10q10k10q10k.net

What changed in ELUTIA INC.'s 10-K — 2023 vs 2024

vs

Paragraph-level year-over-year comparison of ELUTIA INC.'s 2023 and 2024 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 2024 report.

+489 added−497 removedSource: 10-K (2025-03-11) vs 10-K (2024-03-11)

Top changes in ELUTIA INC.'s 2024 10-K

489 paragraphs added · 497 removed · 380 edited across 8 sections

Item 1. Business

Business — how the company describes what it does

119 edited+38 added−43 removed143 unchanged
Biggest changeWith the sale of our Orthobiologics Business in November 2023 to Berkeley (as described in further detail below), we no longer operate our former Richmond, California human tissue processing and distribution facility; however, we continue to have a contract manufacturing relationship with Berkeley under which we receive SimpliDerm. 4 ​ Table of Contents Sale of Orthobiologics Business On November 8, 2023, we completed the sale to Berkeley of substantially all of the assets of our Orthobiologics segment (the “Orthobiologics Business”), which were comprised of assets related to our business of (i) researching, developing, administering, insuring, operating, commercializing, manufacturing, selling and marketing our Orthobiologics products, and (ii) contract manufacturing of particulate bone, precision milled bone, cellular bone matrix, acellular dermis, soft tissue and other products.
Biggest changeWith the sale of our Orthobiologics Business in November 2023 to Berkeley as described in further detail below, we no longer operate our former Richmond, California human tissue processing and distribution facility; however, we continue to have a contract manufacturing relationship with Berkeley under which we receive SimpliDerm. ​ Discontinued Operations - Sale of Orthobiologics Business On November 8, 2023, we completed the sale of substantially all of the assets relating to our former Orthobiologics Business to Berkeley.
Our executive management team has extensive experience in the regenerative medicine and medical device industries, spanning R&D, operations, manufacturing and commercial. This experience allows us to operate with a deep understanding of the 5 ​ Table of Contents underlying trends in regenerative medicine and the intertwined scientific, clinical, regulatory, commercial and manufacturing functions that drive success in this industry.
Our executive management team has extensive experience in the regenerative medicine and medical device industries, spanning R&D, 5 ​ Table of Contents operations, manufacturing and commercial. This experience allows us to operate with a deep understanding of the underlying trends in this industry and the intertwined scientific, clinical, regulatory, commercial and manufacturing functions that drive success.
Physicians demonstrated a preference for usage of an antibiotic hydration solution in higher infection risk patients (p 9 ​ Table of Contents CARE Plus Study The CARE Plus Study, a single-center, post-market, retrospective cohort study, assessed outcomes in patients undergoing CIED implantation with either a biologic CanGaroo Envelope, Medtronic’s non-biologic TYRX envelope, or no envelope.
Physicians demonstrated a preference for usage of an antibiotic hydration solution in higher infection risk patients (p ​ CARE Plus Study ​ The CARE Plus Study, a single-center, post-market, retrospective cohort study, assessed outcomes in patients undergoing CIED implantation with either a biologic CanGaroo Envelope, Medtronic’s non-biologic TYRX envelope, or 9 ​ Table of Contents no envelope.
License Agreement with Cook Biotech On May 31, 2017, we entered into a license agreement, which we refer to as the Cook License Agreement, with Cook Biotech under which Cook Biotech granted to us an exclusive worldwide sublicensable license under certain licensed patents to make, have made, use, offer for sale, sell and import CorMatrix ECM for Pericardial Closure, CorMatrix ECM for Cardiac Tissue Repair, CorMatrix ECM for Carotid Repair, CorMatrix ECM for Vascular Repair, TYKE Patch, Pledget and Intracardiac, and CanGaroo ECM Envelope (into which implantable cardiac pacemaker or defibrillator devices are to be inserted).
License Agreement with Cook On May 31, 2017, we entered into a license agreement, which we refer to as the Cook License Agreement, with Cook under which Cook granted to us an exclusive worldwide sublicensable license under certain licensed patents to make, have made, use, offer for sale, sell and import CorMatrix ECM for Pericardial Closure, CorMatrix ECM for Cardiac Tissue Repair, CorMatrix ECM for Carotid Repair, CorMatrix ECM for Vascular Repair, TYKE Patch, Pledget and Intracardiac, and CanGaroo ECM Envelope (into which implantable cardiac pacemaker or defibrillator devices are to be inserted).
Under certain circumstances we will have the right to manufacture the SIS ECM used in the licensed products, provided that in such cases we are required to pay Cook Biotech a low single digit royalty on net sales of the licensed products that include the SIS ECM material manufactured by us and that are covered by a valid enforceable claim of a licensed patent.
Under certain circumstances we will have the right to manufacture the SIS ECM used in the licensed products, provided that in such cases we are required to pay Cook a low single digit royalty on net sales of the licensed products that include the SIS ECM material manufactured by us and that are covered by a valid enforceable claim of a licensed patent.
Upon a change in control transaction, which includes an acquisition of 50% or more of our then outstanding capital stock, we will be obligated to pay Cook Biotech the total amount of all license fees that have not yet been paid within a specified period after the consummation of such change in control transaction.
Upon a change in control transaction, which includes an acquisition of 50% or more of our then outstanding capital stock, we will be obligated to pay Cook the total amount of all license fees that have not yet been paid within a specified period after the consummation of such change in control transaction.
We use annual internal audits, combined with external audits by regulatory agencies and commercial partners to monitor our quality control practices. Our Roswell, Georgia facility is registered with the FDA as a medical device manufacturing establishment. In addition to Cook Biotech, we use other third-party suppliers to support our internal manufacturing processes.
We use annual internal audits, combined with external audits by regulatory agencies and commercial partners to monitor our quality control practices. Our Roswell, Georgia facility is registered with the FDA as a medical device manufacturing establishment. In addition to Cook, we use other third-party suppliers to support our internal manufacturing processes.
(“Sientra”). Through our direct sales force and leveraging our existing commercial partners and sales agents, we believe we can expand our customer base and further strengthen our existing customer relationships and increase penetration in our priority markets. We have a well-established and scalable internal manufacturing facility along with our corporate headquarters and other administrative location.
Through our direct sales force and leveraging our existing commercial partners and sales agents, we believe we can expand our customer base and further strengthen our existing customer relationships and increase penetration in our priority markets. ​ We have a well-established and scalable internal manufacturing facility along with our corporate headquarters and other administrative location.
A total of 35 adverse events (AEs) occurred in 27 (25.2%) patients, with no difference in AE type or rates between ADM groups, and no AEs deemed related. The observed AE profiles and rates were similar to those published for other ADMs in breast reconstruction.
A total of 35 adverse events (“AEs”) occurred in 27 (25.2%) patients, with no difference in AE type or rates between ADM groups, and no AEs deemed related. The observed AE profiles and rates were similar to those published for other ADMs in breast reconstruction.
Excluding any patent term extension, our issued patents relating to our technology for CanGaroo are anticipated to expire starting in 2027, and our issued patent that relates to our technology for SimpliDerm is anticipated to expire in 2033. There can be no assurance that any pending patent applications will ultimately be issued as patents.
Excluding any patent term extension, our issued patents relating to our technology for EluPro and CanGaroo are anticipated to expire starting in 2027, and our issued patent that relates to our technology for SimpliDerm is anticipated to expire in 2033. There can be no assurance that any pending patent applications will ultimately be issued as patents.
Cook Biotech has the right to terminate the license granted to us in the Subfields or convert such license to a non-exclusive license, if we fail to comply with such minimum purchase requirement or diligence obligations.
Cook has the right to terminate the license granted to us in the Subfields or convert such license to a non-exclusive license, if we fail to comply with such minimum purchase requirement or diligence obligations.
Analysis of adverse patient outcomes and events occurring up to 12 months post-implantation revealed that most patients with at least two infection risk factor received an antibacterial envelope (77.9% any envelope vs. 52.1% no envelope, p HEAL Study The HEAL Study was a retrospective cohort study of CIED patients who were presenting for reoperation after a prior implantation.
Analysis of adverse patient outcomes and events occurring up to 12 months post-implantation revealed that most patients with at least two infection risk factors received an antibacterial envelope (77.9% any envelope vs. 52.1% no envelope, p ​ HEAL Study ​ The HEAL Study was a retrospective cohort study of CIED patients who were presenting for reoperation after a prior implantation.
Other major issues are damage to the surrounding soft tissue, altering of the mechanical properties or appearance of the original tissue and increased risk of infection. HADM products offer an “off the shelf” biologic choice for reconstructive procedures, but they have their own limitations. The use of harsh chemicals to remove the cells can damage the extracellular matrix.
Other major issues are damage to the surrounding soft tissue, altering of the mechanical properties or appearance of the original tissue and increased risk of infection. ​ ADM products offer an “off the shelf” biologic choice for reconstructive procedures, but they have their own limitations. The use of harsh chemicals to remove the cells can damage the extracellular matrix.
We do not intend to apply for the UKCA for our cardiovascular and CanGaroo products in the near future. ​ Regulations Governing Fraud and Abuse Within the United States, our products and our customers are subject to extensive regulation by a wide range of federal and state agencies that govern business practices in the medical device and healthcare industry.
We do not intend to apply for the UKCA for our Cardiovascular and Device Protection products in the near future. ​ Regulations Governing Fraud and Abuse Within the United States, our products and our customers are subject to extensive regulation by a wide range of federal and state agencies that govern business practices in the medical device and healthcare industry.
Recalls ​ FiberCel Recall On June 2, 2021, we issued a voluntary recall pertaining to a single donor lot of our FiberCel Fiber Viable Bone Matrix, a bone repair product formerly distributed by Medtronic PLC, after learning of post-surgical infections reported 24 ​ Table of Contents in several patients treated with the product, including some patients that tested positive for tuberculosis (the “FiberCel Recall”).
Product Recalls ​ FiberCel Recall On June 2, 2021, we issued a voluntary recall pertaining to a single donor lot of our FiberCel Fiber Viable Bone Matrix, a bone repair product formerly distributed by Medtronic PLC, after learning of post-surgical infections reported in several patients treated with the product, including some patients that tested positive for tuberculosis (the “FiberCel Recall”).
Class II devices, of moderate risk, require FDA clearance through a 510(k) submission, involving compliance with general controls and potential imposition of special controls, such as performance standards and post-market surveillance. The Quality System Regulation (“QSR”) is a key aspect of general controls, ensuring adherence to quality standards in 17 ​ Table of Contents manufacturing processes.
Class II devices, of moderate risk, require FDA clearance through a 510(k) submission, involving compliance with general controls and potential imposition of special controls, such as performance standards and post-market surveillance. The Quality System Regulation (“QSR”) is a key aspect of general controls, ensuring adherence to quality standards in manufacturing processes.
Thus, migration and erosion have been shown to be similarly frequent and can both result in infection or require replacement of the device. Other complications include those associated 6 ​ Table of Contents with Twiddler’s syndrome, which is a malfunction of a pacemaker due to manipulation of the device by the patient, and discomfort at the implant site.
Thus, migration and erosion have been shown to be similarly frequent and can both result in infection or require replacement of the device. Other complications include those associated with Twiddler’s syndrome, which is a malfunction of a pacemaker due to manipulation of the device by the patient, and discomfort at the implant site.
Our owned patent portfolio includes 14 U.S. patents and six U.S. patent applications that relate to our technology for CanGaroo, including issued claims covering biological envelopes and pending claims covering their use. In addition, we own one U.S. patent that relates to our technology for SimpliDerm that claims a method of preparing an acellular dermal matrix.
Our owned patent portfolio includes 15 U.S. patents and six U.S. patent applications that relate to our technology for EluPro and CanGaroo, including issued claims covering biological envelopes and pending claims covering their use. In addition, we own one U.S. patent that relates to our technology for SimpliDerm that claims a method of preparing an acellular dermal matrix.
For neurostimulator devices, the common location of these devices, which is in the soft tissue of the abdomen or back, increases the risk of migration and erosion and that of patient discomfort when sleeping or sitting. In 1972, Dr.
For neurostimulator devices, the common location of these devices, which is in the soft tissue of the abdomen or back, increases the risk of migration and erosion and that of patient discomfort when sleeping or sitting.
However, our owned and licensed patents could be invalidated or narrowed or otherwise fail to adequately protect our proprietary and intellectual property position and our pending owned and licensed patent applications, and any patent applications that we may in the future file or license from third parties may not result in the issuance of patents.
However, our owned and licensed patents could be invalidated or narrowed or otherwise fail to adequately protect our proprietary and intellectual property position and our 15 ​ Table of Contents pending owned and licensed patent applications, and any patent applications that we may in the future file or license from third parties may not result in the issuance of patents.
Cook Biotech retained certain co-exclusive rights to the CorMatrix ECM for Vascular Repair.
Cook retained certain co-exclusive rights to the CorMatrix ECM for Vascular Repair.
The HIPAA false statements statute prohibits, among other things, knowingly and willfully falsifying, concealing or covering up a material fact or making any materially false, fictitious or fraudulent statement or representation in connection with the delivery of, or payment for, healthcare benefits, items or 21 ​ Table of Contents services.
The HIPAA false statements statute prohibits, among other things, knowingly and willfully falsifying, concealing or covering up a material fact or making any materially false, fictitious or fraudulent statement or representation in connection with the delivery of, or payment for, healthcare benefits, items or services.
Item 1. Business. Overview At Elutia, our mission is to humanize medicine so that patients can thrive without compromise. As a commercial-stage company, we seek to leverage our unique understanding of biologics to improve the interaction between implanted medical devices and patients by reducing complications associated with these surgeries.
Item 1. Business. Overview At Elutia, our mission is to humanize medicine so that patients can thrive without compromise. As a commercial-stage company, we seek to leverage our unique understanding of biologics combined with local drug delivery to improve the interaction between implanted medical devices and patients by reducing complications associated with these surgeries.
We do not own or in-license any patents or patent applications covering our other products. 15 ​ Table of Contents As with other medical device and regenerative medicine companies, our ability to maintain and solidify our proprietary and intellectual property position for our product candidates will depend on our success in obtaining effective patent claims and maintaining and enforcing claims that are granted.
We do not own or in-license any patents or patent applications covering our other products. As with other medical device and regenerative medicine companies, our ability to maintain and solidify our proprietary and intellectual property position for our product candidates will depend on our success in obtaining effective patent claims and maintaining and enforcing claims that are granted.
State, local, and foreign laws impact business practices in the medical device and pharmaceutical industries, including state anti-kickback and false claims laws affecting research, distribution, sales, and marketing. These laws also extend to claims involving healthcare items reimbursed by third-party payors or patients and may restrict payments to healthcare providers and referral sources.
State, local, and foreign laws impact business practices in the medical device and pharmaceutical industries, including state anti-kickback and false claims laws affecting research, distribution, sales, and marketing. These laws also extend to claims involving healthcare items reimbursed by third-party payors or patients and may restrict payments to 21 ​ Table of Contents healthcare providers and referral sources.
Third-party payors are increasingly auditing and challenging the prices charged for medical products and services with concern for upcoding, miscoding, using inappropriate modifiers, or billing for inappropriate care settings. Some third-party payors must approve coverage for new or innovative devices or procedures before they will reimburse healthcare providers who use the products or therapies.
Third-party payors are increasingly auditing and challenging the prices charged for medical products and services with concern for upcoding, miscoding, using inappropriate modifiers, or billing for inappropriate 22 ​ Table of Contents care settings. Some third-party payors must approve coverage for new or innovative devices or procedures before they will reimburse healthcare providers who use the products or therapies.
We believe the results from the completed studies provide evidence supporting the safety of the CanGaroo Envelope when used for the implantation of CIEDs in humans. CARE Study and SECURE Study The CARE Study, a retrospective, post-market investigation, gathered data from 96 consecutive patients who underwent simultaneous implantation of CIED and CanGaroo Envelope at a single institution.
We believe the results from the completed studies provide evidence supporting the benefits of the biomatrix in EluPro and CanGaroo when used for the implantation of CIEDs in humans. ​ CARE Study and SECURE Study ​ The CARE Study, a retrospective, post-market investigation, gathered data from 96 consecutive patients who underwent simultaneous implantation of CIED and CanGaroo Envelope at a single institution.
These sales representatives and agents are supported by teams of professionals focused on sales management, sales operations, ongoing training, analytics and marketing. SimpliDerm, our women’s health product, is sold using independent sales agents and Sientra, who Elutia has granted certain non-exclusive rights in the United States to market, sell and distribute SimpliDerm for select use in reconstruction surgery.
These sales representatives and agents are supported by teams of professionals focused on sales management, sales operations, ongoing training, analytics and marketing. ​ SimpliDerm, our Women’s Health product, is sold using independent sales agents and a partnership with Tiger, who Elutia has granted certain non-exclusive rights in the United States to market, sell and distribute SimpliDerm for select use in reconstruction surgery.
In addition, there is a limited availability in larger sizes for some of these products. 11 ​ Table of Contents Our Solution We designed SimpliDerm to offer improved biocompatibility and better tissue integration in the patient.
In addition, there is a limited availability in larger sizes for some of these products. ​ Our Solution We designed SimpliDerm to offer improved biocompatibility and better tissue integration in the patient.
The reference to our website address does not constitute incorporation by reference of the information contained on or available through our website, and you should not consider such information to be a part of this Annual Report. ​ 25 ​ Table of Contents
The reference to our website address does not constitute incorporation by reference of the information contained on or available through our website, and you should not consider such information to be a part of this Annual Report. ​
IDE regulations govern investigational device labeling, restrict 18 ​ Table of Contents promotion, and outline recordkeeping, reporting, and monitoring responsibilities for sponsors and investigators. If a device presents a "significant risk" as defined by the FDA, an IDE application must be submitted and approved before initiating human clinical studies.
IDE regulations govern investigational device labeling, restrict promotion, and outline recordkeeping, reporting, and monitoring responsibilities for sponsors and investigators. If a device presents a "significant risk" as defined by the FDA, an IDE application must be submitted and approved before initiating human clinical studies.
SimpliDerm was closest 12 ​ Table of Contents to native dermal matrix in both acid-soluble collagen content and collagenase degradation. Differential scanning calorimetry was performed on the samples, and SimpliDerm and AlloDerm RTU were equivalently close to native dermis, while DermACELL showed the largest difference.
SimpliDerm was closest to native dermal matrix in both acid-soluble collagen content and collagenase degradation. Differential scanning calorimetry was performed on the samples, and SimpliDerm and AlloDerm RTU were equivalently close to native dermis, while DermACELL showed the largest difference.
Our commercial success depends in part on 22 ​ Table of Contents the extent to which governmental authorities, private health insurers and other third-party payors provide coverage for and establish adequate reimbursement levels for the procedures during which our products are used.
Our commercial success depends in part on the extent to which governmental authorities, private health insurers and other third-party payors provide coverage for and establish adequate reimbursement levels for the procedures during which our products are used.
We plan to continue our growth and accelerate our penetration into our target markets through our direct sales force and by leveraging our relationships with our commercial partners, Boston Scientific, Sientra and LeMaitre Vascular that have well-established and significant infrastructure and experience in our target markets. Pipeline of Innovative Drug-Eluting Biologics Products.
We plan to continue our growth and accelerate our penetration into our target markets through our direct sales force and by leveraging our relationships with our commercial partners, Boston Scientific, Tiger and LeMaitre Vascular, each of which have well-established and significant infrastructure and experience in our target markets. Pipeline of Innovative Drug-Eluting Biologics Products.
The products can lack uniformity as determined by pliability in each direction, elasticity and non-uniform thickness. Such issues can affect how rapidly, and the extent to which the implant is integrated, as well as the resulting tissue strength.
The products can lack uniformity as determined by pliability in each direction, elasticity and non-uniform thickness. Such issues can affect how 11 ​ Table of Contents rapidly, and the extent to which the implant is integrated, as well as the resulting tissue strength.
The license requires that we order and pay for a minimum of at least $500,000 of SIS ECM per calendar year for use in the Subfields.
The license requires that we order and pay for a minimum of at least 16 ​ Table of Contents $500,000 of SIS ECM per calendar year for use in the Subfields.
Cardiovascular Products We also sell additional cardiovascular products derived from our specialized SIS ECM, all of which received 510(k) regulatory clearance as medical devices: ● ProxiCor for Cardiac Tissue Repair (“CTR”) is cleared for use as an intracardiac patch for repairs such as atrial and ventricular septal defects and suture-line buttressing, as well as for pledgets.
We ship the product directly to hospitals. ​ Cardiovascular Products ​ We also sell additional cardiovascular products derived from our specialized SIS ECM, all of which received 510(k) regulatory clearance as medical devices: ​ ● ProxiCor for Cardiac Tissue Repair (“CTR”) is cleared for use as an intracardiac patch for repairs such as atrial and ventricular septal defects and suture-line buttressing, as well as for pledgets.
Transmission electron microscopy demonstrated intact collagen fibril structures in native dermis and SimpliDerm, supporting the conclusion that the decellularization process used to produce SimpliDerm did not damage the ultrastructural architecture of the collagen matrix. ​ Additional testing was performed that compared the properties of SimpliDerm, AlloDerm RTU and DermACELL to native dermis.
Transmission electron microscopy demonstrated intact collagen fibril structures in native dermis and SimpliDerm, supporting the conclusion that 12 ​ Table of Contents the decellularization process used to produce SimpliDerm did not damage the ultrastructural architecture of the collagen matrix. ​ Additional testing was performed that compared the properties of SimpliDerm and alternative HADMs, AlloDerm RTU and DermACELL, to native dermis.
We have commercial agreements with major medical device companies, including our strategic relationships with Boston Scientific, Sientra and LeMaitre Vascular, which, along with others, we collectively refer to as our commercial partners, to promote or commercialize some of our products.
We have commercial agreements with major medical device companies, including our strategic relationships with Boston Scientific, Tiger and LeMaitre Vascular, which we collectively refer to as our commercial partners, to promote or commercialize some of our products.
However, as of March 2024, no biologic matrix or any other soft tissue reinforcement material, including our product, had been approved or cleared by the FDA specifically for use in breast reconstruction surgery. ​ Limitations of Existing Solutions Autologous tissue repair procedures are options for stabilizing soft tissue defects in various applications. However, these methods have limitations.
As of January 2025, no biologic matrix or any other soft tissue reinforcement material, including our product, has been approved or cleared by the FDA specifically for use in breast reconstruction surgery. ​ Limitations of Existing Solutions Autologous tissue repair procedures are options for stabilizing soft tissue defects in various applications. However, these methods have limitations.
Under the FDCA and its implementing regulations, the FDA is charged with assigning a center with primary jurisdiction, or a lead center, for review of a combination product. The designation of a lead center generally eliminates the need to receive approvals from more than one FDA component for combination products.
These products are known as combination products. Under the FDCA and its implementing regulations, the FDA is charged with assigning a center with primary jurisdiction, or a lead center, for review of a combination product. The designation of a lead center generally eliminates the need to receive approvals from more than one FDA center for combination products.
The clinical investigators in the clinical study are also subject to FDA’s regulations and must obtain patient informed consent, follow the investigational plan and study protocol, and comply with all reporting and recordkeeping requirements.
The clinical investigators in the clinical study are also subject to FDA’s regulations and must obtain patient informed consent, follow 18 ​ Table of Contents the investigational plan and study protocol, and comply with all reporting and recordkeeping requirements.
Our Proprietary Products/Solutions Our portfolio of regenerative medicine products has been developed to address the following specific markets: Device Protection and Cardiovascular Markets Market Opportunity We estimate, based on industry sources and other third-party estimates, that there were more than 600,000 procedures in the United States to install or replace implantable electronic devices (“IED”), such as pacemakers, pulse generators and defibrillators, as well as spinal cord neuromodulators and vagus nerve, deep brain and sacral nerve stimulators, which represents an estimated $600 million opportunity.
Our Proprietary Products/Solutions Our portfolio of regenerative medicine products has been developed to address the following specific markets: Device Protection and Cardiovascular Markets Market Opportunity ​ We estimate, based on industry sources and other third-party estimates, that there were more than 600,000 procedures in the United States to install or replace implantable electronic devices (“IED”), such as pacemakers, pulse generators and defibrillators, as well as spinal cord neuromodulators and vagus nerve, deep brain and sacral nerve stimulators, which represents an estimated $600 million opportunity. ​ Limitations of Existing Solutions ​ CIEDs are used extensively to treat cardiac arrhythmias as well as heart failure.
To obtain 510(k) clearance, a product sponsor must submit to the FDA a premarket notification submission demonstrating that the proposed device is “substantially equivalent” to a predicate device already on the market.
To obtain 510(k) clearance, a product sponsor must submit to the FDA a premarket notification submission 17 ​ Table of Contents demonstrating that the proposed device is “substantially equivalent” to a predicate device already on the market.
The earn-out payments are equal to 10% of the actual revenue earned by Berkeley in each of the five years after the closing of the sale from sales of specified Orthobiologics products under the purchase agreement (including improvements, modifications, derivatives and enhancements related to those products).
The earn-out payments are equal to 10% of the actual revenue earned by Berkeley in each of the five years after the closing of the sale from sales of specified Orthobiologics products under the purchase agreement (including improvements, modifications, derivatives and enhancements related to those products). There have been no earn-out payments made to date.
After expiration of our CE mark on May 23, 2024, we no longer intend to maintain our CE mark and will not continue to market our products in the EU. We will maintain compliance with the transitional Medical Devices Regulation, or MDR, requirements as applicable, including post-market surveillance and vigilance requirements.
However, with the expiration of our CE mark on May 23, 2024, we no longer maintain our CE mark and do not market our products in the EU. We will maintain compliance with the transitional Medical Devices Regulation, or MDR, requirements as applicable, including post-market surveillance and vigilance requirements.
However, from July 2024, the UK Conformity Assessment (UKCA) mark will be required for medical devices sold in Great Britain.
However, from July 2024, the UK Conformity Assessment (UKCA) 20 ​ Table of Contents mark will be required for medical devices sold in Great Britain.
As of December 31, 2023, we owned approximately 15 U.S. patents, seven U.S. patent applications, six foreign patents (in Australia, Germany, Spain, France, Great Britain and Italy), and four foreign patent applications (in Australia, Canada, and Europe); and we in-licensed three U.S. patents, 12 foreign patents (in Australia, Canada, Japan, Denmark, Germany, Great Britain, Ireland, Italy and the Netherlands), and two U.S. and five foreign patent applications (in Brazil China, Japan as well as an application with the European Patent Office).
As of December 31, 2024, we owned approximately 16 U.S. patents, eight U.S. patent applications, six foreign patents (in Australia, Germany, Spain, France, Great Britain and Italy), four foreign patent applications (in Australia, Canada, and Europe) and one Patent Cooperation Treaty application; and we in-licensed three U.S. patents, 12 foreign patents (in Australia, Canada, Japan, Denmark, Germany, Great Britain, Ireland, Italy and the Netherlands), and two U.S. and five foreign patent applications (in Brazil China and Japan, as well as an application with the European Patent Office).
Clinical practice of plastic and reconstructive surgery includes excision of tumors of the skin, vasculature, chest, oral and oropharyngeal cavities and extremities and reconstructions of the same; debridement, skin grafting and skin flaps for burn reconstructions; trauma surgery for the hands, upper and lower limbs and facial region; congenital or acquired malformations related to the hands, face, skull and jaw; surgical removal of vascular abnormalities; a range of aesthetic surgeries; and reconstructions of the breast.
Clinical practice of plastic and reconstructive surgery includes excision of tumors of the skin, vasculature, chest, oral and oropharyngeal cavities and extremities and reconstructions of the same; debridement, skin grafting and skin flaps for burn reconstructions; trauma surgery for the hands, upper and lower limbs and facial region; congenital or acquired malformations related to the hands, face, skull and jaw; surgical removal of vascular abnormalities; a range of aesthetic surgeries; and reconstructions of the breast. ​ One of the most common applications of biologic matrices in plastic and reconstructive surgery is breast reconstruction surgery after mastectomy.
As consideration for the license, we paid Cook Biotech a $200,000 license fee in 2018 and a $100,000 license fee in years 2019 through 2022, and are responsible for a yearly license fee of $100,000 until 2026.
As consideration for the license, we paid Cook a $200,000 license fee in 2018 and are responsible for a yearly license fee of $100,000 until 2026.
States are increasingly implementing regulations controlling product pricing, while third-party payors and authorities show growing interest in reference pricing systems, discounts, and list price disclosures. Human Capital As of December 31, 2023, we had 54 employees, with nearly 100% of whom were full-time employees. We believe our employee relations are good.
States are increasingly implementing regulations controlling product pricing, while third-party payors and authorities show growing interest in reference pricing systems, discounts, and list price disclosures. Human Capital As of December 31, 2024, we had 51 employees, nearly 100% of whom were full-time employees.
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; 19 ​ Table of Contents ● recalls, withdrawals, 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 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, 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 approvals for our products; or ● criminal prosecution. 19 ​ Table of Contents FDA Regulation of Combination Products Certain products may be comprised of components, such as drug components and device components that would normally be regulated under different types of regulatory authorities, and frequently by different centers at the FDA.
Sales generated in the United States represented greater than 97% of our net sales in 2023 and sales of these products outside of the United States will largely cease after May 2024 due to changes in certain international regulatory rules which require investment by us not warranted by the current level of sales in these markets. 14 ​ Table of Contents Research and Development Our research and development team has extensive experience in developing regenerative medicine and DEB products and works to design products that are intended to improve patient outcomes, simplify techniques, shorten procedures, reduce hospitalization and rehabilitation times, and, as a result, reduce costs.
Sales of our products outside of the United States ceased after May 2024 due to changes in certain international regulatory rules which required investment by us not warranted by the current level of sales in these markets. ​ Research and Development Our research and development team has extensive experience in developing regenerative medicine and DEB products and works to design products that are intended to improve patient outcomes, simplify techniques, shorten procedures, reduce hospitalization and rehabilitation times, and, as a result, reduce costs.
In Cardiovascular, we sell our specialized porcine small intestine submucosa, which is also the tissue used to make CanGaroo, for use as an intracardiac and vascular patch as well as for pericardial reconstruction. In addition, our TYKE product is designed for use in the neonatal patient population.
In Cardiovascular, we sell our specialized porcine small intestine submucosa, which is based on the same biomatrix used in EluPro and CanGaroo, for use as an intracardiac and vascular patch as well as for pericardial reconstruction. In addition, our TYKE product is designed for use in the neonatal patient population.
In 2015, a group of third-party researchers published a systematic review and meta-analysis of 60 published reports, consisting of 21 prospective, nine case-control and 30 retrospective cohort studies published between 1981 and 2013, each of which examined the rate of infection associated with the implantation of electronic devices.
While these devices are generally well tolerated, they are not free from complications. ​ In 2015, a group of third-party researchers published a systematic review and meta-analysis of 60 published reports, consisting of 21 prospective, nine case-control and 30 retrospective cohort studies published between 1981 and 2013, each of which examined the rate of infection associated with the implantation of electronic devices.
“Risk Factors - Risks Related to Intellectual Property.” As of December 31, 2023, we had 11 registered trademarks and two pending trademark applications worldwide, including trademark registrations for “Aziyo,” “CanGaroo,” “ProxiCor,” “Tyke,” “VasCure,” “SimpliDerm,” and “SimpliDerm Ellipse,” in the United States, trademark applications for “Elutia,” in Jamaica and the United States, and trademark registrations for CanGaroo in the European Union, United Kingdom and Japan.
“Risk Factors - Risks Related to Intellectual Property.” As of December 31, 2024, we had nine registered trademarks and ten pending trademark applications worldwide, including trademark registrations for “CanGaroo,” “ProxiCor,” “Tyke,” “VasCure,” “SimpliDerm,” and “SimpliDerm Ellipse,” in the United States, and for “CanGaroo” in the European Union, United Kingdom and Japan.
SimpliDerm is a pre-hydrated, HADM manufactured with our patented cell removal technology, a process that maintains the biological and structural integrity of the tissue’s extracellular matrix components and is designed to allow for rapid integration, cellular repopulation and revascularization at the surgical site. Its structurally intact extracellular matrix is designed to closely resemble natural, healthy tissue.
SimpliDerm is a pre-hydrated, human ADM manufactured with our patented cell removal technology, a process that maintains the biological and structural integrity of the tissue’s extracellular matrix components and is designed to allow for rapid integration, cellular repopulation and revascularization at the surgical site.
Success in these markets depends on product efficacy, ease of product use, product price, availability of payor coverage and adequate third-party reimbursement, customer support services for technical, clinical and reimbursement support and customer preference for, and loyalty to, the products. ​ We believe that the demonstrated clinical efficacy of our products, the breadth of our product portfolio, our in-house customer support services, our customer relationships and our reputation offer us advantages over our competitors.
Success in these markets depends on product efficacy, ease of product use, product price, availability of payor coverage and adequate third-party reimbursement, customer support services for technical, clinical and reimbursement support and customer preference for, and loyalty to, the products. ​ We believe that the demonstrated clinical efficacy of our products, the breadth of our product portfolio, our in-house customer support services, our customer relationships and our reputation offer us advantages over our competitors. ​ Our products compete primarily with implantable electronic device envelopes and other cardiovascular repair and human-derived acellular dermis products.
Our cardiovascular products, ProxiCor, Tyke and VasCure, are sold in the U.S. through LeMaitre Vascular. In April 2023, we entered into an agreement with LeMaitre Vascular granting them the exclusive U.S. distribution rights for our cardiovascular products.
In April 2023, we entered into an agreement with LeMaitre Vascular granting them the exclusive U.S. distribution rights for our cardiovascular products.
Recruiting and Retention We believe that we have been successful in attracting and retaining qualified personnel with the appropriate background and skills to support our business and its growth.
We believe our employee relations are good. 23 ​ Table of Contents Recruiting and Retention We believe that we have been successful in attracting and retaining qualified personnel with the appropriate background and skills to support our business and its growth.
The use of these materials is well-characterized in the clinical literature and recommended by recent U.S. and European consensus guidelines for certain surgical techniques.
About two-thirds of these procedures involved reconstruction of both breasts. The use of these materials is well-characterized in the clinical literature and recommended by recent U.S. and European consensus guidelines for certain surgical techniques.
FDA approves the device for commercial distribution if it deems PMA data as valid scientific evidence, ensuring reasonable assurance of safety and effectiveness. Post-approval conditions, including labeling restrictions, long-term data collection, and additional clinical studies, may accompany PMA approval. Post-market surveillance may be required as well.
FDA approves the device for commercial distribution if it deems PMA data as valid scientific evidence, ensuring reasonable assurance of safety and effectiveness. Post-approval conditions, including labeling restrictions and additional clinical studies, may accompany PMA approval. Post-market surveillance may be required as well. Non-compliance with approval conditions may lead to adverse enforcement actions, such as withdrawal of approval.
The Cook License Agreement was amended on December 21, 2017 to expand our field of use for SIS pouch devices to include other implantable electronic cardiac stimulation devices, electronic neurostimulation devices for deep brain stimulation, spinal nerve and sacral nerve stimulation to relieve chronic pain and nerve stimulation to control bladder, digestive, abdomen and bowel movements, and also add additional payment requirements. 16 ​ Table of Contents Under the Cook License Agreement, we agree to use commercially reasonable efforts to promote, solicit and expand the licensed products in certain fields of use.
The Cook License Agreement was amended on December 21, 2017 to expand our field of use for SIS pouch devices to include other implantable electronic cardiac stimulation devices, electronic neurostimulation devices for deep brain stimulation, spinal nerve and sacral nerve stimulation to relieve chronic pain and nerve stimulation to control bladder, digestive, abdomen and bowel movements, and also add additional payment requirements.
Clinical Studies Clinical studies are typically required to support a PMA and may be necessary for a 510(k) submission. In the United States, all device-related clinical investigations to determine safety and effectiveness must adhere to FDA's investigational device exemption (“IDE”) regulations.
None of our products are currently marketed pursuant to a PMA. Clinical Studies Clinical studies are typically required to support a PMA and may be necessary for a 510(k) submission. In the United States, all device-related clinical investigations to determine safety and effectiveness must adhere to FDA's IDE regulations.
In October 2023, the CDC received the results of several MTB tests on the recalled VBM lot. Three cultures and five nucleic acid tests resulted in no detection of MTB, and two other cultures of the recalled VBM lot detected MTB.
Three cultures and five nucleic acid tests resulted in no detection of MTB, and two other cultures of the recalled VBM lot detected MTB.
This number has been driven by advances in medical device technologies, reimbursement models focused on patient outcomes, and an aging population with a growing incidence of comorbidities, including diabetes, obesity and cardiovascular and peripheral vascular diseases. These comorbidities can exacerbate various immune responses and contribute to other complications upon device implant.
This number has been driven by advances in medical device technologies, reimbursement models focused on patient outcomes, and an aging population with a growing incidence of comorbidities, including diabetes, obesity and cardiovascular and peripheral vascular diseases.
The term of the collaboration is three years, and LeMaitre Vascular has the exclusive option to acquire the product line following the first year or under certain other circumstances. ​ Clinical Data We have accumulated a substantial body of clinical and pre-clinical data for our device protection products.
The term of the collaboration is three years, and LeMaitre Vascular has the exclusive option to acquire the product line through March 2026. ​ Clinical Data ​ We have accumulated a substantial body of clinical and pre-clinical data for our Device Protection products.
We have the first right, but not the obligation to initiate legal proceedings against any patent infringement in our fields of use by a third-party product that is the same as one of the licensed products.
We have the first right, but not the obligation to initiate legal proceedings against any patent infringement in our fields of use by a third-party product that is the same as one of the licensed products. Under the Cook License Agreement and SIS Material Supply Agreement, Cook is the exclusive supplier of the SIS ECM used in the licensed products.
We sell CanGaroo in the United States using our direct sales force, which as of December 31, 2023, totaled 12 sales representatives, and through our commercial partner, Boston Scientific Corporation (“Boston Scientific”), which acts as a sales agent, marketing CanGaroo and obtaining orders, and gives us access to approximately 1,000 sales representatives and clinical specialists.
We sell EluPro and CanGaroo in the United States using our direct sales force, which as of December 31, 2024, totaled 11 sales representatives and a network of 31 independent sales agents, and through our commercial partner, Boston Scientific, which acts as a sales agent, marketing EluPro and CanGaroo and obtaining orders, and gives us access to approximately 900 sales representatives and clinical specialists.
Legislative changes, including aggregate reductions in Medicare payments to providers, have occurred since the ACA's inception. Notably, heightened governmental scrutiny on product pricing has led to Congressional inquiries and legislation, emphasizing transparency, pricing relationships, and reforming reimbursement methodologies.
The impact of other healthcare reform measures under the Biden administration on our business remains uncertain. Legislative changes, including aggregate reductions in Medicare payments to providers, have occurred since the ACA's inception. Notably, heightened governmental scrutiny on product pricing has led to Congressional inquiries and legislation, emphasizing transparency, pricing relationships, and reforming reimbursement methodologies.
Stained samples of SimpliDerm retained the collagen structure (density and orientation), elastin, blood vessels and basement membrane complex that was observed in the native dermal matrix.
Histology slides of SimpliDerm and native dermal matrix were examined microscopically, using three different stains. Stained samples of SimpliDerm retained the collagen structure (density and orientation), elastin, blood vessels and basement membrane complex that was observed in the native dermal matrix.
CanGaroo is sold through both our internal sales force and independent sales agents and our commercial partner, Boston Scientific.
EluPro and CanGaroo are sold through both our internal sales force and independent sales agents and our commercial partner, Boston Scientific Corporation (“Boston Scientific”).
During this time, private payors have developed policies for coverage based on available data and literature. Third-party payors generally do not currently cover SimpliDerm or procedures using SimpliDerm. We are aware of several companies that compete, or are developing technologies, in our current and future product areas. As a result, we expect competition to remain intense.
During this time, private payors have developed policies for coverage based on available data and literature. While there are certain national and regional third-party payors who cover SimpliDerm or procedures using SimpliDerm, the majority do not. ​ We are aware of several companies that compete, or are developing technologies, in our current and future product areas.
Cook Biotech has the right to terminate the Cook License Agreement in its entirety, or convert the exclusive license of any field of use to a non-exclusive license if we fail to make any license fee when due. In February 2024, it was announced that Cook Biotech Inc. was acquired by RTI Surgical.
Cook has the right to terminate the Cook License Agreement in its entirety, or convert the exclusive license of any field of use to a non-exclusive license if we fail to make any license fee when due.
We also intend to leverage our DEB platform technology by developing and commercializing products for markets with similar unmet needs, such as neurostimulation and breast reconstruction. We also sell legacy products into the Cardiovascular market.
We intend to leverage our DEB platform technology by developing and commercializing products for markets with similar unmet needs, including breast reconstruction and neurostimulation.
We have CE mark 20 ​ Table of Contents for four of our cardiovascular products and we have had certification for updated labeling of our CanGaroo Envelope to allow for the addition of the antibiotic gentamicin since 2021.
We formerly had a CE mark for four of our cardiovascular products in the EU and had certification for updated labeling of our CanGaroo Envelope to allow for the addition of the antibiotic gentamicin.
We also compete in the marketplace to recruit and retain qualified scientific, management and sales personnel, as well as to acquire technologies and technology licenses complementary to our products or advantageous to our business. 13 ​ Table of Contents Our competitors’ products in the soft tissue repair market have been available for use for multiple years.
SimpliDerm also competes against animal-derived biological mesh products, such as AbbVie’s Strattice and Integra’s SurgiMend, as well as various synthetic mesh products. ​ We also compete in the marketplace to recruit and retain qualified scientific, management and sales personnel, as well as to acquire technologies and technology licenses complementary to our products or advantageous to our business. ​ Our competitors’ products in the soft tissue repair market have been available for use for multiple years.
Under the agreement terms, Elutia has granted Sientra certain non-exclusive rights in the United States to market, sell and distribute SimpliDerm. This agreement with Sientra gives us access to approximately 50 sales representatives to further expand our footprint and accelerate our sales.
Under the agreement terms, Elutia has granted Tiger certain non-exclusive rights in the United States to market, sell and distribute SimpliDerm. This agreement with Tiger gives us access to approximately 50 sales representatives to further expand our footprint and accelerate our sales. Clinical Data We have accumulated a substantial body of clinical and pre-clinical data for our Women’s Health products.
CanGaroo required significantly fewer capsulectomy procedures (83% less, p=.04), and histologic evaluation revealed 30% thinner capsules compared to no envelope (p=0.12) and 32% thinner capsules compared to TYRX (p=.09). The study findings underscore the potential of CanGaroo to enhance CIED implantation outcomes and streamline subsequent reoperative procedures.
CanGaroo required significantly fewer capsulectomy procedures (83% less, p=.04), and histologic evaluation revealed 30% thinner capsules compared to no envelope (p=0.12) and 32% thinner capsules compared to TYRX (p=.09).
Under the terms of this agreement, Boston Scientific receives a commission equal to a specified dollar amount per unit sold. Our direct sales representatives focus on gaining additional market access and driving market penetration, not only by selling our products, but also, by managing our commercial partnership with Boston Scientific and providing technical assistance for selling our products.
Under the terms of this agreement, Boston Scientific receives a commission equal to a specified percentage of the end-user selling price for units they sell. Our direct sales representatives and distributors focus on gaining additional market access and driving market penetration, not only by selling our products, but also, by managing partnerships and providing technical expertise.

