0001558370-22-004151 | 10-K | XBRL Viewer

December 31,

NOL carryforwards

Consolidated Statements of Cash Flows - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
Cash flows from operating activities:
Net loss	$ (33,276)	$ (28,794)	$ (22,425)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation expense	231	221	278
Noncash interest expense	664	584	523
Amortization of intangible assets	304	304	304
Inventory excess and obsolescence charge	1,439	1,327	1,591
Change in fair value of warrants			5
Stockbased compensation expense	3,661	2,058	457
Loss on disposal of fixed assets	2
Change in operating assets and liabilities:
Accounts receivable, net	(1,553)	149	(1,528)
Inventory	(5,194)	(620)	(1,839)
Prepaid expenses and other assets	(992)	66	(1,977)
Accounts payable	1,597	(2,002)	(773)
Accrued expenses and other current and long-term liabilities	2,673	2,321	(118)
Foreign currency remeasurement loss	12	(70)	(21)
Net cash used in operating activities	(30,432)	(24,456)	(25,523)
Cash flows from investing activities:
Purchases of short-term investments			(9,284)
Proceeds from the sale and maturity of short-term investments		9,289
Payment for intangible asset			(2,500)
Purchase of property and equipment	(627)	(167)	(197)
Net cash (used in) provided by investing activities	(627)	9,122	(11,981)
Cash flows from financing activities:
Proceeds from follow-on offering, net of underwriting discounts, commissions and offering costs		44,722
Proceeds from initial public offering, net of underwriting discounts, commissions and offering costs			51,151
Proceeds from issuance of Series B redeemable convertible preferred stock, net of offering costs			14,367
Payment of initial public offering costs		(522)
Proceeds from exercise of stock options	547	175	14
Proceeds from issuance of common stock under the employee stock purchase plan	38	34
Net cash provided by financing activities	585	44,409	65,532
Effect of exchange rate on cash and cash equivalents	11	17	(4)
Net (decrease) increase in cash and cash equivalents	(30,463)	29,092	28,024
Cash and cash equivalents, beginning of year	74,394	45,302	17,278
Cash and cash equivalents, end of year	43,931	74,394	45,302
Supplemental disclosure of cash flow information:
Cash paid during the period for interest	2,933	2,980	3,086
Supplemental disclosures of noncash investing and financing activities:
Accretion of redeemable convertible preferred stock			7,783
Conversion of convertible preferred stock to common stock in connection with the initial public offering			146,300
Conversion of outstanding preferred stock warrants			1,645
Offering costs in accounts payable and accrued expenses and other current liabilities			522
Property and equipment in accounts payable	166	3
Issuance of common stock for early exercised stock options	1	3	4
Unrealized loss on short-term investments			$ 4
Liability-classified stock-based compensation in accrued expenses and other current liabilities		$ 82
Reclassification of liability-classified stock-based compensation awards to equity-classified	$ 82

Consolidated Statements of Redeemable Convertible Preferred Stock and Stockholders Equity (Deficit) (Parenthetical) $ in Thousands	12 Months Ended
	Dec. 31, 2019 USD ($)
Series B Redeemable convertible preferred stock
Stock issue costs	$ 165

Stock-Based Compensation (Tables)

12 Months Ended

Dec. 31, 2021

Stock-Based Compensation

Schedule of stock based compensation expense categories in statement of operations


	Year ended December 31,
	2021		2020		2019
Sales and marketing	$	961	$	696	$	164
General and administrative		1,542		1,030		225
Research and development		1,158		332		68
Total stock‑based compensation	$	3,661	$	2,058	$	457

Schedule of stock option activity


				Weighted
				average
		Weighted		remaining
	Number of	average exercise		contractual term
	shares	price per share		(years)
Outstanding at January 1, 2019	489,222	$	5.84
Granted	978,415		12.51
Exercised	(2,527)		5.93
Early exercised	(471)		5.93
Canceled/forfeited	(43,697)		8.58
Outstanding at December 31, 2019	1,420,942		10.35
Granted	175,086		15.03
Exercised	(27,783)		6.29
Canceled/forfeited	(70,037)		12.41
Outstanding at December 31, 2020	1,498,208		10.87
Granted	468,000		14.80
Exercised	(77,154)		7.08
Canceled/forfeited	(182,645)		13.08
Outstanding at December 31, 2021	1,706,409	$	11.88	7.36
Vested and expected to vest at December 31, 2021	1,657,511	$	11.83	7.31
Exercisable at December 31, 2021	917,602	$	10.23	6.18

Schedule of activity relating to early exercise of stock options


		Number of
		shares
Unvested balance at January 1, 2019		912
Early exercised		471
Vested		(628)
Unvested balance at December 31, 2019		755
Vested		(306)
Forfeited		(267)
Unvested balance at December 31, 2020		182
Vested		(153)
Unvested balance at December 31, 2021		29

Schedule of weighted average assumptions


	Year ended December 31,
	2021		2020		2019
Expected dividend yield	—		—		—
Expected volatility	63.9	%	59.1	%	55.9	%
Risk‑free interest rate	0.99	%	0.87	%	1.82	%
Expected term (in years)	6.15		5.98		6.24

Schedule of restricted stock units (RSUs)

The Company’s restricted stock units (“RSUs”) vest based on the terms in each award agreement and generally vest over four years. The following table summarizes restricted stock units for the Plan:


		Number of
		shares
Outstanding at January 1, 2021		—
Granted		194,232
Vested		(12,000)
Canceled/forfeited		(19,189)
Outstanding at December 31, 2021		163,043

Stock-Based Compensation - Early Exercise Of Stock Options (Details) - shares	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
Stock-Based Compensation
Early exercised stock options, Unvested balance at beginning of period	182	755	912
Early exercised			471
Vested	(153)	(306)	(628)
Forfeited		(267)
Early exercised stock options, Unvested balance at end of period	29	182	755

Risks and Liquidity (Details) - USD ($) $ in Thousands	Dec. 31, 2021	Dec. 31, 2020
Risks and Liquidity
Accumulated deficit	$ (229,929)	$ (196,653)

- Definition

The cumulative amount of the reporting entity's undistributed earnings or deficit.

+ References + Details

Summary of Significant Accounting Policies - Recently Issued Accounting Pronouncements (Details) - ASU 2016-02 - Cumulative Effect, Period of Adoption, Adjustment [Member] $ in Millions	Jan. 01, 2022 USD ($)
Minimum
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Right-of-use asset	$ 1.2
Lease liability	1.5
Maximum
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Right-of-use asset	1.6
Lease liability	$ 1.9

Debt (Tables)

12 Months Ended

Dec. 31, 2021

Debt

Schedule of long term debt

Long-term debt consisted of the following (in thousands):


	December 31,
	2021		2020
OrbiMed Term Loan (related party)	$	30,000	$	30,000
End of term charge		3,000		3,000
Unamortized end of term charge and issuance costs		(1,509)		(2,173)
Long-term debt with related party	$	31,491	$	30,827

Summary of Significant Accounting Policies - Fair value of warrant (Details)	Nov. 13, 2019
MidCap Credit Facility
Fair value of the warrants
Remaining contractual term in years	8 years 4 months 24 days
Convertible promissory notes
Fair value of the warrants
Remaining contractual term in years	7 years 2 months 12 days
Notes payable
Fair value of the warrants
Remaining contractual term in years	7 years 4 months 24 days
Expected volatility \| MidCap Credit Facility
Fair value of the warrants
Fair value of warrants	57.5
Expected volatility \| Convertible promissory notes
Fair value of the warrants
Fair value of warrants	57.4
Expected volatility \| Notes payable
Fair value of the warrants
Fair value of warrants	57.5
Risk-free interest rate \| MidCap Credit Facility
Fair value of the warrants
Fair value of warrants	2.04
Risk-free interest rate \| Convertible promissory notes
Fair value of the warrants
Fair value of warrants	1.79
Risk-free interest rate \| Notes payable
Fair value of the warrants
Fair value of warrants	1.79

Summary of Significant Accounting Policies - Revenue Disaggregated (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
Disaggregation of Revenue [Line Items]
Revenue	$ 29,463	$ 18,213	$ 15,446
OviTex [Member]
Disaggregation of Revenue [Line Items]
Revenue	22,990	15,093	14,041
OviTex PRS [Member]
Disaggregation of Revenue [Line Items]
Revenue	$ 6,473	$ 3,120	$ 1,405

- Definition

Amount, excluding tax collected from customer, of revenue from satisfaction of performance obligation by transferring promised good or service to customer. Tax collected from customer is tax assessed by governmental authority that is both imposed on and concurrent with specific revenue-producing transaction, including, but not limited to, sales, use, value added and excise.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
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-URI http://asc.fasb.org/extlink&oid=123359005&loc=d3e8906-108599

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
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-Topic 280
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-Section 50
-Paragraph 40
-URI http://asc.fasb.org/extlink&oid=123359005&loc=d3e9031-108599

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 41
-Subparagraph (a)
-URI http://asc.fasb.org/extlink&oid=123359005&loc=d3e9038-108599

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 32
-Subparagraph (b)
-URI http://asc.fasb.org/extlink&oid=123359005&loc=d3e8933-108599

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 32
-Subparagraph (a)
-URI http://asc.fasb.org/extlink&oid=123359005&loc=d3e8933-108599

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 4
-Subparagraph (a)
-URI http://asc.fasb.org/extlink&oid=123351226&loc=SL49130543-203045

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 22
-Subparagraph (b)
-URI http://asc.fasb.org/extlink&oid=123359005&loc=d3e8736-108599

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 22
-Subparagraph (a)
-URI http://asc.fasb.org/extlink&oid=123359005&loc=d3e8736-108599

Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 42
-URI http://asc.fasb.org/extlink&oid=123359005&loc=d3e9054-108599

Reference 10: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 5
-URI http://asc.fasb.org/extlink&oid=123351226&loc=SL49130545-203045

Reference 11: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 924
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SAB Topic 11.L)
-URI http://asc.fasb.org/extlink&oid=6472922&loc=d3e499488-122856

+ Details

Summary of Significant Accounting Policies

12 Months Ended

Dec. 31, 2021

Summary of Significant Accounting Policies

Summary of Significant Accounting Policies

(3) Summary of Significant Accounting Policies

Basis of Presentation and Principals of Consolidation

The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”). Any reference in these notes to applicable guidance is meant to refer to GAAP as found in the Accounting Standards Codification (“ASC”) and Accounting Standards Updates (“ASU”) promulgated by the Financial Accounting Standards Board (“FASB”). The consolidated financial statements include the accounts of TELA Bio, Inc. and its wholly owned subsidiary TELA Bio Limited. All intercompany accounts and transactions have been eliminated in consolidation.

