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What changed in CVRx, Inc.'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of CVRx, Inc.'s 2022 and 2023 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 2023 report.

+341 added−340 removedSource: 10-K (2024-02-09) vs 10-K (2023-02-10)

Top changes in CVRx, Inc.'s 2023 10-K

341 paragraphs added · 340 removed · 281 edited across 7 sections

Item 1. Business

Business — how the company describes what it does

107 edited+30 added−21 removed229 unchanged
Biggest changeThese results led to the FDA approval of Barostim in August 2019 on an accelerated basis of only four months from the submission of the final clinical trial report. ​ Barostim is indicated for the improvement of symptoms of HFrEF — quality of life, 6MHW and functional status — for patients who remain symptomatic despite treatment with GDMT, are NYHA Class III or Class II (with a recent history of Class III), have a LVEF ≤ 35%, a NT-proBNP ​ The safety and effectiveness of Barostim Therapy have been published in more than 60 peer-reviewed publications, approximately 20 of which relate to the treatment of HF, including, among others, the publication of the pivotal trial results in the Journal of the American College of Cardiology.
Biggest changeThis led to the FDA approval of expanded labeling with these results and a simplification and clarification of the following indications for use. ​ Barostim is indicated for patients who are NYHA Class III or Class II (with a recent history of Class III) despite treatment with guideline-directed medical therapies (medications and devices), have a LVEF ≤ 35% and a NT-proBNP ​ The safety and effectiveness of Barostim Therapy have been published in more than 60 peer-reviewed publications, approximately 20 of which relate to the treatment of HF, including, among others, the publication of the pivotal trial results in the Journal of the American College of Cardiology. ​ We have established a U.S. patient registry to evaluate and assess real world patient outcomes from patients who have been implanted with Barostim.
We estimate that there are approximately 26 million people globally suffering from HF, including approximately 6.2 million people in the U.S. and 8.6 million people in European Five. Every year, 1.3 million and 1.4 million new patients are diagnosed with HF in the U.S. and the European Five, respectively.
We estimate that there are approximately 26 million people globally suffering from HF, including approximately 6.2 million people in the U.S. and 8.6 million people in the European Five. Every year, 1.3 million and 1.4 million new patients are diagnosed with HF in the U.S. and the European Five, respectively.
Our platform technology is based on a widely accepted mechanism of action and is designed to address the imbalance of the ANS, which causes HFrEF and other cardiovascular diseases. • Strong global clinical evidence.
Our platform technology is based on a widely accepted mechanism of action and is designed to address the imbalance of the ANS, which causes HFrEF and other cardiovascular diseases. • Strong global clinical evidence.
The benefits of treatment with Barostim were shown to be similarly robust and reproducible across all three of our HF clinical studies, including BAT-in-HF (Phase I), HOPE4HF (Phase II) and BeAT-HF (Phase III pivotal trial), evaluating 624 patients in aggregate across the U.S., Germany, Italy, France, Canada and the United Kingdom.
The benefits of treatment with Barostim were shown to be similarly robust and reproducible across all three of our HF clinical studies, including BAT-in-HF (Phase I), HOPE4HF (Phase II) and BeAT-HF (Phase III pivotal trial), evaluating 624 patients in aggregate across the U.S., Germany, Italy, France, Canada and the United Kingdom.
It also demonstrated that the reduction is accompanied by the improvement of a major modulator of sympathetic activity, the arterial baroreflex and baroreflex activation is accompanied by favorable therapeutic impact on cardiac function and clinical profile, as shown in the improved quality of life, increased exercise tolerance and improved functional status. ​ Other clinical trials BATwire implant toolkit ​ In the second half of 2020, the FDA approved a two-stage pivotal trial design to assess the safety and effectiveness of the BATwire implant toolkit.
It also demonstrated that the reduction is accompanied by the improvement of a major modulator of sympathetic activity, the arterial baroreflex and baroreflex activation is accompanied by favorable therapeutic impact on cardiac function and clinical profile, as shown in the improved quality of life, increased exercise tolerance and improved NYHA functional status. ​ Other clinical trials BATwire implant toolkit ​ In the second half of 2020, the FDA approved a two-stage pivotal trial design to assess the safety and effectiveness of the BATwire implant toolkit.
A Company-sponsored and co-authored cost-impact analysis, which was published in BMC Cardiovascular Disorders , a peer-reviewed manuscript, predicted that BAT plus GDMT would become the lower-cost alternative treatment within three years from implantation, as compared to GDMT alone, resulting in significant cost savings to healthcare systems. • Inherent patient compliance and durability.
A Company-sponsored and co-authored cost-impact analysis, which was published in BMC Cardiovascular Disorders , a peer-reviewed manuscript, predicted BAT plus GDMT would become the lower-cost alternative treatment within three years from implantation, as compared to GDMT alone, resulting in significant cost savings to healthcare systems. • Inherent patient compliance and durability.
The government may assert that a claim includes items or services resulting from a violation of the federal Anti-Kickback Statute and thus constitutes a false or fraudulent claim for purposes of the false claims statute; • 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 of one of our cleared devices, or approval of a supplement for certain modifications to PMA and HDE devices; • 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; • the 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 (GUDID); • 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; and • post-market surveillance activities and regulations, which apply when deemed by the FDA to be necessary to protect the public health or to provide additional safety and effectiveness data for the device.
The government may assert that a claim includes items or services resulting from a violation of the federal Anti-Kickback Statute and thus constitutes a false or fraudulent claim for purposes of the false claims statute; • 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 of one of our cleared devices, or approval of a supplement for certain modifications to PMA and HDE devices; • 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; • the 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 (GUDID); • 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; and 31 Table of Contents • post-market surveillance activities and regulations, which apply when deemed by the FDA to be necessary to protect the public health or to provide additional safety and effectiveness data for the device.
When an entity is determined to have violated the federal civil False Claims Act, the government may impose civil fines and penalties ranging from $12,537 to $25,076 for each false claim, plus treble damages, and exclude the entity from participation in Medicare, Medicaid and other federal healthcare programs. ​ The Civil Monetary Penalty Act of 1981 imposes penalties against any person or entity that, among other things, is determined to have presented or caused to be presented a claim to a federal healthcare program that the person knows or should know is for an item or service that was not provided as claimed or is false or fraudulent, or offering or transferring remuneration to a federal healthcare beneficiary that a person knows or should know is likely to influence the beneficiary’s decision to order or receive items or services reimbursable by the government from a particular provider or supplier. ​ The Health Insurance Portability and Accountability Act of 1996 (“HIPAA”) also created additional 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, knowingly and willfully embezzling or stealing from a healthcare benefit program, willfully obstructing a criminal investigation of a healthcare offense 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.
When an entity is determined to have violated the federal civil False Claims Act, the government may impose civil fines and penalties ranging from $12,537 to $25,076 for each false claim, plus treble damages, and exclude the entity from participation in Medicare, Medicaid and other federal healthcare programs. ​ 36 Table of Contents The Civil Monetary Penalty Act of 1981 imposes penalties against any person or entity that, among other things, is determined to have presented or caused to be presented a claim to a federal healthcare program that the person knows or should know is for an item or service that was not provided as claimed or is false or fraudulent, or offering or transferring remuneration to a federal healthcare beneficiary that a person knows or should know is likely to influence the beneficiary’s decision to order or receive items or services reimbursable by the government from a particular provider or supplier. ​ The Health Insurance Portability and Accountability Act of 1996 (“HIPAA”) also created additional 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, knowingly and willfully embezzling or stealing from a healthcare benefit program, willfully obstructing a criminal investigation of a healthcare offense 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.
Unlike directives, which must be implemented into the national laws of the EEA, the regulations are directly applicable in all EEA member states and are intended to eliminate differences in the regulation of medical devices among EEA member states. ​ The new regulations: ​ • Require demonstration of clinically meaningful outcomes for the performance of the medical device; • Require stricter control of Class IIb and Class III medical devices during the clinical investigational phase; • Require rigorous post-market oversight by the manufacturer and increased post-market surveillance authority by the Notified Body, including unannounced audits, and product sample checks and testing; 29 Table of Contents • Establish explicit provisions on manufacturers’ responsibilities for the follow-up of the quality, performance and safety of devices placed on the market; • Improve the traceability of medical devices throughout the supply chain to the end-user or patient through a unique identification number; • Provide greater transparency by establishing a central database (EUDAMED) to provide patients, healthcare professionals and the public with comprehensive information on products available in the EU; and • Strengthen rules for the assessment of certain high-risk devices, which may have to undergo an additional check by an independent expert panel before they are placed on the market.
Unlike directives, which must be implemented into the national laws of the EEA, the regulations are directly applicable in all EEA member states and are intended to eliminate differences in the regulation of medical devices among EEA member states. ​ The new regulations: ​ • Require demonstration of clinically meaningful outcomes for the performance of the medical device; • Require stricter control of Class IIb and Class III medical devices during the clinical investigational phase; • Require rigorous post-market oversight by the manufacturer and increased post-market surveillance authority by the Notified Body, including unannounced audits and product sample checks and testing; • Establish explicit provisions on manufacturers’ responsibilities for the follow-up of the quality, performance and safety of devices placed on the market; • Improve the traceability of medical devices throughout the supply chain to the end-user or patient through a unique identification number; • Provide greater transparency by establishing a central database (EUDAMED) to provide patients, healthcare professionals and the public with comprehensive information on products available in the EU; and • Strengthen rules for the assessment of certain high-risk devices, which may have to undergo an additional check by an independent expert panel before they are placed on the market.
The MANCE-free rate exceeded the performance criteria of 85%, with 121 out of 125 implanted patients being event free, resulting in an event-free rate of 97% (p ​ In addition to the results noted above, we observed a reduction in the rate of cardiovascular serious adverse events (non-HF related events) by 51% (events per patient-year; 0.101 BAT+ vs 0.206 Control; nominal p= 0.023; 95% CI: 0.10 to 0.73) and there were no significant differences in blood pressure or heart rate. ​ The BeAT-HF pivotal trial continued enrolling patients in the post-market stage of the trial in order to determine if Barostim demonstrates a statistically significant improvement in morbidity and mortality in patients with HFrEF.
The MANCE-free rate exceeded the performance criteria of 85%, with 121 out of 125 implanted patients being event free, resulting in an event-free rate of 97% (p ​ In addition to the results noted above, we observed a reduction in the rate of cardiovascular serious adverse events (non-HF related events) by 51% (events per patient-year; 0.101 BAT+ vs 0.206 Control; nominal p= 0.023; 95% CI: 0.10 to 0.73) and there were no significant differences in blood pressure or heart rate. ​ Post-market phase results ​ The BeAT-HF pivotal trial continued enrolling patients in the post-market stage of the trial to determine if Barostim demonstrates a statistically significant improvement in morbidity and mortality in patients with HFrEF.
The Notified Body typically audits the quality management system of the manufacturer, which must comply with the current version of ISO 13485 requiring that manufacturers to follow defined and approved design and development procedures, testing, control, documentation and other quality assurance procedures throughout the entire design and manufacturing process.
The Notified Body typically audits the quality management system of the manufacturer, which must comply with the current version of ISO 13485 requiring that manufacturers follow defined and approved design and development procedures, testing, control, documentation and other quality assurance procedures throughout the entire design and manufacturing process.
Barostim’s implantable pulse generator (“IPG”) and stimulation lead are implanted during a minimally invasive procedure typically performed in an outpatient setting that lasts approximately one hour and involves two small skin incisions.
Barostim’s implantable pulse generator (“IPG”) and stimulation lead are implanted during a minimally invasive implant procedure typically performed in an outpatient setting that lasts approximately one hour and involves two small skin incisions.
These results demonstrated that BAT is safe in patients with HFrEF and significantly improves the patient-centered symptomatic endpoints of the quality-of-life score, 6MHW and functional status, as well as the confirmatory nature of the evidence provided by a reduction of NT-proBNP. ​ • Quality of life (measured by MLWHF): BAT resulted in a 14-point reduction (improvement) in quality of life for patients in the BAT+ group relative to patients in the Control group (p • Exercise capacity (measured by the standardized 6MHW distance test): BAT resulted in a 60-meter increase in the distance patients in the BAT+ group were able to walk on a flat, hard surface in a six-minute period relative to that of patients in the Control group (p • Functional status (determined by NYHA classification): BAT demonstrated that 65% of patients in the BAT+ group improved at least one NYHA class (p 17 Table of Contents • NT-proBNP (serum biomarker used as indicator of severity of HF): BAT resulted in a 25% greater reduction (improvement) in NT-proBNP for patients in the BAT+ group relative to that of patients in the Control group (p=0.004; 95% CI = -38% to -9%).
These results demonstrated that BAT is safe in patients with HFrEF and significantly improves the patient-centered symptomatic endpoints of the quality-of-life score, 6MHW and NYHA functional status, as well as the confirmatory nature of the evidence provided by a reduction of NT-proBNP. ​ • Quality of life (measured by MLWHF): BAT resulted in a 14-point reduction (improvement) in quality of life for patients in the BAT+ group relative to patients in the Control group (p • Exercise capacity (measured by the standardized 6MHW distance test): BAT resulted in a 60-meter increase in the distance patients in the BAT+ group were able to walk on a flat, hard surface in a six-minute period relative to that of patients in the Control group (p • Functional status (determined by NYHA classification): BAT demonstrated that 65% of patients in the BAT+ group improved at least one NYHA class (p • NT-proBNP (serum biomarker used as indicator of severity of HF): BAT resulted in a 25% greater reduction (improvement) in NT-proBNP for patients in the BAT+ group relative to that of patients in the Control group (p=0.004; 95% CI = -38% to -9%).
Barostim also is eligible for reimbursement in certain other European countries, where annual healthcare budgets for the hospital generally determine the number of patients to be treated and the prices to be paid for the related devices that may be purchased. ​ Research and development Our research and development team has significant experience bringing innovative medical devices to market, including minimally invasive neuromodulation systems. ​ We are committed to ongoing research and development efforts of Barostim with an emphasis on improving clinical outcomes, optimizing patient adoption and comfort, increasing access for a greater number of patients and enabling more physicians to perform the procedure. ​ The primary focus of our research and development efforts in the near-term will be the continued technological advancement of Barostim, including tools to simplify the implant procedure for physicians.
Barostim also is eligible for reimbursement in certain other European countries, where annual healthcare budgets for the hospital generally determine the number of patients to be treated and the prices to be paid for the related devices that may be purchased. ​ Research and development Our research and development team has significant experience bringing innovative medical devices to market, including minimally invasive neuromodulation systems. ​ 25 Table of Contents We are committed to ongoing research and development efforts of Barostim with an emphasis on improving clinical outcomes, optimizing patient adoption and comfort, increasing access for a greater number of patients and enabling more physicians to perform the procedure. ​ The primary focus of our research and development efforts in the near-term will be the continued technological advancement of Barostim, including tools to simplify the implant procedure for physicians.
However, CCM is associated with a number of drawbacks, including not being designed to address the imbalance of the ANS; less favorable clinical effectiveness results in patients with LVEF 25–35% as compared to patients with LVEF 35–45% related to exercise capacity, quality of life and functional status; implantation through an invasive procedure that includes running electrical leads through the veins and attaching them to the heart’s ventricle, which may lead to increased risks to the patient; and the requirement that patients regularly charge the battery in their implanted device. ​ We believe that the primary competitive factors in the HFrEF treatment market are: ​ • product safety, reliability and durability; • quality and volume of clinical data; • adoption by patients, physicians and hospitals; • adequate reimbursement for our device; • product ease of use and patient comfort; • sales force expansion, experience and access; • product availability, support and service; • manufacturing and supply chain; • technological innovation and product enhancements; and • intellectual property portfolio.
However, CCM is associated with a number of drawbacks, including not being designed to address the imbalance of the ANS; less favorable clinical effectiveness results in patients with LVEF 25–35% as compared to patients with LVEF 35–45% related to exercise capacity, quality of life and NYHA functional status; implantation through an invasive procedure that includes running electrical leads through the veins and attaching them to the heart’s ventricle, which may lead to increased risks to the patient; and the requirement that patients regularly charge the battery in their implanted device. ​ We believe that the primary competitive factors in the HFrEF treatment market are: ​ • product safety, reliability and durability; • quality and volume of clinical data; • adoption by patients, physicians and hospitals; • adequate reimbursement for our device; • product ease of use and patient comfort; • sales force expansion, experience and access; • product availability, support and service; 26 Table of Contents • manufacturing and supply chain; • technological innovation and product enhancements; and • intellectual property portfolio.
These values are: ​ • Commitments are Sacred — Honor relationships by doing what we say, when we say we’ll do it. • Bold Mindset, Driven Spirit — Always push the boundaries, energetically seeking out impactful opportunities and inspiring others. • Pioneer with Purpose…and a Smile! — As individuals, team leaders and industry innovators, it’s how we pave the way forward that defines us. • Collaborate with Enjoyment — Achieve goals and celebrate as a team. • Determination overcomes Targets — Determine the pathway, overcome obstacles, accelerate and successfully implement. • Embrace the Challenge of Change — Have an eye for identifying when change is needed, and the flexibility to chart a new course.
These values are: ​ • Commitments are Sacred — Honor relationships by doing what we say, when we say we’ll do it. • Bold Mindset, Driven Spirit — Always push the boundaries, energetically seeking out impactful opportunities and inspiring others. 40 Table of Contents • Pioneer with Purpose…and a Smile! — As individuals, team leaders and industry innovators, it’s how we pave the way forward that defines us. • Collaborate with Enjoyment — Achieve goals and celebrate as a team. • Determination overcomes Targets — Determine the pathway, overcome obstacles, accelerate and successfully implement. • Embrace the Challenge of Change — Have an eye for identifying when change is needed, and the flexibility to chart a new course.
If the FDA determines that we failed to comply with applicable regulatory requirements, it can take a variety of compliance or enforcement actions, which may result in any of the following sanctions: ​ • warning letters, untitled letters, fines, injunctions, consent decrees and civil penalties; • recalls, withdrawals, injunctions, or administrative detention or seizure of our products; • operating restrictions or partial suspension or total shutdown of production; • refusing or delaying requests for 510(k) marketing clearance or PMA approvals of new products or modified products; 28 Table of Contents • withdrawing 510(k) clearances or PMA approvals that have already been granted; refusal to grant export or import approvals for our products; or • criminal prosecution.
If the FDA determines that we failed to comply with applicable regulatory requirements, it can take a variety of compliance or enforcement actions, which may result in any of the following sanctions: ​ • warning letters, untitled letters, fines, injunctions, consent decrees and civil penalties; • recalls, withdrawals, injunctions, or administrative detention or seizure of our products; • operating restrictions or partial suspension or total shutdown of production; • refusing or delaying requests for 510(k) marketing clearance or PMA approvals of new products or modified products; • withdrawing 510(k) clearances or PMA approvals that have already been granted; refusal to grant export or import approvals for our products; or • criminal prosecution.
Certain other changes to an approved device require the submission of a new PMA, such as when the design change causes a different intended use, mode of operation, and technical basis of operation, or when the design change is so significant that a new generation of the device will be developed, and the data that were submitted with the original PMA are not applicable for the change in demonstrating a reasonable assurance of safety and effectiveness. ​ The FDA will approve the new device for commercial distribution if it determines that the data and information in the HDE constitute valid scientific evidence and that there is reasonable assurance that the device is safe and has probable benefit for its intended use(s) according to the instructions for use or labeling.
Certain other changes to an approved device require the submission of a new PMA, such as when the design change causes a different intended use, 29 Table of Contents mode of operation, and technical basis of operation, or when the design change is so significant that a new generation of the device will be developed, and the data that were submitted with the original PMA are not applicable for the change in demonstrating a reasonable assurance of safety and effectiveness. ​ The FDA will approve the new device for commercial distribution if it determines that the data and information in the HDE constitute valid scientific evidence and that there is reasonable assurance that the device is safe and has probable benefit for its intended use(s) according to the instructions for use or labeling.
If the trial data meets the safety and effectiveness endpoints, we will submit an application for a PMA-supplement approval by FDA. ​ Hypertension ​ We have completed two clinical trials in Europe and North America for the treatment of drug-resistant hypertension using our first-generation Barostim Therapy device called Rheos, and determined this study was successful in achieving three of the required five safety and effectiveness endpoints (“ Baroreflex Activation Therapy Lowers Blood Pressure in Patients with Resistant Hypertension: Results from the Double-Blind, Randomized, Placebo-Controlled Rheos Pivotal Trial ,” by John D.
If the trial data meets the safety and effectiveness endpoints, we will submit an application for a PMA-supplement approval by FDA. 22 Table of Contents ​ Hypertension ​ We have completed two clinical trials in Europe and North America for the treatment of drug-resistant hypertension using our first-generation Barostim Therapy device called Rheos, and determined this study was successful in achieving three of the required five safety and effectiveness endpoints (“ Baroreflex Activation Therapy Lowers Blood Pressure in Patients with Resistant Hypertension: Results from the Double-Blind, Randomized, Placebo-Controlled Rheos Pivotal Trial ,” by John D.
Barostim ensures patient compliance, unlike most commercially available drug treatments, as it requires no device interaction by the patient. Our device has a battery that does not require recharging, has an average service life of five years and is replaced through a short outpatient procedure.
Barostim ensures patient compliance, unlike most commercially available drug treatments, as it requires no device interaction by the patient. Our device has a battery that does not require recharging, has an average service life of five to six years and is replaced through a short outpatient procedure.
We are registered with the FDA as a medical device manufacturer and licensed by the State of Minnesota to manufacture our device. ​ Seasonality ​ We expect that any revenue we generate could fluctuate from quarter to quarter as a result of timing and seasonality. We anticipate mild seasonality based on national holiday patterns specific to certain nations.
We are registered with the FDA as a medical device manufacturer and licensed by the State of Minnesota to manufacture our device. ​ Seasonality ​ We expect that revenue could fluctuate from quarter to quarter as a result of timing and seasonality. We anticipate mild seasonality based on national holiday patterns specific to certain nations.
There are two lengths of the stimulation lead available to allow for anatomical variations to be used at the physician’s discretion. ​ ​ Ancillary surgical accessories ​ In addition to the IPG and stimulation lead, we provide physicians with single-use surgical tools, including the port plug, torque wrench, implant tool and implant adaptor, all of which were designed to facilitate the implantation of Barostim. ​ Programmer ​ Once implanted, Barostim is managed wirelessly by a programmer that communicates with the IPG.
There are two lengths of the stimulation lead available to allow for anatomical variations to be used at the physician’s discretion. ​ ​ Ancillary surgical accessories ​ In addition to the IPG and stimulation lead, we provide physicians with single-use surgical tools, including the port plug, torque wrench, implant tool and implant adaptor, all of which were designed to facilitate the implantation of Barostim. ​ 13 Table of Contents Programmer ​ Once implanted, Barostim is managed wirelessly by a programmer that communicates with the IPG.
A total of 146 patients (72 in the U.S. and 74 in Germany, Italy, France and Canada) at 45 centers were randomized 1:1 with 76 patients in the BAT+ group and 70 patients in the Control group. ​ Patients were eligible for the study based on symptoms, historical treatment plan and anatomical criteria, including if they were NYHA Class III, received GDMT for their HF, had a LVEF ≤ 35% and were considered a suitable surgical candidate, among others.
A total of 146 patients (72 in the U.S. and 74 in Germany, Italy, France and Canada) at 45 centers were randomized 1:1 with 76 patients in the BAT+ group and 70 patients in the Control group. ​ 21 Table of Contents Patients were eligible for the study based on symptoms, historical treatment plan and anatomical criteria, including if they were NYHA Class III, received GDMT for their HF, had a LVEF ≤ 35% and were considered a suitable surgical candidate, among others.
A person or entity does not need to have actual knowledge of this statute or specific intent to violate it to have committed a violation; • the federal False Claims Act (and similar state laws) prohibiting, among other things, knowingly presenting, or causing to be presented, claims for payment or approval to the federal government that are false or fraudulent, knowingly making a false statement material to an obligation to pay or transmit money or 27 Table of Contents property to the federal government or knowingly concealing, or knowingly and improperly avoiding or decreasing, an obligation to pay or transmit money to the federal government.
