10q10k10q10k.net

What changed in Beta Bionics, Inc.'s 10-K — 2024 vs 2025

vs

Paragraph-level year-over-year comparison of Beta Bionics, Inc.'s 2024 and 2025 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2025 report.

+562 added−870 removedSource: 10-K (2026-02-24) vs 10-K (2025-03-25)

Top changes in Beta Bionics, Inc.'s 2025 10-K

562 paragraphs added · 870 removed · 395 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

97 edited+55 added−341 removed240 unchanged
Biggest changeUnlike five-year NCE exclusivity, an award of three-year exclusivity does not block the FDA from accepting ANDAs or 505(b)(2) NDAs seeking approval for generic versions of the drug as of the date of approval of the original drug product; rather, this three-year exclusivity covers only the conditions of use associated with the new clinical investigations and, as a general matter, does not prohibit the FDA from approving follow-on applications for drugs containing the original active ingredient. 63 Five-year and three-year exclusivity also will not delay the submission or approval of a traditional NDA filed under Section 505(b)(1) of the FDCA; however, an applicant submitting a traditional NDA would be required to conduct or obtain a right of reference to all of the preclinical studies and adequate and well-controlled clinical trials necessary to demonstrate safety and effectiveness.
Biggest changeUnlike five-year NCE exclusivity, an award of three-year exclusivity does not block the FDA from accepting ANDAs or 505(b)(2) NDAs seeking approval for generic versions of the drug as of the date of approval of the original drug product; rather, this three-year exclusivity covers only the conditions of use associated with the new clinical investigations and, as a general matter, does not prohibit the FDA from approving follow-on applications for drugs containing the original active ingredient.
The foregoing payments are subject to customary increase under certain specified circumstances. We also granted BU board observer rights and agreed to bear the patent costs, including prior patent costs incurred by BU in respect of the licensed patent rights.
The foregoing payments are subject to customary increase under certain specified circumstances. We also granted BU board observer rights and agreed to bear the patent costs, including prior patent costs incurred by BU in respect of the licensed patent rights.
The iLet is not compatible with third-party infusion sets or insulin cartridges. • A suite of adaptive control algorithms that autonomously analyze and administer the delivery of insulin doses based on CGM data. • An intuitive touchscreen display that enables user interactions through a custom graphical user interface embracing smartphone simplicity. • A wirelessly rechargeable battery, which must be recharged every 5-7 days, similar to the battery life of other competitive pump products, and wireless software update capabilities. 19 The iLet integrates with the user’s CGM device (either DexCom G6 or G7 or Abbott’s FreeStyle Libre 3 Plus), which measures the user’s glucose levels.
The iLet is not compatible with third-party infusion sets or insulin cartridges. • A suite of adaptive control algorithms that autonomously analyze and administer the delivery of insulin doses based on CGM data. • An intuitive touchscreen display that enables user interactions through a custom graphical user interface embracing smartphone simplicity. • A wirelessly rechargeable battery, which must be recharged every 5-7 days, similar to the battery life of other competitive pump products, and wireless software update capabilities. 7 The iLet integrates with the user’s CGM device (either DexCom G6 or G7 or Abbott’s FreeStyle Libre 3 Plus), which measures the user’s glucose levels.
Most innovative drug products (other than biological products) obtain FDA marketing approval pursuant to an NDA submitted under Section 505(b)(1) of the FDCA, commonly referred to as a traditional or “full NDA.” In 1984, with passage of the Drug Price Competition and Patent Term Restoration Act, informally known as the Hatch-Waxman Act, that established an abbreviated regulatory scheme authorizing the FDA to approve generic drugs based on an innovator or “reference” product, Congress also enacted Section 505(b)(2) of the FDCA, which provides a hybrid pathway combining features of a traditional NDA and a generic drug application.
Most innovative drug products (other than biological products) obtain FDA marketing approval pursuant to an NDA submitted under Section 505(b)(1) of the FDCA, commonly referred to as a traditional or “full NDA.” In 1984, with passage of the Drug Price Competition and Patent Term Restoration Act, informally known as the Hatch-Waxman Act, that established an abbreviated regulatory scheme authorizing the FDA to approve generic drugs based on an innovator or “reference” product, Congress also enacted Section 505(b)(2) of the FDCA, which provides a hybrid pathway combining features of 25 a traditional NDA and a generic drug application.
Under the Control Algorithm Agreement, we received a royalty-bearing license (with the right to sublicense) to (i) make, use, sell, and import products, and practice processes, covered by certain of BU’s patent rights related to automated control systems for treatment of T1D and similar conditions, involving monitoring and/or delivering insulin, glucagon, and glucose (collectively, the Automated Control System Technology); and (ii) use, reproduce, prepare derivative works, perform, display, and distribute all or any part of the software, source code, object code and/or related documentation, covered by certain copyright rights, and related to (a) the Automated Control System Technology and (b) the iLet control algorithm.
Under the Control Algorithm Agreement, we received a royalty-bearing license (with the right to sublicense) to (i) make, use, sell, and import products, and practice processes, covered by certain of BU’s patent rights related to automated control systems for treatment of T1D and similar conditions, involving monitoring and/or delivering 13 insulin, glucagon, and glucose (collectively, the Automated Control System Technology); and (ii) use, reproduce, prepare derivative works, perform, display, and distribute all or any part of the software, source code, object code and/or related documentation, covered by certain copyright rights, and related to (a) the Automated Control System Technology and (b) the iLet control algorithm.
Under the Collaboration and License Agreement, we received a worldwide, exclusive, royalty-bearing, sublicensable license under certain patent rights and know-how related to Xeris’ proprietary non-aqueous formulation technology and technology developed during the collaboration (Xeris Technology) to develop and commercialize glucagon products that are reformulated using the Xeris Technology and developed by Xeris under a development plan under the Collaboration and License Agreement for use in a pump product or system for glycemic control (Glucagon Products) in the field of chronic glycemic control in diabetes mellitus, excluding single-dose, one-time use form for treatment of severe hypoglycemia and diagnostic uses (Field).
Under the Collaboration and License Agreement, we received a worldwide, exclusive, royalty-bearing, sublicensable license under certain patent rights and know-how related to Xeris’ proprietary non-aqueous formulation technology and technology developed during the collaboration (Xeris Technology) to 14 develop and commercialize glucagon products that are reformulated using the Xeris Technology and developed by Xeris under a development plan under the Collaboration and License Agreement for use in a pump product or system for glycemic control (Glucagon Products) in the field of chronic glycemic control in diabetes mellitus, excluding single-dose, one-time use form for treatment of severe hypoglycemia and diagnostic uses (Field).
The requirement for a REMS can materially affect the potential market and profitability of the product. Moreover, the FDA may require substantial post-approval testing and surveillance to monitor the product’s safety or efficacy. 61 Once granted, product approvals may be withdrawn if compliance with regulatory standards is not maintained or problems are identified following initial marketing.
The requirement for a REMS can materially affect the potential market and profitability of the product. Moreover, the FDA may require substantial post-approval testing and surveillance to monitor the product’s safety or efficacy. Once granted, product approvals may be withdrawn if compliance with regulatory standards is not maintained or problems are identified following initial marketing.
In the United States, CMS, an agency within HHS, determines whether and to what extent a new drug or device will be covered and reimbursed under Medicare and private payors tend to follow CMS to a substantial degree. However, no uniform policy of coverage and reimbursement for products exists among third-party payors.
In the United States, CMS, an agency within HHS, determines whether and to what extent a new drug or device will be covered and reimbursed under Medicare and private payors tend to follow CMS to a substantial degree. However, no uniform policy of coverage and reimbursement for products exists 31 among third-party payors.
Such a proceeding could involve substantial uncertainties and cost, even if the eventual outcome is favorable to us. There can be no assurance that our patents, if issued, would be upheld as valid in court. 46 Third parties may claim that our products infringe their patents and other intellectual property rights.
Such a proceeding could involve substantial uncertainties and cost, even if the eventual outcome is favorable to us. There can be no assurance that our patents, if issued, would be upheld as valid in court. Third parties may claim that our products infringe their patents and other intellectual property rights.
Drugs listed in the Orange Book can, in turn, be cited by potential follow-on competitors in support of approval of an ANDA or 505(b)(2) NDA. When an ANDA applicant submits its application to the FDA, it is required to certify to the FDA concerning any patents listed for the reference product in the FDA’s Orange Book.
Drugs listed in the Orange Book can, in turn, be cited by potential follow-on competitors in support of approval of an ANDA or 505(b)(2) NDA. 27 When an ANDA applicant submits its application to the FDA, it is required to certify to the FDA concerning any patents listed for the reference product in the FDA’s Orange Book.
In addition to actions initiated by the government itself, the statute authorizes actions to be brought on behalf of the federal government by a private party having knowledge of the alleged fraud. Because the complaint is initially filed under seal, the action may be pending for some time before the defendant is even aware of the action.
In addition to actions initiated by the government itself, the statute authorizes actions to be brought on behalf of the federal government by a private party having knowledge of the alleged fraud. Because the complaint is initially filed under seal, the action may be pending for some time before the defendant is even aware of the 29 action.
“Risk Factors —Risks Related to Our Intellectual Property .” License and Collaboration Agreements Device License Agreement with Boston University In December 2015, we and BU, entered into a device license agreement, which was amended in December 2017, September 2020, February 2022 and November 2024 (collectively, the Device License Agreement).
“Risk Factors —Risks Related to Our Intellectual Property .” License and Collaboration Agreements Device License Agreement with Boston University 12 In December 2015, we and Boston University (BU), entered into a device license agreement, which was amended in December 2017, September 2020, February 2022 and November 2024 (collectively, the Device License Agreement).
Notwithstanding the foregoing, the patent positions of medical device companies, including our company, are uncertain and involve complex and evolving legal and factual questions. The coverage sought in a patent application can be denied or significantly reduced either before or after the patent is issued.
Notwithstanding the foregoing, the patent positions of medical device companies, including our company, are uncertain and involve complex and evolving legal and factual questions. The coverage sought in a patent 11 application can be denied or significantly reduced either before or after the patent is issued.
The restoration period granted on a patent covering a new FDA-regulated medical product is typically one-half the time between the date a clinical investigation on human beings is begun and the submission date of an application for premarket approval of the product, plus the time between the submission date of an application for approval of the product and the ultimate approval date.
The restoration period granted on a patent covering a new 28 FDA-regulated medical product is typically one-half the time between the date a clinical investigation on human beings is begun and the submission date of an application for premarket approval of the product, plus the time between the submission date of an application for approval of the product and the ultimate approval date.
We believe that one reason for this relatively low adoption rate is the demands placed on users to perform the complex tabulations and calculations required for even the most advanced pumps (other than the iLet) to function optimally.
We believe that one reason for this relatively low 5 adoption rate is the demands placed on users to perform the complex tabulations and calculations required for even the most advanced pumps (other than the iLet) to function optimally.
If the Development and Commercialization Agreement terminates after the first commercial sale of a Libre-Beta System, such licenses will continue for a defined period following such termination in order to provide continued access and support to users of the Libre-Beta System.
If the Development and Commercialization Agreement terminates after the first 16 commercial sale of a Libre-Beta System, such licenses will continue for a defined period following such termination in order to provide continued access and support to users of the Libre-Beta System.
If the FDA has not issued a clinical hold within this 30-day period, the clinical trial may begin. Clinical trials involve the administration of the investigational drug to healthy volunteers or patients under the supervision of a qualified investigator.
If the FDA has not issued a clinical hold within this 30-day period, the clinical trial may begin. Clinical trials involve the administration of the investigational drug to healthy volunteers or patients 24 under the supervision of a qualified investigator.
Our partner’s iCGM makes up the third Class II component of our automated glycemic control system. 53 510(k) Clearance Process To obtain 510(k) clearance, a manufacturer must submit a pre-market notification to the FDA demonstrating that the proposed device is substantially equivalent to a previously-cleared 510(k) device, a device that was in commercial distribution before May 28, 1976 for which the FDA has not yet called for the submission of PMA applications, or is a device that has been reclassified from Class III to either Class II or I.
Our partner’s iCGM makes up the third Class II component of our automated glycemic control system. 18 510(k) Clearance Process To obtain 510(k) clearance, a manufacturer must submit a pre-market notification to the FDA demonstrating that the proposed device is substantially equivalent to a previously-cleared 510(k) device, a device that was in commercial distribution before May 28, 1976 for which the FDA has not yet called for the submission of PMA applications, or is a device that has been reclassified from Class III to either Class II or I.
When FDA grants a request for de novo classification, the device is granted marketing authorization and can serve as a predicate for future devices of that type, through a 510(k) premarket notification. 54 Pre-market Approval Process A PMA application must be submitted and approved prior to marketing if the medical device is in Class III (although the FDA has the discretion to continue to allow certain pre-amendment Class III devices to use the 510(k) process) or cannot be cleared through the 510(k) process.
When FDA grants a request for de novo classification, the device is granted marketing authorization and can serve as a predicate for future devices of that type, through a 510(k) premarket notification. 19 Pre-market Approval Process A PMA application must be submitted and approved prior to marketing if the medical device is in Class III (although the FDA has the discretion to continue to allow certain pre-amendment Class III devices to use the 510(k) process) or cannot be cleared through the 510(k) process.
Both the 510(k) clearance and PMA processes can be resource intensive, expensive and lengthy, and require payment of significant user fees, unless an exemption is available. 52 The FDA classifies medical devices into one of three classes—Class I, Class II or Class III—depending on the degree of risk associated with each medical device and the extent of manufacturer and regulatory control needed to ensure its safety and effectiveness.
Both the 510(k) clearance and PMA processes can be resource intensive, expensive and lengthy, and require payment of significant user fees, unless an exemption is available. 17 The FDA classifies medical devices into one of three classes—Class I, Class II or Class III—depending on the degree of risk associated with each medical device and the extent of manufacturer and regulatory control needed to ensure its safety and effectiveness.
According to the Centers for Disease Control and Prevention (CDC), there are currently approximately 1.8 million people with T1D in the United States, all of whom require daily insulin replacement to manage their disease. • Type 2 diabetes (T2D): a metabolic disorder that typically develops in adulthood, whereby the body becomes resistant to insulin, and, consequently, increased insulin production or replacement is needed to regulate BG levels.
According to the Centers for Disease Control and Prevention (CDC), there are currently approximately 1.9 million people with T1D in the United States, all of whom require daily insulin replacement to manage their disease. • Type 2 diabetes (T2D): a metabolic disorder that typically develops in adulthood, whereby the body becomes resistant to insulin, and, consequently, increased insulin production or replacement is needed to regulate BG levels.
We and DexCom will use commercially reasonable efforts to commercialize the Combined Platform in accordance with an agreed commercialization plan, in the territories specified in the commercialization plan. We and DexCom will conduct certain development activities for the Combined Platform in accordance with an agreed development plan.
We and DexCom will use commercially reasonable efforts to commercialize the Combined Platform in accordance with an agreed commercialization plan, in the territories specified in the commercialization plan. We and DexCom 15 will conduct certain development activities for the Combined Platform in accordance with an agreed development plan.
Post-Market Regulation of Medical Devices After a medical device is placed on the market, numerous FDA regulatory requirements apply, including, but not limited to the following: • the QSR, which requires manufacturers to follow design, testing, control, documentation and other quality assurance procedures during the manufacturing process; • establishment registration, which requires establishments involved in the production and distribution of medical devices, intended for commercial distribution in the United States, to register with the FDA; • medical device listing, which requires manufacturers to list the devices they have in commercial distribution with the FDA; • clearance or approval of product modifications to 510(k)-cleared devices that could significantly affect safety or effectiveness or that would constitute a major change in intended use; • medical device reporting regulations, which require that a manufacturer report to the FDA if a device it markets may have caused or contributed to a death or serious injury, or has malfunctioned and the device or a similar device that it markets would be likely to cause or contribute to a death or serious injury, if the malfunction were to recur; • correction, removal and recall reporting regulations, which require that manufacturers report to the FDA field corrections and product recalls or removals if undertaken to reduce a risk to health posed by the device or to remedy a violation of the FDCA that may present a risk to health; • complying with federal law and regulations requiring Unique Device Identifiers (UDI) on devices and also requiring the submission of certain information about each device to the FDA’s Global Unique Device Identification Database; • the FDA’s recall authority, whereby the agency can order device manufacturers to recall from the market a product that is in violation of governing laws and regulations; • labeling regulations, which prohibit “misbranded” devices from entering the market, as well as prohibit the promotion of products for unapproved or “off-label” uses and impose other restrictions on labeling; and 58 • post-market surveillance regulations, which apply when necessary to protect the public health or to provide additional safety and effectiveness data for the device.
Post-Market Regulation of Medical Devices After a medical device is placed on the market, numerous FDA regulatory requirements apply, including, but not limited to the following: • the QMSR, which requires manufacturers to follow design, testing, control, documentation and other quality assurance procedures during the manufacturing process; • establishment registration, which requires establishments involved in the production and distribution of medical devices, intended for commercial distribution in the United States, to register with the FDA; • medical device listing, which requires manufacturers to list the devices they have in commercial distribution with the FDA; • clearance or approval of product modifications to 510(k)-cleared devices that could significantly affect safety or effectiveness or that would constitute a major change in intended use; • medical device reporting regulations, which require that a manufacturer report to the FDA if a device it markets may have caused or contributed to a death or serious injury, or has malfunctioned and the device or a similar device that it markets would be likely to cause or contribute to a death or serious injury, if the malfunction were to recur; • correction, removal and recall reporting regulations, which require that manufacturers report to the FDA field corrections and product recalls or removals if undertaken to reduce a risk to health posed by the device or to remedy a violation of the FDCA that may present a risk to health; • complying with federal law and regulations requiring Unique Device Identifiers (UDI) on devices and also requiring the submission of certain information about each device to the FDA’s Global Unique Device Identification Database; • the FDA’s recall authority, whereby the agency can order device manufacturers to recall from the market a product that is in violation of governing laws and regulations; • labeling regulations, which prohibit “misbranded” devices from entering the market, as well as prohibit the promotion of products for unapproved or “off-label” uses and impose other restrictions on labeling; and • post-market surveillance regulations, which apply when necessary to protect the public health or to provide additional safety and effectiveness data for the device. 23 The FDA has broad post-market and regulatory enforcement powers.
Although the FDA is not bound by the advisory panel decision, the panel’s recommendation is important to the FDA’s overall decision-making process. Further, the FDA generally will conduct a pre-approval inspection of the manufacturing facility(ies) to evaluate compliance with QSR, which requires manufacturers to implement and follow design, testing, control, documentation and other quality assurance procedures.
Although the FDA is not bound by the advisory panel decision, the panel’s recommendation is important to the FDA’s overall decision-making process. Further, the FDA generally will conduct a pre-approval inspection of the manufacturing facility(ies) to evaluate compliance with QMSR, which requires manufacturers to implement and follow design, testing, control, documentation and other quality assurance procedures.
Furthermore, at BU’s request, we will be required to negotiate a sublicense in good faith with a third party if we are unable or unwilling to use the patent rights licensed to us under the Device License Agreement to address theunmet needs of neglected people or geographic areas that such party is willing and able to address.
Furthermore, at BU’s request, we will be required to negotiate a sublicense in good faith with a third party if we are unable or unwilling to use the patent rights licensed to us under the Device License Agreement to address the unmet needs of neglected people or geographic areas that such party is willing and able to address.
Additionally, after a trial begins, the sponsor, the FDA or the IRB could suspend or terminate a clinical trial at any time for various reasons, including a belief that the risks to study subjects outweigh the anticipated benefits. Although the QSR does not fully apply to investigational devices, the requirement for controls on design and development does apply.
Additionally, after a trial begins, the sponsor, the FDA or the IRB could suspend or terminate a clinical trial at any time for various reasons, including a belief that the risks to study subjects outweigh the anticipated benefits. Although the QMSR does not fully apply to investigational devices, the requirement for controls on design and development does apply.
While there are certain differences in how T2D is treated relative to T1D, these differences primarily relate to the amount and rate of insulin delivered. Among the T2D population, approximately 1.8 million require intensive insulin therapy, but fewer than 10% have adopted pump technology to date.
While there are certain differences in how T2D is treated relative to T1D, these differences primarily relate to the amount and rate of insulin delivered. Among the T2D population, approximately 1.9 million require intensive insulin therapy, but fewer than 10% have adopted pump technology to date.
These classification regulations govern: (1) the alternate controller enabled insulin infusion pump (ACE) insulin pump; (2) the interoperable automated glycemic controller (iAGC); and (3) the iCGM, each of which is determined by the FDA to be Class II. The FDA defines an ACE insulin pump as a device intended for the infusion of insulin into a patient.
These classification regulations govern: (1) the ACE insulin infusion pump; (2) the interoperable automated glycemic controller (iAGC); and (3) the iCGM, each of which is determined by the FDA to be Class II. The FDA defines an ACE insulin pump as a device intended for the infusion of insulin into a patient.
Clinical trials must be conducted: (i) in compliance with federal regulations; (ii) in compliance with GCP, an international standard meant to protect the rights and health of patients and to define the roles of clinical trial sponsors, administrators, and monitors; and (iii) under protocols detailing the objectives of the trial and the criteria to be evaluated.
Clinical trials must be conducted: (i) in compliance with federal regulations; (ii) in compliance with Good Clinical Practice (GCP), an international standard meant to protect the rights and health of patients and to define the roles of clinical trial sponsors, administrators, and monitors; and (iii) under protocols detailing the objectives of the trial and the criteria to be evaluated.
The 101 issued foreign patents include one or more issued patents in jurisdictions such as Australia, Canada, China, France, Germany, Great Britain, Hong Kong, Italy, Japan, Mexico and Spain. The 43 pending foreign patent applications include one or more pending applications in jurisdictions such as Australia, Canada, China, Europe, Israel, Japan, Mexico, and Saudi Arabia.
The 107 issued foreign patents include one or more issued patents in jurisdictions such as Australia, Canada, China, France, Germany, Great Britain, Hong Kong, Italy, Japan, Mexico and Spain. The 43 pending foreign patent applications include one or more pending applications in jurisdictions such as Australia, Canada, China, Europe, Israel, Japan, Mexico, and Saudi Arabia.
Failure to comply with applicable U.S. requirements may subject a company to a variety of administrative or judicial sanctions, such as clinical hold, FDA refusal to approve pending new drug applications (NDAs) warning or untitled letters, product recalls, product seizures, total or partial suspension of production or distribution, injunctions, fines, civil penalties, and criminal prosecution.
Failure to comply with applicable U.S. requirements may subject a company to a variety of administrative or judicial sanctions, such as clinical hold, FDA refusal to approve pending NDAs warning or untitled letters, product recalls, product seizures, total or partial suspension of production or distribution, injunctions, fines, civil penalties, and criminal prosecution.
Our U.S. and foreign patents and patent applications generally relate to alternate controller enabled (ACE) insulin and bihormonal pumps, software and algorithms for modular blood glucose control systems, graphical user interfaces (GUIs) including animations and transitional GUI screens, and/or communication interfacing including disposables and wearables for connecting pumps to infusion sets.
Our U.S. and foreign patents and patent applications generally relate to ACE insulin and bihormonal pumps, software and algorithms for modular blood glucose control systems, graphical user interfaces (GUIs) including animations and transitional GUI screens, and/or communication interfacing including disposables and wearables for connecting pumps to infusion sets.
Diabetes is a serious, chronic, and often lifelong condition with no known cure that is characterized by extended periods of elevated levels of glucose in the bloodstream (hyperglycemia), resulting from the body’s inability to either produce or effectively utilize the hormone insulin.
Market Opportunity: Management of Diabetes Diabetes is a serious, chronic, and often lifelong condition with no known cure that is characterized by extended periods of elevated levels of glucose in the bloodstream (hyperglycemia), resulting from the body’s inability to either produce or effectively utilize the hormone insulin.
Moreover, cyber-attacks, malicious internet-based activity, online and offline fraud, and other similar activities threaten the confidentiality, integrity, and availability of our sensitive information and information technology systems, and those of the third parties with whom we work (including our current and future CROs).
Moreover, cyber-attacks, malicious internet-based activity, online and offline fraud, and other similar activities threaten the confidentiality, integrity, and availability of our sensitive information and information technology systems, and those of the third parties with whom we work (including our current and future contract research organizations (CROs)).
All our employees enjoy a range of benefits including company-matching 401(k) contributions, participation in our incentive stock option incentive program and our payment of health insurance premiums for both the employee and the employee’s family. Environmental Matters Our research and development and manufacturing processes involve the controlled use of hazardous materials, including flammables, toxics, corrosives and biologics.
All our employees enjoy a range of benefits including company-matching 401(k) contributions, participation in our equity incentive program, and employee stock purchase plan and our payment of health insurance premiums for both the employee and the employee’s family. Environmental Matters Our research and development and manufacturing processes involve the controlled use of hazardous materials, including flammables, toxics, corrosives and biologics.
We believe that our facilities are adequate for our current needs and that suitable additional or substitute space would be available if needed. Employees and Human Capital Resources As of December 31, 2024, we had 291 full-time employees and three part-time employees. None of our employees are represented by a labor union or covered by a collective bargaining agreement.
We believe that our facilities are adequate for our current needs and that suitable additional or substitute space would be available if needed. Employees and Human Capital Resources As of December 31, 2025, we had 420 full-time employees and three part-time employees. None of our employees are represented by a labor union or covered by a collective bargaining agreement.
Any updates to the list of disclosure channels through which we will announce information will be posted on the investor relations page on our website. 70
Any updates to the list of disclosure channels through which we will announce information will be posted on the investor relations page on our website. 35
Class I includes devices with the lowest risk to the patient and are those for which safety and effectiveness can be assured by adherence to the FDA’s General Controls for medical devices, which include compliance with the applicable portions of the Quality System Regulation (QSR), facility registration and product listing, reporting of adverse medical events and certain device malfunctions (known as medical device reporting (MDR), and truthful and non-misleading labeling, advertising, and promotional materials.
Class I includes devices with the lowest risk to the patient and are those for which safety and effectiveness can be assured by adherence to the FDA’s General Controls for medical devices, which include compliance with the applicable portions of the QMSR, facility registration and product listing, reporting of adverse medical events and certain device malfunctions (known as medical device reporting (MDR), and truthful and non-misleading labeling, advertising, and promotional materials.