… 120 more changes not shown on this page.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

146 edited+24 added−32 removed508 unchanged
Biggest changeAny future funding requirements will depend on many factors, including, among other things: ● continued patient, physician and market acceptance of our products; ● the scope, rate of progress and cost of our current and future pre-clinical and clinical studies; ● the cost of our research and development activities and the cost of commercializing new products or technologies; ● the cost and timing of expanding our sales and marketing capabilities; ● the cost of filing and prosecuting patent applications and maintaining, defending and enforcing our patent or other intellectual property rights; ● the cost of defending, in litigation or otherwise, any claims that we infringe, misappropriate or otherwise violate third-party patents or other intellectual property rights; ● the costs of defending against or damages payable (to the extent above the applicable insurance coverage), for example, in connection with lawsuits and claims involving the FiberCel Recall or VBM Recall; ● the cost and timing of additional regulatory approvals or certifications; ● costs associated with any product recall; ● the effect of competing technological and market developments; ● the expenses we incur in manufacturing and selling our products; ● the costs of developing and commercializing new products or technologies; ● the extent to which we acquire or invest in products, technologies and businesses, although we currently have no commitments or agreements relating to any of these types of transactions; ● the costs of operating as a public company; and ● unanticipated general, legal and administrative expenses. 31 ​ Table of Contents In addition, our operating plan may change as a result of any number of factors, including those set forth above and other factors currently unknown to us, and we may need additional funds sooner than anticipated.
Biggest changeAny future funding requirements will depend on many factors, including, among other things: ● our ability to commercialize, market and sell our newly approved EluPro antibacterial envelope device; ● continued patient, physician and market acceptance of our products; ● the scope, rate of progress and cost of our current and future pre-clinical and clinical studies; ● the cost of our research and development activities and the cost of commercializing new products or technologies; ● the cost and timing of expanding our sales and marketing capabilities; ● the cost of filing and prosecuting patent applications and maintaining, defending and enforcing our patent or other intellectual property rights; ● the cost of defending, in litigation or otherwise, any claims that we infringe, misappropriate or otherwise violate third-party patents or other intellectual property rights; ● the costs of defending against or damages payable (to the extent above the applicable insurance coverage), for example, in connection with lawsuits and claims involving the FiberCel Recall or VBM Recall; ● the cost and timing of additional regulatory approvals or certifications; ● costs associated with any product recall; ● the effect of competing technological and market developments; 30 ​ Table of Contents ● the expenses we incur in manufacturing and selling our products; ● the costs of developing and commercializing new products or technologies; ● the extent to which we acquire or invest in products, technologies and businesses, although we currently have no commitments or agreements relating to any of these types of transactions; ● the costs of operating as a public company; and ● unanticipated general, legal and administrative expenses.
Subject to certain limited exceptions, these covenants limit our ability to, among other things: ● incur additional indebtedness; ● incur certain liens; ● pay dividends or make other distributions on equity interests; ● enter into agreements restricting their subsidiaries’ ability to pay dividends; ● redeem, repurchase or refinance subordinated indebtedness; ● consolidate, merge or sell or otherwise dispose of their assets; ● make investments, loans, advances, guarantees and acquisitions; ● enter into transactions with affiliates; ● amend or modify their governing documents; ● amend or modify certain material agreements; ● alter the business conducted by them and their subsidiaries; and 27 ​ Table of Contents ● enter into sale and leaseback transactions.
Subject to certain limited exceptions, these covenants limit our ability to, among other things: ● incur additional indebtedness; ● incur certain liens; ● pay dividends or make other distributions on equity interests; ● enter into agreements restricting their subsidiaries’ ability to pay dividends; ● redeem, repurchase or refinance subordinated indebtedness; ● consolidate, merge or sell or otherwise dispose of their assets; ● make investments, loans, advances, guarantees and acquisitions; ● enter into transactions with affiliates; ● amend or modify their governing documents; 27 ​ Table of Contents ● amend or modify certain material agreements; ● alter the business conducted by them and their subsidiaries; and ● enter into sale and leaseback transactions.
In general, our first quarter usually has lower sales than the preceding fourth quarter as patient deductibles are re-established with the new year, thereby increasing the patients’ out-of-pocket costs. 44 ​ Table of Contents Other factors that may cause fluctuations in our quarterly and annual results include, among other things: ● the timing of medical procedures using our products; ● the announcement or introduction of new products by our competitors; ● failure of government health benefit programs and private health plans to cover our products or to timely and adequately reimburse the users of our products; ● the rate of reimbursement for procedures using our products by government and private insurers; ● whether our products are granted pass-through reimbursement status or included in the “bundled” reimbursement structure; ● changes in purchasing patterns by our commercial partners or customers, or the loss of any significant customer or group of customers; ● our ability to upgrade and develop our systems and infrastructure to accommodate growth; ● the amount and timing of operating costs and capital expenditures relating to the expansion of our business, operations and infrastructure; ● changes in, or enactment of, new laws or regulations promulgated by federal, state or local governments; ● changes in our supply or manufacturing costs; ● cost containment initiatives or policies developed by government and commercial payors that create financial incentives not to use our products; ● our inability to demonstrate that our products are cost-effective or superior to competing products; ● our ability to develop new products; ● the degree of competition in our industry and any changes in the competitive landscape; ● discovery of product defects during the manufacturing process; ● initiation of a government investigation into potential non-compliance with laws or regulations, or the initiation of a voluntary or involuntary recall with respect to one or more of our products; ● sanctions imposed by federal or state governments due to non-compliance with laws or regulations; ● general global economic conditions and political instability, such as the conflict between Russia and Ukraine; and ● economic conditions specific to the healthcare industry.
In general, our first quarter usually has lower sales than the preceding fourth quarter as patient deductibles are re-established with the new year, thereby increasing the patients’ out-of-pocket costs. 43 ​ Table of Contents Other factors that may cause fluctuations in our quarterly and annual results include, among other things: ● the timing of medical procedures using our products; ● the announcement or introduction of new products by our competitors; ● failure of government health benefit programs and private health plans to cover our products or to timely and adequately reimburse the users of our products; ● the rate of reimbursement for procedures using our products by government and private insurers; ● whether our products are granted pass-through reimbursement status or included in the “bundled” reimbursement structure; ● changes in purchasing patterns by our commercial partners or customers, or the loss of any significant customer or group of customers; ● our ability to upgrade and develop our systems and infrastructure to accommodate growth; ● the amount and timing of operating costs and capital expenditures relating to the expansion of our business, operations and infrastructure; ● changes in, or enactment of, new laws or regulations promulgated by federal, state or local governments; ● changes in our supply or manufacturing costs; ● cost containment initiatives or policies developed by government and commercial payors that create financial incentives not to use our products; ● our inability to demonstrate that our products are cost-effective or superior to competing products; ● our ability to develop new products; ● the degree of competition in our industry and any changes in the competitive landscape; ● discovery of product defects during the manufacturing process; ● initiation of a government investigation into potential non-compliance with laws or regulations, or the initiation of a voluntary or involuntary recall with respect to one or more of our products; ● sanctions imposed by federal or state governments due to non-compliance with laws or regulations; ● general global economic conditions and political instability, such as the conflict between Russia and Ukraine; and ● economic conditions specific to the healthcare industry.
In connection with one or more of these transactions, we may: ● issue additional equity securities that would dilute the value of your investment in us; ● use cash that we may need in the future to operate our business; ● incur debt that could have terms unfavorable to us or that we might be unable to repay; 37 ​ Table of Contents ● structure the transaction in a manner that has unfavorable tax consequences, such as a stock purchase that does not permit a step-up in the tax basis for the assets acquired; ● incur asset impairment or other acquisition-related charges, or unforeseen costs, expenditures and risks; ● be unable to realize the anticipated benefits, such as increased revenues, cost savings or synergies from additional sales of existing or newly acquired products; ● experience dis-synergies in shared functions following a divestment of any portion of our business; ● be unable to successfully integrate, operate, maintain and manage any newly acquired operations; ● divert management’s attention from the existing business to integrate, operate, maintain and manage any newly acquired operations and personnel, or to manage the complexities involved in separating divested operations, services, products and personnel; ● be unable to secure the services of key employees related to an acquisition or, in the case of a divestiture, lose one or more of our key employees; ● face increased scrutiny and review of our company and operations from government and other regulatory authorities; and ● otherwise be unable to succeed in the marketplace with the acquisition.
In connection with one or more of these transactions, we may: 36 ​ Table of Contents ● issue additional equity securities that would dilute the value of your investment in us; ● use cash that we may need in the future to operate our business; ● incur debt that could have terms unfavorable to us or that we might be unable to repay; ● structure the transaction in a manner that has unfavorable tax consequences, such as a stock purchase that does not permit a step-up in the tax basis for the assets acquired; ● incur asset impairment or other acquisition-related charges, or unforeseen costs, expenditures and risks; ● be unable to realize the anticipated benefits, such as increased revenues, cost savings or synergies from additional sales of existing or newly acquired products; ● experience dis-synergies in shared functions following a divestment of any portion of our business; ● be unable to successfully integrate, operate, maintain and manage any newly acquired operations; ● divert management’s attention from the existing business to integrate, operate, maintain and manage any newly acquired operations and personnel, or to manage the complexities involved in separating divested operations, services, products and personnel; ● be unable to secure the services of key employees related to an acquisition or, in the case of a divestiture, lose one or more of our key employees; ● face increased scrutiny and review of our company and operations from government and other regulatory authorities; and ● otherwise be unable to succeed in the marketplace with the acquisition.
The degree of market acceptance of our products will continue to depend on a number of factors, some of which are outside of our control, including, among other things: ● the actual and perceived safety and efficacy of our products; ● the potential and perceived advantages of our products over alternative treatments; ● clinical data and the clinical indications for which our products are approved or certified; ● product labeling or product insert requirements of the FDA or other regulatory authorities, including any limitations or warnings contained in approved labeling; ● the cost of using our products relative to the use of our competitors’ products or alternative treatment modalities; 36 ​ Table of Contents ● relative convenience and ease of administration; ● the strength of marketing and distribution support; ● the timing of market introduction of competitive products; ● publicity concerning our products or competing products and treatments; ● our reputation and the reputation of our products; ● the prevalence and severity of any adverse events patients experience involving our products; ● the shelf life of our products and our ability to manage the logistics of the end-user supply chain; and ● sufficient and readily accessible third-party insurance coverage and reimbursement for procedures incorporating our products.
The degree of market acceptance of our products will continue to depend on a number of factors, some of which are outside of our control, including, among other things: ● the actual and perceived safety and efficacy of our products; ● the potential and perceived advantages of our products over alternative treatments; ● clinical data and the clinical indications for which our products are approved or certified; 35 ​ Table of Contents ● product labeling or product insert requirements of the FDA or other regulatory authorities, including any limitations or warnings contained in approved labeling; ● the cost of using our products relative to the use of our competitors’ products or alternative treatment modalities; ● relative convenience and ease of administration; ● the strength of marketing and distribution support; ● the timing of market introduction of competitive products; ● publicity concerning our products or competing products and treatments; ● our reputation and the reputation of our products; ● the prevalence and severity of any adverse events patients experience involving our products; ● the shelf life of our products and our ability to manage the logistics of the end-user supply chain; and ● sufficient and readily accessible third-party insurance coverage and reimbursement for procedures incorporating our products.
Competitors could attempt to replicate some or all of the competitive advantages we derive from our development efforts, willfully infringe, misappropriate or otherwise violate our intellectual property rights, design around our patents or develop and obtain patent protection for more effective technologies, designs or methods. CanGaroo and SimpliDerm are the only current products covered by issued patents.
Competitors could attempt to replicate some or all of the competitive advantages we derive from our development efforts, willfully infringe, misappropriate or otherwise violate our intellectual property rights, design around our patents or develop and obtain patent protection for more effective technologies, designs or methods. EluPro, CanGaroo and SimpliDerm are the only current products covered by issued patents.
Among other things, these provisions include those establishing: ● a classified board of directors with three-year staggered terms, which may delay the ability of stockholders to change the membership of a majority of our board of directors; ● no cumulative voting in the election of directors, which limits the ability of minority stockholders to elect director candidates; ● the exclusive right of our board of directors to elect a director to fill a vacancy created by the expansion of the board of directors or the resignation, death or removal of a director, which prevents stockholders from filling vacancies on our board of directors; ● the ability of our board of directors to authorize the issuance of shares of preferred stock and to determine the terms of those shares, including preferences and voting rights, without stockholder approval, which could be used to significantly dilute the ownership of a hostile acquirer; ● the ability of our board of directors to alter our bylaws without obtaining stockholder approval; 73 ​ Table of Contents ● the required approval of the holders of at least two-thirds of the shares entitled to vote at an election of directors to adopt, amend or repeal our bylaws or repeal the provisions of our certificate of incorporation regarding the election and removal of directors; ● a prohibition on stockholder action by written consent, which forces stockholder action to be taken at an annual or special meeting of our stockholders; ● the requirement that a special meeting of stockholders may be called only by the chairman of the board of directors, the chief executive officer, the president or the board of directors, which may delay the ability of our stockholders to force consideration of a proposal or to take action, including the removal of directors; and ● advance notice procedures that stockholders must comply with in order to nominate candidates to our board of directors or to propose matters to be acted upon at a stockholders’ meeting, which may discourage or deter a potential acquirer from conducting a solicitation of proxies to elect the acquirer’s own slate of directors or otherwise attempting to obtain control of us.
Among other things, these provisions include those establishing: ● a classified board of directors with three-year staggered terms, which may delay the ability of stockholders to change the membership of a majority of our board of directors; ● no cumulative voting in the election of directors, which limits the ability of minority stockholders to elect director candidates; ● the exclusive right of our board of directors to elect a director to fill a vacancy created by the expansion of the board of directors or the resignation, death or removal of a director, which prevents stockholders from filling vacancies on our board of directors; ● the ability of our board of directors to authorize the issuance of shares of preferred stock and to determine the terms of those shares, including preferences and voting rights, without stockholder approval, which could be used to significantly dilute the ownership of a hostile acquirer; ● the ability of our board of directors to alter our bylaws without obtaining stockholder approval; ● the required approval of the holders of at least two-thirds of the shares entitled to vote at an election of directors to adopt, amend or repeal our bylaws or repeal the provisions of our certificate of incorporation regarding the election and removal of directors; ● a prohibition on stockholder action by written consent, which forces stockholder action to be taken at an annual or special meeting of our stockholders; ● the requirement that a special meeting of stockholders may be called only by the chairman of the board of directors, the chief executive officer, the president or the board of directors, which may delay the ability of our stockholders to force consideration of a proposal or to take action, including the removal of directors; and ● advance notice procedures that stockholders must comply with in order to nominate candidates to our board of directors or to propose matters to be acted upon at a stockholders’ meeting, which may discourage or deter a potential acquirer from conducting a solicitation of proxies to elect the acquirer’s own slate of directors or otherwise attempting to obtain control of us.
When an entity is determined to have violated the federal civil False Claims Act, the government may impose civil penalties, including treble damages, and exclude the entity from participation in Medicare, Medicaid and other federal healthcare programs; ● 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 Health Insurance Portability and Accountability Act of 1996 (“HIPAA”), which created additional federal criminal statutes that prohibit, among other things, executing a scheme to defraud any healthcare benefit program and making false statements relating to healthcare matters; ● the federal Physician Sunshine Act, which requires certain manufacturers of drugs, devices, biologics and medical supplies for which payment is available under Medicare, Medicaid or CHIP, to report annually to CMS, information related to payments and other transfers of value to physicians, which is defined broadly to include doctors, dentists, optometrists, podiatrists and chiropractors, certain non-physician providers such as physician assistants and nurse practitioners, and teaching hospitals, and applicable manufacturers and GPOs, to report annually ownership and investment interests held by such physicians and their immediate family members.
When an entity is determined to have violated the federal civil False Claims Act, the government may impose civil penalties, including treble damages, and exclude the entity from participation in Medicare, Medicaid and other federal healthcare programs; ● 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 Health Insurance Portability and Accountability Act of 1996 (“HIPAA”), which created additional federal criminal statutes that prohibit, among other things, executing a scheme to defraud any healthcare benefit program and making false statements relating to healthcare matters; ● the federal Physician Sunshine Act, which requires certain manufacturers of drugs, devices, biologics and medical supplies for which payment is available under Medicare, Medicaid or CHIP, to report annually to CMS, information related to payments and other transfers of value to physicians, which is defined broadly to include doctors, dentists, optometrists, podiatrists and chiropractors, certain non-physician providers such as physician assistants and nurse practitioners, and teaching hospitals, and applicable manufacturers and GPOs, to report annually ownership and investment interests held by such physicians and their immediate 54 ​ Table of Contents family members.
If we are unable to or do not realize the expected strategic, economic, or other benefits of the transaction, it could adversely affect our business and financial position. ​ Because we depend upon a limited number of third-party suppliers and manufacturers and, in certain cases, exclusive suppliers for products essential to our business, we may incur significant product development costs and experience material delivery delays if we lose any significant supplier, which could materially and adversely affect our business, financial condition and results of operations. ​ We obtain some of our raw materials from a limited group of suppliers and, for reasons of quality assurance, cost-effectiveness, availability or constraints resulting from regulatory requirements, we rely on a single supplier, Cook Biotech, to source the SIS ECM biomaterial used to manufacture CanGaroo and our cardiovascular products.
If we are unable to or do not realize the expected strategic, economic, or other benefits of the transaction, it could adversely affect our business and financial position. ​ Because we depend upon a limited number of third-party suppliers and manufacturers and, in certain cases, exclusive suppliers for products essential to our business, we may incur significant product development costs and experience material delivery delays if we lose any significant supplier, which could materially and adversely affect our business, financial condition and results of operations. ​ We obtain some of our raw materials from a limited group of suppliers and, for reasons of quality assurance, cost-effectiveness, availability or constraints resulting from regulatory requirements, we rely on a single supplier, Cook, to source the SIS ECM biomaterial used to manufacture EluPro, CanGaroo and our Cardiovascular products.
Prolonged government shutdowns or persistent pandemic-related disruptions could significantly affect the timely review of our regulatory submissions, posing a material adverse effect on our business. ​ We are bound by federal, state, and foreign fraud and abuse laws, violations of which could result in significant penalties.
Prolonged government shutdowns or pandemic-related disruptions could significantly affect the timely review of our regulatory submissions, posing a material adverse effect on our business. ​ We are bound by federal, state, and foreign fraud and abuse laws, violations of which could result in significant penalties.
The SIS ECM biomaterial used in our medical device products are manufactured by Cook Biotech at their facility in West Lafayette, Indiana and converted to a finished product at our facility in Roswell, Georgia. Regulatory approvals or certifications of our products are limited to one or more specifically approved manufacturing facilities.
The SIS ECM biomaterial used in our medical device products are manufactured by Cook at their facility in West Lafayette, Indiana and converted to a finished product at our facility in Roswell, Georgia. Regulatory approvals or certifications of our products are limited to one or more specifically approved manufacturing facilities.
Even if we are successful in developing additional 32 ​ Table of Contents products, the success of any new product offering or enhancements to any of our existing products will depend on several factors, including our ability to: ​ ● properly identify and anticipate physician and patient needs; ● develop and introduce new products and product enhancements in a timely manner; ● distinguish our products from those of our competitors; ● develop an effective and dedicated sales and marketing team; ● enter into successful agreements with commercial partners, independent sales agents and other third parties where it is beneficial for us to do so; ● adequately protect our intellectual property, avoid infringing, misappropriating or otherwise violating the intellectual property rights of third parties and obtain and maintain necessary intellectual property licenses from third parties; ● demonstrate, if required, the safety and efficacy of new products with data from pre-clinical and clinical studies; ● obtain the necessary regulatory clearances, certifications or approvals for new products, product enhancements and expanded indications; ● maintain full compliance with FDA medical devices regulations and other regulatory requirements applicable to new devices or products or modifications of existing devices or products; ● provide adequate training to potential users of our products; ● receive adequate coverage and reimbursement for our products; and ● otherwise compete effectively against products and enhancements developed by our competitors.
Even if we are successful in developing additional products, the success of any new product offering or enhancements to any of our existing products will depend on several factors, including our ability to: ​ ● properly identify and anticipate physician and patient needs; ● develop and introduce new products and product enhancements in a timely manner; ● distinguish our products from those of our competitors; ● develop an effective and dedicated sales and marketing team; ● enter into successful agreements with commercial partners, independent sales agents and other third parties where it is beneficial for us to do so; ● adequately protect our intellectual property, avoid infringing, misappropriating or otherwise violating the intellectual property rights of third parties and obtain and maintain necessary intellectual property licenses from third parties; ● demonstrate, if required, the safety and efficacy of new products with data from pre-clinical and clinical studies; ● obtain the necessary regulatory clearances, certifications or approvals for new products, product enhancements and expanded indications; ● maintain full compliance with FDA medical devices regulations and other regulatory requirements applicable to new devices or products or modifications of existing devices or products; ● provide adequate training to potential users of our products; ● receive adequate coverage and reimbursement for our products; and ● otherwise compete effectively against products and enhancements developed by our competitors.
Emerging growth companies and smaller reporting companies may take advantage of certain exemptions from various reporting requirements that are applicable to other publicly-traded entities that are not emerging growth companies or smaller reporting companies. ​ With respect to emerging growth companies, these exemptions include: ● the option to present only two years of audited financial statements , in addition to any required unaudited interim financial statements, with a correspondingly reduced Management’s Discussion and Analysis of Financial Condition and Results of Operations; ● not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act; ● not being required to comply with any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the financial statements (i.e., an auditor discussion and analysis); ● not being required to submit certain executive compensation matters to stockholder advisory votes, such as “say-on-pay,” “say-on-frequency” and “say-on-golden parachutes”; and 71 ​ Table of Contents ● not being required to disclose certain executive compensation related items such as the correlation between executive compensation and performance and comparisons of the chief executive officer’s compensation to median employee compensation.
Emerging growth companies and smaller reporting companies may take advantage of certain exemptions from various reporting requirements that are applicable to other publicly-traded entities that are not emerging growth companies or smaller reporting companies. ​ With respect to emerging growth companies, these exemptions include: ● the option to present only two years of audited financial statements, in addition to any required unaudited interim financial statements, with a correspondingly reduced Management’s Discussion and Analysis of Financial Condition and Results of Operations; ● not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act; ● not being required to comply with any requirement that may be adopted by the Public Company Accounting Oversight Board regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the financial statements (i.e., an auditor discussion and analysis); ● not being required to submit certain executive compensation matters to stockholder advisory votes, such as “say-on-pay,” “say-on-frequency” and “say-on-golden parachutes”; and ● not being required to disclose certain executive compensation related items such as the correlation between executive compensation and performance and comparisons of the chief executive officer’s compensation to median employee compensation.