A person or entity does not need to have actual knowledge of this statute or specific intent to violate it to have committed a violation; • the federal False Claims Act (and similar state laws) prohibiting, among other things, knowingly presenting, or causing to be presented, claims for payment or approval to the federal government that are false or fraudulent, knowingly making a false statement material to an obligation to pay or transmit money or property to the federal government or knowingly concealing, or knowingly and improperly avoiding or decreasing, an obligation to pay or transmit money to the federal government.
We estimate that our annual market opportunity for HFrEF is $1.4 billion in the U.S. and $1.5 billion in select European Markets (Germany, France, Italy, Spain and the United Kingdom, or “European Five”). ​ HF is one of the most prevalent and devastating cardiovascular diseases.
We estimate that our annual market opportunity for HFrEF is $2.2 billion in the U.S. and $1.5 billion in select European Markets (Germany, France, Italy, Spain and the United Kingdom, or “European Five”). ​ HF is one of the most prevalent and devastating cardiovascular diseases.
In addition, it is possible that we may experience variations in demand for our product in the first fiscal quarter of each year in Europe, following publication of new coverage status and changes in hospital budgets pertaining to allocation of funds to purchase products such as Barostim. 24 Table of Contents Government regulation Our products and operations are subject to extensive regulation by the FDA and other federal and state authorities in the U.S., as well as comparable authorities in the EEA.
In addition, it is possible that we may experience variations in demand for our product in the first fiscal quarter of each year in Europe, following publication of new coverage status and changes in hospital budgets pertaining to allocation of funds to purchase products such as Barostim. ​ Government regulation Our products and operations are subject to extensive regulation by the FDA and other federal and state authorities in the U.S., as well as comparable authorities in the EEA.
HIPAA also requires business associates, such as independent contractors or agents of covered entities that have access to PHI in connection with providing a service to or on behalf of a covered entity, of covered entities to enter into business associate agreements with the covered entity and to safeguard the covered entity’s PHI against improper use and disclosure. ​ The HIPAA privacy regulations cover the use and disclosure of PHI by covered entities as well as business associates, which are defined to include subcontractors that create, receive, maintain, or transmit PHI on behalf of a business associate.
HIPAA also requires business associates, such as independent contractors or agents of covered entities that have access to PHI in connection with providing a service to or on behalf of a covered entity, of covered entities to enter into business associate agreements with the covered entity and to safeguard the covered entity’s PHI against improper use and disclosure. ​ 37 Table of Contents The HIPAA privacy regulations cover the use and disclosure of PHI by covered entities as well as business associates, which are defined to include subcontractors that create, receive, maintain, or transmit PHI on behalf of a business associate.
Failure to comply with the HIPAA privacy and security standards can result in civil monetary penalties up to $63,973 per 34 Table of Contents violation, not to exceed $1.92 million per calendar year for non-compliance of an identical provision and, in certain circumstances, criminal penalties with fines up to $250,000 per violation and/or imprisonment. ​ HIPAA authorizes state attorneys general to file suit on behalf of their residents for violations.
Failure to comply with the HIPAA privacy and security standards can result in civil monetary penalties up to $63,973 per violation, not to exceed $1.92 million per calendar year for non-compliance of an identical provision and, in certain circumstances, criminal penalties with fines up to $250,000 per violation and/or imprisonment. ​ HIPAA authorizes state attorneys general to file suit on behalf of their residents for violations.
A LVEF • Co-morbidities / clinical fit: A patient’s co-morbidities, such as severe chronic obstructive pulmonary disease (COPD), kidney disease or carotid stenosis, as well as a patient’s physical and psychological fit contribute to a physician’s treatment recommendation given the use of general anesthesia in most HF-related device-based treatment options. • QRS complex: The QRS complex is a classification of ventricle depolarization, or the heart’s ability to open once contracted.
A LVEF • Co-morbidities / clinical fit: A patient’s co-morbidities, such as severe chronic obstructive pulmonary disease (COPD), kidney disease or carotid stenosis, as well as a patient’s physical and psychological fit 10 Table of Contents contribute to a physician’s treatment recommendation given the use of general anesthesia in most HF-related device-based treatment options. • QRS complex: The QRS complex is a classification of ventricle depolarization, or the heart’s ability to open once contracted.
The Data Protection Act of 2018, which came into effect on May 25, 2018 and was amended on January 1, 2021, works alongside and supplements the UK GDPR. ​ 35 Table of Contents We are subject to the supervision of local data protection authorities in those jurisdictions where we are established or otherwise subject to applicable law. ​ We depend on third parties in relation to our provision of our services, a number of which process personal data on our behalf.
The Data Protection Act of 2018, which came into effect on May 25, 2018 and was amended on January 1, 2021, works alongside and supplements the UK GDPR. ​ We are subject to the supervision of local data protection authorities in those jurisdictions where we are established or otherwise subject to applicable law. ​ We depend on third parties in relation to our provision of our services, a number of which process personal data on our behalf.
Investment in clinical evidence continues to be one of our core 16 Table of Contents strategies, and we intend to continue to develop and expand upon a significant body of published clinical evidence that supports the safety and effectiveness of Barostim Therapy. ​ Pivotal Phase III Study: BeAT-HF Overview ​ BeAT-HF is a multi-center, prospective, randomized, controlled trial that began in April 2016 to develop scientific evidence for the safety and effectiveness of BAT with Barostim.
Investment in clinical evidence continues to be one of our core strategies, and we intend to continue to develop and expand upon a significant body of published clinical evidence that supports the safety and effectiveness of Barostim Therapy. ​ Pivotal Phase III Study: BeAT-HF Overview ​ BeAT-HF is a multi-center, prospective, randomized, controlled trial that began in April 2016 to develop scientific evidence for the safety and effectiveness of BAT with Barostim.
The MDR repealed and replaced the EU Medical Devices Directive (Council Directive 93/42/EEC — “MDD” or Council Directive 90/385/EEC). ​ Previously, medical devices regulated under the MDD and AIMDD were classified into one of four classes — Class I, Class IIa, Class IIb or Class III — based on the extent of the regulatory controls necessary and sufficient to provide reasonable assurance of safety and effectiveness of the device.
The MDR repealed and replaced the EU Medical Devices Directive (Council Directive 93/42/EEC — “MDD” or Council Directive 90/385/EEC). ​ 32 Table of Contents Previously, medical devices regulated under the MDD and AIMDD were classified into one of four classes — Class I, Class IIa, Class IIb or Class III — based on the extent of the regulatory controls necessary and sufficient to provide reasonable assurance of safety and effectiveness of the device.
Our patents cover aspects of our integrated platform technology, Barostim, including baroreflex methods, stimulus regimes, mapping methods, electrode designs, disease treatments, closed loop control, burst intervals, connection structures and baroreceptor locations, as 23 Table of Contents well as future product concepts. The term of individual patents depends on the law of the countries in which they are granted.
Our patents cover aspects of our integrated platform technology, Barostim, including baroreflex methods, stimulus regimes, mapping methods, electrode designs, disease treatments, closed loop control, burst intervals, connection structures and baroreceptor locations, as well as future product concepts. The term of individual patents depends on the law of the countries in which they are granted.
We believe the following factors offer meaningful benefits for patients, physicians and payors that will continue to drive broad adoption of our therapy: ​ • Addresses significant unmet medical need. Barostim addresses a life-threatening disease for patients who failed to receive adequate benefits from existing treatments and who have no alternative treatment 14 Table of Contents options.
We believe the following factors offer meaningful benefits for patients, physicians and payors that will continue to drive broad adoption of our therapy: ​ • Addresses significant unmet medical need. Barostim addresses a life-threatening disease for patients who failed to receive adequate benefits from existing treatments and who have no alternative treatment options.
Medicare provides reimbursement to hospitals using Barostim under the hospital outpatient prospective system (“HOPPS”), which provides bundled amounts generally intended to reimburse a hospital for all facility costs related to procedures performed in its outpatient setting.
Medicare provides reimbursement to hospitals using Barostim under the hospital outpatient prospective system (“OPPS”), which provides bundled amounts generally intended to reimburse a hospital for all facility costs related to procedures performed in its outpatient setting.
Patients typically recover quickly and are discharged from the hospital within 24 hours of the procedure. ​ Activation/Titration ​ After Barostim is implanted and activated, the patient attends a few follow-up visits with their doctor, during which the device is progressively titrated from a moderate level to a higher amplitude of electrical stimulation.
Patients typically recover quickly and are discharged from the hospital within 24 hours of the procedure. 14 Table of Contents ​ Activation/Titration ​ After Barostim is implanted and activated, the patient attends a few follow-up visits with their doctor, during which the device is progressively titrated from a moderate level to a higher amplitude of electrical stimulation.
We support all aspects of the patient journey, which includes initial diagnosis, surgical support and patient follow-up. We also highlight our compelling clinical benefits and value proposition to build awareness and adoption among physicians through targeted key opinion leader (“KOL”) development, referral network education and direct-to-consumer marketing.
We support all aspects of the patient journey, which includes initial diagnosis, surgical support and patient follow-up. We also highlight our compelling clinical benefits and value 7 Table of Contents proposition to build awareness and adoption among physicians through targeted key opinion leader (“KOL”) development, referral network education and direct-to-consumer marketing.
We will continue to monitor developments in this space, including decisions made by private payors, if any. ​ We will continue to leverage our in-house market access team to obtain appropriate prior authorization approvals in advance of treatment on a case-by-case basis where positive coverage policies currently do not 21 Table of Contents exist.
We will continue to monitor developments in this space, including decisions made by private payors, if any. ​ We will continue to leverage our in-house market access team to obtain appropriate prior authorization approvals in advance of treatment on a case-by-case basis where positive coverage policies currently do not exist.
The image below depicts the relative location and size of Barostim under the patient’s skin: ​ Implantable pulse generator ​ The current IPG contains the electronics and battery in a hermetic enclosure, has an average service life of five to six years and includes a battery that does not require any recharging.
The image below depicts the relative location and size of Barostim under the patient’s skin: ​ 12 Table of Contents Implantable pulse generator ​ The current IPG contains the electronics and battery in a hermetic enclosure, has an average service life of five to six years and includes a battery that does not require any recharging.
In addition, the FCPA imposes accounting standards and requirements on publicly traded U.S. corporations and their foreign affiliates, which are intended to prevent the diversion of corporate funds to the payment of 36 Table of Contents bribes and other improper payments, and to prevent the establishment of “off books” slush funds from which such improper payments can be made.
In addition, the FCPA imposes accounting standards and requirements on publicly traded U.S. corporations and their foreign affiliates, which are intended to prevent the diversion of corporate funds to the payment of bribes and other improper payments, and to prevent the establishment of “off books” slush funds from which such improper payments can be made.
Civil penalties for such conduct can further be 32 Table of Contents assessed under the federal False Claims Act. Violations can also result in criminal penalties, including criminal fines of up to $100,000 and imprisonment of up to 10 years. Similarly, violations can result in exclusion from participation in government healthcare programs, including Medicare and Medicaid.
Civil penalties for such conduct can further be assessed under the federal False Claims Act. Violations can also result in criminal penalties, including criminal fines of up to $100,000 and imprisonment of up to 10 years. Similarly, violations can result in exclusion from participation in government healthcare programs, including Medicare and Medicaid.
Based on the results of our BeAT-HF pivotal trial, Barostim has demonstrated its ability to meaningfully improve the quality of daily life, both physically and emotionally, for patients suffering from HFrEF. ​ 11 Table of Contents Barostim Barostim consists of two implantable components: an IPG and a stimulation lead.
Based on the results of our BeAT-HF pivotal trial, Barostim has demonstrated its ability to meaningfully improve the quality of daily life, both physically and emotionally, for patients suffering from HFrEF. ​ Barostim Barostim consists of two implantable components: an IPG and a stimulation lead.
In left-sided or left-ventricular HF, the left side of the heart must work much harder to pump the same amount of blood it would under healthy conditions. ​ There are two types of left-sided HF, HFrEF, or systolic heart failure, and HF with preserved Ejection Fraction (“HFpEF”), or diastolic heart failure.
In left-sided or left-ventricular HF, the left side of the heart must work much harder to pump the same amount of blood it would under healthy conditions. ​ 9 Table of Contents There are two types of left-sided HF, HFrEF, or systolic heart failure, and HF with preserved Ejection Fraction (“HFpEF”), or diastolic heart failure.
A significant risk device is one that presents a potential for serious risk to the health, safety or welfare of a subject and either is implanted, used in supporting or sustaining human life, substantially important in diagnosing, curing, mitigating or treating disease or otherwise preventing 26 Table of Contents impairment of human health, or otherwise presents a potential for serious risk to a subject.
A significant risk device is one that presents a potential for serious risk to the health, safety or welfare of a subject and either is implanted, used in supporting or sustaining human life, substantially important in diagnosing, curing, mitigating or treating disease or otherwise preventing impairment of human health, or otherwise presents a potential for serious risk to a subject.
See “Risk Factors—Risks Related to Intellectual Property” for additional information regarding these and other risks related to our intellectual property portfolio and their potential effect on us. ​ Manufacturing and supply We manage all aspects of manufacturing operations and product supply of Barostim, which include final assembly, testing and packaging of our IPG and stimulation lead, at our 23,890 square foot headquarters in Minneapolis, Minnesota.
See “Risk Factors—Risks Related to Intellectual Property” for additional information regarding these and other risks related to our intellectual property portfolio and their potential effect on us. ​ Manufacturing and supply We manage all aspects of manufacturing operations and product supply of Barostim, which include final assembly, testing and packaging of our IPG and stimulation lead, at our 31,505 square foot headquarters in Minneapolis, Minnesota.
In particular, in order to process such data, explicit consent to the processing (including any transfer) is usually required from the data subject (being the person to whom the personal data relates). ​ The EU-wide General Data Protection Regulation (“GDPR”) became applicable on May 25, 2018, replacing the previous data protection laws issued by each EU Member State based on the Directive 95/46/EC.
In particular, in order to process such data, explicit consent to the processing (including any transfer) is usually required from the data subject (being the person to whom the personal data relates). ​ 38 Table of Contents The EU-wide General Data Protection Regulation (“GDPR”) became applicable on May 25, 2018, replacing the previous data protection laws issued by each EU Member State based on the Directive 95/46/EC.
Patients who do not respond to LVADs usually have no other treatment options and become candidates for heart transplants. ​ Despite currently available pharmaceutical and device-based treatments, HF remains underpenetrated and imposes significant direct and indirect costs on the healthcare system through patient care, morbidity, unpaid care costs, premature mortality and lost productivity.
Patients who do not respond to LVADs usually have no other treatment options and become candidates for heart transplants. ​ 11 Table of Contents Despite currently available pharmaceutical and device-based treatments, HF remains underpenetrated and imposes significant direct and indirect costs on the healthcare system through patient care, morbidity, unpaid care costs, premature mortality and lost productivity.
We are continuing to actively expand our direct sales force and commercial organization in the U.S. ​ Our direct sales representatives, which we refer to as Account Managers, generally have substantial and applicable medical device experience, specifically in the cardiovascular space, and market our products directly to the approximately 2,500 EPs, 800 HF specialists, and 20,000 general cardiologists in the U.S.
We are continuing to actively expand our direct sales force and commercial organization in the U.S. ​ 23 Table of Contents Our direct sales representatives, which we refer to as Account Managers, generally have substantial and applicable medical device experience, specifically in the cardiovascular space, and market our products directly to the approximately 2,500 EPs, 800 HF specialists and 20,000 general cardiologists in the U.S.
Our BeAT-HF pivotal trial, which was a multi-center, prospective, randomized, controlled trial, met the primary safety and effectiveness endpoints and 6 Table of Contents demonstrated meaningful improvement in the quality of life, both physically and emotionally, for patients suffering from HFrEF.
Our BeAT-HF pivotal trial, which was a multi-center, prospective, randomized, controlled trial, met the primary safety and effectiveness endpoints and demonstrated meaningful improvement in the quality of life, both physically and emotionally, for patients suffering from HFrEF.
Barostim Therapy’s trial results have been published in more than 60 peer-reviewed publications, approximately 20 of which relate to the treatment of HF, including, among others, the Journal of the American College of Cardiology. • Minimally invasive implant procedure.
Barostim Therapy’s trial results have been published in more than 60 peer-reviewed publications, approximately 20 of which relate to the treatment of HF, including, among others, the Journal of the American College of Cardiology. 6 Table of Contents • Minimally invasive implant procedure.
Class II devices are subject to the FDA’s General Controls, and special controls as deemed necessary by the FDA to ensure the safety and effectiveness of the device. These special controls can include performance standards, post-market surveillance, patient registries and FDA guidance documents.
Class II devices are subject to the FDA’s General Controls, and special controls as deemed necessary by the FDA to ensure the safety and effectiveness of the device. These special controls 28 Table of Contents can include performance standards, post-market surveillance, patient registries and FDA guidance documents.
Additional safe harbor provisions providing similar protections have been published intermittently since 1991. Although there are a number of statutory exceptions and regulatory safe harbors protecting some common activities from prosecution, the exceptions and safe harbors are drawn narrowly.
Additional safe harbor provisions providing similar protections have been published intermittently 35 Table of Contents since 1991. Although there are a number of statutory exceptions and regulatory safe harbors protecting some common activities from prosecution, the exceptions and safe harbors are drawn narrowly.
Additionally, after a trial begins, we, 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. ​ Post-market regulation After a device is cleared or approved for marketing, numerous regulatory requirements continue to apply.
Additionally, after a trial begins, we, 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. ​ 30 Table of Contents Post-market regulation After a device is cleared or approved for marketing, numerous regulatory requirements continue to apply.
The objective of this outreach is to inform potential patients about our education webinars and website, where they can find a wealth of information on HFrEF and the purpose and benefits of Barostim Therapy, based on our approved labeling. ​ In addition to driving broad awareness and increasing physician and patient education, our marketing team has developed the in-house resources necessary to obtain prior authorization approval for Barostim procedures and expand reimbursement coverage. ​ 20 Table of Contents Third-party coverage and reimbursement Coding and payment in the United States In the U.S., we sell Barostim primarily to hospitals, where the device is implanted in an outpatient setting.
The objective of this outreach is to inform potential patients about our education webinars and website, where they can find a wealth of information on HFrEF and the purpose and benefits of Barostim Therapy, based on our approved labeling. ​ In addition to driving broad awareness and increasing physician and patient education, our marketing team has developed the in-house resources necessary to obtain prior authorization approval for Barostim procedures and expand reimbursement coverage. ​ Third-party coverage and reimbursement Coding and payment in the United States In the U.S., we sell Barostim primarily to hospitals, where the device is implanted in outpatient and inpatient settings.
When the body perceives a threat in the environment, the sympathetic system reacts by increasing the heart rate, widening the airways to allow for easier breathing, releasing stored energy, increasing strength in the muscles and slowing digestion and other bodily processes that are not as critical for taking action.
When the body perceives a threat in the environment, the sympathetic system reacts by increasing 8 Table of Contents the heart rate, widening the airways to allow for easier breathing, releasing stored energy, increasing strength in the muscles and slowing digestion and other bodily processes that are not as critical for taking action.
Manufacturers must guarantee that their medical device continues to provide the promised benefit to 31 Table of Contents patients as well as the lack of any unacceptable risks, through a constant and systematic approach to post-market surveillance.
Manufacturers must guarantee that their medical device continues to provide the promised benefit to patients as well as the lack of any unacceptable risks, through a constant and systematic approach to post-market surveillance.
For example, the advertising and promotion of our products is 33 Table of Contents subject to EU Directives concerning misleading and comparative advertising and unfair commercial practices, as well as other EEA member state legislation governing the advertising and promotion of medical devices.
For example, the advertising and promotion of our products is subject to EU Directives concerning misleading and comparative advertising and unfair commercial practices, as well as other EEA member state legislation governing the advertising and promotion of medical devices.
The principal purposes of our equity incentive plans are to attract, retain and motivate selected employees, consultants and directors through the granting of stock-based compensation awards. ​ As of December 31, 2022, we had approximately 160 employees worldwide, all of which were employed on a full-time basis.
The principal purposes of our equity incentive plans are to attract, retain and motivate selected employees, consultants and directors through the granting of stock-based compensation awards. ​ As of December 31, 2023, we had approximately 200 employees worldwide, all of which were employed on a full-time basis.
Barostim addresses a life-threatening disease for patients who failed to receive adequate benefits from existing treatments and who have no alternative treatment options. Based on this, the FDA granted Barostim a Breakthrough Device designation for HFrEF in June 2015. • Safe and effective treatment.
Barostim addresses a life-threatening disease for patients who failed to receive adequate benefits from existing treatments and who have no alternative treatment options. Based on this, the FDA granted Barostim a Breakthrough Device designation for HFrEF in June 2015. 5 Table of Contents • Safe and effective treatment.
In 2017, the Tax Cuts and Jobs Acts was enacted, which, among other things, removed penalties for not complying with the individual mandate to carry health insurance, effective in 2019. ​ In addition, other legislative changes have been adopted since the Affordable Care Act.
In 2017, the Tax Cuts and Jobs Acts was enacted, which, among other things, removed penalties for not complying with the individual mandate to carry health insurance, effective in 2019. 39 Table of Contents ​ In addition, other legislative changes have been adopted since the Affordable Care Act.
These devices can be combined with an ICD, which are referred to as CRT-D. ​ 10 Table of Contents Cardiac Contractility Modulation (“CCM”) ​ CCM is eligible for patients with NYHA Class III, LVEF 25%–45%, narrow QRS and normal sinus rhythm.
These devices can be combined with an ICD, which are referred to as CRT-D. ​ Cardiac Contractility Modulation (“CCM”) ​ CCM is eligible for patients with NYHA Class III, LVEF 25%–45%, narrow QRS and normal sinus rhythm.
Nominal dimensions for the current IPG are listed in the figure below: ​ ​ 12 Table of Contents Stimulation lead ​ The stimulation lead is attached via six suture points to the exterior wall of the carotid artery and is connected to the current IPG.
Nominal dimensions for the current IPG are listed in the figure below: ​ ​ Stimulation lead ​ The stimulation lead is attached via six suture points to the exterior wall of the carotid artery and is connected to the current IPG.
Our BeAT-HF pivotal trial met the primary safety and effectiveness endpoints and demonstrated meaningful improvement in the quality of life, both physically and emotionally, for patients suffering from HFrEF.
The pre-market phase of our BeAT-HF pivotal trial met the primary safety and effectiveness endpoints and demonstrated meaningful improvement in the quality of life, both physically and emotionally, for patients suffering from HFrEF.
In addition to providing improved physical and health-related benefits and quality of life for patients, we estimate Barostim has the potential to 15 Table of Contents result in cost savings to healthcare systems.
In addition to providing improved physical and health-related benefits and quality of life for patients, we estimate Barostim has the potential to result in cost savings to healthcare systems.
We continue to seek to broaden and strengthen our supply chain through additional sourcing channels. ​ We select our suppliers to ensure that Barostim and its components are safe and effective, adhere to all applicable standards and regulations, are high quality and meet our supply needs.
We continue to seek to broaden and strengthen our supply chain through additional sourcing channels. 27 Table of Contents ​ We select our suppliers to ensure that Barostim and its components are safe and effective, adhere to all applicable standards and regulations, are high quality and meet our supply needs.
The PMA process is more demanding than the 510(k) premarket notification process. In a PMA, the manufacturer must demonstrate that the device is safe and effective, and the PMA must be supported by extensive data, 25 Table of Contents including data from preclinical studies and human clinical trials.
The PMA process is more demanding than the 510(k) premarket notification process. In a PMA, the manufacturer must demonstrate that the device is safe and effective, and the PMA must be supported by extensive data, including data from preclinical studies and human clinical trials.
Our accumulated deficit as of December 31, 2022 and 2021, was $436.2 million and $394.8 million, respectively. ​ Our market and industry Overview of HF It is estimated that HF currently affects approximately 26 million people globally, including approximately 6.2 million people in the U.S. and approximately 8.6 million people in the European Five.
Our accumulated deficit as of December 31, 2023 and 2022, was $477.4 million and $436.2 million, respectively. ​ Our market and industry Overview of HF It is estimated that HF currently affects approximately 26 million people globally, including approximately 6.2 million people in the U.S. and approximately 8.6 million people in the European Five.
If clinical studies for additional indications do not produce results necessary to support regulatory clearance or approval in the U.S. or elsewhere, we will be unable to commercialize our products for these indications. ​ For the years ended December 31, 2022 and 2021, we incurred research and development expenses of $10.0 million and $7.5 million, respectively. ​ 22 Table of Contents Competition Our industry is subject to rapid change from the introduction of new products and technologies and other activities of industry participants.