The Physician Payments Sunshine Act, enacted as part of the Affordable Care Act (ACA), and its implementing regulations, also imposed annual reporting requirements on manufacturers of certain devices, drugs and biologics for payments available under Medicare, Medicaid or the Children’s Health Insurance Program (with certain exceptions) and other transfers of value to physicians (defined to include doctors, dentists, optometrists, podiatrists and chiropractors), certain other healthcare professionals (such as physician assistants and nurse practitioners), and teaching hospitals; as well as ownership and investment interests held by physicians and their immediate family members.
The Physician Payments Sunshine Act, enacted as part of the Patient Protection and Affordable Care Act of 2010, as amended by the Health Care and Education Reconciliation Act of 2010 (collectively, the ACA), and its implementing regulations, also imposed annual reporting requirements on manufacturers of certain devices, drugs and biologics for payments available under Medicare, Medicaid or the Children’s Health Insurance Program (with certain exceptions) and other transfers of value to physicians (defined to include doctors, dentists, optometrists, podiatrists and chiropractors), certain other healthcare professionals (such as physician assistants and nurse practitioners), and teaching hospitals; as well as ownership and investment interests held by physicians and their immediate family members.
The Current T1D Disease Management Paradigm According to the ADA, the central objectives for disease management in the treatment of T1D are sustaining HbA1c levels at or below 7.0% over time while maintaining daily BG levels between 70 and 180 mg/dL, near the range experienced by healthy individuals, for 17 or more hours per day.
According to the American Diabetes Association (ADA), the central objectives for disease management in the treatment of T1D are sustaining HbA1c levels at or below 7.0% over time while maintaining daily BG levels between 70 and 180 mg/dL, near the range experienced by healthy individuals, for 17 or more hours per day.
In addition, under FDA regulations, combination products are subject to cGMP requirements applicable to both drugs and devices, including the QSR applicable to medical devices. 56 Clinical Trials Clinical trials are almost always required to support a PMA or de novo classification and are sometimes required to support a 510(k) submission.
In addition, under FDA regulations, combination products are subject to cGMP requirements applicable to both drugs and devices, including the QMSR applicable to medical devices. 21 Clinical Trials Clinical trials are almost always required to support a PMA or de novo classification and are sometimes required to support a 510(k) submission.
HIPAA created new federal criminal statutes that prohibit, among other actions, knowingly and willfully executing, or attempting to execute, a scheme to defraud any healthcare benefit program, including private third-party payors, and knowingly and willfully falsifying, concealing or covering up a material fact or making any materially false, fictitious or fraudulent statement in connection with the delivery of or payment for healthcare benefits, items or services.
The Health Insurance Portability and Accountability Act of 1996 (HIPAA) created new federal criminal statutes that prohibit, among other actions, knowingly and willfully executing, or attempting to execute, a scheme to defraud any healthcare benefit program, including private third-party payors, and knowingly and willfully falsifying, concealing or covering up a material fact or making any materially false, fictitious or fraudulent statement in connection with the delivery of or payment for healthcare benefits, items or services.
Some 510(k)-exempt devices are also exempt from QSR requirements, except for the QSR’s complaint handling and recordkeeping requirements. 55 Regulation of Combination Products in the United States Certain products may be comprised of components, such as drug components and device components, that would normally be regulated under different types of regulatory authorities, and frequently by different centers at the FDA.
Some 510(k)-exempt devices are also exempt from QMSR requirements, except for the QMSR’s complaint handling and recordkeeping requirements. 20 Regulation of Combination Products in the United States Certain products may be comprised of components, such as drug components and device components, that would normally be regulated under different types of regulatory authorities, and frequently by different centers at the FDA.
Coverage criteria for DME is determined by CMS under national coverage determinations as well as by local Medicare Administrative Contractors under local coverage determinations. Therefore, Medicare reimbursement for the iLet is subject to various coverage conditions. We are also offering the iLet through the PBP channel.
Our product is eligible for Medicare coverage as DME under Medicare Part B. Coverage criteria for DME is determined by CMS under national coverage determinations as well as by local Medicare Administrative Contractors under local coverage determinations. Therefore, Medicare reimbursement for the iLet is subject to various coverage conditions. We are also offering the iLet through the PBP channel.
We have satisfied all the milestones set forth under the Device License Agreement required to be achieved to date, with regulatory milestones relating to our marketing applications to the FDA remaining to be achieved in connection with our development of the Licensed Products and Licensed Processes.
Additionally, we are obligated to meet certain diligence milestones under the Device License Agreement. We have satisfied all the milestones set forth under the Device License Agreement required to be achieved to date, with regulatory milestones relating to our marketing applications to the FDA remaining to be achieved in connection with our development of the Licensed Products and Licensed Processes.
Foreign Corrupt Practices Act (FCPA) prohibits U.S. corporations and their representatives from directly or indirectly offering, promising, authorizing or making corrupt payments, gifts or transfers to any 68 foreign government official, government staff member, political party or political candidate in an attempt to obtain or retain business.
Foreign Corrupt Practices Act The U.S. Foreign Corrupt Practices Act (FCPA) prohibits U.S. individuals and corporations, as well as their representatives from, directly or indirectly offering, promising, authorizing or making corrupt payments, gifts or transfers of anything of value to any foreign government official, government staff member, political party or political candidate in an attempt to obtain or retain business.
These laws include, without limitation, state and federal anti-kickback, fraud and abuse, false claims and healthcare professional payment transparency laws and regulations. 64 The federal Anti-Kickback Statute (AKS) prohibits, among other things, any person or entity from knowingly and willfully offering, soliciting, receiving or providing remuneration, directly or indirectly, overtly or covertly, in cash or in kind, to induce either the referral of an individual, for an item or service or the purchasing, leasing, ordering, or arranging for or recommending the purchase, lease or order of any good, facility, item or service, for which payment may be made, in whole or in part, under federal healthcare programs such as the Medicare and Medicaid programs.
The federal Anti-Kickback Statute (AKS) prohibits, among other things, any person or entity from knowingly and willfully offering, soliciting, receiving or providing remuneration, directly or indirectly, overtly or covertly, in cash or in kind, to induce either the referral of an individual, for an item or service or the purchasing, leasing, ordering, or arranging for or recommending the purchase, lease or order of any good, facility, item or service, for which payment may be made, in whole or in part, under federal healthcare programs such as the Medicare and Medicaid programs.
Competitors may use this publicly available information to gain knowledge regarding the design and progress of our development programs. 57 Expedited Development and Review Programs Following passage of the 21st Century Cures Act, the FDA implemented the Breakthrough Devices Program, which is a voluntary program offered to manufacturers of certain medical devices and device-led combination products that may provide for more effective treatment or diagnosis of life-threatening or irreversibly debilitating diseases or conditions.
Competitors may use this publicly available information to gain knowledge regarding the design and progress of our development programs. 22 Expedited Development and Review Programs The Breakthrough Devices Program, is a voluntary program offered to manufacturers of certain medical devices and device-led combination products that may provide for more effective treatment or diagnosis of life-threatening or irreversibly debilitating diseases or conditions.
In rare instances, a single Phase 3 trial may be sufficient when either (1) the trial is a large, multicenter trial demonstrating internal consistency and a statistically very persuasive finding of a clinically meaningful effect on mortality, irreversible morbidity or prevention of a disease with a potentially serious outcome and confirmation of the result in a second trial would be practically or ethically impossible or (2) the single trial is supported by confirmatory evidence. 60 After completion of the required clinical testing, an NDA is prepared and submitted to the FDA.
In rare instances, a single Phase 3 trial may be sufficient when either (1) the trial is a large, multicenter trial demonstrating internal consistency and a statistically very persuasive finding of a clinically meaningful effect on mortality, irreversible morbidity or prevention of a disease with a potentially serious outcome and confirmation of the result in a second trial would be practically or ethically impossible or (2) the single trial is supported by confirmatory evidence.
In consideration for the licenses and other rights granted to us under the Collaboration and License Agreement, we paid Xeris a one-time payment of $0.5 million and we will pay Xeris a one-time milestone payment of $3.0 million upon our achievement of a certain development milestone event.
In consideration for the licenses and other rights granted to us under the Collaboration and License Agreement, we paid Xeris a one-time payment of $0.5 million for upfront fees and an additional $3.0 million upon our achievement of certain development milestone events.
We have included our website in this Annual Report solely as an inactive textual reference. 69 Available Information Our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K and amendments to those reports filed or furnished pursuant to Sections 13(a) or 15(d) of the Exchange Act are available on our website, free of charge, as soon as reasonably practicable after the reports are electronically filed or furnished to the Securities and Exchange Commission, or SEC.
Available Information Our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K and amendments to those reports filed or furnished pursuant to Sections 13(a) or 15(d) of the Exchange Act are available on our website, free of charge, as soon as reasonably practicable after the reports are electronically filed or furnished to the Securities and Exchange Commission, or SEC.
In addition to patents, we rely on trademarks, trade secrets, and know-how relating to our proprietary technology and programs, continuing innovation, and in-licensing opportunities to develop, strengthen and maintain our proprietary position and protect our product brands. As of December 31, 2024, our trademark portfolio consists of four (4) registered trademarks and seven (7) pending trademark applications.
In addition to patents, we rely on trademarks, trade secrets, and know-how relating to our proprietary technology and programs, continuing innovation, and in-licensing opportunities to develop, strengthen and maintain our proprietary position and protect our product brands. As of December 31, 2025, our trademark portfolio consists of six (6) registered trademarks and eleven (11) pending trademark applications.
The FDA has broad post-market and regulatory enforcement powers. Medical device manufacturers are subject to unannounced inspections by the FDA and other state, local and foreign regulatory authorities to assess compliance with the QSR and other applicable regulations, and these inspections may include the manufacturing facilities of any suppliers.
Medical device manufacturers are subject to unannounced inspections by the FDA and other state, local and foreign regulatory authorities to assess compliance with the QMSR and other applicable regulations, and these inspections may include the manufacturing facilities of any suppliers.
For instance, it is possible that third-party payors may adopt policies in the future that designate one or more of our competitors as their preferred, in-network provider of insulin pumps and that such policies would discourage or prohibit the payors’ members from purchasing our products, which would adversely impact our ability to sell the iLet. 67 We are pursuing a multi-channel managed care strategy through both traditional DME and PBP channels.
For instance, it is possible that third-party payors may adopt policies in the future that designate one or more of our competitors as their preferred, in-network provider of insulin pumps and that such policies would discourage or prohibit the payors’ members from purchasing our products, which would adversely impact our ability to sell the iLet.
Like the AKS, a person or entity no longer needs to have actual knowledge of the statute or specific intent to violate it to have committed a violation. 65 HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act (HITECH) and their respective implementing regulations, which impose, among other things, requirements on certain covered HCPs, health plans, and healthcare clearinghouses and their respective business associates that perform services for them that involve the use, or disclosure of, individually identifiable health information as well as their covered subcontractors, relating to the privacy, security and transmission of individually identifiable health information without appropriate authorization.
HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act (HITECH) and their respective implementing regulations, which impose, among other things, requirements on certain covered HCPs, health plans, and healthcare clearinghouses and their respective business associates that perform services for them that involve the use, or disclosure of, individually identifiable health information as well as their covered subcontractors, relating to the privacy, security and transmission of individually identifiable health information without appropriate authorization.
The FDCA and other federal and state statutes and regulations, govern, among other things, the research, development, testing, manufacture, storage, recordkeeping, approval, labeling, promotion and marketing, distribution, post-approval monitoring and reporting, sampling, and import and export of pharmaceutical products.
FDA Regulation of Drug Products In the U.S., pharmaceutical products are subject to extensive regulation by the FDA. The FDCA and other federal and state statutes and regulations, govern, among other things, the research, development, testing, manufacture, storage, recordkeeping, approval, labeling, promotion and marketing, distribution, post-approval monitoring and reporting, sampling, and import and export of pharmaceutical products.
Securing and retaining adequate coverage or reimbursement for the iLet and our future products by third-party payors, and expedient processing approvals by those payors, is necessary for sales and the health of our business, financial condition and operating results. Data Privacy and Security In the ordinary course of our business, we may process personal or sensitive data.
Securing and retaining adequate coverage or reimbursement for the iLet and our future products by third-party payors, and expedient processing approvals by those payors, is necessary for sales and the health of our business, financial condition and operating results.
Additionally, under the Control Algorithm Agreement, we granted a perpetual, non-exclusive, royalty-free license back to BU with respect to the copyrights and patents covering any derivative works of the licensed software for BU’s educational and academic purposes and to practice their reserved rights. 48 Pursuant to the Control Algorithm Agreement, we agreed to use commercially reasonable efforts to market Licensed Products in the United States and elsewhere in the world.
Additionally, under the Control Algorithm Agreement, we granted a perpetual, non-exclusive, royalty-free license back to BU with respect to the copyrights and patents covering any derivative works of the licensed software for BU’s educational and academic purposes and to practice their reserved rights.
As of December 31, 2024, our owned and licensed patent estate contains approximately 61 issued U.S. patents, 21 pending U.S. nonprovisional patent applications, 101 issued foreign patents (including 9 issued European patents and their national validations), and 43 pending foreign patent applications.
As of December 31, 2025, our owned and licensed patent estate contains approximately 67 issued U.S. patents, 20 pending U.S. nonprovisional patent applications, 107 issued foreign patents (including at least 9 issued European patents and their national validations), and 43 pending foreign patent applications.
Despite decades of innovation that have advanced the quality of care available, a significant unmet need remains as the vast majority of PWD still cannot manage their diabetes effectively. Our product, the iLet Bionic Pancreas (iLet), was cleared by the U.S.
Despite decades of innovation that have advanced the quality of care available, a significant unmet need remains as the vast majority of PWD still cannot manage their diabetes effectively.
Xeris will be responsible for the cost of completing the activities under the development plan up to a certain development stage, and we will reimburse Xeris for any later-stage or additional work required under the development plan. 49 We and Xeris each agree not to directly or indirectly develop, commercialize or otherwise exploit any drug product comprising glucagon or a glucagon analogue, other than a Glucagon Product, for use with a pump system in the Field worldwide for the duration of the Collaboration and License Agreement, subject to certain specified exceptions.
We and Xeris each agree not to directly or indirectly develop, commercialize or otherwise exploit any drug product comprising glucagon or a glucagon analogue, other than a Glucagon Product, for use with a pump system in the Field worldwide for the duration of the Collaboration and License Agreement, subject to certain specified exceptions.
It is possible that the ACA and the IRA will be subject to additional challenges and health reform measured by the second Trump administration in the future. 66 We believe that there will continue to be proposals by legislators at both the federal and state levels, regulators and third-party payors to reduce costs while expanding individual healthcare benefits, particularly in light of the change of administration.
We believe that there will continue to be proposals by legislators at both the federal and state levels, regulators and third-party payors to reduce costs while expanding individual healthcare benefits, particularly in light of the change of administration.
Finally, there are analogous state and foreign laws and regulations, such as state and foreign laws that require device manufacturers to report information related to payments and other transfers of value to physicians and other HCPs, marketing expenditures or product pricing; state and local laws that require the registration of medical device sales representatives; state and foreign laws governing the privacy and security of health information in certain circumstances, many of which differ from each other in significant ways and often are not preempted by HIPAA, thus complicating compliance efforts; and state and foreign laws governing the privacy and security of health information in certain circumstances, many of which differ from each other in significant ways and often are not preempted by HIPAA, thus complicating compliance efforts.
Finally, there are analogous state and foreign laws and regulations, such as state and foreign laws that require device manufacturers to report information related to payments and other transfers of value to physicians and other HCPs, marketing expenditures or product pricing; state and local laws that require the registration of medical device sales representatives; state and foreign laws governing the privacy and security of health information in certain circumstances, many of which differ from each other in significant ways and often are not preempted by HIPAA, thus complicating compliance efforts; and state and foreign laws governing the privacy and security of health information in certain circumstances, many of which differ from each other in significant ways and often are not preempted by HIPAA, thus complicating compliance efforts. 30 The shifting commercial compliance environment and the need to build and maintain robust and expandable systems to comply with different compliance and/or reporting requirements in multiple jurisdictions increase the possibility that a healthcare company may violate one or more of the requirements.
Under the statute, a generic drug is bioequivalent to an RLD if “the rate and extent of absorption of the drug do not show a significant difference from the rate and extent of absorption of the listed drug.” Unlike the 505(b)(2) NDA pathway that permits a follow-on applicant to conduct and submit data from additional clinical trials or nonclinical studies in order to support the proposed change(s) to the reference product, the ANDA regulatory pathway does not allow applicants to submit new clinical data other than bioavailability or bioequivalence data. 62 Upon approval of an ANDA, the FDA indicates whether the generic product is “therapeutically equivalent” to the RLD in its publication “Approved Drug Products with Therapeutic Equivalence Evaluations,” also referred to as the “Orange Book.” Physicians and pharmacists consider a therapeutic equivalent generic drug to be fully substitutable for the RLD.
Under the statute, a generic drug is bioequivalent to an RLD if “the rate and extent of absorption of the drug do not show a significant difference from the rate and extent of absorption of the listed drug.” Unlike the 505(b)(2) NDA pathway that permits a follow-on applicant to conduct and submit data from additional clinical trials or nonclinical studies in order to support the proposed change(s) to the reference product, the ANDA regulatory pathway does not allow applicants to submit new clinical data other than bioavailability or bioequivalence data.
The FDA also may require post-marketing testing, known as Phase 4 testing, REMS, and surveillance to monitor the effects of an approved product, or the FDA may place conditions on an approval that could restrict the distribution or use of the product. In addition, quality control, drug manufacture, packaging, and labeling procedures must continue to conform to cGMPs after approval.
The FDA also may require post-marketing testing, known as Phase 4 testing, REMS, and 26 surveillance to monitor the effects of an approved product, or the FDA may place conditions on an approval that could restrict the distribution or use of the product.
For example, on August 16, 2022, the Inflation Reduction Act of 2022 (IRA) into law, which among other things, extends enhanced subsidies for individuals purchasing health insurance coverage in Affordable Care Act marketplaces through plan year 2025.
For example, on August 16, 2022, the Inflation Reduction Act of 2022 (IRA) into law, which among other things, extends enhanced subsidies for individuals purchasing health insurance coverage in Affordable Care Act marketplaces through plan year 2025. Congress is considering proposed legislation intended to further reduce healthcare costs with alternatives to replace the expiring ACA subsidies.
If covered, the iLet is typically reimbursed through traditional medical benefit channels. As a medical device company, reimbursement from government and/or commercial third-party healthcare payors, including Medicare and Medicaid, is an important element of our success. Our product is eligible for Medicare coverage as DME under Medicare Part B.
We are pursuing a multi-channel managed care strategy through both traditional DME and PBP channels. If covered, the iLet is typically reimbursed through traditional medical benefit channels. As a medical device company, reimbursement from government and/or commercial third-party healthcare payors, including Medicare and Medicaid, is an important element of our success.
The scope of the FCPA would include interactions with certain healthcare professionals in many countries. Facilities Our principal office is located in Irvine, California, where we lease approximately 50,000 square feet of office, laboratory and manufacturing space. We sublease additional corporate offices in San Diego, California that consist of approximately 6,300 square feet of office space.
Facilities Our principal office is located in Irvine, California, where we lease approximately 50,000 square feet of office, laboratory and manufacturing space. We lease and sublease additional corporate offices in San Diego, California that consist of approximately 21,000 square feet of office space.
We believe that the iLet marks a significant breakthrough in the achievement of our ultimate goal, as it has been shown to enable clinically relevant improvements in glycemic control across broad populations of PWD, while dramatically reducing necessary user engagement. Our initial commercialization efforts for the iLet are in T1D in the United States.
We believe that the iLet marks a significant breakthrough in the achievement of our ultimate goal, as it has been shown to enable clinically relevant improvements in glycemic control across broad populations of PWD, while dramatically reducing necessary user engagement. Our Mission: Life-Changing Solutions Our mission is to simplify and alleviate the burden of managing diabetes with life-changing solutions.
Outside of the insulin pump market, we face competition from a number of companies, medical researchers and pharmaceutical companies that offer or are pursuing competing delivery devices, technologies and procedures, such as prefilled insulin syringes, insulin pens and inhalable insulin products, as well as companies with approved therapeutics or in-development therapeutic candidates impacting diabetes. 44 Many of our competitors are either publicly-traded companies or divisions or subsidiaries of publicly-traded companies that have several competitive advantages over us, including greater market share and name recognition, greater financial and human resources for sales and marketing and product development, more well-established relationships with HCPs, customers and third-party payors, greater experience, additional lines of products with the ability to offer rebates or bundle products, and larger and more established distribution networks.
Many of our competitors are either publicly-traded companies or divisions or subsidiaries of publicly-traded companies that have several competitive advantages over us, including greater market share and name recognition, greater financial and human resources for sales and marketing and product development, more well-established relationships with HCPs, customers and third-party payors, greater experience, additional lines of products with the ability to offer rebates or bundle products, and larger and more established distribution networks.
Other Healthcare Laws Our current and future business activities are subject to healthcare regulation and enforcement by the federal government and the states and foreign governments in which we conduct our business.
Other Healthcare Laws Our current and future business activities are subject to healthcare regulation and enforcement by the federal government and the states and foreign governments in which we conduct our business. These laws include, without limitation, state and federal anti-kickback, fraud and abuse, false claims and healthcare professional payment transparency laws and regulations.
We also lease corporate offices in Concord, Massachusetts that consist of approximately 13,000 square feet of office space. The lease for our office, laboratory and manufacturing space in Irvine, California expires in May 2027, the sublease for our office in San Diego, California expires in June 2032, and the lease for our office in Concord, Massachusetts expires in May 2026.
The lease for our office, laboratory and manufacturing space in Irvine, California expires in June 2032, the lease and sublease for our offices in San Diego, California expires in February 2027 and August 2028, respectively, and the lease for our office in Concord, Massachusetts expires in May 2026.
Accordingly, we are or may become, subject to numerous data privacy and security obligations, including federal, state, local, and foreign laws, regulations, guidance, and industry standards related to data privacy, security, and protection. Such obligations may include, without limitation, the Federal Trade Commission Act, the TCPA, COPPA, the CANSPAM, the CCPA, Washington’s MHMD, the EU GDPR and the UK GDPR.
Accordingly, we are or may become, subject to numerous data privacy and security obligations, including federal, state, local, and foreign laws, regulations, guidance, and industry standards related to data privacy, security, and protection.
Accordingly, manufacturers must continue to expend time, money, and effort in the areas of production and quality-control to maintain compliance with cGMPs. Regulatory authorities may withdraw product approvals or request product recalls if a company fails to comply with required regulatory standards, if it encounters problems following initial marketing, or if previously unrecognized problems are subsequently discovered.
Regulatory authorities may withdraw product approvals or request product recalls if a company fails to comply with required regulatory standards, if it encounters problems following initial marketing, or if previously unrecognized problems are subsequently discovered.
However, we cannot eliminate the risk of accidental contamination or discharge and any resultant injury from these materials. We do not currently maintain separate environmental liability coverage and any such contamination or discharge could result in significant cost to us in penalties, damages and suspension of our operations.
We do not currently maintain separate environmental liability coverage and any such contamination or discharge could result in significant cost to us in penalties, damages and suspension of our operations. 34 Legal Proceedings From time to time, we may become involved in legal proceedings arising in the ordinary course of our business.
Since we began commercializing the iLet, our installed base has grown nearly 5x, from 2,304 iLets as of December 31, 2023 to 15,298 iLets as of December 31, 2024.
Since we began commercializing the iLet, our installed base has grown to 35,011 iLets as of December 31, 2025.
In addition, if the first commercial sale of the Libre-Beta System has not occurred by a specified date, then either party may terminate the Development and Commercialization Agreement on written notice to the other party. 51 Government Regulation and Product Approval Our products and operations are subject to extensive regulation by the FDA, and other federal and state authorities in the United States, as well as comparable authorities and bodies in foreign jurisdictions.
In addition, if the first commercial sale of the Libre-Beta System has not occurred by a specified date, then either party may terminate the Development and Commercialization Agreement on written notice to the other party.
There are currently approximately 36 million people with T2D in the United States according to the CDC, of whom an estimated 1.8 million require daily intensive insulin therapy, based on public and industry data. 5 The dynamic evolution of care in the field of diabetes over the past several decades has been characterized by continuous cycles of innovation that have produced several generations of increasingly sophisticated and complex devices to help maintain BG levels within the normal range or achieve goal, as established by the American Diabetes Association (ADA).
The dynamic evolution of care in the field of diabetes over the past several decades has been characterized by continuous cycles of innovation that have produced several generations of increasingly sophisticated and complex devices to help maintain BG levels within the normal range or achieve goal, as established by the ADA.
The FDA has 60 days from its receipt of an NDA to determine whether the application will be filed based on the FDA’s determination that it is sufficiently complete to permit substantive review. Once the submission is filed, the FDA begins an in-depth review. The FDA has agreed to certain performance goals to complete the review of NDAs.
Under an approved NDA, the applicant is also subject to an annual program fee. These fees typically increase annually. The FDA has 60 days from its receipt of an NDA to determine whether the application will be filed based on the FDA’s determination that it is sufficiently complete to permit substantive review.
FDA approval of the NDA is required before marketing and distribution of the product may begin in the U.S. The NDA must include the results of all nonclinical, clinical, and other testing and a compilation of data relating to the product’s pharmacology, chemistry, manufacture, and controls. The cost of preparing and submitting an NDA is substantial.
The NDA must include the results of all nonclinical, clinical, and other testing and a compilation of data relating to the product’s pharmacology, chemistry, manufacture, and controls. The cost of preparing and submitting an NDA is substantial. The submission of most NDAs is additionally subject to a substantial application user fee unless a waiver applies.