Use of Estimates

The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and contingent liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. The most significant judgments are employed in estimates used to determine stock-based awards issued and recoverability of the carrying value of the Company’s inventory. As future events and their effects cannot be determined with precision, actual results may differ significantly from these estimates.

Segments

Operating segments are defined as components of an enterprise about which separate discrete information is available for evaluation by the chief operating decision maker, or decision-making group, in deciding how to allocate resources and in assessing performance. The Company views its operations and manages its business in one segment.

Concentration of Risk

Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash and cash equivalents. The Company places its cash with high-credit-quality financial institutions and primarily invests in money market funds. The Company has established guidelines relative to credit ratings and maturities that seek to maintain safety and liquidity.

As described in Note 11, the Company has licensed patents and other intellectual property from Aroa Biosurgery Ltd. (“Aroa”). As part of this agreement, Aroa is also the sole manufacturer of the Company’s products. The inability of Aroa to fulfill supply requirements of the Company could materially impact future operating results. A change in the relationship with Aroa, or an adverse change in their business, could materially impact future operating results.

Cash and Cash Equivalents

The Company considers cash equivalents to be highly liquid investments with maturities of three months or less from the date of purchase. Cash equivalents consist of investments in a money market fund. The Company’s cash and cash equivalents are carried at the fair value based on quoted market prices.

Inventory

Inventory consists of finished goods and is identified and tracked by lot and stated at the lower of cost or net realizable value, with cost being determined on a first-in, first-out basis. The Company periodically analyzes its inventory levels and writes down inventory that has become obsolete or that has a cost basis in excess of its expected net realizable value based on expected customer demand. As of December 31, 2021 and 2020, the Company had $1.7 million and $1.4 million, respectively, in finished goods consigned to others.

Property and Equipment

Property and equipment are stated at the aggregate cost incurred to acquire and place the asset in service. Expenditures for routine maintenance and repairs are charged to expense as incurred and costs of improvements and renewals are capitalized. Depreciation is provided over the estimated useful lives of the assets using the straight-line method.

Intangible Assets

Upfront payments and milestone payments due related to licenses or commercialization rights prior to future economic benefit being established are recorded as research and development expenses. Milestone payments due related to licenses or commercialization rights after future economic benefit is established are recorded as intangible assets. In 2021, 2020 and 2019, the Company recorded $0.3 million of amortization expense in each year related to intangible assets. At December 31, 2021, the remaining life of intangible assets was 7.6 years. The Company anticipates recognizing amortization expense of $0.3 million for the next five years and $0.8 million thereafter.

Long-Lived Assets

Long-lived assets, such as property and equipment and intangible assets, are reviewed for impairment whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable. If circumstances require a long-lived asset or asset group be tested for possible impairment, the Company first compares undiscounted cash flows expected to be generated by such asset or asset group to its carrying value. If the carrying value of the long-lived asset or asset group exceeds the undiscounted cash flows, an impairment is recognized to the extent the carrying value exceeds its fair value. Fair value is determined using various valuation techniques, including discounted cash flow models, quoted market values, and third-party independent appraisals, as considered necessary. No impairment losses were recognized during the years ended December 31, 2021, 2020 or 2019.

Debt Issuance Costs

Debt issuance costs incurred in connection with debt (Note 6) are amortized to interest expense over the term of the respective financing arrangement using the effective-interest method, and debt issuance costs incurred under the revolver are amortized to interest expense over the term of the respective financing arrangement using the straight-line method. Debt issuance costs, net of related amortization are deducted from the carrying value of the related debt.

Revenue Recognition

Under ASC Topic 606, Revenue from Contracts with Customers, an entity recognizes revenue when its customer obtains control of the promised good, in an amount that reflects the consideration that the entity expects to be entitled in exchange for those goods. The Company performs the following five steps to recognize revenue under ASC Topic 606: (i) identify the contract(s) with a customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, (iv) allocate the transaction price to the performance obligations in the contract, and (v) recognize revenue when (or as) the entity satisfies a performance obligation. The Company only recognizes revenue when it is probable that it will collect the consideration to which it is entitled in exchange for the goods or services that will be transferred to the customer.

A significant portion of the Company’s revenue is generated from product shipped to a customer or from consigned inventory maintained at hospitals. Revenue from the sale of consigned products is recognized when control is transferred to the customer, which occurs at the time the product is used in a surgical procedure. For product that is not held on consignment, the Company recognizes revenue when control transfers to the customer which occurs at the time the product is shipped or delivered. For all of the Company’s contracts, the only identified performance obligation is providing the product to the customer.

Revenue is recognized at the estimated net sales price which includes estimates of variable consideration. The Company contracts with certain third-party payors for the payment of rebates with respect to the utilization of its products. These rebates are based on contractual percentages. The Company estimates these rebates and records in the same period the related revenue is recognized, resulting in a reduction of product revenue.

Payment terms with customers do not exceed one year and, therefore, the Company does not account for a financing component in its arrangements. There are no incremental costs of obtaining a contract that would rise to or enhance an asset other than product costs, which are a component of inventory. The Company expenses incremental costs of obtaining a contract with a customer (e.g., sales commissions) when incurred as the period of benefit is less than one year. Fees charged to customers for shipping are recognized as revenue.

The following table presents revenue disaggregated (in thousands):


	Year ended December 31,
	2021		2020		2019
OviTex	$	22,990	$	15,093	$	14,041
OviTex PRS		6,473		3,120		1,405
Total revenue	$	29,463	$	18,213	$	15,446

Sales outside of the U.S. were immaterial for the years ended December 31, 2021, 2020 and 2019.

Research and Development

Research and development costs are charged to expense as incurred and consist primarily of salaries, benefits, and other related costs, including stock-based compensation for personnel serving in the research and development functions as well as costs incurred with Aroa under development agreements related to technology transfer, laboratory materials and supplies. At the end of the reporting period, the Company compares payments made to third-party service providers to the estimated progress toward completion of the research or development objectives. Such estimates are subject to change as additional information becomes available. Depending on the timing of payments to the service providers and the progress that the Company estimates has been made as a result of the service provided, the Company may record net prepaid or accrued expense relating to these costs. Costs incurred in obtaining patent and other intellectual property licenses for which there are no alternative future uses are charged to expense as incurred.

Stock-Based Compensation

The Company accounts for stock-based awards in accordance with provisions of ASC Topic 718, Compensation—Stock Compensation, under which the Company recognizes the grant-date fair value of stock-based awards issued to employees and nonemployee board members as compensation expense on a straight-line basis over the vesting period of the award while awards containing a performance condition are recognized as expense when the achievement of the performance criteria is considered probable. The Company uses the Black-Scholes option pricing model to determine the grant-date fair value of stock options. The Company estimates forfeitures that it expects will occur and adjusts expense for actual forfeitures in the periods they occur.

Income Taxes

Income taxes are accounted for under the asset-and-liability method as required by ASC Topic 740 - (“ASC 740”), Income Taxes. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period corresponding to the enactment date. Under ASC 740, a valuation allowance is required when it is more likely than not all or some portion of the deferred tax assets will not be realized through generating sufficient future taxable income.

ASC Subtopic 740-10 (“ASC 740-10”), Accounting for Uncertainty of Income Taxes, defines the criterion an individual tax position must meet for any part of the benefit of the tax position to be recognized in consolidated financial statements prepared in conformity with GAAP. The Company may recognize the tax benefit from an uncertain tax position only if it is more likely than not such tax position will be sustained on examination by the taxing authorities, based solely on the technical merits of the respective tax position. The tax benefits recognized in the consolidated financial statements from such a tax position should be measured based on the largest benefit having a greater than 50% likelihood of being realized upon ultimate settlement with the tax authority. In accordance with the disclosure requirements of ASC 740-10, the Company’s policy on income statement classification of interest and penalties related to income tax obligations is to include such items as part of income tax expense.

Fair value of financial instruments

Fair value is the price that could be received to sell an asset or paid to transfer a liability in an orderly transaction among market participants. Fair value determination in accordance with applicable accounting guidance requires that a number of significant judgments are made. Additionally, fair value is used on a nonrecurring basis to evaluate assets for impairment or as required for disclosure purposes by applicable accounting guidance on disclosures about fair value of financial instruments. Depending on the nature of the assets and liabilities, various valuation techniques and assumptions are used when estimating fair value. The carrying amounts of certain of the Company’s financial instruments, including cash and cash equivalents, accounts receivable and other assets, and accounts payable are shown at cost, which approximates fair value due to the short-term nature of these instruments. Due to the related-party relationship of our OrbiMed Credit Facility (Note 6), it is impractical to determine the fair value of the debt. Items measured at fair value on a recurring basis included the Company’s preferred stock warrants. The warrants were carried at their estimated fair value. All outstanding warrants to purchase shares of preferred stock were converted into warrants to purchase shares of common stock after our IPO.

The Company follows the provisions of ASC Topic 820, Fair Value Measurement, for financial assets and liabilities measured on a recurring basis. The guidance requires fair value measurements be classified and disclosed in one of the following three categories:

●

Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.

●

Level 2: Quoted prices in markets that are not active, or inputs which are observable, either directly or indirectly, for substantially the full term of the asset or liabilities.

●

Level 3: Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e., supported by little or no market activity).