If clinical studies for additional indications do not produce results necessary to support regulatory clearance or approval in the U.S. or elsewhere, we will be unable to commercialize our products for these indications. ​ For the years ended December 31, 2023 and 2022, we incurred research and development expenses of $11.6 million and $10.0 million, respectively. ​ Competition Our industry is subject to rapid change from the introduction of new products and technologies and other activities of industry participants.
As of July 2020, all MACs have retired automatic coverage denial policies, thereby allowing hospitals to be paid for our procedure. CMS has committed to considering additional process improvements to increase access to innovative devices.
As of July 2020, all Medicare Administrative Contractors (“MACs”) have retired automatic coverage denial policies, thereby allowing hospitals to be paid for our procedure. CMS has committed to considering additional process improvements to increase access to innovative devices.
We have also established a U.S. patient registry to evaluate and assess real world outcomes from HFrEF patients who have been implanted with Barostim. ​ We primarily sell Barostim to hospitals through a direct sales organization in the U.S. and Germany and through distributors in Austria, Spain, Italy, the Nordic region and other European countries.
We are continuing to collect data through the U.S. patient registry that we have established in order to evaluate and assess real world outcomes from HFrEF patients who have been implanted with Barostim. ​ We primarily sell Barostim to hospitals through a direct sales organization in the U.S. and Germany and through distributors in Austria, Spain, Italy, the Nordic region and other European countries.
Eleven patients met the eligibility criteria and received Barostim. 18 Table of Contents After six months of Barostim Therapy, the mechanism of action was assessed with serial measurement of muscle sympathetic nerve activity (“MSNA”) and clinical measures of quality of life and functional capacity. ​ Results ​ MSNA was reduced over six months from 45 ± 7.7 to 31 ± 8.3 bursts/minute and from 68 ± 13 to 45 ± 12 bursts/​100 heartbeats, decreases of 31% and 33%, respectively (p ≤ 0.05 each).
After six months of Barostim Therapy, the mechanism of action was assessed with serial measurement of muscle sympathetic nerve activity (“MSNA”) and clinical measures of quality of life and functional capacity. ​ Results ​ MSNA was reduced over six months from 45 ± 7.7 to 31 ± 8.3 bursts/minute and from 68 ± 13 to 45 ± 12 bursts/​100 heartbeats, decreases of 31% and 33%, respectively (p ≤ 0.05 each).
If clinical studies for future indications do not produce results necessary to support regulatory clearance or approval in the U.S. or elsewhere, we will be unable to commercialize our products for these indications. ​ We generated revenue of $22.5 million, a gross margin of 78% and a net loss of $41.4 million for the year ended December 31, 2022, compared to revenue of $13.0 million, a gross margin of 72% and a net loss of $43.1 million for the year ended December 31, 2021.
If clinical studies for future indications do not produce results necessary to support regulatory clearance or approval in the U.S. or elsewhere, we will be unable to commercialize our products for these indications. ​ We generated revenue of $39.3 million, a gross margin of 84% and a net loss of $41.2 million for the year ended December 31, 2023, compared to revenue of $22.5 million, a gross margin of 78% and a net loss of $41.4 million for the year ended December 31, 2022.
These certificates entitle the manufacturer to draw up the EU declaration of conformity and affix the CE Mark to the labeling of its medical devices and place the medical device on the EEA market. ​ 30 Table of Contents CE marking in UK and UK Conformity Assessed marking Since January 1, 2021, the UK (excluding Northern Ireland) has recognized medical devices with an EEA-issued CE Mark, and will continue to do so until June 30, 2023.
These certificates entitle the manufacturer to draw up the EU declaration of conformity and affix the CE Mark to the labeling of its medical devices and place the medical device on the EEA market. ​ CE marking in UK and UK Conformity Assessed marking Since January 1, 2021, the UK (excluding Northern Ireland) has recognized medical devices with an EEA-issued CE Mark, and has since indicated it will continue to do so until December 31, 2027.
In our discussions with commercial payors, we highlight our compelling and robust clinical data, the potential economic cost-savings associated with our highly compliant treatment, increased patient demand and support from leading medical societies and KOLs.
In our discussions with commercial payors, we highlight our compelling and robust clinical data, including the long-term post-market BeAT-HF data, the potential economic cost-savings associated with our highly compliant treatment, increased patient demand and support from leading medical societies and KOLs.
The programmer can be used to assist in verifying the desired location of the stimulation electrode during the implant procedure and allows physicians to input their patient’s therapy parameters and retrieve information on the status of the IPG, including the remaining battery life, without touching the IPG or the patient. ​ ​ 13 Table of Contents Treating patients with Barostim Patient selection ​ Barostim is indicated for the improvement of symptoms of HFrEF — quality of life, 6MHW and functional status — for patients who remain symptomatic despite treatment with GDMT, are NYHA Class III or II (who had a recent history of Class III), have a left ventricular ejection fraction ≤ 35%, a NT-proBNP ​ Once a patient is diagnosed with HFrEF and recommended for an ICD and/or CRT, interventional or general cardiologists will often refer them to EPs, who often conduct a series of diagnostic tests, including an electrocardiogram, ultrasound and various blood tests, from which they will determine the patient’s eligibility for our therapy.
The programmer can be used to assist in verifying the desired location of the stimulation electrode during the implant procedure and allows physicians to input their patient’s therapy parameters and retrieve information on the status of the IPG, including the remaining battery life, without touching the IPG or the patient. ​ ​ Treating patients with Barostim Patient selection ​ Barostim is indicated for patients who are NYHA Class III or II (who had a recent history of Class III) despite treatment with guideline-directed medical therapies (medications and devices), have a LVEF ≤ 35% and a NT-proBNP ​ Once a patient is diagnosed with HFrEF and recommended for an ICD and/or CRT, interventional or general cardiologists will often refer them to EPs, who often conduct a series of diagnostic tests, including an electrocardiogram, ultrasound and various blood tests, from which they will determine the patient’s eligibility for our therapy.
Between May 2016 and July 2020, 467 adult patients were randomized at 72 sites within the U.S. and one site in the United Kingdom. ​ The BeAT-HF study was designed to encompass two stages in an integrated and seamless approach: ​ (1) A pre-market stage that examined three primary effectiveness endpoints (quality of life, 6MHW and NT-proBNP), as well as one safety endpoint that included the major adverse neurological or cardiovascular system or procedure-related event rate (“MANCE”). ​ (2) A post-market stage to examine the effects of BAT on rates of HF hospitalization and cardiovascular mortality and potentially expand the indication for Barostim. ​ Patients were eligible for the trial if they were NYHA Class III or Class II (with a recent history of Class III); had an LVEF ≤ 35% and NT-proBNP ≥ 4 weeks; had at least one carotid artery that was below the level of the mandible with no ulcerative carotid arterial plaques or stenosis ≥ 50%; and were an acceptable surgical candidate. ​ Patients who had AHA/ACC/ESC Class I indication for a CRT were excluded, and there were no restrictions for atrial fibrillation or atrial flutter. ​ Trial results ​ The safety and effectiveness data in the BeAT-HF pivotal trial support the HFrEF clinical benefits of Barostim.
Between May 2016 and July 2020, 467 adult patients were randomized at 72 sites within the U.S. and one site in the United Kingdom. ​ The BeAT-HF study was designed to encompass two stages in an integrated and seamless approach: ​ (1) A pre-market stage that examined three primary effectiveness endpoints (quality of life, 6MHW and NT-proBNP), as well as one safety endpoint that included the major adverse neurological or cardiovascular system or procedure-related event rate (“MANCE”). ​ (2) A post-market stage that examined the effects of BAT on rates of HF hospitalization and cardiovascular mortality, as well as sustained safety and symptomatic improvements, which expanded the labeling for Barostim. ​ Patients were eligible for the trial if they were NYHA Class III or Class II (with a recent history of Class III); had an LVEF ≤ 35% and NT-proBNP ≥ 4 weeks; had at least one carotid artery that was below the level of the mandible with no ulcerative carotid arterial plaques or stenosis ≥ 50%; and were an acceptable surgical candidate. ​ Patients who had a Class I indication for a CRT according to the American Heart Association/American College of Cardiology/European Society of Cardiology guidelines were excluded, and there were no restrictions for atrial fibrillation or atrial flutter. ​ In summary, the primary safety endpoint in the pre-market phase was previously met and confirmed in the post-market phase.
HFrEF patients are typically classified as NYHA Class II (moderate) or Class III (severe). • Level of N-terminal prohormone B-type natriuretic peptide (“NT-proBNP”): NT-proBNP, a non-active prohormone in the heart, is released due to pressure changes inside the heart.
On average, patients who progress to a NYHA Class III either worsen to Class IV or die after 3.3 years. HFrEF patients are typically classified as NYHA Class II (moderate) or Class III (severe). • Level of N-terminal prohormone B-type natriuretic peptide (“NT-proBNP”): NT-proBNP, a non-active prohormone in the heart, is released due to pressure changes inside the heart.
These results are shared with relevant regulatory agencies as required and presented to our management team. 37 Table of Contents Available Information We make our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act, available free of charge at our website as soon as reasonably practicable after they have been filed with, or furnished to, the U.S.
Available Information We make our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act, available free of charge at our website as soon as reasonably practicable after they have been filed with, or furnished to, the U.S.
As of December 31, 2022, we owned 50 issued U.S. patents and had 15 pending U.S. patent applications. Outside of the U.S., we owned seven patents in multiple countries and had one pending application. Our trademark portfolio focuses on nine trademarks in the U.S. and multiple other countries.
As of December 31, 2023, we owned 48 issued U.S. patents and had 12 pending U.S. patent applications. Outside of the U.S., we owned seven patents in multiple countries and had 14 pending applications. Our trademark portfolio focuses on nine trademarks in the U.S. and multiple other countries.
Health and safety We are acutely focused on the health and safety of our employees in the workplace. Our health and safety team monitors various metrics in an effort to ensure we are providing a safe environment to work.
Health and safety We are acutely focused on the health and safety of our employees in the workplace. Our health and safety team monitors various metrics in an effort to ensure we are providing a safe environment to work. These results are shared with relevant regulatory agencies as required and presented to our management team.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeOther disruptions or potential disruptions include restrictions on the ability of our sales representatives and other personnel to travel and access customers for training and case support; inability of our suppliers to manufacture components and parts and to deliver these to us on a timely basis, or at all; disruptions in our production schedule and ability to manufacture and assemble products; inventory shortages or obsolescence; delays in actions of regulatory bodies; and delays in clinical trials and studies, especially if study subjects are reluctant to present themselves at medical facilities.
Biggest changeOther disruptions or potential disruptions include restrictions on the ability of our sales representatives and other personnel to travel and access customers for training and case support; the ability of hospitals and surgical centers to staff and conduct procedures; inability of our suppliers to manufacture components and parts and to deliver these to us on a timely basis, or at all; disruptions in our production schedule and ability to manufacture and assemble products; inventory shortages or obsolescence; delays in actions of regulatory bodies; and delays in clinical trials and studies, especially if study subjects are reluctant to present themselves at medical facilities. ​ While the potential economic impact brought by and the duration of any pandemic, epidemic or outbreak of an infectious disease may be difficult to assess or predict, it may result in significant disruption of global financial markets, reducing our ability to access capital, which could in the future negatively affect our liquidity.
We cannot predict if investors will find our common stock less attractive because we will rely on these exemptions. If some investors find our common stock less attractive as a result, there may be a less active trading market for our common stock and our stock price may decline or be more volatile.
We cannot predict if investors will find our common stock less attractive because we rely on these exemptions. If some investors find our common stock less attractive as a result, there may be a less active trading market for our common stock and our stock price may decline or be more volatile.
These include the following provisions that: ​ • permit our Board of Directors to issue shares of preferred stock, with any rights, preferences and privileges as they may designate, without stockholder approval, which could be used to dilute the ownership of a hostile bidder significantly; • provide that the authorized number of directors may be changed only by resolution of our Board of Directors and that a director may only be removed with cause by the affirmative vote of the holders of at least a majority of our outstanding voting stock, voting together as a single class; • provide that all vacancies, including newly created directorships, may, except as otherwise required by law, be filled by the affirmative vote of a majority of directors then in office, even if less than a quorum; • provide that our amended and restated bylaws may only be altered, amended or repealed by our stockholders upon the affirmative vote of a two-thirds majority of the voting power of all of our outstanding voting stock, voting together as a single class; • provide that stockholders seeking to present proposals before a meeting of stockholders or to nominate candidates for election as directors at a meeting of stockholders must provide notice in writing in a timely manner and also specify requirements as to the form and content of a stockholder’s notice, which may discourage or deter a potential acquiror from conducting a solicitation of proxies to elect the acquiror’s own slate of directors or otherwise attempting to obtain control of our company; 67 Table of Contents • prohibit cumulative voting in the election of directors, which limits the ability of minority stockholders to elect director candidates; and • provide that special meetings of our stockholders may be called only by the Chairman of the board, the Chief Executive Officer, or a majority of the Board of Directors then in office, which may delay the ability of our stockholders to force consideration by our company of a take-over proposal or to take certain corporate actions, including the removal of directors.
These include the following provisions that: ​ • permit our Board of Directors to issue shares of preferred stock, with any rights, preferences and privileges as they may designate, without stockholder approval, which could be used to dilute the ownership of a hostile bidder significantly; • provide that the authorized number of directors may be changed only by resolution of our Board of Directors and that a director may only be removed with cause by the affirmative vote of the holders of at least a majority of our outstanding voting stock, voting together as a single class; • provide that all vacancies, including newly created directorships, may, except as otherwise required by law, be filled by the affirmative vote of a majority of directors then in office, even if less than a quorum; • provide that our amended and restated bylaws may only be altered, amended or repealed by our stockholders upon the affirmative vote of a two-thirds majority of the voting power of all of our outstanding voting stock, voting together as a single class; • provide that stockholders seeking to present proposals before a meeting of stockholders or to nominate candidates for election as directors at a meeting of stockholders must provide notice in writing in a timely manner and also specify requirements as to the form and content of a stockholder’s notice, which may discourage or deter a potential acquiror from conducting a solicitation of proxies to elect the 70 Table of Contents acquiror’s own slate of directors or otherwise attempting to obtain control of our company; • prohibit cumulative voting in the election of directors, which limits the ability of minority stockholders to elect director candidates; and • provide that special meetings of our stockholders may be called only by the Chairman of the board, the Chief Executive Officer, or a majority of the Board of Directors then in office, which may delay the ability of our stockholders to force consideration by our company of a take-over proposal or to take certain corporate actions, including the removal of directors.
A person or entity does not need to have actual knowledge of this statute or specific intent to violate it; • federal civil and criminal false claims laws and civil monetary penalty laws, including civil whistleblower or qui tam actions, that prohibit, among other things, knowingly presenting, or causing to be presented, claims for payment or approval to the federal government that are false or fraudulent, knowingly making a false statement material to an obligation to pay or transmit money or property to the federal government or knowingly concealing or knowingly and improperly avoiding or decreasing an obligation to pay or transmit money or property to the federal government; • the federal Civil Monetary Penalties Law, which prohibits, among other things, offering or transferring remuneration to a federal healthcare beneficiary that a person knows or should know is likely to influence 61 Table of Contents the beneficiary’s decision to order or receive items or services reimbursable by the government from a particular provider or supplier; • the federal HIPAA, which created federal criminal laws that prohibit executing a scheme to defraud any healthcare benefit program or making false statements relating to healthcare matters.
A person or entity does not need to have actual knowledge of this statute or specific intent to violate it; • federal civil and criminal false claims laws and civil monetary penalty laws, including civil whistleblower or qui tam actions, that prohibit, among other things, knowingly presenting, or causing to be presented, claims for payment or approval to the federal government that are false or fraudulent, knowingly making a false statement material to an obligation to pay or transmit money or property to the federal government or knowingly concealing or knowingly and improperly avoiding or decreasing an obligation to pay or transmit money or property to the federal government; 64 Table of Contents • the federal Civil Monetary Penalties Law, which prohibits, among other things, offering or transferring remuneration to a federal healthcare beneficiary that a person knows or should know is likely to influence the beneficiary’s decision to order or receive items or services reimbursable by the government from a particular provider or supplier; • the federal HIPAA, which created federal criminal laws that prohibit executing a scheme to defraud any healthcare benefit program or making false statements relating to healthcare matters.
Similar to the Anti-Kickback Statute, a person or entity does not need to have actual knowledge of these statutes or specific intent to violate them; • HIPAA, as amended by HITECH, and their respective implementing regulations, which impose requirements on certain covered healthcare providers, health plans and healthcare clearinghouses as well as their business associates that perform services for them that involve individually identifiable health information, relating to the privacy, security and transmission of individually identifiable health information without appropriate authorization, including mandatory contractual terms as well as directly applicable privacy and security standards and requirements; • the federal physician payments sunshine requirements under the Affordable Care Act, which require certain manufacturers of drugs, devices, biologics and medical supplies to report annually to HHS information related to payments and other transfers of value to certain healthcare providers and teaching hospitals; • state and foreign law equivalents of each of the above federal laws, such as state anti-kickback and false claims laws that may apply to items or services reimbursed by any third-party payor, including commercial insurers; state laws that require device companies to comply with the industry’s voluntary compliance guidelines and the relevant compliance guidance promulgated by the federal government, or otherwise restrict payments that may be made to healthcare providers and other potential referral sources; state laws that require device manufacturers to report information related to payments and other transfers of value to physicians and other healthcare providers or marketing expenditures; 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.
Similar to the Anti-Kickback Statute, a person or entity does not need to have actual knowledge of these statutes or specific intent to violate them; • HIPAA, as amended by HITECH, and their respective implementing regulations, which impose requirements on certain covered healthcare providers, health plans and healthcare clearinghouses as well as their business associates that perform services for them that involve individually identifiable health information, relating to the privacy, security and transmission of individually identifiable health information without appropriate authorization, including mandatory contractual terms as well as directly applicable privacy and security standards and requirements; • the federal physician payments sunshine requirements under the Affordable Care Act, which require certain manufacturers of drugs, devices, biologics and medical supplies to report annually to HHS information related to payments and other transfers of value to certain healthcare providers and teaching hospitals; • state and foreign law analogs of each of the above federal laws, such as state anti-kickback and false claims laws that may apply to items or services reimbursed by any third-party payor, including commercial insurers; state laws that require device companies to comply with the industry’s voluntary compliance guidelines and the relevant compliance guidance promulgated by the federal government, or otherwise restrict payments that may be made to healthcare providers and other potential referral sources; state laws that require device manufacturers to report information related to payments and other transfers of value to physicians and other healthcare providers or marketing expenditures; and state and foreign laws governing the privacy and security of personal and health information in certain circumstances, many of which differ from each other in significant ways and often are not preempted by HIPAA.
In addition, we face a particular challenge overcoming the long-standing practices by some physicians of using the products of our larger, more established competitors. Physicians who have completed many successful implants using the products made by these competitors may be reluctant to try new products from a source with which they are less familiar.
In addition, we face a particular challenge overcoming the long-standing practices by some physicians of using the products of our larger, more established potential competitors. Physicians who have completed many successful implants using the products made by these competitors may be reluctant to try new products from a source with which they are less familiar.
To comply with the requirements of being a public company, we are undertaking and expect to continue to undertake various actions, including implementing new internal controls and procedures and hiring new accounting or internal audit staff. The Sarbanes-Oxley Act requires that we maintain effective disclosure controls and procedures and internal control over financial reporting.
To comply with the requirements of being a public company, we are undertaking and expect to continue to undertake various actions, including implementing and maintaining new internal controls and procedures and hiring new accounting or internal audit staff. The Sarbanes-Oxley Act requires that we maintain effective disclosure controls and procedures and internal control over financial reporting.
These risks include, among others: ​ • difficulties in enforcing our intellectual property rights and in defending against third-party threats and intellectual property enforcement actions against us, our distributors, or any of our third-party suppliers; • reduced or varied protection for intellectual property rights in some countries; • potential pricing pressure; • a shortage of high-quality sales representatives and distributors; • competitive disadvantage to competition with established business and customer relationships; • foreign currency exchange rate fluctuations; • the imposition of additional U.S. and foreign governmental controls or regulations; • economic instability; • changes in duties and tariffs, license obligations and other non-tariff barriers to trade; • the imposition of restrictions on the activities of foreign agents, representatives and distributors; • scrutiny of U.S. and foreign tax authorities, which could result in significant fines, penalties and additional taxes being imposed on us; • laws and business practices favoring local companies; • longer payment cycles; • difficulties in maintaining consistency with our internal guidelines; • difficulties in enforcing agreements and collecting receivables through certain foreign legal systems; • the imposition of costly and lengthy new export licensing requirements; • the imposition of U.S. or international sanctions against a country, company, person or entity; and • the imposition of new trade restrictions.
These risks include, among others: ​ • difficulties in enforcing our intellectual property rights and in defending against third-party threats and intellectual property enforcement actions against us, our distributors, or any of our third-party suppliers; • reduced or varied protection for intellectual property rights in some countries; • potential pricing pressure; 46 Table of Contents • a shortage of high-quality sales representatives and distributors; • competitive disadvantage to competition with established business and customer relationships; • foreign currency exchange rate fluctuations; • the imposition of additional U.S. and foreign governmental controls or regulations; • economic instability; • changes in duties and tariffs, license obligations and other non-tariff barriers to trade; • the imposition of restrictions on the activities of foreign agents, representatives and distributors; • scrutiny of U.S. and foreign tax authorities, which could result in significant fines, penalties and additional taxes being imposed on us; • laws and business practices favoring local companies; • longer payment cycles; • difficulties in maintaining consistency with our internal guidelines; • difficulties in enforcing agreements and collecting receivables through certain foreign legal systems; • the imposition of costly and lengthy new export licensing requirements; • the imposition of U.S. or international sanctions against a country, company, person or entity; and • the imposition of new trade restrictions.
We have devoted substantially all of our financial resources to research and development activities as well as general and administrative expenses associated with our operations, including clinical and regulatory initiatives to obtain marketing approval. Since our IPO, we have invested substantially in sales and marketing efforts to support commercialization of Barostim.
We had devoted substantially all of our financial resources to research and development activities as well as general and administrative expenses associated with our operations, including clinical and regulatory initiatives to obtain marketing approval. Since our IPO, we have invested substantially in sales and marketing efforts to support commercialization of Barostim.
In addition, there could be public announcements of the results of hearings, motions 50 Table of Contents or other interim proceedings or developments, and if securities analysts or investors perceive these results to be negative, it could have a material adverse effect on the price of our common stock. ​ Finally, any uncertainties resulting from the initiation and continuation of any litigation could have a material adverse effect on our ability to raise the funds necessary to continue our operations. ​ If any of the foregoing occurs, we may have to withdraw existing products from the market or may be unable to commercialize one or more of our products, all of which could have a material adverse effect on our business, results of operations and financial condition.
In addition, there could be public announcements of the results of hearings, motions or other interim proceedings or developments, and if securities analysts or investors perceive these results to be negative, it could have a material adverse effect on the price of our common stock. ​ 53 Table of Contents Finally, any uncertainties resulting from the initiation and continuation of any litigation could have a material adverse effect on our ability to raise the funds necessary to continue our operations. ​ If any of the foregoing occurs, we may have to withdraw existing products from the market or may be unable to commercialize one or more of our products, all of which could have a material adverse effect on our business, results of operations and financial condition.