… 413 more changes not shown on this page.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

191 edited+62 added−27 removed667 unchanged
Biggest changeThe FDA can delay, limit or deny marketing authorization or clearance of a device for many reasons, including: • our inability to demonstrate to the satisfaction of the FDA that our product candidates are substantially equivalent to a predicate device or are safe and effective for their intended uses; • the disagreement of the FDA with the design or implementation of our clinical trials or the interpretation of data from preclinical studies or clinical trials; • serious and unexpected adverse effects experienced by participants in our clinical trials; • the data from our preclinical studies and clinical trials may be insufficient to support clearance, de novo classification or approval, where required; • our inability to demonstrate that the clinical and other benefits of the device outweigh the risks; • the manufacturing process or facilities we use may not meet applicable requirements; and • the potential for approval policies or regulations of the FDA or applicable foreign regulatory bodies to change significantly in a manner rendering our clinical data or regulatory filings insufficient for clearance or approval. 88 Further, if the FDA determines that our financial relationships with our principal investigators resulted in a perceived or actual conflict of interest that may have affected the interpretation of a study, the integrity of the data generated at a particular clinical trial site or the utility of the clinical trial itself, we could encounter delays or difficulties in obtaining any future marketing authorizations or clearances.
Biggest changeThe FDA can delay, limit or deny marketing authorization or clearance of a device for many reasons, including: • our inability to demonstrate to the satisfaction of the FDA that our product candidates are substantially equivalent to a predicate device or are safe and effective for their intended uses; • the disagreement of the FDA with the design or implementation of our clinical trials or the interpretation of data from preclinical studies or clinical trials; • serious and unexpected adverse effects experienced by participants in our clinical trials; 54 • the data from our preclinical studies and clinical trials may be insufficient to support clearance, de novo classification or approval, where required; • our inability to demonstrate that the clinical and other benefits of the device outweigh the risks; • the manufacturing process or facilities we use may not meet applicable requirements; and • the potential for approval policies or regulations of the FDA or applicable foreign regulatory bodies to change significantly in a manner rendering our clinical data or regulatory filings insufficient for clearance or approval.
Any breakthroughs in diabetes monitoring, treatment or prevention could reduce the potential market for our products or render our products obsolete altogether, which would significantly reduce our sales or cause our sales to grow at a slower rate than we currently expect.
Any breakthroughs in diabetes monitoring, treatment or prevention could reduce the potential market for our products or render our products obsolete altogether, which would significantly reduce our sales or cause our sales to grow at a slower rate than we currently expect.
Maintaining regulatory clearance for our iLet as an automated insulin dosing system for the treatment of T1D and obtaining and maintaining marketing authorization or clearance for a bihormonal configuration for T1D or other indication in one jurisdiction does not mean that we will be successful in obtaining marketing authorization of the iLet in any configuration or indication in other jurisdictions.
Maintaining regulatory clearance for our iLet as an automated insulin dosing system for the treatment of T1D and obtaining and maintaining marketing authorization or clearance for a bihormonal system for T1D or other indication in one jurisdiction does not mean that we will be successful in obtaining marketing authorization of the iLet in any configuration or indication in other jurisdictions.
Maintaining regulatory clearance for our iLet as an automated insulin dosing system for the treatment of T1D and obtaining and maintaining marketing authorization or clearance for a bihormonal configuration for T1D or other indication in one jurisdiction does not mean that we will be successful in obtaining or maintaining marketing authorization of the iLet in any configuration or indication in any other jurisdiction.
Maintaining regulatory clearance for our iLet as an automated insulin dosing system for the treatment of T1D and obtaining and maintaining marketing authorization or clearance for a bihormonal system for T1D or other indication in one jurisdiction does not mean that we will be successful in obtaining or maintaining marketing authorization of the iLet in any configuration or indication in any other jurisdiction.
We are subject to a post-market surveillance order issued by the FDA for our iLet.
We are subject to a post-market surveillance order issued by the FDA for our iLet.
Collaborations are subject to numerous risks, which may include that: • collaborators could independently develop, or develop with third parties, products that compete directly or indirectly with our product candidates; • collaborators may not pursue development and commercialization of our product candidates or may elect not to continue or renew development or commercialization programs based on trial or test results, changes in their strategic focus due to the acquisition of competitive products, availability of funding or other external factors, such as a business combination that diverts resources or creates competing priorities; • disputes may arise between us and a collaborator that cause the delay or termination of the research, development or commercialization of our current or future products or that result in costly litigation or arbitration that diverts management attention and resources; • collaborators have significant discretion in determining the efforts and resources that they will apply to collaborations; • a collaborator with marketing, manufacturing and distribution rights to one or more products may not commit sufficient resources to or otherwise not perform satisfactorily in carrying out these activities; • we could grant exclusive rights to our collaborators that would prevent us from collaborating with others; • collaborators may use our intellectual property or proprietary information in a way that gives rise to actual or threatened litigation that could jeopardize or invalidate our intellectual property or proprietary information or expose us to potential liability or business risk; • collaborations may be terminated, which may result in a need for additional capital to pursue further development or commercialization of the applicable current or future products or products; 118 • collaborators may own or co-own intellectual property covering our product candidates that results from our collaborating with them, and, in such cases, we would not have the exclusive right to develop or commercialize such intellectual property; and • a collaborator’s sales and marketing activities or other operations may not be in compliance with applicable laws resulting in civil or criminal proceedings.
Collaborations are subject to numerous risks, which may include that: • collaborators could independently develop, or develop with third parties, products that compete directly or indirectly with our product candidates; • collaborators may not pursue development and commercialization of our product candidates or may elect not to continue or renew development or commercialization programs based on trial or test results, changes in their strategic focus due to the acquisition of competitive products, availability of funding or other external factors, such as a business combination that diverts resources or creates competing priorities; • disputes may arise between us and a collaborator that cause the delay or termination of the research, development or commercialization of our current or future products or that result in costly litigation or arbitration that diverts management attention and resources; • collaborators have significant discretion in determining the efforts and resources that they will apply to collaborations; • a collaborator with marketing, manufacturing and distribution rights to one or more products may not commit sufficient resources to or otherwise not perform satisfactorily in carrying out these activities; • we could grant exclusive rights to our collaborators that would prevent us from collaborating with others; • collaborators may use our intellectual property or proprietary information in a way that gives rise to actual or threatened litigation that could jeopardize or invalidate our intellectual property or proprietary information or expose us to potential liability or business risk; • collaborations may be terminated, which may result in a need for additional capital to pursue further development or commercialization of the applicable current or future products or products; • collaborators may own or co-own intellectual property covering our product candidates that results from our collaborating with them, and, in such cases, we would not have the exclusive right to develop or commercialize such intellectual property; and • a collaborator’s sales and marketing activities or other operations may not be in compliance with applicable laws resulting in civil or criminal proceedings.
Our current collaboration agreements pose, and potential future collaborations involving our iLet may pose, the following risks to us: • we may be required to assume substantial actual or contingent liabilities; • we may not be able to control the amount and timing of resources that our strategic collaborators devote to the development and commercialization of our products; • collaborators could independently develop, or develop with third parties, products that compete directly or indirectly with our iLet; • collaborators may not properly enforce, maintain or defend our intellectual property rights or may use our proprietary information in a way that gives rise to actual or threatened litigation; • disputes may arise between a collaborator and us that cause the delay or termination of the research, development or commercialization of the investigational device, or that result in costly litigation or arbitration that diverts management attention and resources; • collaborators may experience financial difficulties; • our collaborators may experience legal difficulties with respect to FDA regulations or regulations of other government agencies that jeopardize their ability to continue supporting the development and commercialization of our products; • collaborators could terminate our existing or future agreements or allow them to expire, which would delay the development and may increase the cost of developing our products; • if a present or future collaborator of ours were to be involved in a business combination, the continued pursuit and emphasis on our product development or commercialization program under such collaboration could be delayed, diminished or terminated; and • collaboration agreements may restrict our right to independently pursue new investigational devices.
Our current collaboration agreements pose, and potential future collaborations involving our iLet may pose, the following risks to us: • we may be required to assume substantial actual or contingent liabilities; • we may not be able to control the amount and timing of resources that our strategic collaborators devote to the development and commercialization of our products; • collaborators could independently develop, or develop with third parties, products that compete directly or indirectly with our iLet; • collaborators may not properly enforce, maintain or defend our intellectual property rights or may use our proprietary information in a way that gives rise to actual or threatened litigation; • disputes may arise between a collaborator and us that cause the delay or termination of the research, development or commercialization of the investigational device, or that result in costly litigation or arbitration that diverts management attention and resources; • collaborators may experience financial difficulties; 65 • our collaborators may experience legal difficulties with respect to FDA regulations or regulations of other government agencies that jeopardize their ability to continue supporting the development and commercialization of our products; • collaborators could terminate our existing or future agreements or allow them to expire, which would delay the development and may increase the cost of developing our products; • if a present or future collaborator of ours were to be involved in a business combination, the continued pursuit and emphasis on our product development or commercialization program under such collaboration could be delayed, diminished or terminated; and • collaboration agreements may restrict our right to independently pursue new investigational devices.
Moreover, a violation of the federal Anti-Kickback Statute is grounds for the government or a whistleblower to assert that a claim for payment of items or services resulting from such violation constitutes a false or fraudulent claim for purposes of the False Claims Act. • The Health Insurance Portability and Accountability Act of 1996 (HIPAA), which created new federal criminal statutes that prohibit knowingly and willfully executing, or attempting to execute, a scheme to defraud any healthcare benefit program or obtain, by means of false or fraudulent pretenses, representations, or promises, any of the money or property owned by, or under the custody or control of, any healthcare benefit program, regardless of the payor (e.g., public or private) and knowingly and willfully falsifying, concealing or covering up by any trick or device a material fact or making any materially false statements in connection with the delivery of, or payment for, healthcare benefits, items or services relating to healthcare matters.
Moreover, a violation of the federal Anti-Kickback Statute is grounds for the government or a whistleblower to assert that a claim for 75 payment of items or services resulting from such violation constitutes a false or fraudulent claim for purposes of the False Claims Act. • The Health Insurance Portability and Accountability Act of 1996 (HIPAA), which created new federal criminal statutes that prohibit knowingly and willfully executing, or attempting to execute, a scheme to defraud any healthcare benefit program or obtain, by means of false or fraudulent pretenses, representations, or promises, any of the money or property owned by, or under the custody or control of, any healthcare benefit program, regardless of the payor (e.g., public or private) and knowingly and willfully falsifying, concealing or covering up by any trick or device a material fact or making any materially false statements in connection with the delivery of, or payment for, healthcare benefits, items or services relating to healthcare matters.
If any such actions are instituted against us, and we are not successful in defending ourselves or asserting our rights, those actions could have a significant impact on our business, including 109 the imposition of significant penalties, including civil, criminal and administrative penalties, damages, fines, disgorgement, individual imprisonment, possible exclusion from participation in federal and state funded healthcare programs, contractual damages and the curtailment or restricting of our operations, as well as additional reporting obligations and oversight if we become subject to a corporate integrity agreement or other agreement to resolve allegations of non-compliance with these laws.
If any such actions are instituted against us, and we are not successful in defending ourselves or asserting our rights, those actions could have a significant impact on our business, including the imposition of significant penalties, including civil, criminal and administrative penalties, damages, fines, disgorgement, individual imprisonment, possible exclusion from participation in federal and state funded healthcare programs, contractual damages and the curtailment or restricting of our operations, as well as additional reporting obligations and oversight if we become subject to a corporate integrity agreement or other agreement to resolve allegations of non-compliance with these laws.
As we continue to build our business, we expect our quarterly and annual financial condition, operating results and cash flows to fluctuate significantly due to a variety of factors including, but not limited to: • the timing of the launch of new products and product features by us and our competitors; • market acceptance of our products and competing products by PWD, their caregivers and HCPs; • the timing of regulatory clearance or certification of our products and the products of our competitors; • the actual efficiencies gained in our manufacturing processes; • the implementation and impact of third-party payor reimbursement and our multi-channel coverage and reimbursement strategy, including the mix of products sold via the DME and PBP channels; • expenditures that we may incur to acquire, develop or commercialize additional products; • sales and marketing efforts and expenses; • warranty expenses; • pricing pressures; • the purchasing patterns of our customers, including as a result of seasonality, which may be impacted by the timing and use of deductibles and out-of-pocket expense maximums; • the rate at which we grow our sales force and the speed at which newly hired salespeople become effective; • changes in the productivity of our sales force, • positive or negative coverage in the media or clinical publications of our products or products of our competitors or our industry; and • general economic, political, industry and market conditions.
As we continue to build our business, we expect our quarterly and annual financial condition, operating results, cash flows and key business metrics to fluctuate significantly due to a variety of factors including, but not limited to: • the timing of the launch of new products and product features by us and our competitors; • market acceptance of our products and competing products by PWD, their caregivers and HCPs; • the timing of regulatory clearance or certification of our products and the products of our competitors; • the actual efficiencies gained in our manufacturing processes; • the implementation and impact of third-party payor reimbursement and our multi-channel coverage and reimbursement strategy, including the mix of products sold via the DME and PBP channels; • expenditures that we may incur to acquire, develop or commercialize additional products; • sales and marketing efforts and expenses; • warranty expenses; • pricing pressures; • the purchasing patterns of our customers, including as a result of seasonality, which may be impacted by the timing and use of deductibles and out-of-pocket expense maximums; • the rate at which we grow our sales force and the speed at which newly hired salespeople become effective; • changes in the productivity of our sales force; • positive or negative coverage in the media or clinical publications of our products or products of our competitors or our industry; and • general economic, political, industry and market conditions.
If we were unable or unwilling to renew at the proposed rates, relocating our manufacturing facility would involve significant expense in connection with the movement and installation of key manufacturing equipment and any necessary recertification with 99 regulatory bodies, and we cannot assure investors that such a move would not delay or otherwise adversely affect our manufacturing activities or operating results.
If we were unable or unwilling to renew at the proposed rates, relocating our manufacturing facility would involve significant expense in connection with the movement and installation of key manufacturing equipment and any necessary recertification with regulatory bodies, and we cannot assure investors that such a move would not delay or otherwise adversely affect our manufacturing activities or operating results.
The FTC also has authority under Section 5 of the FTC Act to initiate enforcement actions against entities that engage in unfair or deceptive practices such as misleading customers, about HIPAA compliance, making unfair or deceptive statements about the use of personal data (including PHI) in privacy policies, failing to limit service providers use of PHI, or failing to implement policies to protect PHI or engaging in other unfair practices that harm customers.
The FTC also has authority under Section 5 of the FTC Act to initiate enforcement actions against entities that engage in unfair or deceptive practices such as misleading customers, about HIPAA compliance, making unfair or 78 deceptive statements about the use of personal data (including PHI) in privacy policies, failing to limit service providers use of PHI, or failing to implement policies to protect PHI or engaging in other unfair practices that harm customers.
For example, if the issuance in a given country of a patent covering an invention is not followed by the issuance in other countries of patents covering the same invention, or if any judicial interpretation of the validity, enforceability or scope of the claims or the written description or enablement in a patent issued in one country is not similar to the interpretation given to the corresponding patent issued in another country, our ability to protect our intellectual property in those countries may be limited.
For example, if the issuance in a given country of a patent covering an invention is not followed by the issuance in other countries of patents covering the same invention, or if any judicial interpretation of the validity, enforceability or scope of the claims or the written description or enablement in a patent issued in one country is not similar to the interpretation given to the corresponding patent issued in another country, our ability to protect our intellectual property in those countries may 84 be limited.
Foreign courts will have similar burdens to overcome in order to successfully challenge a third-party claim of patent infringement. We may be subject to claims that our employees, consultants or independent contractors have wrongfully used or disclosed confidential information of third parties. 119 We employ individuals who were previously employed at other medical device companies.
Foreign courts will have similar burdens to overcome in order to successfully challenge a third-party claim of patent infringement. We may be subject to claims that our employees, consultants or independent contractors have wrongfully used or disclosed confidential information of third parties. We employ individuals who were previously employed at other medical device companies.
Such a stock price decline could occur even when we have met any previously publicly stated guidance we may provide. 72 We currently rely on sales of our iLet and related single-use products to generate all of our revenue, and any factors that negatively impact sales of these products may adversely affect our business, financial condition and operating results.
Such a stock price decline could occur even when we have met any previously publicly stated guidance we may provide. We currently rely on sales of our iLet and related single-use products to generate all of our revenue, and any factors that negatively impact sales of these products may adversely affect our business, financial condition and operating results.
Even following the termination of our status as an emerging growth company, we may be able to take advantage of the reduced disclosure requirements applicable to “smaller reporting companies,” as that term is 127 defined in Rule 12b-2 of the Exchange Act, and, in particular, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements.
Even following the termination of our status as an emerging growth company, we may be able to take advantage of the reduced disclosure requirements applicable to “smaller reporting companies,” as that term is defined in Rule 12b-2 of the Exchange Act, and, in particular, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements.
In addition, clinical trials must be conducted with supplies of our devices and drugs produced under current good manufacturing practices (cGMPs). Furthermore, we rely on CROs, and clinical trial sites to ensure the proper and timely conduct of our clinical trials and while we have agreements governing their committed activities, we have limited influence over their actual performance.
In addition, clinical trials must be conducted with supplies of our devices and drugs produced under current good manufacturing 56 practices (cGMPs). Furthermore, we rely on CROs, and clinical trial sites to ensure the proper and timely conduct of our clinical trials and while we have agreements governing their committed activities, we have limited influence over their actual performance.
If our existing agreements are terminated and/or DexCom or Abbott enter into an exclusive partnership with one of our competitors, our ability to commercialize the iLet would be disrupted, 97 which would have a material adverse impact on our business, financial condition and results of operations, negatively impact our ability to compete and cause the price of our common stock to decline.
If our existing agreements are terminated and/or DexCom or Abbott enter into an exclusive partnership with one of our competitors, our ability to commercialize the iLet would be disrupted, which would have a material adverse impact on our business, financial condition and results of operations, negatively impact our ability to compete and cause the price of our common stock to decline.
Additionally, we entered into an exclusive collaboration and license agreement with Xeris to facilitate the development of a dual-hormone pump for PWD, whereby Xeris will develop a glucagon drug product candidate utilizing Xeris’ XeriSol technology for use in our iLet in its bihormonal configuration (if such configuration is authorized for marketing).
Additionally, we entered into an exclusive collaboration and license agreement with Xeris to facilitate the development of a dual-hormone pump for PWD, whereby Xeris will develop a glucagon drug product candidate utilizing Xeris’ XeriSol technology for use in our iLet in its bihormonal system (if such configuration is authorized for marketing).
While we believe that historical experience provides a reliable basis for estimating such warranty cost, unforeseen quality issues or component failure rates could result in future costs in excess of such estimates, or alternatively, improved quality and reliability in our products, including our single-use products, could result in actual expenses that are below those currently estimated.
While we believe that historical experience provides a reliable basis for estimating such warranty cost, unforeseen quality issues or component failure rates 69 could result in future costs in excess of such estimates, or alternatively, improved quality and reliability in our products, including our single-use products, could result in actual expenses that are below those currently estimated.
Seeking such marketing authorizations or clearances may delay our ability to replace the recalled devices in a timely manner. Moreover, if we do not adequately address problems associated with our devices, we may face additional regulatory enforcement action, including FDA warning letters, product seizure, injunctions, administrative penalties, 106 or civil or criminal fines.
Seeking such marketing authorizations or clearances may delay our ability to replace the recalled devices in a timely manner. Moreover, if we do not adequately address problems associated with our devices, we may face additional regulatory enforcement action, including FDA warning letters, product seizure, injunctions, administrative penalties, or civil or criminal fines.
In such instance, we would expect to vigorously assert the validity and enforceability of the exclusive forum provisions of our amended and restated certificate of incorporation. This may require significant additional costs associated with 129 resolving such action in other jurisdictions and there can be no assurance that the provisions will be enforced by a court in those other jurisdictions.
In such instance, we would expect to vigorously assert the validity and enforceability of the exclusive forum provisions of our amended and restated certificate of incorporation. This may require significant additional costs associated with resolving such action in other jurisdictions and there can be no assurance that the provisions will be enforced by a court in those other jurisdictions.
The future regulatory and commercial success of our iLet, patch pump and any other product candidate is subject to a number of risks, including the following: • completion of preclinical studies with favorable results; • successful enrollment in, and completion of, planned and future clinical trials with favorable results; • sufficiency of our financial and other resources to complete the necessary clinical trials and regulatory activities; • successful patient enrollment in clinical trials; • successful data from our clinical program that supports an acceptable risk-benefit profile in the intended populations; • whether we are required by the FDA to conduct additional clinical trials or to modify the design of current or planned trials to support any future application seeking marketing authorization or clearance of the iLet in a bihormonal configuration for the treatment of T1D or for other indications we may pursue, or seeking initial marketing authorization or clearance for any of our other product candidates; • receipt and maintenance of marketing authorizations or clearances from applicable regulatory authorities; • obtaining and maintaining patent and trade secret protection and regulatory exclusivity for our iLet; • making arrangements with third-party manufacturers and ensuring such third-party manufacturers supply sufficient quantities of components of our products and product candidates; • scaling up our manufacturing capabilities, for both commercial and clinical supplies of our products and product candidates; • entry into collaborations to further the development of our iLet’s capabilities; • expanding sales, marketing and distribution capabilities as we continue our commercialization efforts of the iLet, whether alone or in collaboration with others; • successfully launching commercial sales of the iLet, patch pump and any other product candidate, if authorized for marketing or cleared; 85 • acceptance of our products by PWD, the medical community and third-party payors; • maintaining a continued acceptable safety profile following marketing authorization or clearance; • maintaining regulatory compliance; • effectively competing with other treatment options and the availability, perceived advantages, relative cost, relative safety and relative effectiveness of alternative and competing treatments; • the emergence of competing technologies and other adverse market developments, and our need to enhance existing products and/or develop new products to maintain market share in response to such competing technologies or market developments; • maintaining healthcare coverage and adequate reimbursement from third-party payors; • continuing to build and maintain an organization of people who can successfully develop our products; and • enforcing and defending intellectual property rights and claims.
The future regulatory and commercial success of our iLet, patch pump and any other product candidate is subject to a number of risks, including the following: • completion of preclinical studies with favorable results; • successful enrollment in, and completion of, planned and future clinical trials with favorable results; • sufficiency of our financial and other resources to complete the necessary clinical trials and regulatory activities; • successful patient enrollment in clinical trials; • successful data from our clinical program that supports an acceptable risk-benefit profile in the intended populations; • whether we are required by the FDA to conduct additional clinical trials or to modify the design of current or planned trials to support any future application seeking marketing authorization or clearance of the iLet in a bihormonal system for the treatment of T1D or for other indications we may pursue, or seeking initial marketing authorization or clearance for any of our other product candidates; 51 • receipt and maintenance of marketing authorizations or clearances from applicable regulatory authorities; • obtaining and maintaining patent and trade secret protection and regulatory exclusivity for our iLet; • making arrangements with third-party manufacturers and ensuring such third-party manufacturers supply sufficient quantities of components of our products and product candidates; • scaling up our manufacturing capabilities, for both commercial and clinical supplies of our products and product candidates; • entry into collaborations to further the development of our iLet’s capabilities; • expanding sales, marketing and distribution capabilities as we continue our commercialization efforts of the iLet, whether alone or in collaboration with others; • successfully launching commercial sales of the iLet, patch pump and any other product candidate, if authorized for marketing or cleared; • acceptance of our products by PWD, the medical community and third-party payors; • maintaining a continued acceptable safety profile following marketing authorization or clearance; • maintaining regulatory compliance; • effectively competing with other treatment options and the availability, perceived advantages, relative cost, relative safety and relative effectiveness of alternative and competing treatments; • the emergence of competing technologies and other adverse market developments, and our need to enhance existing products and/or develop new products to maintain market share in response to such competing technologies or market developments; • maintaining healthcare coverage and adequate reimbursement from third-party payors; • continuing to build and maintain an organization of people who can successfully develop our products; and • enforcing and defending intellectual property rights and claims.
Furthermore, even though we have received clearance for our iLet for insulin-only delivery for the treatment of T1D, any other configuration for the treatment of T1D such as a bihormonal configuration using both insulin and glucagon or other indications we may pursue for which we receive marketing authorization or clearance may be subject to limitations on the patient populations for which we may market the product.
Furthermore, even though we have received clearance for our iLet for insulin-only delivery for the treatment of T1D, any other configuration for the treatment of T1D such as a bihormonal system using both insulin and glucagon or other indications we may pursue for which we receive marketing authorization or clearance may be subject to limitations on the patient populations for which we may market the product.
Undesirable side effects, whether observed in clinical trials or in connection with the commercial use of our products, could also affect patient recruitment or the ability of enrolled patients to complete the trial or result in potential product liability claims. Any of these occurrences may harm our business, financial condition and prospects significantly.
Undesirable side effects, whether observed in clinical trials or in connection with the commercial use of our products, could also affect patient recruitment or the ability of enrolled patients to complete the trial or result in potential product liability claims. Any 57 of these occurrences may harm our business, financial condition and prospects significantly.
While we have confidence in these individuals, organizations and systems, our agreements and/or security measures may be breached, and we may not have adequate remedies for any such breach. Also, if the steps taken to maintain our trade secrets are deemed inadequate, we may have insufficient recourse against third parties for misappropriating the trade secret.
While we have confidence in these individuals, organizations and systems, our agreements and/or security measures may be breached, and we may not have adequate remedies for any such breach. Also, if the steps taken to maintain our trade secrets are deemed inadequate, we may have insufficient recourse against third parties for misappropriating the trade 82 secret.
Following price volatility, holders of securities may institute securities class action litigation against the issuer. If any holders of our common stock were to bring such a lawsuit against us, we could incur substantial costs 125 defending the lawsuit and the attention of our board of directors and senior management would be diverted from the operation of our business.
Following price volatility, holders of securities may institute securities class action litigation against the issuer. If any holders of our common stock were to bring such a lawsuit against us, we could incur substantial costs defending the lawsuit and the attention of our board of directors and senior management would be diverted from the operation of our business.
Further, our general liability insurance may not cover all potential claims made against us or be sufficient to indemnify us for all liability that may be imposed. Any claim against us, regardless of its merit, could be costly, divert management’s attention and operational resources, and harm our reputation. 131 Our directors and executive officers may also be subject to litigation.
Further, our general liability insurance may not cover all potential claims made against us or be sufficient to indemnify us for all liability that may be imposed. Any claim against us, regardless of its merit, could be costly, divert management’s attention and operational resources, and harm our reputation. Our directors and executive officers may also be subject to litigation.
Even if we are successful in defending against such claims, litigation could result in substantial costs and be a distraction to management and other employees. 120 We may be subject to claims that our employees, consultants or independent contractors have wrongfully used or disclosed confidential information of their former employers or other third parties.
Even if we are successful in defending against such claims, litigation could result in substantial costs and be a distraction to management and other employees. We may be subject to claims that our employees, consultants or independent contractors have wrongfully used or disclosed confidential information of their former employers or other third parties.