The following fair value hierarchy table presents information about each major category of the Company’s financial assets and liabilities measured at fair value on a recurring basis as of December 31, 2021 and 2020 (in thousands):


	Fair value measurement at reporting date using
	Quoted prices in
	active markets		Significant other		Significant
	for identical		observable		unobservable
	assets		inputs		inputs
	(Level 1)		(Level 2)		(Level 3)
December 31, 2021:
Cash equivalents – money market fund	$	41,396	$	—	$	—

December 31, 2020:
Cash equivalents – money market fund	$	72,889	$	—	$	—

A rollforward of the warrant liability (Level 3 measurement) was as follows (in thousands):


January 1, 2019	$	1,640
Change in fair value of warrants		5
Conversion into common stock warrants		(1,645)
December 31, 2019	$	—

The fair value of the warrants at November 13, 2019 was determined using the Black-Scholes option pricing model with the following assumptions:


			Convertible
	MidCap Credit		promissory
	Facility		notes		Notes payable
Expected dividend yield	—		—		—
Expected volatility	57.5	%	57.4	%	57.5	%
Risk-free interest rate	2.04	%	1.79	%	1.79	%
Remaining contractual term in years	8.4		7.2		7.4

Net loss per share

Basic and diluted net loss per common share is determined by dividing net loss attributable to common stockholders by the weighted-average shares of common stock outstanding during the reporting period. The Company’s outstanding redeemable convertible preferred stock contractually entitled the holders of such shares to participate in distributions but contractually did not require the holders of such shares to participate in losses of the Company. In periods in which the Company reports a net loss attributable to common stockholders, diluted net loss per share attributable to common stockholders is the same as basic net loss per share attributable to common stockholders since dilutive shares are not assumed to have been issued if their effect is antidilutive. Therefore, the weighted-average shares used to calculate both basic and diluted loss per share are the same.

The following potentially dilutive securities have been excluded from the computation of diluted weighted-average shares outstanding as of December 31, 2021, 2020 and 2019, as they would be antidilutive.


	Year ended December 31,
	2021	2020	2019
Stock options (including shares subject to repurchase)	1,706,438	1,498,390	1,421,697
Unvested restricted stock units	163,043	—	—
Common stock warrants	88,556	88,556	88,556
Total	1,958,037	1,586,946	1,510,253

Recently Issued Accounting Pronouncements

The Company is an emerging growth company, as defined in the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”). Under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards issued subsequent to the enactment of the JOBS Act, until such time as those standards apply to private companies. The Company has elected to use this extended transition period for complying with new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date that it (i) is no longer an emerging growth company or (ii) affirmatively and irrevocably opts out of the extended transition period provided in the JOBS Act. As a result, these consolidated financial statements may not be comparable to companies that comply with the new or revised accounting pronouncements as of public company effective dates.

In February 2016, the FASB issued ASU No. 2016-02, Leases, which requires a lessee to record a right-of-use asset and a corresponding lease liability on the balance sheet for all leases with terms longer than 12 months. A modified retrospective transition approach is required, applying the new standard to all leases existing at the date of initial application. An entity may choose to use either (1) its effective date or (2) the beginning of the earliest comparative period presented in the consolidated financial statements as its date of initial application. If an entity chooses the second option, the transition requirements for existing leases also apply to leases entered into between the date of initial application and the effective date. The standard is effective for the Company beginning January 1, 2022, with early adoption permitted. The Company plans to adopt this standard on January 1, 2022 and anticipates the recognition of a right-of-use asset of approximately $1.2 million to $1.6 million and a lease liability of approximately $1.5 million to $1.9 million. The Company is continuing its assessment of potential changes to its disclosures under the standard.

In December 2019, the FASB issued ASU No. 2019-12, Simplifying the Accounting for Income Taxes. This guidance applies to all entities and aims to reduce the complexity of tax accounting standards while enhancing reporting disclosures. This guidance is effective for fiscal years beginning after December 15, 2020 and interim periods therein. The adoption of this guidance did not have any impact on the Company’s consolidated financial statements and related disclosures.

Redeemable Convertible Preferred Stock and Stockholders Equity (Deficit) - Warrants outstanding (Details)	12 Months Ended
	Dec. 31, 2021 $ / shares shares
Stockholders' Equity
Warrants outstanding	88,556
Common stock warrants expiring in 2027
Stockholders' Equity
Warrants outstanding	80,177
Warrants exercise price \| $ / shares	$ 28.65
Expiration dates	2027
Common stock warrants expiring in 2028
Stockholders' Equity
Warrants outstanding	8,379
Warrants exercise price \| $ / shares	$ 28.65
Expiration dates	2028

Consolidated Statements of Redeemable Convertible Preferred Stock and Stockholders Equity (Deficit) - USD ($) $ in Thousands	Series A Redeemable convertible preferred stock Preferred stock	Series B Redeemable convertible preferred stock Preferred stock	Common stock	Additional paid-in capital	Accumulated other comprehensive (loss) income	Accumulated deficit	Total
Balance at Beginning of period at Dec. 31, 2018	$ 33,112	$ 91,038
Balance at Beginning of period (in shares) at Dec. 31, 2018	22,501,174	63,032,500
Increase (Decrease) in Temporary Equity [Roll Forward]
Sale of Series B redeemable convertible preferred stock, net of stock issue costs		12,527,956
Sale of Series B redeemable convertible preferred stock, net of stock issue costs		$ 14,367
Accretion of redeemable convertible preferred stock to redemption value	$ 1,563	$ 6,220
Balance at Beginning of period at Dec. 31, 2018						$ (137,860)	$ (137,860)
Balance at Beginning of period (in shares) at Dec. 31, 2018			295,717
Increase (Decrease) in Temporary Equity [Roll Forward]
Vesting of common stock previously subject to repurchase				$ 4			4
Vesting of common stock previously subject to repurchase (in shares)			628
Exercise of stock options				14			$ 14
Exercise of stock options (in shares)			2,527				2,527
Foreign currency translation adjustment					$ (15)		$ (15)
Stock-based compensation expense				457			457
Issuance/Conversion of convertible preferred stock (in shares)	(22,501,174)	(75,560,456)	6,708,649
Issuance/Conversion of convertible preferred stock	$ (34,675)	$ (111,625)	$ 7	146,293			146,300
Issuance of common stock			$ 4	50,625			50,629
Issuance of common stock (in shares)			4,398,700
Unrealized loss on short-term investments					(4)		(4)
Accretion of redeemable convertible preferred stock to redemption value				(209)		(7,574)	(7,783)
Conversion of preferred stock warrants to redemption value				1,645			1,645
Net loss						(22,425)	(22,425)
Balance at Ending period at Dec. 31, 2019			$ 11	198,829	(19)	(167,859)	30,962
Balance at Ending period (in shares) at Dec. 31, 2019			11,406,221
Increase (Decrease) in Temporary Equity [Roll Forward]
Vesting of common stock previously subject to repurchase				3			3
Vesting of common stock previously subject to repurchase (in shares)			306
Exercise of stock options				175			$ 175
Exercise of stock options (in shares)			27,783				27,783
Issuance of common stock under the employee stock purchase plan				34			$ 34
Issuance of common stock under the employee stock purchase plan (in shares)			2,797
Foreign currency translation adjustment					(52)		(52)
Stock-based compensation expense				1,976			1,976
Issuance of common stock			$ 3	44,719			44,722
Issuance of common stock (in shares)			3,000,000
Net loss						(28,794)	(28,794)
Balance at Ending period at Dec. 31, 2020			$ 14	245,736	(71)	(196,653)	49,026
Balance at Ending period (in shares) at Dec. 31, 2020			14,437,107
Increase (Decrease) in Temporary Equity [Roll Forward]
Vesting of common stock previously subject to repurchase				1			1
Vesting of common stock previously subject to repurchase (in shares)			153
Exercise of stock options			$ 1	546			$ 547
Exercise of stock options (in shares)			77,154				77,154
Issuance of common stock under the employee stock purchase plan				38			$ 38
Issuance of common stock under the employee stock purchase plan (in shares)			3,163
Foreign currency translation adjustment					19		19
Stock-based compensation expense				3,661			3,661
Stock-based compensation expense (in shares)			12,000
Reclassification of liability-classified stock-based compensation awards				82			82
Net loss						(33,276)	(33,276)
Balance at Ending period at Dec. 31, 2021			$ 15	$ 250,064	$ (52)	$ (229,929)	$ 20,098
Balance at Ending period (in shares) at Dec. 31, 2021			14,529,577

Summary of Significant Accounting Policies - Revenue Recognition (Details) $ in Thousands	12 Months Ended
	Dec. 31, 2021 USD ($)
Summary of Significant Accounting Policies
Incremental costs of obtaining a contract	$ 0

Income Taxes - Deferred tax assets (Details) - USD ($) $ in Thousands	Dec. 31, 2021	Dec. 31, 2020
Deferred tax assets
Net operating loss carryforwards	$ 47,737	$ 39,937
Research and development credits	623	747
Depreciation and amortization	(89)	239
Accrued expenses and other	1,356	611
Inventory reserve	171	205
Gross deferred tax asset	49,798	41,739
Valuation allowance	(49,798)	(41,739)
Net deferred tax asset	$ 0	$ 0

Income Taxes (Tables)

12 Months Ended

Dec. 31, 2021

Income Taxes

Summary of Significant components of the Company's deferred tax assets


	December 31,
	2021		2020
Deferred tax assets
Net operating loss carryforwards	$	47,737	$	39,937
Research and development credits		623		747
Depreciation and amortization		(89)		239
Accrued expenses and other		1,356		611
Inventory reserve		171		205
Gross deferred tax asset		49,798		41,739
Valuation allowance		(49,798)		(41,739)
Net deferred tax asset	$	—	$	—

Schedule of Company's net operating loss (NOL) carryforwards

Schedule of reconciliation of income tax benefit


	Year ended December 31,
	2021		2020		2019
Rate reconciliation
Federal tax benefit at statutory rate	(21.0)	%	(21.0)	%	(21.0)	%
State rate, net of federal benefit	(3.5)		(4.2)		(2.9)
Permanent differences	0.2		0.6		0.4
Research and development	0.4		0.7		(0.7)
Change in valuation allowance	24.2		24.0		24.2
Other	(0.3)		(0.1)		—
Total tax provision	—	%	—	%	—	%

Accrued Expenses and Other Current Liabilities (Tables)

12 Months Ended

Dec. 31, 2021

Accrued Expenses and Other Current Liabilities

Schedule of Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities consisted of the following (in thousands):


	December 31,
	2021		2020
Compensation and related benefits	$	4,976	$	3,666
Interest		—		40
Third-party and professional fees		2,233		1,626
Amounts due to Aroa		842		498
Research and development expenses		31		7
Other		79		116
Total accrued expenses and other current liabilities	$	8,161	$	5,953