The successful assertion of one or more large claims against us that exceed or are not covered by our insurance coverage or changes in our insurance policies, including premium increases or the imposition of large deductible or co-insurance requirements, could have a material adverse effect on our business, prospects, operating results and financial condition. 46 ​ Table of Contents Our success depends on our ability to retain and motivate key management personnel and other employees and consultants, to attract, retain and motivate additional qualified personnel and to effectively navigate changes in our senior management team.
The successful assertion of one or more large claims against us that exceed or are not covered by our insurance coverage or changes in our insurance policies, including premium increases or the imposition of large deductible or co-insurance requirements, could have a material adverse effect on our business, prospects, operating results and financial condition. 45 ​ Table of Contents Our success depends on our ability to retain and motivate key management personnel and other employees and consultants, to attract, retain and motivate additional qualified personnel and to effectively navigate changes in our senior management team.
Our certificate of incorporation provides that, unless we consent in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware will be the exclusive forum for (i) any derivative action or proceeding brought on our behalf, (ii) any action asserting a claim of breach of a fiduciary duty or other wrongdoing by any of our directors, officers, employees or agents to us or our stockholders, (iii) any action asserting a claim arising pursuant to any provision of the DGCL or our certificate of incorporation or bylaws, (iv) any action to interpret, apply, enforce or determine the validity of our certificate of incorporation or bylaws or (v) any action asserting a claim governed by the internal affairs doctrine; provided that, the exclusive forum provision will not apply to suits brought to enforce any liability or duty created by the Securities Act, the Exchange Act, the rules and regulations thereunder or any other claim for which the federal courts have exclusive jurisdiction; and provided further that, if and only if the Court of Chancery of the State of Delaware dismisses any such action for lack of subject matter jurisdiction, such action may be brought in another state or federal court sitting in the State of Delaware.
Our certificate of incorporation provides that, unless we consent in writing to the selection of an alternative forum, the Court of Chancery of the State of Delaware will be the exclusive forum for (i) any derivative action or proceeding brought on our behalf, (ii) any action asserting a claim of breach of a fiduciary duty or other wrongdoing by any of our directors, officers, employees or agents to us or our stockholders, (iii) any action asserting a claim arising pursuant to any provision of the DGCL or our certificate of incorporation or bylaws, (iv) any action to interpret, apply, enforce or determine the validity of our certificate of incorporation or bylaws or (v) any action asserting a claim governed by the internal affairs doctrine; provided that, the exclusive forum provision will not apply to suits brought to enforce any liability or duty created 72 ​ Table of Contents by the Securities Act, the Exchange Act, the rules and regulations thereunder or any other claim for which the federal courts have exclusive jurisdiction; and provided further that, if and only if the Court of Chancery of the State of Delaware dismisses any such action for lack of subject matter jurisdiction, such action may be brought in another state or federal court sitting in the State of Delaware.
Our failure to comply with applicable regulatory requirements could result in enforcement action by the FDA, state or foreign regulatory authorities, which may include any of the following sanctions: ● untitled letters or warning letters; ● fines, injunctions, consent decrees and civil penalties; ● recalls, termination of distribution, administrative detention or seizure of our products; ● customer notifications or repair, replacement or refunds; ● operating restrictions or partial suspension or total shutdown of production; ● delays in or refusal to grant our requests for future clearances or approvals or foreign marketing authorizations or certification of new products, new intended uses or modifications to existing products; ● withdrawals or suspensions of our current 510(k) clearances, or certifications resulting in prohibitions on sales of our products; ● FDA refusal to issue certificates to foreign governments needed to export products for sale in other countries; and ● criminal prosecution.
Our failure to comply with applicable regulatory requirements could result in enforcement action by the FDA, state or foreign regulatory authorities, which may include any of the following sanctions: ● untitled letters or warning letters; ● fines, injunctions, consent decrees and civil penalties; ● recalls, termination of distribution, administrative detention or seizure of our products; ● customer notifications or repair, replacement or refunds; ● operating restrictions or partial suspension or total shutdown of production; ● delays in or refusal to grant our requests for future clearances or approvals or foreign marketing authorizations or certification of new products, new intended uses or modifications to existing products; ● withdrawals or suspensions of our current 510(k) clearances, or certifications resulting in prohibitions on sales of our products; 52 ​ Table of Contents ● FDA refusal to issue certificates to foreign governments needed to export products for sale in other countries; and ● criminal prosecution.
Disputes may arise between us and our licensors regarding intellectual property that is subject to a license agreement, including, with respect to, among other things: ● the scope of rights granted under the license agreement and other interpretation-related issues; ● whether our licensor had the right to grant the rights granted to us under the license agreement; ● whether and the extent to which our technology and processes infringe, misappropriate or otherwise violate intellectual property of the licensor that is not subject to the license agreement; ● our right to sublicense patent and other rights to third parties under collaborative development relationships; ● our involvement in the prosecution and enforcement of the licensed patents and our licensor’s overall patent enforcement strategy; ● our diligence obligations with respect to the use of the licensed technology in relation to our development and commercialization of our products and technologies, and what activities satisfy those diligence obligations; ● the ownership of inventions and know-how resulting from the joint creation or use of intellectual property by our licensors and us and our partners; and ● the amounts of royalties, milestones or other payments due under the license agreement.
Disputes may arise between us and our licensors regarding intellectual property that is subject to a license agreement, including, with respect to, among other things: ● the scope of rights granted under the license agreement and other interpretation-related issues; ● whether our licensor had the right to grant the rights granted to us under the license agreement; ● whether and the extent to which our technology and processes infringe, misappropriate or otherwise violate intellectual property of the licensor that is not subject to the license agreement; ● our right to sublicense patent and other rights to third parties under collaborative development relationships; ● our involvement in the prosecution and enforcement of the licensed patents and our licensor’s overall patent enforcement strategy; ● our diligence obligations with respect to the use of the licensed technology in relation to our development and commercialization of our products and technologies, and what activities satisfy those diligence obligations; ● the ownership of inventions and know-how resulting from the joint creation or use of intellectual property by our licensors and us and our partners; and 65 ​ Table of Contents ● the amounts of royalties, milestones or other payments due under the license agreement.
In addition, even if we cease to be an emerging growth company, we will remain exempt from the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act provided we do not qualify as an “accelerated filer” as defined in Rule 12b-2 under the Exchange Act, which would occur if our annual revenue was $100 million or more during our most recently completed fiscal year and the market value of our common equity held by non-affiliates is $75 million or more as of the last business day of our most recently completed second fiscal quarter, and only after we have been subject to the reporting requirements of the Exchange Act for a period of at least 12 calendar months.
In addition, even if we cease to be an emerging growth company, we will remain exempt from the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act provided we do 70 ​ Table of Contents not qualify as an “accelerated filer” as defined in Rule 12b-2 under the Exchange Act, which would occur if our annual revenue was $100 million or more during our most recently completed fiscal year and the market value of our common equity held by non-affiliates is $75 million or more as of the last business day of our most recently completed second fiscal quarter, and only after we have been subject to the reporting requirements of the Exchange Act for a period of at least 12 calendar months.
In the United States, we have obtained 510(k) premarket clearance from the FDA to market products such as our CanGaroo, VasCure, ProxiCor and Tyke products.
In the United States, we have obtained 510(k) premarket clearance from the FDA to market products such as our EluPro, CanGaroo, VasCure, ProxiCor and Tyke products.
Further, as a strategic response to changes in the competitive environment or to changes in laws and regulations, 45 ​ Table of Contents we may from time to time make certain pricing, service or marketing decisions (e.g., reduce prices) that could have a material and adverse effect on our business, financial condition and results of operations.
Further, as a strategic response to changes in the competitive environment or to changes in laws and regulations, 44 ​ Table of Contents we may from time to time make certain pricing, service or marketing decisions (e.g., reduce prices) that could have a material and adverse effect on our business, financial condition and results of operations.
Our insurance for damage to our property and the disruption of our business may not be sufficient to cover all of our potential losses and may not continue to be available to us on acceptable terms or at all. 41 ​ Table of Contents Increased prices for raw materials or supplies used in our products could adversely affect our business, financial condition and results of operations.
Our insurance for damage to our property and the disruption of our business may not be sufficient to cover all of our potential losses and may not continue to be available to us on acceptable terms or at all. 40 ​ Table of Contents Increased prices for raw materials or supplies used in our products could adversely affect our business, financial condition and results of operations.
Neither hospitals nor surgeons are likely to use our products if they do not receive adequate reimbursement for the procedures utilizing our products. 42 ​ Table of Contents Many private payors currently base their reimbursement policies on the coverage decisions and payment amounts determined by the CMS which administers the Medicare program.
Neither hospitals nor surgeons are likely to use our products if they do not receive adequate reimbursement for the procedures utilizing our products. 41 ​ Table of Contents Many private payors currently base their reimbursement policies on the coverage decisions and payment amounts determined by the CMS which administers the Medicare program.
In the sale, we received approximately $14.6 million, and we may earn up to an additional $20 million, in the aggregate, in the form of earn-out payments.
In the sale, we received $14.6 million, and we may earn up to an additional $20 million, in the aggregate, in the form of earn-out payments.
We rely on these licenses in order to be able to use and sell various proprietary technologies that are material to our business, as well as technologies we intend to use in our future commercial activities. For example, we expect that we will be dependent on our licensing arrangements with Cook Biotech, relating to CanGaroo and our cardiovascular products.
We rely on these licenses in order to be able to use and sell various proprietary technologies that are material to our business, as well as technologies we intend to use in our future commercial activities. For example, we expect that we will be dependent on our licensing arrangements with Cook, relating to EluPro, CanGaroo and our cardiovascular products.
In addition, regardless of merit or eventual outcome, product liability claims may result in: ​ ● harm to our business reputation; ● investigations by regulators; ● significant legal costs; ● distraction of management’s attention from our primary business; ● substantial monetary awards to patients or other claimants; ● loss of revenue; ● exhaustion of any available insurance and our capital resources; and ● decreased demand for our products. ​ Our product liability insurance is subject to deductibles and coverage limitations, and we may not be able to maintain this insurance.
In addition, regardless of merit or eventual outcome, product liability claims may result in: ​ ● harm to our business reputation; ● investigations by regulators; ● significant legal costs; ● distraction of management’s attention from our primary business; ● substantial monetary awards to patients or other claimants; ● loss of revenue; ● exhaustion of any available insurance and our capital resources; and 29 ​ Table of Contents ● decreased demand for our products. ​ Our product liability insurance is subject to deductibles and coverage limitations, and we may not be able to maintain this insurance.
For example, these rules and regulations make it more difficult and more expensive for us to obtain director and officer liability insurance, which requires us to incur substantially higher costs to 72 ​ Table of Contents obtain the same or similar coverage or accept reduced policy limits and coverage, which in turn could also make it more difficult for us to attract and retain qualified individuals to serve on our board of directors and as our executive officers. ​ We cannot predict or estimate the amount of additional costs we may incur or the timing of such costs.
For example, these rules and regulations make it more difficult and more expensive for us to obtain director and officer liability insurance, which requires us to incur substantially higher costs to obtain the same or similar coverage or accept reduced policy limits and coverage, which in turn could also make it more difficult for us to attract and retain qualified individuals to serve on our board of directors and as our executive officers. ​ We cannot predict or estimate the amount of additional costs we may incur or the timing of such costs.
While we were in compliance with all covenants under the agreement as of December 31, 2023, there can be no guarantee that we will not breach these covenants in the future. Our ability to comply with these covenants may be affected by events and factors beyond our control.
While we were in compliance with all covenants under the agreement as of December 31, 2024, there can be no guarantee that we will not breach these covenants in the future. Our ability to comply with these covenants may be affected by events and factors beyond our control.
If we are unable to establish new commercial partner and independent sales agent relationships and maintain our relationships with our existing commercial partners and independent sales agents, in each case, on commercially reasonable terms, we will be unable to increase sales of our products, which, in turn, could materially and adversely affect our business, financial condition and results of operations. ​ 35 ​ Table of Contents Our future growth depends on physician awareness of the distinctive characteristics, benefits, safety, clinical efficacy and cost-effectiveness of our products.
If we are unable to establish new commercial partner and independent sales agent relationships and maintain our relationships with our existing commercial partners and independent sales agents, in each case, on commercially reasonable terms, we will be unable to increase sales of our products, which, in turn, could materially and adversely affect our business, financial condition and results of operations. ​ Our future growth depends on physician awareness of the distinctive characteristics, benefits, safety, clinical efficacy and cost-effectiveness of our products.
Even if we are able to successfully develop and commercialize new product offerings or enhancements, they may be quickly rendered obsolete by changing customer preferences or the introduction by our competitors of products embodying new technologies or features and/or otherwise not produce sales in excess of the costs of development, any of 33 ​ Table of Contents which could also materially and adversely affect our business, financial condition and results of operations.
Even if we are able to successfully develop and commercialize new product offerings or enhancements, they may be quickly rendered obsolete by changing customer preferences or the introduction by our competitors of products embodying new technologies or features and/or otherwise not produce sales in excess of the costs of development, any of which could also materially and adversely affect our business, financial condition and results of operations.
A person or entity does not need to have actual knowledge of the statute or specific intent to violate it to have committed a violation; 55 ​ Table of Contents ● the federal civil and criminal false claims laws, including the federal civil False Claims Act, which prohibit, among other things, individuals or entities from knowingly presenting, or causing to be presented, claims for payment from Medicare, Medicaid or other federal healthcare programs that are false or fraudulent.
A person or entity does not need to have actual knowledge of the statute or specific intent to violate it to have committed a violation; ● the federal civil and criminal false claims laws, including the federal civil False Claims Act, which prohibit, among other things, individuals or entities from knowingly presenting, or causing to be presented, claims for payment from Medicare, Medicaid or other federal healthcare programs that are false or fraudulent.
A decline in the trading price of our Class A common stock might impede our ability to raise capital through the issuance of additional shares of our Class A common stock or other equity securities and may impair your ability to sell shares of our Class A common stock at a price higher than the price you paid for them or at all. ​ The dual class structure of our common stock and the option of the holders of shares of our Class B common stock to convert into shares of our Class A common stock may limit your ability to influence corporate matters.
A decline in the trading price of our Class A common stock might impede our ability to raise capital through the issuance of additional shares of our Class A common stock or other equity securities and may impair your ability to sell shares of our Class A common stock at a price higher than the price you paid for them or at all. ​ 68 ​ Table of Contents The dual class structure of our common stock and the option of the holders of shares of our Class B common stock to convert into shares of our Class A common stock may limit your ability to influence corporate matters.
We have been named in multiple lawsuits alleging that the plaintiffs contracted tuberculosis and are suffering substantial adverse symptoms following the implantation of FiberCel during spinal fusion operations, which are described in further detail in Part I, Item 3, “Legal Proceedings” and Note 17 to the consolidated financial statements included elsewhere in this Annual Report.
We have been named in multiple lawsuits alleging that the plaintiffs contracted tuberculosis and are suffering substantial adverse symptoms following the implantation of FiberCel or VBM during spinal fusion or other operations, which are described in further detail in Part I, Item 3, “Legal Proceedings” and Note 17 to the consolidated financial statements included elsewhere in this Annual Report.
Before we can market or sell a new medical device or a new use of or a claim for or significant modification to an existing medical device in the United States, we must obtain either clearance from the FDA under Section 510(k) of the Federal Food, Drug, and Cosmetic Act (the “FDCA”) or approval of an application for premarket approval, or PMA, unless an exemption applies.
Before we can market or sell a new medical device or a new use of or a claim for or significant modification to an existing medical device in the United States, we must obtain either clearance from the FDA under Section 510(k) of 49 ​ Table of Contents the Federal Food, Drug, and Cosmetic Act (the “FDCA”) or approval of an application for premarket approval, or PMA, unless an exemption applies.
Quality and safety issues may occur with respect to any of our products, and our future operating results will 43 ​ Table of Contents depend on our ability to maintain an effective quality control system and effectively train and manage our workforce with respect to our quality system.
Quality and safety issues may occur with respect to any of our products, and our future operating results will depend on our ability to maintain an effective quality control system and effectively train and manage our workforce with 42 ​ Table of Contents respect to our quality system.
At present, Berkeley is our single source of supply for SimpliDerm, but we are evaluating additional options for supply redundancy. ​ For us to be successful, our suppliers must be able to provide us with products and components in substantial quantities, in compliance with regulatory requirements, in accordance with agreed upon specifications, at acceptable costs and on a timely basis.
At present, Berkeley is our single source of supply for SimpliDerm, but we are evaluating additional options for supply redundancy. ​ For us to be successful, our suppliers must be able to provide us with products and components in substantial quantities, in compliance with regulatory requirements, in accordance with agreed upon specifications, at acceptable costs 33 ​ Table of Contents and on a timely basis.
If we are unable to do so, our sales and/or margins will decrease, which could have a material adverse effect on our business, financial condition and results of operations. 39 ​ Table of Contents Pricing pressure as a result of cost-containment efforts of our customers, purchasing groups, third-party payors and governmental organizations could adversely affect our sales and profitability.
If we are unable to do so, our sales and/or margins will decrease, which could have a material adverse effect on our business, financial condition and results of operations. Pricing pressure as a result of cost-containment efforts of our customers, purchasing groups, third-party payors and governmental organizations could adversely affect our sales and profitability.
Any of the foregoing could have a material and adverse effect on our business, financial condition and results of operations. 63 ​ Table of Contents Third parties may assert that our employees or consultants have wrongfully used or disclosed confidential information or misappropriated trade secrets. We employ individuals who previously worked with other companies, including our competitors or potential competitors.
Any of the foregoing could have a material and adverse effect on our business, financial condition and results of operations. Third parties may assert that our employees or consultants have wrongfully used or disclosed confidential information or misappropriated trade secrets. We employ individuals who previously worked with other companies, including our competitors or potential competitors.
It is not always possible to identify and deter misconduct, and the precautions we take to detect and prevent this activity may not be effective in preventing such conduct, 48 ​ Table of Contents mitigating risks, or reducing the chance of governmental investigations or other actions or lawsuits stemming from a failure to comply with these laws or regulations.
It is not always possible to identify and deter misconduct, and the precautions we take to detect and prevent this activity may not be effective in preventing such conduct, mitigating risks, or reducing the chance of governmental investigations or other actions or lawsuits stemming from a failure to comply with these laws or regulations.
Customers in our target markets consider 38 ​ Table of Contents many factors when selecting a product, including product efficacy, ease of use, price, availability of payor coverage and adequate third-party reimbursement for procedures using the product, customer support services for technical-, clinical- and reimbursement-related matters and customer preference for, and loyalty to, particular products or a particular manufacturer.
Customers in our target markets consider many factors when selecting a product, including product efficacy, ease of use, price, availability of payor coverage and adequate third-party reimbursement for procedures using the product, customer support services for technical-, clinical- and reimbursement-related matters and customer preference for, and loyalty to, particular products or a particular manufacturer.
If we fail to comply with our obligations under these agreements, or if we are subject to a bankruptcy proceeding, the licensor may have the right to terminate the license, in which case we would not be able to market products covered by the license, which would adversely affect our business, financial condition and results of operations.
If 64 ​ Table of Contents we fail to comply with our obligations under these agreements, or if we are subject to a bankruptcy proceeding, the licensor may have the right to terminate the license, in which case we would not be able to market products covered by the license, which would adversely affect our business, financial condition and results of operations.
During the year ended December 31, 2023, global markets continued to experience significant volatility, driven by concerns over persistent inflation, rising interest rates, slowing economic growth and geopolitical uncertainty.
During the year ended December 31, 2024, global markets continued to experience significant volatility, driven by concerns over persistent inflation, rising interest rates, slowing economic growth and geopolitical uncertainty.
The complexity of these processes, as well as strict company and government standards for the manufacture and storage of our products, subject us to production risks. In addition to ongoing production risks, process deviations or unanticipated effects of approved process changes may result in non-compliance with regulatory requirements, including stability requirements or specifications.
The complexity of 39 ​ Table of Contents these processes, as well as strict company and government standards for the manufacture and storage of our products, subject us to production risks. In addition to ongoing production risks, process deviations or unanticipated effects of approved process changes may result in non-compliance with regulatory requirements, including stability requirements or specifications.
For example, FDA may decide that certain uses of SimpliDerm may not be considered HCT/Ps in specific breast reconstruction procedures, necessitating clinical studies and potential PMA approval. HCT/Ps are subject to donor eligibility, screening, 54 ​ Table of Contents Good Tissue Practices, labeling, and post-market reporting requirements.
For example, FDA may decide that certain uses of SimpliDerm may not be considered HCT/Ps in specific breast reconstruction procedures, necessitating clinical studies and potential PMA approval. HCT/Ps are subject to donor eligibility, screening, Good Tissue Practices, labeling, and post-market reporting requirements.
Any additional shares of common stock that we issue, including under our 2020 Plan, 2020 ESPP or other equity incentive plans that we may adopt in the future, or as a result of any exercise of the warrant, would dilute the percentage ownership and voting power held by investors who purchase our common stock.
Any additional shares of common stock that we issue, including under our 2020 Plan, 2020 ESPP or other equity incentive plans that we may adopt in the future, or as a result of any exercise of outstanding warrants, would dilute the percentage ownership and voting power held by investors who purchase our common stock.
Also, if serious adverse events are reported during the conduct of a study, it could affect continuation of the study, product approval, certification or clearance and product adoption. In addition, U.S. and foreign regulatory authorities routinely conduct audits of clinical studies and such audits may result in adverse regulatory actions.
Also, if serious adverse events are reported during the conduct of a study, it could affect continuation of the study, product approval, certification or clearance and product adoption. In addition, U.S. and foreign regulatory authorities routinely conduct audits of clinical studies and such 48 ​ Table of Contents audits may result in adverse regulatory actions.
Product defects or other errors may occur in the future. 52 ​ Table of Contents In the EU, compliance with the medical device vigilance system is imperative. Serious incidents and Field Safety Corrective Actions (“FSCAs”) must be reported to the relevant authorities of EU member states, facilitated through Eudamed.
Product defects or other errors may occur in the future. In the EU, compliance with the medical device vigilance system is imperative. Serious incidents and Field Safety Corrective Actions (“FSCAs”) must be reported to the relevant authorities of EU member states, facilitated through Eudamed.
As a public company, we are required to evaluate our internal control over financial reporting in a manner that meets the standards of publicly traded companies required by Section 404(a) of the Sarbanes-Oxley Act, or Section 404. 75 ​ Table of Contents As a public company, we have significant requirements for enhanced financial reporting and internal controls.
As a public company, we are required to evaluate our internal control over financial reporting in a manner that meets the standards of publicly traded companies required by Section 404(a) of the Sarbanes-Oxley Act, or Section 404. As a public company, we have significant requirements for enhanced financial reporting and internal controls.
The Revenue Interest Obligation requires us to pay Ligand 5.0% of future sales of our CanGaroo, ProxiCor, Tyke and VasCure products, and substantially similar products, through May 31, 2027, subject to annual minimum payments of $4.4 million. See Part II, Item 7.