Moreover, we cannot guarantee that we have entered into such agreements with each party that may have or have had access to our confidential information or proprietary technology and processes. Monitoring unauthorized uses and disclosures is difficult, and we do not know whether the steps we have taken to protect our proprietary technologies will be effective.
Moreover, we cannot guarantee that we have entered into such agreements with each party that may have or have had access to our confidential information or proprietary 88 technology and processes. Monitoring unauthorized uses and disclosures is difficult, and we do not know whether the steps we have taken to protect our proprietary technologies will be effective.
“Management’s Discussion and Analysis of Financial Condition and Results of Operations.” To the extent that our mix of distribution channels fluctuates, our financial results may vary from period to period. Our ability to generate more revenue in the PBP channel over the patient’s lifespan will be dependent upon the continued use of our products by PWD.
“Management’s Discussion and Analysis of Financial Condition and Results of Operations.” To the extent that our mix of distribution channels 37 fluctuates, our financial results may vary from period to period. Our ability to generate more revenue in the PBP channel over the patient’s lifespan will be dependent upon the continued use of our products by PWD.
Such disclosures and related actions can be costly, and the disclosure or the failure to comply with such applicable requirements could lead to adverse consequences. 81 If we (or a third party with whom we work) experience a security incident or are perceived to have experienced a security incident, we may experience material adverse consequences, such as government enforcement actions (for example, investigations, fines, penalties, audits, and inspections); additional reporting requirements and/or oversight; restrictions on processing sensitive information (including personal data); litigation (including class claims); indemnification obligations; negative publicity; reputational harm; monetary fund diversions; diversion of management attention; interruptions in our operations (including availability of data); financial loss; and other similar harms.
Such disclosures and related actions can be costly, and the disclosure or the failure to comply with such applicable requirements could lead to adverse consequences. 46 If we (or a third party with whom we work) experience a security incident or are perceived to have experienced a security incident, we may experience material adverse consequences, such as government enforcement actions (for example, investigations, fines, penalties, audits, and inspections); additional reporting requirements and/or oversight; restrictions on processing sensitive information (including personal data); litigation (including class claims); indemnification obligations; negative publicity; reputational harm; monetary fund diversions; diversion of management attention; interruptions in our operations (including availability of data); financial loss; and other similar harms.
The Bayh-Dole Act also provides federal agencies with “march-in rights.” March-in rights allow the government, in specified circumstances, to require the contractor or successors in title to the patent to grant a “non-exclusive, partially exclusive, or exclusive license” to a “responsible applicant or applicants.” If the patent owner refuses to do so, the government may grant the license itself.
The 86 Bayh-Dole Act also provides federal agencies with “march-in rights.” March-in rights allow the government, in specified circumstances, to require the contractor or successors in title to the patent to grant a “non-exclusive, partially exclusive, or exclusive license” to a “responsible applicant or applicants.” If the patent owner refuses to do so, the government may grant the license itself.
The 128 issuance of preferred stock, while providing flexibility in connection with possible acquisitions and other corporate purposes, could, among other things, have the effect of delaying, deferring or preventing a change in our control that may otherwise benefit holders of our common stock and may adversely affect the market price of the common stock and the voting and other rights of the holders of common stock.
The issuance of preferred stock, while providing flexibility in connection with possible acquisitions and other corporate purposes, could, among other things, have the effect of delaying, deferring or preventing a change in our control that may otherwise benefit holders of our common stock and may adversely affect the market price of the common stock and the voting and other rights of the holders of common stock.
Currently, the only iCGM models that are compatible with our iLet are DexCom’s G6 and G7 iCGM devices and Abbott’s FreeStyle Libre 3 Plus CGM sensor. Although we are actively 92 working to expand the compatibility of our iLet with other iCGM models, there is no assurance we will be successful in our efforts.
Currently, the only iCGM models that are compatible with our iLet are DexCom’s G6 and G7 iCGM devices and Abbott’s FreeStyle Libre 3 Plus CGM sensor. Although we are actively working to expand the compatibility of our iLet with other iCGM models, there is no assurance we will be successful in our efforts.
Following FDA clearance of the iLet as an automated insulin dosing system for the treatment of T1D in adults and children six years of age and older, we have had to invest additional resources in purchasing components, hiring and training employees and enhancing our manufacturing processes and quality systems.
Following FDA clearance of the iLet as an automated insulin dosing system for the treatment of T1D in adults and children six years of age and older, we have had to invest additional resources in purchasing components, hiring 66 and training employees and enhancing our manufacturing processes and quality systems.
We generally use a small number of suppliers for our components and products, some of which are located outside the United States, including Switzerland, Mexico, China and Taiwan. Our dependence on a limited number of suppliers exposes us to risks, including limited control over costs, including tariffs, availability, quality and 100 delivery schedules.
We generally use a small number of suppliers for our components and products, some of which are located outside the United States, including Switzerland, Mexico, China and Taiwan. Our dependence on a limited number of suppliers exposes us to risks, including limited control over costs, including tariffs, availability, quality and delivery schedules.
New income or other tax laws or regulations could be enacted at any time, which could adversely affect our business operations and financial performance. For example, the Tax Cuts and Jobs Act, the Coronavirus Aid, Relief, and Economic Security Act and the IRA made many significant changes to U.S. tax laws.
New income or other tax laws or regulations could be enacted at any time, which could adversely affect our business operations and financial performance. For example, the Tax Cuts and Jobs Act, the Coronavirus Aid, Relief, and Economic Security Act, the IRA and the OBBBA made many significant changes to U.S. tax laws.
Moreover, we do not have the first right to control the preparation, filing and prosecution of patent applications 114 covering technology that we have in-licensed from BU and Xeris. Therefore, these patents and patent applications may not be prosecuted and enforced in a manner consistent with the best interests of our business.
Moreover, we do not have the first right to control the preparation, filing and prosecution of patent applications covering technology that we have in-licensed from BU and Xeris. Therefore, these patents and patent applications may not be prosecuted and enforced in a manner consistent with the best interests of our business.
A U.S. or global recession, could negatively impact our current and prospective customers, adversely affect the financial ability of health insurers to pay claims, adversely impact our ability to pay our expenses and ability to obtain financing of our operations, cause delays or other problems with key suppliers and increase the risk of counterparty failures.
A U.S. or global recession, could negatively impact our current and prospective customers, adversely affect the financial ability of health insurers to pay claims, adversely impact our ability to pay our expenses and ability to obtain 96 financing of our operations, cause delays or other problems with key suppliers and increase the risk of counterparty failures.
We do not have the first right to control the prosecution, maintenance and enforcement of our licensed intellectual property, and we thus require the cooperation of our licensor. Therefore, we cannot be certain that the prosecution, maintenance and enforcement of 115 these patent rights will be in a manner consistent with the best interests of our business.
We do not have the first right to control the prosecution, maintenance and enforcement of our licensed intellectual property, and we thus require the cooperation of our licensor. Therefore, we cannot be certain that the prosecution, maintenance and enforcement of these patent rights will be in a manner consistent with the best interests of our business.
If the actual number of patients who would benefit from our products, the price at which we can sell products, or the total addressable market for our products is smaller than we anticipated, it may impair our sales growth and have an adverse impact on our business.
If the actual number of patients who would benefit from our products, the price at which we can sell products, or the total addressable market for our products is smaller than we anticipated, it may impair our growth and have an adverse impact on our business.
We have limited experience manufacturing our products and, if we are unable to manufacture our products in high-quality commercial quantities successfully and consistently to meet demand, our growth will be limited. 98 We have limited experience manufacturing our products. We currently manufacture our iLet and its accompanying ready-to-fill insulin cartridges at our single manufacturing facility in Irvine, California.
We have limited experience manufacturing our products and, if we are unable to manufacture our products in high-quality commercial quantities successfully and consistently to meet demand, our growth will be limited. We have limited experience manufacturing our products. We currently manufacture our iLet and its accompanying ready-to-fill insulin cartridges at our single manufacturing facility in Irvine, California.
Our suppliers may encounter problems during manufacturing due to a variety of reasons, including failure to follow specific protocols and procedures, failure to comply with applicable regulations and equipment malfunction and environmental factors, any of which could delay or impede their ability to meet our demand.
Our suppliers may encounter problems during manufacturing due to a variety of reasons, including failure to follow specific protocols and procedures, failure to comply with applicable regulations and equipment malfunction and 67 environmental factors, any of which could delay or impede their ability to meet our demand.
Manufacturing, sales, promotion and other activities also are potentially subject to federal and state consumer protection and unfair competition laws. The distribution of products is subject to additional requirements and regulations, including extensive record-keeping, licensing, storage and security requirements intended to prevent the unauthorized sale of pharmaceutical products.
Manufacturing, sales, promotion and other activities also are potentially subject to federal and state consumer protection and unfair competition laws. 76 The distribution of products is subject to additional requirements and regulations, including extensive record-keeping, licensing, storage and security requirements intended to prevent the unauthorized sale of pharmaceutical products.
We have limited financial and personnel resources and are placing significant focus on the commercialization of our iLet as an automated insulin dosing system cleared for the treatment of T1D in adults and children six years of age and older, and the development of a bihormonal configuration for the treatment of T1D.
We have limited financial and personnel resources and are placing significant focus on the commercialization of our iLet as an automated insulin dosing system cleared for the treatment of T1D in adults and children six years of age and older, and the development of a bihormonal system for the treatment of T1D.
Coverage and reimbursement by a third-party payor may depend upon a number of factors, including the third-party payor’s determination that use of a product is: • a covered benefit under its health plan; • safe, effective and medically necessary; • appropriate for the specific patient; • cost-effective; and • neither experimental nor investigational. 95 Obtaining coverage and reimbursement approval of a product from a government or other third-party payor is a time-consuming and costly process that could require us to provide to each payor supporting scientific, clinical and cost-effectiveness data for the use of our products on a payor-by-payor basis, with no assurance that coverage and adequate reimbursement will be obtained.
Coverage and reimbursement by a third-party payor may depend upon a number of factors, including the third-party payor’s determination that use of a product is: • a covered benefit under its health plan; • safe, effective and medically necessary; • appropriate for the specific patient; • cost-effective; and • neither experimental nor investigational. 62 Obtaining coverage and reimbursement approval of a product from a government or other third-party payor is a time-consuming and costly process that could require us to provide to each payor supporting scientific, clinical and cost-effectiveness data for the use of our products on a payor-by-payor basis, with no assurance that coverage and adequate reimbursement will be obtained.
If the FDA determines that our iLet does not perform as anticipated, or if the FDA identifies new concerns related to the safety and effectiveness of the device, we may need to make changes to or recall or withdraw the iLet from the field, which could harm our business.
If the FDA determines that our iLet does not perform as anticipated, or if the FDA identifies new concerns related to the safety and 52 effectiveness of the device, we may need to make changes to or recall or withdraw the iLet from the field, which could harm our business.
HIPAA requires covered entities and business associates to develop and maintain policies with respect to the protection of, use and disclosure of PHI, including the adoption of administrative, physical and technical safeguards to protect such information, and certain notification requirements in the event of a breach of unsecured PHI.
HIPAA requires covered entities and business associates to develop and maintain policies with respect to the protection of, use and disclosure of PHI, including the adoption of administrative, physical and 77 technical safeguards to protect such information, and certain notification requirements in the event of a breach of unsecured PHI.
For example, the complexity and uncertainty of European patent laws have also increased in recent years. In Europe, 116 a new unitary patent system took effect June 1, 2023, which will significantly impact European patents, including those granted before the introduction of the new unitary patent system.
For example, the complexity and uncertainty of European patent laws have also increased in recent years. In Europe, a new unitary patent system took effect June 1, 2023, which will significantly impact European patents, including those granted before the introduction of the new unitary patent system.
Any trademarks we have obtained or may obtain may be infringed or otherwise violated, or successfully challenged, resulting in harm to our business. We rely on trademarks as one means to distinguish the iLet from the systems of our competitors and market ourselves and our products.
Any trademarks we have obtained or may obtain may be infringed or otherwise violated, or successfully challenged, resulting in harm to our business. 90 We rely on trademarks as one means to distinguish the iLet from the systems of our competitors and market ourselves and our products.
Should any of these events occur, our business, results of operations and prospects could be significantly harmed. Risks Related to Ownership of Our Common Stock The trading price of our common stock may be volatile, and you could lose all or part of your investment. The trading price of our common stock is likely to be volatile.
Should any of these events occur, our business, results of operations and prospects could be significantly harmed. 91 Risks Related to Ownership of Our Common Stock The trading price of our common stock may be volatile, and you could lose all or part of your investment. The trading price of our common stock is likely to be volatile.
To the extent that we raise additional 126 capital through the sale of equity or convertible debt securities, your ownership interest will be diluted, and the terms may include liquidation or other preferences that adversely affect your rights as a stockholder.
To the extent that we raise additional capital through the sale of equity or convertible debt securities, your ownership interest will be diluted, and the terms may include liquidation or other preferences that adversely affect your rights as a stockholder.
Our ability to obtain patents is highly uncertain because, to date, some legal principles remain unresolved, and there has not been a consistent policy regarding the breadth or interpretation of claims allowed in patents in the United States.
Our ability to obtain patents is highly uncertain because, to date, some legal principles remain unresolved, and there has not been a consistent policy 83 regarding the breadth or interpretation of claims allowed in patents in the United States.
Companies that perceive us to be a competitor may be unwilling to assign or license rights to us. We also may be unable to license or acquire third-party intellectual property rights on terms that would allow us to make an appropriate return on our investment, or at all.
Companies that perceive us to be a competitor may be unwilling to assign or license 85 rights to us. We also may be unable to license or acquire third-party intellectual property rights on terms that would allow us to make an appropriate return on our investment, or at all.
Competitors or other parties may adopt trade names or trademarks similar to ours, thereby impeding our ability to build brand identity and possibly leading to market confusion. 123 Our competitors may also infringe or otherwise violate our trademarks, and we may not have adequate resources to enforce our trademarks.
Competitors or other parties may adopt trade names or trademarks similar to ours, thereby impeding our ability to build brand identity and possibly leading to market confusion. Our competitors may also infringe or otherwise violate our trademarks, and we may not have adequate resources to enforce our trademarks.
If we are not able to successfully implement our multi-channel coverage and reimbursement strategy, secure or retain adequate coverage or reimbursement for the iLet and our product candidates, if authorized, by third-party payors, or face delays in processing approvals by those payors, our business, financial condition and operating results could be adversely affected. 96 If we experience pricing pressure for our products and we are unable to reduce our expenses, including the per unit cost of producing our products, there may be a material adverse effect on our business, financial condition, results of operations and cash flows.
If we are not able to successfully implement our multi-channel coverage and reimbursement strategy, secure or retain adequate coverage or reimbursement for the iLet and our product candidates, if authorized, by third-party payors, or face delays in processing approvals by those payors, our business, financial condition and operating results could be adversely affected. 63 If we experience pricing pressure for our products and we are unable to reduce our expenses, including the per unit cost of producing our products, there may be a material adverse effect on our business, financial condition, results of operations and cash flows.
We also maintain customary directors’ and officers’ liability insurance. If we fail to maintain an effective system of internal control over financial reporting, we may not be able to accurately report our financial results or prevent fraud.
We also maintain customary directors’ and officers’ liability insurance. 98 If we fail to maintain an effective system of internal control over financial reporting, we may not be able to accurately report our financial results or prevent fraud.
The third pathway is called de novo classification, which is generally used for low- to moderate-risk products that have not previously been classified by the FDA and therefore no predicate device is available.
The third pathway is called de novo classification, which is generally used 53 for low- to moderate-risk products that have not previously been classified by the FDA and therefore no predicate device is available.
Further, we perform all of our manufacturing activities at our single manufacturing facility in Irvine, California. Our facilities, equipment and inventory would be costly to replace and could require substantial lead time to repair or replace.
Further, since we perform all of our manufacturing activities at our single manufacturing facility in Irvine, California, our facilities, equipment and inventory would be costly to replace and could require substantial lead time to repair or replace.
Such a failure by our suppliers could also require us to cease using the components, seek alternative components or technologies, and modify our products to incorporate alternative components or technologies, which could necessitate additional marketing authorizations or clearances.
Such a failure by our suppliers could also require us to cease using the components, seek alternative components or technologies, and modify our products to incorporate alternative components or technologies, which could necessitate additional 68 marketing authorizations or clearances.
Even if we establish infringement, the court may decide not to grant an injunction against further infringing activity 117 and instead award only monetary damages, which may or may not be an adequate remedy.
Even if we establish infringement, the court may decide not to grant an injunction against further infringing activity and instead award only monetary damages, which may or may not be an adequate remedy.
Our capital requirements, both near and long-term, will depend on many factors, including, but not limited to: • the cost of maintaining FDA clearance for the iLet as an automated insulin dosing system cleared for the treatment of T1D in adults and children six years of age and older; • the cost of obtaining and maintaining FDA marketing authorization or clearance for other future indications or other product candidates, including for the iLet for T1D using both insulin and glucagon (a bihormonal configuration), the iLet for T2D and the patch pump; • future revenue generated by sales of the iLet and any future product candidates, if approved; • expenses we incur in manufacturing and selling the iLet; • costs associated with scaling up and expanding our manufacturing capacity; • costs associated with building and expanding our sales and marketing efforts in the United States and, in the future, internationally; • costs associated with conducting research and development efforts for future improvements to the iLet; • costs associated with conducting research and development efforts for future product offerings, such as the bihormonal iLet and patch pump; • the cost of complying with regulatory requirements; • costs associated with capital expenditures; • the costs associated with hiring additional personnel as our business grows; 74 • the costs of operating as a public company; • costs associated with any future litigation; and • the costs and timing of preparing, filing and prosecuting patent applications, maintaining and enforcing our intellectual property rights and defending any intellectual property-related claims.
Our capital requirements, both near and long-term, will depend on many factors, including, but not limited to: • the cost of maintaining FDA clearance for the iLet as an automated insulin dosing system cleared for the treatment of T1D in adults and children six years of age and older; • the cost of obtaining and maintaining FDA marketing authorization or clearance for other future indications or other product candidates, including for the iLet for T1D using both insulin and glucagon (a bihormonal system), the iLet for T2D and the patch pump; • future revenue generated by sales of the iLet and any future products or product candidates, if approved; • expenses we incur in manufacturing and selling the iLet; • costs associated with scaling up and expanding our manufacturing capacity; • costs associated with building and expanding our sales and marketing efforts in the United States and, in the future, internationally; • costs associated with conducting research and development efforts for future improvements to the iLet; • costs associated with conducting research and development efforts for future product offerings, such as the bihormonal iLet and patch pump; • the cost of complying with regulatory requirements; • costs associated with capital expenditures; • the costs associated with hiring additional personnel as our business grows; 39 • the costs of operating as a public company; • costs associated with any future litigation; and • the costs and timing of preparing, filing and prosecuting patent applications, maintaining and enforcing our intellectual property rights and defending any intellectual property-related claims.
These 111 obligations may make it harder for us to conduct our business using AI/ML, lead to regulatory fines or penalties, require us to change our business practices, retrain our AI/ML, or prevent or limit our use of AI/ML.
These obligations may make it harder for us to conduct our business using AI/ML, lead to regulatory fines or penalties, require us to change our business practices, retrain our AI/ML, or prevent or limit our use of AI/ML.
There is no certainty that all of our employees, agents or contractors, or those of our affiliates, will comply with all applicable laws and regulations, particularly given the high level of complexity of these laws.
There is no certainty that all of our employees, agents or contractors, or those of our affiliates, will comply with all applicable laws and 81 regulations, particularly given the high level of complexity of these laws.
HIPAA also authorizes state Attorneys General to file suit on behalf of their residents. 110 Courts may award damages, costs and attorneys’ fees related to violations of HIPAA in such cases.
HIPAA also authorizes state Attorneys General to file suit on behalf of their residents. Courts may award damages, costs and attorneys’ fees related to violations of HIPAA in such cases.
Any reduction in the amount of revenues that we derive from these customers, without an offsetting increase in new sales to other customers, could have a material adverse effect on our results of operations and financial condition. 73 Furthermore, any disruption in our supply chain could negatively impact our ability to manufacture or otherwise supply sufficient product quantities to meet demand.
Any reduction in the amount of revenues that we derive from these customers, without an offsetting increase in new sales to other customers, could have a material adverse effect on our results of operations and financial condition. 38 Furthermore, any disruption in our supply chain could negatively impact our ability to manufacture or otherwise supply sufficient product quantities to meet demand.
In addition, even the perception that new products may be introduced, or that technological or treatment advancements could occur, could cause consumers to delay the purchase of our products. 78 Because the insulin-dependent diabetes market is large and growing, we anticipate companies will continue to dedicate significant resources to developing competing products and technologies, including potentially competitive learning algorithms.
In addition, even the perception that new products may be introduced, or that technological or treatment advancements could occur, could cause consumers to delay the purchase of our products. 43 Because the insulin-dependent diabetes market is large and growing, we anticipate companies will continue to dedicate significant resources to developing competing products and technologies, including potentially competitive learning algorithms.
Even if we are able to obtain the requisite financing to continue to fund our development programs, we cannot assure you that we will successfully develop, obtain marketing authorization or clearance for, and commercialize our iLet in its bihormonal configuration for the treatment of T1D or for any future indication we may pursue, the patch pump, the investigational glucagon product, or any other development-stage products.
Even if we are able to obtain the requisite financing to continue to fund our development programs, we cannot assure you that we will successfully develop, obtain marketing authorization or clearance for, and commercialize our iLet in its bihormonal system for the treatment of T1D or for any future indication we may pursue, the patch pump, the investigational glucagon product, or any other development-stage products.
The existence of these provisions could negatively affect the price of our common stock and limit opportunities for you to realize value in a corporate transaction.
The existence of these provisions 95 could negatively affect the price of our common stock and limit opportunities for you to realize value in a corporate transaction.
Later discovery of previously unknown problems with our products, including manufacturing problems, or failure to comply with regulatory requirements such as the QSR, may result in changes to labeling, restrictions on such products or manufacturing processes, withdrawal of the products from the market, voluntary or mandatory recalls, a requirement to repair, replace or refund the cost of any medical device we manufacture or distribute, fines, suspension of regulatory approvals, product seizures, injunctions or the imposition of civil or criminal penalties which would adversely affect our business, operating results and prospects. 105 In addition, the FDA may change its marketing authorization or clearance policies, adopt additional regulations or revise existing regulations, or take other actions, which may prevent or delay marketing authorization or clearance of any product candidate under development or impact our ability to modify any products authorized for market on a timely basis.
Later discovery of previously unknown problems with our products, including manufacturing problems, or failure to comply with regulatory requirements such as the QMSR, may result in changes to labeling, restrictions on such products or manufacturing processes, withdrawal of the products from the market, voluntary or mandatory recalls, a requirement to repair, replace or refund the cost of any medical device we manufacture or distribute, fines, suspension of regulatory approvals, product seizures, injunctions or the imposition of civil or criminal penalties which would adversely affect our business, operating results and prospects. 72 In addition, the FDA may change its marketing authorization or clearance policies, adopt additional regulations or revise existing regulations, or take other actions, which may prevent or delay marketing authorization or clearance of any product candidate under development or impact our ability to modify any products authorized for market on a timely basis.
If we are unable to hire, develop and retain talented sales personnel or if new sales personnel are unable to achieve desired productivity levels in a reasonable period of time, we may not be able to realize the expected benefits of this investment or increase our revenue. 79 We may also decide to pursue collaborative arrangements regarding the sales and marketing of our products, if licensed.
If we are unable to hire, develop and retain talented sales personnel or if new sales personnel are unable to achieve desired productivity levels in a reasonable period of time, we may not be able to realize the expected benefits of this investment or increase our revenue. 44 We may also decide to pursue collaborative arrangements regarding the sales and marketing of our products, if licensed.
We currently have no other products cleared for sale and may never be able to develop other marketable products. Our iLet will require additional clinical development, testing and marketing authorization or regulatory clearance before we are permitted to commercialize it in a bihormonal configuration for the treatment of T1D or for any future indications we may pursue.
We currently have no other products cleared for sale and may never be able to develop other marketable products. Our iLet will require additional clinical development, testing and marketing authorization or regulatory clearance before we are permitted to commercialize it in a bihormonal system for the treatment of T1D or for any future indications we may pursue.
Our failure or the failure of our third-party contractors to comply with the applicable regulations may require us to repeat studies or trials, which could delay or prevent us from obtaining marketing authorization or clearance for the iLet in other configurations or indications, or for the glucagon drug product candidate for which we will need to obtain approval in order to obtain marketing authorization for a bihormonal configuration of the iLet.
Our failure or the failure of our third-party contractors to comply with the applicable regulations may require us to repeat studies or trials, which could delay or prevent us from obtaining marketing authorization or clearance for the iLet in other configurations or indications, or for the glucagon drug product candidate for which we will need to obtain approval in order to obtain marketing authorization for a bihormonal system of the iLet.
If we are not successful in commercializing our iLet or obtaining marketing authorization or clearance for the iLet in its bihormonal configuration for the treatment of T1D or in other indications, such as T2D, the investigational glucagon product, the patch pump, or any other product candidate, or if we experience delays as a result of any of these risks or otherwise, our business could be materially harmed.
If we are not successful in commercializing our iLet or obtaining marketing authorization or clearance for the iLet in its bihormonal system for the treatment of T1D or in other indications, such as T2D, the investigational glucagon product, the patch pump, or any other product candidate, or if we experience delays as a result of any of these risks or otherwise, our business could be materially harmed.
If we are unable to comply with the QMSR, once effective, or with any other changes in the laws or regulations enforced by the FDA or comparable regulatory authorities, we may be subject to enforcement action, which could have an adverse effect on our business, financial condition and results of operations. Additionally, the U.S.
If we are unable to comply with the QMSR or with any other changes in the laws or regulations enforced by the FDA or comparable regulatory authorities, we may be subject to enforcement action, which could have an adverse effect on our business, financial condition and results of operations. Additionally, the U.S.
If such an event were to affect our supply chain, it could have a material adverse effect on our ability to conduct our clinical trials, our development plans and business. 133 Evolving expectations around corporate responsibility practices, specifically related to environmental, social and governance (ESG) matters, may expose us to reputational and other risks.
If such an event were to affect our supply chain, it could have a material adverse effect on our ability to conduct our clinical trials, our development plans and business. 100 Evolving expectations around corporate responsibility practices, specifically related to environmental, social and governance (ESG) matters, may expose us to reputational and other risks.
If we fail to attract new personnel or fail to retain and motivate our current personnel, it will negatively affect our business, financial condition and results of operations. 83 We may acquire other companies or technologies, which could fail to result in a commercial product or revenue, divert our management’s attention, result in additional dilution to our stockholders and otherwise disrupt our business.
If we fail to attract new personnel or fail to retain and motivate our current personnel, it will negatively affect our business, financial condition and results of operations. 48 We may acquire other companies or technologies, which could fail to result in a commercial product or revenue, divert our management’s attention, result in additional dilution to our stockholders and otherwise disrupt our business.
In particular, there are currently no authorized pump therapies that utilize both insulin and glucagon to treat T1D. As such it is difficult to accurately predict the developmental and regulatory challenges we may experience for our iLet in its bihormonal configuration if it proceeds into a pivotal trial.
In particular, there are currently no authorized pump therapies that utilize both insulin and glucagon to treat T1D. As such it is difficult to accurately predict the developmental and regulatory challenges we may experience for our iLet in its bihormonal system if it proceeds into a pivotal trial.
The FDA may ultimately determine that the 510(k) pathway is not appropriate for the bihormonal configuration of the iLet for the treatment of T1D, or for any other indications we may pursue, and may require us to obtain a PMA or seek de novo classification in order to commercialize the iLet for such uses in the United States.
The FDA may ultimately determine that the 510(k) pathway is not appropriate for the bihormonal system of the iLet for the treatment of T1D, or for any other indications we may pursue, and may require us to obtain a PMA or seek de novo classification in order to commercialize the iLet for such uses in the United States.