Debt - OrbiMed Term Loan (related party) (Details)	12 Months Ended
Debt - OrbiMed Term Loan (related party) (Details)	Dec. 31, 2021 USD ($) tranche	Dec. 31, 2020 USD ($)	Dec. 31, 2019 USD ($)	Nov. 30, 2018
OrbiMed Term Loans (related party)
Debt
Number of Tranches \| tranche	2
Minimum Cash Balance	$ 2,000,000.0
Interest due to unpaid obligation	3.00%
Interest Rate (as a percent)	9.75%			7.75%
Number of Installment	60 months
Exit fee (as a percent)	10.00%
Administration Fees	$ 10,000
Debt issuance costs	300,000
End of term charge	3,000,000.0
Interest Expenses	$ 3,600,000	$ 3,600,000	$ 3,600,000
OrbiMed Term Loans (related party) \| Prior to second anniversary
Debt
Percentage of prepayment penalty on prepaid principal amount	10.00%
OrbiMed Term Loans (related party) \| After second anniversary but prior to third anniversary
Debt
Percentage of prepayment penalty on prepaid principal amount	5.00%
OrbiMed Term Loans (related party) \| After third anniversary
Debt
Percentage of prepayment penalty on prepaid principal amount	2.50%
OrbiMed Term Loans (related party) \| LIBOR
Debt
Interest Rate (as a percent)	2.00%
OrbiMed Term Loans (related party) \| Maximum
Debt
Debt Amount	$ 35,000,000.0
Tranche One
Debt
Debt Amount	30,000,000.0
Tranche Two
Debt
Debt Amount	$ 5,000,000.0

Summary of Significant Accounting Policies - Warrant liability (Details) $ in Thousands	12 Months Ended
	Dec. 31, 2019 USD ($)
Summary of Significant Accounting Policies
Beginning balance	$ 1,640
Change in fair value of warrants	5
Conversion into common stock warrants	$ (1,645)

Related-Party Transactions

12 Months Ended

Dec. 31, 2021

Related-Party Transactions

Related-Party Transactions

(12) Related-Party Transactions

On November 16, 2018, the Company entered into a senior secured term loan facility with OrbiMed, an entity affiliated with an owner of a material amount of the Company’s outstanding voting securities. The terms of the debt and related components are further described in more detail in Note 6.

Contingencies and Commitments (Details) - USD ($) $ in Millions	1 Months Ended	12 Months Ended
	Aug. 31, 2012	Dec. 31, 2021	Dec. 31, 2019	Dec. 31, 2018
Contingencies and Commitments
Agreement extended term		10 years
Umbrella Agreement with Aroa
Contingencies and Commitments
Payment for agreement	$ 4.0
Fixed Cost Of Net Sales		27.00%
Purchase commitments		$ 1.8
Number of days for product supply		60 days
Percentage of products ordered to be supplied		75.00%
Royalty percentage of net sales		6.00%
Umbrella Agreement with Aroa \| European territory
Contingencies and Commitments
Sales milestone payments due		$ 1.0
Purchase commitments due year Six		$ 1.0
Umbrella Agreement with Aroa \| North American territory
Contingencies and Commitments
Sales milestone payment			$ 2.0	$ 1.0
Transfer Price For Product Produced		200.00%
Fixed Cost Of Net Sales		27.00%
Purchase commitments due year Six		$ 5.0
Next Science
Contingencies and Commitments
Purchase commitments		$ 10.8
Term of Contract		10 years

Risks and Liquidity

12 Months Ended

Dec. 31, 2021

Risks and Liquidity

Risks and Liquidity

(2) Risks and Liquidity

The Company’s operations to date have focused on commercializing products, developing and acquiring technology and assets, business planning, raising capital and organization and staffing. The Company has incurred recurring losses and negative cash flows from operations since inception and has an accumulated deficit of $229.9 million as of December 31, 2021. The Company anticipates incurring additional losses until such time, if ever, it can generate sufficient revenue from its products to cover its expenses.

The operations of the Company are subject to certain risks and uncertainties including, among others, uncertainty of product development, the impact of COVID-19 and the development of any variants, on the business, ongoing economic uncertainty, including as a result of geopolitical factors such as hostilities and the conflict between Russia and Ukraine, technological uncertainty, commercial acceptance of any developed products, alternative competing technologies, dependence on collaborative partners, uncertainty regarding patents and proprietary rights, comprehensive government regulations, and dependence on key personnel.

Redeemable Convertible Preferred Stock and Stockholders Equity (Deficit) (Tables)

12 Months Ended

Dec. 31, 2021

Redeemable Convertible Preferred Stock and Stockholders Equity (Deficit)

Schedule of warrants outstanding to purchase common stock


			Exercise	Expiration
	Outstanding		price	dates
Common stock warrants	8,379	$	28.65	2028
Common stock warrants	80,177		28.65	2027
	88,556

Stock-Based Compensation - Narratives (Details) $ / shares in Units, $ in Millions	12 Months Ended
	Dec. 31, 2021 USD ($) item $ / shares shares	Dec. 31, 2020 USD ($) $ / shares	Dec. 31, 2019 $ / shares
Stock-Based Compensation
Number of equity incentive plans \| item	2
Aggregate intrinsic value of outstanding options	$ 3.0
Aggregate intrinsic value of exercisable options	$ 2.8
Restricted stock units
Stock-Based Compensation
Vesting period	4 years
Weighted average grant date fair value, Equity Instruments (per share) \| $ / shares	$ 16.57
Unrecognized compensation expense	$ 1.6
Weighted average period for recognition of unrecognized expenses	3 years 2 months 12 days
2012 Stock Incentive Plan
Stock-Based Compensation
Weighted average grant date fair value, Options (per share) \| $ / shares	$ 8.66	$ 8.13	$ 6.81
2019 Equity Incentive Plan
Stock-Based Compensation
Shares available for future issuance \| shares	1,299,218
Common Stock Capital Shares Reserved For Future Annual Issuance \| shares	432,442
Common Stock Capital Shares Reserved For Future Issuance, Percentage Of Shares Outstanding Last Day Of Fiscal Year	4.00%
Vesting period	4 years
Vesting term	10 years
2012 Stock Incentive Plan and 2019 Equity Incentive Plan
Stock-Based Compensation
Aggregate intrinsic value of exercisable options	$ 0.4	$ 0.2
Unrecognized compensation expense	$ 5.1
Weighted average period for recognition of unrecognized expenses	2 years 6 months

Summary of Significant Accounting Policies - Inventory (Details) - USD ($) $ in Millions	Dec. 31, 2021	Dec. 31, 2020
Inventory
Inventory consigned to others	$ 1.7	$ 1.4

Stock-Based Compensation - Stock Option Activity (Details) - $ / shares	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
Number of shares
Balance at beginning of period	1,498,208	1,420,942	489,222
Granted	468,000	175,086	978,415
Exercised	(77,154)	(27,783)	(2,527)
Early exercised			(471)
Canceled/forfeited	(182,645)	(70,037)	(43,697)
Balance at end of period	1,706,409	1,498,208	1,420,942
Vested and expected to vest at end of period	1,657,511
Exercisable at end of period	917,602
Weighted average exercise price per share
Balance at beginning of period (in dollars per share)	$ 10.87	$ 10.35	$ 5.84
Granted ( in dollars per share)	14.80	15.03	12.51
Exercised (in dollars per share)	7.08	6.29	5.93
Early exercised (in dollars per share)			5.93
Canceled/forfeited (in dollars per share)	13.08	12.41	8.58
Balance at end of period (in dollars per share)	11.88	$ 10.87	$ 10.35
Vested and expected to vest at end of period (in dollars per share)	11.83
Exercisable at end of period (in dollars per share)	$ 10.23
Weighted average remaining contractual term (years)
Weighted average remaining contractual term, outstanding	7 years 4 months 9 days
Weighted average remaining contractual term, Vested and expected to vest	7 years 3 months 21 days
Weighted average remaining contractual term, Exercisable	6 years 2 months 4 days

Redeemable Convertible Preferred Stock and Stockholders Equity (Deficit)

12 Months Ended

Dec. 31, 2021

Redeemable Convertible Preferred Stock and Stockholders Equity (Deficit)

Redeemable Convertible Preferred Stock and Stockholders Equity (Deficit)

(7) Redeemable Convertible Preferred Stock and Stockholders’ Equity (Deficit)

Public Stock Offerings

In November 2019, the Company closed its initial public offering (“IPO”) in which the Company issued and sold 4,398,700 shares of its common stock at a public offering price of $13.00 per share, including 398,700 shares of the Company’s common stock sold pursuant to the underwriters’ option to purchase additional shares. The Company received net proceeds of $50.6 million after deducting underwriting discounts, commissions and other offering expenses. In addition, immediately prior to the closing of the IPO, all of the Company’s outstanding shares of redeemable convertible preferred stock, including accrued dividends payable converted into an aggregate of 6,708,649 shares of common stock and the Company’s outstanding warrants to purchase shares of preferred stock were automatically converted into warrants to purchase an aggregate of 88,556 shares of common stock.

In June 2020, the Company completed a follow-on public offering in which the Company issued and sold 3,000,000 shares of its common stock at a public offering price of $16.00 per share. The Company received net proceeds of $44.7 million after deducting underwriting discounts, commissions and other offering expenses.

In December 2020, the Company entered into an Equity Distribution Agreement (the “Equity Agreement”) with Piper Sandler & Co (the “Agent”) in connection with the establishment of an at-the-market offering program under which it may sell up to an aggregate of $50.0 million of shares of the Company’s common stock, from time to time through the Agent as sales agent. No sales were made under the Equity Agreement during the years ended December 31, 2021 or 2020.

Preferred Stock

Prior to the IPO, all of the Company’s redeemable convertible preferred stock was classified outside of stockholders’ deficit because the shares contain certain redemption features that were not solely within the control of the Company. At the time of issuance, the redeemable convertible preferred stock was recorded at its issuance price, less issuance costs.

Throughout 2019, the Company entered into various stock purchase agreements with new and existing investors pursuant to which the Company sold an aggregate 12,527,956 shares of the Company’s Series B preferred stock at $1.16 per share for aggregate gross proceeds of $14.5 million. Transaction fees of $0.2 million were recorded as a reduction of the carrying value of the Series B preferred stock.