The Revenue Interest Obligation requires us to pay Ligand 5.0% of future sales of our CanGaroo, ProxiCor, Tyke and VasCure products, and substantially similar products, such as EluPro, through May 31, 2027, subject to annual minimum payments of $4.4 million. See Part II, Item 7.
Any failure by us to comply with federal regulations regarding intellectual property rights that were developed through the use of U.S. government funding could have a material and adverse effect on our business, financial condition and results of operations.
Any failure by 63 ​ Table of Contents us to comply with federal regulations regarding intellectual property rights that were developed through the use of U.S. government funding could have a material and adverse effect on our business, financial condition and results of operations.
We cannot assure you, however, that any such policies and procedures will be sufficient or that directors, officers, employees, representatives, consultants and agents have not engaged, and will not engage, in conduct for which we may be held responsible, nor can we assure you that our business partners have not engaged, and will not engage, in conduct that could materially affect their ability to perform their contractual obligations to us or result in our being held liable for such conduct.
We cannot assure you, however, that any such policies and procedures will be sufficient or that directors, officers, employees, representatives, consultants and agents have not engaged, and will not engage, in conduct for which we may be held responsible, nor can we assure you that our business partners have not engaged, and will not engage, in conduct that could materially affect 46 ​ Table of Contents their ability to perform their contractual obligations to us or result in our being held liable for such conduct.
In addition, in 2018, we established valuation allowances against all deferred tax assets (including interest carry forwards) to reflect certain limitations on these assets and their anticipated impact on our ability to utilize these tax assets following the adoption of the TCJA. 49 ​ Table of Contents Additionally, the U.S.
In addition, in 2018, we established valuation allowances against all deferred tax assets (including interest carry forwards) to reflect certain limitations on these assets and their anticipated impact on our ability to utilize these tax assets following the adoption of the TCJA. Additionally, the U.S.
For example, these stockholders could attempt to delay or prevent a change in control of the company, even if such change in control would benefit our other 69 ​ Table of Contents stockholders, thereby depriving our other stockholders of an opportunity to receive a premium for their common stock as part of a sale of the company or our assets.
For example, these stockholders could attempt to delay or prevent a change in control of the company, even if such change in control would benefit our other stockholders, thereby depriving our other stockholders of an opportunity to receive a premium for their common stock as part of a sale of the company or our assets.
The market price of our Class A common stock is likely to be highly volatile and may fluctuate substantially due to a variety of factors, many of which are outside of our control, including, among other things: ● the volume and timing of sales of our products; ● the introduction of new products or product enhancements by us or others in our industry; ● disputes or other developments with respect to our or others’ intellectual property rights; ● our ability to develop, obtain regulatory clearance or approval for, and market new and enhanced products on a timely basis, including our CanGarooRM; ● changes or proposed changes in laws or regulations or differing interpretations or enforcement thereof affecting our business; ● product liability claims, other litigation or regulatory investigations; ● annual or quarterly variations in our results of operations or those of others in our industry, or results of operations that otherwise vary from those expected by securities analysts and investors; 68 ​ Table of Contents ● publications, reports or other media exposure of our products or those of others in our industry, or of our industry generally; ● announcements by us or others in our industry, or by our or their respective suppliers, distributors or other business partners, regarding, among other things, significant contracts, price reductions, capital commitments or other business developments, the entry into or termination of strategic transactions or relationships, securities offerings or other financing initiatives, and public reaction thereto; ● additions or departures of key management personnel; ● changes in governmental regulations or in reimbursement; ● changes in earnings estimates or recommendations by securities analysts, or other changes in investor perceptions of the investment opportunity associated with our Class A common stock relative to other investment alternatives; ● the development and sustainability of an active trading market for our Class A common stock; ● general market conditions and other factors, including factors unrelated to our operating performance or the operating performance of our competitors; and ● other factors discussed in Part I, Item 1A.
The market price of our Class A common stock is likely to be highly volatile and may fluctuate substantially due to a variety of factors, many of which are outside of our control, including, among other things: ● our ability to successfully commercialize, market and sell our newly approved EluPro antibacterial envelope device; 66 ​ Table of Contents ● the volume and timing of sales of our products; ● the introduction of new products or product enhancements by us or others in our industry; ● disputes or other developments with respect to our or others’ intellectual property rights; ● our ability to develop, obtain regulatory clearance or approval for, and market new and enhanced products on a timely basis; ● changes or proposed changes in laws or regulations or differing interpretations or enforcement thereof affecting our business; ● product liability claims, other litigation or regulatory investigations; ● annual or quarterly variations in our results of operations or those of others in our industry, or results of operations that otherwise vary from those expected by securities analysts and investors; ● publications, reports or other media exposure of our products or those of others in our industry, or of our industry generally; ● announcements by us or others in our industry, or by our or their respective suppliers, distributors or other business partners, regarding, among other things, significant contracts, price reductions, capital commitments or other business developments, the entry into or termination of strategic transactions or relationships, securities offerings or other financing initiatives, and public reaction thereto; ● additions or departures of key management personnel; ● changes in governmental regulations or in reimbursement; ● changes in earnings estimates or recommendations by securities analysts, or other changes in investor perceptions of the investment opportunity associated with our Class A common stock relative to other investment alternatives; ● the development and sustainability of an active trading market for our Class A common stock; ● general market conditions and other factors, including factors unrelated to our operating performance or the operating performance of our competitors; and ● other factors discussed in this Part I, Item 1A.
The FDA or any foreign regulatory agency or notified body can delay, limit or deny approval, certification or clearance of our product candidates or require us to conduct additional nonclinical or clinical testing or abandon a program for many reasons, including: ● the FDA or the applicable foreign regulatory agency or notified body’s disagreement with the design or implementation of our clinical studies; ● negative or ambiguous results from our clinical studies or results that may not meet the level of statistical significance required by the FDA or comparable foreign regulatory agencies; ● serious and unexpected drug or device-related side effects experienced by participants in our clinical studies or by individuals using devices similar to our products; 51 ​ Table of Contents ● our inability to demonstrate to the satisfaction of the FDA or the applicable foreign regulatory agency or notified body that our product candidates are safe and effective for their intended uses, or in the case of the 510(k) clearance process, that our product candidate is substantially equivalent to a predicate device; ● the FDA’s or the applicable foreign regulatory agency or notified body’s disagreement with the interpretation of data from pre-clinical or clinical studies; ● our inability to demonstrate the clinical and other benefits of our product candidates outweigh any safety or other perceived risks; ● the FDA’s or the applicable foreign regulatory agency or notified body’s requirement for additional pre-clinical studies or clinical studies; ● the FDA’s or the applicable foreign regulatory agency or notified body’s disagreement regarding the formulation, labeling or the specifications of our products or future product candidates; ● the FDA’s or the applicable foreign regulatory agency’s failure to approve the manufacturing processes or facilities of third-party manufacturers with which we contract; or ● the potential for approval or clearance policies or regulations of the FDA or the applicable foreign regulatory agencies or notified bodies to significantly change in a manner rendering our clinical data insufficient for approval.
The FDA or any foreign regulatory agency or notified body can delay, limit or deny approval, certification or clearance of our product candidates or require us to conduct additional nonclinical or clinical testing or abandon a program for many reasons, including: ● the FDA or the applicable foreign regulatory agency or notified body’s disagreement with the design or implementation of our clinical studies; ● negative or ambiguous results from our clinical studies or results that may not meet the level of statistical significance required by the FDA or comparable foreign regulatory agencies; ● serious and unexpected drug or device-related side effects experienced by participants in our clinical studies or by individuals using devices similar to our products; ● our inability to demonstrate to the satisfaction of the FDA or the applicable foreign regulatory agency or notified body that our product candidates are safe and effective for their intended uses, or in the case of the 510(k) clearance process, that our product candidate is substantially equivalent to a predicate device; ● the FDA’s or the applicable foreign regulatory agency or notified body’s disagreement with the interpretation of data from pre-clinical or clinical studies; ● our inability to demonstrate the clinical and other benefits of our product candidates outweigh any safety or other perceived risks; ● the FDA’s or the applicable foreign regulatory agency or notified body’s requirement for additional pre-clinical studies or clinical studies; ● the FDA’s or the applicable foreign regulatory agency or notified body’s disagreement regarding the formulation, labeling or the specifications of our products or future product candidates; ● the FDA’s or the applicable foreign regulatory agency’s failure to approve the manufacturing processes or facilities of third-party manufacturers with which we contract; or ● the potential for approval or clearance policies or regulations of the FDA or the applicable foreign regulatory agencies or notified bodies to significantly change in a manner rendering our clinical data insufficient for approval. 50 ​ Table of Contents Of the large number of products in development, only a small percentage successfully complete the FDA or foreign regulatory approval or certification processes and are commercialized.
Our estimates of the annual total addressable markets for our products are based on a number of internal and third-party estimates and assumptions, including, without limitation, the number of implantable electronic device procedures as well as the number of procedures 50 ​ Table of Contents using biologic products annually in the United States.
Our estimates of the annual total addressable markets for our products are based on a number of internal and third-party estimates and assumptions, including, without limitation, the number of implantable electronic device procedures as well as the number of procedures using biologic products annually in the United States.
Accordingly, our efforts to protect our intellectual property rights in such countries may be inadequate. In addition, changes in the law and legal decisions by courts in the United States and foreign countries may affect our ability to obtain adequate protection for our technology and the enforcement of our intellectual property.
Accordingly, our efforts to protect our intellectual property rights in such countries may be inadequate. In addition, changes in the law and legal decisions by courts in the United States and 61 ​ Table of Contents foreign countries may affect our ability to obtain adequate protection for our technology and the enforcement of our intellectual property.
Although it is not clear what, if any, long-term impact the PTAB proceedings will have on the operation of our business, patent challenge proceedings before the PTAB since its inception in 2013 have resulted in the invalidation of many U.S. patent claims.
Although it is not clear what, if any, long-term impact the PTAB proceedings will have on the operation of our business, patent challenge proceedings before the PTAB since its inception in 2013 have resulted in the invalidation of many U.S. 62 ​ Table of Contents patent claims.
Our ability to achieve and maintain profitability will depend, in part, on our ability to develop or acquire proprietary products that reach the market in a timely manner, receive adequate coverage and reimbursement for procedures using our products, and are safer and more effective than their alternatives, as well as our ability to otherwise compete effectively on the factors listed above.
Our ability to achieve and maintain profitability will depend, in part, on our ability to develop or acquire proprietary products that reach the market in a timely manner, receive adequate coverage and reimbursement for 38 ​ Table of Contents procedures using our products, and are safer and more effective than their alternatives, as well as our ability to otherwise compete effectively on the factors listed above.
We may be slow to attract research 76 ​ Table of Contents coverage and the analysts, who publish information about our Class A common stock, may have had relatively little experience with us or our industry, which could affect their ability to accurately forecast our results and could make it more likely that we fail to meet their estimates.
We may be slow to attract research coverage and the analysts, who publish information about our Class A common stock, may have had relatively little experience with us or our industry, which could affect their ability to accurately forecast our results and could make it more likely that we fail to meet their estimates.
The occurrence of this or any other actual or suspected production or distribution problem can lead to lost 40 ​ Table of Contents inventory, customer returns and, in some cases, recalls, with consequential damage to our reputation and customer relationships and the risk of product liability.
The occurrence of this or any other actual or suspected production or distribution problem can lead to lost inventory, customer returns and, in some cases, recalls, with consequential damage to our reputation and customer relationships and the risk of product liability.
For instance, Kevin Rakin, our board chairman, faced allegations in the United States ex rel. Webb v. Advanced BioHealing, Inc., a whistleblower suit related to sales practices at ABH, where Mr. Rakin served as CEO. All claims were dismissed with prejudice in a settlement, where Mr. Rakin denied any 56 ​ Table of Contents wrongdoing.
For instance, Kevin Rakin, our board chairman, faced allegations in the United States ex rel. Webb v. Advanced BioHealing, Inc., a whistleblower suit related to sales practices at ABH, where Mr. Rakin served as CEO. All claims were dismissed with prejudice in a settlement, where Mr. Rakin denied any wrongdoing.
In addition, the third 66 ​ Table of Contents parties owning such intellectual property rights could seek either an injunction prohibiting our sales, or, with respect to our sales, an obligation on our part to pay royalties or other forms of compensation and damages.
In addition, the third parties owning such intellectual property rights could seek either an injunction prohibiting our sales, or, with respect to our sales, an obligation on our part to pay royalties or other forms of compensation and damages.
In addition, because our board of directors is responsible for appointing the members of our management team, these provisions may frustrate or prevent any attempts by our stockholders to replace or remove our current management by making it more difficult for stockholders to replace members of our board of directors.
In addition, because our board of directors is responsible for appointing the members of our management team, these provisions may frustrate or prevent any attempts by our stockholders to replace or remove our current 71 ​ Table of Contents management by making it more difficult for stockholders to replace members of our board of directors.
In recent years, patent rights have been the subject of significant litigation. Changes in either the patent laws or interpretation of the patent laws in the United States and other countries may diminish the value of our owned or licensed patents or narrow the scope of our patent protection.
In recent years, patent rights have been the subject of significant litigation. Changes in either the patent laws or interpretation 56 ​ Table of Contents of the patent laws in the United States and other countries may diminish the value of our owned or licensed patents or narrow the scope of our patent protection.
The degree of future protection for our proprietary rights is uncertain, and we cannot ensure that: ● any of our patents, or any of our pending patent applications, if issued, will include claims having a scope sufficient to protect our products; ● any of our pending patent applications will issue as patents; ● we will be able to successfully commercialize our products on a substantial scale, if approved, before the relevant patents we currently have, or may have, expire; ● we were the first to conceive and reduce to practice the inventions covered by each of our patents and pending patent applications; ● we were the first to file patent applications for these inventions; ● others will not develop similar or alternative technologies that do not infringe, misappropriate or otherwise violate our owned or licensed patents and other intellectual property rights; ● any of our patents will ultimately be found to be valid and enforceable; ● ownership of our patents or patent applications will not be challenged by third parties; ● any patents issued to us will provide a basis for an exclusive market for our commercially viable products, will provide us with any competitive advantages or will not be challenged by third parties; ● our competitors will not conduct research and development activities in countries where we do not have patent rights, or in countries where research and development safe harbor laws exist, and then use the information learned from such activities to develop competitive products for sale in our major commercial markets; ● we will develop additional proprietary technologies or products that are separately patentable; or ● our commercial activities or products will not infringe, misappropriate or otherwise violate the patents and other intellectual property rights of others. ● Should any of these events occur, they could have a material and adverse effect on our business, financial condition and results of operations. 59 ​ Table of Contents We may not enter into invention assignment and confidentiality agreements with all of our employees and contractors and such agreements could be ineffective or breached.
The degree of future protection for our proprietary rights is uncertain, and we cannot ensure that: ● any of our patents, or any of our pending patent applications, if issued, will include claims having a scope sufficient to protect our products; ● any of our pending patent applications will issue as patents; ● we will be able to successfully commercialize our products on a substantial scale, if approved, before the relevant patents we currently have, or may have, expire; ● we were the first to conceive and reduce to practice the inventions covered by each of our patents and pending patent applications; ● we were the first to file patent applications for these inventions; ● others will not develop similar or alternative technologies that do not infringe, misappropriate or otherwise violate our owned or licensed patents and other intellectual property rights; 57 ​ Table of Contents ● any of our patents will ultimately be found to be valid and enforceable; ● ownership of our patents or patent applications will not be challenged by third parties; ● any patents issued to us will provide a basis for an exclusive market for our commercially viable products, will provide us with any competitive advantages or will not be challenged by third parties; ● our competitors will not conduct research and development activities in countries where we do not have patent rights, or in countries where research and development safe harbor laws exist, and then use the information learned from such activities to develop competitive products for sale in our major commercial markets; ● we will develop additional proprietary technologies or products that are separately patentable; or ● our commercial activities or products will not infringe, misappropriate or otherwise violate the patents and other intellectual property rights of others. ● Should any of these events occur, they could have a material and adverse effect on our business, financial condition and results of operations.
Disruption to our facilities could arise for a variety of reasons, including technical, labor or other difficulties, equipment malfunction, contamination due to a COVID-19 infection or otherwise, the failure of our employees to follow specific protocols and procedures, the destruction of, or damage to, any facility (as a result of a natural or man-made disaster, including, but not limited to, a tornado, flood, fire, power outage or other event), quality control issues or other reasons.
Disruption to our facilities could arise for a variety of reasons, including technical, labor or other difficulties, equipment malfunction, contamination, the failure of our employees to follow specific protocols and procedures, the destruction of, or damage to, any facility (as a result of a natural or man-made disaster, including, but not limited to, a tornado, flood, fire, power outage or other event), quality control issues or other reasons.
Regulatory changes could result in restrictions on our ability to continue or expand our operations, and higher than anticipated costs or lower than anticipated sales. Even after we have obtained the proper regulatory clearance to market a device, we have 53 ​ Table of Contents ongoing responsibilities under FDA regulations and applicable foreign laws and regulations.
Regulatory changes could result in restrictions on our ability to continue or expand our operations, and higher than anticipated costs or lower than anticipated sales. Even after we have obtained the proper regulatory clearance to market a device, we have ongoing responsibilities under FDA regulations and applicable foreign laws and regulations.
It may be difficult to detect infringers who do not advertise the components that are used in their products. Moreover, it may be difficult or impossible 58 ​ Table of Contents to obtain evidence of infringement in a competitor’s or potential competitor’s product.
It may be difficult to detect infringers who do not advertise the components that are used in their products. Moreover, it may be difficult or impossible to obtain evidence of infringement in a competitor’s or potential competitor’s product.
If no or few securities or industry analysts commence coverage of us, the trading price for our stock would be negatively impacted.
If no or few securities or industry analysts provide coverage of us, the trading price for our stock would be negatively impacted.
If we do not adequately protect our intellectual property and proprietary technology, competitors may be able 57 ​ Table of Contents to use our technologies or the goodwill we have acquired in the marketplace and erode or negate any competitive advantage we may have, which could harm our business and ability to achieve profitability.
If we do not adequately protect our intellectual property and proprietary technology, competitors may be able to use our technologies or the goodwill we have acquired in the marketplace and erode or negate any competitive advantage we may have, which could harm our business and ability to achieve profitability.
Third parties may, in the future, assert claims that we are employing their proprietary technology without authorization, including claims from competitors or from non-practicing entities that have no relevant product sales and against whom our own patent portfolio may have no deterrent effect.
Third parties may, in the future, 59 ​ Table of Contents assert claims that we are employing their proprietary technology without authorization, including claims from competitors or from non-practicing entities that have no relevant product sales and against whom our own patent portfolio may have no deterrent effect.
As such, there can be no assurance that we will be able to continue as a going concern. ​ 26 ​ Table of Contents Our indebtedness and our Revenue Interest Obligation to Ligand Pharmaceuticals Incorporated may limit our flexibility in operating our business and adversely affect our financial health and competitive position.
As such, there can be no assurance that we will be able to continue as a going concern. ​ Our indebtedness and our Revenue Interest Obligation to Ligand Pharmaceuticals Incorporated may limit our flexibility in operating our business and adversely affect our financial health and competitive position.
These sales, or the perception in the market that the holders of a large number of such shares intend to sell shares, could reduce the market price of our Class A common stock. ​ As of December 31, 2023, we had outstanding approximately 18.9 million shares of Class A common stock, of which 9.5 million shares of our Class A common stock were freely tradable without restriction or further registration under the Securities Act of 1933, as amended (the “Securities Act”), by persons other than our “affiliates,” as that term is defined under Rule 144 of the Securities Act and approximately 9.4 million shares were held by our affiliates and eligible for resale subject to volume, manner of sale and other limitations under Rule 144.
These sales, or the perception in the market that the holders of a large number of such shares intend to sell shares, could reduce the market price of our Class A common stock. ​ As of December 31, 2024, we had outstanding approximately 30.9 million shares of Class A common stock, of which 21.0 million shares of our Class A common stock were freely tradable without restriction or further registration under the Securities Act of 1933, as amended (the “Securities Act”), by persons other than our “affiliates,” as that term is defined under Rule 144 of the Securities Act and approximately 9.9 million shares were held by our affiliates and eligible for resale subject to volume, manner of sale and other limitations under Rule 144.
For example, we have commercial agreements with major medical device companies, including Boston Scientific, Sientra and LeMaitre Vascular.
For example, we have commercial agreements with major medical device companies, including Boston Scientific, Tiger and LeMaitre Vascular.
In addition to patent protection, we also rely upon copyright and trade secret protection, as well as non-disclosure agreements and invention assignment agreements with our employees, consultants, independent sales agents and other 62 ​ Table of Contents third parties, to protect our confidential and proprietary information.
In addition to patent protection, we also rely upon copyright and trade secret protection, as well as non-disclosure agreements and invention assignment agreements with our employees, consultants, independent sales agents and other third parties, to protect our confidential and proprietary information.
All of these factors related to global economic conditions, which are beyond our control, could adversely impact our business, financial condition, results of operations and liquidity.
All of these factors related to global economic 31 ​ Table of Contents conditions, which are beyond our control, could adversely impact our business, financial condition, results of operations and liquidity.
Our principal stockholders have significant voting power and may take actions that may not be in the best interests of our other stockholders. As of December 31, 2023, our principal stockholder, HighCape Partners L.P. and its affiliates, held approximately 48.7% of our outstanding Class A common stock.
Our principal stockholders have significant voting power and may take actions that may not be in the best interests of our other stockholders. As of December 31, 2024, our principal stockholder, HighCape Partners L.P. and its affiliates, held approximately 29.5% of our outstanding Class A common stock.
Our FiberCel products were included in the sale of our former Orthobiologics Business to Berkeley, but Berkeley did not assume any liabilities related to the FiberCel Recall, our market withdrawal of all of our viable bone matrix products, or any claims or lawsuits related thereto.
Our VBM products, which encompass FiberCel, were included in the sale of our former Orthobiologics Business to Berkeley, but Berkeley did not assume any liabilities related to the FiberCel and VBM Recalls, our market withdrawal of all of our viable bone matrix products, or any claims or lawsuits related thereto.
We have not yet registered certain of our trademarks in all of our potential markets. If we apply to register these and other trademarks in the United States and other countries, our applications may not be allowed for registration in a timely fashion or at all, and our registered trademarks may not be maintained or enforced.
If we apply to register these and other trademarks in the United States and other countries, our applications may not be allowed for registration in a timely fashion or at all, and our registered trademarks may not be maintained or enforced.
Medical technology companies, healthcare systems and group purchasing organizations (“GPOs”) have intensified competitive pricing pressure as a result of industry trends and new technologies. Rising healthcare costs have resulted in numerous cost reform initiatives by legislators, regulators and third-party payors.
Medical technology companies, healthcare systems and group purchasing organizations (“GPOs”) have intensified competitive pricing pressure as a result of industry trends and new technologies. The healthcare system is under significant financial pressure to reduce costs, and rising healthcare costs have resulted in numerous cost reform initiatives by legislators, regulators and third-party payors.