… 200 more changes not shown on this page.

Item 2. Properties

Properties — owned and leased real estate

1 edited+2 added−6 removed0 unchanged
Biggest changeWe believe that our existing facilities are adequate to meet our current needs, and that suitable additional alternative spaces will be available in the future on commercially reasonable terms if deemed necessary.
Biggest changeWe believe that these facilities are sufficient to meet our current and anticipated future needs and that suitable additional alternative spaces would be available in the future on commercially reasonable terms if deemed necessary.
Removed
Item 2. P roperties. Substantially all of our operations are currently conducted at leased facilities, including our manufacturing processes, research and development activities, customer and technical support, and management and administrative functions.
Added
Item 2. P roperties. The following table summarizes the facilities leased as of December 31, 2025, including the location and size of each principal facility and their designated use.
Removed
As of December 31, 2024, we leased facilities with an aggregate total of approximately 73,969 square feet, as follows: • 11 Hughes, Irvine, CA 92618 : 50,020 square feet of manufacturing, general administrative, and research and development office space, which also serves as our corporate headquarters.
Added
Location Primary Use Approximate Square Footage Lease Expiration Year Concord, Massachusetts General and Administrative, R&D 13,035 2026 Cincinnati, Ohio Pharmacy and Sales 1,524 2026 San Diego California General and Administrative, Technical Support 7,881 2027 San Diego California General and Administrative, R&D 12,467 2028 Irvine, California General and Administrative, R&D, Manufacturing, Warehouse 50,020 2032
Removed
The lease term will expire in June 2032 and we have one option to extend the term of the lease for an additional period of five years. • 12671 High Bluff Drive, Suites 100, 130, and 330 San Diego, CA 92130 : 10,064 square feet of general administrative and customer and technical support office space.
Removed
The lease term for Suite 100 will expire in February 2027, and we have one option to the extend the term of the lease for a period of five years.
Removed
The lease and sublease terms for Suites 130 and 330 will expire in March 2027 and July 2025, respectively. • 300 Baker Ave, Suite 301, Concord, MA 01742 : 13,035 square feet of general administrative and research and development office space.
Removed
The lease term will expire in October 2026 and we have one option to extend the term of the lease for an additional period of five years. • 194 S Hanover Street, Suite 102, Pottstown, PA 19464 : 850 square feet of general administrative office space. The lease term is month-to-month.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

1 edited+0 added−0 removed1 unchanged
Biggest changeItem 3. Le gal Proceedings. From time to time, we may become involved in legal proceedings arising in the ordinary course of our business. There are currently no claims or actions pending against us, the ultimate disposition of which we believe 136 could have a material adverse effect on our results of operations.
Biggest changeItem 3. Le gal Proceedings. From time to time, we may become involved in legal proceedings arising in the ordinary course of our business. There are currently no claims or actions pending against us, the ultimate disposition of which we believe could have a material adverse effect on our results of operations.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

5 edited+1 added−10 removed7 unchanged
Biggest changeThe Company did not receive any proceeds from the sale of the shares of common stock by the selling stockholders. There has been no material change in the expected use of the net proceeds from our IPO as described in our final prospectus filed with the SEC on January 30, 2025 pursuant to Rule 424(b)(4).
Biggest changeThere has been no material change in the expected use of the net proceeds from our IPO as described in our final prospectus filed with the SEC on January 30, 2025 pursuant to Rule 424(b)(4). 104 Securities Authorized for Issuance under Equity Compensation Plans The information required by Item 5 of this Annual Report regarding equity compensation plans is incorporated herein by reference to Item 12 of Part III of this Annual Report.
Any future determination to pay dividends will be at the discretion of our board of directors, subject to applicable laws, and would depend on our financial condition, results of operations, capital requirements, general business conditions and other factors that our board of directors considers relevant.
Any future determination to pay dividends will be at the discretion of our board of directors, subject to applicable laws, and would depend on our financial condition, results of operations, capital requirements, general business conditions and other factors that our board of directors considers relevant. Recent Sales of Unregistered Securities None.
The offer and sale of all of the shares of our common stock in the IPO were registered under the Securities Act pursuant to our Registration Statement on Form S-1, as amended (File No. 333-284147), which were declared effective by the SEC on January 29, 2025. BofA Securities, Piper Sandler, and Leerink Partners acted as lead bookrunners for the offering.
The offer and sale of all of the shares of our common stock in the initial public offering (IPO) were registered under the Securities Act pursuant to our Registration Statement on Form S-1, as amended (File No. 333-284147), which were declared effective by the SEC on January 29, 2025.
Stifel acted as a bookrunner and Lake Street Capital Markets acted as co-manager for the IPO. Shares of our common stock began trading on The Nasdaq Global Market on January 30, 2025.
BofA Securities, Piper Sandler, and Leerink Partners acted as lead bookrunners for the offering. Stifel acted as a bookrunner and Lake Street Capital Markets acted as co-manager for the IPO. Shares of our common stock began trading on The Nasdaq Global Market on January 30, 2025.
Holders As of March 1, 2025, there were approximately 794 holders of record of our common stock.
Holders As of February 2, 2026, there were approximately 674 holders of record of our common stock.
Removed
Recent Sales of Unregistered Securities Issuances of Securities Pursuant to Our Equity Plans During 2024, we granted to certain of our directors and employees options to purchase 935,105 shares of our Class B common stock with a weighted average exercise price of $9.27 per share under our 2016 Stock Incentive Plan.
Added
The Company did not receive any proceeds from the sale of the shares of common stock by the selling stockholders.
Removed
During 2024, 11,953 shares of Class B common stock were issued upon the exercise of options for aggregate consideration of approximately $0.1 million. No underwriters were involved in the foregoing issuances of securities.
Removed
The issuances of stock options described in the above paragraph were issued pursuant to written compensatory plans or arrangements with our employees and directors in reliance on the exemption provided by Rule 701 promulgated under the Securities Act, or pursuant to Section 4(a)(2) under the Securities Act, relative to transactions by an issuer not involving any public offering, to the extent an exemption from such registration was required.
Removed
All recipients either received adequate information about us or had access, through employment or other relationships, to such information.
Removed
Issuances of Securities Pursuant to Series E Financing In November 2024, we issued and sold to investors in a private placement an aggregate of 4,352,393 shares of our Series E convertible preferred stock in our Series E convertible preferred stock financing at a purchase price of $13.79 per share for aggregate cash proceeds of approximately $60.0 million.
Removed
No underwriters were involved in the foregoing issuances of securities.
Removed
These securities described in the paragraph above were issued to investors in reliance upon the exemption from the registration requirements of the Securities Act, as set forth in Section 4(a)(2) under the Securities Act and Regulation D promulgated thereunder relative to transactions by an issuer not involving any public offering, to the extent an exemption from such registration was required.
Removed
All holders of securities described above represented to us in connection with their purchase or issuance that they were accredited investors and were acquiring the securities for their own account for investment purposes only and not with a view to, or for sale in connection with, any distribution thereof and that they could bear the risks of the investment and could hold the securities for an indefinite period of time.
Removed
The holders 138 received written disclosures that the securities had not been registered under the Securities Act and that any resale must be made pursuant to a registration statement or an available exemption from such registration.
Removed
Securities Authorized for Issuance under Equity Compensation Plans The information required by Item 5 of this Annual Report regarding equity compensation plans is incorporated herein by reference to Item 12 of Part III of this Annual Report. Item 6. [Re served] 139