Warrants

The Company had the following warrants outstanding at December 31, 2021:


			Exercise	Expiration
	Outstanding		price	dates
Common stock warrants	8,379	$	28.65	2028
Common stock warrants	80,177		28.65	2027
	88,556

Income Taxes

12 Months Ended

Dec. 31, 2021

Income Taxes

Income Taxes

(10) Income Taxes

The Company has incurred losses since inception. Deferred tax assets and liabilities are determined based on the differences between the financial statement carrying amounts and tax bases of assets and liabilities using enacted tax rates in effect for years in which differences are expected to reverse.

Significant components of the Company’s deferred tax assets for federal income taxes consisted of the following (in thousands):


	December 31,
	2021		2020
Deferred tax assets
Net operating loss carryforwards	$	47,737	$	39,937
Research and development credits		623		747
Depreciation and amortization		(89)		239
Accrued expenses and other		1,356		611
Inventory reserve		171		205
Gross deferred tax asset		49,798		41,739
Valuation allowance		(49,798)		(41,739)
Net deferred tax asset	$	—	$	—

The Company does not have unrecognized tax benefits as of December 31, 2021 and 2020. The Company recognizes interest and penalties accrued on any unrecognized tax benefits as a component of income tax expense.

The Company’s net operating loss (“NOL”) carryforwards for federal and state income tax purposes consisted of the following (in thousands):

The NOL carryforwards begin expiring in 2032 for federal purposes and in 2026 for state income tax purposes. The Company recorded a valuation allowance on the deferred tax assets as of December 31, 2021 and 2020 because of the uncertainty of their realization. The valuation allowance increased by $8.1 million and $6.9 million for the years ended December 31, 2021 and 2020, respectively, mainly due to losses incurred.

Utilization of the net operating losses and general business tax credits carryforwards may be subject to a substantial limitation under Sections 382 and 383 of the Internal Revenue Code of 1986, as amended, if changes in ownership of the company have occurred previously or occur in the future. Ownership changes may limit the amount of net operating losses and general business tax credits carryforwards that can be utilized annually to offset future taxable income and tax, respectively. In general, an ownership change, as defined by Section 382, results from transactions increasing the ownership of 5% shareholders in the stock of a corporation by more than 50 percentage points over a three-year period. If the Company experiences a Section 382 ownership change, the tax benefits related to the NOL carryforwards may be further limited or lost. The Company has not performed an analysis under Section 382 and cannot predict or otherwise determine whether there would be any limitation to the amount of net operating losses and general business tax credits carryforwards that can be utilized.

A reconciliation of income tax benefit at the statutory federal income tax rate and as reflected in the consolidated financial statements is as follows:


	Year ended December 31,
	2021		2020		2019
Rate reconciliation
Federal tax benefit at statutory rate	(21.0)	%	(21.0)	%	(21.0)	%
State rate, net of federal benefit	(3.5)		(4.2)		(2.9)
Permanent differences	0.2		0.6		0.4
Research and development	0.4		0.7		(0.7)
Change in valuation allowance	24.2		24.0		24.2
Other	(0.3)		(0.1)		—
Total tax provision	—	%	—	%	—	%

The Company files income tax returns in the U.S. federal jurisdiction, various state jurisdictions and the United Kingdom. Tax years 2017 and forward remain open for examination for federal tax purposes and tax years 2017 and forward remain open for examination for the Company’s more significant state tax jurisdictions. Carryforward attributes from prior years may be adjusted upon examination by taxing authorities if used in an open period.

Many governments have enacted or are currently contemplating economic stimulus and financial aid measures. Many of these measures include deferring the due dates for tax payments, including both income tax and other taxes. The Coronavirus Aid, Relief, and Economic Security Act ("CARES Act") was enacted on March 27, 2020 in the United States to address the economic impacts of the COVID-19 pandemic. The CARES Act includes corporate income tax, payroll tax, and other provisions. While the Company may receive financial, tax, or other benefits under the bill, this

legislation did not impact the Company during the year ended December 31, 2020. During the year ended December 31, 2021, the Company claimed an employee retention payroll tax credit of $0.5 million for certain employment taxes.

- Definition

The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 10
-Section 50
-Paragraph 21
-URI http://asc.fasb.org/extlink&oid=121826272&loc=d3e32857-109319

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 10
-Section S99
-Paragraph 2
-Subparagraph (SAB Topic 11.C)
-URI http://asc.fasb.org/extlink&oid=122134291&loc=d3e330215-122817

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 10
-Section 50
-Paragraph 17
-Subparagraph (b)
-URI http://asc.fasb.org/extlink&oid=121826272&loc=d3e32809-109319

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SAB TOPIC 6.I.5.Q1)
-URI http://asc.fasb.org/extlink&oid=122134291&loc=d3e330036-122817

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 10
-Section 50
-Paragraph 14
-URI http://asc.fasb.org/extlink&oid=121826272&loc=d3e32705-109319

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 270
-Section 50
-Paragraph 1
-URI http://asc.fasb.org/extlink&oid=6424409&loc=d3e44925-109338

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-URI http://asc.fasb.org/topic&trid=2144680

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 30
-Section 50
-Paragraph 2
-Subparagraph (a)
-URI http://asc.fasb.org/extlink&oid=6424122&loc=d3e41874-109331

Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 235
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.4-08(h)(2))
-URI http://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690

+ Details

Contingencies and Commitments (Tables)

12 Months Ended

Dec. 31, 2021

Contingencies and Commitments

Schedule of future minimum lease payments under the facility operating lease agreement

The future minimum lease payments under the facility operating lease agreement as of December 31, 2021 are as follows (in thousands):


2022	$	349
2023		358
2024		366
2025		375
2026		383
Thereafter		557
	$	2,388

Accrued Expenses and Other Current Liabilities

12 Months Ended

Dec. 31, 2021

Accrued Expenses and Other Current Liabilities

Accrued Expenses and Other Current Liabilities

(5) Accrued Expenses and Other Current Liabilities

Accrued expenses and other current liabilities consisted of the following (in thousands):


	December 31,
	2021		2020
Compensation and related benefits	$	4,976	$	3,666
Interest		—		40
Third-party and professional fees		2,233		1,626
Amounts due to Aroa		842		498
Research and development expenses		31		7
Other		79		116
Total accrued expenses and other current liabilities	$	8,161	$	5,953

Debt

12 Months Ended

Dec. 31, 2021

Debt

Debt

(6) Debt

Long-term debt consisted of the following (in thousands):


	December 31,
	2021		2020
OrbiMed Term Loan (related party)	$	30,000	$	30,000
End of term charge		3,000		3,000
Unamortized end of term charge and issuance costs		(1,509)		(2,173)
Long-term debt with related party	$	31,491	$	30,827

OrbiMed Term Loan (Related Party)

In November 2018, the Company entered into a senior secured term loan facility (“OrbiMed Credit Facility”) with OrbiMed Royalty Opportunities II, LP (“OrbiMed”), a related party as the lender is affiliated with a stockholder of the Company, which consists of up to $35.0 million in term loans (“OrbiMed Term Loans”). The OrbiMed Term Loans

consist of two tranches, a $30.0 million Tranche 1 (“Tranche 1”) and a $5.0 million Tranche 2 (“Tranche 2”). In November 2018, the Company borrowed $30.0 million of Tranche 1. The Company elected not to borrow Tranche 2 prior to its expiration on December 31, 2019.

Pursuant to the OrbiMed Credit Facility, the Company provided a first priority security interest in all existing and future acquired assets, excluding intellectual property and certain other assets, owned by the Company. The OrbiMed Credit Facility contains a negative pledge on intellectual property owned by the Company. The OrbiMed Credit Facility also contains customary indemnification obligations and customary events of default, including, among other things, (i) nonpayment, (ii) breach of warranty, (iii) nonperformance of covenants and obligations, (iv) default on other indebtedness, (v) judgments, (iv) change of control, (vii) bankruptcy and insolvency, (viii) impairment of security, (ix) key permit events, (x) key person events, (xi) regulatory matters, (xii) and key contracts. In addition, the Company must maintain a minimum cash balance of $2.0 million. If an event of default occurs under the OrbiMed Credit Facility, the Company may become obligated to immediately pay all outstanding principal and interest and all other due and unpaid obligations at the current rate in effect plus 3%.

The OrbiMed Term Loan matures on November 16, 2023 and bears interest at a rate equal to 7.75% plus the greater of one-month LIBOR or 2.0%. At December 31, 2021, the interest rate was 9.75%. The Company is required to make 60 monthly interest payments beginning on November 30, 2018, with the entire principal payment due at maturity. The OrbiMed Term Loans have a prepayment penalty equal to 10.0% of the prepaid principal amount prior to the second anniversary of the Term Loans, 5.0% of the prepaid principal amount after the second anniversary but prior to the third anniversary and 2.5% of the prepaid principal amount after the third anniversary. The Company is also required to pay an exit fee at the time of maturity or prepayment event equal to 10.0% of all principal borrowings (the “End of Term Charge”) and an administration fee equal to $10,000 on the last day of each quarter until all obligations have been paid in full. In conjunction with the closing of the OrbiMed Term Loans, the Company incurred $0.3 million of third party and lender fees, which along with the End of Term Charge of $3.0 million were recorded as debt issuance costs, and are being recognized as interest expense over the term of the loan using the effective-interest method. Interest expense associated with the OrbiMed Credit Facility recorded during each of 2021, 2020 and 2019 was $3.6 million.