… 122 more changes not shown on this page.

Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

5 edited+1 added−0 removed3 unchanged
Biggest changeBased on the information we have as of the date of this Annual Report, we do not believe that any risks from cybersecurity threats, including as a result of any 77 ​ Table of Contents previous cybersecurity incidents, have materially affected or are reasonably likely to materially affect the Company’s business strategy, results of operations or financial position.
Biggest changeDespite ongoing efforts to continued improvement of our ability to protect against cyber incidents, we may not be able to protect all information systems, and such incidents may lead to reputational harm, revenue and client loss, legal actions, statutory penalties, among other consequences. ​ Based on the information we have as of the date of this Annual Report, we do not believe that any risks from cybersecurity threats, including as a result of any previous cybersecurity incidents, have materially affected or are reasonably likely to materially affect the Company’s business strategy, results of operations or financial position.
Key elements of that program include: ​ ● Alignment with the National Institute of Standards and Technology Cybersecurity Framework to prevent, detect and respond to cyberattacks; ● Engaging external cybersecurity experts in incident response development and management; ● An information security training program instructing company employees with access to our networks how to be aware of, and help defend against cybersecurity risks; ● Evaluating the cybersecurity risk of third party service providers; and ● Business continuity plans and critical recovery backup systems. ​ Our cybersecurity risk management program is supervised by our Director of Information Systems whose team is responsible for leading enterprise-wide information security strategy, policy, standards, architecture, and processes, as well as managing the Company’s information security and risk management awareness program. ​ Cybersecurity Incident Response Process ​ We maintain and regularly update a cybersecurity incident response plan that outlines the steps we take to identify, investigate and take action in response to any potentially material cybersecurity incidents.
Key elements of that program include: ​ ● Alignment with the National Institute of Standards and Technology Cybersecurity Framework to prevent, detect and respond to cyberattacks; ● Engaging external cybersecurity experts in incident response development and management; ● An information security training program instructing company employees with access to our networks how to be aware of, and help defend against cybersecurity risks; ● Evaluating the cybersecurity risk of third party service providers ; and ● Business continuity plans and critical recovery backup systems . ​ Our cybersecurity risk management program is supervised by our Director of Information Systems, who has over 20 years of relevant experience, and whose team is responsible for leading enterprise-wide information security strategy, policy, standards, architecture, and processes, as well as managing the Company’s information security and risk management awareness program. ​ Cybersecurity Incident Response Process ​ 75 ​ Table of Contents We maintain and regularly update a cybersecurity incident response plan that outlines the steps we take to identify, investigate and take action in response to any potentially material cybersecurity incidents.
As reflected in the Audit Committee’s charter, the Board has specifically delegated responsibility for oversight of cybersecurity matters to the Audit Committee, which provides advice and guidance on the adequacy of the Company’s initiatives on, among other things, cybersecurity risk management.
As reflected in the Audit Committee’s charter, the Board has specifically delegated responsibility for oversight of cybersecurity matters to the Audit Committee, comprised solely of independent directors. The Audit Committee reviews and discusses our cybersecurity risks and threats and provides advice and guidance on the adequacy of the Company’s initiatives on, among other things, cybersecurity risk management.
Periodic updates are provided to the Audit Committee on, among other things, our cybersecurity risks and threats, the status of projects to strengthen the Company’s information security systems, and the emerging threat landscape.
Periodic updates are provided to the Audit Committee on, among other things, our cybersecurity risks and threats, the status of projects to strengthen the Company’s information security systems, and the emerging threat landscape. We also engage third parties to periodically evaluate and audit aspects of our information security programs, including by conducting vulnerability assessments and penetration testing.
We also engage third parties to periodically evaluate and audit aspects of our information security programs, including by conducting vulnerability assessments and penetration testing, and the results of those findings are reported to the Audit Committee and used to help identify potentially material risks and prioritize certain security initiatives. ​ We face a number of cybersecurity risks in connection with our business.
These partnerships enable us to leverage specialized knowledge and insights, with the goal of ensuring our cybersecurity strategies and processes remain current. The results of those findings are reported to the Audit Committee and used to help identify potentially material risks and prioritize certain security initiatives. ​ We face a number of cybersecurity risks in connection with our business.
Added
Due to evolving cybersecurity threats, it has been and will continue to be difficult to prevent, detect, mitigate, and remediate cybersecurity incidents. We may also rely on information technology and third-party vendors to support our operations, including to collect and store sensitive data.

Item 2. Properties

Properties — owned and leased real estate

3 edited+1 added−0 removed0 unchanged
Biggest changeWe believe that our facilities are sufficient to meet our current needs and that suitable additional space will be available as and when needed. ​
Biggest changeWe believe that our facilities are sufficient to meet our current needs and that suitable additional space will be available as and when needed. Additionally, in March 2025, we signed a lease for 26,598 square feet in Gaithersburg, Maryland. This new facility will become our principal executive office and be utilized for office, manufacturing and laboratory space.
Item 2. Properties. Our principal executive office is located in Silver Spring, Maryland, where we lease approximately 5,052 square feet of office and laboratory space under a lease that expires in May 2024.
Item 2. Properties. Our principal executive office at December 31, 2024 is located in Silver Spring, Maryland, where we lease approximately 5,052 square feet of office and laboratory space under a lease that expires in May 2025.
We also occupy approximately 12,888 square feet of manufacturing and office space in Roswell, Georgia under a lease that expires in July 2024, and 2,391 square feet for administrative space in San Diego, California that commenced in February 2024 and expires in February 2026. We expect to renew both of our leases that expire in 2024.
We also occupy approximately 12,888 square feet of manufacturing and office space in Roswell, Georgia under a lease that expires in July 2029 (with an early termination right in October 2026), and 2,391 square feet for administrative space in San Diego, California that expires in February 2026.
Added
We expect to occupy this new facility in the second quarter of 2025. This lease expires in January 2036 with early termination dates in 2029 and 2033. ​

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

1 edited+0 added−0 removed1 unchanged
Biggest changeFor information about legal proceedings in which we are involved, see Note 17 to the consolidated financial statements included elsewhere in this Annual Report. ​ Item 4. Mine Safety Disclosure. Not applicable. ​ PART II
Biggest changeFor information about legal proceedings in which we are involved, see Note 17 to the consolidated financial statements included elsewhere in this Annual Report. ​ Item 4. Mine Safety Disclosure. Not applicable. 76 ​ Table of Contents ​ PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

3 edited+0 added−0 removed4 unchanged
Biggest changeIn addition, our ability to pay cash dividends is currently restricted by the terms of the agreements governing our SWK Loan Facility. Equity Compensation Plans The information required by Item 5 regarding equity compensation plans is incorporated herein by reference to Part III, Item 12 in this Annual Report. 78 ​ Table of Contents Recent Sales of Unregistered Securities None.
Biggest changeIn addition, our ability to pay cash dividends is currently restricted by the terms of the agreements governing our SWK Loan Facility. Equity Compensation Plans The information required by Item 5 regarding equity compensation plans is incorporated herein by reference to Part III, Item 12 in this Annual Report. Recent Sales of Unregistered Securities None.
Purchases of Equity Securities by the Issuer or Affiliated Purchasers None. Item 6. [Reserved] ​
Purchases of Equity Securities by the Issuer or Affiliated Purchasers None. Item 6. [Reserved] Reserved.
Market Information Our Class A common stock is traded on The Nasdaq Capital Market under the symbol “ELUT.” Stockholders As of March 1, 2024, there were approximately 26 holders of record of our Class A common stock and two affiliated holders of record of our Class B common stock.
Market Information Our Class A common stock is traded on The Nasdaq Capital Market under the symbol “ELUT.” Stockholders As of March 3, 2025, there were approximately 29 holders of record of our Class A common stock and two affiliated holders of record of our Class B common stock.