Failing to continue to comply with applicable foreign regulatory requirements, including those administered by authorities of the EEA countries, could result in enforcement actions against us, including refusal, suspension or withdrawal of our CE Certificates of Conformity by our Notified Body (the National Standards Authority of Ireland, or NSAI), which could impair our ability to market products in the EEA in the future. ​ 58 Table of Contents Our business is subject to extensive governmental regulation that could make it more expensive and time consuming for us to market Barostim in the U.S. and introduce new or improved products.
Failing to continue to comply with applicable foreign regulatory requirements, including those administered by authorities of the EEA countries, could result in enforcement actions against us, including refusal, suspension or withdrawal of our CE Certificates of Conformity by our Notified Body (the National Standards Authority of Ireland, or NSAI), which could impair our ability to market products in the EEA in the future. 61 Table of Contents Our business is subject to extensive governmental regulation that could make it more expensive and time consuming for us to market Barostim in the U.S. and introduce new or improved products.
Many of the companies developing or marketing competing products enjoy several advantages over us, including, among others: ​ • more experienced sales forces; • greater name recognition; • more established sales and marketing programs and distribution networks; • earlier regulatory approval; • long established relationships with physicians and hospitals; • significant patent portfolios, including issued U.S. and foreign patents and pending patent applications, as well as the resources to enforce patents against us or any of our third-party suppliers and distributors; • the ability to acquire and integrate our competitors and/or their technology; • demonstrated ability to develop product enhancements and new product offerings; • established history of product reliability, safety and durability; • the ability to offer rebates or bundle multiple product offerings to offer greater discounts or incentives; • greater financial and human resources for product development, sales and marketing; and • greater experience in and resources for conducting research and development, clinical studies, manufacturing, preparing regulatory submissions, obtaining regulatory clearance or approval for products and marketing approved products.
Many of the companies developing or marketing competing products enjoy several advantages over us, including, among others: ​ • more experienced sales forces; • greater name recognition; • more established sales and marketing programs and distribution networks; • earlier regulatory approval; • long established relationships with physicians and hospitals; • significant patent portfolios, including issued U.S. and foreign patents and pending patent applications, as well as the resources to enforce patents against us or any of our third-party suppliers and distributors; • the ability to acquire and integrate our competitors and/or their technology; • demonstrated ability to develop product enhancements and new product offerings; • established history of product reliability, safety and durability; 43 Table of Contents • the ability to offer rebates or bundle multiple product offerings to offer greater discounts or incentives; • greater financial and human resources for product development, sales and marketing; and • greater experience in and resources for conducting research and development, clinical studies, manufacturing, preparing regulatory submissions, obtaining regulatory clearance or approval for products and marketing approved products.
If our operations are found to be in violation of any of the laws described above or any other governmental regulations that apply to us now or in the future, we may be subject to penalties, including civil and criminal penalties, damages, fines, disgorgement, exclusion from governmental health care programs and the curtailment or restructuring of our operations, any of which could adversely affect our ability to operate our business and our financial results. ​ 62 Table of Contents Healthcare legislative reform measures may have a material adverse effect on us.
If our operations are found to be in violation of any of the laws described above or any other governmental regulations that apply to us now or in the future, we may be subject to penalties, including civil and criminal penalties, damages, fines, disgorgement, exclusion from governmental health care programs and the curtailment or restructuring of our operations, any of which could adversely affect our ability to operate our business and our financial results. 65 Table of Contents Healthcare legislative reform measures may have a material adverse effect on us.
Legislative or regulatory changes could result in restrictions on our ability to carry on or expand our operations, higher than anticipated costs or lower than anticipated sales. ​ 57 Table of Contents Our failure to comply with U.S. federal and state regulations or EEA or other foreign regulations applicable in the countries where we operate could lead to the issuance of warning letters or untitled letters, fines, injunctions, suspensions or loss of regulatory clearance or approvals, recalls or seizures of products, termination of distribution, or civil penalties.
Legislative or regulatory changes could result in restrictions on our ability to carry on or expand our operations, higher than anticipated costs or lower than anticipated sales. ​ 60 Table of Contents Our failure to comply with U.S. federal and state regulations or EEA or other foreign regulations applicable in the countries where we operate could lead to the issuance of warning letters or untitled letters, fines, injunctions, suspensions or loss of regulatory clearance or approvals, recalls or seizures of products, termination of distribution, or civil penalties.
Our reliance on these third-party suppliers also subjects us to other risks that could harm our business, including, among others: ​ • we are not a major customer of many of our suppliers, and these suppliers may therefore give other customers’ needs higher priority than ours; • third parties may threaten or enforce their intellectual property rights against our suppliers, which may cause disruptions or delays in shipment, or may force our suppliers to cease conducting business with us; • we may not be able to obtain an adequate supply of components in a timely manner or on commercially reasonable terms; • our suppliers, especially new suppliers, may make errors in manufacturing that could negatively affect the efficacy or safety of Barostim or cause delays in shipment; • we may have difficulty locating and qualifying alternative suppliers; • switching components or suppliers may require product redesign and possibly submission to the FDA, EEA or other foreign regulatory bodies, which could significantly impede or delay our commercial activities; one or more of our limited source suppliers may be unwilling or unable to supply components of Barostim; • other customers may use fair or unfair negotiation tactics and/or pressures to impede our use of the 41 Table of Contents supplier; • we do not conduct formal environmental, social or governance due diligence on our supply chain and thus may not be aware if our suppliers pose such risks; • the occurrence of a fire, natural disaster or other catastrophe impacting one or more of our suppliers may affect their ability to deliver products to us in a timely manner; and • our suppliers may encounter financial or other business hardships unrelated to our demand, which could inhibit their ability to fulfill our orders and meet our requirements.
Our reliance on these third-party suppliers also subjects us to other risks that could harm our business, including, among others: ​ • we are not a major customer of many of our suppliers, and these suppliers may therefore give other customers’ needs higher priority than ours; 44 Table of Contents • third parties may threaten or enforce their intellectual property rights against our suppliers, which may cause disruptions or delays in shipment, or may force our suppliers to cease conducting business with us; • we may not be able to obtain an adequate supply of components in a timely manner or on commercially reasonable terms; • our suppliers, especially new suppliers, may make errors in manufacturing that could negatively affect the effectiveness or safety of Barostim or cause delays in shipment; • we may have difficulty locating and qualifying alternative suppliers; • switching components or suppliers may require product redesign and possibly submission to the FDA, EEA or other foreign regulatory bodies, which could significantly impede or delay our commercial activities; one or more of our limited source suppliers may be unwilling or unable to supply components of Barostim; • other customers may use fair or unfair negotiation tactics and/or pressures to impede our use of the supplier; • we do not conduct rigorous, formal environmental, social or governance due diligence on our supply chain and thus may not be aware if our suppliers pose such risks; • the occurrence of a fire, natural disaster or other catastrophe impacting one or more of our suppliers may affect their ability to deliver products to us in a timely manner; and • our suppliers may encounter financial or other business hardships unrelated to our demand, which could inhibit their ability to fulfill our orders and meet our requirements.
The Leahy-Smith Act and its implementation could increase the uncertainties and costs surrounding the prosecution of our patent applications and the enforcement or defense of our issued patents, all of which could have a material adverse effect on our business and financial condition. ​ 51 Table of Contents In addition, patent reform legislation may pass in the future that could lead to additional uncertainties and increased costs surrounding the prosecution, enforcement and defense of our patents and applications. ​ Furthermore, the U.S. and foreign courts are continually interpreting various aspects of patent law.
The Leahy-Smith Act and its implementation could increase the uncertainties and costs surrounding the prosecution of our patent applications and the enforcement or defense of our issued patents, all of which could have a material adverse effect on our business and financial condition. ​ In addition, patent reform legislation may pass in the future that could lead to additional uncertainties and increased costs surrounding the prosecution, enforcement and defense of our patents and applications. ​ 54 Table of Contents Furthermore, the U.S. and foreign courts are continually interpreting various aspects of patent law.
It is also possible that other federal, state or foreign enforcement authorities might take action if they consider our business activities to constitute inappropriate promotion, including promotion of an off-label 59 Table of Contents use, which could result in significant penalties, including, but not limited to, criminal, civil and/or administrative penalties, damages, fines, disgorgement, exclusion from participation in government healthcare programs and the curtailment of our operations.
It is also possible that other federal, state or foreign enforcement authorities might take action if 62 Table of Contents they consider our business activities to constitute inappropriate promotion, including promotion of an off-label use, which could result in significant penalties, including, but not limited to, criminal, civil and/or administrative penalties, damages, fines, disgorgement, exclusion from participation in government healthcare programs and the curtailment of our operations.
We have not entered into manufacturing, supply or quality agreements with most of our limited suppliers, some of which supply components critical to our products, such as modules, batteries and electrodes.
We have not entered into manufacturing, supply or quality agreements with some of our limited suppliers, some of which supply components critical to our products, such as modules, batteries and electrodes.
We have developed and expect to continue to refine our disclosure controls and other procedures that are designed to ensure that information required to be disclosed by us in the reports that we file with the SEC is recorded, processed, summarized 65 Table of Contents and reported within the time periods specified in SEC rules and forms, and that information required to be disclosed in reports under the Exchange Act is accumulated and communicated to our principal executive and financial officers.
We have developed and expect to continue to refine our disclosure controls and other procedures that are designed to ensure that 68 Table of Contents information required to be disclosed by us in the reports that we file with the SEC is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and that information required to be disclosed in reports under the Exchange Act is accumulated and communicated to our principal executive and financial officers.
If our intellectual property is not adequately protected to protect our market against competitors’ products and methods, our competitive position and business could be adversely affected. 53 Table of Contents ​ Risks related to our financial and operating results We may be required to obtain additional funds in the future, and these funds may not be available on acceptable terms or at all.
If our intellectual property is not adequately protected to protect our market against competitors’ products and methods, our competitive position and business could be adversely affected. ​ 56 Table of Contents Risks related to our financial and operating results We may be required to obtain additional funds in the future, and these funds may not be available on acceptable terms or at all.
However, it is possible the regulation will change in the future, and we cannot be certain that future changes will not have an adverse effect on our business operations. ​ 63 Table of Contents Risks related to our common stock We expect that the price of our common stock will fluctuate substantially, and you may not be able to resell shares of our common stock at or above the price you paid.
However, it is possible the regulation will change in the future, and we cannot be certain that future changes will not have an adverse effect on our business operations. ​ 66 Table of Contents Risks related to our common stock We expect that the price of our common stock will fluctuate substantially, and you may not be able to resell shares of our common stock at or above the price you paid.
We expect to continue to incur significant sales and marketing, research and development, regulatory and other expenses as we grow our U.S. commercial sales force and expand our marketing efforts to increase adoption of Barostim, add new features to Barostim, obtain regulatory clearances or approvals for our planned or future products and conduct clinical trials on our existing and planned or future products. ​ Until our IPO, we financed our operations primarily through convertible preferred stock financings and amounts borrowed under our previous loan and security agreement (“Horizon loan agreement”) with Horizon Technology Finance Corporation.
We expect to continue to incur significant sales and marketing, research and development, regulatory and other expenses as we grow our U.S. commercial sales force and expand our marketing efforts to increase adoption of Barostim, add new features to Barostim, obtain regulatory clearances or approvals for our planned or future products and conduct clinical trials on our existing and planned or future products. ​ Until our IPO, we financed our operations primarily through convertible preferred stock financings and amounts borrowed under our previous loan and security agreement (“Horizon loan agreement”) with Horizon 41 Table of Contents Technology Finance Corporation.
Our cash requirements in the future may be significantly different from our current estimates and depend on many factors, including, among others: ​ • the scope and timing of our continued investment in our U.S. commercial infrastructure and sales force; • the costs of commercialization activities, including product sales, marketing, manufacturing and distribution and hiring additional members for our direct sales and marketing team in the U.S.; • the degree and rate of market acceptance of Barostim; • the research and development activities we intend to undertake in order to pursue product enhancements and expand HF indications; • the costs of filing, prosecuting, defending and enforcing any patent claims and other intellectual property rights; • our need to implement additional infrastructure and internal systems; • our ability to hire additional personnel to support our operations as a public company; and • the emergence of competing technologies or other adverse market developments.
Our cash requirements in the future may be significantly different from our current estimates and depend on many factors, including, among others: ​ • the scope and timing of our continued investment in our U.S. commercial infrastructure and sales force; • the costs of commercialization activities, including product sales, marketing, manufacturing and distribution and hiring additional members for our direct sales and marketing team in the U.S.; • the degree and rate of market acceptance of Barostim; • the research and development activities we intend to undertake in order to pursue product enhancements and expand HF indications; • the costs of filing, prosecuting, defending and enforcing any patent claims and other intellectual property rights; • our need to implement additional infrastructure and internal systems; • our ability to hire additional personnel to support our operations; and • the emergence of competing technologies or other adverse market developments.
If we do not obtain additional resources, our ability to capitalize on business opportunities will be limited, we may be unable to compete effectively and the growth of our business may be adversely affected. ​ 54 Table of Contents Our operating results may vary significantly annually or from quarter to quarter, which may negatively impact our stock price in the future.
If we do not obtain additional resources, our ability to capitalize on business opportunities will be limited, we may be unable to compete effectively and the growth of our business may be adversely affected. 57 Table of Contents Our operating results may vary significantly annually or from quarter to quarter, which may negatively impact our stock price in the future.
The application of such transfer pricing rules, as well as of withholding taxes, goods and services taxes, sales taxes and other taxes is not always clear, and we may be subject to tax audits relating to such rules or taxes. ​ 56 Table of Contents We believe that our tax positions are reasonable, and our tax provisions and reserves are adequate to cover any potential liability.
The application of such transfer pricing rules, as well as of withholding taxes, goods and services taxes, sales taxes and other taxes is not always clear, and we may be subject to tax audits relating to such rules or taxes. ​ 59 Table of Contents We believe that our tax positions are reasonable, and our tax provisions and reserves are adequate to cover any potential liability.
Although we have procedures in place that seek to prevent our employees and consultants from using the intellectual property, proprietary information, know-how or trade secrets of others in their work for us, we may in the future be subject to claims that we caused an employee to breach the terms of his or her non- 52 Table of Contents disclosure or confidentiality agreement, or that we or these individuals have, inadvertently or otherwise, used or disclosed the alleged trade secrets or other proprietary information of a former employer or competitor, resulting in litigation.
Although we have procedures in place that seek to prevent our employees and consultants from using the intellectual property, proprietary information, know-how or trade secrets of others in their work for us, we may in the future be subject to claims that we caused an employee to breach the terms of his or her non-disclosure or confidentiality agreement, or that we or these individuals have, inadvertently or otherwise, used or disclosed the alleged trade secrets or other proprietary information of a former employer or competitor, resulting in litigation.
In addition, we believe our limited history commercializing our products has, in part, made our seasonal patterns more difficult to discern and therefore predict. 55 Table of Contents We are subject to risks associated with currency fluctuations, and changes in foreign currency exchange rates could impact our results of operations.
In addition, we believe our limited history commercializing our products has, in part, made our seasonal patterns more difficult to discern and therefore predict. 58 Table of Contents We are subject to risks associated with currency fluctuations, and changes in foreign currency exchange rates could impact our results of operations.
Any adverse determination in litigation could also subject us to significant liabilities. ​ 64 Table of Contents Securities analysts may not publish favorable research or reports about our business or may publish no information at all, which could cause our stock price and trading volume to decline.
Any adverse determination in litigation could also subject us to significant liabilities. 67 Table of Contents Securities analysts may not publish favorable research or reports about our business or may publish no information at all, which could cause our stock price and trading volume to decline.
Our amended and restated certificate of incorporation provides that, to the fullest extent permitted by law, the Court of Chancery of the State of Delaware is the exclusive forum for any derivative action or proceeding brought on our behalf, any action asserting a breach of fiduciary duty, any action asserting a claim against us arising pursuant to the Delaware General Corporation Law (the “DGCL”) or any action asserting a claim against us that is governed by the internal affairs doctrine.
Our amended and restated certificate of incorporation provides that, to the fullest extent permitted by law, the Court of Chancery of the State of Delaware is the exclusive forum for any derivative action or proceeding brought on our behalf, any action asserting a breach of fiduciary duty, any action asserting a claim against us arising pursuant to the Delaware General Corporation Law (the “DGCL”) or any action asserting a claim 69 Table of Contents against us that is governed by the internal affairs doctrine.
Our competitors in both the U.S. and abroad, many of which have substantially greater resources and have made substantial investments in patent portfolios and competing technologies, may have applied for or obtained or may in the future apply for and obtain, patents that will prevent, limit or otherwise interfere with our ability to make, use, sell, or export our products.
Our competitors in both the U.S. and abroad, many of which 52 Table of Contents have substantially greater resources and have made substantial investments in patent portfolios and competing technologies, may have applied for or obtained or may in the future apply for and obtain, patents that will prevent, limit or otherwise interfere with our ability to make, use, sell, or export our products.
The coverage limits of our liability insurance policies may not be adequate and one or more successful claims brought against us may have a material adverse effect on our business and results of 46 Table of Contents operations. Further, interpretation of product liability laws may change in the future due to court rulings.
The coverage limits of our liability insurance policies may not be adequate and one or more successful claims brought against us may have a material adverse effect on our business and results of operations. Further, interpretation of product liability laws may change in the future due to court rulings.
In addition, demand for Barostim may decline or may not continue to increase as quickly as we 38 Table of Contents expect. If we are unable to achieve significant market acceptance in the U.S. for Barostim, our results of operations will be adversely affected.
In addition, demand for Barostim may decline or may not continue to increase as quickly as we expect. If we are unable to achieve significant market acceptance in the U.S. for Barostim, our results of operations will be adversely affected.
Healthcare costs have risen significantly over the past decade, which has resulted in or led to numerous cost reform initiatives by legislators, regulators and third-party payors. Cost reform has triggered a consolidation 44 Table of Contents trend in the healthcare industry to aggregate purchasing power, which may create more requests for price concessions in the future.
Healthcare costs have risen significantly over the past decade, which has resulted in or led to numerous cost reform initiatives by legislators, regulators and third-party payors. Cost reform has triggered a consolidation trend in the healthcare industry to aggregate purchasing power, which may create more requests for price concessions in the future.
We are subject to numerous risks relating to our manufacturing capabilities, including: • quality or reliability defects in product components that we source from third-party suppliers, including manufacturing compliance with federal and state regulations; • our inability to secure product components in a timely manner, in sufficient quantities or on commercially reasonable terms; • our failure to increase production of products to meet demand; • our inability to modify production lines to enable us to efficiently produce future products or implement changes in current products in response to regulatory requirements; and • potential damage to or destruction of our manufacturing equipment or manufacturing facility. ​ If demand for Barostim increases, we will have to invest additional resources to purchase components, hire and train employees and enhance our manufacturing processes.
We are subject to numerous risks relating to our manufacturing capabilities, including: • quality or reliability defects in product components that we source from third-party suppliers, including manufacturing compliance with federal and state regulations; • our inability to secure product components in a timely manner, in sufficient quantities or on commercially reasonable terms; • our failure to increase production of products to meet demand; • our inability to modify production lines to enable us to efficiently produce future products or implement changes in current products in response to regulatory requirements; and • potential damage to or destruction of our manufacturing equipment or manufacturing facility. ​ 45 Table of Contents As demand for Barostim increases, we have invested, and expect to continue to invest, additional resources to purchase components, hire and train employees and enhance our manufacturing processes.
Any such delay or increased expense could adversely affect our ability to generate revenue. ​ Future growth will continue to impose significant added responsibilities on management, including the need to identify, recruit, train and integrate additional employees.
Any such delay or increased expense could adversely affect our ability to generate revenue. ​ 47 Table of Contents Future growth will continue to impose significant added responsibilities on management, including the need to identify, recruit, train and integrate additional employees.
Whether merited or 49 Table of Contents not, it is possible that third parties controlling U.S. and foreign patents allege such patents cover our products, or we may decide to initiate infringement claims or litigation to protect our patents or other intellectual property rights.
Whether merited or not, it is possible that third parties controlling U.S. and foreign patents allege such patents cover our products, or we may decide to initiate infringement claims or litigation to protect our patents or other intellectual property rights.
If we do not achieve and sustain profitability, our financial condition could suffer. We have experienced significant net losses since our inception and we expect to continue to incur losses for the foreseeable future. We incurred net losses of $41.4 million and $43.1 million for the years ended December 31, 2022 and 2021, respectively.
If we do not achieve and sustain profitability, our financial condition could suffer. We have experienced significant net losses since our inception and we expect to continue to incur losses for the foreseeable future. We incurred net losses of $41.2 million and $41.4 million for the years ended December 31, 2023 and 2022, respectively.
Such orders or restrictions previously resulted in reduced operations at our headquarters, slowdowns and delays, travel restrictions and cancellation of events and restricted the ability of our front-line sales representatives to attend procedures in which our products are used, among other effects, thereby negatively impacting our operations.
Such orders or restrictions previously resulted, and may in the future result, in reduced operations at our headquarters, slowdowns and delays, travel restrictions and cancellation of events and restrictions on the ability of our front-line sales representatives to attend procedures in which our products are used, among other effects, thereby negatively impacting our operations.
Our employees may be more likely to leave us if the shares they own or the shares underlying their vested options have significantly appreciated in value relative to the original purchase prices of the shares or the exercise prices of the options, or if the exercise prices of the options that they hold are significantly below the market price of our common stock. ​ Many executive officers and employees in the medical device industry are subject to strict non-compete or confidentiality agreements with their employers.
Our employees may be more likely to leave us if the shares they own or the shares underlying their vested options have significantly appreciated in value relative to the original purchase prices of the shares or the exercise prices of the options, or if the exercise prices of the options that they hold are significantly below the market price of our common stock. ​ Although non-compete agreements are becoming more disfavored and, in some cases, banned, many executive officers and employees in the medical device industry are still subject to strict non-compete or confidentiality agreements with their employers.