Consolidated Balance Sheets - USD ($) $ in Thousands	Dec. 31, 2021	Dec. 31, 2020
Current assets:
Cash and cash equivalents	$ 43,931	$ 74,394
Accounts receivable, net	4,234	2,683
Inventory	7,658	3,907
Prepaid expenses and other assets	3,232	2,241
Total current assets	59,055	83,225
Property and equipment, net	1,186	626
Intangible assets, net	2,303	2,607
Total assets	62,544	86,458
Current liabilities:
Accounts payable	2,414	652
Accrued expenses and other current liabilities	8,161	5,953
Total current liabilities	10,575	6,605
Longterm debt with related party	31,491	30,827
Other longterm liabilities	380
Total liabilities	42,446	37,432
Commitments and contingencies (Note 11)
Stockholders' equity:
Preferred stock; $0.001 par value: 10,000,000 shares authorized; no shares issued and outstanding
Common stock; $0.001 par value: 200,000,000 shares authorized; 14,529,606 and 14,437,289 shares issued and 14,529,577 and 14,437,107 shares outstanding at December 31, 2021 and December 31, 2020, respectively	15	14
Additional paid-in capital	250,064	245,736
Accumulated other comprehensive loss	(52)	(71)
Accumulated deficit	(229,929)	(196,653)
Total stockholders' equity	20,098	49,026
Total liabilities and stockholders' equity	$ 62,544	$ 86,458

Stock-Based Compensation - Restricted Stock Units (Details) - Restricted stock units $ in Millions	12 Months Ended
	Dec. 31, 2021 USD ($) shares
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Granted	194,232
Vested	(12,000)
Canceled/forfeited	(19,189)
Outstanding at December 31, 2021	163,043
Aggregate intrinsic value \| $	$ 2.1

Employee Benefit Plans (Details) - USD ($) $ in Millions	1 Months Ended	12 Months Ended
Employee Benefit Plans (Details) - USD ($) $ in Millions	Nov. 30, 2019	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
Defined Contribution Plan Disclosure [Line Items]
Maximum contribution of participant (as a percent)		100.00%
Percentage of employer's contribution		50.00%
Percentage of employer's contribution to employees		6.00%
Amount of employer's contribution		$ 0.3	$ 0.2
Deferred Compensation Arrangement with Individual, Requisite Service Period		3 years
Employee Stock Purchase Plan 2019
Defined Contribution Plan Disclosure [Line Items]
Shares reserved for future issuance		317,701	317,701
Increase in number of shares	107,887
Increase in percentage of shares outstanding	1.00%
Discount on purchase of common stock	5.00%
Shares issued		3,163	2,797	0

Contingencies and Commitments - Operating Leases (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
Leases, Operating [Abstract]
Rent expense	$ 400	$ 300	$ 300
2022	349
2023	358
2024	366
2025	375
2026	383
Thereafter	557
Future minimum lease payments	$ 2,388

Consolidated Balance Sheets (Parenthetical) - $ / shares	Dec. 31, 2021	Dec. 31, 2020
Consolidated Balance Sheets
Preferred stock, Par value (in dollars per share)	$ 0.001	$ 0.001
Preferred stock, shares authorized (in shares)	10,000,000	10,000,000
Preferred stock, shares issued (in shares)	0	0
Preferred stock, shares outstanding (in shares)	0	0
Common stock, Par value (in dollars per share)	$ 0.001	$ 0.001
Common stock, shares authorized (in shares)	200,000,000	200,000,000
Common stock, shares issued (in shares)	14,529,606	14,437,289
Common stock, shares outstanding (in shares)	14,529,577	14,437,107

Consolidated Statements of Operations and Comprehensive Loss - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
Consolidated Statements of Operations and Comprehensive Loss
Revenue	$ 29,463	$ 18,213	$ 15,446
Cost of revenue (excluding amortization of intangible assets)	10,346	6,675	5,870
Amortization of intangible assets	304	304	304
Gross profit	18,813	11,234	9,272
Operating expenses:
Sales and marketing	29,062	22,111	18,060
General and administrative	12,459	10,143	6,223
Research and development	6,743	4,255	4,151
Total operating expenses	48,264	36,509	28,434
Loss from operations	(29,451)	(25,275)	(19,162)
Other (expense) income:
Interest expense	(3,597)	(3,564)	(3,609)
Change in fair value of preferred stock warrant liability			(5)
Other (expense) income	(228)	45	351
Total other expense	(3,825)	(3,519)	(3,263)
Net loss	(33,276)	(28,794)	(22,425)
Accretion of redeemable convertible preferred stock to redemption value			(7,783)
Net loss attributable to common stockholders	$ (33,276)	$ (28,794)	$ (30,208)
Net loss per common share, basic	$ (2.30)	$ (2.23)	$ (17.10)
Net loss per common share, diluted	$ (2.30)	$ (2.23)	$ (17.10)
Weighted average common shares outstanding, basic	14,473,213	12,934,421	1,766,412
Weighted average common shares outstanding, diluted	14,473,213	12,934,421	1,766,412
Comprehensive loss:
Net loss	$ (33,276)	$ (28,794)	$ (22,425)
Foreign currency translation adjustment	19	(52)	(15)
Unrealized loss on short-term investments			(4)
Comprehensive loss	$ (33,257)	$ (28,846)	$ (22,444)

Contingencies and Commitments

12 Months Ended

Dec. 31, 2021

Contingencies and Commitments

Contingencies and Commitments

(11) Commitments and Contingencies

Legal Proceedings

From time to time, the Company may be a party to various other lawsuits, claims, and other legal proceedings that arise in the ordinary course of its business. While the outcomes of these matters are uncertain, management does not expect that the ultimate costs to resolve these matters will have a material adverse effect on the Company’s financial position, results of operations, or cash flows.

Agreements with Aroa

In August 2012, the Company entered into a License, Product Development, and Supply Umbrella Agreement (“Aroa Agreement”) with Aroa. The Aroa Agreement provides the Company a license to patent rights and other intellectual property related to Aroa’s products and technologies for use in certain indications and expires on the expiration of the last patent covering the products (currently April 19, 2031). The Company has the right to extend the term of the agreement by an additional 10 years following the expiration of the last patent covering the products on commercially reasonable terms to be negotiated by the parties. This agreement initially limited the Company’s license rights to the U.S. but was subsequently amended in March 2013 to include the European Union and certain former Union of Soviet Socialist Republic satellite nations. The Aroa Agreement required payments aggregating up to $4.0 million upon the achievement of U.S. and European cumulative product sales targets.

The Company paid $1.0 million to Aroa in 2018 related to one of the cumulative product sales targets and the remaining $2.0 million in 2019. With respect to the sales milestone payments in the European territory, a payment of $1.0 million is due when cumulative product net sales in the European territory reach certain amounts.

Other key terms of the amended Aroa agreement in addition to those disclosed above are as follows:

●

The transfer price for product produced by Aroa is 200% of Aroa’s cost of goods sold. The transfer price and the quarterly true-up amount continued to equal 27% of Company’s net sales of licensed products. Upon a change in control of the Company (as defined in the amended agreement), the annual minimum amounts will be extended for a sixth year with a $5.0 million minimum amount for the North American territory and $1.0 million minimum amount for the European territory. If a change in control of the Company occurs prior to the first product launch in the applicable territory, then the annual minimum requirements shall commence upon such change in control. If the make whole payments, if any, are not made by the Company after a notice and cure period, then the license will convert to a nonexclusive basis in the territory for which the payment was required but not made.

●

Provisions exist for the Company to step in and operate Aroa’s plant if a supply failure occurs and is not cured within a set timeframe. Under the amended agreement, the criteria for a supply failure was modified to mean a failure by Aroa to timely supply, during any consecutive 60-day period, at least 75% of the products ordered by the Company under binding purchase orders. During the period that the Company steps in and assumes manufacturing responsibility, it shall not be required to purchase product from or pay transfer prices to Aroa, the annual minimums shall be proportionately reduced to reflect the lack of supply responsibility by Aroa and the Company shall pay a royalty of 6% of net sales in lieu of 27% of net sales of the licensed products.

The Company expects to enter into similar milestone-based agreements with its strategic partner for both product territories and new products in order to expand and extend its product portfolio.

As of December 31, 2021, the Company had $1.8 million in purchase commitments with Aroa and certain other suppliers to maintain exclusivity rights.

Other Commitments

In November 2021, the Company entered into an exclusive distribution agreement with Next Science, a medical technology company, granting the Company exclusive rights to sell and market Next Science’s proprietary antimicrobial surgical wash in the U.S. plastic reconstructive surgery market. To maintain exclusivity, the Company has $10.8 million in purchase commitments and annual license fees over a ten-year period.

Employment Agreements

The Company entered into employment agreements with key personnel providing for compensation and severance in certain circumstances, as defined in the respective employment agreements.

Operating Leases

The Company leases office and laboratory space in Malvern, Pennsylvania under a noncancelable lease, which was amended in December 2020 to extend the term of the lease from May 2021 to May 2028. The facility lease agreement has annual scheduled payment increases. The Company is recognizing the rent expense on a straight-line basis over the lease term. The Company recognized rent expense of $0.4 million, $0.3 million and $0.3 million for the years ended December 31, 2021, 2020 and 2019, respectively.

The future minimum lease payments under the facility operating lease agreement as of December 31, 2021 are as follows (in thousands):


2022	$	349
2023		358
2024		366
2025		375
2026		383
Thereafter		557
	$	2,388

Accrued Expenses and Other Current Liabilities (Details) - USD ($) $ in Thousands	Dec. 31, 2021	Dec. 31, 2020
Accrued Expenses and Other Current Liabilities
Compensation and related benefits	$ 4,976	$ 3,666
Interest		40
Third-party and professional fees	2,233	1,626
Amounts due to Aroa	842	498
Research and development expenses	31	7
Other	79	116
Total accrued expenses and other current liabilities	$ 8,161	$ 5,953

Summary of Significant Accounting Policies (Policies)

12 Months Ended

Dec. 31, 2021

Summary of Significant Accounting Policies

Basis of Presentation and Principals of Consolidation

Use of Estimates

Segments

Concentration of Risk

Cash and Cash Equivalents

Inventory

Property and Equipment

The following table presents revenue disaggregated (in thousands):


	Year ended December 31,
	2021		2020		2019
OviTex	$	22,990	$	15,093	$	14,041
OviTex PRS		6,473		3,120		1,405
Total revenue	$	29,463	$	18,213	$	15,446

Sales outside of the U.S. were immaterial for the years ended December 31, 2021, 2020 and 2019.

Research and Development

Stock-Based Compensation

Income Taxes

Fair value of financial instruments

●

Level 1: Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities.

●

Level 2: Quoted prices in markets that are not active, or inputs which are observable, either directly or indirectly, for substantially the full term of the asset or liabilities.

●

Level 3: Prices or valuation techniques that require inputs that are both significant to the fair value measurement and unobservable (i.e., supported by little or no market activity).