Item 7. Management's Discussion & Analysis

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

96 edited+45 added−41 removed47 unchanged
Biggest changeResults of Operations Comparison of the Years Ended December 31, 2023 and 2022 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ ​ ​ ​ ​ ​ ​ 2023 ​ 2022 ​ Change 2022 / 2023 ​ ​ ​ ​ ​ ​ % of Net ​ ​ ​ ​ % of Net ​ ​ ​ ​ ​ ​ ​ (in thousands, except percentages) Amount Sales Amount Sales $ ​ % Net sales ​ $ 24,745 ​ 100.0 % $ 23,849 ​ 100.0 % $ 896 ​ 3.8 % ​ Cost of goods sold ​ 13,692 55.3 % ​ 12,210 51.2 % ​ 1,482 ​ 12.1 % Gross profit ​ 11,053 44.7 % ​ 11,639 48.8 % ​ (586) ​ (5.0) % Sales and marketing ​ 13,087 52.9 % ​ 17,850 74.8 % ​ (4,763) ​ (26.7) % General and administrative ​ 14,104 57.0 % ​ 16,051 67.3 % ​ (1,947) ​ (12.1) % Research and development ​ 4,399 17.8 % ​ 7,727 32.4 % ​ (3,328) ​ (43.1) % FiberCel litigation costs ​ ​ 9,989 40.4 % ​ 5,200 21.8 % ​ 4,789 ​ 92.1 % ​ Total operating expenses ​ 41,579 ​ 168.0 % ​ 46,828 ​ 196.4 % ​ (5,249) ​ (11.2) % Loss from continuing operations ​ (30,526) (123.4) % ​ (35,189) (147.5) % ​ 4,663 ​ 13.3 % Interest expense ​ 5,796 23.4 % ​ 5,118 21.5 % ​ 678 ​ 13.2 % Other expense (income), net ​ 4,899 19.8 % ​ (4,159) (17.4) % ​ 9,058 ​ NM ​ Loss before provision of income taxes ​ (41,221) (166.6) % ​ (36,148) (151.6) % ​ (5,073) ​ (14.0) % Income tax expense ​ 28 0.1 % ​ 34 0.1 % ​ (6) ​ (17.6) % Net loss from continuing operations ​ ​ (41,249) ​ (166.7) % ​ (36,182) ​ (151.7) % ​ (5,067) ​ (14.0) % ​ Net income from discontinued operations ​ ​ 3,593 ​ 14.5 % ​ 3,285 ​ 13.8 % ​ 308 ​ 9.4 % ​ Net loss ​ $ (37,656) (152.2) % $ (32,897) (137.9) % $ (4,759) ​ (14.5) % ​ NM = not meaningful Net Sales Net sales information for our products is summarized as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years Ended December 31, ​ ​ ​ ​ ​ ​ ​ 2023 ​ 2022 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ % of Net ​ ​ ​ ​ % of Net ​ Change (in thousands, except percentages) Amount Sales Amount Sales $ % Products: ​ ​ ​ ​ ​ ​ Device protection ​ $ 9,401 38.0 % $ 9,093 38.1 % $ 308 ​ 3.4 % Women's health ​ 10,304 41.6 % 7,474 31.3 % 2,830 ​ 37.9 % Cardiovascular ​ ​ 5,040 ​ 20.4 % ​ 7,282 ​ 30.5 % ​ (2,242) ​ (30.8) % Total Net Sales ​ $ 24,745 100.0 % $ 23,849 100.0 % $ 896 ​ 3.8 % ​ Total net sales increased $0.9 million, or 3.8%, to $24.7 million in the year ended December 31, 2023 compared to $23.8 million in the year ended December 31, 2022.
Biggest changeLitigation Costs, net Litigation costs, net consist primarily of legal fees and the estimated and actual costs to resolve the outstanding FiberCel and VBM litigation cases offset by the estimated and actual amounts recoverable or recovered under insurance, indemnity and contribution agreements for such costs. 81 ​ Table of Contents Results of Operations Comparison of the Years Ended December 31, 2024 and 2023 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ ​ ​ ​ ​ ​ ​ 2024 ​ ​ 2023 ​ ​ Change 2023 / 2024 ​ ​ ​ ​ ​ % of Net ​ ​ ​ ​ ​ % of Net ​ ​ ​ ​ ​ ​ ​ (in thousands, except percentages) Amount ​ Sales ​ Amount ​ Sales ​ $ ​ % Net sales ​ $ 24,375 ​ 100.0 % ​ $ 24,745 ​ 100.0 % ​ $ (370) ​ (1.5) % Cost of goods sold ​ 13,668 ​ 56.1 % ​ ​ 13,692 ​ 55.3 % ​ ​ (24) ​ (0.2) % Gross profit ​ 10,707 ​ 43.9 % ​ ​ 11,053 ​ 44.7 % ​ ​ (346) ​ (3.1) % Sales and marketing ​ 12,546 ​ 51.5 % ​ ​ 13,087 ​ 52.9 % ​ ​ (541) ​ (4.1) % General and administrative ​ 18,659 ​ 76.5 % ​ ​ 14,104 ​ 57.0 % ​ ​ 4,555 ​ 32.3 % Research and development ​ 3,785 ​ 15.5 % ​ ​ 4,399 ​ 17.8 % ​ ​ (614) ​ (14.0) % Litigation costs, net ​ ​ 11,368 ​ 46.6 % ​ ​ 9,989 ​ 40.4 % ​ ​ 1,379 ​ 13.8 % Total operating expenses ​ 46,358 ​ 190.2 % ​ ​ 41,579 ​ 168.0 % ​ ​ 4,779 ​ 11.5 % Loss from continuing operations ​ (35,651) ​ (146.3) % ​ ​ (30,526) ​ (123.4) % ​ ​ (5,125) ​ (16.8) % Interest expense ​ 4,779 ​ 19.6 % ​ ​ 5,796 ​ 23.4 % ​ ​ (1,017) ​ (17.5) % Loss on revaluation of warrant liability ​ ​ 14,878 ​ 61.0 % ​ ​ 4,140 ​ 16.7 % ​ ​ 10,738 ​ 259.4 % Other (income) expense, net ​ (1,186) ​ (4.9) % ​ ​ 759 ​ 3.1 % ​ ​ (1,945) ​ NM ​ Loss before provision of income taxes ​ (54,122) ​ (222.0) % ​ ​ (41,221) ​ (166.6) % ​ ​ (12,901) ​ (31.3) % Income tax expense ​ 7 ​ 0.0 % ​ ​ 28 ​ 0.1 % ​ ​ (21) ​ (75.0) % Net loss from continuing operations ​ ​ (54,129) ​ (222.1) % ​ ​ (41,249) ​ (166.7) % ​ ​ (12,880) ​ (31.2) % Income from discontinued operations ​ ​ 180 ​ 0.7 % ​ ​ 3,593 ​ 14.5 % ​ ​ (3,413) ​ (95.0) % Net loss ​ $ (53,949) ​ (221.3) % ​ $ (37,656) ​ (152.2) % ​ $ (16,293) ​ (43.3) % NM = not meaningful Net Sales Net sales information for our products is summarized as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years Ended December 31, ​ ​ ​ ​ ​ ​ ​ ​ 2024 ​ ​ 2023 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ % of Net ​ ​ ​ ​ ​ % of Net ​ ​ Change (in thousands, except percentages) Amount ​ Sales ​ Amount ​ Sales ​ $ ​ % Products: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Device Protection ​ $ 9,907 ​ 40.6 % ​ $ 9,401 ​ 38.0 % ​ $ 506 ​ 5.4 % Women's Health ​ 11,553 ​ 47.4 % ​ 10,304 ​ 41.6 % ​ 1,249 ​ 12.1 % Cardiovascular ​ ​ 2,915 ​ 12.0 % ​ ​ 5,040 ​ 20.4 % ​ ​ (2,125) ​ (42.2) % Total Net Sales ​ $ 24,375 ​ 100.0 % ​ $ 24,745 ​ 100.0 % ​ $ (370) ​ (1.5) % ​ Total net sales decreased $0.4 million, or 1.5%, to $24.4 million in the year ended December 31, 2024 compared to $24.7 million in the year ended December 31, 2023.
Below is a breakdown of our main expense categories and the related expenses incurred in each category: Costs of Goods Sold Our cost of goods sold relate to purchased raw materials and the processing and conversion costs of such raw materials consisting primarily of salaries and benefits, supplies, quality control testing and the manufacturing overhead incurred at our processing facilities in Roswell, Georgia and our former facility in Richmond, California.
Below is a breakdown of our main expense categories and the related expenses incurred in each category: Costs of Goods Sold Our cost of goods sold relate to purchased raw materials and the processing and conversion costs of such raw materials consisting primarily of salaries and benefits, supplies, quality control testing and the manufacturing overhead incurred at our processing facilities in Roswell, Georgia and our former Orthobiologics facility in Richmond, California.
Each Prefunded Warrant is exercisable at any time at a nominal exercise price per share of $0.001 (with the remainder of the exercise price per share of Class A Common Stock having been prefunded to us). ​ We expect our losses to continue for the foreseeable future and these losses will continue to have an adverse effect on our financial position.
Each 2023 Prefunded Warrant is exercisable at any time at a nominal exercise price per share of $0.001 (with the remainder of the exercise price per share of Class A Common Stock having been prefunded to us). ​ We expect our losses to continue for the foreseeable future and these losses will continue to have an adverse effect on our financial position.
We have elected to account for shipping and handling activities as a fulfillment cost rather than a separate performance obligation. Amounts billed to customers for shipping and handling are included as part of the transaction price and recognized as revenue when control of the underlying products is transferred to the customer.
We elected to account for shipping and handling activities as a fulfillment cost rather than a separate performance obligation. Amounts billed to customers for shipping and handling are included as part of the transaction price and recognized as revenue when control of the underlying products is transferred to the customer.
We will remain an emerging growth company, and will be able to take advantage of the foregoing exemptions, until the earliest of: (i) the last day of the first fiscal year in which our annual gross revenues are $1.235 billion or more; (ii) the last day of 2025; (iii) the date that we become a “large accelerated filer” as defined in Rule 12b-2 under the Exchange Act, which would occur if the market value of our common equity held by non-affiliates is $700 million or more as of the last business day of our most recently completed second fiscal quarter; or (iv) the date on which we have issued more than $1.0 billion in non-convertible debt securities during the previous three years. ​ Recently Issued Accounting Pronouncements ​ See Note 3, “Recently Issued Accounting Standards,” to our audited consolidated financial statements included elsewhere in this Annual Report for information regarding recently issued accounting pronouncements. ​
We will remain an emerging growth company, and will be able to take advantage of the foregoing exemptions, until the earliest of: (i) the last day of the first fiscal year in which our annual gross revenues are $1.235 billion or more; (ii) the last day of 2025; (iii) the date that we become a “large accelerated filer” as defined in Rule 12b-2 under the Exchange Act, which would occur if the market value of our common equity held by non-affiliates is $700 million or more as of the last business day of our most recently completed second fiscal quarter; or (iv) the date on which we have issued more than $1.0 billion in non-convertible debt securities during the previous three years. ​ 93 ​ Table of Contents Recently Issued Accounting Pronouncements ​ See Note 3, “Recently Issued Accounting Standards,” to our audited consolidated financial statements included elsewhere in this Annual Report for information regarding recently issued accounting pronouncements. ​
We rely on a single or limited number of suppliers for certain raw materials and supplies. We have a long-term supply agreement with Cook Biotech, the porcine tissue supplier of our raw materials for our CanGaroo and cardiovascular products.
We rely on a single or limited number of suppliers for certain raw materials and supplies. We have a long-term supply agreement with Cook, the porcine tissue supplier of our raw materials for our CanGaroo and cardiovascular products.
The Common Units were sold at a purchase price of $1.4275 per unit, and the Prefunded Units were sold at a purchase price of $1.4265 per unit, for aggregate gross proceeds of approximately $10.5 million, before deducting offering expenses.
The Common Units were sold at a purchase price of $1.4275 per unit, and the 2023 Prefunded Units were sold at a purchase price of $1.4265 per unit, for aggregate gross proceeds of approximately $10.5 million, before deducting offering expenses.
Our historical cash outflows have primarily been associated with acquisitions and integration, manufacturing and administrative costs, general and marketing, research and development, clinical activity, purchase of property and equipment used in our production activities, litigation costs and investing in our commercial infrastructure through our direct sales force and our commercial partners in order to expand our presence and to promote awareness and adoption of our products.
Our historical cash outflows have primarily been associated with acquisitions and integration, manufacturing and administrative costs, general and marketing, research and development, clinical activity, purchase of property and equipment used in our production activities, litigation defense and settlement costs and investing in our commercial infrastructure through our direct sales force and our commercial partners in order to expand our presence and to promote awareness and adoption of our products.
Due to these factors, there is substantial doubt about our ability to continue as a going concern within one year after the issuance of the financial statements. Off-Balance Sheet Arrangements As of December 31, 2023, we did not have any off-balance sheet arrangements, as defined under SEC Regulation S-K Item 303(a)(4)(ii).
Due to these factors, there is substantial doubt about our ability to continue as a going concern within one year after the issuance of the financial statements. Off-Balance Sheet Arrangements As of December 31, 2024, we did not have any off-balance sheet arrangements, as defined under SEC Regulation S-K Item 303(a)(4)(ii).
While it is difficult to accurately measure the impact of inflation due to the imprecise nature of the estimates required, we do not believe inflation had a material effect on our financial condition or results of operations during the years ended December 31, 2023 and 2022.
While it is difficult to accurately measure the impact of inflation due to the imprecise nature of the estimates required, we do not believe inflation had a material effect on our financial condition or results of operations during the years ended December 31, 2024 and 2023.
Accordingly, future adjustments may result from refining these estimates. Such adjustments may be significant. Valuation of Purchased Intangible Assets Purchased intangible assets with finite lives are carried at acquired fair value, less accumulated amortization. Amortization is computed over the estimated useful lives of the respective assets.
Accordingly, future adjustments may result from refining these estimates. Such adjustments may be significant. Valuation of Purchased Intangible Assets Purchased intangible assets with finite lives are carried at acquired fair value, less accumulated amortization. Amortization is recorded over the estimated useful lives of the respective assets.
If impairment exists, the carrying value of that asset is adjusted to its fair value. A discounted cash flow analysis is used to 92 ​ Table of Contents estimate an asset’s fair value, using assumptions that market participants would apply.
If 91 ​ Table of Contents impairment exists, the carrying value of that asset is adjusted to its fair value. A discounted cash flow analysis is used to estimate an asset’s fair value, using assumptions that market participants would apply.
The first covenant, which is measured quarterly, requires us to achieve a specified Minimum Aggregate Revenue (as defined in the SWK Loan Facility) for the preceding 12-month period or, alternatively, to maintain Consolidated Unencumbered Liquid Assets (as defined in the SWK Loan Facility) greater than either (i) the outstanding principal balance of the loan, or (ii) the aggregate operating 89 ​ Table of Contents cash burn (as defined in the SWK Loan Facility) for the preceding 12-month period.
The first covenant, which is measured quarterly, requires us to achieve a specified Minimum Aggregate Revenue (as defined in the SWK Loan Facility) for the preceding 12-month period or, alternatively, to maintain Consolidated Unencumbered Liquid Assets (as defined in the SWK Loan Facility) greater than either (i) the outstanding principal balance of the loan, or (ii) the aggregate operating cash burn (as defined in the SWK Loan Facility) for the preceding 12-month period.
Revenue is recognized when we have met our performance obligations pursuant to our contracts with our customers in an amount that we expect to be entitled to in exchange for the transfer of control of the products and services to our customers.
Revenue is recognized when we have met our performance obligations pursuant to our contracts with our customers in an amount that we expect to be entitled to in exchange for the transfer of control of the products to our customers.
For all net sales, we have no further performance obligations and revenue is recognized when control transfers which occurs either when: i) the product is shipped via common carrier; or ii) the product is delivered to the customer or distributor, in accordance with the terms of the agreement.
For all product sales, we have no further performance obligations and revenue is recognized at the point control transfers which occurs either when: i) the product is shipped via common carrier; or ii) the product is delivered to the customer or distributor, in accordance with the terms of the agreement.
A portion of our product revenue is generated from consigned inventory maintained at hospitals, distributors and by our direct sales representatives. For these types of products sales, we retain control until the product has been shipped, used or implanted, at which time revenue is recognized.
A portion of our product revenue is generated from consigned inventory maintained at hospitals and from inventory physically held by distributors and direct sales representatives. For these types of products sales, we retain control until the product has been used or implanted, at which time revenue is recognized.
To the extent that management determines there is excess or obsolete inventory or quantities with a shelf life that is too near its expiration for us to reasonably expect that we can sell those products prior to their expiration, we adjust the carrying value of the inventory to its estimated net realizable value.
To the extent that we determine there is excess or obsolete inventory or quantities with a shelf life that is too near its expiration for us to reasonably expect that we can sell those products prior to their expiration, we adjust the carrying value of the inventory to its estimated net realizable value.
We cannot assure you, however, that we will be able to increase the selling prices of our products or reduce our operating expenses in an amount sufficient to offset the effects future 81 ​ Table of Contents inflationary pressures may have on our gross margin.
We cannot assure you, however, that we will be able to increase the selling prices of our products or reduce our operating expenses in an amount sufficient to offset the effects future inflationary pressures may have on our gross margin.
We expect that our recurring operating costs will largely stabilize, or increase at modest rates, in the near future through the identification of efficiencies as we grow. We may, however, still experience more significant expense increases as we expand our product development and clinical and research activities.
We expect that our recurring operating costs will largely stabilize, or increase at modest rates, in the near future through the identification of efficiencies as we grow. We may, however, still experience more significant expense increases to the extent we expand our sales and marketing, product development and clinical and research activities.
Although we use gross margin, excluding intangible asset amortization, as described above, this metric has limitations as an analytical tool and should not be considered in isolation or as a substitute for financial information presented in accordance with GAAP.
Although we use gross margin, excluding intangible asset amortization, as described above, this metric has limitations as an analytical tool and should not be considered in isolation or as a substitute for financial information 84 ​ Table of Contents presented in accordance with GAAP.
Actual results and the timing of events may differ materially from those contained in these forward-looking statements due to a number of factors, including those discussed in the sections entitled “Forward-Looking Statements,” “Risk Factors Summary” and in Part I, Item 1A. “Risk Factors” of this Annual Report.
Actual results and the timing of events may differ materially from those contained in these forward-looking statements due to a number of factors, including those discussed in the sections entitled “Forward-Looking Statements,” “Risk Factors Summary” and in Part I, Item 1A.
The Revenue Interest Obligation requires us to pay Ligand 5.0% of future sales of our CanGaroo, ProxiCor, Tyke and VasCure products, and substantially similar products, through May 31, 2027, subject to annual minimum payments of $4.4 million. ​ If our available cash balances and cash flow from operations are insufficient to satisfy our liquidity requirements, we may seek to raise additional capital through equity offerings, debt financings, or asset sale or other transactions.
The Revenue Interest Obligation, as amended in January 2024, requires us to pay Ligand 5.0% of future sales of our CanGaroo, ProxiCor, Tyke and VasCure products, and substantially similar products, such as EluPro, through May 31, 2027, subject to annual minimum payments of $4.4 million. ​ If our available cash balances and cash flow from operations are insufficient to satisfy our liquidity requirements, we may seek to raise additional capital through equity offerings, debt financings, or asset sale or other transactions.
Our management uses 85 ​ Table of Contents this metric and the results of the segments in assessing the health of our business and our operating performance, and we believe investors’ understanding of our operating performance is similarly enhanced by our presentation of this metric.
Our management uses this metric and the results of the segments in assessing the health of our business and our operating performance, and we believe investors’ understanding of our operating performance is similarly enhanced by our presentation of this metric.
The warrants are subject to re-measurement at each settlement date and at each balance sheet date and any change in fair value is recognized in other expense (income), net in the statements of operations. The Company estimates the fair value of the warrant liability using a Black-Scholes pricing model.
The warrants are subject to re-measurement at each settlement date and at each balance sheet date and any change in fair value is recognized in other (income) expense, net in the consolidated 92 ​ Table of Contents statements of operations. The Company estimates the fair value of the Common Warrant liability using a Black-Scholes pricing model.
Our present and future funding requirements will depend on many factors, including, among other things: ​ ● the costs of defending against or the damages payable in connection with the FiberCel Recall and VBM Recall and any future litigation that we may be subject to (to the extent above the applicable insurance coverage); ● continued patient, physician and market acceptance of our products; ● the scope, rate of progress and cost of our current and future pre-clinical and clinical studies; ● the cost of our research and development activities and the cost and timing of commercializing new products or technologies; ● the cost and timing of expanding our sales and marketing capabilities; ● the cost of filing and prosecuting patent applications and maintaining, defending and enforcing our patent or other intellectual property rights; 90 ​ Table of Contents ● the cost of defending, in litigation or otherwise, any claims that we infringe, misappropriate or otherwise violate third-party patents or other intellectual property rights; ● the cost and timing of additional regulatory approvals; ● costs associated with any product recall that may occur; ● the effect of competing technological and market developments; ● the expenses we incur in manufacturing and selling our products; ● the extent to which we acquire or invest in products, technologies and businesses, although we currently have no commitments or agreements relating to any of these types of transactions; ● the costs of operating as a public company; and ● unanticipated general, legal and administrative expenses.
Our present and future funding requirements will depend on many factors, including, among other things: ​ ● the cost of fully commercializing our EluPro product; ● continued patient, physician and market acceptance of our products; ● the scope, rate of progress and cost of our current and future pre-clinical and clinical studies; ● the cost of our research and development activities and the cost and timing of commercializing new products or technologies; ● the cost and timing of expanding our sales and marketing capabilities; ● the cost of filing and prosecuting patent applications and maintaining, defending and enforcing our patent or other intellectual property rights; ● the cost of defending, in litigation or otherwise, any claims that we infringe, misappropriate or otherwise violate third-party patents or other intellectual property rights; 89 ​ Table of Contents ● the costs of defending against or the damages payable in connection with the FiberCel Litigation, associated litigation related to indemnity claims by other defendants to the FiberCel Litigation and any future litigation that we may be subject to (to the extent above the applicable insurance coverage); ● the cost and timing of additional regulatory approvals; ● costs associated with any product recall that may occur; ● the effect of competing technological and market developments; ● the expenses we incur in manufacturing and selling our products; ● the extent to which we acquire or invest in products, technologies and businesses in the future, although we may currently have no commitments or agreements relating to any of these types of transactions; ● the costs of operating as a public company; ● unanticipated general, legal and administrative expenses; and ● the effects on any of the above from any pandemic, epidemic or outbreak of infectious disease or any other public health crisis.
Auto and travel costs also contribute to sales and marketing expenses. Outside of our direct sales force, we incur significant expenses relating to commissions to our CanGaroo commercial partners and independent sales agents. Additionally, this expense category includes distribution costs as well as market research, trade show attendance, advertising and public relations related to our products, and customer service expenses.
Outside of our direct sales force, we incur significant expenses relating to commissions to our CanGaroo and SimpliDerm commercial partners and independent sales agents. Additionally, this expense category includes distribution costs as well as market research, trade show attendance, advertising and public relations related to our products, and customer service expenses.
The earn-out payments are equal to 10% of the actual revenue earned by Berkeley in each of the five years after the closing of the sale from sales of specified Orthobiologics products under the purchase agreement (including improvements, modifications, derivatives and enhancements related to those products).
The earn-out payments are equal to 10% of the actual revenue earned by Berkeley in each of the five years after the closing of the sale from sales of specified Orthobiologics products under the purchase agreement (including improvements, modifications, derivatives and enhancements related to those products). There have been no earn-out payments made to date.
As a percentage of sales, sales and marketing expenses decreased to 52.9% in the year ended December 31, 2023 from 74.8% in the year ended December 31, 2022. The decrease in expense was largely attributable to a reduction in force which occurred in the first quarter of 2023 and primarily impacted certain members of sales and marketing management.
As a percentage of sales, sales and marketing expenses decreased to 51.5% in the year ended December 31, 2024 from 52.9% in the year ended December 31, 2023. The decrease in expense was largely attributable to a reduction in force which occurred in the first quarter of 2023 and primarily impacted certain members of sales and marketing management.
Our inability to achieve and then maintain profitability would negatively affect our business, financial condition, results of operations and cash flows. ​ In order to mitigate the current and potential future liquidity issues caused by the matters noted above, we may seek to raise capital through the issuance of common stock, such as the private placement which we closed in September 2023 described above, pursue asset sale or other transactions, such as the sale of the Orthobiologics Business described above.
Our inability to achieve and then maintain profitability would negatively affect our business, financial condition, results of operations and cash flows. ​ In order to mitigate the current and potential future liquidity issues caused by the matters noted above, we may seek to raise capital through the issuance of common stock, such as the 2025 Registered Offering, 2024 Registered Offering and Private Offering described above, pursue asset sale or other transactions, such as the sale of the Orthobiologics Business described above.
Conversely, our first quarter generally has lower sales than the preceding fourth quarter as patient deductibles are re-established with the new year, which increases their out-of-pocket costs. Liquidity and Capital Resources As of December 31, 2023, we had cash of approximately $19.3 million.
Conversely, our first quarter generally has lower sales than the preceding fourth quarter as patient deductibles are re-established with the new year, which increases their out-of-pocket costs. Liquidity and Capital Resources As of December 31, 2024, we had cash and cash equivalents of approximately $13.2 million.
In Cardiovascular, we sell our specialized porcine small intestine submucosa, which is also the tissue used to make CanGaroo, for use as an intracardiac and vascular patch as well as for pericardial reconstruction. In addition, our TYKE product is designed for use in the neonatal patient population.
In Cardiovascular, we sell our specialized porcine small intestine submucosa, which is based on the same the biomatrix used to make EluPro and CanGaroo, for use as an intracardiac and vascular patch as well as for pericardial reconstruction. In addition, our TYKE product is designed for use in the neonatal patient population.
See Note 10 to the accompanying consolidated financial statements included elsewhere in this Annual Report for further discussion of these transactions. ​ Non-GAAP Financial Measures In this Part II. Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of the Annual Report, we present our gross margin, excluding intangible asset amortization.
See Note 14 to the consolidated financial statements included elsewhere in this Annual Report for additional information. ​ Non-GAAP Financial Measures In this Part II. Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of the Annual Report, we present our gross margin, excluding intangible asset amortization.
On an ongoing basis, management evaluates these estimates and judgments, including those related to inventories, receivables, long-lived assets, stock-based awards, revenue interest obligation, the warrant liability, the contingent liability for the FiberCel 91 ​ Table of Contents Litigation and deferred income taxes. Actual results may differ from those estimates.
On an ongoing basis, management evaluates these estimates and judgments, including those related to inventories, receivables, long-lived assets, stock-based awards, revenue interest obligation, the warrant liability, the contingent liability for legal proceedings and deferred income taxes. Actual results may differ from those estimates.
The payment terms and conditions in our contracts vary; however, as a common business practice, payment terms are typically due in full within 30 to 60 days of delivery. We, at times, extend volume discounts to customers. We permit returns of our products in accordance with the terms of contractual agreements with customers.
The payment terms and conditions in our contracts vary; however, as a common business practice, payment terms are typically due in full within 30 to 60 days of delivery. We, at times, extend volume discounts to customers.
Interest Rates All of the SWK Loan Facility borrowings take the form of Secured Overnight Financing Rate (“SOFR”) loans and bear interest at a rate per annum equal to the sum of an applicable margin of (i) 7.75% and the “Term SOFR Rate” (based upon an interest period of 3 months), or (ii) if the Company has elected the PIK Interest option (as defined below), 3.75% and the “Term SOFR Rate.” The Company may elect a portion of the interest due, to be paid in-kind at a rate per annum of 4.5% (“PIK Interest”), and such election may be made (x) until November 15, 2024 if the conditions to draw the Additional Term Loan have not been met, or (y) if such conditions to draw the Additional Term Loan have been satisfied, until November 17, 2025.
Interest Rates All of the SWK Loan Facility borrowings take the form of Secured Overnight Financing Rate (“SOFR”) loans and bear interest at a rate per annum equal to the sum of an applicable margin of (i) 7.75% and the “Term SOFR Rate” (based upon an interest period of 3 months), or (ii) if we have elected the PIK Interest option (as defined below), 3.75% and the “Term SOFR Rate.” We may elect a portion of the interest due, to be paid in-kind at a rate per annum of 4.5% (“PIK Interest”), and such election may be made until November 15, 2025.
Our women’s health product, SimpliDerm, is sold directly to hospitals and other healthcare facilities through independent sales agents or through our distribution agreement with Sientra. Expenses In recent years, we have incurred significant costs in the operation of our business.