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

100 edited+47 added−91 removed109 unchanged
Biggest changeThe following table sets forth our selected unaudited quarterly statements of operations data for the periods presented: Three Months Ended March 31, 2024 June 30, 2024 September 30, 2024 December 31, 2024 (unaudited) (in thousands, except percentages) Net sales $ 12,933 $ 15,046 $ 16,705 $ 20,440 Cost of sales (1) 5,732 6,962 7,791 8,751 Gross profit 7,201 8,084 8,914 11,689 Gross margin 55.7 % 53.7 % 53.4 % 57.2 % Operating expenses: Research and development (1) 5,479 6,350 5,141 9,214 Sales and marketing (1) 7,663 8,974 9,645 10,804 General and administrative (1) 3,512 4,544 5,105 4,708 Total operating expenses 16,654 19,868 19,891 24,726 Loss from operations (9,453 ) (11,784 ) (10,977 ) (13,037 ) Other income (expense): Interest income 1,139 993 826 951 Other expense 4 (2 ) (4 ) — Change in fair value of warrant liabilities (4,139 ) (3,670 ) 419 (6,022 ) Total other income (expense), net (2,996 ) (2,679 ) 1,241 (5,071 ) Net loss $ (12,449 ) $ (14,463 ) $ (9,736 ) $ (18,108 ) Adjusted EBITDA $ (7,806 ) $ (9,985 ) $ (8,671 ) $ (11,254 ) 153 Three Months Ended March 31, 2023 June 30, 2023 September 30, 2023 December 31, 2023 (unaudited) (in thousands, except percentages) Net sales $ — $ 552 $ 3,093 $ 8,350 Cost of sales (1) — 531 1,868 3,288 Gross profit — 21 1,225 5,062 Gross margin — 3.8 % 39.6 % 60.6 % Operating expenses: Research and development (1) 5,867 3,762 3,854 4,460 Sales and marketing (1) 942 2,103 3,327 5,618 General and administrative (1) 2,877 3,171 2,826 3,351 Total operating expenses 9,686 9,036 10,007 13,429 Loss from operations (9,686 ) (9,015 ) (8,782 ) (8,367 ) Other income (expense): Interest income 65 68 393 1,251 Other expense — (13 ) — (55 ) Change in fair value of warrant liabilities — 2,010 (291 ) (11,677 ) Total other income (expense), net 65 2,065 102 (10,481 ) Net loss $ (9,621 ) $ (6,950 ) $ (8,680 ) $ (18,848 ) Adjusted EBITDA $ (8,146 ) $ (7,103 ) $ (7,218 ) $ (6,554 ) (1) Includes stock-based compensation expense as follows: Three Months Ended March 31, 2024 June 30, 2024 September 30, 2024 December 31, 2024 (unaudited) (in thousands) Cost of sales $ 71 $ 61 $ 69 $ 74 Research and development 263 287 294 300 Sales and marketing 288 390 472 511 General and administrative 735 762 1,141 666 Total stock-based compensation expense $ 1,357 $ 1,500 $ 1,976 $ 1,551 Three Months Ended March 31, 2023 June 30, 2023 September 30, 2023 December 31, 2023 (unaudited) (in thousands) Cost of sales $ — $ 73 $ 76 $ 90 Research and development 557 554 300 370 Sales and marketing 70 117 175 248 General and administrative 588 857 715 868 Total stock-based compensation expense $ 1,215 $ 1,601 $ 1,266 $ 1,576 154 Adjusted EBITDA In addition to our financial results determined in accordance with generally accepted accounting principles in the United States (GAAP), we believe the following adjusted EBITDA non-GAAP measure is useful in evaluating our operating performance.
Biggest changeThe following table sets forth our selected unaudited quarterly statements of operations data for the periods presented: Three Months Ended March 31, 2025 June 30, 2025 September 30, 2025 December 31, 2025 (unaudited) (in thousands, except percentages) Net sales $ 17,639 $ 23,238 $ 27,253 $ 32,121 Cost of sales (1) 8,668 10,735 12,134 13,177 Gross profit 8,971 12,503 15,119 18,944 Gross margin 50.9 % 53.8 % 55.5 % 59.0 % Operating expenses: Research and development (1) 7,590 8,873 8,195 10,131 Sales and marketing (1) 13,402 15,623 16,045 16,334 General and administrative (1) 6,621 7,879 7,922 8,603 Total operating expenses 27,613 32,375 32,162 35,068 Loss from operations (18,642 ) (19,872 ) (17,043 ) (16,124 ) Other income (expense): Interest income 2,436 3,005 2,833 2,658 Other income (expense), net — (2 ) 1 — Change in fair value of warrant liabilities (12,450 ) — — — Total other income (expense), net (10,014 ) 3,003 2,834 2,658 Net loss $ (28,656 ) $ (16,869 ) $ (14,209 ) $ (13,466 ) Adjusted EBITDA $ (15,535 ) $ (14,526 ) $ (12,179 ) $ (10,512 ) 116 Three Months Ended March 31, 2024 June 30, 2024 September 30, 2024 December 31, 2024 (unaudited) (in thousands, except percentages) Net sales $ 12,933 $ 15,046 $ 16,705 $ 20,440 Cost of sales (1) 5,732 6,962 7,791 8,751 Gross profit 7,201 8,084 8,914 11,689 Gross margin 55.7 % 53.7 % 53.4 % 57.2 % Operating expenses: Research and development (1) 5,479 6,350 5,141 9,214 Sales and marketing (1) 7,663 8,974 9,645 10,804 General and administrative (1) 3,512 4,544 5,105 4,708 Total operating expenses 16,654 19,868 19,891 24,726 Loss from operations (9,453 ) (11,784 ) (10,977 ) (13,037 ) Other income (expense): Interest income 1,139 993 826 951 Other income (expense), net 4 (2 ) (4 ) — Change in fair value of warrant liabilities (4,139 ) (3,670 ) 419 (6,022 ) Total other income (expense), net (2,996 ) (2,679 ) 1,241 (5,071 ) Net loss $ (12,449 ) $ (14,463 ) $ (9,736 ) $ (18,108 ) Adjusted EBITDA $ (7,805 ) $ (9,985 ) $ (8,672 ) $ (11,254 ) (1) Includes stock-based compensation expense as follows: Three Months Ended March 31, 2025 June 30, 2025 September 30, 2025 December 31, 2025 (unaudited) (in thousands) Cost of sales $ 106 $ 153 $ 140 $ 143 Research and development 502 924 893 886 Sales and marketing 801 1,314 1,273 1,237 General and administrative 1,395 2,408 2,172 2,037 Total stock-based compensation expense $ 2,804 $ 4,799 $ 4,478 $ 4,303 Three Months Ended March 31, 2024 June 30, 2024 September 30, 2024 December 31, 2024 (unaudited) (in thousands) Cost of sales $ 71 $ 61 $ 69 $ 74 Research and development 263 287 294 300 Sales and marketing 288 390 472 511 General and administrative 735 762 1,141 666 Total stock-based compensation expense $ 1,357 $ 1,500 $ 1,976 $ 1,551 The following table sets forth our selected unaudited quarterly key business metrics for the periods presented: 117 Three Months Ended March 31, 2025 June 30, 2025 September 30, 2025 December 31, 2025 (unaudited) % of Total Net Sales: Durable Medical Equipment (DME) Channel 78 % 80 % 77 % 70 % Pharmacy Benefit Plan (PBP) Channel 22 % 20 % 23 % 30 % Total 100 % 100 % 100 % 100 % % of New Patient Starts (NPS) Reimbursed Through Pharmacy Low 20s % High 20s % Low 30s % Low 30s % Three Months Ended March 31, 2024 June 30, 2024 September 30, 2024 December 31, 2024 (unaudited) % of Total Net Sales: Durable Medical Equipment (DME) Channel 94 % 95 % 87 % 88 % Pharmacy Benefit Plan (PBP) Channel 6 % 5 % 13 % 12 % Total 100 % 100 % 100 % 100 % % of New Patient Starts (NPS) Reimbursed Through Pharmacy Mid-single digit % Mid-single digit % High-single digit % Low-teens % Adjusted EBITDA In addition to our financial results determined in accordance with GAAP, we believe the following adjusted EBITDA non-GAAP measure is useful in evaluating our operating performance.
We are working with payors to establish coverage and reimbursement under both the DME and PBP channels as we believe this strategy increases access and optimizes the potential for better medical outcomes for PWD through the adoption of the iLet.
We are working with payors to establish coverage and reimbursement under both the DME and PBP channels as we believe this strategy increases access and optimizes the potential for better medical outcomes for PWD through the adoption of the iLet.
When considering the overall economics over the lifetime of each iLet, sales through the DME channel generally result in higher upfront cash flows from the large, upfront payment and reimbursement for the iLet, but lead to lower cash flows over time as the user purchases the necessary single-use products.
When considering the overall economics over the lifetime of each iLet, sales through the DME channel generally result in higher upfront cash flows from the large, upfront payment and reimbursement for the iLet, but lead to lower cash flows over time as the user purchases the necessary single-use products.
By contrast, sales through the PBP channel generally result in lower upfront cash flows from the small payment and reimbursement for the iLet, but lead to higher cash flows over time as the user purchases the necessary single-use products.
By contrast, sales through the PBP channel generally result in lower upfront cash flows from the small payment and reimbursement for the iLet, but lead to higher cash flows over time as the user purchases the necessary single-use products.
Note 13 of our audited financial statements included elsewhere in this Annual Report for more information concerning certain of the specific assumptions we used in applying the Black-Scholes option pricing model to determine the estimated fair value of our stock options. Certain of these assumptions involve 162 inherent uncertainties and generally require significant analysis and judgment to develop.
Note 13 of our audited financial statements included elsewhere in this Annual Report for more information concerning certain of the specific assumptions we used in applying the Black-Scholes option pricing model to determine the estimated fair value of our stock options. Certain of these assumptions involve inherent uncertainties and generally require significant analysis and judgment to develop.
Estimates associated with pharmacy rebates and chargebacks on products sold are the most significant component of our variable consideration estimates and most at risk for material adjustment 161 because of the time delay between the recording of the provision and its ultimate settlement, an interval that generally ranges from 30 to 90 days.
Estimates associated with pharmacy rebates and chargebacks on products sold are the most significant component of our variable consideration estimates and most at risk for material adjustment because of the time delay between the recording of the provision and its ultimate settlement, an interval that generally ranges from 30 to 90 days.
Unomedical, PMC and Maxon are our only suppliers of infusion sets, cartridge connections and pump motors, respectively. For additional information regarding the risks of our reliance on these suppliers, please see the section under Part I. Item 1A. “Risk Factors—Risks Related to Manufacturing and Our Reliance on Third Parties”.
Unomedical, PMC and Maxon are our only suppliers of infusion sets, cartridge connections and pump motors, respectively. For additional information regarding the risks of our reliance on these suppliers, please 111 see the section under Part I. Item 1A. “Risk Factors—Risks Related to Manufacturing and Our Reliance on Third Parties”.
A iCGM is a wearable device that works by inserting a small sensor under the skin into fatty tissue and tracks blood sugar levels in real time. The sensor measures glucose levels in the interstitial fluid and sends the information to a receiver, smartphone or insulin pump.
An iCGM is a wearable device that works by inserting a small sensor under the skin into fatty tissue and tracks blood sugar levels in real time. The sensor measures glucose levels in the interstitial fluid and sends the information to a receiver, smartphone or insulin pump.
In 160 consideration for the licenses and other rights granted to us under the License and Collaboration Agreement, we paid Xeris a one-time, non-refundable payment of $0.5 million and a one-time, non-refundable milestone payment of $3.0 million for the achievement of certain developmental milestones.
In consideration for the licenses and other rights granted to us under the License and Collaboration Agreement, we paid Xeris a one-time, non-refundable payment of $0.5 million and a one-time, non-refundable milestone payment of $3.0 million for the achievement of certain developmental milestones.
Forfeitures are accounted for as they occur. • Fair Value of Our Class B Common Stock— Prior to our initial public offering, our stock was not publicly traded, and therefore we estimated the fair value of our Class B common stock, as discussed in the subsection title “Determination of Fair Value of Our Class B Common Stock and Series C Convertible Preferred Stock” below. • Expected Volatility— Because we do not have a trading history of our common stock, the expected volatility was derived from the average historical stock volatilities of several public companies within our industry that we consider to be comparable to our business over a period equivalent to the expected term of the stock-based awards.
Forfeitures are accounted for as they occur. • Fair Value of Our Class B Common Stock— Prior to our initial public offering, our stock was not publicly traded, and therefore we estimated the fair value of our Class B common stock, as discussed in the subsection titled “Determination of Fair Value of Our Class B Common Stock and Series C Convertible Preferred Stock” below. • Expected Volatility— Because we do not have a trading history of our common stock, the expected volatility was derived from the average historical stock volatilities of several public companies within our industry that we consider to be comparable to our business over a period equivalent to the expected term of the stock-based awards.
To the extent that our mix of channel reimbursement fluctuates, our financial results may vary from period to period. 146 Continued Investment In Growth and Innovation Our revenue growth has been driven by rapid innovation and quick adoption of our products by our customer base.
To the extent that our mix of channel reimbursement fluctuates, our financial results may vary from period to period. Continued Investment In Growth and Innovation Our revenue growth has been driven by rapid innovation and quick adoption of our products by our customer base.
We have a supply agreement with Unomedical for the production of infusion sets for our iLet, a contract manufacturing agreement with PMC SMART Solutions LLC (PMC) for the manufacture of our cartridge 147 connectors and a supplier quality agreement with Maxon Precision Motors, Inc. (Maxon) for the supply of pump motors for our iLet.
We have a supply agreement with Unomedical for the production of infusion sets for our iLet, a contract manufacturing agreement with PMC SMART Solutions LLC (PMC) for the manufacture of our cartridge connectors and a supplier quality agreement with Maxon Precision Motors, Inc. (Maxon) for the supply of pump motors for our iLet.
We intend to continue to make focused investments to increase revenue and grow our business, and therefore expect expenses in this area to increase. We have invested, and will continue to invest, significantly in our manufacturing capabilities and commercial and customer support infrastructure.
We intend to continue to make focused investments to increase revenue and grow our business, and therefore expect expenses in this area to increase. 110 We have invested, and will continue to invest, significantly in our manufacturing capabilities and commercial and customer support infrastructure.
New Patient Starts from MDI as a Percentage of Total New Patient Starts 157 The percentage of new patient starts from MDI is a valuable metric for us, as it demonstrates a user’s willingness to transition from an MDI therapy to the insulin delivery mechanism provided by the iLet.
New Patient Starts from MDI as a Percentage of Total New Patient Starts The percentage of new patient starts from MDI is a valuable metric for us, as it demonstrates a user’s willingness to transition from an MDI therapy to the insulin delivery mechanism provided by the iLet.
The durable machine equipment (DME) and pharmacy benefit plans (PBP) reimbursement channels for the iLet and its single-use products entail different payment outlays and therefore differentially impact PWD and our financial results. DME reimbursement requires the user and insurance carrier to make a large, upfront payment and reimbursement, respectively, for the iLet, which is typically in the thousands of dollars.
The durable medical equipment (DME) and pharmacy benefit plans (PBP) reimbursement channels for the iLet and its single-use products entail different payment outlays and therefore differentially impact PWD and our financial results. DME reimbursement requires the user and insurance carrier to make a large, upfront payment and reimbursement, respectively, for the iLet, which is typically in the thousands of dollars.
We 142 are in the early stages of developing an insulin pump that adheres directly to the skin and administers insulin without the need for tubing, commonly known in the diabetes industry as a “patch pump.” We are also in the early stages of developing a first-of-its-kind bihormonal configuration of the iLet, which combines automated delivery of insulin and glucagon, the BG-raising hormone that protects against low blood sugar, or hypoglycemia, with adaptive closed-loop algorithms where all doses of both hormones are autonomously determined.
We are in the early stages of developing an insulin pump that adheres directly to the skin and administers insulin without the need for tubing, commonly known in the diabetes industry as a “patch pump.” We are also in the early stages of developing a first-of-its-kind bihormonal system of the iLet, which combines automated delivery of insulin and glucagon, the BG-raising hormone that protects against low blood sugar, or hypoglycemia, with adaptive closed-loop algorithms where all doses of both hormones are autonomously determined.
In the future, we also intend to pursue additional products, such as a patch pump and bihormonal configuration of the iLet, as well as pursue the development of the iLet for expanded patient populations and indications such as people with T2D, which will increase our expenses and subject us to increased regulatory-related risks.
In the future, we also intend to pursue additional products, such as a patch pump and bihormonal system of the iLet, as well as pursue the development of the iLet for expanded patient populations and indications such as people with T2D, which will increase our expenses and subject us to increased regulatory-related risks.
Manufacturing overhead expenses include expenses relating to manufacturing engineering, material procurement, inventory and quality control, facilities, depreciation, amortization, information technology and operations supervision and management.
Manufacturing overhead expenses include expenses relating to manufacturing engineering, material procurement, inventory and quality control, facilities, depreciation, information technology and operations supervision and management.
In order to maintain our competitive position in the marketplace, we intend, through our experienced research and development team, to continue investing in disruptive technologies, such as a patch pump and bihormonal configuration of the iLet, as well as pursuing the development of the iLet for expanded patient populations and indications such as people with T2D.
In order to maintain our competitive position in the marketplace, we intend, through our experienced research and development team, to continue investing in disruptive technologies, such as a patch pump and bihormonal system of the iLet, as well as pursuing the development of the iLet for expanded patient populations and indications such as people with T2D.
According to the Centers for Disease Control and Prevention (CDC), there are approximately 1.8 million people with T1D currently in the United States, all of whom require daily insulin replacement to manage their disease.
According to the Centers for Disease Control and Prevention (CDC), there are approximately 1.9 million people with T1D currently in the United States, all of whom require daily insulin replacement to manage their disease.
Specifically, as a smaller reporting company we may choose to present only the two most recent fiscal years of audited financial statements in our Annual Report on Form 164 10-K and, similar to emerging growth companies, smaller reporting companies have reduced disclosure obligations regarding executive compensation. 165
Specifically, as a smaller reporting company we may choose to present only the two most recent fiscal years of audited financial statements in our Annual Report on Form 10-K and, similar to emerging growth companies, smaller reporting companies have reduced disclosure obligations regarding executive compensation. 127
We expect to incur significant expenses and operating losses for the foreseeable future as we advance the commercialization of our iLet, including future development of the patch pump and bihormonal configuration of the iLet.
We expect to incur significant expenses and operating losses for the foreseeable future as we advance the commercialization of our iLet, including future development of the patch pump and bihormonal system of the iLet.
In January 2025, we completed our initial public offering and a concurrent private placement, pursuant to which we received aggregate net proceeds of approximately $190.4 million and approximately $15.6 million, respectively, in each case after deducting underwriting discounts, commissions, and other offering expenses.
In January 2025, we completed our IPO and a concurrent private placement, pursuant to which we received aggregate net proceeds of approximately $190.4 million and approximately $15.6 million, respectively, in each case after deducting underwriting discounts, commissions, and other offering expenses.
Some of the limitations of adjusted EBITDA include: (i) adjusted EBITDA does not properly reflect capital commitments to be paid in the future and (ii) although depreciation and amortization expense are non-cash charges, the underlying assets may need to be replaced and adjusted EBITDA does not reflect these capital expenditures.
Some of the limitations of adjusted EBITDA include: (i) adjusted EBITDA does not properly reflect capital commitments to be paid in the future and (ii) although depreciation expense includes non-cash charges, the underlying assets may need to be replaced and adjusted EBITDA does not reflect these capital expenditures.
For the year ended December 31, 2024 and 2023, PBP channel sales represented 10% and 6%, respectively, of net sales. When comparing sales through the DME and PBP channels, we expect sales through the PBP channel will have a more favorable economic impact on our financial results over the lifetime of the iLet.