	Fair value measurement at reporting date using
	Quoted prices in
	active markets		Significant other		Significant
	for identical		observable		unobservable
	assets		inputs		inputs
	(Level 1)		(Level 2)		(Level 3)
December 31, 2021:
Cash equivalents – money market fund	$	41,396	$	—	$	—

December 31, 2020:
Cash equivalents – money market fund	$	72,889	$	—	$	—

A rollforward of the warrant liability (Level 3 measurement) was as follows (in thousands):


January 1, 2019	$	1,640
Change in fair value of warrants		5
Conversion into common stock warrants		(1,645)
December 31, 2019	$	—

The fair value of the warrants at November 13, 2019 was determined using the Black-Scholes option pricing model with the following assumptions:


			Convertible
	MidCap Credit		promissory
	Facility		notes		Notes payable
Expected dividend yield	—		—		—
Expected volatility	57.5	%	57.4	%	57.5	%
Risk-free interest rate	2.04	%	1.79	%	1.79	%
Remaining contractual term in years	8.4		7.2		7.4

Net loss per share


	Year ended December 31,
	2021	2020	2019
Stock options (including shares subject to repurchase)	1,706,438	1,498,390	1,421,697
Unvested restricted stock units	163,043	—	—
Common stock warrants	88,556	88,556	88,556
Total	1,958,037	1,586,946	1,510,253

Recently Issued Accounting Pronouncement

Recently Issued Accounting Pronouncements

Summary of Significant Accounting Policies - Long-Lived Assets (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
Long-Lived Assets
Impairment of Long-Lived Assets	$ 0.0	$ 0.0	$ 0.0

Summary of Significant Accounting Policies - Potentially dilutive securities (Details) - shares	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
Potentially dilutive securities
Potentially dilutive securities excluded from computation of diluted weighted average shares	1,958,037	1,586,946	1,510,253
Stock Options
Potentially dilutive securities
Potentially dilutive securities excluded from computation of diluted weighted average shares	1,706,438	1,498,390	1,421,697
Restricted stock units
Potentially dilutive securities
Potentially dilutive securities excluded from computation of diluted weighted average shares	163,043
Common Stock Warrants
Potentially dilutive securities
Potentially dilutive securities excluded from computation of diluted weighted average shares	88,556	88,556	88,556

Debt - Schedule of long term debt (Details) - USD ($) $ in Thousands	Dec. 31, 2021	Dec. 31, 2020
Debt
Longterm debt with related party	$ 31,491	$ 30,827
OrbiMed Term Loans (related party)
Debt
Long Term Debt	30,000	30,000
End of term charge	3,000	3,000
Unamortized end of term charge and issuance costs	(1,509)	(2,173)
Longterm debt with related party	$ 31,491	$ 30,827

- Definition

Amount, after unamortized (discount) premium and debt issuance costs, of long-term debt. Includes, but not limited to, notes payable, bonds payable, debentures, mortgage loans and commercial paper. Excludes capital lease obligations.

+ References + Details

Stock-Based Compensation - Expenses (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
Stock-Based Compensation
Total stock-based compensation	$ 3,661	$ 2,058	$ 457
Sales and marketing
Stock-Based Compensation
Total stock-based compensation	961	696	164
General and administrative
Stock-Based Compensation
Total stock-based compensation	1,542	1,030	225
Research and development
Stock-Based Compensation
Total stock-based compensation	$ 1,158	$ 332	$ 68

Summary of Significant Accounting Policies (Tables)

12 Months Ended

Dec. 31, 2021

Summary of Significant Accounting Policies

Disaggregation of Revenue

The following table presents revenue disaggregated (in thousands):


	Year ended December 31,
	2021		2020		2019
OviTex	$	22,990	$	15,093	$	14,041
OviTex PRS		6,473		3,120		1,405
Total revenue	$	29,463	$	18,213	$	15,446

Schedule of fair value of assets and liabilities measured on recurring basis


	Fair value measurement at reporting date using
	Quoted prices in
	active markets		Significant other		Significant
	for identical		observable		unobservable
	assets		inputs		inputs
	(Level 1)		(Level 2)		(Level 3)
December 31, 2021:
Cash equivalents – money market fund	$	41,396	$	—	$	—

December 31, 2020:
Cash equivalents – money market fund	$	72,889	$	—	$	—

Schedule of warrant liability


January 1, 2019	$	1,640
Change in fair value of warrants		5
Conversion into common stock warrants		(1,645)
December 31, 2019	$	—

Schedule of fair value of warrants


			Convertible
	MidCap Credit		promissory
	Facility		notes		Notes payable
Expected dividend yield	—		—		—
Expected volatility	57.5	%	57.4	%	57.5	%
Risk-free interest rate	2.04	%	1.79	%	1.79	%
Remaining contractual term in years	8.4		7.2		7.4

Schedule of dilutive securities excluded


	Year ended December 31,
	2021	2020	2019
Stock options (including shares subject to repurchase)	1,706,438	1,498,390	1,421,697
Unvested restricted stock units	163,043	—	—
Common stock warrants	88,556	88,556	88,556
Total	1,958,037	1,586,946	1,510,253

- Definition

Tabular disclosure of financial instruments measured at fair value, including those classified in shareholders' equity measured on a recurring or nonrecurring basis. Disclosures include, but are not limited to, fair value measurements recorded and the reasons for the measurements, level within the fair value hierarchy in which the fair value measurements are categorized and transfers between levels 1 and 2. Nonrecurring fair value measurements are those that are required or permitted in the statement of financial position in particular circumstances.

+ References + Details

Income Taxes - NOL carryforwards (Details) - USD ($) $ in Thousands	Dec. 31, 2021	Dec. 31, 2020
Federal
Income Taxes
NOL carryforwards	$ 181,443	$ 150,642
State
Income Taxes
NOL carryforwards	$ 151,488	$ 128,912

Property and Equipment (Tables)

12 Months Ended

Dec. 31, 2021

Property and Equipment

Schedule of Property and Equipment

Property and equipment consisted of the following (in thousands):


		December 31,
Asset description	Estimated useful lives	2021		2020
Lab equipment	5 Years	$	2,352	$	2,304
Furniture and fixtures	5 Years		242		118
Computer equipment and software	3 Years		468		577
Leasehold improvements	Lesser of useful life or lease term		1,881		1,360
Total			4,943		4,359
Less accumulated depreciation and amortization			(3,757)		(3,733)
Property and equipment, net		$	1,186	$	626

Redeemable Convertible Preferred Stock and Stockholders Equity (Deficit) - Public Stock Offerings (Details) - USD ($) $ / shares in Units, $ in Millions	1 Months Ended
	Jun. 30, 2020	Nov. 30, 2019	Dec. 31, 2021	Dec. 31, 2020
IPO
Stockholders' Equity
Common stock issued and sold (in shares)		4,398,700
Offering price (in dollar per share)		$ 13.00
Received net proceeds of after deducting underwriting discounts, commissions and other offering expenses		$ 50.6
Over-Allotment Option
Stockholders' Equity
Common stock issued and sold (in shares)		398,700
Second Underwritten Public Offering [Member]
Stockholders' Equity
Common stock issued and sold (in shares)	3,000,000
Offering price (in dollar per share)	$ 16.00
Received net proceeds of after deducting underwriting discounts, commissions and other offering expenses	$ 44.7
Equity Distribution Agreement
Stockholders' Equity
Value Of Shares Authorized To Be Sold			$ 0.0	$ 50.0
Convertible Preferred Stock \| IPO
Stockholders' Equity
Aggregate of common stock		6,708,649
Warrants \| IPO
Stockholders' Equity
Aggregate of common stock		88,556

Stock-Based Compensation

12 Months Ended

Dec. 31, 2021

Stock-Based Compensation

Stock-Based Compensation

(8) Stock-Based Compensation

The Company has two equity incentive plans: the 2012 Stock Incentive Plan and the Amended and Restated 2019 Equity Incentive Plan. New awards can only be granted under the Amended and Restated 2019 Equity Incentive Plan (the “Plan”). At December 31, 2021, 1,299,218 shares were available for future issuances under the Plan. The Plan is subject to an annual increase, subject to prior approval by the Company’s board of directors, equal to the lesser of (i) 432,442 shares, (ii) 4% of the shares outstanding on the last day of the immediately preceding fiscal year and (iii) such smaller number of shares as determined by the board of directors. The Plan provides for the grant of incentive stock options, nonqualified stock options, restricted stock awards, restricted stock units and/or stock appreciation rights to employees, directors, and other persons, as determined by the Company’s board of directors. The Company’s stock options vest based on the terms in each award agreements and generally vest over four years and have a term of 10 years. The Company estimates forfeitures that it expects will occur and adjusts expense for actual forfeitures in the periods they occur.

The Company measures employee and nonemployee stock-based awards at grant-date fair value and records compensation expense ratably over the vesting period of the award. The Company recorded stock-based compensation expense in the following expense categories of its accompanying consolidated statements of operations (in thousands):


	Year ended December 31,
	2021		2020		2019
Sales and marketing	$	961	$	696	$	164
General and administrative		1,542		1,030		225
Research and development		1,158		332		68
Total stock‑based compensation	$	3,661	$	2,058	$	457

The following table summarizes stock option activity for the Plan:


				Weighted
				average
		Weighted		remaining
	Number of	average exercise		contractual term
	shares	price per share		(years)
Outstanding at January 1, 2019	489,222	$	5.84
Granted	978,415		12.51
Exercised	(2,527)		5.93
Early exercised	(471)		5.93
Canceled/forfeited	(43,697)		8.58
Outstanding at December 31, 2019	1,420,942		10.35
Granted	175,086		15.03
Exercised	(27,783)		6.29
Canceled/forfeited	(70,037)		12.41
Outstanding at December 31, 2020	1,498,208		10.87
Granted	468,000		14.80
Exercised	(77,154)		7.08
Canceled/forfeited	(182,645)		13.08
Outstanding at December 31, 2021	1,706,409	$	11.88	7.36
Vested and expected to vest at December 31, 2021	1,657,511	$	11.83	7.31
Exercisable at December 31, 2021	917,602	$	10.23	6.18

At December 31, 2021, the aggregate intrinsic value of outstanding options and exercisable options was $3.0 million and $2.8 million, respectively.

The 2012 Stock Incentive Plan provided the holders of stock options an election to early exercise prior to vesting. The Company had the right, but not the obligation, to repurchase early exercised options without transferring any appreciation to the employee if the employee terminates employment before the end of the original vesting period. The repurchase price is the lesser of the original exercise price or the then fair value of the common stock. At December 31, 2021, an immaterial amount of proceeds from early exercised options are recognized as a current liability in accrued expenses and other current liabilities in the accompanying consolidated balance sheet.