Our Women’s Health products are sold directly to hospitals and other healthcare facilities through independent sales agents or through our distribution agreement with Tiger. Expenses In recent years, we have incurred significant costs in the operation of our business.
The Orthobiologics Business was comprised of researching, developing, administering, insuring, operating, commercializing, manufacturing, selling and marketing our Orthobiologics products, and contract manufacturing of particulate bone, precision milled bone, cellular bone matrix, acellular dermis, soft tissue and other products.
The Orthobiologics Business was comprised of assets relating to researching, developing, administering, insuring, operating, commercializing, manufacturing, selling and marketing our Orthobiologics products, and the business of contract manufacturing of particulate bone, precision milled bone, cellular bone matrix, acellular dermis, soft tissue and other products. The assets sold represent the entirety of our Orthobiologics segment.
The terms of the Revenue Interest Obligation require us to pay Ligand 5.0% of future sales of our CanGaroo, ProxiCor, Tyke and VasCure products, and substantially similar products, through May 31, 2027, subject to annual minimum payments of $2.75 million.
The terms of the Revenue Interest Obligation, as amended in January 2024, require us to pay Ligand 5.0% of future sales of our CanGaroo, ProxiCor, Tyke and VasCure products, and substantially similar products, through May 31, 2027, subject to annual minimum payments of $4.4 million.
Interest Expense Interest expense was approximately $5.8 million in the year ended December 31, 2023 compared to $5.1 million in the year ended December 31, 2022.
Interest Expense Interest expense was approximately $4.8 million in the year ended December 31, 2024 compared to $5.8 million in the year ended December 31, 2023.
An initial draw of $21 million was made in August 2022, with the additional $4 million drawn on December 14, 2022 upon satisfaction of the amended terms enabling such receipt. The SWK Loan Facility also allows for the establishment of a separate, new asset-based revolving loan facility of up to $8 million, which has not been entered into to date.
An initial draw of $21 million was made on the Closing Date with the additional $4 million drawn on December 14, 2022. The SWK Loan Facility also allows for the establishment of a separate, new asset-based revolving loan facility of up to $8 million, which has not been entered into to date.
Credit Facilities General O n August 10, 2022, we entered into a senior secured term loan facility with SWK Funding LLC (“SWK”), as agent, and other lenders party thereto for an aggregate principal amount of $25 million, and we amended the facility on May 12, 2023 (as amended, the “SWK Loan Facility”).
Credit Facilities General O n August 10, 2022 (the “Closing Date”), we entered into a senior secured term loan facility with SWK Funding LLC (“SWK”), as agent, and other lenders party thereto (as amended and modified subsequent to the Closing Date, the “SWK Loan Facility”) for an aggregate principal amount of $25 million.
The fair value of stock options is determined on the grant date using assumptions for the estimated fair value of the underlying common stock, expected term, expected volatility, dividend yield and the risk-free interest rate.
The fair value of stock options is determined on the grant date using assumptions for the estimated fair value of the underlying common stock, expected term, expected volatility, dividend yield and the risk-free interest rate. We use the simplified method for estimating the expected term used to determine the fair value of options.
The Prefunded and Common Warrants issued in connection with the September 2023 private placement (see Note 14 to the consolidated financial statements included elsewhere in this Annual Report) are classified as liabilities and are recorded at fair value.
The 2024 Prefunded Warrants from the Registered Offering and the Common Warrants and the 2023 Prefunded Warrants from the Private Offering (see Note 14 to the consolidated financial statements included elsewhere in this Annual Report) are classified as liabilities and are recorded at fair value.
This number has been driven by advances in medical device technologies, reimbursement models focused on patient outcomes, and an aging population with a growing incidence of comorbidities, including diabetes, obesity and cardiovascular and peripheral vascular diseases. These comorbidities can exacerbate various immune responses and contribute to other complications upon device implant.
This number has been driven by advances in medical device technologies, reimbursement models focused on patient outcomes, and an aging population with a growing incidence of comorbidities, including diabetes, obesity and cardiovascular and peripheral vascular diseases.
We have identified the following critical accounting policies: Revenue Recognition We enter into contracts to sell and distribute products to healthcare providers or commercial partners which are billed under ship and bill contract terms.
We have identified the following critical accounting policies: Revenue Recognition We enter into contracts to primarily sell and distribute products to healthcare providers or commercial partners.
Because of the numerous risks and uncertainties associated with our commercialization and development efforts, including our ability to obtain FDA clearance for the next generation of our flagship CanGaroo product, CanGarooRM and successfully commercialize this product, we are unable to predict when we will become profitable, and we may never become profitable.
Because of the numerous risks and uncertainties associated with our commercialization and development efforts, including our ability to successfully commercialize our new EluPro product, we are unable to predict when we will become profitable, and we may never become profitable.
Revenues from Device Protection and Women’s Health increased compared to the corresponding period of the prior year due to volume growth and revenues from Cardiovascular decreased 83 ​ Table of Contents due to the commencement of our distribution agreement with LeMaitre Vascular which provides for sales at a contracted price to the distributor versus sales prior to such agreement being made at end-user pricing.
Revenues from Device Protection and Women’s Health increased compared to the corresponding period of the prior year due to volume growth, but such increases were offset by a decrease in revenues from Cardiovascular due to lower sales volumes in the current year as well as the commencement in April 2023 of our distribution agreement with LeMaitre Vascular which provides for sales at a contracted price to the distributor versus sales prior to such agreement being made at end-user pricing.
Gross margin was 44.7% in the year ended December 31, 2023 compared to 48.8% in the year ended December 31, 2022. Gross margin, excluding intangible asset amortization, was 58.4% in the year ended December 31, 2023 compared to 63.0% in the year ended December 31, 2022.
Gross margin was 43.9% in the year ended December 31, 2024 compared to 44.7% in the year ended December 31, 2023. Gross margin, excluding intangible asset amortization, was 57.9% in the year ended December 31, 2024 compared to 58.4% in the year ended December 31, 2023.
On September 21, 2023, we sold, in a private offering an aggregate of (i) 6,852,811 units (“Common Units”), each comprised of (a) one share of our Class A common stock and (b) a warrant (“Common Warrant”) to purchase one and one half shares of Class A Common Stock, and (ii) 503,058 units (the “Prefunded Units”), each comprised of (a) a prefunded warrant (“Prefunded Warrant”) to purchase one share of Class A Common Stock, and (b) a Common Warrant.
The 2024 Prefunded Warrants have an exercise price of $0.001 per share of Class A Common Stock, are exercisable immediately and will expire when exercised in full. ​ On September 21, 2023, we sold, in a private offering (“Private Offering”) an aggregate of (i) 6,852,811 units (“Common Units”), each comprised of (a) one share of our Class A common stock and (b) a warrant (“Common Warrant”) to purchase one and one half shares of Class A Common Stock, and (ii) 503,058 units (the “Prefunded Units”), each comprised of (a) a prefunded warrant (“2023 Prefunded Warrant”) to purchase one share of Class A Common Stock, and (b) a Common Warrant.
Furthermore, a $5.0 million payment will be due to Ligand if cumulative sales of the acquired products exceed $100 million and a second $5.0 million will be due if cumulative sales exceed $300 million during the ten-year term of the agreement which expires on May 31, 2027.
Furthermore, a $5.0 million payment will be due if cumulative sales exceed $300 million or the assets related to CanGaroo and any substantially similar products undergo a change of control during the ten-year term of the agreement which expires on May 31, 2027.
Cash Flows for the Years Ended December 31, 2023 and 2022 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ ​ December 31, ​ 2023 2022 ​ ​ (in thousands) Net cash used in: ​ ​ Operating activities ​ $ (21,761) ​ $ (21,434) Investing activities ​ 14,208 ​ (540) Financing activities ​ 9,840 ​ 8,535 Net increase (decrease) in cash ​ $ 2,287 ​ $ (13,439) ​ Net Cash Used in Operating Activities Net cash used in operating activities for the year ended December 31 2023 was $21.8 million compared to $21.4 million for the year ended December 31, 2022.
Cash Flows for the Years Ended December 31, 2024 and 2023 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ ​ December 31, ​ 2024 2023 ​ ​ (in thousands) Net cash used in: ​ ​ Operating activities ​ $ (22,657) ​ $ (21,761) Investing activities ​ (474) ​ 14,208 Financing activities ​ 17,094 ​ 9,840 Net increase (decrease) in cash ​ $ (6,037) ​ $ 2,287 ​ Net Cash Used in Operating Activities Net cash used in operating activities for the year ended December 31 2024 was $22.7 million compared to $21.8 million for the year ended December 31, 2023.
SimpliDerm has historically been processed by us at our Richmond, California facility; however, that facility was included with the divestiture of the Orthobiologics Business, and SimpliDerm will be provided to us on a go-forward basis through a long-term supply agreement with the purchaser of the Orthobiologics Business, Berkeley Biologics, LLC. ​ Discontinued Operations – Sale of Orthobiologics Business On November 8, 2023, we sold substantially all of the assets related to our Orthobiologics segment (the “Orthobiologics Business”) to Berkeley Biologics, LLC (“Berkeley”).
SimpliDerm has historically been processed by us at our Richmond, California facility; however, that facility was included with the divestiture of the Orthobiologics Business, and SimpliDerm is now provided to us on a go-forward basis through a long-term supply agreement with the purchaser of the Orthobiologics Business, Berkeley Biologics, LLC (“Berkeley”).
The following table presents a reconciliation of our gross margin, excluding intangible asset amortization, for the years ended December 31, 2023 and 2022 to the most directly comparable GAAP financial measure, which is our GAAP gross margin (in thousands). ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ ​ ​ December 31, ​ ​ 2023 2022 Net sales ​ $ 24,745 ​ $ 23,849 ​ Cost of goods sold ​ 13,692 ​ 12,210 ​ Gross profit ​ 11,053 ​ 11,639 ​ Intangible asset amortization expense ​ 3,398 ​ 3,397 ​ Gross profit, excluding intangible asset amortization ​ $ 14,451 ​ $ 15,036 ​ Gross margin ​ 44.7 % 48.8 % Gross margin, excluding intangible asset amortization ​ 58.4 % 63.0 % ​ Seasonality Historically, we have experienced seasonality in our first and fourth quarters, and we expect this trend to continue.
The following table presents a reconciliation of our gross margin, excluding intangible asset amortization, for the years ended December 31, 2024 and 2023 to the most directly comparable GAAP financial measure, which is our GAAP gross margin (in thousands). ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended ​ ​ ​ December 31, ​ ​ 2024 ​ 2023 Net sales ​ $ 24,375 ​ ​ $ 24,745 ​ Cost of goods sold ​ 13,668 ​ ​ 13,692 ​ Gross profit ​ 10,707 ​ ​ 11,053 ​ Intangible asset amortization expense ​ 3,398 ​ ​ 3,398 ​ Gross profit, excluding intangible asset amortization ​ $ 14,105 ​ ​ $ 14,451 ​ Gross margin ​ 43.9 % ​ 44.7 % Gross margin, excluding intangible asset amortization ​ 57.9 % ​ 58.4 % ​ Seasonality Historically, we have experienced seasonality in our first and fourth quarters, and we generally expect this trend to continue but may also see quarter-to-quarter fluctuations that are inconsistent with this trend.
As of December 31, 2023, we had $23.7 million of indebtedness outstanding under our SWK Loan Facility, with such balance being net of $0.8 million of unamortized discount and deferred financing costs.
As of December 31, 2024, we had $23.5 million of indebtedness outstanding under our SWK Loan Facility and an exit fee liability to SWK of $0.9 million, with such balances being net of $0.5 million of unamortized discount and deferred financing costs.
Berkeley did not assume any liabilities related to the FiberCel Recall or VBM Recall, our market withdrawal of all of our viable bone matrix products, or any claims or lawsuits related thereto. ​ The FiberCel Recall and VBM Recall are described in further detail in Part I, Item 3, “Legal Proceedings” and Note 17 to the consolidated financial statements, included elsewhere in this Annual Report. ​ Defending any current or future claims, proceedings or lawsuits, regardless of merit, could be costly, divert management attention and result in adverse publicity, which could result in the withdrawal of, or reduced acceptance of, our products in the market.
These product recalls and the associated legal proceedings in which we are involved as well as their possible future financial implications are described in further detail in Part I, Item 3, “Legal Proceedings” and Note 17 to the consolidated financial statements, included elsewhere in this Annual Report. ​ Defending any current or future claims, proceedings or lawsuits, regardless of merit, could be costly, divert management attention and result in adverse publicity, which could result in the withdrawal of, or reduced acceptance of, our products in the market.
Based on our current operating plans, we believe there is uncertainty as to whether our future cash flows along with our existing cash, issuances of additional equity and cash generated from expected future sales will be sufficient to meet our anticipated operating needs through twelve months from the financial statement issuance date.
“Risk Factors — Risks Related to Our Business — Our future capital needs are uncertain and we may need to raise funds in the future, and such funds may not be available on acceptable terms or at all .” Based on our current operating plans, we believe there is uncertainty as to whether our future cash flows along with our existing cash, issuances of additional equity and cash generated from expected future sales will be sufficient to meet our anticipated operating needs through twelve months from the financial statement issuance date.
Inventory Valuation Inventories, consisting of purchased materials, direct labor and manufacturing overhead, are stated at the lower of cost or net realizable value, with cost determined using the average cost method.
Inventory Valuation Inventories, consisting of purchased materials, direct labor and manufacturing overhead, are stated at the lower of cost or net realizable value, with cost determined using the average cost method. At each balance sheet date, we also evaluate inventories for excess quantities, obsolescence or shelf life expiration.
During the year ended December 31, 2023, our device protection and cardiovascular products were sold to hospitals and other healthcare facilities primarily through our direct sales force, commercial partners or independent sales agents; however, beginning in April 2023, our cardiovascular products have been sold domestically through our distribution agreement with LeMaitre Vascular and internationally through commercial partners.
Our Device Protection products are sold to hospitals and other healthcare facilities primarily through our direct sales force, commercial partners or independent sales agents. Our cardiovascular products are sold domestically through a distribution agreement with LeMaitre Vascular and were previously sold internationally through commercial partners.
General and Administrative G&A expenses decreased $1.9 million, or 12.1%, to $14.1 million in the year ended December 31, 2023 compared to $16.1 million in the year ended December 31, 2022. As a percentage of net sales, G&A expenses decreased to 57.0% in the year ended December 31, 2023 from 67.3% in the year ended December 31, 2022.
General and Administrative G&A expenses increased $4.6 million, or 32.3%, to $18.7 million in the year ended December 31, 2024 compared to $14.1 million in the year ended December 31, 2023. As a percentage of net sales, G&A expenses increased to 76.5% in the year ended December 31, 2024 from 57.0% in the year ended December 31, 2023.
Critical Accounting Policies and Significant Judgments and Estimates The preparation of financial statements in conformity with U.S. GAAP requires that management make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the amounts of revenues and expenses reported during the period.
GAAP requires that management make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities 90 ​ Table of Contents at the date of the financial statements and the amounts of revenues and expenses reported during the period.
Overview At Elutia, our mission is to humanize medicine so that patients can thrive without compromise. As a commercial-stage company, we seek to leverage our unique understanding of biologics to improve the interaction between implanted medical devices and patients by reducing complications associated with these surgeries. These complications include device migration, erosion, non-union of implants as well as implant rejection.
As a commercial-stage company, we seek to leverage our unique understanding of biologics combined with local drug delivery to improve the interaction between implanted medical devices and patients by reducing complications associated with these surgeries. These complications include infection, device migration, erosion, implant rejection, non-union of implants, fibrosis and scar formation.
Our products are targeted to address unmet clinical needs with the goal of promoting healthy tissue formation and avoiding complications associated with medical device implants, such as scar tissue formation, capsular contraction, erosion, migration and implant rejection. These products currently focus on our priority markets – Device Protection and Women’s Health.
These comorbidities can exacerbate various immune responses and contribute to other complications upon device implant. ​ Our products are targeted to address unmet clinical needs with the goal of promoting healthy tissue formation and avoiding complications associated with medical device implants, such as scar tissue formation, capsular contraction, erosion, migration and infection.
The period expense for all of our stock options and restricted stock units is recognized on a straight-line basis over the requisite service period for the entire award.
The period expense for all of our stock options and restricted stock units is recognized on a straight-line basis over the requisite service period for the entire award. Different assumptions relative to the fair valuation of our stock options and restricted stock units would result in a different period expense and such differences may be material.
The Roswell facility has additional capacity, which if utilized, would further leverage our fixed overhead. Cost of goods sold also includes the amortization of intangibles generated from the CorMatrix Acquisition in 2017. Sales and Marketing Expenses Sales and marketing expenses are primarily related to our direct sales force, consisting of salaries, commission compensation, fringe benefits, meals and other expenses.
Cost of goods sold also includes the amortization of intangibles generated from the CorMatrix Acquisition in 2017. 80 ​ Table of Contents Sales and Marketing Expenses Sales and marketing expenses are primarily related to our direct sales force, consisting of salaries, commission compensation, fringe benefits, meals and other expenses. Auto and travel costs also contribute to sales and marketing expenses.
At each reporting period, the value of the Revenue Interest Obligation is re-measured based on current estimates of the net present value of future payments, with changes to be recorded in the consolidated statements of operations. There was no change to estimated future payments during the year ended December 31, 2023, and thus, no re-measurement gain or loss was recognized.
At each reporting period, the value of the Revenue Interest Obligation is re-measured based on current estimates of the net present value of future payments, with changes to be recorded in the consolidated statements of operations.
Research and Development Expenses Research and development (“R&D”) expenses consist primarily of salaries and fringe benefits, laboratory supplies, clinical studies and outside service costs. Our product development efforts primarily relate to activities associated with the development of CanGarooRM, our CanGaroo Envelope with antibiotics.
Research and Development Expenses Research and development (“R&D”) expenses consist primarily of salaries and fringe benefits, laboratory supplies, clinical studies and outside service costs. Over the last several years, our product development efforts have primarily related to activities associated with the development of EluPro (referred to as CanGarooRM during development), our initial DEB product offering.
(the “VBM Recall”). Notice of the voluntary recall was issued to centers after we learned of post-surgical MTB infections in two patients treated with product from a single donor lot of our VBM product.
Notice of the voluntary recall was issued to centers after we learned of post-surgical tuberculosis infections in two patients treated with product from a single donor lot of our VBM product. Both of these products were part of our Orthobiologics Business, which we have fully divested as described above.
Different assumptions relative to the fair valuation of our stock options and restricted stock units would result in a different period expense and such differences may be material. 94 ​ Table of Contents JOBS Act Section 107 of the JOBS Act permits us, as an “emerging growth company,” to take advantage of an extended transition period for adopting new or revised accounting standards until those standards would otherwise apply to private companies.
JOBS Act Section 107 of the JOBS Act permits us, as an “emerging growth company,” to take advantage of an extended transition period for adopting new or revised accounting standards until those standards would otherwise apply to private companies.
See Note 14 to the consolidated financial statements included elsewhere in this Annual Report for additional information. ​ Other expense (income), net was income of approximately $4.2 million in the year ended December 31, 2022 and was primarily attributable to the $5.0 million gain on the revaluation of our Revenue Interest Obligation to Ligand.
Other (Income) Expense, net ​ Other (income) expense, net was income of approximately $1.2 million in the year ended December 31, 2024 and was primarily attributable to the $1.4 million gain on the revaluation of our Revenue Interest Obligation to Ligand.
Different assumptions relative to the fair valuation of our Prefunded and Common Warrants would result in an adjustment to other expense (income), net in the consolidated statements of operations and such differences may be material.
Different assumptions relative to the fair valuation of our Prefunded and Common Warrants would result in a change to such valuation and these differences could be material.
These cardiovascular products are sold in the United States through an exclusive agreement with LeMaitre Vascular and internationally through distributors. ​ We process all of our CanGaroo and cardiovascular products at our manufacturing facility in Roswell, Georgia and stock inventory of raw materials, supplies and finished goods at this location.
This agreement also provided LeMaitre with an option to acquire the Cardiovascular product line, exercisable through March 2026. ​ We produce all of our CanGaroo and cardiovascular products at our manufacturing facility in Roswell, Georgia and stock inventory of raw materials, supplies and finished goods at this location.
Funding Requirements We expect to continue to incur significant expenses and operating losses for the foreseeable future as we expand our product development and clinical and research activities. In addition, we expect to continue to incur significant costs and expenses associated with operating as a public company.
As of December 31, 2024, we were in compliance with the financial covenants and all other covenants. ​ Funding Requirements We expect to continue to incur significant expenses and operating losses for the foreseeable future as we further commercialize EluPro and expand our product development and clinical and research activities.
We estimate that, over the past two years, more than 600,000 surgical procedures were performed per year in the United States in which the patient was implanted with medical devices such as pacemakers, defibrillators, neuro-stimulators or tissue expanders for breast reconstruction.
We estimate that in 2024, more than 700,000 surgical procedures were performed annually in the United States involving the implantation of medical devices such as pacemakers, defibrillators, neurostimulators or tissue expanders for breast reconstruction.
These factors include (i) the extent of the injuries incurred, (ii) recent experience on settled claims, (iii) settlement offers made to the other parties to the litigation and (iv) any other factors that may have a material effect on the estimated liability. 93 ​ Table of Contents While we believe our estimated liability to be reasonable, the actual loss amounts are highly variable and turn on a case-by-case analysis of the relevant facts.
The provision for litigation claims is based upon many factors, which vary for each case. These factors include (i) the extent of the injuries incurred, (ii) recent experience on settled claims, (iii) settlement offers made to the other parties to the litigation and (iv) any other factors that may have a material effect on the estimated liability.
The significant increase was due to the proceeds received from the sale of our Orthobiologics Business. Net Cash Provided by Financing Activities Net cash provided by financing activities for the year ended December 31, 2023 was $9.8 million compared to $8.5 million for the year ended December 31, 2022.
Net Cash Provided by Financing Activities Net cash provided by financing activities for the year ended December 31, 2024 was $17.1 million compared to $9.8 million for the year ended December 31, 2023.
As of December 31, 2023, quarterly principal payments are scheduled to begin on November 15, 2024, in an amount equal to 5% of the Initial Term Loan with the balance paid at maturity.
Principal amortization of the SWK Loan Facility starts on November 15, 2025. Principal payments during the amortization period will be limited based on revenue-based caps. As of December 31, 2024, quarterly principal payments will be in an amount equal to 5% of the aggregate principal amount funded with the balance paid at maturity.
Cost of Goods Sold Cost of goods sold and gross margin percentage information for our products is summarized as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ ​ ​ ​ ​ ​ ​ ​ 2023 ​ 2022 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Gross ​ ​ ​ ​ Gross ​ Change 2022 / 2023 ​ (in thousands, except percentages) ​ Amount Margin % Amount Margin % $ % ​ Products: ​ ​ ​ ​ ​ ​ Device protection ​ $ 2,836 69.8 % $ 2,979 67.2 % $ (143) ​ 2.6 % ​ Women's health ​ 5,902 42.7 % ​ 4,337 42.0 % ​ 1,565 ​ 0.7 % ​ Cardiovascular ​ ​ 1,556 ​ 69.1 % ​ 1,497 ​ 79.4 % ​ 59 ​ (10.3) % ​ Cost of goods sold, excluding intangible asset amortization ​ ​ 10,294 ​ 58.4 % ​ 8,813 ​ 63.0 % ​ 1,481 ​ (4.6) % ​ Intangible asset amortization expense ​ ​ 3,398 ​ (13.7) % ​ 3,397 ​ (14.2) % ​ 1 ​ 0.5 % ​ Total Cost of Goods Sold ​ $ 13,692 44.7 % $ 12,210 48.8 % $ 1,482 (4.1) % ​ ​ Total cost of goods sold increased $1.5 million to $13.7 million in the year ended December 31, 2023 compared to $12.2 million in the year ended December 31, 2022.
EluPro revenues as well as overall Device Protection revenues are expected to continue to grow as we further commercialize this product in 2025. 82 ​ Table of Contents Cost of Goods Sold Cost of goods sold and gross margin percentage information for our products is summarized as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Year Ended December 31, ​ ​ ​ ​ ​ ​ ​ ​ ​ 2024 ​ ​ 2023 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Gross ​ ​ ​ ​ ​ Gross ​ ​ Change 2023 / 2024 (in thousands, except percentages) ​ Amount ​ Margin % ​ Amount ​ Margin % ​ $ ​ % Products: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Device Protection ​ $ 3,594 ​ 63.7 % ​ $ 2,836 ​ 69.8 % ​ $ 758 ​ (6.1) % Women's Health ​ 5,568 ​ 51.8 % ​ ​ 5,902 ​ 42.7 % ​ ​ (334) ​ 9.1 % Cardiovascular ​ ​ 1,108 ​ 62.0 % ​ ​ 1,556 ​ 69.1 % ​ ​ (448) ​ (7.1) % Cost of goods sold, excluding intangible asset amortization ​ ​ 10,270 ​ 57.9 % ​ ​ 10,294 ​ 58.4 % ​ ​ (24) ​ (0.5) % Intangible asset amortization expense ​ ​ 3,398 ​ (13.9) % ​ ​ 3,398 ​ (13.7) % ​ ​ — ​ (0.2) % Total Cost of Goods Sold ​ $ 13,668 ​ 43.9 % ​ $ 13,692 ​ 44.7 % ​ $ (24) ​ (0.7) % ​ Total cost of goods sold was unchanged at $13.7 million for both the years ended December 31, 2024 and 2023.
As part of the divestiture, we also assigned the lease to our 36,173 square feet of manufacturing, laboratory and office space in Richmond, California to Berkeley. ​ In the sale, we received approximately $14.6 million, and we may earn up to an additional $20 million, in the aggregate, in the form of earn-out payments.
In the sale, we received $14.6 million, and we may earn up to an additional $20 million, in the aggregate, in the form of earn-out payments.
Of such amount, $2.0 million wa s paid shortly after closing of the divestiture of the Orthobiologics Business and the remainder was paid on February 15, 2024 based on mutual agreement between the parties. ​ 88 ​ Table of Contents Optional Prepayment The agreement, as amended, governing the SWK Loan Facility also includes an exit fee equal to 6.5% of the aggregate principal amount funded prior to termination plus $62,500 and prepayment penalties equal to: (i) if such prepayment occurs prior to the first anniversary of the Closing Date, 2% of the aggregate principal amount funded prior to the termination plus remaining unpaid interest payments scheduled to be paid during the first year of the loan or (ii) if such prepayment occurs after the first anniversary of the Closing Date but prior to the second anniversary of the Closing Date, 2% of the aggregate principal amount funded prior to the termination. ​ Amortization and Final Maturity ​ The SWK Loan Facility matures on August 10, 2027 and accrues interest, payable quarterly in arrears.
No other such mandatory prepayments were required in the year ended December 31, 2024. ​ 87 ​ Table of Contents Optional Prepayment The agreement, as amended, governing the SWK Loan Facility also includes an exit fee equal to 6.5% of the aggregate principal amount funded prior to termination plus $112,500. ​ Amortization and Final Maturity ​ The SWK Loan Facility matures on August 10, 2027 and accrues interest, payable quarterly in arrears.
Both years included the proceeds of $10.1 million from the issuance of common stock (and warrants in 2023). The year-over-year net increase of $1.3 million was primarily due to proceeds received from the financing of certain insurance premiums during the year ended December 31, 2023.
Both years included proceeds from the issuance of common stock ($12.4 million in 2024 and $10.1 million in 2023); however, the year ended December 31, 2024 also included the proceeds from the exercise of Common Warrants yielding exercise proceeds of $15.7 million.