The initiation and completion of any of these studies, including the post-market stage of our BeAT-HF pivotal trial, may be prevented, delayed, or halted for numerous reasons, including, but not limited to, the following: ​ • the FDA, IRBs, ethics committees, EU competent authorities or other regulatory authorities do not approve a clinical study protocol, force us to modify a previously approved protocol, or place a clinical study on hold; • patients do not enroll in, or enroll at a lower rate than we expect, or do not complete a clinical study; • patients or investigators do not comply with study protocols; • patients do not return for post-treatment follow-up at the expected rate; • patients experience serious or unexpected adverse side effects for a variety of reasons that may or may 45 Table of Contents not be related to our products, such as the advanced stage of co-morbidities that may exist at the time of treatment, causing a clinical study to be put on hold; • sites participating in an ongoing clinical study withdraw, requiring us to engage new sites; • difficulties or delays associated with establishing additional clinical sites; • third-party clinical investigators decline to participate in our clinical studies, do not perform the clinical studies on the anticipated schedule, or perform in a manner inconsistent with the investigator agreement, clinical study protocol, good clinical practices, other FDA, IRB or ethics committee requirements and EEA member state or other foreign regulations governing clinical trials; • third-party organizations do not perform data collection and analysis in a timely or accurate manner; • regulatory inspections of our clinical studies or manufacturing facilities require us to undertake corrective action or suspend or terminate our clinical studies; • changes in federal, state, or foreign governmental statutes, regulations or policies; • interim results are inconclusive or unfavorable as to immediate and long-term safety or efficacy; • the study design is inadequate to demonstrate safety and efficacy; or • the statistical endpoints are not met.
The initiation and completion of studies may be prevented, delayed, or halted for numerous reasons, including, but not limited to, the following: • the FDA, IRBs, ethics committees, EU competent authorities or other regulatory authorities do not approve a clinical study protocol, force us to modify a previously approved protocol, or place a clinical study on hold; • patients do not enroll in, or enroll at a lower rate than we expect, or do not complete a clinical study; • patients or investigators do not comply with study protocols; • patients do not return for post-treatment follow-up at the expected rate; • patients experience serious or unexpected adverse side effects for a variety of reasons that may or may not be related to our products, such as the advanced stage of co-morbidities that may exist at the time of treatment, causing a clinical study to be put on hold; • sites participating in an ongoing clinical study withdraw, requiring us to engage new sites; • difficulties or delays associated with establishing additional clinical sites; • third-party clinical investigators decline to participate in our clinical studies, do not perform the clinical studies on the anticipated schedule, or perform in a manner inconsistent with the investigator agreement, clinical study protocol, good clinical practices, other FDA, IRB or ethics committee requirements and EEA member state or other foreign regulations governing clinical trials; • third-party organizations do not perform data collection and analysis in a timely or accurate manner; • regulatory inspections of our clinical studies or manufacturing facilities require us to undertake corrective action or suspend or terminate our clinical studies; • changes in federal, state, or foreign governmental statutes, regulations or policies; • interim results are inconclusive or unfavorable as to immediate and long-term safety or effectiveness; • regional or worldwide conditions, like an infectious disease or pandemic, precluding or interfering with execution; • the study design is inadequate to demonstrate safety and effectiveness; or • the statistical endpoints are not met.
In such circumstances, our results of operations would be materially adversely affected. ​ Patients may not choose or be able to receive Barostim if, among other potential reasons, they are reluctant to receive an implantable device as opposed to an alternative, non-implantable treatment, they are worried 39 Table of Contents about potential adverse effects of Barostim, or they are unable to obtain adequate third-party coverage or reimbursement. ​ Our industry is highly competitive.
In such circumstances, our results of operations would be materially adversely affected. ​ Patients may not choose or be able to receive Barostim if, among other potential reasons, they are reluctant to receive an implantable device as opposed to an alternative, non-implantable treatment, they are worried about potential adverse effects of Barostim, or they are unable to obtain adequate third-party coverage or reimbursement.
The exclusive forum provision does not apply to suits brought to enforce any liability or duty created by the Exchange Act or any other claim for which the 66 Table of Contents federal courts have exclusive jurisdiction.
The exclusive forum provision does not apply to suits brought to enforce any liability or duty created by the Exchange Act or any other claim for which the federal courts have exclusive jurisdiction.
As of December 31, 2022, we had federal and state tax credit carryforwards of approximately $9.3 million and $1.8 million, respectively. The federal and state tax credit carryforwards began expiring in 2021 and begin expiring in 2028, respectively. These NOL and tax credit carryforwards could expire unused and be unavailable to offset future income tax liabilities.
As of December 31, 2023, we had federal and state tax credit carryforwards of approximately $9.8 million and $2.0 million, respectively. The federal and state tax credit carryforwards began expiring in 2021 and begin expiring in 2028, respectively. These NOL and tax credit carryforwards could expire unused and be unavailable to offset future income tax liabilities.
Depending on the relevant conformity assessment procedure, the Notified Body would audit the QMS and examine the Technical File for the manufacture, design and final inspection of our devices.
Depending on the relevant conformity assessment procedure, the Notified Body would audit the Quality Management System and examine the Technical File for the manufacture, design and final inspection of our devices.
A future recall announcement could harm our reputation with customers, potentially lead to product liability claims against us and negatively affect our sales.
A future recall 63 Table of Contents announcement could harm our reputation with customers, potentially lead to product liability claims against us and negatively affect our sales.
If we fail to maintain the patents and patent applications covering our products or procedures, we may not be able to stop a competitor from marketing products that are the same as or similar to our own, which would have a material adverse effect on our business. ​ We may not be able to adequately protect our intellectual property rights throughout the world.
If we fail to maintain the patents and patent applications covering our products or procedures, we may not be able to stop a competitor from marketing products that are the same as or similar to our own, which would have a material adverse effect on our business.
As of December 31, 2022, our executive officers, directors, holders of 5% or more of our capital stock and their respective affiliates beneficially owned approximately 59% of our outstanding voting stock. Three of our non-employee directors are also affiliated with certain of our principal stockholders.
As of December 31, 2023, our executive officers, directors, holders of 5% or more of our capital stock and their respective affiliates beneficially owned approximately 52% of our outstanding voting stock. Two of our non-employee directors are also affiliated with certain of our principal stockholders.
Concerns over economic and political stability, inflation levels and related efforts to mitigate inflation, a potential recession, the level of U.S. national debt, currency fluctuations and volatility, the rate of growth of Japan, China and other Asian economies, unemployment, the availability and cost of credit, trade relations, including the imposition of various sanctions and tariffs, the recovery from the COVID-19 pandemic, energy costs and geopolitical uncertainty and conflict have contributed to increased volatility and diminished expectations for the economy and markets in general.
Concerns over economic and political stability, inflation levels and related efforts to mitigate inflation, a potential recession, the level of U.S. national debt, currency fluctuations and volatility, the rate of growth of Japan, China and other Asian economies, unemployment, the availability and cost of credit, trade relations, including the imposition of various sanctions and tariffs, infectious diseases or pandemics, climate-related events, energy costs and geopolitical uncertainty and conflict have contributed to increased volatility and diminished expectations for the economy and markets in general.
If we identify material weaknesses in our internal control over financial reporting, if we are unable to comply with the requirements of Section 404 of the Sarbanes-Oxley Act in a timely manner, if we are unable to assert that our internal control over financial reporting is effective, or, when required in the future, if our independent registered public accounting firm is unable to express an opinion as to the effectiveness of our internal control over financial reporting, or if our internal control over financial reporting is perceived as inadequate or we are unable to produce timely or accurate financial statements, investors may lose confidence in the accuracy and completeness of our financial reports and the market price of our common stock could decline and we could become subject to investigations or removal by the stock exchange on which our securities are listed, the SEC, or other regulatory authorities, which could require additional financial and management resources. ​ Our principal stockholders, management and directors (three of whom are affiliated with our principal stockholders) own a significant percentage of our stock and will be able to exert significant control over matters subject to stockholder approval.
If we identify material weaknesses in our internal control over financial reporting, if we are unable to comply with the requirements of Section 404 of the Sarbanes-Oxley Act in a timely manner, if we are unable to assert that our internal control over financial reporting is effective, or, when required in the future, if our independent registered public accounting firm is unable to express an opinion as to the effectiveness of our internal control over financial reporting, or if our internal control over financial reporting is perceived as inadequate or we are unable to produce timely or accurate financial statements, investors may lose confidence in the accuracy and completeness of our financial reports and the market price of our common stock could decline and we could become subject to investigations or removal by the stock exchange on which our securities are listed, the SEC, or other regulatory authorities, which could require additional financial and management resources.
Even if we are successful in defending against these claims, the litigation could be costly and a distraction to management.
Even if we are successful in defending against these claims, the litigation could be costly 55 Table of Contents and a distraction to management.
Because we do not yet have other products currently in development, if we are unsuccessful in commercializing Barostim or are unable to market Barostim as a result of a quality problem, failure to maintain regulatory approvals, unexpected or serious complications or other unforeseen negative effects related to Barostim or the other factors discussed in these risk factors, we would lose our main source of revenue, and our business, reputation, liquidity and results of operations will be materially and adversely affected. ​ We have limited commercial sales experience marketing and selling Barostim, and if we are unable to continue to maintain and grow sales and marketing capabilities, we will be unable to generate sustained and increasing product revenue.
Because we do not yet have other products currently in development, if we are unsuccessful in commercializing Barostim or are unable to market Barostim as a result of a quality problem, failure to maintain regulatory approvals, unexpected or serious complications or other unforeseen negative effects related to Barostim or the other factors discussed in these risk factors, we would lose our main source of revenue, and our business, reputation, liquidity and results of operations will be materially and adversely affected.
Alternatively, if a court were to find the choice of forum provision contained in our amended and restated certificate of incorporation to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could harm our business, financial condition and results of operations. ​ Anti-takeover provisions included in our amended and restated certificate of incorporation and amended and restated bylaws, as well as under Delaware law, could discourage a takeover.
Alternatively, if a court were to find the choice of forum provision contained in our amended and restated certificate of incorporation to be inapplicable or unenforceable in an action, we may incur additional costs associated with resolving such action in other jurisdictions, which could harm our business, financial condition and results of operations.
If the actual number of patients who would benefit from our product, the price at which we can sell our product, or the annual total addressable market for our product is smaller than we have estimated, it may impair our sales growth and have an adverse impact on our business. ​ Unfavorable economic conditions could adversely affect our business, financial condition or results of operations.
If the actual number of patients who would benefit from our product, the price at which we can sell our product, or the annual total addressable market for our product is smaller than we have estimated, it may impair our sales growth and have an adverse impact on our business.
For the fiscal years ended December 31, 2022 and 2021, net cash used in operating activities was $42.7 million and $27.7 million, respectively.
For the fiscal years ended December 31, 2023 and 2022, net cash used in operating activities was $39.0 million and $42.7 million, respectively.
An economic downturn could result in a variety of risks to our business, including weakened demand for Barostim, a delayed time to meet clinical endpoints and our ability to raise additional capital when needed on acceptable terms, if at all.
An economic downturn could result in a 50 Table of Contents variety of risks to our business, including weakened demand for Barostim and our ability to raise additional capital when needed on acceptable terms, if at all.
We currently source certain components for Barostim from a limited number of suppliers. Our ability to supply Barostim commercially depends, in part, on our ability to obtain a supply of these components that has been manufactured in accordance with regulatory requirements and in sufficient quantities for commercialization and clinical testing.
Our ability to supply Barostim commercially depends, in part, on our ability to obtain a supply of these components that has been manufactured in accordance with regulatory requirements and in sufficient quantities for commercialization and clinical testing.
These may include the requirement of prior authorization by the competent authorities of the country in which the study takes place and the requirement to obtain a positive opinion from a competent Ethics Committee.
These may include the requirement of prior authorization by the competent authorities of the country in which the study takes place and the requirement to obtain a positive opinion from a competent Ethics Committee. This process can be expensive and time-consuming.
Filing, prosecuting and defending patents on our products in all countries throughout the world would be prohibitively expensive. The requirements for patentability may differ in certain countries, particularly developing countries, and the breadth of patent claims allowed can be inconsistent.
We may not be able to adequately protect our intellectual property rights throughout the world. Filing, prosecuting and defending patents on our products in all countries throughout the world would be prohibitively expensive. The requirements for patentability may differ in certain countries, particularly developing countries, and the breadth of patent claims allowed can be inconsistent.
An inability to incorporate technologies or features that are important or essential to our products would have a material adverse effect on our business, and may prevent us from selling our products or from practicing our processes.
An inability to incorporate technologies or features that are important or essential to our products would have a material adverse effect on our business, and may prevent us from selling our products or from practicing our processes. In addition, we may lose valuable intellectual property rights.
Our business practices and relationships with providers are subject to scrutiny under these laws. We are subject to privacy and security regulation related to patient, customer, employee and other third-party information by both the federal government and the states and foreign jurisdictions in which we conduct our business.
We are subject to privacy and security regulation related to patient, customer, employee and other third-party information by both the federal government and the states and foreign jurisdictions in which we conduct our business.
We have generated and expect to continue to generate significant federal and state net operating loss (“NOLs”) and tax credit carryforwards. As of December 31, 2022, we had federal and state NOL carryforwards of approximately $361.0 million and $6.2 million, respectively. The federal NOLs began expiring in 2021 and state NOLs began expiring in 2020.
We have generated and expect to continue to generate significant federal and state net operating loss (“NOLs”) and tax credit carryforwards. As of December 31, 2023, we had federal and state NOL carryforwards of approximately $389.9 million and $7.3 million, respectively. The federal NOLs began expiring in 2021 and state NOLs began expiring in 2020.
Any of these occurrences may harm our business, financial condition and prospects significantly. ​ We may face product liability claims that could be costly, divert management’s attention and harm our reputation. Manufacturing and marketing of Barostim and clinical testing of Barostim Therapy may expose us to product liability claims.
We may face product liability claims that could be costly, divert management’s attention and harm our reputation. Manufacturing and marketing of Barostim and clinical testing of Barostim Therapy may expose us to product liability claims.
As compared to direct manufacturers, our dependence on third-party manufacturers for our component parts exposes us to greater lead times. The seasonality of our business creates variance in our quarterly revenue, which makes it difficult to compare or forecast our financial results.
As compared to direct manufacturers, our dependence on third-party manufacturers for our component parts exposes us to greater lead times. The seasonality of our business creates variance in our quarterly revenue, which makes it difficult to compare or forecast our financial results. We expect that revenue could fluctuate from quarter to quarter as a result of timing and seasonality.
We will remain an emerging growth company until the earliest of (1) the last day of the fiscal year (a) following the fifth anniversary of the completion of the IPO, (b) in which we have total annual gross revenue of at least $1.235 billion, or (c) in which we are deemed to be a large accelerated filer, which means the market value of our common stock that is held by non-affiliates exceeds $700 million as of the prior June 30th, and (2) the date on which we have issued more than $1.0 billion in non-convertible debt during the prior three-year period. ​ Because we have opted to take advantage of the JOBS Act provision which allows us to delay implementing new accounting standards, our financial statements may not be directly comparable to other public companies.
We will remain an emerging growth company until the earliest of (1) the last day of the fiscal year (a) following the fifth anniversary of the completion of the IPO, (b) in which we have total annual gross revenue of at least $1.235 billion, or (c) in which we are deemed to be a large accelerated filer, which means the market value of our common stock that is held by non-affiliates exceeds $700 million as of the prior June 30th, and (2) the date on which we have issued more than $1.0 billion in non-convertible debt during the prior three-year period.
As a result, this concentration of ownership may not be in the best interests of our other stockholders. ​ Our amended and restated certificate of incorporation provides that the Court of Chancery of the State of Delaware is the exclusive forum for substantially all disputes between us and our stockholders, which could limit our stockholders' ability to obtain a favorable judicial forum for disputes with us or our directors, officers or employees.
Our amended and restated certificate of incorporation provides that the Court of Chancery of the State of Delaware is the exclusive forum for substantially all disputes between us and our stockholders, which could limit our stockholders' ability to obtain a favorable judicial forum for disputes with us or our directors, officers or employees.
If this happens, we may have to incur significant costs to comply with such laws and regulations, which will harm our results of operations. ​ The misuse or off-label use of our product may harm our image in the marketplace, result in injuries that lead to product liability suits, which could be costly to our business, or result in costly investigations and sanctions from the FDA and other regulatory bodies if we are deemed to have engaged in inappropriate promotion.
The misuse or off-label use of our product may harm our image in the marketplace, result in injuries that lead to product liability suits, which could be costly to our business, or result in costly investigations and sanctions from the FDA and other regulatory bodies if we are deemed to have engaged in inappropriate promotion.
We expect substantially all of our revenue to continue to be derived from sales of Barostim for the foreseeable future, the majority of which will be generated in the U.S. Because of its relatively recent commercial introduction in the U.S., Barostim has limited product and brand recognition.
We expect substantially all of our revenue to continue to be derived from sales of Barostim for the foreseeable future, the majority of which will be generated in the U.S. Although increasing as our commercial sales grow, Barostim still has limited product and brand recognition.
In addition, if the FDA determines for any reason, including safety or their risk-benefit analysis, that the results of the post-market stage of our BeAT-HF pivotal trial or any other future trial are negative, the FDA may decide to modify or revoke our existing approval or such data may impact the adoption of Barostim.
In addition, if the FDA determines for any reason, including safety or their risk-benefit analysis, that the results of a trial are negative, the FDA may decide to modify or revoke our existing 48 Table of Contents approval or such data may impact the adoption of Barostim.
Our results of operations could be adversely affected by general conditions in the economy and the financial markets.
Unfavorable economic conditions could adversely affect our business, financial condition or results of operations. Our results of operations could be adversely affected by general conditions in the economy and the financial markets.
For example, we jointly develop intellectual property with certain parties, and disagreements may therefore arise as to the ownership of the intellectual property developed pursuant to these relationships.
For example, we jointly develop intellectual property with certain parties, and disagreements may therefore arise as to the ownership of the intellectual property developed pursuant to these relationships. If we are unable to resolve these disputes, we could lose valuable intellectual property rights.
Moreover, a negative perception of clinical results for one indication for use could impact the use of Barostim for other FDA approved and clinically supported indications for use. ​ We could also encounter delays if the FDA concludes that our financial relationships with investigators result in a perceived or actual conflict of interest that may have affected the interpretation of a study, the integrity of the data generated at the applicable clinical trial site or the utility of the clinical trial itself.
We could also encounter delays if the FDA concludes that our financial relationships with investigators result in a perceived or actual conflict of interest that may have affected the interpretation of a study, the integrity of the data generated at the applicable clinical trial site or the utility of the clinical trial itself.
Approval procedures vary among jurisdictions and can involve requirements and administrative review periods different from, and greater than, those in the U.S. or the EEA, including additional preclinical studies or clinical trials.
Approval procedures vary among jurisdictions and can involve requirements and administrative review periods different from, and greater than, those in the U.S. or the EEA, including additional preclinical studies or clinical trials. Any of these occurrences may harm our business, financial condition and prospects significantly.
Our registered or unregistered trademarks or trade names may be challenged, infringed, circumvented, declared generic or determined to be infringing on other marks. We may not be able to protect our rights in these trademarks and trade names, which we need in order to build name recognition with potential partners or customers in our markets of interest.
We may not be able to protect our rights in these trademarks and trade names, which we need in order to build name recognition with potential partners or customers in our markets of interest.
As of December 31, 2022 and 2021, our accumulated deficit was $436.2 million and $394.8 million, respectively.
As of December 31, 2023 and 2022, our accumulated deficit was $477.4 million and $436.2 million, respectively.
If these relationships and any related compensation to or ownership interest by the clinical investigator carrying out the study result in perceived or actual conflicts of interest, or if the FDA concludes that the financial relationship may have affected interpretation of the study, the integrity of the data generated at the applicable clinical trial site may be questioned and the utility of the clinical trial itself may be jeopardized. ​ Even if our products are approved in the U.S. and the EEA, comparable regulatory authorities of additional foreign countries must also approve the manufacturing and marketing of our products in those countries.
If these relationships and any related compensation to or ownership interest by the clinical investigator carrying out the study result in perceived or actual conflicts of interest, or if the FDA concludes that the financial relationship may have affected interpretation of the study, the integrity of the data generated at the applicable clinical trial site may be questioned and the utility of the clinical trial itself may be jeopardized.
We expect that any revenue we generate could fluctuate from quarter to quarter as a result of timing and seasonality. We anticipate mild seasonality based on national holiday patterns specific to certain nations. These seasonal variations are difficult to predict accurately, may vary amongst different markets, and at times may be entirely unpredictable.
We anticipate mild seasonality based on national holiday patterns specific to certain nations. These seasonal variations are difficult to predict accurately, may vary amongst different markets, and at times may be entirely unpredictable.
If we do not receive access to hospitals via these contracting processes or otherwise, or if we are unable to secure contracts or tender successful bids, our sales may decrease and our operating results may be harmed.
If we do not receive access to hospitals via these contracting processes or otherwise, or if we are unable to secure contracts or tender successful bids, our sales may decrease and our operating results may be harmed. Furthermore, we may expend significant effort in these time-consuming processes and still may not obtain a purchase contract from such hospitals.
Despite our review of studies reporting on the trends of HF incidence in the U.S., the actual incidence of HF and the actual demand for our product or competitive products could differ materially from our expectations. 47 Table of Contents In addition, our strategy of focusing exclusively on patients with HFrEF who are looking for an improvement in the symptoms associated with HFrEF may limit our ability to increase sales or achieve profitability, especially if there are any significant clinical breakthroughs or product or drug introductions that significantly delay or reduce the need for heart disease therapy.
In addition, our strategy of focusing exclusively on patients with HFrEF who are looking for an improvement in the symptoms associated with HFrEF may limit our ability to increase sales or achieve profitability, especially if there are any significant clinical breakthroughs or product or drug introductions that significantly delay or reduce the need for heart disease therapy.
If our systems suffer severe damage, disruption or shutdown and we are unable to effectively resolve the issues in a timely manner, our business and operating results may suffer. ​ If important assumptions about the potential market for our product are inaccurate, or if we have failed to understand what people with HF are seeking in a treatment, we may not be able to increase our revenue or achieve profitability.
If important assumptions about the potential market for our product are inaccurate, or if we have failed to understand what people with HF are seeking in a treatment, we may not be able to increase our revenue or achieve profitability.
Specifically, Barostim provides symptomatic relief for patients with NYHA Class III or II (with recent history of III), have a LVEF ≤ 35% and a NT-proBNP ​ In addition, physicians typically need to perform several procedures to become comfortable using Barostim.
Specifically, Barostim is indicated for patients with NYHA Class III or II (with recent history of III) despite treatment with guideline-directed medical therapies (medications and devices), have a LVEF ≤ 35% 42 Table of Contents and a NT-proBNP ​ In addition, physicians typically need to perform several procedures to become comfortable using Barostim.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeItem 2. Properties We lease 23,890 square feet of office space in Minneapolis, Minnesota, which houses our principal executive offices and our manufacturing facility. We lease this space under an operating lease agreement that commenced December 1, 2008 and expires July 31, 2024.
Biggest changeItem 2. Properties We lease 31,505 square feet of office space in Minneapolis, Minnesota, which houses our principal executive offices and our manufacturing facility. We lease this space under an operating lease agreement that commenced December 1, 2008 and expires August 31, 2028 .

