [Line Items] | ||
| Principal payments due | $ 35,000 | $ 35,000 |
Debt - Schedule Relating to the Company's Debt (Details) $ in Thousands |
Mar. 31, 2023
USD ($)
|
|---|---|
| Debt Disclosure [Abstract] | |
| 2023 (remainder) | $ 0 |
| 2024 | 2,917 |
| 2025 | 32,083 |
| Thereafter | 0 |
| Long-term Debt, Total | $ 35,000 |
Commitments and Contingencies - Additional Information (Details) - USD ($) $ in Thousands |
3 Months Ended | 12 Months Ended | ||
|---|---|---|---|---|
Feb. 05, 2021 |
Mar. 31, 2023 |
Mar. 31, 2022 |
Dec. 31, 2022 |
|
| Supply Commitment [Line Items] | ||||
| Operating lease right-of-use assets | $ 1,372 | $ 1,614 | ||
| Remaining lease term | 1 year 3 months 18 days | |||
| Operating leases, rent expense | $ 293 | $ 173 | ||
| Supply agreement [Member] | ||||
| Supply Commitment [Line Items] | ||||
| Operating lease right-of-use assets | $ 700 | |||
| Lease, borrowing rate | 10.75% | |||
| Operating lease term | 18 months | |||
| Total base rent under lease agreement | $ 700 | |||
| California [Member] | ||||
| Supply Commitment [Line Items] | ||||
| Lease commencement date | Aug. 01, 2021 | |||
| Operating lease right-of-use assets | $ 1,500 | |||
| Lease, borrowing rate | 13.59% | |||
| Operating lease term | 37 months | |||
| Total base rent under lease agreement | $ 1,600 | |||
Commitments and Contingencies - Schedule of Operating Lease Expense Recognized and Supplemental Cash Flow (Details) - USD ($) $ in Thousands |
3 Months Ended | |
|---|---|---|
Mar. 31, 2023 |
Mar. 31, 2022 |
|
| Commitments and Contingencies Disclosure [Abstract] | ||
| Operating lease expense | $ 293 | $ 173 |
| Cash paid for operating leases | $ 297 | $ 170 |
Commitments and Contingencies - Schedule of Aggregate Future Minimum Lease Payments (Details) - USD ($) $ in Thousands |
Mar. 31, 2023 |
Dec. 31, 2022 |
|---|---|---|
| Commitments and Contingencies Disclosure [Abstract] | ||
| 2023 | $ 887 | |
| 2024 | 662 | |
| Total future minimum lease payments | 1,549 | |
| Less: imputed interest | (127) | |
| Present value of future minimum lease payments | 1,422 | |
| Less: current portion of operating lease liability | (1,069) | $ (1,033) |
| Operating lease liabilities - noncurrent | $ 353 | $ 635 |
Stockholder's Equity - Additional Information (Details) |
3 Months Ended | |
|---|---|---|
|
Mar. 31, 2023
USD ($)
Vote
$ / shares
shares
|
Dec. 31, 2022
$ / shares
shares
|
|
| Subsidiary, Sale of Stock [Line Items] | ||
| Common stock, shares authorized | 200,000,000 | 200,000,000 |
| Preferred stock, shares authorized | 10,000,000 | 10,000,000 |
| Common stock, par value | $ / shares | $ 0.001 | $ 0.001 |
| Preferred stock par value | $ / shares | $ 0.001 | $ 0.001 |
| Dividends declared | $ | $ 0 | |
| Number of votes entitled per share of common stock | Vote | 1 | |
| Common stock, shares issued | 48,450,378 | 48,298,138 |
| IPO | ||
| Subsidiary, Sale of Stock [Line Items] | ||
| Common stock, shares authorized | 200,000,000 | |
| Preferred stock, shares authorized | 10,000,000 | |
| Common stock, par value | $ / shares | $ 0.001 | |
| Preferred stock par value | $ / shares | $ 0.001 |
Stockholder's Equity - Schedule of Reserved Common Stock for Future Issuances (Details) - shares |
Mar. 31, 2023 |
Dec. 31, 2022 |
|---|---|---|
| Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||
| Common stock reserved for future issuance | 15,903,856 | 13,159,736 |
| Common stock options issued and outstanding | ||
| Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||
| Common stock reserved for future issuance | 5,095,956 | 4,819,906 |
| Common stock available for future grant | ||
| Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||
| Common stock reserved for future issuance | 7,258,472 | 6,099,584 |
| Restricted stock units outstanding | ||
| Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||
| Common stock reserved for future issuance | 1,840,324 | 1,014,123 |
| Shares available for future purchase under ESPP | ||
| Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||
| Common stock reserved for future issuance | 1,709,104 | 1,226,123 |
Equity Incentive Plans - Summary of Stock Based Compensation Fair Value Assumptions (Details) |
3 Months Ended | |
|---|---|---|
Mar. 31, 2023 |
Mar. 31, 2022 |
|
| Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||
| Dividend yield | 0.00% | |
| 2021 Employee Stock Purchase Plan | ||
| Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||
| Expected term (in years) | 5 months 23 days | |
| Expected volatility | 97.38% | |
| Risk-free interest rate | 4.62% | |
| Maximum | ||
| Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||
| Expected term (in years) | 6 years 7 days | 6 years 11 months 8 days |
| Expected volatility | 60.12% | |
| Risk-free interest rate | 3.67% | 2.40% |
| Minimum | ||
| Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||
| Expected term (in years) | 5 years 7 months 6 days | 5 years 4 months 17 days |
| Expected volatility | 79.73% | 58.75% |
| Risk-free interest rate | 3.66% | 1.34% |
Equity Incentive Plans - Summary of Share-Based Compensation Expense By Function (Details) - USD ($) $ in Thousands |
3 Months Ended | |
|---|---|---|
Mar. 31, 2023 |
Mar. 31, 2022 |
|
| Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||
| Total stock-based compensation expense | $ 3,523 | $ 2,974 |
| Cost of Goods Sold | ||
| Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||
| Total stock-based compensation expense | 59 | 36 |
| Research and Development Expenses | ||
| Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||
| Total stock-based compensation expense | 529 | 343 |
| Selling, General and Administrative Expenses | ||
| Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||
| Total stock-based compensation expense | $ 2,935 | $ 2,595 |
Net Loss Per Share Attributable to Common Stockholders - Schedule of Computation of Basic and Diluted Net Loss per Share Attributable to Common Stockholders (Details) - USD ($) $ / shares in Units, $ in Thousands |
3 Months Ended | |
|---|---|---|
Mar. 31, 2023 |
Mar. 31, 2022 |
|
| Numerator: | ||
| Net loss attributable to common stockholders | $ (17,067) | $ (23,263) |
| Denominator: | ||
| Weighted-average shares of common stock outstanding-basic | 48,405,271 | 47,569,499 |
| Weighted-average shares of common stock outstanding-diluted | 48,405,271 | 47,569,499 |
| Net loss per share attributable to common stockholders-basic | $ (0.35) | $ (0.49) |
| Net loss per share attributable to common stockholders-diluted | $ (0.35) | $ (0.49) |
Net Loss Per Share Attributable to Common Stockholders - Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share (Details) - shares |
3 Months Ended | |
|---|---|---|
Mar. 31, 2023 |
Mar. 31, 2022 |
|
| Redeemable convertible preferred stock | 6,936,280 | 6,601,472 |
| Stock option awards | ||
| Redeemable convertible preferred stock | 5,095,956 | 5,944,899 |
| Restricted Stock Units | ||
| Redeemable convertible preferred stock | 1,840,324 | 656,573 |
Segment Information - Summary of Operating Result Information for Each Reportable Segment (Details) - USD ($) $ in Thousands |
3 Months Ended | |
|---|---|---|
Mar. 31, 2023 |
Mar. 31, 2022 |
|
| Revenue | ||
| Revenue | $ 18,824 | $ 14,881 |
| Cost of goods sold | ||
| Cost of goods sold | 3,048 | 3,033 |
| Gross profit | ||
| Gross profit | 15,776 | 11,848 |
| Operating expense | 33,344 | 34,041 |
| Loss from operations | (17,568) | (22,193) |
| Interest expense | (1,276) | (1,046) |
| Other (expense) income, net | 1,791 | (15) |
| Loss before income tax | (17,053) | (23,254) |
| Surgical Glaucoma | ||
| Revenue | ||
| Revenue | 17,334 | 13,870 |
| Cost of goods sold | ||
| Cost of goods sold | 2,362 | 1,491 |
| Gross profit | ||
| Gross profit | 14,972 | 12,379 |
| Dry Eye | ||
| Revenue | ||
| Revenue | 1,490 | 1,011 |
| Cost of goods sold | ||
| Cost of goods sold | 686 | 1,542 |
| Gross profit | ||
| Gross profit | $ 804 | $ (531) |