The following table summarizes activity relating to early exercise of stock options:


		Number of
		shares
Unvested balance at January 1, 2019		912
Early exercised		471
Vested		(628)
Unvested balance at December 31, 2019		755
Vested		(306)
Forfeited		(267)
Unvested balance at December 31, 2020		182
Vested		(153)
Unvested balance at December 31, 2021		29

The weighted average grant-date fair value per share of options granted was $8.66, $8.13 and $6.81 for the years ended December 31, 2021, 2020 and 2019, respectively. The aggregate intrinsic value of options exercised was $0.4 million and $0.2 million for the years ended December 31, 2021 and 2020, respectively, and nominal for the year ended December 31, 2019. As of December 31, 2021, the total unrecognized compensation expense related to unvested employee and nonemployee stock option awards was $5.1 million, which is expected to be recognized in expense over a weighted-average period of approximately 2.5 years.

Estimating Fair Value of Stock Options

The fair value of each grant of stock options was determined by the Company using the methods and assumptions discussed below. Certain of these inputs are subjective and generally require judgment to determine.

Expected term – The expected term of stock options represents the weighted average period the stock options are expected to be outstanding. The Company uses the simplified method for estimating the expected term as provided by the Securities and Exchange Commission. The simplified method calculates the expected term as the average time to vesting and the contractual life of the options.

Expected volatility – Due to the Company’s limited operating history and lack of adequate company-specific historical or implied volatility, the expected volatility assumption was determined by examining the historical volatilities of a group of industry peers whose share prices are publicly available.

Risk-free interest rate – The risk-free rate assumption is based on the U.S. Treasury instruments, the terms of which were consistent with the expected term of the Company’s stock options.

Expected dividend – The Company has not paid and does not intend to pay dividends.

The fair value of each option was estimated on the date of grant using the weighted average assumptions in the table below:


	Year ended December 31,
	2021		2020		2019
Expected dividend yield	—		—		—
Expected volatility	63.9	%	59.1	%	55.9	%
Risk‑free interest rate	0.99	%	0.87	%	1.82	%
Expected term (in years)	6.15		5.98		6.24

Restricted Stock Units


		Number of
		shares
Outstanding at January 1, 2021		—
Granted		194,232
Vested		(12,000)
Canceled/forfeited		(19,189)
Outstanding at December 31, 2021		163,043

The weighted average grant-date fair value per RSU granted was $16.57 during the year ended December 31, 2021. The aggregate intrinsic value of RSUs outstanding was $2.1 million at December 31, 2021. The total unrecognized

compensation expense at December 31, 2021 related to RSUs was $1.6 million, which is expected to be recognized in expense over a weighted-average period of approximately 3.2 years.

Property and Equipment (Details) - USD ($) $ in Thousands	12 Months Ended
Property and Equipment (Details) - USD ($) $ in Thousands	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
Property and Equipment
Property and Equipment, Total	$ 4,943	$ 4,359
Less accumulated depreciation and amortization	(3,757)	(3,733)
Property and equipment, net	1,186	626
Depreciation expense	231	221	$ 278
Umbrella Agreement with Aroa
Property and Equipment
Property and Equipment, Total	200	200
Lab equipment
Property and Equipment
Property and Equipment, Total	$ 2,352	2,304
Estimated useful lives	5 years
Furniture and fixtures
Property and Equipment
Property and Equipment, Total	$ 242	118
Estimated useful lives	5 years
Computer equipment and software
Property and Equipment
Property and Equipment, Total	$ 468	577
Estimated useful lives	3 years
Leasehold improvements
Property and Equipment
Property and Equipment, Total	$ 1,881	$ 1,360

Summary of Significant Accounting Policies - Segments (Details)	12 Months Ended
	Dec. 31, 2021 segment
Segments
Number of segments	1

Summary of Significant Accounting Policies - Fair value of financial instruments (Details) - USD ($) $ in Thousands	Dec. 31, 2021	Dec. 31, 2020
Recurring \| Level 1 \| Money market funds
Fair value of financial instruments
Cash equivalents	$ 41,396	$ 72,889

Property and Equipment

12 Months Ended

Dec. 31, 2021

Property and Equipment

Property and Equipment

(4) Property and Equipment

Property and equipment consisted of the following (in thousands):


		December 31,
Asset description	Estimated useful lives	2021		2020
Lab equipment	5 Years	$	2,352	$	2,304
Furniture and fixtures	5 Years		242		118
Computer equipment and software	3 Years		468		577
Leasehold improvements	Lesser of useful life or lease term		1,881		1,360
Total			4,943		4,359
Less accumulated depreciation and amortization			(3,757)		(3,733)
Property and equipment, net		$	1,186	$	626

The cost of property and equipment at both December 31, 2021 and 2020 includes $0.2 million of equipment located at Aroa. Depreciation expense was $0.2 million, $0.2 million and $0.3 million for the years ended December 31, 2021, 2020 and 2019, respectively.

Summary of Significant Accounting Policies - Intangible Assets (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
Intangible Assets
Amortization expense related to intangible assets	$ 304	$ 304	$ 304
Remaining life of intangible assets	7 years 7 months 6 days
Intangible assets future amortization
Year 1	$ 300
Year 2	300
Year 3	300
Year 4	300
Year 5	300
Thereafter	$ 800

Redeemable Convertible Preferred Stock and Stockholders Equity - Preferred Stock (Details) - Convertible Preferred Stock - Series B - USD ($) $ / shares in Units, $ in Millions	12 Months Ended
	Dec. 31, 2020	Dec. 31, 2019
Stockholders' Equity
Shares issued (in shares)		12,527,956
Issue price		$ 1.16
Gross proceeds	$ 14.5
Transaction Fee		$ 0.2

Stock-Based Compensation - Weighted average assumptions (Details)	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
Stock-Based Compensation
Expected dividend yield	0.00%	0.00%	0.00%
Expected volatility	63.90%	59.10%	55.90%
Risk-free interest rate	0.99%	0.87%	1.82%
Expected term (in years)	6 years 1 month 24 days	5 years 11 months 23 days	6 years 2 months 26 days

Income Taxes - Rate reconciliation (Details)	12 Months Ended
Income Taxes - Rate reconciliation (Details)	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
Rate reconciliation
Federal tax benefit at statutory rate	(21.00%)	(21.00%)	(21.00%)
State rate, net of federal benefit	(3.50%)	(4.20%)	(2.90%)
Permanent differences	0.2	0.6	0.4
Research and development	0.40%	0.70%	(0.70%)
Change in valuation allowance	24.20%	24.00%	24.20%
Other	(0.30%)	(0.10%)	0.00%
Total tax provision

Income Taxes - Narratives (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2021	Dec. 31, 2020	Dec. 31, 2019
Income Taxes
Unrecognized tax benefits	$ 0	$ 0
Increase (decrease) in valuation allowance	$ 8,100	$ 6,900
Corporate income tax rate	21.00%	21.00%	21.00%
Employee retention payroll tax credit	$ 500

Background

12 Months Ended

Dec. 31, 2021

Background

Background

(1) Background

TELA Bio, Inc. (the “Company”) was incorporated in the state of Delaware on April 17, 2012 and wholly owns TELA Bio Limited, a company incorporated in the United Kingdom. The Company is commercial-stage medical technology company focused on providing innovation soft-tissue reconstruction solutions that optimize clinical outcomes by prioritizing the preservation and restoration of the patient’s own anatomy. OviTex Reinforced Tissue Matrix (“OviTex”), the Company’s first portfolio of products, addresses unmet needs in hernia repair and abdominal wall reconstruction by combining the benefits of biologic matrices and polymer materials while minimizing their shortcomings, at a cost-effective price. OviTex PRS Reinforced Tissue Matrix (“OviTex PRS”), the Company’s second portfolio of products, addresses unmet needs in plastic and reconstructive surgery. The Company’s principal corporate office and research facility is located in Malvern, Pennsylvania.

The Company has been impacted by the pandemic resulting from the novel coronavirus and the disease it causes, including variants thereof (“COVID-19”). To date, among other impacts on its business related to the pandemic, physicians and their patients are required by state mandates, or are choosing to defer elective surgery procedures in which its products otherwise would be used. There remains uncertainty and lack of visibility regarding the Company’s near-term revenue growth prospects and product development plans due to the rapidly evolving environment and continued uncertainties resulting from the ongoing COVID-19 pandemic. While certain regions are experiencing a reduction in COVID-19 cases and a relaxing of governmental restrictions, at this time, the full extent of the impact of the ongoing COVID-19 pandemic on its business, results of operations and financial condition, including revenue, expenses, manufacturing capability, supply chain integrity, research and development costs and employee-related compensation, will depend on future developments that are highly uncertain, including new information that may emerge concerning COVID-19 and the actions taken to mitigate the spread of or treat COVID-19, the emergence of new variants of COVID-19, as well as the economic impact on local, regional, national and international customers and markets.

Employee Benefit Plans

12 Months Ended

Dec. 31, 2021

Employee Benefit Plans

Employee Benefit Plans

(9) Employee Benefit Plans

401(k) Defined Contribution Plan

The Company sponsors a 401(k) defined-contribution plan covering all employees. Participants are permitted to contribute up to 100% of their eligible annual pretax compensation up to an established federal limit on aggregate participant contributions. Discretionary contributions made by the Company, if any, are determined annually by the board of directors. Effective January 1, 2020, the Company matched 50% of employees’ contributions up to 6%, subject to a maximum annual amount. The Company’s contributions were $0.3 million and $0.2 million for the years ended December 31, 2021 and 2020, respectively. The match was suspended from April to August 2020 due to COVID-19. Participants are immediately vested in their own contributions to the plan and are fully vested in discretionary profit sharing made by the Company after three years of service.

2019 Employee Stock Purchase Plan

In November 2019, the Company adopted the 2019 Employee Stock Purchase Plan (the “ESPP”). At December 31, 2021, 317,701 shares were available for future issuance under the ESPP. The ESPP is subject to an annual increase, subject to prior approval by the Company’s board of directors, equal to the least of (i) 107,887 shares of common stock, (ii) 1% of the shares outstanding on the final day of the immediately preceding calendar year, and (iii) such smaller number of shares as determined by the board of directors. The ESPP provides the opportunity to purchase the Company’s common stock at a 5% discount to the market price through payroll deductions. As of December 31, 2021 and 2020, 3,163 and 2,797 shares, respectively, have been issued under the ESPP. No shares were issued under the ESPP as of December 31, 2019.