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeItem 5. Market for Registrant’s Common Equity , Related Stockholder Matters and Issuer Purchases of Equity Securities ​ Market Information ​ Our common stock trades on the Nasdaq Global Select Market under the symbol “CVRX.” ​ Holders ​ As of February 3, 2023, there were approximately 87 holders of record of our common stock.
Biggest changeItem 5. Market for Registrant’s Common Equity , Related Stockholder Matters and Issuer Purchases of Equity Securities ​ Market Information ​ Our common stock trades on the Nasdaq Global Select Market under the symbol “CVRX.” ​ Holders ​ As of February 2, 2024, there were approximately 68 holders of record of our common stock.

Item 6. [Reserved]

Selected Financial Data — reserved (removed by SEC in 2021)

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Biggest changeItem 6. ​ [Reserved] ​ 69 ​ ​ ​ ​ ​ ​ ​ Item 7. ​ Management’s Discussion and Analysis of Financial Condition and Results of Operations ​ 69 ​ ​ ​ ​ ​ ​ ​ Item 7A. ​ Quantitative and Qualitative Disclosures About Market Risk ​ 79 ​ ​ ​ ​ ​ ​ ​ Item 8. ​ Financial Statements and Supplementary Data ​ 81 ​ ​ ​ ​ ​ ​ ​ Item 9. ​ Changes in and Disagreements with Accountants on Accounting and Financial Disclosure ​ 98 ​ ​ ​ ​ ​ ​ ​ Item 9A. ​ Controls and Procedures ​ 98 ​ ​ ​ ​ ​ ​ ​ Item 9B. ​ Other Information ​ 99 ​ ​ ​ ​ ​ ​ ​
Biggest changeItem 6. ​ [Reserved] ​ 73 ​ ​ ​ ​ ​ ​ ​ Item 7. ​ Management’s Discussion and Analysis of Financial Condition and Results of Operations ​ 73 ​ ​ ​ ​ ​ ​ ​ Item 7A. ​ Quantitative and Qualitative Disclosures About Market Risk ​ 82 ​ ​ ​ ​ ​ ​ ​ Item 8. ​ Financial Statements and Supplementary Data ​ 84 ​ ​ ​ ​ ​ ​ ​ Item 9. ​ Changes in and Disagreements with Accountants on Accounting and Financial Disclosure ​ 101 ​ ​ ​ ​ ​ ​ ​ Item 9A. ​ Controls and Procedures ​ 101 ​ ​ ​ ​ ​ ​ ​ Item 9B. ​ Other Information ​ 102 ​ ​ ​ ​ ​ ​ ​

Item 7. Management's Discussion & Analysis

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

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Biggest changeWe maintain a full valuation allowance for deferred tax assets including NOL carryforwards, R&D credits and other tax credits. 73 Table of Contents Results of operations Consolidated results of operations for the year ended December 31, 2022, compared to the year ended December 31, 2021 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended ​ ​ ​ ​ ​ ​ December 31, ​ Change ​ (in thousands) ​ 2022 2021 ​ $ % Revenue ​ $ 22,469 ​ $ 13,036 ​ $ 9,433 72 % Cost of goods sold ​ 4,999 ​ 3,640 ​ 1,359 37 % Gross profit ​ 17,470 ​ 9,396 ​ 8,074 86 % Gross margin ​ 78 % 72 % ​ Operating Expenses: ​ ​ ​ ​ Research and development ​ 9,952 ​ 7,501 ​ 2,451 33 % Selling, general and administrative ​ 50,045 ​ 27,863 ​ 22,182 80 % Total operating expenses ​ 59,997 ​ 35,364 ​ 24,633 70 % Loss from operations ​ (42,527) ​ (25,968) ​ (16,559) 64 % Interest expense ​ (165) ​ (2,219) ​ 2,054 (93) % Other income (expense), net ​ 1,373 ​ (14,800) ​ 16,173 NM ​ Loss before income taxes ​ (41,319) ​ (42,987) ​ 1,668 (4) % Provision for income taxes ​ (109) ​ (91) ​ (18) 20 % Net loss ​ $ (41,428) ​ $ (43,078) ​ $ 1,650 (4) % NM – Not meaningful Revenue ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Revenue by Geography ​ ​ Year ended ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ Change ​ (in thousands) ​ 2022 2021 ​ $ % United States ​ $ 18,021 ​ $ 9,147 ​ $ 8,874 97 % Europe ​ 4,448 ​ 3,889 ​ 559 14 % Total Revenue ​ $ 22,469 ​ $ 13,036 ​ $ 9,433 72 % ​ Revenue was $22.5 million for the year ended December 31, 2022, an increase of $9.4 million, or 72%, over the year ended December 31, 2021.
Biggest changeWe maintain a full valuation allowance for deferred tax assets including NOL carryforwards, R&D credits and other tax credits. 76 Table of Contents Results of operations Consolidated results of operations for the year ended December 31, 2023, compared to the year ended December 31, 2022 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year ended ​ ​ ​ ​ ​ ​ December 31, ​ Change ​ (in thousands) ​ 2023 2022 ​ $ % Revenue ​ $ 39,295 ​ $ 22,469 ​ $ 16,826 75 % Cost of goods sold ​ 6,256 ​ 4,999 ​ 1,257 25 % Gross profit ​ 33,039 ​ 17,470 ​ 15,569 89 % Gross margin ​ 84 % 78 % ​ Operating Expenses: ​ ​ ​ ​ Research and development ​ 11,633 ​ 9,952 ​ 1,681 17 % Selling, general and administrative ​ 64,509 ​ 50,045 ​ 14,464 29 % Total operating expenses ​ 76,142 ​ 59,997 ​ 16,145 27 % Loss from operations ​ (43,103) ​ (42,527) ​ (576) 1 % Interest expense ​ (1,799) ​ (165) ​ (1,634) NM ​ Other income, net ​ 3,850 ​ 1,373 ​ 2,477 180 % Loss before income taxes ​ (41,052) ​ (41,319) ​ 267 (1) % Provision for income taxes ​ (147) ​ (109) ​ (38) 35 % Net loss ​ $ (41,199) ​ $ (41,428) ​ $ 229 (1) % ​ NM – Not meaningful Revenue ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Revenue by Geography ​ ​ Year ended ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ Change ​ (in thousands) ​ 2023 2022 ​ $ % United States ​ $ 35,111 ​ $ 18,021 ​ $ 17,090 95 % Europe ​ 4,184 ​ 4,448 ​ (264) (6) % Total Revenue ​ $ 39,295 ​ $ 22,469 ​ $ 16,826 75 % ​ Revenue was $39.3 million for the year ended December 31, 2023, an increase of $16.8 million, or 75%, over the year ended December 31, 2022.
Cash provided by financing activities: Net cash provided by financing activities for the year ended December 31, 2022 was $7.5 million and consisted of $7.5 million related to proceeds from debt financing, $0.6 million related to proceeds from the Employee Stock Purchase Plan and $0.2 million related to proceeds from the exercise of common stock options, partially offset by debt financing costs of $0.8 million.
Net cash provided by financing activities for the year ended December 31, 2022 was $7.5 million and consisted of $7.5 million related to proceeds from debt financing, $0.6 million related to proceeds from the Employee Stock Purchase Plan and $0.2 million related to proceeds from the exercise of common stock options, partially offset by debt financing costs of $0.8 million.
As of December 31, 2022, no shares have been sold. ​ Our future liquidity and capital funding requirements will depend on numerous factors, including: ● our investment in our U.S. commercial infrastructure and sales forces; ● the degree and rate of market acceptance of Barostim and the ability for our customers to obtain appropriate levels of reimbursement; ● the costs of commercialization activities, including product sales, marketing, manufacturing and distribution; ● our R&D activities for product enhancements and to expand our indications; ● the costs of filing, prosecuting, defending and enforcing any patent claims and other intellectual property rights; ● our need to implement additional infrastructure and internal systems; ● our ability to hire additional personnel to support our operations as a public company; and ● the emergence of competing technologies or other adverse market developments.
As of December 31, 2023, no shares have been sold. ​ Our future liquidity and capital funding requirements will depend on numerous factors, including: ● our investment in our U.S. commercial infrastructure and sales forces; ● the degree and rate of market acceptance of Barostim and the ability for our customers to obtain appropriate levels of reimbursement; ● the costs of commercialization activities, including product sales, marketing, manufacturing and distribution; ● our R&D activities for product enhancements and to expand our indications; ● the costs of filing, prosecuting, defending and enforcing any patent claims and other intellectual property rights; ● our need to implement additional infrastructure and internal systems; ● our ability to hire additional personnel to support our operations as a public company; and ● the emergence of competing technologies or other adverse market developments.
Our ability to generate revenue from product sales and become profitable will depend on our ability to continue to successfully commercialize Barostim and any product enhancements we may advance in the future.
Our ability to generate significant revenue from product sales and become profitable will depend on our ability to continue to successfully commercialize Barostim and any product enhancements we may advance in the future.
We expect to derive future revenue by continuing to both expand our own dedicated salesforce and increase awareness of Barostim among payors, physicians and patients. 69 Table of Contents Our sales and marketing efforts are directed at EPs, HF specialists, interventional and general cardiologists and vascular surgeons because they are the primary users of our technology.
We expect to derive future revenue by continuing to both expand our own dedicated salesforce and increase awareness of Barostim among payors, physicians and patients. 73 Table of Contents Our sales and marketing efforts are directed at EPs, HF specialists, interventional and general cardiologists and vascular surgeons because they are the primary users of our technology.
Components of results of operations Revenue Our U.S. sales have increased since the pre-market approval of Barostim by the FDA in August 2019, and the subsequent reimbursement changes in 2020.
Components of results of operations Revenue Our U.S. sales have steadily increased since the pre-market approval of Barostim by the FDA in August 2019, and the subsequent reimbursement changes.
We expect cost of goods sold to increase in absolute dollars primarily as, and to the extent, our revenue grows. Gross margin may also vary based on regional differences in rebates and incentives negotiated with certain customers. We calculate gross margin as revenue less cost of goods sold divided by revenue.
We expect cost of goods sold to increase in absolute dollars primarily as, and to the extent, our revenue grows. Gross margin may also vary based on regional differences in rebates and incentives negotiated with certain customers. 75 Table of Contents We calculate gross margin as revenue less cost of goods sold divided by revenue.
In addition, we will continue to increase our international presence and to develop and assist our channel partners. However, we expect our SG&A expenses to decrease as a percentage of revenue as our revenue grows. Interest expense Interest expense consists of interest on our debt and amortization of associated debt discount.
In addition, we will continue to increase our international presence and to develop and assist our channel partners. However, we expect our SG&A expenses to decrease as a percentage of revenue as our revenue grows. Interest expense Interest expense consists of interest on our debt and amortization of associated financing costs.
We believe that our existing cash resources and term loan facility together with revenue will be sufficient to meet our forecasted requirements for operating liquidity, capital expenditures and debt services for at least the next three years.
We believe that our existing cash resources and Loan Agreement for Term Loans together with revenue will be sufficient to meet our forecasted requirements for operating liquidity, capital expenditures and debt services for at least the next three years.
We expect to continue to drive increases in revenue through our efforts to increase awareness of Barostim among physicians, patients and payors and by the expansion of our U.S. sales force. As a result, we expect that U.S. sales will continue to account for the majority of our revenue going forward.
We expect to continue to drive increases in revenue through our efforts to increase awareness of Barostim among physicians, patients and payors, and by the expansion of our U.S. sales force, as well as by seeking expanded labeling for Barostim. As a result, we expect that U.S. sales will continue to account for the majority of our revenue going forward.
The number of sales territories in the U.S. increased by 12 to a total of 26 during the year ended December 31, 2022. A sales territory is an established regional area held by an account manager, typically after six to nine months of employment.
The number of sales territories in the U.S. increased by 12 to a total of 38 during the year ended December 31, 2023. A sales territory is an established regional area held by an account manager, typically after six to nine months of employment.
The increase was primarily driven by continued growth as a result of the expansion into new sales territories and new accounts, as well as increased physician and patient awareness of Barostim. Total HF revenue units in the U.S. totaled 587 and 290 for the years ended December 31, 2022 and 2021, respectively.
The increase was primarily driven by continued growth as a result of the expansion into new sales territories and new accounts, as well as increased physician and patient awareness of Barostim. Total HF revenue units in the U.S. totaled 1,123 and 587 for the years ended December 31, 2023 and 2022, respectively.
Provision for income taxes Provision for income taxes was nominal for the years ended December 31, 2022 and 2021. 75 Table of Contents Liquidity, capital resources and plan of operations We have incurred significant operating losses and negative cash flows from operations since our inception, and we anticipate that we will incur significant losses for at least the next several years.
Provision for income taxes Provision for income taxes was nominal for the years ended December 31, 2023 and 2022. Liquidity, capital resources and plan of operations We have incurred significant operating losses and negative cash flows from operations since our inception, and we anticipate that we will incur significant losses for at least the next several years.
These factors include: ● Growing and supporting our U.S. commercial organization; ● Promoting awareness among physicians, hospitals and patients to accelerate adoption of Barostim; 71 Table of Contents ● Raising awareness among payors to build upon reimbursement for Barostim; ● Investing in research and development to foster innovation and further simplify the Barostim procedure; and ● Leveraging our manufacturing capacity to further improve our gross margins.
These factors include: ● Growing and supporting our U.S. commercial organization; ● Seeking expanded labeling for Barostim and promoting awareness among physicians, hospitals and patients to accelerate adoption of Barostim; ● Raising awareness among payors to build upon reimbursement for Barostim; ● Investing in research and development to foster innovation and further simplify the Barostim procedure; and ● Leveraging our manufacturing capacity to further improve our gross margins.
We expense R&D costs as they are incurred. We expect R&D expenses to increase in absolute dollars as we continue to develop enhancements to Barostim. Our 72 Table of Contents R&D expenses may fluctuate from period to period due to the timing and extent of our product development and clinical trial expenses related to Barostim in HFrEF.
We expense R&D costs as they are incurred. We expect R&D expenses to increase in absolute dollars as we continue to develop enhancements to Barostim. Our R&D expenses may fluctuate from period to period due to the timing and extent of our product development and clinical trial expenses.
Future expense amounts for any particular period could be affected by changes in our assumptions or market conditions. ● Expected share price volatility — Due to the lack of a public market for the trading of our common stock and a lack of company-specific historical and implied volatility data, we have based our estimate of expected volatility on the historical volatility of a group of similar (guideline) companies that are publicly traded.
Future expense amounts for any particular period could be affected by changes in our assumptions or market conditions. 81 Table of Contents ● Expected share price volatility — Due to the lack of company-specific historical and implied volatility data, we have based our estimate of expected volatility on the historical volatility of a group of similar (guideline) companies that are publicly traded.
As of December 31, 2022, the Company had a total of 106 active implanting centers, as compared to 46 as of December 31, 2021. Active implanting centers are customers that have completed at least one commercial HF implant in the last 12 months.
As of December 31, 2023, we had a total of 178 active implanting centers, as compared to 106 as of December 31, 2022. Active implanting centers are customers that have completed at least one commercial HF implant in the last 12 months.
On November 4, 2022, we entered into an Equity Distribution Agreement with Piper Sandler & Co., as agent, under which we may offer and sell, from time to time at our sole discretion, shares of our common stock having an aggregate offering price of up to $50.0 million in an “at-the-market” or ATM offering, to or through the agent.
The Loan Agreement provides for an additional tranche of up to $20.0 million, based on the timing and other conditions set forth in the Loan Agreement. ​ On November 4, 2022, we entered into an Equity Distribution Agreement with Piper Sandler & Co., as agent, under which we may offer and sell, from time to time at our sole discretion, shares of our common stock having an aggregate offering price of up to $50.0 million in an “at-the-market” or ATM offering, to or through the agent.
On October 31, 2022, we entered into the Loan Agreement under which we may borrow, subject to our achievement of certain milestones, up to a total of $50.0 million in a series of term loans described in Note 5 to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K, and we borrowed $7.5 million of such total on that date to fund our commercial and investment efforts.
Longer term, we plan to explore Barostim’s potential to expand its indications for use to other cardiovascular diseases. ​ On October 31, 2022, we entered into the Loan Agreement under which we may borrow, subject to our achievement of certain milestones, up to a total of $50.0 million in a series of Term Loans described in Note 4 to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K, and we borrowed $7.5 million of such total on that date to fund our commercial and investment efforts.
This change was driven by a $12.3 million increase in compensation expenses, mainly as a result of increased headcount, a $2.4 million increase in travel expenses, a $1.8 million increase in non-cash stock-based compensation expense, a $1.7 million increase in marketing and advertising expenses, primarily related to the commercialization of Barostim in the U.S., a $1.2 million increase related to D&O insurance costs incurred as a result of becoming a public company, a $0.9 million increase in professional fees, and a $0.6 million increase in consulting expenses.
This change was driven by a $8.6 million increase in compensation expenses, mainly as a result of increased headcount, a $2.3 million increase in marketing and advertising expenses, primarily related to the commercialization of Barostim in the U.S., a $1.8 million increase in non-cash stock-based compensation expense, a $1.5 million increase in travel expenses and a $1.0 million increase in consulting expenses, partially offset by a $0.3 million decrease related to D&O insurance costs and a $0.2 million decrease in professional fees.
As of December 31, 2022 and 2021, we had cash and cash equivalents of $106.2 million and $142.1 million, respectively. For the years ended December 31, 2022 and 2021, our net losses were $41.4 million and $43.1 million, respectively.
As of December 31, 2023 and 2022, we had cash and cash equivalents of $90.6 million and $106.2 million, respectively. For the years ended December 31, 2023 and 2022, our net losses were $41.2 million and $41.4 million, respectively.
This change was primarily driven by a $1.8 million increase in compensation expenses, mainly as a result of increased headcount, a $0.4 million increase in consulting fees, a $0.2 million increase in clinical study expenses and a $0.1 million increase in non-cash stock-based compensation expense.
This change was primarily driven by a $1.7 million increase in compensation expenses, mainly as a result of increased headcount and a $0.6 million increase in non-cash stock-based compensation expense, partially offset by a $0.8 million decrease in clinical study expenses.
Factors affecting our performance We believe there are several important factors that have impacted and that we expect will continue to impact our business and results of operations.
The new payment took effect January 1, 2024. ​ Factors affecting our performance We believe there are several important factors that have impacted and that we expect will continue to impact our business and results of operations.
On October 31, 2022, we entered into a loan and security agreement under which we may borrow, subject to our achievement of certain milestones, up to a total of $50.0 million in a series of term loans described in Note 5 to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K, and we borrowed $7.5 million of such total on that date to fund our commercial and investment efforts.
Our net cash used in operating activities for the years ended December 31, 2023 and 2022, was $39.0 million and $42.7 million, respectively. 78 Table of Contents On October 31, 2022, we entered into the Loan Agreement under which we may borrow, subject to our achievement of certain milestones, up to a total of $50.0 million in a series of Term Loans described in Note 4 to our consolidated financial statements included elsewhere in this Annual Report on Form 10-K, and we borrowed $7.5 million of such total on that date to fund our commercial and investment efforts.
The number of sales territories in Europe remained consistent at six during the year ended December 31, 2022. ​ Cost of goods sold and gross margin Cost of goods sold increased $1.4 million, or 37%, to $5.0 million for the year ended December 31, 2022, compared to the year ended December 31, 2021.
The number of sales territories in Europe remained consistent at six during the year ended December 31, 2023. 77 Table of Contents ​ Cost of goods sold and gross margin Cost of goods sold increased $1.3 million, or 25%, to $6.3 million for the year ended December 31, 2023, compared to the year ended December 31, 2022.
Revenue generated in the U.S. was $18.0 million for the year ended December 31, 2022, an increase of $8.9 million, or 97%, over the year ended December 31, 2021. HF revenue in the U.S. totaled $17.6 million and $8.4 million for the years ended December 31, 2022 and 2021, respectively.
Revenue generated in the U.S. was $35.1 million for the year ended December 31, 2023, an increase of $17.1 million, or 95%, over the year ended December 31, 2022. HF revenue in the U.S. totaled $34.6 million and $17.6 million for the years ended December 31, 2023 and 2022, respectively.
Other items include losses on the extinguishment of debt, interest income earned on our cash and cash equivalents and the effect of exchange rates on our foreign currency-denominated asset and liability balances. Provision for income taxes Provision for income taxes consists primarily of income taxes in foreign jurisdictions in which we conduct business.