For the year ended December 31, 2025 and 2024, PBP channel sales represented 24% and 10%, respectively, of net sales. When comparing sales through the DME and PBP channels, we expect sales through the PBP channel will have a more favorable economic impact on our financial results over the lifetime of the iLet.
The information for each of these quarters has been prepared in accordance with GAAP, on a basis consistent with our audited consolidated financial statements included elsewhere in this Annual Report and include, in our opinion, all normal recurring adjustments necessary for the fair presentation of the results of operations for the periods presented, with the exception of Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA), which is a non-GAAP financial measure discussed 152 below.
The information for each of these quarters has been prepared in accordance with generally accepted accounting principles in the United States (GAAP), on a basis consistent with our audited consolidated financial statements included elsewhere in this Annual Report and include, in our opinion, all normal recurring adjustments necessary for the fair presentation of the results of operations for the periods presented, with the exception of Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA), which is a non-GAAP financial measure discussed below.
In addition, we are required to pay tiered royalties of low double-digit percentages based on net sales of Glucagon Products, subject to certain reductions. For additional information, see the section under Part I. Item 1. “Business—Collaboration and License and Agreements.” We may continue to incur costs as we progress into Phase 2 and Phase 3 clinical trials.
In addition, we are required to pay tiered royalties of low double-digit percentages based on net sales of glucagon products, subject to certain reductions. We may continue to incur 124 costs as we progress into Phase 2 and Phase 3 clinical trials. For additional information, see the section under Part I. Item 1.
Royalty Obligations In connection with the development, production and sale of the iLet, we have entered into certain agreements that obligate us to pay royalties based on specific production or net sales metrics.
“Business—License and Collaboration Agreements.” Royalty Obligations In connection with the development, production and sale of the iLet, we have entered into certain agreements that obligate us to pay royalties based on specific production or net sales metrics.
Contractual Obligations and Other Commitments Leases We have entered into various non-cancelable operating leases for certain office, laboratory and manufacturing space. The leases have varying initial lease terms of approximately 1-7 years. For additional information, see Notes 2 and 17 of our audited financial statements included elsewhere in this Annual Report.
Contractual Obligations and Other Commitments Leases We have entered into various non-cancelable operating leases for certain office, laboratory and manufacturing space. The leases have varying initial lease terms of approximately 1-6 years. For additional information, see Note 17 to our audited financial statements included elsewhere in this Annual Report.
Our initial commercial results suggest that the iLet’s value proposition is resonating strongly within the MDI population as approximately 69% and 51% of the iLet’s adoption through December 31, 2024 and 2023, respectively, came from PWD who were previously utilizing MDI.
Our initial commercial results suggest that the iLet’s value proposition is resonating strongly within 106 the MDI population as approximately 70% and 69% of the iLet’s adoption through December 31, 2025 and 2024, respectively, came from PWD who were previously utilizing MDI.
We have based this estimate on assumptions that may prove to be wrong, and we could utilize our available capital resources sooner than we expect. We expect to finance our operations through product revenue, as well as potentially through equity or debt financing, collaborations or strategic alliances.
We have based this estimate on assumptions that may prove to be wrong, and we could utilize our available capital resources sooner than we expect and we may seek additional capital to support future growth initiatives. We expect to finance our operations through product revenue, as well as potentially through equity or debt financing, collaborations or strategic alliances.
(2) Internal research and development costs primarily include personnel-related expenses for research and development functions, excluding stock-based compensation and internal costs to manufacture product candidates before FDA marketing authorization, such as raw materials and internal facilities-related expenses. (3) Other primarily includes licensing fees.
(2) Internal research and development costs primarily include personnel-related expenses for research and development functions, excluding stock-based compensation and internal costs to manufacture product candidates before FDA marketing authorization, such as raw materials and internal facilities-related expenses.
We believe that the iLet’s core value proposition of marrying effective glycemic control with the simplicity of use that is brought about by adaptive closed-loop algorithm insulin-dose determination may resonate particularly well among PCP who do not have the subspecialty-level of expertise, the resources, or the clinical bandwidth that is needed to initiate insulin-pump or hybrid closed-loop therapy or for the continual demand (such as adjustments at quarterly visits) those systems place on clinical practices in follow-on care. 141 A key element of our commercialization strategy is educating users and potential users on the use of the iLet.
We believe that the iLet’s core value proposition of marrying effective glycemic control with the simplicity of use that is brought about by adaptive closed-loop algorithm insulin-dose determination may resonate particularly well among PCP who do not have the subspecialty-level of expertise, the resources, or the clinical bandwidth that is needed to initiate insulin-pump or hybrid closed-loop therapy or for the continual demand (such as adjustments at quarterly visits) those systems place on clinical practices in follow-on care.
This metric highlights our capability to identify and attract new users, illustrating the number of new iLet product users during each period presented. In the year ended December 31, 2023, a mid-single digit percentage of our new patient starts were reimbursed through the PBP channel.
This metric highlights our capability to identify and attract new users, illustrating the number of new iLet product users during each period presented. In the year ended December 31, 2025, a high-twenties percentage of our new patient starts were reimbursed through the PBP channel.
We believe that the following metrics are representative of our current business: Year Ended December 31, 2024 2023 New patient starts 12,994 2,304 New patient starts from MDI as a percentage of total new patient starts 69 % 51 % Installed customer base 15,298 2,304 New Patient Starts Our ability to add new patients is a key indicator of the market’s adoption of the iLet and a key growth driver for the business.
We believe that the following metrics are representative of our current business: Year Ended December 31, 2025 2024 New patient starts 19,713 12,994 New patient starts from MDI as a percentage of total new patient starts 70 % 69 % Installed customer base 35,011 15,298 New Patient Starts Our ability to add new patients is a key indicator of the market’s adoption of the iLet and a key growth driver for the business.
We are also required to pay BU (i) quarterly royalties of a mid-single-digit percentage based on net sales by us and our affiliates, (ii) royalties of a low double-digit percentage of net sales by sublicensees (in each case (i) and (ii), which royalties are creditable against the minimum royalty amount) and (iii) agreed to make quarterly lump sum payments of a low double-digit percentage of the non-royalty sublicensing revenue received by us from our sublicensees.
Under the financial terms of the agreement, we are required to pay BU (i) quarterly royalties of a mid-single-digit percentage based on net sales by us and our affiliates, (ii) quarterly royalties of a low double-digit percentage based on net sales by sublicensees, in each case of (i) and (ii) creditable against a minimum annual royalty amount, and (iii) quarterly lump-sum payments of a low double-digit percentage of certain non-royalty sublicensing revenue received from sublicensees.
For the years ended December 31, 2024 and December 31, 2023, PBP channel sales represented 10% and 6% of net sales, respectively.
For the years ended December 31, 2025 and 2024, PBP channel sales represented 24% and 10% of net sales, respectively.
We provide this education primarily through healthcare providers, online resources, and our customer care team. We offer all users with an initial training to provide an overview of the functionalities of our product either through our own clinical diabetes specialists or by contracting with healthcare providers that provide this training directly to the user.
We offer all users with an initial training to provide an overview of the functionalities of our product either through our own clinical diabetes specialists or by contracting with healthcare providers that provide this training directly to the user.
Other Income (Expense) Total other expense, net was $9.5 million for the year ended December 31, 2024, compared to $8.2 million for the year ended December 31, 2023.
Other Income (Expense) Total other expense, net for the year ended December 31, 2025 was $1.5 million, compared to $9.5 million for the year ended December 31, 2024.
To maximize the commercial value of the iLet opportunity, we have assembled a team across our organization with broad experience in the successful commercialization of innovative technologies in the field of diabetes disease management.
It also allows for cloud-based data storage. To maximize the commercial value of the iLet opportunity, we have assembled a team across our organization with broad experience in the successful commercialization of innovative technologies in the field of diabetes disease management.
We are also required to pay (i) quarterly royalties of a mid-single-digit percentage based on net sales of all Licensed Products and Licensed Processes by us or our affiliates, (ii) quarterly royalties of a low double-digit percentage based on net sales by our sublicensees (in each case (i) and (ii), which royalties are creditable against the minimum royalty amount) and (iii) agreed to make quarterly lump sum payments of a low- double-digit percentage based on certain non-royalty sublicensing revenue received by us from our sublicensees.
Under the agreement, we are required to pay (i) quarterly royalties in the mid-single-digit percentage range based on net sales of licensed products by us and our affiliates, (ii) quarterly royalties in the low double-digit percentage range based on net sales by sublicensees, which are creditable against a minimum annual royalty amount, and (iii) quarterly lump-sum payments in the low double-digit percentage range based on certain non-royalty sublicensing revenue.
Based on our current operating plans, we believe that our existing cash, cash equivalents and short-term investments, as well as cash generated from sales of our products, will be sufficient to fund our projected operating expenses and capital expenditure requirements through the first half of 2028.
Based on our current operating plans, we believe that our existing cash, cash equivalents and short-term and long-term investments, as well as cash generated from sales of our products, will be sufficient to fund our projected operating expenses and capital expenditure requirements for at least the next 12 months.
We also intend to pursue the development of the iLet for expanded patient populations and indications, such as people with type 2 diabetes (T2D), as we believe the size and composition of this population make it a compelling opportunity.
We also intend to pursue the development of the iLet for expanded patient populations and indications, such as people with type 2 diabetes (T2D), as we believe the size and composition of this population make it a compelling opportunity. 108 License and Collaboration Agreements Below is a summary of the key terms of certain of our license and collaboration agreements.
Research and Development Expenses Research and development expenses were $26.2 million for the year ended December 31, 2024, compared to $17.9 million during the year ended December 31, 2023.
Research and Development Expenses Research and development expenses for the year ended December 31, 2025 were $34.8 million, compared to $26.2 million during the year ended December 31, 2024.
Key Business Metrics We regularly review the following key business metrics to evaluate our business, measure our performance, identify trends affecting our business, formulate financial projections and make strategic decisions.
Key Business Metrics We regularly review the following key business metrics to evaluate our business, measure our performance, identify trends affecting our business, formulate financial projections and make strategic decisions, although we may change our key business metrics or how we present our key business metrics from time to time.
The timing and amount of our funding requirements will depend on many factors, including: 159 • the cost of maintaining FDA clearance for the iLet as an automated insulin dosing system cleared for the treatment of T1D in adults and children six years of age and older; • the cost of obtaining and maintaining FDA marketing authorization or clearance for other future indications or other product candidates, including for the iLet for T1D using both insulin and glucagon (a bihormonal configuration), the iLet for T2D and the patch pump; • future revenue generated by sales of the iLet and any future product candidates, if approved; • costs associated with scaling up and expanding our manufacturing capacity; • costs associated with building and expanding our sales and marketing efforts in the United States and, in the future, internationally; • costs associated with conducting research and development efforts for future improvements to the iLet; • costs associated with conducting research and development efforts for future product offerings, such as the patch pump and bihormonal configuration of the iLet; • the cost of complying with regulatory requirements; • costs associated with capital expenditures; • the costs associated with hiring additional personnel as our business grows; • the costs of operating as a public company; • costs associated with any future litigation; and • the costs and timing of preparing, filing and prosecuting patent applications, maintaining and enforcing our intellectual property rights and defending any intellectual property-related claims.
The timing and amount of our funding requirements will depend on many factors, including: • the cost of maintaining FDA clearance for the iLet as an automated insulin dosing system cleared for the treatment of T1D in adults and children six years of age and older; • the cost of obtaining and maintaining FDA marketing authorization or clearance for other future indications or other product candidates, including for the iLet for T1D using both insulin and glucagon (a bihormonal system), the iLet for T2D and the patch pump; • future revenue generated by sales of the iLet and any future product candidates, if approved; • costs associated with scaling up and expanding our manufacturing capacity; • costs associated with building and expanding our sales and marketing efforts in the United States and, in the future, internationally; • costs associated with conducting research and development efforts for future improvements to the iLet; • costs associated with conducting research and development efforts for future product offerings, such as the patch pump and bihormonal system of the iLet; 123 • the cost of complying with regulatory requirements; • costs associated with capital expenditures; • the costs associated with hiring additional personnel as our business grows; • the costs of operating as a public company; • costs associated with any future litigation; • the costs and timing of preparing, filing and prosecuting patent applications, maintaining and enforcing our intellectual property rights and defending any intellectual property-related claims; and • the impact of geopolitical and macroeconomic events, including tariffs or other trade measures, future bank failures, increased geopolitical tensions and conflict, global pandemics, global economic conditions including changes in monetary and fiscal policy, U.S. political developments and other sources of instability that may impact our ability to access capital on acceptable terms, if at all.
Sales and Marketing Expenses Sales and marketing expenses were $37.1 million for the year ended December 31, 2024, compared to $12.0 million for the year ended December 31, 2023.
Sales and Marketing Expenses Sales and marketing expenses for the year ended December 31, 2025 were $61.4 million, compared to $37.1 million for the year ended December 31, 2024.
Operating expenses Our quarterly research and development expenses increased in all periods presented, except the second quarter of 2023 and third quarter of 2024, primarily due to increases in engineering, third-party consulting costs and payroll-related expenses incurred to support our continued research and development efforts to enhance our existing product and develop new products.
Operating expenses Our quarterly research and development expenses increased in all periods presented, except the third quarters of 2024 and 2025 and the first quarter of 2025, primarily due to increases in payroll-related expenses, materials and clinical trial related expenses incurred to support our continued research and development efforts to enhance our existing product and develop new products.
We are pursuing a multi-channel coverage and reimbursement strategy to maximize access to the iLet within the T1D population, provide flexibility for PWD in choosing their device and provide PWD with advantageous coverage and reimbursement terms.
Currently, the majority of our new patient starts are reimbursed through the DME channel. 107 We are pursuing a multi-channel coverage and reimbursement strategy to maximize access to the iLet within the T1D population, provide flexibility for PWD in choosing their device and provide PWD with advantageous coverage and reimbursement terms.
Our general and administrative expenses increased in all periods presented, except the third quarter of 2023, primarily due to increases in payroll-related expenses driven by headcount increases in our quality assurance team, as well as expenses incurred for operational overhead expenses to meet the growing demand for the iLet.
Our general and administrative expenses increased in all periods presented, except the fourth quarter of 2024, primarily due to increases in payroll-related expenses driven by headcount increases in our quality assurance team, and public company costs, including accounting and audit services, insurance premiums and legal expenses, as well as expenses incurred for operational overhead expenses to meet the growing demand for the iLet.
This increase of $25.1 million was primarily attributable to an increase of $17.4 million in payroll-related costs, including salaries and wages, sales incentive bonuses, and stock-based compensation, due to an increase in headcount of our sales force and customer care team in connection with the post-commercial launch of the iLet in the United States.
This increase of $24.3 million was primarily attributable to an increase of $16.3 million in payroll-related expenses, including salaries and wages, sales incentive bonuses, and stock-based compensation, due to an increase in headcount of our sales force and customer care team in connection with the expansion of our sales territories within the United States.
Other Income (Expense) Our other income (expense) consists of (i) interest income, (ii) other expense and (iii) change in fair value of warrant liabilities. Interest Income Interest income consists of cash interest earned on our cash, cash equivalents and short-term investment balances. 149 Other Expense Other expense consists of miscellaneous expenses unrelated to our core operations.
Interest Income Interest income consists of cash interest earned on our cash, cash equivalents and short-term and long-term investment balances. Other Income (Expense) Other income (expense) consists of miscellaneous income and expenses unrelated to our core operations.
As of December 31, 2024, we had cash and cash equivalents and short-term investments of $103.6 million.
As of December 31, 2025, we had cash and cash equivalents and short-term and long-term investments of $264.7 million.
General and Administrative General and administrative expenses primarily consist of personnel-related costs, including salaries, bonuses, stock-based compensation expense and benefits for our personnel in executive, legal, finance and accounting, human resources, information technology, quality assurance and other administrative roles.
General and Administrative General and administrative expenses include personnel-related costs, including salaries, bonuses, stock-based compensation expense and benefits for our personnel in executive, legal, finance, accounting, human resources, information technology, quality assurance and other administrative functions, as well as expenses for patent filings, legal services, accounting and tax services, insurance, travel, facilities and depreciation.
Third-Party Payor Reimbursement and Impact of Our Multi-Channel Reimbursement Strategy As a medical device company, our revenue and results of operations may be impacted by the failure to obtain adequate coverage or reimbursement for our current and future products from third-party payors, as well as changes in reimbursement structures in line with our strategy.
Third-Party Payor Reimbursement and Impact of Our Multi-Channel Reimbursement Strategy As a medical device company, our revenue and results of operations may be impacted if we are unable to secure sufficient coverage or reimbursement from third-party payors for our current or future products, or if reimbursement structures change under our multi-channel strategy.