… 102 more changes not shown on this page.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

7 edited+0 added−1 removed3 unchanged
Biggest changeAccordingly, we cannot assure you that our financial condition and results of operations will not be materially impacted by inflation in the future. Item 8. Financial Statements and Supplementary Data. The financial statements required to be filed pursuant to this Item 8 are appended to this Annual Report and are incorporated herein by reference. ​ Item 9.
Biggest changeAccordingly, we cannot assure you that our financial condition and results of operations will not be materially impacted by inflation in the future.
A hypothetical 10% relative change in interest rates to our variable rate indebtedness outstanding during the years ended December 31, 2023 or 2022 would not have had a material effect on our financial statements. We do not currently engage in hedging transactions to manage our exposure to interest rate risk.
A hypothetical 10% relative change in interest rates to our variable rate indebtedness outstanding during the years ended December 31, 2024 or 2023 would not have had a material effect on our financial statements. We do not currently engage in hedging transactions to manage our exposure to interest rate risk.
While it is difficult to accurately measure the impact of inflation due to the imprecise nature of the estimates required, we do not believe inflation had a material effect on our financial condition or results of operations during the years ended December 31, 2023 and 2022.
While it is difficult to accurately measure the impact of inflation due to the imprecise nature of the estimates required, we do not believe inflation had a material effect on our financial condition or results of operations during the years ended December 31, 2024 and 2023.
One customer represented 31% of our accounts receivable as of December 31, 2023. Foreign Currency Risk Our business is primarily conducted in U.S. dollars. Any transactions that may be conducted in foreign currencies are not expected to have a material effect on our financial condition, results of operations or cash flows.
One customer represented 14% of our accounts receivable as of December 31, 2024. Foreign Currency Risk Our business is primarily conducted in U.S. dollars. Any transactions that may be conducted in foreign currencies are not expected to have a material effect on our financial condition, results of operations or cash flows.
As we grow our operations, our exposure to foreign currency risk could become more significant. 95 ​ Table of Contents Inflation Risk Inflationary factors, such as increases in our cost of goods sold or other operating expenses, may adversely affect our operating results.
As we grow our operations, our exposure to foreign currency risk could become more significant. Inflation Risk Inflationary factors, such as increases in our cost of goods sold or other operating expenses, may adversely affect our operating results.
As of December 31, 2023 we maintained $18.6 million in bank deposit accounts that are in excess of the federally insured limit in one federally insured financial institution. The Company has not experienced any losses in such accounts. Our accounts receivable relate to sales to customers. To minimize credit risk, ongoing credit evaluations of all customers’ financial condition are performed.
As of December 31, 2024 we maintained $12.2 million in bank deposit accounts that are in excess of the federally insured limit in one federally insured financial institution. The Company has not experienced any losses in such accounts. Our accounts receivable relate to sales to customers. To minimize credit risk, ongoing credit evaluations of all customers’ financial condition are performed.
Credit Risk As of December 31, 2023, our cash and cash equivalents were maintained with one financial institution in the United States. While our deposit accounts are insured up to the legal limit, the balances we maintain may, at times, exceed this insured limit.
Credit Risk As of December 31, 2024, our cash and cash equivalents were maintained with two financial institutions in the United States. While our deposit accounts are insured up to the legal limit, the balances we maintain may, at times, exceed this insured limit.
Removed
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure. None. ​

Other ELUT 10-K year-over-year comparisons