Other income, net Other income, net consists primarily of interest income on our interest-bearing accounts, partially offset by the effect of exchange rates on our foreign currency-denominated asset and liability balances. Provision for income taxes Provision for income taxes consists primarily of income taxes in foreign jurisdictions in which we conduct business.
If these sources are insufficient to satisfy our liquidity requirements, however, we may seek to sell additional equity or enter into an additional loan agreement. If we raise additional funds by issuing equity securities, our stockholders would experience dilution. Additional debt financing, if available, may involve covenants further restricting our operations or our ability to incur additional debt.
If these sources are insufficient to satisfy our liquidity requirements, or provide funding to execute or accelerate our growth strategies, however, we may seek to sell additional equity or enter into an additional loan agreement. If we raise additional funds by issuing equity securities, our stockholders would experience dilution.
This increase was primarily due to higher sales of Barostim. Gross profit was $17.5 million for the year ended December 31, 2022, an increase of $8.1 million, or 86%, over the year ended December 31, 2021. Gross margin increased to 78% for the year ended December 31, 2022, compared to 72% for the year ended December 31, 2021.
This increase was primarily due to higher sales of Barostim. Gross profit was $33.0 million for the year ended December 31, 2023, an increase of $15.6 million, or 89%, over the year ended December 31, 2022. Gross margin increased to 84% for the year ended December 31, 2023, compared to 78% for the year ended December 31, 2022.
Barostim provides Baroreflex Activation Therapy by sending imperceptible and persistent electrical pulses to baroreceptors located in the wall of the carotid artery to signal the brain to modulate cardiovascular function. Barostim is currently approved by the FDA to improve the symptoms of patients with HFrEF and is CE Marked for HFrEF and resistant hypertension.
Barostim provides Baroreflex Activation Therapy by sending imperceptible and persistent electrical pulses to baroreceptors located in the wall of the carotid artery to signal the brain to modulate cardiovascular function.
Selling, general and administrative expenses SG&A expenses increased $22.2 million, or 80%, to $50.0 million for the year ended December 31, 2022, compared to the year ended December 31, 2021.
Selling, general and administrative expenses SG&A expenses increased $14.5 million, or 29%, to $64.5 million for the year ended December 31, 2023, compared to the year ended December 31, 2022.
All MACs have retired automatic coverage denial policies for our CPT codes, thereby allowing hospitals to be paid for the Barostim procedure.
All MACs have retired their official automatic coverage denial policies for our CPT codes, thereby allowing hospitals to submit payment requests for the Barostim procedure to be adjudicated on a claim-by-claim basis.
On the closing date, we borrowed the minimum amount of $7.5 million 77 Table of Contents under the Loan Agreement. The term loans advanced pursuant to the Loan Agreement (collectively, the “Term Loans”) bear interest at a floating rate per annum equal to the sum of (a) the greater of (i) the prime rate and (ii) 5.50% plus (b) 2.65%.
The term loans advanced pursuant to the Loan Agreement (collectively, the “Term 80 Table of Contents Loans”) bear interest at a floating rate per annum equal to the sum of (a) the greater of (i) the prime rate and (ii) 5.50% plus (b) 2.65%. The Term Loans mature on January 31, 2028 and require interest-only payments until November 1, 2027.
Cash flows The following table sets forth the primary sources and uses of cash for each of the periods presented below: ​ ​ ​ ​ ​ ​ ​ ​ Year ended ​ ​ December 31 (in thousands) ​ 2022 2021 Net cash (used in) provided by: ​ ​ Operating activities ​ $ (42,677) $ (27,732) Investing activities ​ (685) (1,183) Financing activities ​ 7,493 111,883 Effect of exchange rate changes on cash and cash equivalents ​ (9) (8) Net change in cash and cash equivalents ​ $ (35,878) $ 82,960 ​ Cash used in operating activities Net cash used in operating activities for the year ended December 31, 2022 was $42.7 million and consisted primarily of a net loss of $41.4 million and a decrease in net operating assets of $5.6 million, partially offset by $3.9 million from non-cash stock-based compensation expense and $0.4 million from the depreciation of property and equipment.
If we are unable to obtain additional financing when needed to satisfy our liquidity requirements, we may be required to delay the commercialization and marketing of Barostim. 79 Table of Contents Cash flows The following table sets forth the primary sources and uses of cash for each of the periods presented below: ​ ​ ​ ​ ​ ​ ​ ​ Year ended ​ ​ December 31 (in thousands) ​ 2023 2022 Net cash (used in) provided by: ​ ​ Operating activities ​ $ (39,021) $ (42,677) Investing activities ​ (591) (685) Financing activities ​ 23,984 7,493 Effect of exchange rate changes on cash and cash equivalents ​ 3 (9) Net change in cash and cash equivalents ​ $ (15,625) $ (35,878) ​ Cash used in operating activities Net cash used in operating activities for the year ended December 31, 2023 was $39.0 million and consisted primarily of a net loss of $41.2 million and a decrease in net operating assets of $4.8 million, partially offset by $6.3 million from non-cash stock-based compensation expense, $0.5 million from the depreciation of property and equipment and $0.2 million from amortization of deferred financing costs and loan discount.
Any such debt financing or additional equity that we raise may contain terms that are not favorable to us or our stockholders. 76 Table of Contents Additional financing may not be available at all or may only be available in amounts or on terms that we do not deem to be favorable.
Additional financing may not be available at all or may only be available in amounts or on terms that we do not deem to be favorable.
We continued investing in research and development in the near term to improve clinical outcomes, optimize patient adoption and comfort, increase patient access and enhance the physician and patient experience. Longer term, we plan to explore Barostim’s potential to expand its indications for use to other cardiovascular diseases.
We have continued investing in research and development to improve clinical outcomes, optimize patient adoption and comfort, increase patient access, and enhance the physician and patient experience.
Net cash used in operating activities for the year ended December 31, 2021 was $27.7 million and consisted primarily of a net loss of $43.1 million and a decrease in net operating assets of $1.6 million, partially offset by non-cash charges of $13.3 million related to the fair value adjustment to our convertible preferred stock warrants, $1.9 million from non-cash stock-based compensation expense and $1.3 million from the loss on debt extinguishment.
Net cash used in operating activities for the year ended December 31, 2022 was $42.7 million and consisted primarily of a net loss of $41.4 million and a decrease in net operating assets of $5.6 million, partially offset by $3.9 million from non-cash stock-based compensation expense and $0.4 million from the depreciation of property and equipment.
Net operating assets consisted primarily of inventory, accounts receivable and accrued expenses to support the growth of our operations. Cash used in investing activities: Cash used in investing activities was $0.7 million and $1.2 million for the years ended December 31, 2022 and 2021, respectively, and consisted of purchases of property and equipment.
Cash used in investing activities: Cash used in investing activities was $0.6 million and $0.7 million for the years ended December 31, 2023 and 2022, respectively, and consisted of purchases of property and equipment.
The Black-Scholes option pricing model requires the input of certain subjective assumptions, including (i) the fair value of common stock, (ii) the expected share price volatility, (iii) the expected term of the award, (iv) the risk-free interest rate and (v) the expected dividend yield. ● Fair value of common stock — Given the absence of a public trading market for our common stock prior to the IPO, the fair value of our common stock was determined by our Board of Directors with the 78 Table of Contents assistance of an unrelated third-party valuation firm.
The Black-Scholes option pricing model requires the input of certain subjective assumptions, including (i) the fair value of common stock, (ii) the expected share price volatility, (iii) the expected term of the award, (iv) the risk-free interest rate and (v) the expected dividend yield. ● Fair value of common stock — For valuations after the completion of the IPO, our Board of Directors determines the fair value of each share of common stock based on the closing price of our common stock as reported on the date of grant.
Net cash provided by financing activities for the year ended December 31, 2021 was $111.9 million and consisted primarily of proceeds from the issuance of common stock of $133.2 million, partially offset by the repayment of the outstanding debt balance and related fees of $21.3 million.
Cash provided by financing activities: Net cash provided by financing activities for the year ended December 31, 2023 was $24.0 million and consisted of $22.5 million related to proceeds from debt financing, $0.9 million related to proceeds from the Employee Stock Purchase Plan and $0.7 million related to proceeds from the exercise of common stock options, partially offset by debt financing costs of $0.2 million.
Other income (expense), net Other income, net was $1.4 million for the year ended December 31, 2022, compared to other expense, net of $14.8 million for the year ended December 31, 2021. Other income, net in 2022 was primarily driven by $1.5 million in interest income on our interest-bearing account.
Other income, net Other income, net was $3.9 million for the year ended December 31, 2023, compared to $1.4 million for the year ended December 31, 2022. This increase was primarily driven by higher interest rates on interest-bearing accounts partially offset by a lower cash balance.
Interest expense Interest expense decreased $2.1 million, or 93%, to $0.2 million for the year ended December 31, 2022, compared to the year ended December 31, 2021. This was driven primarily by the repayment of the outstanding debt in November 2021 under the Horizon loan agreement.
Interest expense Interest expense increased $1.6 million, to $1.8 million for the year ended December 31, 2023, compared to the year ended December 31, 2022. This increase was driven by the interest expense on borrowings under the Loan Agreement entered into on October 31, 2022.
We have the option to draw down (i) the remaining $7.5 million of the first tranche from the filing date of our Annual Report on Form 10-K for the year ended December 31, 2022 until September 30, 2023, (ii) up to $30.0 million less the amount funded from the first tranche between September 1, 2023 and December 15, 2023 if we achieve trailing three months revenue of $5.75 million prior to June 30, 2023, and (iii) up to $20.0 million between September 1, 2024 and December 15, 2024 if we achieve trailing three months revenue of $9.0 million prior to June 30, 2024.
The Term Loans are secured by substantially all of our personal property. We have the option to draw down up to $20.0 million between September 1, 2024 and December 15, 2024 if we achieve trailing three months revenue of $9.0 million prior to June 30, 2024.
Since our inception we have generated minimal revenue, as our activities have consisted primarily of developing Barostim Therapy, conducting our BeAT-HF pre-market and post-market pivotal studies in the U.S. and filing for regulatory approvals.
Barostim is currently indicated by the FDA for patients who are NYHA Class III or II (who had a recent history of Class III) despite treatment with guideline-directed medical therapies (medications and devices), have a LVEF ≤ 35% and a NT-proBNP Since our inception our activities have consisted primarily of developing Barostim Therapy, conducting our BeAT-HF pre-market and post-market pivotal studies in the U.S. and filing for regulatory approvals.
Gross margin for the year ended December 31, 2022 was higher due to a decrease in the cost per unit and an increase in the average selling price. This was partially offset by a larger percentage of our revenue units coming from full systems versus battery replacements.
Gross margin for the year ended December 31, 2023 was higher due to a decrease in the cost per unit and an increase in the average selling price. Research and development expenses R&D expenses increased $1.7 million, or 17%, to $11.6 million for the year ended December 31, 2023, compared to the year ended December 31, 2022.
Total revenue units in Europe increased to 231 for 74 Table of Contents the year ended December 31, 2022, from 176 for the prior year period. The revenue increase was primarily due to the lessening impact of the COVID-19 pandemic in Europe.
Revenue generated in Europe was $4.2 million for the year ended December 31, 2023, a decrease of $0.3 million, or 6%, over the year ended December 31, 2022. Total revenue units in Europe decreased to 207 for the year ended December 31, 2023, from 231 for the prior year period.
As a result of these investments and our commercialization efforts, we expect to continue to incur net losses for the next several years, which may require additional funding and could include future equity and debt financing. ​ Recent developments Since it was reported to have surfaced in December 2019, a novel strain of coronavirus disease, COVID-19, has spread across the world and has been declared a pandemic by the World Health Organization.
As a result of these investments and our commercialization efforts, we expect to continue to incur net losses for the next several years, which may require additional funding and could include future equity and debt financing. ​ 74 Table of Contents Recent developments In December 2023, the FDA approved expanded labeling for Barostim based on the BeAT-HF trial data, resulting in simplification and clarification of the indications for use as well as inclusion of the primary endpoint results, the 6, 12 and 24 month symptomatic data, the Win Ratio and the all-cause mortality data in the “Clinical Summary” discussion included in Barostim’s indications for use.
Removed
Efforts to contain the spread of COVID-19 have been significant and governments around the world, including in the U.S., implemented severe travel restrictions, social distancing requirements, quarantines, stay-at-home orders and other significant restrictions.
Added
On March 10, 2023, we borrowed the $7.5 million remaining under the first tranche of the Loan Agreement. On December 15, 2023, we borrowed $15.0 million under the second tranche of the Loan Agreement. We had $30.0 million in outstanding Term Loans under the Loan Agreement at December 31, 2023.
Removed
As a result, the COVID-19 pandemic presented a substantial public health and economic challenge and is affecting hospitals, physicians, patients, communities and business 70 Table of Contents operations, as well as contributing to significant volatility and negative pressure on the U.S. and world economy and in financial markets.
Added
The Loan Agreement provides for an additional tranche of up to $20.0 million, based on the timing and other conditions set forth in the Loan Agreement .
Removed
The COVID-19 pandemic has negatively impacted our business, financial condition and results of operations by decreasing and delaying procedures performed to implant Barostim, and we expect the pandemic will continue to negatively impact our business, financial condition and results of operations.
Added
We currently believe this would increase our annual market opportunity in the U.S. to an estimated $2.2 billion, or 76,000 patients, based on this new long-term safety and effectiveness data as well as our commercial experience and, as discussed below, the new reimbursement assignment for Barostim in 2024. ​ In the 2024 OPPS final rule issued in November 2023, Barostim was reassigned to New Technology APC 1580, which carries an average payment amount of $45,000.
Removed
Beginning in March 2020, our revenue was negatively impacted by COVID-19 as healthcare facilities and clinics began restricting in-person access to their clinicians, reducing patient consultations and treatments or temporarily closing their facilities.
Added
On March 10, 2023, we borrowed the $7.5 million remaining under the first tranche of the Loan Agreement. On December 15, 2023, we borrowed $15.0 million under the second tranche of the Loan Agreement. We had $30.0 million in outstanding Term Loans under the Loan Agreement at December 31, 2023.
Removed
In response to the COVID-19 pandemic, we implemented a variety of measures intended to help us manage its impact while maintaining business continuity to support our customers and patients.
Added
Additional debt financing, if available, may involve covenants further restricting our operations or our ability to incur additional debt. Any such debt financing or additional equity that we raise may contain terms that are not favorable to us or our stockholders.
Removed
These measures include: ● Establishing safety protocols, facility enhancements and work-from-home strategies to protect our employees; ● Ensuring that our manufacturing and supply chain operations remain intact and operational; ● Keeping our workforce intact, including our experienced and specialized U.S. sales and clinical support team; ● Implementing virtual physician education programs to support opening new accounts with minimal in person interaction; and ● Increasing our capital resources through the completion of the IPO, which resulted in net proceeds of $133.2 million.
Added
Net operating assets consisted primarily of inventory, accounts receivable, prepaid expenses and other current assets, accrued expenses to support the growth of our operations and accounts payable.
Removed
Our hospital customers in the U.S. and Europe began to gradually perform elective procedures again during the fourth quarter of 2020.
Added
On the closing date, we borrowed the minimum amount of $7.5 million under the Loan Agreement. On March 10, 2023, we borrowed the $7.5 million remaining under the first tranche of the Loan Agreement. On December 15, 2023, we borrowed $15.0 million under the second tranche of the Loan Agreement.
Removed
As the pandemic eased throughout 2021, we experienced the following positive trends: ● Strong physician participation in our virtual educational events; ● Expansion into new accounts; and ● Hospitals accepting patients for elective procedures at closer to pre-pandemic levels in the U.S.
Removed
However, procedure volumes were again negatively impacted by the Delta and Omicron variants of COVID-19 in the third and fourth quarters of 2021 and continuing into the first quarter of 2022. By March 2022 and continuing through the date of this Annual Report on Form 10-K, implant centers resumed procedures at more normal levels.
Removed
The extent to which the business recovers from the COVID-19 pandemic will depend on future developments, which are highly uncertain and cannot be predicted, including new information that may emerge concerning the severity and spread of COVID-19 and its variants and the actions to contain the spread of COVID-19 and its variants or treat its impact.
Removed
Other income (expense), net Other income, net consists primarily of interest income on our interest-bearing account. Other expense, net consists primarily of the fair value adjustments related to our formerly outstanding convertible preferred stock warrants, which were accounted for as a liability and marked-to-market at each reporting period.
Removed
The final fair value adjustment of the warrant liability was recorded upon the closing of the IPO in connection with the conversion of the warrants to common stock warrants.
Removed
Legacy hypertension revenue in the U.S. totaled $0.5 million and $0.7 million for each of the years ended December 31, 2022 and 2021, respectively. Revenue generated in Europe was $4.4 million for the year ended December 31, 2022, an increase of $0.6 million, or 14%, over the year ended December 31, 2021.
Removed
Research and development expenses R&D expenses increased $2.5 million, or 33%, to $10.0 million for the year ended December 31, 2022, compared to the year ended December 31, 2021.
Removed
Other expense, net in 2021 was primarily driven by a $13.7 million increase in expense related to the increase in fair value of our convertible preferred stock warrants due to the change in the value of our common stock from December 31, 2021 to July 2, 2021, which is the date the warrants converted to common stock warrants.
Removed
The expense in 2021 was also due to a $1.3 million loss on debt extinguishment in connection with the November 2021 repayment of the outstanding debt under the Horizon loan agreement.
Removed
Our net cash used in operating activities for the years ended December 31, 2022 and 2021, was $42.7 million and $27.7 million, respectively. Prior to the IPO, our operations were financed primarily by aggregate net proceeds from the sale of our convertible preferred stock of $383.1 million, as well as debt financing.
Removed
In September 2019, we entered into the Horizon loan agreement to borrow $20.0 million, which was fully repaid on November 3, 2021. In July 2020, we completed an equity financing pursuant to which we issued 62,500,000 shares of Series G convertible preferred stock at a price of $0.80 per share, for net proceeds of $49.8 million after deducting offering expenses.
Removed
On July 2, 2021, we closed our IPO for net proceeds from the offering, after deducting the underwriting discount and other offering expenses payable by us, of $133.2 million.
Removed
If we are unable to obtain additional financing when needed to satisfy our liquidity requirements, we may be required to delay the commercialization and marketing of Barostim.
Removed
The Term Loans mature on January 31, 2028 and require interest-only payments until November 1, 2027. The Term Loans are secured by substantially all of our personal property.
Removed
The valuation was determined in accordance with the guidance provided by the American Institute of Certified Public Accountants Practice Guide, Valuation of Privately-Held Company Equity Securities Issued as Compensation.
Removed
For the valuation as of the date of pricing of the IPO, the fair value of our common stock was determined by our Board of Directors to be the public offering price of the shares of common stock issued in the IPO.
Removed
For valuations after the completion of the IPO, our Board of Directors determines the fair value of each share of common stock based on the closing price of our common stock as reported on the date of grant.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