The decrease in Adjusted EBITDA from the third quarter of 2024 to the fourth quarter of 2024 was primarily driven by a $3.0 million milestone payment made to Xeris in the fourth quarter of 2024 for the achievement of certain developmental milestones.
The decline from the third quarter of 2024 to the first quarter of 2025 was primarily driven by product mix, lower volume due to seasonal factors as well as a $3.0 million milestone payment made to Xeris in the fourth quarter of 2024 for the achievement of certain developmental milestones.
As there is no observable standalone selling price for access to the mobile application or promise to provide firmware upgrades, we estimate standalone selling price by applying the expected cost plus a margin approach.
As there is no observable standalone selling price for access to the mobile application or promise to provide firmware upgrades, we estimate standalone selling price by applying the expected cost plus a margin approach. Stock-Based Compensation We measure stock-based awards granted to employees, non-employees and directors based on their fair value on the date of the grant.
Emerging Growth Company and Smaller Reporting Company Status We are an “emerging growth company” as defined in the Jumpstart Our Business Startups (JOBS) Act. For as long as we remain an “emerging growth company”, we may take advantage of reduced reporting requirements that are otherwise applicable to public companies.
For as long as we remain an “emerging growth company”, we may take advantage of reduced reporting requirements that are otherwise applicable to public companies.
They are subsequently remeasured to fair value at the end of each reporting period, with changes in the fair value recognized as a component of other income (expense), net. We will continue to recognize changes in fair value of the warrant liabilities until the Warrants are exercised, expire, or qualify for equity classification.
They are subsequently remeasured to fair value at the end of each reporting period through their exercise in January 2025. Changes in the fair value were recognized as a component of other income (expense), net. We continued to recognize changes in fair value of the warrant liabilities until the Warrants were exercised prior to the completion of our IPO.
Use of the iLet requires the independent purchase of a compatible third-party iCGM to provide real-time data to the iLet user. The iLet requires the use of single-use products, which we sell separately to our customers.
Use of the iLet requires the independent purchase of a compatible third-party iCGM to provide real-time data to the iLet user. The iLet requires the use of single-use products, which we sell separately to our customers. These single-use products include cartridges for storing and delivering insulin, as well as infusion sets that connect the insulin pump to a user’s body.
The iLet was specifically designed to provide improvements in glycemic control relative to currently available treatment options, such as insulin pumps, including partially automated insulin delivery (AID) systems (also known as hybrid closed-loop systems), and multiple daily injections (MDI), also reducing the complexity and burden of achieving these improved results for PWD.
The iLet was designed to provide improved glycemic control relative to currently available treatment options, such as insulin pumps, partially automated insulin delivery systems, and multiple daily injections (MDI), while reducing the workload associated with achieving these outcomes.
This was partially offset by a $2.1 million increase in interest income from our short-term investments. Selected Quarterly Financial Information The following table sets forth our selected unaudited quarterly consolidated statements of operations data for each of the eight quarters in the period ended December 31, 2024.
Selected Quarterly Financial Information The following table sets forth our selected unaudited quarterly consolidated statements of operations data for each of the eight quarters in the period ended December 31, 2025.
We have identified the ability for a customer to access the mobile application and our promise to provide firmware upgrades to the iLet through the mobile application as distinct performance obligations, as access and support is provided throughout the standard four-year warranty period of the device.
If the actual amounts of consideration that we receive differ from estimates, we adjust these estimates, which affects reported revenue, in the period that such variances become known or at the end of each reporting period. 125 We have identified the ability for a customer to access the mobile application and our promise to provide firmware upgrades to the iLet through the mobile application as distinct performance obligations, as access and support is provided throughout the standard four-year warranty period of the device.
Market development and post-commercial launch activities account for a significant portion of our overall operating expenses and are expensed as they are incurred. We anticipate a significant increase in sales and marketing expenses for the foreseeable future to support the continued commercialization of the iLet.
We anticipate a significant increase in sales and marketing expenses for the foreseeable future to support the continued commercialization of the iLet and our future products.
Therefore, we believe the adaptive closed-loop algorithms can make the iLet easier to initiate and use on a daily basis than other available AID systems. 140 Our initial commercialization efforts for the iLet are in type 1 diabetes (T1D), an indication for which we received FDA clearance in patients six and older in May 2023, in the United States.
Our initial commercialization efforts for the iLet are in type 1 diabetes (T1D), an indication for which we received FDA clearance in patients six and older in May 2023, in the United States.
PWD acquire our products through the DME channel and the PBP channel. Currently, the majority of our new patient starts are reimbursed through the DME channel.
PWD acquire our products through the DME channel and the PBP channel.
The remaining increase is attributable to a net increase of $2.8 million in payroll-related expenses driven by an increase in R&D personnel headcount offset by a decrease of $0.2 million in facilities-related overhead. 151 The table below summarizes the nature of research and development expense by major expense category: Year Ended December 31, Change 2024 2023 $ % (in thousands, except percentages) External research and development (1) $ 6,722 $ 2,401 $ 4,321 180 % Internal research and development (2) 17,818 13,699 4,119 30 % Stock-based compensation 1,144 1,781 (637 ) (36 )% Other (3) 500 62 438 706 % Total research and development expense $ 26,184 $ 17,943 $ 8,241 46 % (1) External research and development costs primarily include expenses incurred with third-parties such as clinical research organizations conducting the clinical trials and engineering and product development consulting services associated with our development of the iLet.
The table below summarizes the nature of research and development expense by major expense category: Year Ended December 31, Change 2025 2024 $ % (in thousands, except percentages) External research and development (1) $ 5,573 $ 6,722 $ (1,149 ) (17 )% Internal research and development (2) 26,011 17,818 8,193 46 % Stock-based compensation 3,205 1,144 2,061 180 % Licensing fees and other — 500 (500 ) (100 )% Total research and development expense $ 34,789 $ 26,184 $ 8,605 33 % (1) External research and development costs primarily include expenses incurred with third parties such as clinical research organizations conducting the clinical trials and engineering and product development consulting services associated with our development of the iLet.
Financing Activities During the year ended December 31, 2024, net cash provided by financing activities was $55.6 million, primarily attributable to the net proceeds of $59.7 million from the issuance and sale of shares of our Series E convertible preferred stock, offset by $4.1 million in payments of deferred offering costs associated with the initial public offering (IPO).
By comparison, financing activities in 2024 primarily consisted of $59.7 million from the issuance and sale of shares of our Series E convertible preferred stock, offset by $4.1 million in payments of deferred offering costs associated with our IPO. Future Funding Requirements We expect our expenses to increase significantly in connection with our ongoing activities.
Cash Flows The following table summarizes our cash flows for the periods presented: Year Ended December 31, 2024 2023 (in thousands) Net cash used in operating activities $ (48,273 ) $ (32,445 ) Net cash used in investing activities (3,476 ) (69,693 ) Net cash provided by financing activities 55,615 101,029 Net increase (decrease) in cash, cash equivalents and restricted cash $ 3,866 $ (1,109 ) Operating Activities During the year ended December 31, 2024, net cash used in operating activities was $48.3 million, primarily resulting from our net loss of $54.8 million and net cash used by changes in our operating assets and liabilities of $12.1 million.
Cash Flows The following table summarizes our cash flows for the periods presented: Year Ended December 31, 2025 2024 (in thousands) Net cash used in operating activities $ (50,925 ) $ (48,273 ) Net cash used in investing activities (162,805 ) (3,476 ) Net cash provided by financing activities 214,874 55,615 Net increase in cash, cash equivalents and restricted cash $ 1,144 $ 3,866 Operating Activities Net cash used in operating activities was $50.9 million for the year ended December 31, 2025, compared to $48.3 million the year ended December 31, 2024.
The remaining increase includes $7.7 million in HCP-related marketing, training and professional education and facilities-related expenses. General and Administrative Expenses General and administrative expenses were $17.9 million for the year ended December 31, 2024, compared to $12.2 million for the year ended December 31, 2023.
The remaining increase includes HCP-related marketing, training and travel-related expenses attributable to our continued efforts to grow our install base and support sales expansion. General and Administrative Expenses General and administrative expenses for the year ended December 31, 2025 were $31.0 million, compared to $17.9 million for the year ended December 31, 2024.
Gross Profit and Margin Gross profit was $35.9 million for the year ended December 31, 2024, compared to $6.3 million for the year ended December 31, 2023. Gross margin was 55% for the year ended December 31, 2024, compared to 53% in the year ended December 31, 2023.
Gross margin was 55% for the year ended December 31, 2025, compared to 55% in the year ended December 31, 2024. The $19.6 million increase in gross profit was primarily driven by higher sales volume.
Adjusted EBITDA Our quarterly Adjusted EBITDA increased from the first quarter 2023 to the fourth quarter of 2023 primarily due to an increase in Net Sales and Gross Profit. Our quarterly Adjusted EBITDA decreased from the fourth quarter of 2023 to the fourth quarter of 2024 primarily due to increases in Sales & Marketing and Research & Development expenses.
Adjusted EBITDA improved from the second quarter of 2024 to the third quarter of 2024 due to favorable timing of research and development expenses. Adjusted EBITDA declined from the first quarter of 2024 to the second quarter of 2024 primarily due to increases in sales and marketing and research and development expenses.
The mobile application receives information from the iLet and displays that information discreetly to the user. This user-friendly, intuitive mobile application provides real-time glucose readings, trends and graphs. It also allows for cloud-based data storage.
We also offer a mobile application that includes a share/follow feature which allows data to be shared in real time with a trusted “Bionic Circle” of friends and family members. The mobile application receives information from the iLet and displays that information discreetly to the user. This user-friendly, intuitive mobile application provides real-time glucose readings, trends and graphs.
The following table presents a reconciliation of adjusted EBITDA from the most comparable GAAP measure, net loss, for the years ended December 31, 2024 and 2023: Year Ended December 31, 2024 2023 (in thousands) Net loss $ (54,756 ) $ (44,099 ) Add: Depreciation expense 1,151 1,226 Stock-based compensation expense 6,384 5,658 Interest income (3,909 ) (1,777 ) Provision for state taxes 2 13 Change in fair value of warrant liabilities 13,412 9,958 Adjusted EBITDA $ (37,716 ) $ (29,021 ) The following table presents a reconciliation of adjusted EBITDA from the most comparable GAAP measure, net loss, for each quarter of the year ended December 31, 2024: For the Three Months Ended March 31, 2024 June 30, 2024 September 30, 2024 December 31, 2024 (unaudited) (in thousands) Net loss $ (12,449 ) $ (14,463 ) $ (9,736 ) $ (18,108 ) Add: Depreciation expense 287 299 333 232 Stock-based compensation expense 1,356 1,500 1,977 1,551 Interest income (1,139 ) (993 ) (826 ) (951 ) Provision for state taxes — 2 — — Change in fair value of warrant liabilities 4,139 3,670 (419 ) 6,022 Adjusted EBITDA $ (7,806 ) $ (9,985 ) $ (8,671 ) $ (11,254 ) The following table presents a reconciliation of adjusted EBITDA from the most comparable GAAP measure, net loss, for each quarter of the year ended December 31, 2023: 155 For the Three Months Ended March 31, 2023 June 30, 2023 September 30, 2023 December 31, 2023 (unaudited) (in thousands) Net loss $ (9,621 ) $ (6,950 ) $ (8,680 ) $ (18,848 ) Add: Depreciation expense 325 311 298 292 Stock-based compensation expense 1,215 1,601 1,266 1,576 Interest income (65 ) (68 ) (393 ) (1,251 ) Provision for state taxes — 13 — — Change in fair value of warrant liabilities — (2,010 ) 291 11,677 Adjusted EBITDA $ (8,146 ) $ (7,103 ) $ (7,218 ) $ (6,554 ) Adjusted EBITDA is a key performance measure that we use to assess our operating performance.
The following table presents a reconciliation of adjusted EBITDA from the most comparable GAAP measure, net loss, for the eight quarters in the period ended December 31, 2025: 118 Year Ended December 31, 2025 2024 (unaudited) (in thousands) Net loss $ (73,200 ) $ (54,756 ) Add: Depreciation expense 1,573 1,151 Stock-based compensation expense 16,384 6,384 Interest income (10,932 ) (3,909 ) Income tax expense 1 2 Litigation settlement and other related expense 410 — Other non-recurring 562 — Change in fair value of warrant liabilities 12,450 13,412 Adjusted EBITDA $ (52,752 ) $ (37,716 ) The following table presents a reconciliation of adjusted EBITDA from the most comparable GAAP measure, net loss, for each quarter of the year ended December 31, 2025: Three Months Ended March 31, 2025 June 30, 2025 September 30, 2025 December 31, 2025 (unaudited) (in thousands) Net loss $ (28,656 ) $ (16,869 ) $ (14,209 ) $ (13,466 ) Add: Depreciation expense 303 347 386 537 Stock-based compensation expense 2,804 4,799 4,478 4,303 Interest income (2,436 ) (3,005 ) (2,833 ) (2,658 ) Income tax expense (benefit) — 2 (1 ) — Litigation settlement and other related expense — 200 — 210 Other non-recurring — — — 562 Change in fair value of warrant liabilities 12,450 — — — Adjusted EBITDA $ (15,535 ) $ (14,526 ) $ (12,179 ) $ (10,512 ) The following table presents a reconciliation of adjusted EBITDA from the most comparable GAAP measure, net loss, for each quarter of the year ended December 31, 2024: Three Months Ended March 31, 2024 June 30, 2024 September 30, 2024 December 31, 2024 (unaudited) (in thousands) Net loss $ (12,449 ) $ (14,463 ) $ (9,736 ) $ (18,108 ) Add: Depreciation expense 287 299 333 232 Stock-based compensation expense 1,357 1,500 1,976 1,551 Interest income (1,139 ) (993 ) (826 ) (951 ) Income tax expense — 2 — — Change in fair value of warrant liabilities 4,139 3,670 (419 ) 6,022 Adjusted EBITDA $ (7,805 ) $ (9,985 ) $ (8,672 ) $ (11,254 ) 119 Adjusted EBITDA is a key performance measure that we use to assess our operating performance.
Recent Accounting Pronouncements A description of recently issued accounting standards that may potentially impact our financial position, results of operations, and cash flows is included in Part II. Item 8. Note 2 to our audited financial statements included elsewhere in this Annual Report.
Changes in these assumptions can materially impact the fair value and ultimately how much stock-based compensation expense is recognized. 126 Recent Accounting Pronouncements A description of recently issued accounting standards that may potentially impact our financial position, results of operations, and cash flows is included in Part II. Item 8.
Results of Operations Comparison of the Years Ended December 31, 2024 and 2023 The following table summarizes our results of operations for the periods indicated: Year Ended December 31, Change 2024 2023 $ % (in thousands, except percentages) Net sales $ 65,124 $ 11,995 $ 53,129 100 % Cost of sales 29,236 5,687 23,549 100 % Gross profit 35,888 6,308 29,580 100 % Operating expenses: Research and development (1) 26,184 17,943 8,241 46 % Sales and marketing (1) 37,086 11,990 25,096 100 % General and administrative (1) 17,869 12,225 5,644 46 % Total operating expenses 81,139 42,158 38,981 * Loss from operations (45,251 ) (35,850 ) (9,401 ) * Other income (expense): Interest income 3,909 1,777 2,132 * Other expense (2 ) (68 ) 66 * Change in fair value of warrant liabilities (13,412 ) (9,958 ) (3,454 ) * Total other expense, net (9,505 ) (8,249 ) (1,256 ) * Net loss $ (54,756 ) $ (44,099 ) $ (10,657 ) * * Not meaningful (1) Includes stock-based compensation expense as follows: Year Ended December 31, 2024 2023 (in thousands) Cost of sales $ 275 $ 239 Research and development 1,144 1,781 Sales and marketing 1,661 610 General and administrative 3,304 3,028 Total stock-based compensation expense $ 6,384 $ 5,658 150 Net Sales Net sales for the year ended December 31, 2024 was $65.1 million, compared to $12.0 million for the year ended December 31, 2023.
Note 4 of our audited financial statements included elsewhere in this Annual Report. 113 Results of Operations Comparison of the Years Ended December 31, 2025 and 2024 The following table summarizes our results of operations for the periods indicated: Year Ended December 31, Change 2025 2024 $ % (in thousands, except percentages) Net sales $ 100,251 $ 65,124 $ 35,127 54 % Cost of sales (1) 44,714 29,236 15,478 53 % Gross profit 55,537 35,888 19,649 55 % Operating expenses: Research and development (1) 34,789 26,184 8,605 33 % Sales and marketing (1) 61,404 37,086 24,318 66 % General and administrative (1) 31,025 17,869 13,156 74 % Total operating expenses 127,218 81,139 46,079 57 % Loss from operations (71,681 ) (45,251 ) (26,430 ) 58 % Other income (expense): Interest income 10,932 3,909 7,023 * Other expense (1 ) (2 ) 1 * Change in fair value of warrant liabilities (12,450 ) (13,412 ) 962 * Total other expense, net (1,519 ) (9,505 ) 7,986 * Net loss $ (73,200 ) $ (54,756 ) $ (18,444 ) 34 % * Not meaningful (1) Includes stock-based compensation expense as follows: Year Ended December 31, 2025 2024 (in thousands) Cost of sales $ 542 $ 275 Research and development 3,205 1,144 Sales and marketing 4,625 1,661 General and administrative 8,012 3,304 Total stock-based compensation expense $ 16,384 $ 6,384 Net Sales Net sales for the year ended December 31, 2025 was $100.3 million, compared to $65.1 million for the year ended December 31, 2024.
Sales and Marketing We are in the early commercialization stages of the iLet and are focused on driving awareness and adoption among new customers. Sales and marketing expenses are primarily related to the market development and post-commercial launch activities for the iLet, including the design of infrastructure to support the customer experience, and marketing and branding strategy.
Sales and Marketing We are in the early commercialization stages of the iLet and are focused on driving awareness and adoption among new customers.
These single -use products include cartridges for storing and delivering insulin, as well as infusion sets that connect the insulin pump to a user’s body. The user fills the cartridge with insulin and inserts it into the iLet. The iLet then administers the insulin from the cartridge to the user’s body through a single-use infusion set.
The user fills the cartridge with insulin and inserts it into the iLet. The iLet then administers the insulin from the cartridge to the user’s body through a single-use infusion set. These single-use products are generally recommended to be disposed of entirely every 2-3 days, or as directed by a healthcare provider.
In consideration for the licenses and other rights granted to us under the Collaboration and License Agreement, we paid Xeris a one-time payment of $0.5 million and a one-time milestone payment of $3.0 million for the achievement of certain development milestones, both of which are recognized as research and development expense when incurred.
We have the Collaboration and License Agreement with Xeris Pharmaceuticals, Inc. to develop and commercialize a glucagon formulation for use in our bihormonal system. Under this agreement, we paid an upfront fee of $0.5 million and a milestone payment of $3.0 million, both of which were recognized as research and development expense when incurred.
Because adjusted EBITDA facilitates internal comparisons of our historical operating performance on a more consistent basis, we use this measure for business planning purposes. We calculate adjusted EBITDA as net loss adjusted to exclude (i) depreciation and amortization expense, (ii) stock-based compensation expense, (iii) interest income, (iv) provision for state taxes and (v) change in fair value of warrant liabilities.
We calculate adjusted EBITDA as net loss adjusted to exclude (i) depreciation expense, (ii) stock-based compensation expense, (iii) interest income, (iv) income tax expense (benefit), (v) litigation settlement and other related expense, and (vi) change in fair value of warrant liabilities.

… 158 more changes not shown on this page.