3 edited+0 added−1 removed3 unchanged
Biggest changeWe believe this institution has sufficient assets and liquidity to conduct its operations in the ordinary course of business with little or no credit risk to us. ​ 80 Table of Contents
Biggest changeCredit risk As of December 31, 2023 and 2022, our cash and cash equivalents were maintained with financial institutions which we believe have sufficient assets and liquidity to conduct their operations in the ordinary course of business with little or no credit risk to us; however, our cash balances were in excess of insured limits. ​ 83 Table of Contents
We do not currently use or plan to use financial derivatives in our investment portfolio. 79 Table of Contents ​ Foreign currency exchange rate risk Portions of our revenue and operating expenses that are incurred outside the U.S. are denominated in foreign currencies and are subject to fluctuations due to changes in foreign currency exchange rates, particularly changes in the Euro.
We do not currently use or plan to use financial derivatives in our investment portfolio. ​ 82 Table of Contents Foreign currency exchange rate risk Portions of our revenue and operating expenses that are incurred outside the U.S. are denominated in foreign currencies and subject to fluctuations due to changes in foreign currency exchange rates, particularly changes in the Euro.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk Interest rate risk The risk associated with fluctuating interest rates is primarily limited to our cash equivalents and debt entered into under the Loan Agreement, which are carried at quoted market prices and the prime rate, respectively.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk Interest rate risk The risk associated with fluctuating interest rates is primarily limited to our cash equivalents and debt under the Loan Agreement, which are carried at quoted market prices and the prime rate, respectively.
Removed
Credit risk As of December 31, 2022 and 2021, our cash and cash equivalents were maintained with one financial institution in the U.S., and our current deposits are likely in excess of insured limits.

Other CVRX 10-K year-over-year comparisons